Eurogrid GmbH Group Management Report 2021
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Group Management Report and
Consolidated financial statements for the
fiscal year 2021
Eurogrid GmbH
Berlin
Eurogrid GmbH Group Management Report 2021
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Group Management Report of Eurogrid
GmbH
Background of the Group
Purpose of the Company
The Eurogri d GmbH Group (hereinafter referred to as the “ Group”) consists of Eurogrid GmbH
(“Eurogrid”) as well as 50Hertz Transmission GmbH (“50Hertz Transmission”) and 50Hertz
Offshore GmbH (“50Hertz Offshore”; together with “50Hertz Transmission” also referred to as
“50Hertz”) as affiliated companies of Eurogrid and additionally from investments of 50Hertz
Transmission. Among others, there is an investment in Elia Grid International NV/SA, which is
accounted for as an associated company using the equity method. The three associated
companies have their registered offices in Berlin, while Elia Grid International NV/SA, in which
50Hertz Transmission has a direct shareholding, has its registered office in Brussels.
The Eurogrid group management report includes a non-financial group statement in a separate
section. The standards of the Global Reporting Initiative (GRI) were applied in this part of the
management report.
Cooperation within the Elia Group
Elia Group NV/SA (Elia Group), as the listed holding company and ultimate management
company, holds all shares in Elia Transmission Belgium NV/SA (Elia TSO) as well as in Eurogrid
International NV/SA (Eurogrid International) and thus indirectly in Eurogrid and 50Hertz
Transmission and in Elia Grid International NV/SA. Elia TSO is the Belgian transmission system
operator (TSO).
Under the name Elia Group, Elia TSO and 50Hertz work together intensively as two strong
European TSOs as well as all other Group companies. The cooperation is also strengthened
organisationally within the Group, through the establishment of joint Group functions, especially
for IT, purchasing, strategy, Group Controlling and EU Affairs. About their financing activities
and their refinancing on the capital market, the two national parts of the Group act independently
of each other, partly due to the regulatory framework; there are no cross-border financing
relationships.
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Eurogrid
Elia Group holds 100 percent of the shares in Eurogrid International, which in turn holds 80
percent of the shares in Eurogrid. 80 percent of the shares in Eurogrid. Kew holds the remaining
20 percent of Eurogrid indirectly through its wholly owned subsidiary Selent Netzbetreiber GmbH
(Selent), based in Frankfurt am Main.
Eurogrid holds 100 percent of the shares in 50Hertz Transmission, which in turn holds 100 percent
of the shares in 50Hertz Offshore. Profit and loss transfer agreements exist between the
companies along the participation chain. 50Hertz Transmission also has other shareholdings,
such as in Elia Grid International SA, in the European Energy Exchange AG (EEX), in the Joint
Allocation Office S.A. (JAO), in the TEG and in the TEG. (JAO), in TSCNET Services GmbH
(TSCNET) and in Coreso SA (Coreso).
Both Eurogrid and its subsidiaries 50Hertz Transmission and 50Hertz Offshore are included in
the consolidated financial statements of Elia Group as affiliated companies. Due to its capital
market orientation, the Elia Group's consolidated financial statements do not have any exempting
effect. Eurogrid therefore prepares its own consolidated financial statements.
The business purpose of Eurogrid is to acquire, hold and operate investment activities, mainly the
investment in 50Hertz Transmission. In the financial year, Eurogrid essentially arranged and
secured financing for 50Hertz's construction and operating activities.
As part of the uniform financial management, there is a cash pooling agreement that includes the
current business accounts of Eurogrid, 50Hertz Transmission and 50Hertz Offshore. The EEG
account managed by 50Hertz Transmission is managed separately.
50Hertz Transmission and 50Hertz Offshore
As a TSO, 50Hertz Transmission operates the extra-high voltage grid in the north and east of
responsible for maintenance and expansion in line with demand, as well as for maintaining the
balance of generation and consumption within the entire electricity supply system of the control
area. The business activities of 50Hertz Offshore include the planning, construction, and provision
of lines for electric power as well as the associated facilities and equipment for connecting
offshore wind energy plants or offshore wind farms (OWPs), which are primarily constructed in the
Baltic Sea. 50Hertz Offshore serves the transparent presentation of German offshore activities
within the regulated framework with regards to planning, production, and provision of grid
connections and as a basis for the processing of the offshore grid levy by 50Hertz Transmission.
The company does not employ its own staff but uses the staff of the direct parent company.
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50Hertz Transmission carries out billing in accordance with the statutory requirements of the
Renewable Energy Sources Act (EEG), the Combined Heat and Power Act (KWKG) and certain
levies under the Energy Industry Act (New) and the Electricity Grid Charges Ordinance
(StromNEV). These transactions do not affect the TSO's earnings; however, their effects on
liquidity have a significant impact on the Group's balance sheet.
Management system
The supervision of the German Group activities is the responsibility of the Supervisory Board of
Eurogrid.
The operational management of the Group is carried out by the management of 50Hertz
Transmission as the leading company in the Group.
The central performance indicators for Group management include both financial and non-
financial elements; they are based on the Group's objectives (competitive and sustainable
result, high efficiency and acceleration, digital transformation and value-based corporate culture,
demand- driven network expansion, sustainable and secure network including occupational
safety) and are recorded and analysed on an ongoing basis using a key performance indicator
system that includes various dimensions. The financial performance indicators are the after-tax
result according to IFRS, an absolute figure reflecting the efficiency value of 50Hertz for the
operating onshore costs (OPEX value onshore), which essentially include personnel costs and
non-energy- related expenses, and the investment behavior for the transmission grid. In addition
to financial performance indicators (amount of capital expenditure per year), the investment
behavior for the transmission grid is also controlled via non-financial indicators such as the
achievement of specific milestones and the quality of project execution. Furthermore, non-
financial performance indicators are considered, among other things, in the area of health and
occupational safety (the number of occupational accidents, the grading according to accident
severity and the health rate) and, as a technical indicator, network availability. The evaluation of
various performance indicators also includes contributions from the achievement of Group targets
of the Elia Group.
The Group's financial position is assessed and managed through rolling liquidity planning,
considering the status of the investment settlement in particular.
Eurogrid has a Funding and Dividend Policy that sets out the key points of a separate funding
strategy for the Group. This policy requires in particular an accumulative payout ratio of up to 70
percent of the net earning to ensure sufficient internal funding within the Eurogrid group. The
aim is to secure a stable rating initially for the duration of the third regulatory period via a
sustainable financing structure.
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Economic and Industry-specific environment
Business Strategy
As a group with a high level of social responsibility for the success of the energy transition, the
political framework conditions in G erman y
and Europe are extremely important for the activities
of its subsidiaries as regulated companies in a natural monopoly. 50Hertz is therefore in intensive
dialogue with political decision-makers, authorities, industry representatives and civil society
associations. In particular, the political decisions regarding the phase-out of various conventional
forms of energy generation and the simultaneous special promotion of the generation of
renewable energies have for years presented the company responsible for the electrical system
with constant challenges, which 50Hertz addresses actively and innovatively. Accordingly, the
Group's strategic goal is to ensure that 100 percent of the total annual electricity consumption in
the 50Hertz grid area can be covered by renewable energies by 2032. In addition, 50Hertz
supports the industry in its efforts towards rapid decarbonization accompanied by additional
electrification requirements.
The energy transition requires the safe and efficient integration of large amounts of renewable
electricity into the grid and the overall electrical system. To cope with this complexity, 50Hertz is
increasingly making use of digital technologies.
Economic and political environment
The consequences of the Corona pandemic were also clearly noticeable in 2021. Nevertheless,
according to the Federal Statistical Office, the recovery of the German economy was shown by
the positive development of the gross domestic product over the course of the year. This
development was also reflected in the BDEW Annual Report 2021: compared to the previous year
(566.7 kWh), gross electricity generation already increased slightly again in the first half of 2021
and amounted to 582.2 kWh at the end of 2021. However, the level of 2019, i.e., before the Corona
pandemic, of 601.9 kWh has not yet been reached again.
Energy transition and climate change are taking on an increasingly central role in the political and
social debate. In addition to ambitious climate neutrality plans of individual nations, societal
pressure on states and companies to address climate change more quickly and decisively is also
increasing.
Even before the parliamentary summer break - and in direct response to the Federal
Constitutional Court ruling on the Climate Protection Act - the amendment to the Federal Climate
Protection Act was passed. The target year of net greenhouse gas neutrality was brought forward
from 2050 to 2045 and the greenhouse gas reduction targets were set at 65 percent by 2030 and
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88 percent by 2040. In the process, the majority of the additional emission reductions by 2030 are
allocated to the energy sector. The traffic light coalition of SPD, Bündnis 90/Die Grünen and FDP,
formed after the last Bundestag elections, will have to deal with the concretization and
formulation of the necessary implementation measures to achieve the targets. In the coalition
agreement, the parties have attached great importance to energy and climate policy. With the
intended bringing forward of the end of coal-fired power generation and a massive acceleration
of the expansion of renewable energies, new demands will also be placed on 50Hertz. In concrete
terms, this means that the grid expansion must be implemented even more quickly than previously
planned, and opportunities must be created to connect producers of large amounts of electricity
from renewable energies to the 50Hertz grid even more quickly and easily. In order to expand the
transmission grid accordingly and to continue to guarantee system security, the acceleration of
planning and approval procedures in particular is even more crucial than before. The development
of a new electricity market design, which will become necessary in the course of the expansion of
renewable energies, will also be essential. As a trustee in the EEG system, the termination of the
financing of EEG costs via the EEG levy on 31 December 2022, as decided by the parties, will
also be relevant for 50Hertz.
With the European Climate Change Act, which came into force on 29 July 2021, the goal of a
climate-neutral economy and society in Europe by 2050, which was anchored in the "Green Deal",
is now made binding. The law also sets the interim target for reducing greenhouse gas emissions
by at least 55 percent by 2030 compared to 1990 levels. In this context, the expansion of
renewable energies on land and at sea as well as a significant increase in installed offshore wind
power capacity will continue to be pursued. The EU Commission's strategy is based primarily on
large-scale joint projects by various member states. A clear legal framework adapted rules for the
internal electricity market and environmental protection as well as amended state aid guidelines
are to make this development possible.
As another political milestone, the European Commission presented its "Fit for 55" package on 14
July 2021. The "Fit for 55" package consists of a series of interconnected legislative proposals
aimed at achieving the agreed targets by 2030 and beyond. For example, a higher share of
renewable energies, addressed among others by the adaptation of the Renewable Energies
Directive, as well as higher energy efficiency (adaptation of the Energy Efficiency Directive) are to
contribute to the achievement of the 55 percent target.
50Hertz also closely followed the negotiations between the Council and Parliament on the revision
of the guidelines for trans-European energy infrastructure (TEN-E), which were concluded in
December 2021. Based on the TEN-E regulation, infrastructure projects that contribute to the
achievement of the EU's energy policy goals and the further integration of the EU's internal energy
market are identified and specifically promoted as so-called Projects of Common Interest (PCI).
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As in the past, 50Hertz will continue to closely follow future legislative and regulatory projects as
well as political developments at federal and state policy level and - within the Elia Group - at
European level. 50Hertz has made a constructive contribution to energy policy consultations
through various statements.
Regulatory framework of the energy industry
European law
On 2 September 2021, the European Court of Justice (ECJ) handed down its decision in the
infringement proceedings on the transposition of the 3rd internal market package into German
law in conformity with European law. The ECJ granted the request of the European Commission,
which had complained of insufficient transposition, on all points. In particular, the finding that the
Federal Network Agency (BNetzA) did not have the sufficient independence required under
European law will lead to significant changes in German energy and regulatory law. The court
based its opinion on the lack of exclusive competence of the Federal Network Agency due to the
legal ordinances of the Federal Government issued on the basis of § 24 para. 1 no. 1 EnWG, e.g.
ARegV, StromNEV, GasNEV, StromNZV, GasNZV. A corresponding adaptation of German law
will therefore (at least) extend to these legal acts. No deadline has been set for this. Until an
adjustment is made, the previous legal framework will continue to be applied.
Another infringement procedure was directed against the Federal Republic of Germany because
of allegations of improper implementation of the Flora-Fauna-Habitat Directive. The proceedings
concern several thousand protected area ordinances throughout Germany. The outcome of the
proceedings is relevant for approval procedures of 50Hertz and may pose a legal risk.
In another decision, the ECJ upheld the strict individual-based protection regime of the Birds
Directive (Birds Directive) also with regard to so-called "common species". The ECJ has not
fulfilled the hopes of the wind energy sector and power line builders in particular for an easing of
permit practice. Even in the case of common species, it must still be carefully examined whether
there is a significantly increased risk for the specific individual.
In addition, the implementation of the "Clean Energy for all Europeans Package" (CEP) legislative
package 2021 was the defining European legal topic in the energy sector. While the Regulation
on the Internal Electricity Market had already been directly applicable in all Member States since
2020, the new Internal Electricity Market Directive was only transposed into national law in July
2021. The implementation primarily affected the EnWG as well as several legal ordinances such
as the ARegV and the StromNEV.
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National law
At national level, the legal framework for 50Hertz was primarily shaped by rulings by the highest
court and the entry into force of various planning and environmental regulations.
As of 25. February 2021, the amendment to the Federal Requirement Plan Act was passed. With
this decision, the legislator confirmed and legally anchored various grid expansion projects of
50Hertz.
The “Netzausbaubeschleunigungsgesetz” [Grid Expansion Acceleration Act] (NABEG), which
came into force on 13 May 2019, contains new requirements for the management of grid
congestion that had to be implemented by grid operators by 1 October 2021. The regulations on
feed-in management of renewable energy plants (RE plants) and combined heat and power plants
(CHP plants) in the “Erneuerbare-Energien-Gesetz” [Renewable Energy Sources Act] (EEG) and the
“Kraft-Wärme-Kopplungs-Gesetz” [combined Heat and Power Act] (KWKG) will be repealed on
this date and a uniform redispatch regime (Redispatch 2.0) will be introduced in accordance
with sections 13, 13a, 14 of the “Energiewirtschaftsgesetz” [Energy Industry Act] (EnWG). In
concrete terms, this means that in future RE plants and CHP plants from 100 kW and plants that
can be remotely controlled by a grid operator at any time will also be included in the redispatch.
Despite the long preparation time, the industry did not succeed in fully implementing the legal
requirements. In this respect, with the approval of the BNetzA, a transitional variant was created,
which initially leaves the balance sheet management of redispatch with the balancing group
manager on the basis of the previous system and provides for financial compensation for this. The
transitional variant now practiced is to be terminated by the end of May 2022 at the latest.
The Higher Regional Court of Nuremberg has ruled in interim legal protection proceedings that
the general order issued by the “Bondsman für Sicherheit in der Informationstechnik” [ Federal
Office for Information Security] (BSI) is likely to be unlawful. The general order of the BSI
triggers the obligation of the basic metering point operators to equip metering points for electricity
consumption and generation with intelligent metering systems; this obligation also applies to
competitive metering point operators. This is also followed by an installation stop for other metering
systems.
In a judgement of November 2020, the “Bundesverwaltungsgericht” (BVerwG) [German Federal
Administrative Court] strengthened the rights of private plaintiffs to sue in the case of relative
procedural errors, thus reversing its previous case law.
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Previously, the court had found that individual plaintiffs could only rely on a publication error if it
deprived them of the opportunity to participate as provided by law. However, the BVerwG
referred the question to the ECJ whether this was compatible with Union law. The ECJ answered
in the affirmative, provided that the error remained without influence on the substantive decision.
As a result, the BVerwG now revised its earlier case law. The present decision (once again)
increases the importance of procedural requirements to be complied with for both project
developers and approval authorities.
In another ruling, however, the BVerwG confirmed its previous case law that individuals are not
entitled to complain about violations of nature conservation regulations if they are not themselves
affected. With this ruling, the Federal Administrative Court once again clarified that individuals do
not have the same rights as nature conservation associations: only the latter can invoke the
violation of nature conservation law; individuals, on the other hand, cannot, even with reference
to their property rights. In its decision of 4 December 2020, the BVerwG clarified the requirements
for the concretisation of toleration orders that network operators can issue against third parties in
order to carry out necessary preliminary work for line construction projects. In doing so, the court
affirmed the rights of the network operators in that the requirements can be limited to a reasonable
extent.
In summary proceedings directly against the BNetzA's federal sectoral planning decision in
Section C of the SuedOstLink (SOL) project, the BVerwG has already rejected applications
received on the grounds of inadmissibility. The legislator has excluded direct actions against the
federal sectoral planning; it was disputed whether this exclusion violates EU law, international law
or constitutional law. In view of the clear reasoning, the decision is a complete success for
50Hertz. On the one hand, the requested planning stop for the SOL procedure is no longer a risk.
On the other hand, it is to be expected that the court will also reject the other complaints of other
plaintiffs against SOL federal sectoral planning and in other sections in the same way. In addition,
the legal certainty for other NABEG projects will also increase.
In another case concerning the SOL project, the BVerwG rejected an urgent application against
the issuance of a change ban pursuant to Section 16 NABEG in favour of the project developers
50Hertz and TenneT TSO GmbH (TenneT), who were invited to participate in the proceedings.
The court ruled that the change ban issued by the BNetzA was lawful. It was not necessary to
separately determine an urgent need and all other requirements for the issuance of the change
ban were also fulfilled. This first decision on the newly introduced block on changes for federal
sectoral planning is of fundamental importance and leads to increased procedural certainty.
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In a total of three lawsuits against the planning approval decision on the “Nordring Berlin” [Berlin
Northern Ring] of 30 September 2019, the BVerwG combined the lawsuits of a municipality,
an environmental association and two private plaintiffs and dismissed them at first and last
instance in its ruling of 27 July 2021. The court thus fully confirmed its legal opinion already
expressed in two previous urgent decisions. The planning approval decision is thus final, and the
construction work could be continued as planned.
In August 2020, 50Hertz received the supplementary planning decision for the construction of the
Uckermark line. The application for interim legal protection filed by an environmental association
against this construction right was now finally rejected in 2021 for construction lots 4 and 5 of the
project. The BVerwG has thus finally confirmed the interim decision made in 2020. The underlying
legal action is still pending before the BVerwG.
The long-standing proceedings on the procedural regulation of the costs and revenues from the
procurement and remuneration of redispatch measures were pacified in the 2021 financial year
through an agreement between the parties concerned. As a result, the BNetzA issued a new
determination based on the criteria for appropriate remuneration of power plant operators for
redispatch measures, as requested by the Higher Regional Court of Düsseldorf, and the parties
to the proceedings declared the legal proceedings to be settled.
Grid development plans
The preparation of the seventh German Network Development Plan (NEP) 2035 (2021) for the
onshore and offshore electricity grid refers to the determination of demand for the target years
203 5and 2040 (scenario framework).
The approval of scenario framework 2035, which was granted by the Federal Network Agency on
26 June 2020, considered the energy policy goals of the Federal Government at the time, which
envisaged an increase in the share of renewable energies in gross electricity consumption to 65
percent. Compared to the previous 2030 scenario framework, the assumed installed
capacities of renewable energies have therefore risen sharply.
In their draft NEP, the TSOs propose further Alternating Current (AC/AC) and Direct Current
(DC/DC) measures that go beyond the measures already approved in the Federal Requirements
Plan and the BNetzA confirmation of the NEP 2030 (2019). Of particular relevance for 50Hertz are
the projects DC31 (2 GW DC connection from the Heide search area to the Klein Rogahn search
area), NOR-12-2 (2 GW offshore grid connection system), OST-2-4 (1 GW offshore grid
connection system), P531 (reinforcement of the Berlin grid connection), P221 ("Hansa
PowerBridge II"; new interconnector between Germany and Sweden with a capacity of 700 MW)
as well as various reactive power compensation measures bundled in the P360 project.
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The NEP was confirmed by the BNetzA on 14 January 2022. For 50Hertz, this shows that all
projects already identified in the Federal Requirements Plan Act continue to be classified as
necessary and urgent for the energy industry. This includes in particular the SuedOstLink
extension DC20 between Isar and the "Klein Rogahn/Stralendorf/Warsow/Holthusen/Schossin“
search area, which is referred to below as the Klein Rogahn search area. The new
aforementioned projects P531 and P221 were also positively assessed. The confirmation of the
NEP 2035 also results in an extension of offshore activities to the North Sea for 50Hertz for the
first time. The confirmation confirmed the new concept jointly proposed by TenneT and 50Hertz
for the further connection of offshore wind energy from the North Sea, consisting of the three DC
grid connection systems or lines NOR-12-2, NOR-x-3 and DC31 as well as a total of four 2-GW
converters.
With regard to the Baltic Sea, the offshore grid connection system OST-1-4 with an installed
generation capacity of 300 MW was confirmed without reservation. The planned completion date
was set for the 3rd quarter of 2026. The new offshore grid connection system OST-2-4 to connect
the areas EO2 and EO2-West defined in the ROP EEZ 2021 was confirmed for the first time with
reservations. The project is to be realized in DC technology with an expected 1,000 MW of
installed generation capacity by 2030. In addition, the grid connection system OST-T-1 for
connecting the national test field was confirmed with reservations. The reservations relate to
specifications in OST-2-4 on the areas and generation capacities and in OST-T-1 on the spatial
design of the test site. The reservations are to be lifted with the update of the 2020 land
development plan (FEP). The BSH began the procedure for the partial update of the FEP 2020
on 17 September 2021 and published a corresponding draft. The partial update serves to define
the spatial design of the test field in order to lift the reservation of the NEP. 50Hertz submitted a
statement on the draft on 15 November 2021. The procedure at the BSH has not yet been
completed.
Furthermore, on 17 December 2021, the BSH initiated the procedure for updating the FEP 2020
and also published a preliminary draft in this regard. With the entry into force of the ROP EEZ
2021, a spatial basis for the further expansion of offshore wind energy in the EEZ is now available.
On 20 January 2022, the TSOs sent a joint written statement on the preliminary draft of the area
development plan to the BNetzA and the BSH pursuant to Section 6 (2) sentence 3 of the Offshore
Wind Energy Act, which was presented to the authorities and the public and discussed at the BSH
hearing on the preliminary draft on 26 January 2022. In the further update process, the BSH will
prepare a draft FEP by mid-2022, considering the comments submitted, and consult the public.
With regard to the reactive power compensation systems (P360), "budgets" of 5.1 Gvar of static
inductive reactive power (compensation coils), 1.3 Gvar of static capacitive reactive power
(MSCDN), 1.2 Gvar of slowly controllable reactive power and ±4.6 Gvar of dynamic reactive
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power (STATCOM) were confirmed for the 50Hertz control area. For frequency stabilisation, a
total of 8.5 GWs of instantaneous reserve is also confirmed, to be provided in the form of
STATCOM with short-term energy storage or rotating phase shifters with flywheel.
Business development
Strategic objective "From 60 to 100 by 2032”
With its strategic goal "From 60 to 100 by 2032", 50Hertz is sending out a signal in terms of energy
and climate policy, but also in terms of industrial policy: 100 percent coverage of electricity
consumption by renewable energies in the 50Hertz grid area as early as 2032. This will of course
be done while respecting the imperatives of non-discriminatory and transparent grid connection
and grid access in the regulatory environment. For a growing number of companies, it is becoming
increasingly important to locate and develop in regions where a high share of renewable energies
is available in the electricity grid. 50Hertz supports renewable energy providers in a faster
implementation of their projects and industry in their efforts to decarbonize their processes.
50Hertz has been a leader in the integration of renewables for many years: in 2019, the share of
renewables in electricity consumption in the 50Hertz grid area was 60 percent (as a starting point
for the "From 60 to 100 by 2032" strategy), in 2020 it was approximately 62 percent and in 2021 it
was percent56,1. This temporary decline is due in particular to a strongly below-average wind
yield, which could not be compensated for by additional REG plants or more PV feed-in. Thus, the
electricity market data for 2021 currently published by the Federal Network Agency show a
significant decline in generation from renewable energies for 2021. The
share of electricity
generated fro
m renewable energies in the grid load was 42.8 percent in 2021 (2020: 48.0
percent).
50Hertz actively contributes to accelerating the energy transition by supporting consumers in
decarbonizing their industries and producers in feeding their electricity from renewable sources
into the grid. Together with partners, 50Hertz is tapping location potential on land and at sea,
using all the technical possibilities to transport even more electricity and exploiting the potential
of digitalization for secure and efficient system control, the development of the electricity market,
the operation of its plants, the handling of its infrastructure projects and for the development of
additional flexibility potential. In this way, 50Hertz can make an effective contribution to combating
climate change and strengthening sustainable industrial locations.
This strategy establishes the 50Hertz grid area as a "green power plant" of the energy transition
in the sense of 50Hertz's overall social mission and as a partner for industry on the path to
decarbonization as well as for new industries that create sustainable jobs.
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Onshore grid expansion
In the onshore area, 50Hertz worked in particular on the further implementation of the mast
reinforcement programmed in the control area, the phase-shifting transformers at the Hamburg -
East site and several infrastructure measures in the capital (several substations and the Berlin
cable diagonal project). On the Parchim South - Perleberg (Mecklenburg-Western Pomerania
section) and Bertikow - Pasewalk lines, construction could begin after receiving the planning
approval decisions. Construction continued on two lots of the Uckermark line/south and progress
was made on the measures for weather-dependent overhead line operation and for increasing
the current carrying capacity. Furthermore, the conversion of the communications technology to
modern IP technology was almost completed. The new replacement construction to increase the
current carrying capacity on the Wolmirstedt - Stendal/West lines was completed. Legal certainty
was achieved with regard to the continuation of construction on the Berlin Nordring project.
The planning approval procedure for the SOL high-voltage direct current line is being advanced
and the main components of the direct current system have been contracted. In addition,
numerous significant line expansion projects such as Stendal/West - Güstrow, Röhrsdorf - Weida
- Remptendorf, Pulgar - Vieselbach, grid connection Südharz, Helmstedt - Wolmirstedt and
Vieselbach - Mecklar are in the approval phase.
Interconnector projects
The Kriegers Flak Combined Grid Solution project was put into regular operation in 2021.
After the approval documents for the Hansa PowerBridge interconnector project were submitted
to the Ministry of Energy of Mecklenburg-Western Pomerania, the Federal Maritime and
Hydrographic Agency and the State Agency for Agriculture and the Environment of Western
Pomerania in 2020, the approval procedures continued to progress positively in 2021. With the
publication of the prequalification requirements, the procurement procedures for the stations
(converter and cable section station) by Svenska kraftnät and for the cable manufacture and
installation by 50Hertz were started jointly.
In continuation of the successful cooperation with the Danish TSO Energinet, a cooperation
agreement was concluded in November 2021 for the development of Bornholm Energy Island, a
future offshore node in the Baltic Sea. In a first step, Energinet and 50Hertz intend to build a
hybrid interconnector by 2030, connecting the Danish main island of Zealand to the 50Hertz
control area via Bornholm, integrating offshore wind farms in the waters off Bornholm. This
interconnector will use direct current technology and will be expanded in later steps to include
connections to other countries, such as possibly Sweden, Poland or the Baltic States.
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Offshore grid expansion
In the offshore sector, the planning approval for the grid connection of offshore wind farms of the
Westlich Adlergrund 2 (Ostwind 2) cluster has also been granted for the previously missing
segments in the territorial sea. Two of the three cable systems could be laid in the seabed. The
expected completion date for grid connection OST-1-4 has been published. Essential work on the
route reconnaissance was carried out and the tenders for the main components were published.
Network user charges
50Hertz's network charges for calendar year 2022 were published 2021 on 10 December. They
are determined in cooperation with the other transmission system operators. The grid fees are
calculated considering the Grid Fee Modernization Act, which provides for a gradual
standardization of the transmission grid fees. In 2022, the transmission grid fees will consist of a
company-specific grid fee share (20 percent) and a national grid fee share (80 percent).
Compared to the previous year, the average grid charges of 50Hertz will increase by
approximately 3 percent.
Financing
Eurogrid is responsible for the procurement of funds for 50Hertz's business operations and for
financing the approved investment program within the German group.
The objectives of financial management include securing the solvency of the Group companies
at all times and minimizing the potentially negative effects of developments on the financial
markets. In the medium and long term, the financing capability of the extensive investment
activities and a good credit rating are to be secured. Continuous monitoring serves to achieve
these goals.
Eurogrid issued a corporate bond in April of financial year 2021 under the €5 billion Debt Issuance
Program adopted in May 2015. This corporate bond with a nominal amount of €500 million has
a maturity of 12 years. These funds were provided internally for 50Hertz's business operations and
to finance the investment program. Under the debt issuance program, Eurogrid has so far raised
a total of € 3.590 million.
Due to the development of the EEG account balance since the beginning of 2021, the additional
credit lines agreed with three different banks in 2020 to finance the EEG account could be
terminated in the course of the year.
In February 2021, a new syndicated revolving credit facility was concluded with eight banks for
an amount of € 750 million. It has an initial term of 4 years, which can be extended by another 2
Eurogrid GmbH Group Management Report 2021
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years. Due to the conclusion of this new credit line, the previous revolving credit facility of € 750
million, which runs until March 2022, was subsequently cancelled.
In September 2021, reports on the Eurogrid Group were published by the rating agencies
Standard & Poor's and Moody's, confirming the ratings of BBB+ and Baa1 respectively with a
stable outlook.
Regulatory issues
As part of the amendment to the ARegV on 31 July 2021, the regulatory treatment of distribution
system operators and transmission system operators will be aligned. For this purpose,
transmission system operators will in future also be subject to the system of capital cost
equalization for financing investments in the network, which replaces the previous system of
investment measures (expansion and restructuring investments) and replacement investments.
The capital cost equalization provides for an annual consideration of the capital costs of new
investments regardless of the type of investment (expansion, restructuring or replacement). This
capital cost mark-up is offset by an annual flat-rate capital cost mark-down, which reflects the
decline in existing fixed assets. For the transition, the ARegV amendment provides for extensive
transitional regulations.
In addition to the described change in the financing regime, the ARegV amendment introduces
an incentive regime on congestion management costs. This is intended to incentivize investments
in the network that lead to a reduction in congestion management costs (i.e., redispatch costs).
The incentive model will be applied collectively to the four German TSOs and provides for an
annual reference value derived from the costs of previous years by means of a trend function.
The incentive regime will take full effect from the fourth regulatory period, i.e., from 2024. In 2022
and 2023 it will be applied transitionally as a pure bonus model.
The BNetzA significantly 2021reduced the equity interest rates in its determination for the fourth
regulatory period (2024 to 2028) on 12 October. For electricity, the interest rate was set at
percent 5,07 (before taxes). This means a reduction of more than 25 percent compared to the
currently valid interest rate of 6.91 percent (before taxes).
The regulatory account balance for the year 2018 was approved by the BNetzA in a decision
dated 28 July 2021. The decision met the company's expectations and contributed significantly to
further planning and legal certainty.
Since the beginning of the third regulatory period in 2019, numerous procedural regulations have
been further developed in the form of Voluntary Commitments (FSV) pursuant to Section 11 (2)
ARegV. The FSV Redispatch was adapted and redefined by the BNetzA on 19 May 2021.
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In the course of the phase-out of hard coal-fired power generation, the BNetzA established an
effective procedural regulation for the costs and revenues for maintaining operational readiness
in accordance with Section 52 (2) KVBG on 5 May 2021. Accordingly, these costs are also costs
that cannot be influenced in the long term.
By 31 December 2021, 50Hertz had received approvals92 for an investment volume of approx.
€ 9,6billion for the 103 active applications for approval of onshore investment measures submitted
since 2008. The investments for offshore grid connections are refinanced separately via the
offshore grid levy.
Energy Management
Balancing group management
50Hertz settles all balancing groups in its balancing zone on a monthly basis. At the end of 2021,
these were 2.274 balancing groups of 691 traders, electricity distributors, generators and network
operators operating in the control area.
On the basis of a package of measures from the BNetzA to strengthen balancing group loyalty,
50Hertz (as well as the other TSOs) worked on a monitoring system in 2021, which will enable
imbalances in balancing group management to be identified promptly in the future and
countermeasures to be taken. The tool will be available in 2022.
System services
50Hertz procures system services to balance the system, among other things. On 3 November
2020, a fundamental change in market design was implemented with the introduction of the
control reserve market, in which the procurement of control reserve was decoupled from the
provision of control reserve. The implementation of this market in Europe is a requirement of the
Guideline Electricity Balancing, in which the EU Commission defined the rules for system
balancing in Europe and which is now being implemented step by step. The innovation makes
it possible to change supply quantities and energy prices until shortly before real time. In addition,
suppliers who are not awarded a premium on the balancing market can also submit energy price
bids (e.g., suppliers of balancing energy from renewable energies).
The granularity of the regular labor market will be further increased in 2022 (96 auctions with a
lead time of 25 minutes compared to the current 6 auctions with a lead time of 60 minutes). In
addition, the first national regular labor markets will be coupled internationally in 2022. The
necessary further development of the IT systems took place to a large extent in 2021.
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The costs for the procurement of the standard benefit of 50Hertz have increased from € 31.1
million (2020) to approximately € 115.2 million (2021).
For more efficient use and simultaneous avoidance of congestion-related shutdowns of
renewable generation plants, a new procedural regulation for financing and cost recovery of
power-to-heat plants was established through the voluntary commitment "Use instead of
shutdown" on the basis of Section 13 (6a) EnWG. In 2021, the first two plants were commissioned
by third parties in Parchim (2 MW) and Stralsund (5 MW) to reduce the disconnection of renewable
energies in grid congestion management. At the Wedel site, a further power-to-heat plant with a
capacity of 80 MW is to be built by third parties by the end of 2022.
EEG settlement
The volume of EEG electricity within the 50Hertz grid area decreased by almost 6 percent in 2021
compared to the previous year, in particular due to a lower supply from wind energy and solar
energy as well as a lower feed-in from biomass. At the same time, the share of directly marketed
capacity fell in 2021, as the plants that had been removed from direct marketing were removed.
As a result, only 11 percent of the EEG electricity in the 50Hertz control area was distributed by
the TSOs.
In particular due to the strong increase in market prices, the balances of the TSO EEG accounts
recorded a massive surplus in 2021. As of 30 September 2021 - the cut-off date for the assessment
of the EEG surcharge - there was a nationwide account balance of €4.5 billion, which was considered
in the calculation of the EEG surcharge for 2022. The levy for 2021 of 6.5 ct/kWh was co-financed
throughout Germany by a federal subsidy of €10.8 billion. As of 31 December 2021, the EEG account
balance at 50Hertz Transmission amounted to €2,110 million.
The EEG surcharge for the year 202 published by 1the four German TSOs on 15 October 2022 is
ct/kWh3,723 percent43 below the surcharge for 2021. This calculation is based on a federal
subsidy of €3,25 billion. Without this federal subsidy, the EEG levy for 2022 would be
ct/kWh.4,657
Other energy-related levies
In addition to handling the EEG process, the TSOs also handle the levies under the KWKG, the
AbLaV, Section 19 (2) StromNEV and the offshore network levy. With regard to the nationwide
revenue, these are allocated on the basis of the so-called CHP key (so-called CHP-based levies).
The Corona-related declines in end-consumer sales did not affect the collection of CHP-based
levies during the year, as these are collected on a forecast basis. The results of the annual
Eurogrid GmbH Group Management Report 2021
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settlements for 2020 showed a decline of around 5 percent compared to the forecast values, both
nationwide and in the 50Hertz balancing zone.
Grid operation and system management
50Hertz ensures secure grid operation and the availability of the electricity grid in the entire control
area. In addition to the ongoing management of the entire transmission grid, considering new
construction and maintenance projects, the grid operator regularly intervenes in electricity
generation to ensure that system stability is maintained. This concerns both interventions to
maintain the current-carrying capacity of operating resources and measures to maintain the
voltage bands. In particular, the challenges for voltage maintenance increased in 2021. This is
mainly due to the increasing reactive power demand of the grid. Reactive power is necessary for
voltage maintenance, which is why reactive power and voltage maintenance are closely linked.
In addition to an increasing demand for reactive power, we are simultaneously experiencing a
shortage of reactive power sources. This is due, among other things, to the decreasing availability
of power plants for the provision of reactive power (displacement from the market by renewable
energies) as well as the highly volatile feed-in of renewable energies, which on the one hand
influence the reactive power demand, but also the provision of reactive power by RE plants is
dependent on their active power feed-in.
In addition, the use of the 50Hertz grid for cross-border electricity trading was again significantly
increased in 2021. In particular, the expansion of the European electricity market coupling in June
2021, including the transmission capacity of the interconnectors to Poland and the Czech
Republic, had a positive effect. In addition to 50Hertz, other TSOs and power exchanges from
Germany, Austria, Poland, the Czech Republic, Slovakia and Hungary were involved in the
successful implementation of the so-called Interim Coupling Project.
Three wind peaks were particularly noteworthy for the 50Hertz control area in 2021. On 13 March
2021, a new all-time high of 16 556,3MWh of wind energy was fed into the grid. On 21 October
2021, this was surpassed once again with 16,727.5 MWh. The third strong wind event on 1
December 2021 reached a feed-in peak of 16,698.1 MWh. Congestion management measures
had to be taken for all three peaks. On 13 March 2021, 1.365 MWh of feed-in management was
applied to plants in the DSO grid. A wind share of the grid load of 116.25 percent (190 percent
RE share) was achieved. On 21 October 2021, a total of 18,705.5 MWh of conventional power
plants, directly connected wind farms and plants were metered in at the DSOs. The wind share of
the grid load on 21 October 2021 was 125.6 percent (129 percent RE share). For 1 December
2021, a total of 51,853 MWh of congestion management measures were necessary. The wind
share of the grid load was 121.3 percent. On all three days, system security was guaranteed
despite the high wind levels.
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On 29 March 2021, the grid connection of the Baltic 1 and Baltic 2 offshore wind farms was
disrupted again. The application of the internal repair concept and the use of existing service
contracts and spare parts stockpiling enabled the disruption to be rectified quickly and the cable
systems to be put back into operation.
Based on the amendment of the § 13 EnWG (national law) on November 1, 2021, 50Hertz
replaced the transitional solution of the Federal Network Agency for Redispatch 2.0 with the
control process with feeders directly connected to the transmission grid. 50Hertz was thus the
first German TSO to introduce balanced redispatch with RE plants.
Energy to cover grid losses
In 2021, grid losses amounted to 2.3 terawatt hours (TWh). 50Hertz covers its own demand for
grid loss energy within the framework of a risk-averse procurement strategy based on the existing
regulations of an FSV.
To minimize risk, approx. 2.1 TWh have already been procured for the year 2022 in the reference
period 1 July 2020 to 30 June 2021. For the year 2023, 1.1 TWh were already purchased in 2021.
Employees
The number of employees in the Group increased from 1,243 in the previous year to 1,351 as of
31 December 2021, an increase of 8.69 percent.
The number of trainees/dual students is 30. A total of employees 10 are completing a trainee
program with stations in different areas of 50Hertz as well as at European TSOs and non-
governmental organizations.
This year, employees had the opportunity to subscribe to up to 12 discounted Elia Group shares
to share in the success of the last financial year. The offer was taken up by 66.64 per cent of those
eligible.
Occupational health and safety
The goal is to make the conditions at the workplace or in the work environment safe and healthy
and to prevent occupational accidents and work-related illnesses.
Occupational safety is understood and developed as a continuous improvement process. 50Hertz
has set itself the goal of consistently implementing a high standard of occupational safety. The
effectiveness of the occupational health and safety management system in accordance with DIN
ISO 45001:2018 was again confirmed in the reporting year in a monitoring audit in November by
Eurogrid GmbH Group Management Report 2021
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an external auditor without any deviations. The auditor also confirmed that 50Hertz had
implemented very good infection control measures during the Corona pandemic. The company's
infection control measures were also adapted to the pandemic situation in 2021. In addition to the
continuously applicable distance and hygiene regulations in the company as well as the offer of
mobile working from home since the beginning of 2021 there has been the possibility for
employees to carry out rapid antigen tests at least twice a week. In addition, vaccination offers
were organized at an early stage for staff relevant to system management. Since the middle of
the year, the vaccination offers could be made to all employees.
During the reporting period, 5 occupational accidents occurred with a total of 21 lost working
days. All accidents were without serious injuries. The number of occupational accidents with lost
working days at contracted external companies increased compared to the previous year and
amounted in 2021 to 30 accidents, of which one accident involved serious injuries.
The exchange with the contracting companies was further intensified. In the middle of the year,
the management of the overhead line construction companies working for 50Hertz were invited
to the "Dialog Arbeitssicherheit" to discuss accidents and their possible causes (dealing with
subcontractors, safety culture, measures to raise awareness) and to derive joint measures.
Research and development
The integration of renewable energies and the necessary development of the electrical system
continue to be reflected in several research and development projects and studies at 50Hertz. In
the areas of energy markets, system security and new technologies, a total of €3,1 million
(previous year: € million1,8) was spent on research and development projects in 2021. In addition,
we have established the Scientific Advisory & Project Board with 21 renowned institutes and
universities, in which we discuss challenges and innovative solutions for a climate-neutral future
in an interdisciplinary manner and work on them in concrete research and development projects
with 50Hertz.
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Net assets, financial position, and results of operations of
the Group
Instead of the minus sign, a bracket is placed around the amounts in the tables. In the figures,
rounding differences remain irrelevant.
Results of operations
The figures for fiscal year 2021, as in the prior year, relate to the respective calendar year for all
group companies.
Income Statement
(in million €)
2021
2020
revenues 7,860.4 11,050.8
Cost-matching income (6,238.6) (9,686.1)
Revenue from grid business and other revenue 1,621.8 1,364.7
Other income 95.1 90.1
Cost of materials and purchased services (7,250.3) (10,421.0)
Income-matching cost
6,238.6
9,686.1
Cost of materials and services purchased from the network business
(1,011.7)
(734.9)
Personnel expenses (151.4) (131.5)
Amortization, depreciation, and impairment (260.3) (245.2)
Other expenses (20.6) (3.1)
Result from investments accounted for using the equity method 0.1 0.1
Financial result (34.8) (62.6)
Income taxes (72.8) (84.9)
Group annual result 165.4 192.7
In addition to the result from the core business, the "grid business" segment, the Group's income
and expenses are significantly characterized by the settlement of the Renewable Energy Sources
Act (EEG) and other levies without effect on income ("non-profit business"). The income and
expenses from the non-profit business are included in the items "
Income-matching cost" and
"Cost-matching income".
The TSOs market the renewable electricity fed in by downstream grid operators and generators
directly connected to the transmission grid, insofar as this is not subject to direct marketing, on
an electricity exchange. In addition to these marketing revenues, the TSOs levy a charge on all
Eurogrid GmbH Group Management Report 2021
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trading and distribution companies active in the control area, which is intended to cover the
difference between the costs of reception and the revenues from the marketing of the electricity
generated from renewable sources. Revenues of € 5,715.9 million (previous year: € 8,586.0
million) were generated from the settlement of the EEG, revenues of € 257.2 million (previous
year: € 209.5 million) from the settlement of the KWKG, which is levied in accordance with the
requirements of the equalization of burdens under the KWKG, and revenues of € 259.5 million
(previous year: € 237.4 million) from the settlement of the levy under Section 19 (2) StromNEV.
Income of € 6.0 million (previous year: € 7.7 million) was generated from the allocation mechanism
pursuant to Section 18 (1) AbLaV [“Verordnung zu abschaltbaren Lasten”: Regulation of
agreements on interruptible loads]
Income and expenses from the individual allocation mechanisms do not affect 50Hertz's overall
result. In the 2021 financial year, revenue of € 2,004.7 million (previous year: € 645.5 million) was
generated from the billing of services to third parties, which was offset by material expenses in
the same amount.
In the financial year, a total business volume of € 6,238.6 million (previous year: € 9 686,1 million)
is attributable to the settlement of matters not affecting net income.
The core segment "grid business" with sales revenues from the network business gives the
following picture:
(in million €)
2021
2020
Revenue from contracts with customers
1,621.8
1,364.7
Revenue from incentive regulation 963.7 813.5
Revenue from offshore regulation 294.7 300.0
Electricity revenue 354.9 246.8
Revenue from building cost subsidies 1.4 1.5
Other revenue 7.1 2.9
Revenues
1,621.8
1,364.7
The revenues from incentive regulation in the financial year 2021 include non-period effects
from regulatory items in the amount of € 51.9 million (previous year: € 11.2 million).
In addition, the Group generates other income of € 95.1 million (previous year: € 90,1 million),
which mainly includes other own work capitalized.
Cost of materials and purchased services include expenses for electricity purchases and
purchased services. The cost of materials (excluding electricity costs) increased by € 36.4 million
due to very high (third-party) maintenance expenses. The increase in electricity costs (+ € 250.1
million compared to the previous year) is mainly due to the increase in redispatch costs (+ € 140.7
million) and expenses for balancing power (+€ 84.1 million). The reduced costs for feed-in
management (- € 22.3 million) had the opposite effect.
Eurogrid GmbH Group Management Report 2021
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Personnel expenses amount to € 151,4 million (previous year € 131,5 million). The increase is
due to the continued expansion of the workforce.
Depreciation and amortization accounted for € 260,3 million (previous year € 245.2 million). The
development of depreciation corresponds to the steady progress of investment activities.
The change in provisions and other expenses accounted for € -20.6 million (previous year € -3.1
million). Among other things, this was due to increased expenses in connection with asset
disposals.
The OPEX value onshore reached a value of € 265 million in the financial year (previous year:
€ 198 million). This value reflects a calculated figure from personnel-related and other, non-
energy- related expenditures, which is made up of various items. The planned value of € 249 million
within the target corridor of € 237 to 262 million was not reached in the financial year because,
among other things, personnel costs of € +10.5 million were significantly higher and incurred earlier
compared to budget due to accelerated recruitment measures.
The result from investments accounted for using the equity method is fully attributable to Elia Grid
International NV/SA.
The financial result amounts to € -34.8 million (previous year: € -62.6 million). It includes financial
income (€ 2.1 million; previous year € 4.1 million) and financial expenses (€ -36.9 million; previous
year € -66.7 million). The decrease in financial expenses results from the lower interest rates of
the last bond issues.
Earnings before taxes reached € 238,2 millions (previous year € 277.6 million). After deduction of
taxes on income (€ 72.8 million, previous year € 84.9 million), the consolidated result was € 165.4
million (previous year € 192,7 million). The IFRS after-tax result exceeded the planned value of
€ 146 million, and lies within the target corridor of € 117 - 175 million. This result is mainly
characterized by significantly higher expenses for purchased services, depreciation, and
personnel, which are, however, also offset by higher grid fees and some one-off effects from
regulatory issues for previous years.
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Net assets and financial position
(in million €)
12/31/2021
12/31/2020
assets
Non-current Assets 6,423.3 5,776.0
Current Assets 4,125.0 1,991.6
10,548.3
7,767.6
Equity and liabilities
Equity 1,931.7 1,634.3
Non-current liabilities 4,334.6 3,645.6
Current Liabilities 3,837.1 1,984.4
Regulatory items (net) 444.9 503.3
10.548,3 7.767,6
Non-current assets mainly include property, plant and equipment including assets under
construction and are covered by equity to the extent of 30.1 percent (previous year: 28,3 percent).
The Group achieved an investment volume of € 851 million (previous year: € 716 million) and
thus met the expectations set for the financial year in the form of the target corridor of € 820 to
€ 920 million.
The current assets primarily comprise trade receivables, other receivables and cash and cash
equivalents.
Non-current liabilities mainly result from liabilities to bondholders and current liabilities mainly
include trade payables.
Within the current assets and liabilities, the high billing volumes from the grid business, which is
largely neutral in terms of earnings, are reflected. The development of the balance sheet items is
highly dependent on the regulatory framework conditions and compensation effects as well as -
to a limited extent - the energy costs of the control area. The dynamic developments and volatile
prices in the electricity market led to sometimes considerable effects on the various cost and
revenue items and the amounts to be rolled over from now on.
For the first time, the Group now accounts for derivative financial instruments which result from
the countervalue of the contractually contracted portfolio of futures traded on EEX by applying
hedge accounting. The valuation effect from the market valuation of these derivative financial
instruments (€ 355.6 million) is recognised in equity (OCI) considering deferred taxes (€ - 105.7
million) until the financial realization for these contracts occurs in subsequent years. Due to the
daily revaluation of the futures and the daily financial settlement of the security deposits with the
power exchange, there are in some cases considerable liquidity effects for the Group as a result
of incoming or outgoing payments by the EEX clearing office, depending on the dynamics of the
Eurogrid GmbH Group Management Report 2021
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power price development.
Despite a slight decrease in regulatory obligations (-€ 58.4 million), which mainly results from the
decision for the 2018 regulatory account, there are still significant offsetting positions, the reversal
of which will be reflected in the network charges in subsequent years.
The increase in equity is significantly influenced by the first-time valuation effect from the
accounting of derivative financial instruments at +€ 249.9 million. In addition, the previous year’s
result (reduced by the distribution in 2021) has a slightly increasing effect on the year-end
balance.
Consolidated statement of cash flows
(In million €) 2021 2020
Cash flow from operating activities
3,720.7
(796.3)
Cash flow from investing activities (831.4) (730.1)
Cash flow from financing activities
(328.7)
1,029.8
Cash changes in cash and cash equivalents 2,560.6 (496.6)
Cash funds at the end of the period
2,857.2
296.6
The cash flow from operating activities reflects the extent of the liquidity fluctuations of the Group
and results primarily from the settlement of the business not affecting net income. Particularly
noteworthy in this context are the incoming payments in connection with the EEG federal subsidy
of € 2.2 billion as well as the payments received from the EEX clearing office in connection with
the deposited collateral for contracted futures.
The cash flow from investing activities essentially reflects the additions to property, plant,
and equipment.
The cash flow from financing activities mainly includes the profit distribution to the shareholders
of € 120.0 million and the redemption of approximately € 700 million as well as proceeds from the
issuance of another bond (498 € million).
In addition to the reported cash and cash equivalents, Eurogrid has undrawn credit facilities with
several credit institutions amounting to € 900.0 million.
Eurogrid GmbH Group Management Report 2021
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Forecast, opportunity, and risk report
Forecast report
The Group will continue to invest in the development of the transmission grid, especially to be
able to absorb the growing share of electricity safely and efficiently from renewable energies and
transport it towards the centers of consumption. In the process, the number of measures is
increasing due to current legal requirements and implementation is subject to greater time
pressure.
The investment volume, which has already increased significantly, will initially stabilize, but the
group expects a further significant increase in investments in subsequent years as a result of
numerous grid expansion projects. This will also lead to additional financing needs in future
financial years, which will be met, among other things, by issuing further corporate bonds -
possibly again in green bond format.
Liquidity for the EEG process is managed separately. Here, the liquidity situation for the EEG
business continues to be characterized by fluctuations due to the numerous influencing factors in
generation, feed-in and marketing. Since 2020, the nationwide EEG revenue has been supported
by payments from the federal budget. The liquidity reserve from the EEG levy will be reduced
from 10 percent to 5 percent in 2022. In the medium term, investment activities require the further
development of Eurogrid's financing instruments and continued active cash management.
Financing on the capital market is ensured through the stable rating of Eurogrid, which provides
its subsidiaries with financial resources.
The Group is constantly making efforts to ensure efficiency in processes and cost structures to
dampen the cost increase in grid operations caused by the energy transition. Despite this, there
has been a continuous increase in operating expenses. This is driven by the increasing investment
volume as well as new regulations and requirements for system operation. In addition to external
expenses, the need for resources is increasing. The costs for system services, redispatch
measures and grid loss energy are significantly influenced by the development of electricity
prices, weather conditions and grid topology.
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The financial performance indicators show the following development:
All in €m
2020
2021
2022
Investment volume (actual)
716
851
target corridor (plan)
687
820 -
920
820 - 92
0
OPEX value onshore
(actual)
198
265
target corridor (plan)
220
237-2
62
253-
280
IFRS after
-tax result (actual)
193
165
target corridor (plan)
161
117 - 1
75
150 -
180
In the following business year, the regulatory standard return can probably be achieved under the
premises listed below. The forecast for 2022 is mainly based on the following assumptions:
• Stability of the regulatory framework according to the current legal situation,
•
Maintain a solid investment grade,
•
moderate energy cost development and
•
Normal course of business for 50Hertz without extraordinary weather conditions and
without major technical disruptions.
For the non-financial performance indicators, high quality standards continue to be set and
ongoing efforts are made for sustainable improvements. About the quality of network
availability, the Group makes continuous efforts to maintain a high level of quality and a low
incident rate. The assessment of network availability includes both the absolute number of
network events in relation to the system circuit length and the ratio of avoidable network events to
all network events. The non-financial performance indicators show the following development:
Evaluation of network availability
2020
2021
2022
Grid events in relation to 100km system circuit length
(actual)
1.06
1.
17
target corridor (plan)
1.0 -
1.2
1.0 -
1.2
1.0 -
1.2
Ratio of avoidable network events to all network
events (actual)
3.7 percent
5.7 percent
target corridor (plan)
10 percent - 15
percent
10 percent - 15
percent
10 percent - 15
percent
Eurogrid GmbH Group Management Report 2021
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Assessment of occupational health and safety
2020
2021
Schedule 2022
accident rate
Occupational accidents among employees (actual)
11 11 -
target corridor (plan)
- <10 -
Accidents at work with external company employees
(actual)
22 36 -
target corridor (plan)
- <20 -
Moderately severe and severe accidents at work among
employees (actual)
1
target corridor (plan)
- <10
Moderately severe and severe accidents at work for
external company employees (actual)
target corridor (plan)
- <10
Electrical accidents at work (actual)
1 1
target corridor (plan)
0
0 0
health rate
Quota of planned working days minus the number of days
lost due to illness in
relation to the planned working days
(actual)
97.3 percent
97.3
percent
target value (plan)
96.1
percent
96.5 percent
96.7 percent
Through offers and measures of occupational health and safety, continuous efforts are made to
keep the accident frequency low and the health rate at a high level. From the 2022 business year
onwards, a gradation according to the severity of accidents will be used (actual values for the
2021 business year are given for information purposes). With the goal of absolute accident
prevention among employees and service providers, the target values set are very ambitious and,
together with comprehensive reporting on every accident, serve to raise awareness and prevent
accidents. For the 2021 business year, the projected targets were not achieved. The health rate,
which is the ratio of target working days minus lost days in relation to target working days,
continues to be tracked.
Overall, the Group expects a positive business development with a solidly financed balance sheet
structure for the year 2022.
Risk management system
The goals of risk management are the fundamental avoidance of risks that endanger the
existence of the Group, the reduction of existing risk positions and the optimization of the risk-
opportunity profile. Risks are identified, recorded, evaluated, and monitored in a standardized
manner using the existing risk guideline. The assessment of potential damage and probability of
occurrence is based on scenarios. Continuous monitoring of the risk situation is carried out,
especially for the early detection of potential risks that could jeopardize the company's existence,
and support is provided for the selection and implementation of countermeasures. The focus of
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the further development of the risk management system is the systematic preparation and central
tracking of action plans to deal with significant corporate risk.
Relevant individual risks and the overall risk situation are regularly reported to the Executive
Board, the Supervisory Board, and the shareholders. In the event of significant changes, the
responsible decision-makers are informed on an ad hoc basis. The functionality and effectiveness
of the risk management system are subject to regular reviews.
Opportunities and risks
Due to the regulatory framework, the Group's risk-opportunity ratio is fundamentally unbalanced,
with the risks from developments subject to uncertainty predominating. The Group’s main
opportunity is to strengthen its regulated asset base and realize organic growth, thereby
increasing profitability, while maintaining efficiency and ensuring that investments in the
transmission grid and grid connections are made on time and in line with requirements. Further
opportunities lie in actively shaping the changes and new requirements resulting from the energy
transition with 50Hertz as an independent TSO in the European environment and in being a
reliable and high-performance partner for the customers supplied in the grid area. The European
positioning is to be further strengthened through joint activities of the Elia Group. In this way, the
regulatory framework conditions for the further development of the company are to be shaped
positively and the economic burdens are to be limited. The Group's opportunities thus lie in its
operating segment "Network Provision". There are implicitly no significant opportunities in the
segment "Profit-neutral business", which largely comprises the profit-neutral processing of the
EEG and other levies in accordance with the legal requirements.
Opportunities and risks from political, regulatory and legislative matters
The Group's business activities are largely determined by regulation and the existing legal
framework conditions, which in turn are influenced by the energy policy objectives. Changes in
the regulatory and legal framework can have a lasting impact on the Group's earnings and liquidity
situation, both positively and negatively.
50Hertz's grid usage fees are subject to regulation by the Bentz. Decisions by the BNetzA in the
current regulatory framework as well as changes to the regulatory framework through
amendments to the relevant regulations may have a material positive or negative impact on
50Hertz.
Further changes to the legal framework cannot be ruled out. Although the amendment of the
Incentive Regulation Ordinance in July 2021 set the course for 50Hertz's investment activities in
particular, which will take effect at the start of the new regulatory period in 2024, the regulatory
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framework continues to be the subject of intensive European, national and regional legal
discussions, not least because of the ECJ ruling. 50Hertz follows and accompanies European
and national legislative processes and is actively involved in the corresponding discussions.
Following the redefinition of the equity capital interest rates for the fourth regulatory period, further
parameters have yet to be defined, in particular the general sector productivity factor Gem and
the company-specific efficiency value Xind, which is determined by means of a relative reference
network analysis as a comparison between the German TSOs. In addition, 50Hertz's permissible
revenue cap in the fourth regulatory period will be determined as part of the Federal Network
Agency's review of the costs for the base year 2021, which is scheduled to begin in 2022 and
continue into 2023. Finally, before the start of the fourth regulatory period, the voluntary
commitments will be reviewed and, if necessary, newly agreed. All of these currently outstanding
determinations have a significant influence on the liquidity and earnings situation of the Group in
the fourth regulatory period and are therefore being intensively prepared and supported by
50Hertz.
Energy policy legislation and guidelines on renewable energies have a strong influence on
50Hertz's liquidity and apportionment-related billing processes. Changes in the relevant
legislation or the interpretation of this legislation by the BNetzA can significantly improve or
worsen the liquidity situation.
In the course of accounting, planning data and estimates are continuously processed, which are
then replaced by the corresponding actual values in subsequent periods as they become
available. As a result of these estimation processes, deviations, and consequential effects with a
liquidity and/or earnings effect may arise. Furthermore, these planning data may deviate
significantly from the actual values because of unforeseeable circumstances or weather
conditions or because new standards are applied in connection with the regulatory rollover or
because the BNetzA makes new stipulations. Deviations have a direct effect on the result of the
year of determination or on the results of the group in subsequent years within the framework of
the settlement via the revenue cap.
The rapid development of renewable energies and the fact that grid expansion is not progressing
at the same pace may also make it necessary in the future for grid operators to intervene in
electricity generation to a greater extent, resulting in correspondingly high- cost burdens.
In addition to the growing challenges, the increasing interconnection in the energy system also
offers opportunities for the development of new business areas (e.g., at the interfaces to other
sectors). 50Hertz wants to make an active contribution to accelerating the energy transition and
decarbonization through the massive integration of renewable energies. This strategic role serves
as an incentive for 50Hertz to provide the infrastructure more quickly and to develop a sustainable
system for a successful ecological and industrial transformation.
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An adjustment or further development of the applicable accounting standards may lead to a
corresponding change in the presentation of the Group's net assets, financial position and results
of operations and may affect key figures in this respect.
Opportunities and risks from technology and infrastructure
50Hertz's assets are widely distributed geographically and can be a potential target for theft, acts
of terrorism and sabotage. Furthermore, the assets are exposed to environmental influences,
which can lead to sometimes significant damage in special weather conditions or also to faster
wear and tear.
As an infrastructure operator for a safe and reliable electricity supply for around 18 million people,
50Hertz is also obliged to be well prepared for crisis situations. To this end, crisis tools have been
further developed and regular crisis exercises conducted to train its own skills and uncover
potential for improvement.
In the event of voltage fluctuations or interruptions, grid failure or the failure to implement legally
prescribed emergency measures, 50Hertz may be held responsible for damages to its customers
and/or damages to third parties. In addition, further costs may be incurred, the regulatory
enforcement of which is unclear.
The connection and operation of OWPs is a business field with additional technical and
organizational challenges, as the legislator has decided to allow wind farms to be built relatively
far off the German coasts. Despite careful preparations and analyses, technical problems are
often only discovered in the implementation and operation phase and must then be solved
immediately. Delays and changes in the planning and construction phase as well as later
unplanned changes in the operating phase are therefore possible. If 50Hertz is attributed
responsibility for the delay or interruption, the company must essentially compensate the wind
farm operator for the financial damage. The expenses associated with the damages can be
partially offset by compensation amounts through recourse to the suppliers. According to the
New, the risks for the TSO are limited: in the case of culpable, non-intentional delay or
disruption of the connection, the TSO only has to bear part of the damages itself. Nevertheless,
substantial risks remain with the connecting TSO.
High-voltage cables increasingly represent a considerable value in the company's fixed assets,
and the share of onshore direct current cables will also increase significantly in the coming years
on a project-related basis. As there is still no comprehensive long-term operating experience with
these technologies, there is a risk of design errors that are only discovered when the cable is in
operation. As a preventive measure, various tests are carried out before the start of production
until commissioning. However, it cannot be completely guaranteed that all, even combined,
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causes of faults can be identified. In extreme cases, this can lead to a complete cable system
having to be replaced. This would result in high special depreciation, compensation payments,
e.g., to offshore wind farm operators, and investment costs. The risk is mitigated, among other
things, through close cooperation with suppliers, through extensive functional tests prior to
commissioning, through monitoring the cables in operation, through the conclusion of insurance
policies and the possibility of rolling over costs via the regulatory framework. Since the adjustment
of the regulatory framework in 2019, cost risks no longer necessarily and completely affect the
network operator, but recognition risks remain in the event that the BNetzA classifies certain costs
as not covered by regulation.
The construction of power lines is often associated with low acceptance among local stakeholders
and with lengthy and complex administrative procedures. Delays in line construction are therefore
still possible despite intensive efforts by 50Hertz's approval and participation experts. In addition,
the high number of parallel procedures harbors the risk of resource bottlenecks at the federal and
state authorities concerned. The market for required services (experts, environmental planning
and routing offices, engineering offices, mapping experts) is also extremely tight throughout
Germany due to the high demand for infrastructure. Timely access to suitable resources
and suppliers who can provide services in line with requirements appears to be increasingly
important in this context and, in addition to cost effects, can also entail time restrictions.
In addition, due to the complexity of the projects, there are other possible causes for delays and
additional costs, which can be reduced with professional project management, but not completely
eliminated. Delays in grid expansion can lead not only to an increase in operational costs to cope
with grid bottlenecks, but also to an increase in critical situations in grid operation, as the new
lines are essentially needed to transport the constantly growing variable feed-in of renewable
energies in the 50Hertz control area to areas with higher consumption and, in addition, planned
shutdowns of conventional power plants near the centers of consumption in the south and west
are approaching.
50Hertz uses a highly available grid control system for the secure operation of its transmission
grid. The existing grid control system is currently being replaced by a new system in a complex
project. As this project is delayed, the old grid control system must be operated beyond the
planned duration and the operation must be secured in cooperation with the manufacturers of the
subsystems.
In the safe operation of network facilities, maintenance and new construction of network facilities,
there have so far only been minor additional expenses or delays due to the Corona pandemic.
These mostly resulted from restrictions or delays in the cross-border movement of goods or
service providers' personnel. In the event of a worsening or longer-lasting pandemic, negative
effects on operations cannot be ruled out.
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However, the construction of new plants also creates opportunities through the accelerated
completion and commissioning of plants. By taking them over earlier into the finished assets,
higher returns are achieved from these plants, which in turn free up capital for further investment
activities. Otherwise, opportunities are limited due to the regulatory framework in this area.
As an operator of critical infrastructure, 50Hertz is obliged by the IT Security Act to ensure
information security. In this context, the processing, storage, and communication of
information must be designed in such a way that the availability, confidentiality and integrity of the
information and systems are ensured to a sufficient degree. The regulatory requirements for this
are set out in the IT security catalogue for network operators of the BNetzA pursuant to Section
11 (1a) New. According to this requirement, 50Hertz as a network operator is obliged to
maintain an information security management system in accordance with ISO 27001 and to have
it certified. Through the established security process, IT risks are systematically identified and
dealt with. In particular, the security advisories and warnings issued by the BSI are also recorded
and evaluated. If necessary, the necessary protective measures are derived and implemented.
Risks from health, occupational safety, and personnel-related matters
The prevention of accidents and work-related illnesses is a top priority at 50Hertz. Occupational
health and safety are integrated into the corporate strategy. Despite all preventive measures,
accidents on 50Hertz premises or in connection with the construction and use of 50Hertz facilities
cannot be completely ruled out. Accidents can result in injuries or, in extreme cases, even the
loss of human life or other serious consequences. This could result in reputational damage and
lawsuits against 50Hertz, which could lead to significant financial obligations and the diminution
of financial and human resources.
Occupational safety at 50Hertz is systematically developed in the course of a continuous
improvement process. In addition to creating safe and healthy workplaces, the focus is on
strengthening a culture of prevention by integrating occupational safety as a corporate value into
the thinking and actions of all employees. The occupational safety management system at
50Hertz has been certified in accordance with DIN ISO 45001:2018 since November 2019. Within
this framework, regular internal and external monitoring audits take place, in which the
effectiveness of the management system is reviewed, and improvement measures are derived
and implemented. In the reporting year, the effectiveness of the occupational health and safety
management system was again confirmed by an external auditor in a monitoring audit in
November without any deviations.
The high standards of occupational safety also apply to external companies commissioned by
50Hertz. The "
“instructions for guaranteeing occupational health and safety when contracting
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external companies for work in the scope of the transmission grid of 50Hertz Transmission GmbH
(OAFN)" and the "Agreement on quality assurance at construction sites" are fixed contractual
components of the contract. Within this framework, regular checks are carried out on
construction sites for occupational safety and environmental protection as well as for quality
assurance.
Any incidents (near misses, occupational accidents, contractor accidents) are systematically
evaluated in a standardized process, and measures are derived to eliminate the hazards. Safety
instructions are prepared for relevant incidents and communicated to the employees. Quality
assurance on construction sites, including inspections (prospective) and the process for
evaluating incidents (retrospective), have established themselves as effective instruments for
improving occupational safety at contractors.
The occupational health and safety measures have been accompanied by the gib8 campaign
since 2018. gib8 is noticed by employees and generates the desired awareness of hazards and
the measures to avert them.
Risks from markets and financing
The ongoing Corona pandemic did not have a significant overall impact on the Group's overall
performance in the financial year. However, the incipient recovery of the global economy had a
significant impact on commodity and especially energy prices. The EEG federal subsidy and
steadily rising electricity prices over the course of 2021 led to a significant improvement in the
EEG account balance.
Due to the strong market price movements, high fluctuations were observed in some cases in the
costs for control and grid loss energy as well as redispatch measures. Effects on earnings were
greatly reduced by the respective regulatory models and the netting of opposing effects.
In the area of energy procurement, 50Hertz is subject to the general market risks observable on
the electricity market. In order to cover the constant demand for grid loss energy, which is
necessary due to the system, 50Hertz uses electricity products and contracts that are customary
on the market in order to be able to counter the existing market price risks appropriately. Based
on a risk-averse procurement strategy and considering the regulatory framework for cost
compensation for grid losses, 50Hertz actively manages its market activities in this regard, taking
internal risk considerations into account. When procuring loss energy for its own portfolios,
50Hertz operates on the electricity market exclusively with the aim of covering its own needs. The
use of physical and financial contracts on the electricity market entails liquidity risks in addition to
general coverage risks, which are countered by internal control measures.
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The Group finances itself on the bank and capital markets. Financing needs are determined on
the basis of long-term planning and, if necessary, targeted capital market measures are taken as
well as the necessary capital market communication to ensure sustainable access to the
financial markets. Risks from financing bottlenecks are limited by a long-term secured, previously
unused credit line.
A rating downgrade could increase financing costs in the future and restrict access to financing
funds. Potential risks in the context of follow-up financing of investments in the future may arise
from unforeseeable bottlenecks in the context of public financing in Europe and the high volatilities
on the capital markets.
The interest rate risk is countered by means of continuous market observation and targeted
capital market communication. Counterparty risks in the investment of time deposits are limited
by a cautious, diversifying investment strategy, constant market monitoring and strict compliance
with investment guidelines.
Decisions or actions in companies in which 50Hertz only holds minority interests and does not
have control over these companies as a result may lead to higher costs, lower revenues, or lower
profit margins for these companies.
Overall opportunities and risk situation
The Group's overall opportunities situation is influenced by the regulatory framework, which may
support organic growth of the Group. Stable ratings of Eurogrid allow to create an optimal
financing structure of the Group.
There was no threat to the Group's continued existence in the 2021 business year, neither from
individual risks nor from the aggregated risk position. The ongoing Corona pandemic had no
significant impact on the overall performance of the group. Also, for the following year 2022,
considering measures taken, no risks threatening the existence of the group are seen.
Accounting-related internal control and risk management
system
In order for Eurogrid to operate successfully as a group in its complex business environment, it
has created an effective and integrated internal control system that includes all relevant business
processes in its entirety. It regulates the identification, recording, assessment, documentation and
reporting of risks and is integrated into the strategy, planning and budgeting processes as well as
the management and reporting systems of the company.
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The internal control system forms an integral part of the risk management system. This system
includes reporting for the Supervisory Board of 50Hertz Transmission GmbH, for the Supervisory
Board and the Audit Committee of Eurogrid, as well as for the respective management boards,
and is aligned in scope and design to the company-specific requirements.
Key elements of the internal control system in relation to the accounting processes are the
consistently applied dual control principle, an audit-proof document system and the consistent
separation of functions between and within the specialist departments of the Group. The
processing of data in the accounting system is organized uniformly for all companies included in
the Eurogrid consolidated financial statements and is based on the same processes with regard
to account allocation and the processing of invoices and receipts. Furthermore, there is uniform
handling of the preparation of the financial statements with regard to the preparation processes
and scheduling.
The standard commercial software used for accounting is subject to an annual audit with regard
to the regularity of the IT procedures used, including the organizational and procedural
environment of the use of the system, considering the requirements for an effective internal
control system. An authorization concept has been set up that is adequate for the purpose of
ensuring proper accounting and reducing the risk of fraudulent acts. This is applied in full. The
business transactions of the Eurogrid Group companies are processed centrally in the
accounting/tax department of 50Hertz Transmission.
Consolidation at group level is based on guidelines for accounting and the preparation of financial
statements in order to ensure the uniform application of recognition, measurement and reporting
of balance sheet and income statement items, in particular considering the material and accrual-
based presentation of regulatory matters that is essential for the TSO business. Plausibility
checks are carried out between Financial Reporting, Controlling and Regulatory Management
for each monthly report. These and the observance of all relevant commercial and tax standards
as well as the corresponding energy law requirements and IFRS regulations ensure compliant
accounting and reporting in the individual and consolidated financial statements.
Measures to limit accounting-related risks include the clear allocation of responsibilities,
graduated release strategies, access authorizations structured according to the principle of
segregation of duties, and the application of uniform rules on organization and scheduling
as well as on the valuation of business transactions. The effectiveness of the internal control
system is reviewed by the internal audit department on an ad hoc basis or on the basis of an audit
programmed in consultation with the shareholder bodies. Furthermore, the Supervisory Board of
Eurogrid and the Supervisory Board of 50Hertz Transmission continuously monitor the regularity
of the management. All bodies base their assessment on regular reports and analyses by the
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management of 50Hertz Transmission, on the results of the auditing activities of the internal audit
department and on the audits of the financial statements of the Group companies. In addition,
the Group companies and their risk areas are recorded and evaluated as part of the risk
management system.
Consolidated non-financial statement
For the fiscal year 2021 Eurogrid GmbH (Eurogrid) is issuing a non-financial group statement for
the fifth time for the financial year. Information on the business purpose and the shareholdings
can be found in the management report on page x. The group of Eurogrid GmbH (hereinafter
referred to as the group) consists of Eurogrid GmbH (Eurogrid) as well as 50Hertz Transmission
GmbH (50Hertz Transmission) and 50Hertz Offshore GmbH (50Hertz Offshore; together with
50Hertz Transmission also referred to as 50Hertz) as affiliated companies of Eurogrid and
additionally from participations of 50Hertz Transmission. The participation in 50Hertz is material
for the non- financial group statement. For the financial year, 50Hertz follows 2021 the standards
of the Global Reporting Initiative (GRI) in the Core option for the third time in its sustainability
reporting. The last report was published in May 2021.
1. General
1.1 Business Model
(GRI 102-1, GRI 102-2, GRI 102-6, GRI 102-7, GRI 102-9)
50Hertz operates one of the most modern electricity transmission grids in Europe in the north and
east of Germany and thus ensures the supply of electricity to around 18 million people around the
clock - more than half of which comes from renewable energies on an annual average. At ten
locations, 1,388 50Hertz employees act as an interface between energy producers on the
one hand and distribution grid operators and large consumers on the other, ensuring that
electricity flows around the clock. 50Hertz operates 10,325 kilometer lines and coordinates
the electricity market players in the grid area, manages and coordinates balancing groups
and brings the electricity from renewable energies that is not directly marketed to the electricity
exchange. In order to successfully shape the energy transition and achieve the self-imposed goal
of being able to cover 100 percent of electricity consumption in the grid area from renewable
energies by 2032, 50Hertz is developing innovative solutions for the system and market
integration of volatile renewable energies.
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50Hertz operates a "natural monopoly" with the transmission grid in its grid area, i.e., in the area
in the north and east of Germany, the company is the sole operator of the extra-high voltage
electricity grid in its grid area, as the competitive operation of such a grid does not make economic
sense. 50Hertz is therefore subject to regulatory supervision by the national regulatory authority -
the Federal Network Agency (BNetzA). The regulatory system decisively shapes the business
model. The BNetzA also sets the revenue cap for 50Hertz for the calculation of grid fees. As
part of the European Elia Group, 50Hertz believes that interconnectors, especially those
connecting offshore wind farms across borders, are necessary to achieve the goals of the
European Green Deal. Given the huge electricity demand needed to decarbonize our societies,
Europe needs to exploit all potential for renewable electricity generation and, in some cases,
generate this electricity far off the coasts of member states. 50Hertz operates the world's first
hybrid offshore interconnector Kriegers Flag Combined Grid Solution (CGS). The Combined Grid
Solution (CGS) connects two substation platforms in the Baltic Sea both to each other and to the
existing shore connections of the offshore wind farms. This allows the CGS to transmit offshore
wind power to Denmark or to Germany and additionally to be used for cross-border electricity
trading. In addition to our activities as a transmission system operator, we offer various consulting
services for international customers through our subsidiary Elia Grid International (EGI), which,
among other things, improve the increasing integration of renewable energies in other countries
as well.
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1.2 Locations GRI 102-3, GRI 102-4)
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1.3 Memberships (GRI 102-12, GRI 102-13)
50Hertz is involved in the areas of renewable energies, climate and environmental protection,
human rights and the harmonization of the European electricity market in various clubs,
associations and initiatives. For example:
memberships
energy
climate
environment
human rights
AVEU Employers' Association of Energy
and Utilities Companies eV
✅
✅
BEN - Berlin-Brandenburg Energy
Network eV
✅
✅
✅
BDEW – Federal Association of Energy
and Water Management
✅
Diversity Charter
✅
German Commette of the CIGRE Conseil
International des Grands Réseaux
Électriques
✅
Energy Dialogue 2050 eV
✅
✅
ENTSO-E – European Network of
Transmission System Operators for
Electricity
✅
✅
FGW - Association for the promotion of
wind energy and other decentralized
energies
✅
RGI – Renewable Grid Initiative
✅
✅
UN Global Compact
✅
VDE Electrotechnical Association e. V
✅
✅
✅
✅
Wind Energy Network registered
association
✅
World Energy Council
✅
2 Governance, Risk & Compliance
2.1 Values, principles, standards, and codes of conduct
(GRI 102-16, GRI 102-17, GRI 102-19, GRI 102-20, GRI 102-26, GRI 102-32, GRI 102-33, GRI
206-1, GRI 307-1)
For 50Hertz, sustainably successful entrepreneurial activity means carrying it out for the benefit
of society. This is reflected in the Company’s vision "A successful energy transition - for a
Eurogrid GmbH Group Management Report 2021
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sustainable world", as well as in the strategy "From 60 to 100 by 2032 - new energy for a strong
economy". 50Hertz has set itself the task of driving forward the energy transition and making a
very concrete contribution to enabling a stable electricity supply in the 50Hertz grid area from a
balance of 100 percent renewable energies as early as 2032. Three strategic pillars define how
50Hertz, as part of the Elia Group, will efficiently provide the infrastructure required for this, while
generating added value for society and strengthening the position of its customers and business
partners. On the one hand, 50Hertz is a partner for companies on the path to a decarbonized
industry and, on the other, for the expansion of renewable energies. The greatest possible
transparency, which is also expressed by this report, forms the basis for this.
50Hertz's commitment to responsible corporate governance is laid down in its sustainability
mission statement and in the Elia Group Code of Ethics. This states that the company acts in
accordance with the ten principles of the UN Global Compact in the areas of human rights, labor
standards, environmental protection and anti-corruption. Employees also have access to
comprehensive company documentation that includes all applicable guidelines, directives, work
instructions, process manuals and company agreements and is integrated into the company-wide
intranet. The Code of Ethics and the guidelines specify what is meant by entrepreneurially correct
behavior and make it clear that all employees comply with the law. These principles are also
part of organizational regulations that apply throughout the company. In the reporting year, no
significant fines were legally imposed on 50Hertz in connection with general business activities or
projects in line construction or operation. In order to distinguish administrative offences, the
reporting threshold was set at 25,000 euro. As a result of the legal changes that occurred due to
the Financial Market Integrity Strengthening Act, the Europe-wide new tender for audit services
was initiated and successfully completed. As a result of the tender, BDO AG Wirtschafts-
prüfungsgesellschaft was appointe
d as the new auditor for the 2021 financial year for all German
Group companies of the Eurogrid Group.
The continuous expansion of sustainability management is reflected in the annual business plan,
which is valid for five years. Within the framework of our sustainability program Act Now, goals
indicators and measures are systematically developed, reviewed and thus anchored in the
corporate strategy. A company-wide committee (Sustainability Board) at the first (executive) and
second management level (division heads) steers this development from the development of
roadmaps to reporting under the chairmanship of the Managing Director Finance and the Director
of Labor. The Sustainability Board meets twice a year to agree on goals and processes.
The implementation of the individual measures as well as the recording of key figures is the
responsibility of the corresponding areas of the company. The core sustainability team meets
quarterly. Those responsible for data make key figures available on the central transparency
management platform in a comprehensible way throughout the company. Sustainability risks are
Eurogrid GmbH Group Management Report 2021
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discussed and evaluated with the Executive Board in the quarterly updated risk analysis and in
an annual risk conference. Furthermore, certified management systems, such as ISO 45001 in
the area of health and safety and ISO 27001 in information security management, or internal
management systems based on recognized standards, for example in the context of early public
participation according to VDI 7000, are used in core areas of sustainability. The existing
environmental management system is currently being aligned with ISO 14001. The certification
audit is planned for the fourth quarter of 2022.
2.2 Responsibility
(GRI 102-18, GRI 102-19, GRI 102-20)
The operational management of the Eurogrid GmbH Group was delegated to the management
of 50Hertz by way of a number of agreements.
The Management Board of 50Hertz consisted of 2021 five members in the financial year: Stefan
Kapferer (Chief Executive Officer), Dr. Dirk Biermann (Chief Markets & System Operations
Officer), Sylvia Borcherding (Chief Human Resources Officer), Dr. Frank Golletz (Chief Technical
Officer) and Marco Nix (Chief Financial Officer). Chief Digital Officer Michael von Roeder is a
member of the extended Executive Board.
The responsibilities and organization of sustainability management are clearly anchored.
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2.3 Legal framework
50Hertz always acts in accordance with applicable law. Business activities are subject to
numerous national and European legal regulations. In the reporting year, the following laws in
particular should be mentioned, which have an influence on the integration of sustainability into
business activities:
The amendment to the Climate Protection Act increases the greenhouse gas reduction target
from 55 to at least 65 percent by 2030 and to 88 percent by 2040. The target year of net
greenhouse gas neutrality was brought forward from 2050 to 2045. Concrete measures to achieve
the target will be ensured in future by individual laws and ordinances. These will also have a
significant influence on 50Hertz's business activities.
The Supply Chain Due Diligence Act describes requirements for the due diligence of companies.
The aim is to improve the protection of human rights in global supply chains. The supply chain
extends from a company's own business operations to its direct and indirect suppliers. Important
components of the law are a risk analysis and the corresponding management, as well as a
complaints mechanism and transparent reporting. From 2024, the law will apply to companies
with more than 1,000 employees. An ordinance was passed in 2021 that recasts or amends the
Federal Soil Protection and Contaminated Sites Ordinance, the Landfill Ordinance and the
Commercial Waste Ordinance. The Mantelverordnung will apply from 2023.
Further information on other laws and regulations relevant to the business activities can be found
in the management report. In particular, in the chapter "Economic and political environment”,
"Energy law framework", in the sections "European law" and "National law".
2.4 Political influence
(GRI 102-16, GRI 415-1)
Because legislative activities have a major impact on the business activities of 50Hertz, the
company represents its positions transparently and publicly as part of the political process. This
is the responsibility of the Communications and Public Affairs department. For example, the
position paper "Doing more of the right things faster" was published for the 2021 federal election,
which provides an overview of the energy policy course urgently needed from the perspective of
a transmission system operator. In a joint roundtable initiative with the industrial union IG BCE,
50Hertz 2021 discussed with a large number of stakeholders from politics, business and
science how the phase-out of fossil fuels and the parallel entry into climate-neutral business can
succeed. The results of this discussion are summarized in the summary "With new energy for
strong industrial jobs". Further information on the roundtable initiative can be found in chapter 6.3
Dialogues with stakeholders (page X). In addition, 50Hertz 2021 launched the initiative
"Together Faster Climate Neutral" and developed concrete proposals with other grid operators,
energy and industrial companies and published them in December in order to accelerate the
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expansion of the electricity grids necessary to transport electricity from renewable energies.
The company's political communication is conducted in a responsible and transparent manner
and completely refrains from party donations. Ethical principles for the representation of political
interests have been formulated and form the basis of our actions. A detailed orientation guide,
which is valid throughout the company and has been agreed with the management, explicitly
regulates our conduct in the political environment. It is stated that 50Hertz does not make any
donations to politicians or political parties and pays attention to appropriate consideration and
balance when sponsoring. Responsibility for donations to party-affiliated foundations and
associations is centrally anchored in the Communication and Public Affairs department.
Together with specific training programmed, 50Hertz thus ensures that its employees who are
active in social and energy policy align their communication and actions with clearly defined
principles. In addition, 50Hertz is registered in the EU Transparency Register and is committed
to its Code of Conduct. The Lobby Register Act passed on 25 March 2021 will come into force on
1 January 2022. The lobby register is intended to contribute to strengthening public trust in politics
and the legitimacy of the decision-making processes in parliament and government. The aim is
to create more transparency regarding the influence of interest representatives on this process.
As soon as the entry in the German lobby register is officially possible, 50Hertz will deposit all
required information there.
2.5 Anti-corruption
(GRI 205-2, GRI 205-3)
Guidelines on preventing corruption specify 50Hertz’s understanding of correct ethical conduct
and that the Company does not tolerate corruption in any shape or form. In addition to further
specifications on certain topics, another guideline describes the anonymous reporting channel via
an external ombudsman as a fixed component of the established whistleblower system. In
addition to needs-oriented classroom training for compliance, a web-based compliance training
course for employees was introduced throughout the company for the first time in March 2021
and completed with a high participation rate of almost 90%. The next round of regular training is
scheduled for spring 2023. Due to the increasingly close integration of governance, risk and
compliance, the internal control systems (ICS) are also being continuously developed and
increasingly linked to risk management. Thus, in the course of the regular risk assessment, the
respective control mechanisms are also updated accordingly. For more information on anti-
corruption in the purchasing process, see chapter 5.2 Human Rights.
There were no incidents of corrupti
on during the reporting period.
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2.6 Risk management (GRI 102-30, GRI 102-11)
As part of its systematic risk management, 50Hertz regularly records and evaluates the following
risk areas:
•
Protection of life and limb
•
Profit & loss
•
Liquidity
•
Reputation
•
Supply reliability.
50Hertz's aim is to avoid risks that could jeopardize the company's continued existence, to reduce
risk positions where- reduce risk positions as far as possible and optimize the risk-opportunity
profile. A risk guideline specifies how risks are systematically identified, recorded, evaluated and
monitored on a quarterly basis. A risk conference is held once a year in which all division heads
(second management level) as risk owners as well as the risk manager discuss the most
significant risks and risk-related topics together with the Executive Board. At the project
management level, an integrated process has been installed for the linked planning of schedule,
budget and risk management. In the context of sustainability, various risks are assigned to the
areas of environmental, social and governance (ESG). These are, for example, risks of
occupational safety, environmental damage and in the area of data security and transparency. An
initiative was launched at the Elia Group level to further develop the management of ESG risks
and influence 50Hertz risk management. In 2021, for example, a risk assessment on physical and
climate-related impacts was carried out at Group level. The results have been incorporated into
country-specific risk management.
2.7 Security
(GRI Sector Supplement Disaster/Emergency Planning and Disaster Relief Measures)
As an operator of critical infrastructure, 50Hertz is obliged by the “IT-Sicherheitsgesetz” [IT
Security Act] and the EnWG to ensure information security on systems that are necessary for
maintaining security of supply. In this context, the processing, storage and communication of
information must be designed in such a way that the availability, confidentiality and integrity of
the information and the critical systems are ensured to a sufficiently appropriate degree.
The information security management system in accordance with ISO 27001 "IT Security
Catalogue pursuant to § 11 Paragraph 1a EnWG" was recertified in 2020. Through the established
security process, information security risks are systematically identified and addressed. In the
reporting year, no targeted cyber attacks on 50Hertz were registered or damage caused by
information security incidents. In an independent audit for the evaluation and certification of the
operational security of data centers (based on DIN EN 56000), the 50Hertz data centers were
deemed as "highly available" at Level 3.
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As part of the data protection management system (DMS), the existing e-learning program was
updated, and internal and external employees were sensitized and trained.
For 50Hertz, safety does not stop at the company boundaries. For example, crisis management
and crisis communication with internal and external stakeholders are trained in regular crisis team
exercises. Not only are the existing structures, processes and reporting channels reviewed and
continuously improved, but also the skills of the crisis team members and the employees are
intensively trained to deal with unexpected events in a level-headed manner under special stress
and to make quick and appropriate decisions for crisis management. These and other measures
serve the goal of continuously increasing the resilience of 50Hertz in a holistic manner. In addition
to the training concept for all members of the crisis team and the response team, this also includes
the review of the property security concepts and the expansion of the security network.
At regular intervals, 50Hertz rehearses so-called black starts in order to restore the power supply
within a short time in the event of a blackout. These scenarios have to be trained regularly with
the partners involved: both on the simulator and in real network reconstruction tests. This ensures
safety in the event of a crisis and is also required by law.
In the reporting year, the grid reconstruction with a high-speed grid was successfully completed for
the second time. A start-up grid consists of a grid island with strategically useful transformer
stations, which are simultaneously energized by a black-start unit, in this case a pumped
storage power plant.
2.8 Materiality and objectives
(GRI 102-15, GRI 102-46, GRI 102-47, GRI 103-1, GRI 103-2, GRI 103-3, GRI 201-2)
Undeniably, the energy transition is one of the greatest social challenges of this century. With the
50Hertz vision "For a successful energy transition - in a sustainable world" and our new strategic
goal "From 60 to 100 by 2032 - new energy for a strong economy", we are making it clear that
we are an active driver when it comes to decarbonizing society and industry. To this end, we are
developing the grid, the system and the market of the future.
Definition of our material topics
Our materiality matrix shows our most important fields of action and priorities. It serves as a
guideline for our transparent reporting and is an important element for our strategic decision-
making. The development and review of the materiality matrix is based on a systematic process
in which we have involved external and internal stakeholders and is regularly cross-checked with
studies (such as the World Energy Council's World Energy Issues Monitor) and analyses (such
as the GRI Sector Supplement for Electric Utilities). This repeated stakeholder process involved
both internal management levels 1 and 2 as well as a broad base of our external stakeholders.
Our stakeholders include our shareholders, the public, non-governmental organizations (NGOs),
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politicians, regulators, investors, the media, customers, suppliers and representatives of the
50Hertz workforce.
In 2020, we prioritized our opportunities and risks along the Sustainable Development Goals. This
initial prioritization approach served as the basis for the development of our strategic sustainability
program "Act Now", with which we set ourselves concrete sustainability goals along the SDGs that
are strategically important to us. In determining the relevant SDGs, the service provider S&P
Trucost considered both opportunities (positive impacts on performance, development and
reputation) and risks (negative external impacts of our activities or on our business) in a finance-
based approach that encompassed our entire value chain. This approach fulfils the required
inside-out/outside-in perspective, also known as double materiality.
The result of this process is our materiality matrix to prioritize our reporting and governance of our
ESG issues. We use our materiality matrix to determine our current and future priorities and focus.
It also serves as a guide for determining the issues we include in our annual reporting. The matrix
reflects the importance of the issues to our stakeholders and the impact on 50Hertz.
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Understanding the matrix
50Hertz's materiality matrix consists of three categories - low, medium and high materiality issues.
The chart above reflects our medium and high materiality topics, highlighting those that contribute
directly to one or more SDGs.
The development of our materiality
We review our materiality analysis in a regular cycle. In order to gain an even deeper
understanding of our stakeholders' views and also to do justice to past economic and social
developments, we have planned to survey our most important external stakeholders in detailed
interviews and workshops. This is planned for the third quarter of 2022.
“Act Now” - our sustainability roadmap
In the reporting year, we further developed the Group-wide sustainability program “Act Now”. We
reviewed our business units and processes with regard to the SDGs and the improvement of our
sustainability performance and developed indicators for target setting and measurement as well
as a roadmap for implementation. We have set specific targets that we regularly review and
manage.
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Dimensions of “Act Now”
SDG 7 & SDG
13
Climate protection
Enable decarbonization of the power
sector
Environment
CO
2
neutrality in system operation
CO
2
neutrality of own activities
CO
2
neutrality in the supply chain for
plants and construction activity
Strengthening resilience to climate
change impacts
SDG 12 &
SDG 15
Environment
Embedding the circular economy in
our
core business processes
Ensuring the implementation of
environmental standards
SDG 8
Health protection &
occupational safety
Social
Establish an effective safety culture
Establishing a leadership claim in the
security sector
Ensuring and promoting the health
and well-being of our workforce
SDG 10
Diversity, equal
Opportunities
inclusion
Strengthening an inclusive recruitment
process
Ensuring equal opportunities on the
basis of merit and professional
experience
Strengthening an open and inclusive
corporate culture and work-life balance
Support and develop external social
diversity, inclusion and equality
initiatives.
SDG 16
Governance, ethics,
compliance
Sustainable attitudes and behaviors
Compliance with external and internal
regulations
Transparency and targeted
stakeholder dialogue
Env
ironment &
Ci
rcular Economy
C
onservation and strengthening of the
ecosy
stem and biodiversity
Str
iving for and adhering to the goal of
zer
o accidents (We go for Zero)
Enabling an inclusive leadership culture Social
Resilient rules and processes Governance
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While "Act Now" serves as a compass for all corporate activities along our value chain, we at
50Hertz go further and position ourselves as an active promoter of sustainability in our grid area:
With our strategic goal "From 60 to 100 by 2032 - new energy for a strong economy", we want to
achieve100 % balance sheet - i.e., annualized - coverage of electricity consumption by renewable
energies in our grid area as early as 2032. We support the providers of renewable energies in
implementing their projects more quickly and the industry in their efforts to decarbonize their
processes. In this way, we can make an effective contribution to combating climate change on the
one hand and to strengthening sustainable industrial locations on the other.
With the Elia Group-wide sustainability programmed "Act Now" and the 50Hertz strategic goal
"From 60 to 100 by 2032 - new energy for a strong economy", we are making an ambitious
contribution to achieving European, national and regional renewable and climate targets - as well
as decarbonizing society - internally and externally.
2.9 Compliance with the EU taxonomy
Sustainable finance plays an essential role in achieving the EU's policy objectives. The EU Action
Plan on Financing Sustainable Growth led to the creation of the EU Taxonomy, a classification
system for sustainable economic activities. It is designed to help identify companies that
contribute to climate neutrality. Using the EU Taxonomy, an analysis for the 2020 financial year
was carried out in cooperation with the consulting and auditing firm Deloitte. 50Hertz has placed
sustainability at the heart of its business strategy. The results of the analysis confirm that 50Hertz
is around 99.70 per cent in line with the EU taxonomy in terms of revenue, 99.96 per cent in terms
of capital expenditure (CAPEX) and around 99.80 per cent in terms of operating expenditure
(OPEX). 50Hertz will report according to the EU taxonomy in future.
3 Social and personnel matters
3.1 Management approach
(GRI 102-8, GRI 103-2, GRI 103-3, GRI 402)
50Hertz is only successful because its employees are successful. It is part of our corporate
responsibility to develop them, promote their health and commitment, involve them in decisions
and guarantee equal opportunities for all. As part of the group-wide sustainability initiative "Act
Now", we have set ourselves concrete goals in the areas of "diversity, equal opportunities and
inclusion" as well as "occupational health and safety" and derived measures from them. The
cultivation and further development of the value-based, open and inclusive corporate culture as
well as the creation of a work-life balance are among the top goals of the company and the
strategic basis for all personnel-related decisions. Within the management, responsibility for
personnel strategy issues lies with the
Chief HR Officer (CHRO).
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An annually updated business plan, which is designed for a period of five years in each case,
provides the framework for qualitative and quantitative personnel planning. Beyond collective
agreements and works agreements, 50Hertz is also committed to internationally established
guidelines, such as the core labor standards of the International Labor Organization (ILO: C87,
C98 and C135) and the labor rights in the UN Global Compact.
50Hertz is committed to promoting diversity out of conviction and in accordance with ILO
Convention 111. 50Hertz is committed to valuing all employees and their abilities equally -
regardless of their individual identity. All employees are of equal value regardless of their ethnic
origin, age and gender, sexual identity, religious affiliation, political views, national or social origin.
As an expression of this, 50Hertz is a member of the Diversity Charter, a working initiative to
promote diversity in companies and institutions and participated in the nationwide Diversity Day
for the third time in the reporting year with a programmed to raise employee awareness.
The average age of employees at 50Hertz slightly decreased compared to the previous year to
42.2 years.
3.2 Employees
(GRI 102-7)
Total number of employees
Average age
average age
2021
2020
2019
Tariff area
41.6
41.9
42.6
AT area
47.2
47.8
48.3
Supervisors
51.2
51.3
51.7
Managing directors
54.2
53.2
52
Total 50 Hertz
42.2
42.5
43.1
Employees
Men
Women
Men
Women
Men
Women
2021 2020 2019
Management
4 1 4 1 4 0
Head of Departments
32 9 37 8 38 5
Supervisors
88 18 86 14 68 13
Employees
922 313 844 290 763 249
Total (excluding management)
1042 340 967 312 869 267
Total (excluding management)
1382 1279 1136
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New employees and departures
New Hires/Terminates
Men
women
Men
women
Men
women
2021 2020 2019
New employees > 50 years
12
1
42
17
8th
3
New employees 30 - 50 years
84 34 52 19 58 23
New employees < 30 years
46 19 41 20 30 13
Terminations > 50 years
21 5 13 2 21 7
Terminations 30 - 50 years
20 7 18 4 20 6
Terminations < 30 years
10
4
2
3
3
1
3.3 Combining work and family life
(GRI 401-1, GRI 401-2, GRI 401-3, GRI Sector Disclosure EU15)
50Hertz employees benefit from a family-friendly working environment and the opportunity to
create a work-life balance. In order to give mothers and fathers the necessary flexibility for
childcare, a company agreement on better work-life balance is in place, among other things. It
regulates issues such as parental leave, support services, flexible working hours, special leave
and sabbaticals as well as career advancement. The 50Hertz headquarter (“Netzquartier”) also
has a day-care center for employees' offspring, which also offers places for children from the
neighborhood. In addition, a parent-child office has been set up for short-term childcare
bottlenecks. In job advertisements at 50Hertz, the so-called Flexi-Compass provides information
about possible part- time and flexi-time work. Employees whose work is suitable for this are to
be granted spatial flexibility and self-organization of their work in order to better reconcile
personal interests and operational requirements. The operational principles for this are provided
by the guideline on mobile working, which was converted into a general works agreement on
"mobile working". As a result of the COVID 19 pandemic, parents who were affected by the closure
of schools and day- care centers were again enabled to make compensatory working time
arrangements in an unbureaucratic manner in this reporting year to enable them to care for their
children at home.
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Parental leave
2021
2020
2019
Number of employees on parental and care leave
14
9
12
thereof male
6
4 0
thereof female
20
5 12
Number of employees on parental leave 01.01.2021 -
31.12.2021
77
67
74
thereof male
49
47 50
thereof female
28
20 24
Together with the General Works Council and the Mining, Chemical and Energy Industrial Union
(IG BCE), an agreement was concluded to promote and maintain the employability of employees.
It creates the basis for personnel policy measures to counter the effects of demographic change.
The goal: employees should be able to carry out their activities without restrictions until regular
retirement.
Retirement transitions
Retirement transitions in %
Men
women
Men
women
in 5 years in 10 years
Managing directors
20.00 0.00 20.00 0.00
Head of department
9.76 0.00 29.27 0.00
Superiors
1.89 0.00 11.32 0.00
Employees
5.75 1.70 11.58 3.48
Total (excluding management ) 5.60 1.50 12:10 3.10
3.4 Employee survey
A regular exchange of opinions with employees is facilitated through various platforms (see
stakeholder engagement section) and, in particular, the regularly conducted employee survey
„Sag es!” (Say it!). In 2020, the survey took place for the fourth time. The participation rate was
91 per cent (2017: 91 per cent) and 50Hertz was again able to achieve an above-average
1
employee commitment index (MCI) of 71 (2017 survey: 68). The detailed results will be
discussed across the organization and the hierarchy. In a follow-up process started in the first
quarter of 2021, company-wide fields of action and measures for the individual teams were
derived.
1
The average ECI of energy supply companies in Germany comes to 66.
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3.5 Qualification (GRI 404-1, GRI 404-2)
In order to realize our vision and our strategic goal "From 60 to 100 by 2032 - new energy for a
strong economy" and to master the challenges of tomorrow, motivated employees are an
important success factor in times of constant change. Therefore, employees are offered
individually tailored further training and relevant additional qualifications. Systematic succession
planning ensures that a sufficient number of potentially suitable employees are available for all
management positions and that vacancies can be filled internally wherever possible. To this end,
talent is identified and promoted - for example through programs for "young professionals" that
are jointly developed and offered in the Elia Group. 50Hertz attracts qualified young talent through
its own in-house training, a 24-month trainee program and by supervising internships, diploma,
bachelor's and master's theses in cooperation with universities and universities of applied
sciences. In 2021, a total of 108 student employees and 10 trainees were employed at 50Hertz
in 2021. Currently, 30 young people are completing industrial or commercial training. The trainee
ratio was therefore 2.1 percent. The average number of hours for training and further education,
excluding regular safety instructions, was 12.56 hours per employee in the reporting year. In
addition, managers can participate in 50Hertz-specific training modules to develop their own
leadership skills.
A Group-wide talent program was launched in the third quarter of 2020. Against the backdrop of
a constantly changing environment, the project team will develop a sustainable, integrated and
diverse framework for action to support the implementation of the Elia Group strategy. The goal
is to create a corporate culture and work environment that is attractive and motivating for talent.
3.6 Remuneration policies (GRI 102-38, GRI 102-41)
Fair pay for employees is a matter of course for 50Hertz. Additional offers for retirement benefits
and health round off the offer as an attractive employer. The remuneration systems will be further
developed in line with requirements in order to remain an attractive employer for our employees
in the future. The Mining, Chemical and Energy Industrial Union (IG BCE) negotiates the collective
agreements together with the Employers' Association of Energy and Utility Companies (AVEU).
(AVEU) negotiate the collective agreements. For the first time since 2013, a separate collective
agreement was negotiated for 50Hertz in 2020 and it was decided to continue the talks on the
general working conditions (framework collective agreement). Remuneration in line with
requirements and performance is supplemented by extensive company social benefits and the
offer of a company pension scheme. In addition, as part of the COVID 19 pandemic management,
a tax-free one-off payment was granted in January 2021 in connection with increased mobile
working for the purchase of private IT equipment, and a further tax-free one-off payment with a
payout in January 2022 was decided to mitigate the additional pandemic-related burdens and as
a thank you for the strong commitment of the employees during the pandemic.
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In addition, employees have the opportunity to participate in the success of the previous business
year within the framework of an Elia Group share program. For the ninth time, every 2021
employee was offered shares at a reduced price.
50Hertz transparently and voluntarily discloses the total remuneration of the management in the
consolidated financial statements and shows the fixed and variable total remuneration as well as
company pensions and other benefits in favor of the management. The basic features of the
remuneration system are explained with details in the corporate governance statement.
The factor of the compensation of the highest paid employee compared to the median of the total
annual compensation of all employees is 7.7.
3.7 Incentive systems
The remuneration of employees includes success and performance-related elements that provide
an incentive to achieve the common corporate goals as well as the individual goals derived from
them. Some goals also relate to the environment of sustainable corporate governance, such as
compliance with occupational health and safety or successful social dialogue.
3.8 Codetermination (GRI 102-41, GRI 402)
50Hertz is committed to the freedom of association, collective industrial agreements and the
protection of employees’ representatives. Particular emphasis is placed on trusting and constant
cooperation with all co-determination bodies. The supervisory board of 50Hertz is composed of
six members and, beyond the legal requirements, is contractually guaranteed to have equal
numbers of employee and employer representatives. In a total of four Supervisory Board
meetings per year, the Supervisory Board was 2021 informed and advised in detail about the
current course of business, the economic situation and the status and development of risks
through written reports and oral presentations by the Executive Board. A spokesperson committee
with information and consultation rights represents the interests of the executive employees.
The works council is responsible for representing employees at 50Hertz who are covered by
collective agreements and those who are not. A cross-company exchange takes place in the
European Works Council of the Elia Group. 50Hertz is committed to employee concerns through
joint events such as the Electricity Industry Group Committee and the Netzer working group. The
company also regularly provides guest speakers and lecturers at IG BCE educational events.
In order to promote the trade union involvement of employees "taster courses on co-
determination" are offered. A youth and trainee representation (JAV) looks after the interests of
the young people in the. The JAV works closely with the co-determination bodies.
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3.9 Equal opportunities
As part of the Group-wide "Act Now" program, 50Hertz is committed to promoting diversity and
providing equal opportunities for all employees. As a concrete target, the 50Hertz management
has agreed to increase the proportion of women in the total workforce, in leadership positions and
in management to at least 30 percent by 2030. As of 31 December 2021 the proportion of women
in the first and second management levels under the extended management was one per cent 22,
in the third management level 17 per cent, in the Supervisory Board 33per cent and in the
Executive Board 20 per cent. The share of women in the total workforce was 25 percent. In 2020,
in addition to the already existing internal company network "50:50 - the women's network",
the initiative "Women in Leadership" was founded to, among other things, specifically promote
female junior staff. This is having an effect: 202150Hertz was once again named "Best Employer
for Women" by Brigitte magazine. In addition, 50Hertz took part in "Girls Day" for the third time in
the reporting year. Due to the still existing Corona situation, around 20 girls were able to take part
in a virtual simulation game on the energy transition. In addition, 50Hertz supports the
"EnterTechnik" program, in which three-month internships in various companies with a technical
focus are placed with young women.
Promoting diversity and equal opportunities at 50Hertz also means giving people with health
impairments the same opportunities as colleagues without health impairments. An inclusion
agreement reached with the works council, the spokesperson's committee and the representative
body for severely disabled employees sets out measures to support people with health
impairments in their working lives. An internal inclusion team is responsible for implementing and
monitoring this agreement. In the business year, the proportion of severely disabled employees
and employees with equal rights in our workforce was 1,4 per cent. In total, 23 employees with
disabilities were employed in the company in the reporting year. Depending on the job-specific
requirements in the commercial and technical areas, the quota is to be successively increased in
the future. To this end, there is a cooperation with the Annedore-Leber-Berufsbildungswerk, which
is intended to make it easier for young people with disabilities to start a career. In the year under
review, two interns from the facility were given an insight into the job profiles at 50Hertz. One
former trainee was taken on as an employee in the past.
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Around 50 diversity ambassadors ensure the creation of an open and inclusive corporate culture
throughout the company. To this end, workshops to raise awareness of diversity and inclusion
issues were offered and held in the reporting year. A discussion format already offered in the
previous year, the Diversity Break, was further developed. In the reporting year, the new Blind
Conversations took place, in which employees could anonymously express their views on the
topics of equality, diversity and inclusion. The format will be continued and evaluated in the
coming year. Furthermore, an awareness-raising event was held for managers.
To strengthen governance on diversity and equal opportunities issues, an Equal Opportunities
Officer was appointed for the first time in the reporting year. She provides an independent and
anonymous reporting channel. There 2021 were no reported cases of discrimination in the year.
Furthermore, a cooperation is maintained with AfB gGmbH for the disposal of IT client hardware,
which, as a recognized inclusion company, offers jobs to disabled people and contributes to the
avoidance of additional CO
2 emissions by refurbishing and marketing used IT equipment.
4 Occupational health and safety
4.1 Management approach
(GRI 403-1, GRI sector supplement LA6 OHS)
The prevention of accidents and work-related illnesses is a top priority at 50Hertz. Occupational
health and safety are integrated into the corporate strategy. This is also underpinned by the
health and safety guideline, which is binding for all employees. Occupational health and safety at
50Hertz have been systematically developed in recent years as part of a continuous improvement
process. In addition to creating safe and healthy workplaces, the focus was on strengthening a
culture of prevention by integrating occupational safety as a corporate value. This ensures that
the aspects of occupational safety are anchored in the thinking and actions of all employees and
implemented in all support and core functions. As part of the annual audit plan, eight internal
audits were conducted for the continuous development of the management system. The
implementation of the requirements for the occupational health and safety management system
(OH&S) according to DIN ISO 45001:2018 was again confirmed in a monitoring audit by an
external auditor in the reporting year without any deviations. Health protection and occupational
safety topics are an integral part of the weekly management meetings and the Eurogrid GmbH
Supervisory Board.
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Every employee is instructed to be aware of hazards, to report them immediately and to make
suggestions for improvements to safe and healthy working conditions. Occupational health and
safety are part of the Elia Group-wide sustainability program "Act Now".
In order to further raise awareness of occupational health and safety issues among employees
and suppliers of 50Hertz, communication campaigns are conducted on a regular basis. Especially
with regard to the diverse suppliers, the translation of documents and campaign content into other
languages - beyond English and German - is planned. Employees' personal protective equipment
(PPE) is always kept up to date, new PPE is tested by wearing it and the catalogue is adapted to
the requirements.
Once a year, an occupational safety competition is held to further sensitize and motivate the
workforce. On the one hand, the accident figures of the individual locations of the previous year
are considered, and on the other hand, the knowledge of occupational safety is tested and
anchored in an annually different practical part.
The early detection and prevention of work-related illnesses and the preservation of employability
are also fixed components of occupational health and safety at 50Hertz. To achieve these goals,
50Hertz ensures appropriate occupational health care, which focuses on individual protection and
prevention of health hazards. In addition, 50Hertz provides regular company medical
consultations, protective vaccinations and advice on ergonomics at the workplace for all
employees. Qualified external counselling is available to employees in confidence at any time in
the event of individual stress, conflicts or addiction problems. Furthermore, employees can
participate in various public sports events. Another health promotion service available to
employees is an app that offers a variety of personalized coaching in the areas of exercise,
mindfulness and nutrition - from workouts and physio sessions to meditation and recipe ideas.
Since July 2021, an additional service has been available to users via this app, which supports
them in finding the right medical care for an individual medical concern. This service offers
individual medical advice that can help to find medical specialists and appointments quickly and
safely.
The Corona pandemic has an impact on the private and professional lives of 50Hertz employees.
The pandemic situation was constantly monitored further, measures were derived and
implemented in accordance with the requirements of the SARS-CoV-2 Occupational Health and
Safety Ordinance. In addition, all employees have had the option since the end of February 2021,
conduct a rapid antigen test at least twice a week. A large number of meeting rooms at the
company locations were equipped with measuring devices to ensure regular ventilation. In
addition, all employees were offered vaccination until June 2021, and follow-up or initial
vaccination was made possible again from November of that year. The measures at 50Hertz have
helped to ensure that there were no major incidents of infection within the workforce in 2021. In
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addition, 50Hertz took part in the nationwide advertising campaign "Vaccinate. Jett!" nationwide
advertising campaign in December to draw attention to the need for vaccination in the Corona
pandemic. Here, the participating companies were able to determine the amount of the advertising
costs themselves. According to the Handelsblatt Media Group, part of the total proceeds went to
projects and organizations that support the fight against Corona with their work. The campaign,
which is also reflected in social networks, is to be continued and expanded in the new year.
4.2 Safety training
All employees are regularly instructed about workplace-specific hazards and measures to avoid
them. The instruction topics for the operational employees in the regional centers are distributed
over six dates per year. The employees in the administrative areas are instructed on at least one
date per year.
For work requiring the wearing of personal protective equipment against falls from a height (PPE),
the respective employees complete annual practical exercises on the use of PPE and on rescue
from heights and depths. The contents of the annual training on the overhead line pylon and
transformer are determined on the basis of the 50Hertz rescue concept, whereby a uniform level
of knowledge is promoted among the employees as well as an exchange of knowledge across
sites.
4.3 Safety inspections
(GRI 403-2)
Occupational safety and health protection are not limited to our own employees. The high 50Hertz
standards also apply to external companies working on 50Hertz construction sites. Already at the
time of commissioning and later via IT-supported construction inspections with specially trained
50Hertz employees, it is verified that the suppliers comply with 50Hertz's high safety standards.
This is regulated in a transparent and binding manner by the regulations for ensuring occupational
safety when using external companies in the transmission grid area of 50Hertz (OAFN). For new
contracts, the agreement on quality assurance on construction sites at 50Hertz is part of the
contract. This includes an unrestricted right to carry out inspections by 50Hertz. In the reporting
year, 538 construction site inspections (933 in 2020) were carried out. Overall, the quality of the
construction site inspections was improved, and the number reduced. This was achieved by
introducing an IT-supported system and by concentrating the inspection tasks on the operational
quality assurance officers at the individual sites. Incidents relevant to occupational safety and
environmental protection that occurred at external companies working on behalf of 50Hertz were
analyzed together with the external companies concerned in accordance with a defined process.
Measures to avoid similar accidents and incidents were derived, implemented and documented
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under the control of a central evaluation commission. In accordance with this process,
environmental
69 incidents, accidents, near-accidents and safety-related incidents were evaluated in the
reporting year.
In July 2021, the managing directors of all overhead line construction companies working for
50Hertz were also invited to the "Dialogue on Occupational Safety" to exchange views on
accidents and their possible causes (dealing with subcontractors, safety culture, awareness-
raising measures). A regular exchange is planned for the future. In addition, it was agreed that
the safety instructions from 50Hertz would be distributed directly to the contractors and that the
checks on subcontractors would be intensified
4.4 Accident statistics
(GRI 403-2)
Accident Statistics
2021
2020
2019
Accidents at work ( with at least 2 lost days )
8
6
0
Accident rate *
2.6
3.9
0.6
Accident severity **
0.01
0.03
0.00
Quantity accidents contractors
30.00
12.00
18.00
* Number of lost time accidents (>=1 day) x 1,000,000/number of hours actually worked
** Number of days lost due to work accidents in calendar days x 1,000/number of hours actually worked
The continuous evaluation of accident statistics showed an increase in accidents involving
contractors in overhead line construction from the middle of the year onwards. In response, the
"Dialogue on Occupational Safety" (see 4.3) was launched. The contractor accidents include 27
accidents with minor injuries (reversible health damage, for example minor cuts, bruises, etc.), 2
accidents with moderate injuries (probably reversible health damage, e.g., fractures) and 1
accident with severe injuries (irreversible health damage, e.g., amputation).
As part of Act Now, accident rate reporting will be expanded to include contractor accidents from
2022.
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5 Suppliers companies, local added value and human rights
5.1 Suppliers
(GRI 204-1)
Suppliers from the EU
Supplier EU/Non-EU in %
2021
2020
2019
Proportion of expenses for suppliers outside the EU in
total supplier expenses
0.8
0.3
7.4
Percentage of expenses for suppliers within the EU in
total supplier expenses
99.2
99.7
92.6
5.2 Local added value
(GRI 203-1, GRI 203-2, GRI 204-1, GRI 201-1)
In its rules and regulations adopted by the management, 50Hertz has committed itself to not
pursuing an "aggressive tax policy" and to paying its taxes on time and in accordance with the
law. With this voluntary commitment, 50Hertz creates a framework in its influenceable behavior
for a sustainable distribution of the value added generated by the company. This particularly
benefits structurally weak regions that are located in the 50Hertz grid area.
Tax Revenue
Tax revenue in million euro
2021
2020
2019
Sales tax/VAT *
1,216.6
905.2
1,050.9
Input tax *
1,274.4
905.6
1,029.9
Corporate income tax *
18.2
70.1
64.7
Property tax **
0.5
0.5
0.4
Trade income tax **
23:1
60.1
60.8
* Indirect inflow to the local authorities of the states and municipalities via the state financial equalization
** Direct flow to the regional and local authorities
50Hertz is clearly committed to its regional responsibility and the economic development there.
Goods 2021 and services worth 765 million euro were purchased from companies
headquartered in Germany. Of these, 304 million euro went to companies headquartered in the
50Hertz grid area. This corresponds to a quota of around 39.8 percent
In the reporting year, 50Hertz had an input-output analysis carried out by the independent WifOR
Institute. This determined 50Hertz's contribution to the gross domestic product (GDP) in the form
of direct and indirect as well as induced economic and fiscal effects. Within the framework of
above-average labor productivity and a gross value-added ratio of almost 50% (average energy
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supply 43 percent), the direct value-added contribution to the German GDP amounted to 710
million euros. This corresponds to approx. 18 percent of Rostock's total economic output.
Including the indirect (effects along the supply chain caused by demand for intermediate inputs)
and induced (through the expenditure of directly and indirectly generated income) effects, the total
value-added effect amounts to 1.9 billion euro. In addition, around 16,000 jobs in Germany were
supported by these spillover effects. In the grid area, 50Hertz creates about 6,000 jobs. That is
35 percent of the jobs created in Germany.
There were no legal disputes on tax issues in the reporting year.
Due to its stable economic situation, 50Hertz has not taken advantage of any Corona aid.
5.3 Human rights
(GRI 205-1, GRI 308-1, GRI 308-2, GRI 414-1)
50Hertz acknowledges its responsibility with regard to respect for human rights and naturally
respects the right to privacy, personal safety, freedom of expression and property rights of
employees as well as local residents and customers. 50Hertz also assumes responsibility for
compliance with social standards in the supply chain. For this reason, 50Hertz is not only a
member of the United Nations Global Compact but is also committed to the core labor standards of
the International Labor Organization (ILO).
In order to ensure that business partners also comply with internationally valid rules on human
rights - such as the prohibition of forced and child labor - sustainability and ethics are essential
components of the supplier and service provider evaluation. Elia Group suppliers commit to a
common, binding Supplier Code of Conduct (SCOC). This is an integral part of all Elia Group
supplier contracts. Suppliers must accept the SCOC when submitting a bid and are obliged to
comply with it. Human rights are also regulated in clauses of the General Terms and Conditions
of Purchase. In addition, further initiatives in purchasing are planned at Group level. For example,
in the future, strategic suppliers will first be asked about sustainability issues, including human
rights due diligence, via an external service provider and recorded in a balanced score card. The
project is currently in the start-up phase and initial results are expected in the course of 2022. In
addition, 50Hertz raises awareness of sustainable action in regular discussions and thus
conveys an understanding of compliance with ethical principles and guidelines of sustainable
development.
All procurements at 50Hertz are made in accordance with the applicable procurement guidelines.
It states that procurements (> €100,000) are made centrally via the purchasing department. A
multi-level release strategy prevents misuse and increases control. The 4-eyes principle is
guaranteed at all times. The procurement guideline, the purchasing manual and also the general
purchasing conditions in the different versions form a regulated framework to prevent corruption
at all locations.
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Based on the human rights due diligence requirements anchored in the National Action Plan
(NAP), 50Hertz conducted an analysis of its direct and indirect supply chains. As a result, four
human rights risks could be prioritized:
• Occupational health and safety
• Environmental protection and health
• Employment and working conditions
• Freedom of assembly and speech
50Hertz examined the identified risks in an in-depth analysis of the submarine cable value chain.
Submarine cables are used in offshore activities and are suitable for analysis due to their complex
supply chain and high investment volume. The analysis includes interviews with 50Hertz's direct
suppliers in order to determine and track the risk potential of past steps in the value chain and to
derive suitable measures.
In spring 2021, an intensive stakeholder dialogue on the topic of human rights in the supply chain
of a submarine cable was launched with the main suppliers in the areas of production and
construction. In both areas, suppliers have a risk-based approach and process to mitigate the risk
of human rights violations in their supply chain from a mandatory Code of Conduct to supplier
assessments and audits, to a whistleblower system. 50Hertz's model approach to determining its
own supply chain risks was confirmed.
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The successive expansion of supply chain management on sustainability topics will continue in
the coming years.
6 Stakeholder participation
6.1 Management approach
50Hertz maintains regular contact and exchange with its stakeholders. Internal, project-related
guidelines regulate timelines and the interaction of project planning, approval, public participation
and stakeholder management. This also includes comprehensive learning processes that enable
the company to continuously develop the standardized toolbox for public participation at 50Hertz.
In addition, 50Hertz actively participates in the debate on the quality of public participation, for
example within the Alliance for Diverse Democracy, which is coordinated by the Berlin Institute
for Participation, and is a founding member of Dialog Gesellschaft e. V. For 50Hertz, the relevant
publications on good participation, such as Guideline 7000 of the Association of German
Engineers (2015), the Quality Criteria of the Alliance for Diverse Democracy (2017a) and the
Quality Criteria of the Citizen Participation Network (2013), set the orientation framework.
Together with various European environmental associations and other transmission system
operators, 50Hertz is a founding member of the "Renewables Grid Initiative" (RGI), which
promotes grid expansion across Europe for the effective integration of renewable energies and,
in doing so, advances the dissemination of innovative participation practices.
Hybrid and virtual event formats were also increasingly used in the dialogue with internal and
external stakeholders in 2021. Examples include the roundtable series "New energy for strong
industrial jobs", the virtual electricity market forum of the four German transmission system
operators, and the Elia Group Stakeholder Day with the presentation of the Vision 2050 study, all
of which experienced great personal and digital participation and response. Furthermore, in
internal communication, most formats were digitalized, if this was not already the case in advance.
In particular, participation formats for employees, such as the general works meeting, were held
as hybrid events in 202.1
6.2 Public participation
(GRI 102-29, GRI 102-43, GRI 102-44, GRI 413-1, GRI Sector Disclosure
Stakeholder Engagement)
When planning and implementing grid expansion, 50Hertz implements a comprehensive dialogue
and participation approach. This is because the involvement of the relevant stakeholder groups
plays a special role in sustainable grid expansion. The regional and local stakeholder groups are
first analyzed in detail, and the issues, questions and fears that exist among those affected locally
are identified. In this way, a participation roadmap can be developed and implemented together
with the region, which is oriented both to the standards of good early public participation and to
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the project specifics of the respective project. This is because the information and participation
need of citizens vary in the regions where existing capacities are being reinforced or new
substations and lines are being built. 50Hertz would like to orient itself to these specific needs
and conduct a dialogue on site. This is the only way to further improve planning, integrate local
knowledge and turn those affected into participants.
The dialogue with the relevant stakeholders begins at a very early planning stage of the projects.
This includes consultation on the grid development plan as well as on grid reinforcement and
expansion projects. The dialogues with the stakeholders take place according to clearly defined
specifications, in specified formats and via a standardized toolbox. In the course of the COVID 19
pandemic, additional formats and tools, including virtual ones, were implemented to ensure these
early dialogues even under limited contact conditions, and an additional space for exchange with
mayors, residents and representatives of associations was created in telephone consultation
hours previously announced in the local press, which was actively used. Furthermore, digital
communication formats and tools were examined for their target-oriented integration into the
process of citizen participation, as these can maintain communication and at the same time open
up access to new stakeholder groups. In this context, the website was evaluated for user-
friendliness and new user behavior, and as a result the structure and design of the information
was adapted and improved. In the reporting year, the concept of early public participation was
also extended to construction activities and measures such as ecological construction monitoring
were brought closer to the interested public.
Due to the COVID 19 pandemic, planned information tours with the DialogMobil had to be
postponed in the first half of the year. The first tour with eight stops for the Südharz grid connection
started at the end of June, followed by further information tours on the Mecklar-Vieselbach,
SüdOstLink and Güstrow-Parchim-Süd-Perleberg projects as well as the Hansa PowerBridge
offshore project.
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6.3 Dialogue with stakeholders
(GRI 102-21, GRI 102-40)
Despite the Covid 19 pandemic, dialogue between 50Hertz and the company's stakeholders
continued. Communication options were expanded to include virtual and hybrid events and
hygiene guidelines were established for the various occasions. The focus of many events in 2021
was the strategy "#from 60 to 100 by 2032 - new energies for a strong economy" to safely
integrate and transport 100 per cent renewable energy on an annual average in the 50Hertz grid
area by 2032,
Together, 50Hertz and the IG BCE therefore held a roundtable series with politics and business
in the reporting year under the heading "New energy for strong industrial jobs", which concluded
with a foyer discussion in the 50Hertz grid quarter. The invitation of 50Hertz CEO Stefan Kapferer
and IG BCE head Michael Vassiliadis to the various digital conferences was accepted by, among
others, several minister presidents, state secretaries and the ministers and senators responsible
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for energy from the grid area, including Dr. Reiner Haseloff (Saxony-Anhalt), Bodo Ramelow
(Thuringia) and Michael Kretschmer (Saxony), as well as the Federal Government Commissioner
for Eastern Germany, Marco Wanderwitz. Also present were the leaders of the Federation of
German Industries (BDI), the German Association of Energy and Water Industries (BDEW), the
Association of German Chambers of Industry and Commerce (DIHK), the German Renewable
Energy Federation (BEE) and Germany Trade and Invest (GTAI). The roundtable series is aimed
at energy-intensive industries from the chemical, steel, copper, glass, paper or cement sectors in
the 50Hertz control area, but also at new companies that want to invest sustainably - such as the
automotive industry, battery suppliers or large data centers. Renewable producers, scientific
institutes, think tanks and other associations also took part in the various events. In a joint
summary, 50Hertz and IG BCE recorded which goals and demands resulted from the talks.
50Hertz CEO Stefan Kapferer summarized what politics and business will tackle together rather
than against each other more often in the future: 1. electricity must become cheaper. 2. the
expansion of renewables and the grid infrastructure needs more speed and 3. climate protection
should have priority in approval procedures in the future.
To further develop the strategic ambition, the initiative "Together. Faster. Climate Neutral. was
launched. Stakeholders from business, associations and NGOs were called upon to develop a
catalogue of pragmatic proposals for measures. The goal: to accelerate the expansion of
renewable energies and the electricity grids - as key factors for a successful energy and climate
transition. The consultation and analysis phase as well as the evaluation phase by a three-
member expert panel (Prof. Dr. Barbara Praetorius, HTW Berlin, Dr. Felix Matthes, Öko-Institut,
and 50Hertz CEO Stefan Kapferer) were completed and the results presented in a consolidated
catalogue of measures. The joint catalogue of measures is intended to serve as a basis for the
newly elected federal government to identify and leverage acceleration potential in these areas.
In addition to 50Hertz, Aurubis, RWE Renewables, TÜV Nord Systems, TenneT, Vattenfall
Wärme, Wacker Chemie and the large distribution grid operators active in eastern Germany, who
have joined forces in the Arbeitsgemeinschaft der Flächennetzbetreiber Ost (ARGE FNB Ost),
are part of the initiative Gemeinsam.Schneller.Klimaneutral.
50Hertz is in direct digital exchange with stakeholders via its corporate presence on the two social
media platforms Twitter and LinkedIn. The LinkedIn presence has over 16,000 followers, while
Twitter has over 3,000, who are thus informed about the latest developments in the company. At
the same time, the channels offer them the opportunity to enter into direct dialogue with the
company at any time via news and comment functions.
More than 600 guests took part online in the second "Electricity Market Forum", a joint event of
the four transmission system operators, 50Hertz, Amprion, TenneT and TransnetBW. In this
cross-sectoral exchange with representatives from industry and civil society, the challenges of the
energy transition and possible solutions were discussed in various expert rounds. More
acceleration, a market design adapted to the new challenges, joint efforts in the expansion of
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renewable energies and the creation of the necessary infrastructure for their feed-in and transport
were exemplary topics of the diverse panels.
The Elia Group Stakeholder Day took place for the second time in the year under review. The
program included panel discussions and presentations. The Elia Group study "Vision 2050 - How
do we manage to become a climate-neutral society?" was presented. (see 6.5). Besides the
presentation of the study results, it was equally important to discuss the different scenarios and
assumptions with colleagues and other important stakeholders.
In 2020 a cross-divisional customer survey was conducted for the second time. A total of 1,054
customers were contacted on the basis of an online evaluation, including balancing group
managers (BKV), grid and metering point operators and connection customers.
6.4 Community service
(GRI 413-1)
50Hertz supports a wide range of projects in its grid area, primarily in the areas of culture, energy
and environmental education, as well as youth and social issues. Clear management and
organizational structures have been established for the implementation of the diverse social
activities. Responsibility lies with the Communication and Public Affairs department. In
consultation with the management, the department defines the objectives, coordinates the
activities and, if necessary, in consultation with the Legal Department and the Compliance
Committee, it examines requests for projects worthy of support. In the internal guideline for
donations and sponsoring, the general principles of support, the evaluation criteria and the
organizational procedure are defined in a transparent, uniform and binding manner for all
employees. When making donations and providing support through sponsorship, care is always
taken to ensure that this is in line with our corporate values, that a sponsorship is designed for
the long term as well as offering real added value for society and people and that it follows the
defined process.
In the vicinity of the company headquarters, the 50Hertz headquarter (“Netzquartier”), the
company sees itself as a good corporate citizen that makes an active contribution to the attractive
design of the new living and working quarter "Europa city". The "Energiebündel" daycare center
not only offers space for the offspring of the 50Hertz workforce, but also for children from the
surrounding area. The partnership with the Berlin National Gallery - Hamburger Bahnhof -
Museum für Gegenwart was continued in the reporting year. On the website rundgang50hertz.de,
the creative process for three outstanding works by graduates of various art academies in the
50Hertz network area is documented on film every year. Conveying concrete knowledge to
children and young people about the energy transition is important. The hands-on exhibition
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"Turning Energy Together" developed by 50Hertz and the Independent Institute for Environmental
Issues (UfU e. V.) playfully illustrates various aspects of the energy transition to schoolchildren.
In the process, the aspects, some of which are quite technical or diffuse, become concrete and
can be included by schools in both physics and biology lessons. In the future, the cooperation will
also be adapted for greater use in the digital environment. In addition, both partners are
developing an online game on the topic of grid development and energy transition, in which young
people take on different roles such as local residents, farmers, nature conservationists, tourism
managers, etc. and look at a grid expansion project. Using a points system, the optimal course
can be examined and discussed with all actors. The game will be used from 2022.
50Hertz also supports selected projects in its network area that enable a multi-faceted cultural
landscape. In 2021, the soprano Anna Prohaska was supported as part of the renowned "Artist in
Residence" program series at the Konzerthaus Berlin. Starting in the 2022 season, we will focus
our commitment on supporting the digitization of the traditional house's offerings. The
Mecklenburg-Vorpommern Music Festival was also supported once again.
Throughout the grid area, 50Hertz was again involved in numerous initiatives, associations and
organizations in addition 2021 to industry-relevant congresses. These include, for example, the
Rennsteig autumn run in the Thuringian Forest, the Baltic Sea relay marathon in Dierhagen, the
junior division of the BR Volleys and a large number of local charitable institutions.
6.5 Innovation management
Active consortium leadership and participation in research and development projects is an integral
part of innovation management for 50Hertz. In diverse collaborations with both academic and
industrial partners, the focus is primarily on activities in the areas of new technologies and
digitalization, energy markets and system security, the integration of renewable energies and the
development of the electrical system required for this, as well as supporting industry in the
decarbonization of its processes. The commitment is reinforced by the Scientific Advisory &
Project Board (SAPB), various industry and science cooperation’s as well as the internal
Innovation Week and the Elia Group's own Excelarator, "The Nest".
21 of Germany's most renowned scientists met twice in the reporting year as part of the Scientific
Advisory & Project Board (SAPB). On the one hand, the topics dealt with strategic aspects, such
as the German government's hydrogen strategy or Germany's challenges on the path to climate
neutrality. On the other hand, concrete use cases for 50Hertz's everyday business were also
discussed. This concerned, for example, the energy scenarios of the future and grid
reconstruction in a world with more and more renewable energies. In addition, two project outlines
were approved, which were worked on together with the scientists and 50Hertz during the course
of the year. The results are expected to be available in the first quarter of 2022. Another focus of
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the SAPB in the coming years will be customer-centric market design.
As a further component of the strategy "From 60 to 100 by 2032 - new energy for a strong
economy", 50Hertz is contributing its expertise as an associated partner in three real laboratories
for the energy transition. In addition, 50Hertz has participated in the construction of power-to-heat
plants in Hamburg, Parchim, Rostock, Stralsund and Neubrandenburg, among other places,
under the motto "Use instead of shutting down". The projects have in common that their focus is
on the topics of sector coupling or hydrogen technology. Millions of electric cars will be driving
and charging on Germany's roads in the coming years. So that they can also contribute to system
stability, data exchange via a smart metering infrastructure is necessary. For this reason, the
distribution grid operator Stromnetz Berlin and the transmission system operator 50Hertz are
investigating and testing in a joint project with Elia and Bosch, subsidiaries of Volkswagen AG
and Robert Bosch GmbH, which data exchange is required for this and how the balancing energy
can be provided by a network of electric cars. For 50Hertz, this is an important part of its "From
60 to 100 by 2032" strategy.
In the reporting year, the Elia Group Innovation Week also took place under the motto "Co-
creating the future with our ecosystem". At the innovation fair, the most innovative projects from
the "moonshot fields" of system management, consumer centricity, infrastructure, asset
management and offshore were presented for the first time together with 15 external partners. To
promote innovative thinking even more, Elia Group has created another space, The Nest,
where innovative projects are enabled and supported through prototyping and testing of
innovative ideas in an agile environment.
At the end of the year, the Elia Group also published the study "Vision 2050 - How can we become
a climate-neutral society? The focus was on three elements: The energy balance - from which
sources will future energy needs be met? Flexibility - how will fluctuations in electricity generation
be balanced out by renewable energies? And security of supply - how can longer phases of low
feed-in from renewable energies be dealt with?
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7 Use of natural resources
7.1 Management approach
(GRI 102-11, GRI 308-1, GRI 308-2, GRI Biodiversity Sector Report)
50Hertz is a pioneer in the integration of renewable energies into the overall electrical system: In
the year, an annual average of 56.1 percent of electricity consumption in the 50Hertz grid area
came from 2021 renewable energies. This was below the previous year's figure of 62 percent. The
reasons for this were increased electricity consumption in the 50Hertz grid area with a
significantly lower wind harvest. With the new strategy "From 60 to 100 by 2032 - new energy for
a strong economy", we have set ourselves an ambitious goal. The development of the extra-high
voltage grid is essential to enable a stable electricity supply from 100 percent renewable energies
in the 50Hertz grid area as early as 2032. In doing so, we pursue the goal of keeping the impact
of 50Hertz facilities and activities on people and natural habitats as low as possible. Adherence
to the NOVA principle (network optimization before reinforcement before expansion) is therefore
a matter of course for 50Hertz. In concrete terms, this means that 50Hertz only builds new lines
once all other options for increasing capacity in the grid have been exhausted. Another step
towards reducing interference with the environment is the development of the "compactLine" pylon
design. Lower pylon heights, narrower routes and a full-wall pylon with a smaller circumference
characterize this innovative research and development project. Ecological and social
sustainability as well as a clear commitment to environmental protection and resource
conservation are fixed components of the corporate strategy. In the Elia Group-wide sustainability
roadmap "Act Now", 50Hertz and Elia have set concrete goals in the areas of climate protection,
biodiversity and eco-design of their assets. In 2021, a project was launched that takes
into account
the c
oncrete implementation of circularity measures in procurement processes, for example by
including suitable decision parameters. An internal CO2 price (IPC) was already introduced in the
reporting year as an additional decision parameter in the procurement process.
The planning, operation and environmentally compatible conversion and expansion of the
transmission grid in the east and north of Germany are based on national and European
framework conditions and regulations. These were redefined in 2021 in a legal cadaster and
changes are constantly monitored. The requirements are implemented in the company's internal
regulations. Deviations are evaluated in a process and improvement measures are defined. The
existing environmental management system is currently being aligned with the internationally
recognized ISO 14001 in order to increase its level of maturity. Certification is planned for 2022.
50Hertz is consistently committed to the continuous improvement of its environmental
performance, energy-related performance and the improvement of the management system. The
successive further development of operational environmental protection and energy management
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also includes raising awareness and actively involving employees, who are motivated to act in an
environmentally conscious and energy-efficient manner. To this end, environmentally relevant
briefings are held in the teams of the regional centers as well as in central areas such as
purchasing or facility management, either annually or on an ad hoc basis. The waste, water
protection and hazardous goods officers are demonstrably trained. In 2021, the environmental
and nature conservation specialists were trained on nature conservation issues during
maintenance and repair work. Likewise, numerous employees were trained on the expertise for
separator systems. The "Agreement on Quality Assurance at Construction Sites" is part of the
contract for new contracts with suppliers and includes, among other things, the precautionary
principle in environmental protection. Compliance with this agreement is regularly checked within
the framework of IT-supported construction inspections. In the reporting year, around 500
construction inspections were carried out.
50Hertz ensures the availability of all relevant information as well as all necessary resources for
the fulfilment of strategic and operational goals in the context of energy efficiency and
environmental protection. Environmental protection activities are documented internally in annual
environmental reports. The environmental report for the reporting year is available in March 2022.
Parts of the figures mentioned are therefore based on estimated values and are marked.
7.2 Nature conservation and biodiversity
(GRI 304-1, GRI 304-2, GRI 304-3, biodiversity sector disclosure, GRI sector
disclosure EN12 and EN13)
50Hertz follows the principle of keeping the impact of its own activities on nature and a restriction
of biodiversity as low as possible. When planning projects, not only the economic efficiency, the
concerns of the population or the technology are considered during approval procedures, but also
the protection of flora and fauna is always considered. In the run-up to such procedures,
environmental impact assessments are carried out to minimize conflicts in the field of nature
conservation at an early stage. Subsequently, a corridor is identified in which the exact route of
the pipeline is located and determined in a further step. At the same time, protection and
compensation measures are identified. All these investigations are carried out together with
external environmental planners, routing experts and, if necessary, other specialists from science
and nature conservation. Only when this overall process has been completed does the
construction project proceed - including external ecological construction supervision. Construction
site facilities and the construction process are implemented in such a way that even temporary
impairments to nature are minimized, nature conservation-relevant deadlines and requirements
are considered at an early stage and the companies carrying out the work on behalf of 50Hertz
are committed to the ecological aspects of their actions. A final audit will be carried out following
the measure.
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As part of Act Now, a pilot to increase biodiversity in and around substations was launched in
2020. It included various pilot measures, such as green roofs, nesting aids for birds and shelters
for insects, and the avoidance of pesticides. In 2021, herbicide avoidance was made mandatory
for all substations from 2023. Alternative methods for "weed control" were tested and evaluated.
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Furthermore, potential analyses were carried out for 15 transformer stations, which concretely
show the possibilities of an increase in biodiversity at the individual sites within the framework of
biotope mapping. These potential analyses enable the targeted implementation of the most
efficient measures from 2022 onwards.
The use of wind at sea to generate electricity is enormously important and indispensable for
climate protection. At the same time, the expansion of offshore wind energy and the submarine
cables needed to transport the electricity on the seabed are associated with interventions in
nature. For this reason, 18 organizations and companies working together in the Renewables
Grid Initiative (RGI) signed a joint declaration of intent in 2020 as the "Offshore Coalition" and
published how the biodiversity of the marine ecosystem can be preserved despite the expansion
of offshore wind energy. Beyond the "Marine Grid Declaration" co-signed by 50Hertz - with which
RGI members had set the standards for the early involvement of stakeholders and for nature and
species protection in offshore grid expansion beyond the legal requirements in 2019 - 50Hertz,
as a co-signatory of the "Offshore Coalition" declaration of intent, is committed to the growing
responsibility in this sensitive environment.
7.3 Compensatory measures (GRI 304-2)
According to the Federal Nature Conservation Act (BNatSchG), there is an obligation to refrain
from avoidable impairments of nature and landscape or to keep them as low as possible
(avoidance and minimization requirement). Wherever it makes sense, power lines are combined
and bundled with existing overhead lines and other infrastructure such as railway lines and
motorways. In order not to impair the landscape unnecessarily, the lines are adapted to the
landscape conditions. Where interventions are unavoidable, 50Hertz takes compensatory
measures.
Increasingly, regional ecopools are coming i
nto play. Eco pools are participations in projects of
other organizations as well as compensation payments that enable more comprehensive
measures than individual replacement plantings and are thus more effective, efficient and
sustainable. When planning and implementing compensation measures, 50Hertz applies the
principle of involving the affected communities, nature conservation authorities, interested citizens
and non-governmental organizations at an early stage. In a spirit of partnership, 50Hertz develops
suitable projects at an early stage and proposes them to the authorities in the course of the
approval planning. A guideline for targeted compensatory management defines the fields of action
required for successful approval and implementation of the measures. An internal evaluation
commission meets every two months to decide on the measures. The selected measures are
recorded in a. real estate cadaster.
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Compensatory Measures
Compensatory Measures
2021
2020
2019
In Planning and Realization
153
268
170
Ongoing
371
249
218
Completed
313
297
286
Total
837
814
674
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7.4 Ecological aisle management
(GRI 304-3)
To build an overhead line, aisles are usually created. The conductor cables need sufficient
clearance to the sides and to the ground because of the necessary safety distances. Particularly
in forest areas, trees have to be removed in sections and regularly along these routes. However,
trees and shrubs provide habitats for numerous animals and plants. Therefore, 50Hertz's goal is
to impair these natural areas as little as possible in the long term and to increase biodiversity
under the lines. For several years now, 50Hertz has been paying attention to so-called "ecological
route management" (ÖTM). In regular line maintenance, ecological aspects such as individual
tree removals and heath management are considered on more than two thirds of the forest
corridors in the entire network area. The pilot activities started in recent years in the ÖTM on
existing roads, such as the creation of forest edges or the establishment of species-rich meadows
and pastures, are now part of an overall strategy to increase biodiversity. Currently, a geo-
database is being created that presents and structures all activities in pipeline routes that
contribute to increasing biodiversity, in order to create a valid basis for targeted further action.
Currently, almost 100 pipeline sections are already recorded in this database. The geodatabase
also establishes the spatial relationship between forest corridors and protected areas in the
50Hertz network area. Based on this mapping, 50Hertz is able to contribute to the EU Biodiversity
Strategy 2030. The Biodiversity Strategy, officially adopted in May 2020, sees the integration of
ecological corridors as part of a true trans-European nature conservation network and thus as a
key commitment to improving biodiversity. As part of the sustainability roadmap Act Now, 50Hertz
has set itself the goal of introducing ecological route management on 95 percent of suitable routes
by 2030. In order to further develop the topics of biodiversity and ecological management in the
future, we have started a dialogue on these specific topics together with external stakeholders,
such as nature conservation organizations and universities.
7.5 Bird protection
(GRI sector statement EN12)
Extra-high voltage power lines affect bird life. For this reason, 50Hertz also makes great efforts to
minimize negative impacts in the area of bird protection.
To this end, an extensive study was carried out in the past reporting years with the Brandenburg
State Environmental Agency and evaluated together with experts from the Renewables Grid
Initiative (RGI) and the German Nature and Biodiversity Conservation Union (NABU). The aim is
to identify lines with an increased collision risk for birds and to equip them with bird protection
markers.
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In 2020 another 30 kilometers of power lines in the ornithologically highly valuable
Havelländisches Luch were retrofitted with folding markers as part of a voluntary species
protection measure. Currently, bird protection markers have been installed on around one
kilometre of 368 overhead line.
In preparation for further projects, 122 km existing pipelines running through ornithologically
sensitive areas were assessed in in the reporting year 6 for the technical feasibility of retrofitting
bird protection markers.
7.6 Water protection (GRI 306-5)
50Hertz is committed to effective water protection. It is planned to collect and evaluate the
company-wide administrative and technical water consumption and, if necessary, to derive
measures. The focus is on giving special consideration to water retention in the ground in line and
substation projects and preventing water and soil pollution by hazardous substances. Thus, oil-
filled installations such as transformers or generators are constantly monitored. Underneath the
oil-filled installations in transformer stations on land and at sea, there are elaborate constructions
to protect the environment so that no drip leaks into the ground or the water cycle. The installations
are regularly inspected and, if necessary, renovated or renewed. The handling and storage of
substances hazardous to water is ensured by regular inspections and sensitized employees.
Wastewater may only be discharged if an official permit has been obtained and it has been
regularly checked to ensure that it is free of pollutants. When it comes to water protection, the
Water Resources Act (WHG) and the Plant Ordinance (AwSV) are important for 50Hertz. The
water protection officers monitor, advise and support the responsible persons and employees.
Our employees are instructed regularly or on an ad hoc basis.
In the event of a leakage of substances hazardous to water, 50Hertz implements numerous
preventive measures. In addition to contracted service providers, sufficient damage prevention
materials are available at all substations and administrative sites. In 2021, an extended standard
of materials to be kept on hand was installed. This consists of a mobile box and contains a natural
binding agent, collection trays and various collection and disposal equipment. Any deviations
from existing processes as well as contamination are recorded in an incident report at 50Hertz,
the causes are determined and evaluated, and improvement measures are defined.
In 50Hertz's activities at sea, the protection of the Baltic Sea is ensured through a variety of
measures. For example, as early as the planning stage for offshore platforms, care is taken to
ensure that no substances hazardous to water enter the sea and that equipment with readily
biodegradable hydraulic oils is used wherever possible.
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7.7 Energy consumption
(GRI 302-1, GRI 302-4)
50Hertz supports the goals of the European Union and the German government to reduce CO2
emissions in particular through grid expansion, which enables an increase in the share of CO2-
free energy sources in the electricity system, as well as through the optimization of the company-
wide CO2 balance. Since the purchase of green electricity to compensate for grid losses is by far
the largest and currently most effective lever for this, we are actively working to make this possible
in the future. In the administrative area, the focus is on optimizing the energy efficiency of the
buildings and facilities as well as the purchase of green electricity for administrative consumption.
Periodically in 2019, the second energy audit according to DIN EN 16247-1 took place to
systematically record the energy consumption of the systems and administration buildings. The
energy consumption from 2018 was used as a basis. The 50Hertz network district has been
awarded the internationally recognized gold standard of the German Sustainable Building Council
(DGNB) and the American LEED standard (Leadership in Energy and Environmental Design).
For new buildings, aspects of energetically sustainable construction are already considered in the
planning and implemented where possible.
The distribution of the total CO
2
emissions shows the clear dominance of electricity with a share
of almost 90 percent. A noticeable reduction in the CO
2
footprint can only be achieved in this
segment. At 55,497.65 MWh, the largest share of electricity consumption is attributable to the
50Hertz substations. All switchgear together, in which only electrical energy is required, account
for a total of almost 79 percent. The locations with administrative and controlling tasks, such as
the headquarters, the regional centers and the control center (CC), which also require thermal
energy and fuel, have a total share of around 21 percent.
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The energy audit revealed potential for optimization that was largely implemented or is in the
process of being implemented. This includes, for example, insulation work in the technical areas
of the company headquarters and in the Teufel Bruch substation, temperature adjustments on
the air conditioning units from 21 degrees to 26 degrees in the technical rooms at the Röhrsdorf
administration site and energy-related repairs at the Bad Lauchstädt administration site.
7.8 Emissions
(GRI 305-1, GRI 305-2, GRI sector information EU12)
In addition to the electricity consumption, the vehicles in the fleet, which are essential for
comprehensive coverage of the extensive network area and fast access to the system, have an
impact on the CO
2
balance. In 2021 these vehicles emitted 1,586 tons of CO
2
(previous year:
1,351 tons of CO
2
. As part of the "Act Now" sustainability initiative, 50Hertz has decided to aim
for an emission-free vehicle fleet by 2030. For this purpose, the existing fleet was analyzed and
a roadmap for vehicle replacement was developed and accompanying measures such as the
creation of the necessary charging infrastructure at the administrative locations were decided.
Today, sulfur hexafluoride (SF6) is used as an insulating and switching gas in gas-insulated high-
voltage switchgear. It has very good electrical properties, is non-toxic and chemically very stable.
But: per substance unit, SF6 has a global warming potential that is approx. 23,500 times higher
than that of CO
2
2
. That is why SF6 is used in the switchgear in a closed circuit, which means that
emissions into the environment are almost completely ruled out. The pressure tanks are
constantly technically monitored for possible leaks. But despite all these protective measures, a
natural leak cannot be avoided 100 percent due to the sealing technology and the necessary gas
handling. According to a voluntary commitment by the SF6 manufacturers and users in Germany,
the loss rate measured for the total stock of SF6 may only be 0.6 percent - at 50Hertz this rate
2
IPCC Fifth Assessment Report, 2014 (AR5)
Eurogrid GmbH Group Management Report 2021
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was with 0.14 percent significantly lower in the reporting year. 50Hertz handles this technical gas
extremely sensitively and responsibly during transport, storage and use and is striving for an
alternative solution. However, for switchgear at the 220 and 380 kV level, there is still no viable,
marketable alternative to SF6. That is why 50Hertz, together with other companies, is funding a
research project at ETH Zurich. The aim of this project is to systematically examine alternative
gases for their suitability as insulating and switching gases in switchgear. The research program
runs for several years. A 123 kV switchgear with an alternative gas mixture was put into operation
for the first time in the Charlottenburg substation in the year under review. This reduces the
greenhouse effect by 99 percent compared to SF6 systems with the same performance. In
addition, it was decided to place reprocessed SF6 on an equal footing with brand-new SF6 and
to use it in the future. In this way, 50Hertz makes an important contribution to reducing the amount
of SF6 in use, as this reduces production. The topic of a future substitution of sulfur hexafluoride
is being promoted with the group-wide sustainability program Act Now. In the 2021 reporting year,
the SF6 losses were compensated for by the service provider atmosair for the second time.
Different means of transport are used for business trips. Air travel was responsible for 48.4 tons
of CO
2
equivalents in the year under review. In addition, the employees used the long-distance
transport of Deutsche Bahn. According to statements by Deutsche Bahn, long-distance transport
is to be regarded as CO
2
neutral. In 2021, all CO
2
emissions from business air travel were offset
for the third time.
While the construction and operation of a wind farm in Nicaragua was supported in the previous
year, a photovoltaic system in Senegal will be supported with the compensation payments in
2020. The project is in line with the Sustainable Development Goals (SDG 1, 3, 7, 8, 9, 13 and
17) of the United Nations.
50Hertz is committed to the principle that CO2 emissions should primarily be avoided and
reduced. Compensation should only be applied when avoidance or reduction is impossible.
In the reporting year, the direct (Scope 1) and indirect GHG emissions (Scope 2) were balanced
for the fourth time. We have set ourselves the goal of establishing extensive Scope 3 reporting
by 2023.
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Greenhouse gas emissions t CO2 equivalent
Share
2021
2020
2019
Direct (Scope 1)
Scope 1 SF6 loss
0.60%
5,984
8,300
4.257
Emergency power systems *
0.00%
0
0
7
fleet
0.16%
1,586
1,351
1,521
natural gas
0.02%
151
145
147
total direct emissions
7,721
9,797
5,932
Indirect (Scope 2)
District heating *
0.03%
346
287
264
total power consumption Netzquartier *
0.17%
1,662
1,441
1,728
grid losses
96.84%
959,904
812,520
922,080
power consumption own facilities
2.18%
21,607
19,453
20,373
total indirect emissions
983,519
833,701
944,445
Total direct and indirect emissions ( Scope 1 & 2)
991,240
843,498
950,377
* The stated values are estimates as of December 31, 2021. The following calculation bases and emission factors were used to
determine the CO2 equivalents : SF6/IPCC 5th ARS, vehicle fleet/direct fuel consumption, energy (electricity, district heating,
natural gas )/Federal Environment Agency 2017 Scope 2 Guidance )
The value determined in the CO
2
balance corresponds to around 96 tons of CO
2
equivalents per
line kilometer including grid losses (basis: 10.325 line kilometers). And 9.052 tons of CO
2
equivalents per TWh (based on 109.5 TWh of electricity transmitted).
7.9 Electric and magnetic fields
Strict regulations apply to electric and magnetic fields in Germany, which are regulated by the
Federal Emission Control Ordinance. 50Hertz complies with these limit values. 50Hertz takes the
concerns of interested parties seriously, carries out measurements together with them on site
and, if necessary, derives measures.
7.10 Sound
As in the area of electric and magnetic fields, strict guideline values for noise emissions apply in
Germany, which are regulated in the “Bundesimmissionsgesetz” [Federal Immissions Act].
50Hertz also complies with these limit values. Measurements are carried out on the basis of
information from interested parties and, if necessary, measures are derived.
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7.11 Waste
(GRI 306-2)
When dealing with waste, avoidance is the top priority for 50Hertz. However, the annual amount
and composition of waste is heavily dependent on conversion and dismantling projects.
Therefore, an annual ranking is not useful. When dealing with waste that cannot be avoided, the
motto “reuse – recycle – recycle – eliminate” is followed. If systems are newly built, converted or
dismantled, the parts that are no longer required are disposed of in a resource-saving manner.
As a result of numerous construction projects to expand the grid, more waste was generated from
construction projects and compensation projects than in the previous year.
Waste Disposal
Waste Disposal (in t)
2021*
2020
2019
Total Waste
127,850
99,261
41,647
Hazardous waste
13,494
5,973
7.241
Nonhazardous waste
114,356
93,288
34,406
Recycling rate (in %)
90
95
86
* preliminary values
50Hertz was able to implement the statutory recycling requirement (recycling before disposal)
with a recycling rate of around 90 percent.
Eurogrid GmbH Group Management Report 2021
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8. Appendix
GRI Index
theme
GRI
page
basics
business model
102-1, 102-2, 102-6, 102-7, 102-9
41
Locations
102-3, 102-4
43
memberships
102-12, 102-13
44
Governance, risk, compliance
Values, principles, standards and
codes of conduct
102-16, 102-17, 102-19, 102-20, 102-26, 102-
32, 102-33, 206-1, 307-1
44
responsibility
102-18, 102-19, 102-20
46
legal framework
206-1, 419-1
46
Political influence
102-16, 415-1
47
anti-corruption
205-2, 205-3
47
risk management
102-11, 102-30
48
safety
Disaster and Emergency Planning
48
Materiality and Goals
102-15, 102-46, 102-47, 103-1, 103-2, 103-3,
201-2
49
social and employee matters
management approach
102-8, 103-2, 103-3, 402
53
employees
102-7, 405-1
54
Work-life balance
401-1, 401-2, 401-3, EU15
54
employee survey
56
qualification
404-1, 404-2
57
Remuneration Policy
102-38, 102-41
57
incentive systems
58
codetermination
102-41, 402
58
Equality of Opportunity
405-1, 405-2, 406-1
59
Health protection and occupational safety
management approach
403-1, LA6OHS
60
safety training
61
security inspections
403-2
61
accident statistics
403-2
62
Delivery companies, local business and human rights
Suppliers
204-1
63
Local added value
201-1, 203-1, 203-2, 204-1
63
human rights
205-1, 308-1, 308-2, 414-1
64
Stakeholder Involvement
management approach
66
public participation
102-29, 102-43, 102-44, 413-1, stakeholder
engagement
66
Dialogues with stakeholders
102-21, 102-40
community
413-1
69
innovation management
70
use of natural resources
management approach
102-11, 308-1, 307-1, 308-2, biodiversity
72
nature conservation and
biodiversity
304-1, 304-2, 304-3, EN12, EN13,
Biodiversity
73
compensation measures
304-2
76
Ecological aisle management
304-3
77
bird protection
EN12
77
water protection
306-5
77
power consumption
302-1, 302-4
78
emissions
305-1, 305-2, EU15
79
Electric and Magnetic Fields
81
Eurogrid GmbH Group Management Report 2021
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sound
82
waste
306-2
82
COVID-19 – Pandemic
Management
82
Corporate governance declaration
Increasing the female representation quota in management positions
The proportion of women on the Eurogrid Supervisory Board was 20 percent in 2021. At 50Hertz
Transmission, the proportion of women on the supervisory board was 33 percent and on the
extended management board, the same as in the previous year at 17 percent.
The management of 50Hertz Transmission decided on August 7, 2017, that the proportion of
women in the first and second management levels (division and department management) below
the management board should be 10 percent and in the third management level below
(department management) 16 percent by June 30, 2022, should reach. As of December 31, 2021,
these targets were exceeded by almost 22 percent at the first and second management levels
and by 17 percent at the third management level.
50Hertz promotes diversity and equal opportunities. The 50Hertz management therefore
voluntarily agreed on December 1, 2020, to increase the proportion of women in the entire
workforce and in management to 30 percent by 2030.
Basic principles of the remuneration system within the Group
The management of Eurogrid GmbH does not receive any remuneration for their work. At the
meeting on January 3, 2017, the management of 50Hertz Transmission decided to voluntarily
disclose the main features of the remuneration of the management of 50Hertz Transmission with
additional information.
In the 2021 financial year, the management of 50Hertz Transmission received € 3,135,164.98 in
fees. These consist of the following components:
• Fixed basic salaries €1,472,607.01
• Variable salary components – short-term € 461,620.00
• Variable salary components – long-term € 657.149,24
• Retirement provision (company pension provision and direct insurance) € 364,104.48
• Other benefits and allowances (incl. share purchase program) € 179,684.25.
Eurogrid GmbH Group Management Report 2021
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The structure and the amount of the remuneration are reviewed by a presidium of the Supervisory
Board of 50Hertz Transmission and determined by the Supervisory Board of 50Hertz
Transmission.
Berlin, February 11, 2022
The Board
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 1 of 76
Consolidated financial statements for
fiscal year 2021
Eurogrid GmbH
Berlin
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 2 of 76
Consolidated statement of profit or loss
EUR m Note 2021 2020
Revenue ´5.2.1 7,860.4 11,050.8
Cost-matching income ´5.1 (6,238.6 ) (9,686.1 )
Revenue from contracts with customers ´5.2.1 1,621.8 1,364.7
Other income ´5.2.2 95.1 90.1
Total turnover ´5.2 1,716.9 1,454.8
Cost of materials and purchased services ´5.3.1 (7,250.3 ) (10,421.0 )
Income-matching cost ´5.1 6,238.6 9,686.1
Cost of materials and purchased services, grid business ´5.3.1 (1,011.7 ) (734.9 )
Personnel expenses ´5.3.2 (151.4 ) (131.5 )
Amortization, depreciation and impairment
(260.3 ) (245.2 )
Other expenses
(20.6 ) (3.1 )
Result from equity investments accounted for using the equity method ´6.4 0.1 0.1
Earnings before interest and taxes
Financial result
(34.8 ) (62.6 )
Finance income ´5.4 2.1 4.1
Finance expenses ´5.4 (36.9 ) (66.7 )
Earnings before taxes
Income taxes 5.5 (72.8 ) (84.9 )
Group profit
Profit attributable to
The owners of the parent company
Non-controlling interests
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 3 of 76
Consolidated statement of comprehensive income
EUR m Note 2021 2020
Group profit
Other comprehensive income (OCI):
Items that will not be reclassified to the statement of profit or loss in the future:
Actuarial gains and losses ´5.6 2.8 (3.7 )
Deferred taxes on changes recognized directly in equity ´5.6 (0.8 ) 1.1
Changes in fair value of other financial assets designated at fair value through OCI ´5.6 - 14.9
Items that may be reclassified to the statement of profit or loss in the future:
Cash-flow hedge - effective portion of fair value changes ´5.6 355.6 -
Deferred taxes on changes recognized directly in equity ´5.6 (105.7 ) -
Other comprehensive income after taxes 5.6 251.9 12.3
Total comprehensive income 5.6 417.3 205.0
Total comprehensive income attributable to
The owners of the parent company
Non-controlling interests
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 4 of 76
Consolidated statement of financial position
EUR m
Note
31.12.2021
31.12.2020
NON-CURRENT ASSETS
Property, plant and equipment
´6.1
Intangible assets ´6.2 79.0 62.5
Trade and other receivables
Other financial assets
´6.3
Investments accounted for using the equity method
´6.4
Deferred tax assets ´6.5 - 1.5
CURRENT ASSETS
Inventories
Trade and other receivables
´6.6
Receivables from income taxes
Other financial assets
6.3
Cash and cash equivalents
´6.7
Prepayments
´6.6
Total assets
EUR m
Note
31.12.2021
31.12.2020
EQUITY
Issued capital
´6.8
Capital reserve
´6.8
Hedging Reserve
´6.8
Other reserves
´6.8
Retained earnings
´6.8
Equity attributable to the owners of the parent company
´6.8
Non-controlling interests ´6.8 386.4 326.9
NON-CURRENT LIABILITIES
Loans and borrowings
´6.9
Provisions for employee benefits
´6.10
Other provisions
´6.11
Deferred tax liabilities
´6.5
Other liabilities ´6.12 182.4 120.0
CURRENT LIABILITIES
Loans and borrowings
´6.9
Other provisions
´6.11
Trade payables and other liabilities
´6.13
Liabilities from income taxes
Anticipatory equity and liabilities
´6.14
REGULATORY ITEMS
´6.17
Total equity and liabilities
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 5 of 76
Consolidated statement of changes in equity
EUR m
Issued capital
Capital reserve
Hedging reserve
Other reserves
Retained earnings
Equity attributable to the
owners of the parent
company
Non
-
controlling interests
Total
As of 1 January 2020 0.0 464.6 - 1.3
Group profit - - - -
Other comprehensive income (OCI) - - - 12.3
Total comprehensive income - - - 12.3
Distribution - - - -
(120.0 )
(96.0 ) (24.0 ) (120.0 )
As of 31 December 2020 0.0 464.6 - 13.7
EUR m
Issued capital
Capital reserve
Hedging reserve
Other reserves
Retained earnings
Equity attributable to the
owners of the parent
company
Non
-
controlling interests
Total
As of 1 January 2021 0.0 464.6 - 13.7
Group profit - - - -
Other comprehensive income (OCI) - - 249.9 2.0
Total comprehensive income - - 249.9 2.0
Distribution - - - -
(120.0 )
(96.0 ) (24.0 ) (120.0 )
As of 31 December 2021 0.0 464.6 249.9 15.7
Other comprehensive income is explained in more detail in 5.6 Total comprehensive income.
Changes in equity are explained in more detail in 6.8 Equity.
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 6 of 76
Consolidated statement of cash flows
EUR m Note 2021 2020
Cash flow from operating activities
Group profit
Adjusted for:
Net finance expenses ´5.4 34.7 62.5
Non-cash items
Income tax expenses ´5.5 60.4 82.6
Depreciation of property, plant and equipment and amortisation of intangible assets
Gain on the disposal of intangible assets and property, plant and equipment ´6.1, 6.2 10.1 1.8
Impairment of current assets
Change in provisions ´6.11 1.5 (1.9 )
Change in deferred taxes ´5.5, 6.5 12.4 1.3
Share of profit of associates accounted for using the equity method, after tax ´6.4 (0.1 ) (0.1 )
Cash flow from operating activities without changes in working capital
Change in inventories
(0.3 ) 0.6
Changes in trade receivables and other receivables ´6.6 742.7 (677.8 )
Change in trade payables and other liabilities ´6.13 2,573.2 (504.0 )
Change in regulatory items ´5.4, 6.17 (51.9 ) (11.2 )
Change in working capital
Interest paid
(50.9 ) (60.5 )
Interest received
Income taxes paid
(41.3 ) (130.8 )
Cash flow from operating activities
Cash flow from investing activities
Cash paid for the procurement of property, plant and equipment and intangible assets ´6.1, 6.2 (833.1 ) (730.3 )
Net cash flow from disposals of property, plant and equipment ´6.1 1.3 0.2
Caid paid for loans to third parties
(0.5 ) -
Cash received from dividends from participations
Cash flow from investing activities
(831.4 ) (730.1 )
Cash flow from financing activities
Distribution ´6.8 (120.0 ) (120.0 )
Repayment of borrowings ´6.16 (706.7 ) (505.4 )
Proceeds from withdrawal of borrowings
Cash flow from financing activities
(328.7 ) 1,029.8
Change in cash and cash equivalents
Cash and cash equivalents as of 1 January
Cash and cash equivalents as of 31 December ´6.7 2,857.2 296.6
Change in cash and cash equivalents
Cash and cash equivalents contain EUR 2,110m restricted cash.
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 7 of 76
Notes to the consolidated financial
statements for fiscal year 2021
Consolidated financial statements of Eurogrid GmbH
Berlin
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 8 of 76
Table of contents
1. Basic information ............................................................................................... 11
2. Basis of preparation .......................................................................................... 12
2.1. Confirmation of compliance with IFRSs ........................................................... 12
2.2. Functional and presentation currency ............................................................. 13
2.3. Basis of measurement ....................................................................................... 14
2.4. Estimates and judgements ................................................................................ 14
2.5. Authorisation of the financial statements for issue ........................................ 16
3. Summary of significant policies ....................................................................... 16
3.1. Basis of consolidation ....................................................................................... 16
3.2. Foreign currency translation ............................................................................. 17
3.3. Financial instruments ........................................................................................ 18
3.4. Intangible assets ................................................................................................ 20
3.5. Property, plant and equipment.......................................................................... 21
3.6. Impairment of non-financial assets .................................................................. 22
3.7. Inventories .......................................................................................................... 22
3.8. Trade receivables ............................................................................................... 22
3.9. Cash and cash equivalents ............................................................................... 22
3.10. Trade payables ................................................................................................. 23
3.11. Income taxes .................................................................................................... 23
3.12. Pensions and other long-term employee benefits ......................................... 24
3.13. Provisions ........................................................................................................ 25
3.14. Regulatory items .............................................................................................. 25
3.15. Grants and subsidies ....................................................................................... 26
3.16. Revenue recognition ........................................................................................ 26
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 9 of 76
3.17. Leases............................................................................................................... 27
4. Segment reporting ............................................................................................. 28
5. Notes to the statement of profit or loss and other comprehensive income .. 32
5.1. Non-profit business ........................................................................................... 32
5.2. Revenue from the grid business and other income ........................................ 33
5.2.1. Revenue from the grid business................................................................ 33
5.2.2. Other income............................................................................................... 34
5.3. Operating expenses ........................................................................................... 34
5.3.1. Cost of materials and services grid business .......................................... 34
5.3.2. Personal expenses ..................................................................................... 35
5.4. Financial result ................................................................................................... 35
5.5. Income taxes ...................................................................................................... 36
5.6. Total comprehensive income ............................................................................ 37
6. Notes to the statement of financial position .................................................... 37
6.1. Property, plant and equipment.......................................................................... 37
6.2. Intangible assets ................................................................................................ 40
6.3. Other financial assets ........................................................................................ 41
6.4. Equity-accounted investees .............................................................................. 41
6.5. Deferred taxes .................................................................................................... 42
6.6. Current trade receivables and other receivables (including anticipatory
items) ......................................................................................................................... 44
6.7. Cash and cash equivalents ............................................................................... 45
6.8. Equity .................................................................................................................. 45
6.9. Financial liabilities ............................................................................................. 46
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 10 of 76
6.10. Provisions for employee benefits ................................................................... 47
General description of existing plans in the Group................................................... 47
Defined contribution plans ....................................................................................... 48
Defined benefit plans ............................................................................................... 49
6.11. Other provisions .............................................................................................. 54
6.12. Other non-current liabilities ............................................................................ 56
6.13. Trade payables and other liabilities ................................................................ 56
6.14. Anticipatory equity and liabilities ................................................................... 57
6.15. Financial instruments – fair values ................................................................. 57
6.16. Leasing ............................................................................................................. 59
6.17. Regulatory items .............................................................................................. 62
7. Other notes ......................................................................................................... 63
7.1. Financial risk management and factors ........................................................... 63
7.2. Capital management .......................................................................................... 68
7.3. Commitment and contingencies ....................................................................... 69
7.4. Related party disclosures.................................................................................. 70
7.5. List of shareholdings as of 31 December 2021 ................................................ 72
7.6. Subsequent events ............................................................................................ 72
7.7. Auditor’s fees in accordance with Sec. 314 (1) No. 9 HGB ............................. 72
7.8. Exemption options pursuant to Sec. 264 (3) and Sec. 264b HGB ................... 73
7.9. Supervisory Board ............................................................................................. 73
7.10. Management ..................................................................................................... 74
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 11 of 76
1. Basic information
Eurogrid GmbH, Berlin (“Eurogrid” or the “Company”), is a limited liability company founded in
accordance with the law of the Federal Republic of Germany.
Directive. As a parent company domiciled in Germany, Eurogrid GmbH is required to prepare
consolidated financial statements within the meaning of Sec. 315e HGB [“Handelsgesetzbuch”:
German Commercial Code]. Eurogrid has its registered office at
and is filed in the commercial register of the Berlin-Charlottenburg district court under
HRB 130427 B.
(Elia Group), Brussels/Belgium, holds 100% of the shares in Eurogrid
nternational NV/SA (Eurogrid International) and this company in turn holds 80% of the shares in
Eurogrid. The remaining 20% of the shares in Eurogrid are held by KfW indirectly via its 100%
subsidiary Selent Netzbetreiber GmbH (Selent), Frankfurt am Main. The ultimate parent is Elia
Group. Eurogrid is part of the consolidated financial statements of its parent company Elia Group.
The consolidated financial statements of Elia Group for the largest and smallest group of
companies are available on the website of Elia Group www.eliagroup.eu.
T
he company established a supervisory board by resolution of its shareholders dated
23 November 2017. The supervisory board contains five members, to be elected by the
shareholders of the company.
Eurogrid invests in electric grid infrastructure and holds 100% of the shares in 50Hertz
Transmission GmbH which in turn holds 100% of the shares in 50Hertz Offshore GmbH.
plants and offshore wind farms.
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 12 of 76
2. Basis of preparation
2.1. Confirmation of compliance with IFRSs
We complied with the legal obligation to prepare consolidated financial statements and a group
management report in accordance with Sec. 290 HGB by preparing consolidated financial
statements pursuant to International Financial Reporting Standards (IFRSs) as endorsed by the
EU as well as a group management report in accordance with Sec. 315 HGB (Sec. 315e (1) HGB)
which is supplemented by a consolidated non-financial statement (Sec. 315b HGB).
This version of the consolidated financial statements complies with the requirements of Sec. 315e
HGB. It represents the legal basis for group accounting according to international financial
reporting standards in Germany in conjunction with EC Directive No 1606/2002 of the European
Parliament and of the Council of 19 July 2002 on the adoption of international financial reporting
standards. The consolidated financial statements comply with all International Financial Reporting
Standards (IFRSs) and interpretations of the International Reporting Interpretations Committee
(IFRIC) endorsed by the EU. All accounting standards and interpretations whose adoption is
mandatory as of 31 December 2021 have been applied. However, as of 31 December 2020, these
committees had not yet made a pronouncement on the treatment of regulatory receivables and
liabilities.
New and amended standards and interpretations applied for the first time in fiscal year
2021:
Standard Topic Endorsement date
Application
date
Effects on the Group
Amendment to IFRS 16
Covid-19-related
Rent Concessions
beyond 30 June
2021
´1 August 2021 ´1 April 2021 none
Amendments to IFRS 4
Insurance Contracts
- deferral of IFRS 9
´15 December 2020
´1 January
2021
none
Amendments to IFRS 9, IAS
39, IFRS 7, IFRS 4 and IFRS
16
Interest Rate
Benchmark Reform -
Phase 2
´13 January 2021
´1 January
2021
none
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 13 of 76
Standards, interpretations and amendments to standards that were not yet subject to
mandatory adoption in fiscal year 202 and that have not been early adopted by the Group
Endorsed standards
Standard Topic Endorsement date
Application
date
Effects on the Group
Amendments to IFRS 3, IAS
16 and IAS 37, Annual
Improvements 2018-2020
´28 June 2021
´1 January
2022
none
IFRS 17 Insurance Contracts ´19 November 2021
´1 January
2023
none
Standards still not endorsed
Standard Topic Endorsement date
Application
date
Effects on the Group
Amendments to IAS 1
Classification of
Liabilities as Current
or Non-current
Pending
´1 January
2023
currently being
assessed
Amendments to IAS 1
Disclosure of
Accounting Policies
Pending
´1 January
2023
currently being
assessed
Amendments to IAS 8
Disclosure of
Accounting
Estimates
Pending
´1 January
2023
currently being
assessed
Amendments to IAS 12
Deferred Tax related
to Assets and
Liabilities arising
from a Single
Transaction
Pending
´1 January
2023
none
Amendments to IFRS 17
Insurance Contracts:
Initial Application of
IFRS 17 and IFRS 9
- Comparative
Information
Pending
´1 January
2023
none
2.2. Functional and presentation currency
The items in the financial statements of each group entity are measured in the currency of the
primary economic environment in which the respective entity operates (functional currency). The
consolidated financial statements are prepared in euro, which is the functional and presentation
currency of Eurogrid GmbH.
Unless otherwise stated, all figures in the notes are presented in millions of euro (EUR m).
Instead of the minus sign, figures are put into brackets. For the figures presented, rounding
differences remain irrelevant.
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 14 of 76
2.3. Basis of measurement
The consolidated financial statements were prepared based on historical cost.
Fair values are determined on the basis of quoted market prices in active markets. If necessary,
the values are derived from observed market prices. If there is no active market, fair values are
determined using generally accepted valuation techniques on the basis of other observable
transactions.
The Group’s planning and forecasts show that taking into account expected changes to operating
profit, the Group can continue its business operations on the basis of current financing.
Management expects the Group to have sufficient liquidity available to continue its business
operations in the near future. As a result, the Group prepared the consolidated financial
statements assuming the continued existence of the Company as a going concern. The corona-
virus pandemic did not jeopardize the ability of the Company to continue as a going concern.
The principal accounting policies adopted are explained below.
2.4. Estimates and judgements
Estimates and assumptions are made when preparing the consolidated financial statements. All
judgements are reassessed continuously based on experience and expectations as to future
events that appear to be appropriate under the circumstances. However, by their very nature,
such estimates can only represent an approximation of actual events.
The Group makes estimates and judgements especially when calculating/deriving fair values,
measuring fixed assets (see notes 6.1 to 6.7), calculating and measuring provisions (see notes
6.10 and 6.11) as well as determining deferred revenue in the energy business (see notes 6.6
and 6.13).
In addition to estimates on the amount of the future expected cash flows, the forecast utilization,
expected price increases and discount rate have a particularly large influence on the
measurement of provisions. The interest rates used for discounting are derived from interest rate
curves with appropriate maturities considering the financing situation of the Group and the market
interest rate. Provisions for litigation are subject to uncertainty regarding the outcome of the court
case. The Group recognizes provisions for pending and contingent litigation proceedings if the
outcome is likely to result in an obligation of an uncertain amount.
The useful lives of the fixed assets are chosen so as to obtain the best possible match with the
actual depreciation of each asset. Depreciation of property, plant and equipment at 50Hertz
Transmission is calculated based on the useful lives recognized by the Federal Network Agency
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 15 of 76
for regulatory purposes; the Group believes that these values represent the best possible
approximation of actual events in terms of economic utilization. An exception here from this are
rights of use from lease contracts which are depreciated over the non-cancellable lease period
considering periods covered by an extension option if the Group is reasonably certain to exercise
it or by a termination option if the Group is reasonably certain not to exercise it.
All external borrowings at group level which are actually drawn are included in the calculation of
the capitalization rate used for determining the amount of borrowing costs. The capitalization rate
is the weighted average of the borrowing costs applicable to the borrowings of the entity that are
outstanding during the period. The capitalization ceases in the event of test operation.
When preparing the consolidated financial statements, expenses and income and the
corresponding receivables and liabilities in the area of grid-based accounting were determined
based on preliminary data provided by third parties and partly based on forecasts. This primarily
relates to the settlement of the EEG [“Erneuerbare-Energien-Gesetz”: German Renewable
Energy Act] and KWKG [“Kraft-Wärme-Kopplungsgesetz”: German Combined Heat and Power
Act] processes, the accounting of the balancing group, grid utilization as well as the accounting
of system services. For a final statement on the actual expenses and income incurred, external
data of each partner are decisive, in particular the actual electricity volumes certified by auditors.
Due to the very nature of the activity, these data are not available in their entirety as of the time
of preparing the consolidated financial statements, resulting in uncertainties surrounding the
amount of expenses and income in these areas. The related items of the consolidated financial
statements were determined using the data available as well as relying on estimates and consider
the information available as of the time of preparing the consolidated financial statements.
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 16 of 76
2.5. Authorization of the financial statements for issue
The consolidated financial statements were established by management on 11 February 2022.
Approval of the prior year financial statements
The prior year financial statements were approved by the shareholders' meeting on 19 February
2021.
3. Summary of significant policies
The principal accounting policies adopted in preparing these consolidated financial statements
are presented in the following. The methods described below were consistently applied.
In the current financial year, hedge accounting was applied for the first time to the open derivative
financial instruments concluded as of the balance sheet date, which result from annual futures
traded on the EEX. The measurement effect at the balance sheet date from the fair value
measurement of these financial assets (€ 355.6 million) is recognized in equity (OCI), taking into
account deferred taxes (€ -105.7 million), until financial realization for these contracts occurs in
subsequent years. Recognition of the financial instruments entered into at the balance sheet date
at their fair value provides the users of the financial statements with more relevant information
from the management's perspective.
3.1. Basis of consolidation
The consolidated financial statements are prepared in accordance with the following consolidation
principles.
Generally speaking, all subsidiaries are included in the Group’s consolidated financial statements.
Subsidiaries are all entities over which Eurogrid has control, from which it receives variable
economic returns and can influence the amount of the returns (controlled entities). When
determining whether control exists, the existence of any potential voting rights is taken into
account. This is not the case within the Group.
Subsidiaries are generally included in Eurogrid’s consolidated financial statements (full
consolidation) as of the date on which control is transferred to Eurogrid. They are deconsolidated
on the date on which Eurogrid ceases to have control. Subsidiaries classified as held for sale are
accounted for in accordance with the provisions of IFRS 5.
The purchase method is used to account for acquired subsidiaries. The cost of the business
combination corresponds to the fair value of the assets given, the equity instruments issued, and
the liabilities incurred and assumed as of the date of exchange. Acquisition-related costs are
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 17 of 76
always treated as expenses, regardless of whether they can be directly allocated or not.
Identifiable assets, liabilities and contingent liabilities in the course of the business combination
are measured initially at their fair values at the acquisition date, irrespective of the extent of non-
controlling interests.
The difference between acquisition costs and the pro rata net assets acquired at fair value is
recognized as goodwill. If the cost of acquisition is less than the net assets of the subsidiary
acquired measured at fair value, the difference is checked again and then recognized directly in
profit or loss under other income.
All transactions, balances and unrealized gains resulting from transactions between entities
included in the consolidated financial statements of Eurogrid are eliminated. Unrealized losses
are also eliminated unless the transaction provides evidence of an impairment of the asset
transferred.
The financial statements of the German subsidiaries included in the consolidation are prepared
using uniform accounting and measurement methods in accordance with IFRS 10.B87. The
accounting policies of subsidiaries were adjusted as appropriate.
Investments in associates are undertakings in which the Group has significant influence but no
control. The Group’s investments in its associates are accounted for using the equity method.
Under the equity method, the investment in an associate is initially recognized at cost. The
carrying amount of the investment is adjusted to recognize changes in the Group’s share of net
assets of the associate since the acquisition date.
3.2. Foreign currency translation
Transactions in foreign currencies are translated to the functional currency at the rates prevailing
at the date of the transaction or at the measurement date for revaluations. Gains and losses from
the settlement of such transactions and from the translation at the closing rate of monetary assets
and liabilities in foreign currencies are recognized in the statement of profit or loss unless they
are recognized in equity as part of a hedging relationship.
Foreign currency gains and losses resulting from the translation of cash and cash equivalents as
well as financial liabilities are generally disclosed in the statement of profit or loss under financial
result.
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 18 of 76
3.3. Financial instruments
Initial recognition and measurement
The classification of financial assets at initial recognition depends on the financial asset’s
contractual cash flow characteristics and the Group’s business model for managing them. The
Group initially measures a financial asset at its fair value plus transaction costs.
Financial assets are managed to hold to maturity and to collect contractual cash flows. The
financial assets that give rise to cash flows are solely payments of principal and interest on the
principal amount outstanding.
Financial liabilities consist of interest-bearing loans and borrowings in the Group. They are
recognized initially at fair value plus related transaction costs.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in two categories:
• Financial assets at amortized cost (debt instruments)
• Financial assets designated at fair value through OCI (equity instruments)
Subsequent to initial recognition, financial liabilities are stated at amortized cost with any
difference between cost and redemption value being recognized in profit or loss over the period
of the loans on an effective interest basis.
Financial assets at amortized cost
Financial assets at amortized cost are subsequently measured using the effective interest
method. In accordance with IFRS 9, impairment is recognized based on expected losses
("expected credit loss model").
Financial assets designated at fair value through OCI (equity instruments)
Upon initial recognition, the Group irrevocably classifies its equity investments as equity
instruments designated at fair value through OCI when the Group does not have significant
influence and equity investments are not held for trading. The classification is determined on an
instrument-by-instrument basis.
Gains and losses on these financial assets are never recycled to profit or loss. Dividends are
recognized as other income in the statement of profit or loss when the right of payment has been
established, except when the Group benefits from such proceeds as a recovery of part of the cost
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 19 of 76
of the financial asset. In the latter case, the gains from this are recorded in OCI. Equity instruments
designated at fair value through OCI are not subject to impairment assessment.
The Group elected irrevocably to classify its non-listed equity investments for which the Group
does not have significant influence under this category.
The Group recognizes derivatives to hedge the price for the future procurement of the physical
requirement for grid losses that is expected in subsequent periods and is covered in each case
by short-term procurement transactions on the spot market. These derivatives are measured at
fair value in OCI with no effect on profit or loss as part of cash flow hedge accounting; they serve
as price hedging of the physical demand for electrical energy to cover grid losses (underlying
transaction). Effectiveness is measured on a monthly basis based on variances of the fair value
of the hedge instrument and the underlying transaction. The Group strives for full price hedging
of the expected volume of grid loss energy.
Impairment of financial assets
The Group regularly monitors whether the assets carried at amortized cost may be impaired on
an objective basis. In this regard, various different criteria are applied as part of the individual
assessment of customer or contractual relationships. Accounted for are, among others,
indications of financial difficulty on the part of the customer or borrower, indications of a possible
breach of contract or non-payment, changes in the general market conditions, the threat of
customers’ insolvency or other known facts that could have a negative impact on group profit.
The Group recognizes an allowance for expected credit losses (ECLs) for its debt instruments.
ECLs are recognized in two stages. For credit exposures for which there has not been a significant
increase in credit risk since initial recognition, ECLs are provided for credit losses that result from
default events that are possible within the next 12months (a 12-month ECL). For those credit
exposures for which there has been a significant increase in credit risk since initial recognition, a
valuation allowance is required for credit losses expected over the remaining life of the exposure,
irrespective of the timing of the default (a lifetime ECL).
IFRS 9 requires the Group to impair financial assets based on a forward-looking expected credit
loss (ECL) approach. The Group’s trade receivables are subject to this expected credit loss
approach. The Group applies the IFRS 9 simplified approach to measuring expected credit losses
which uses a lifetime expected valuation allowance for all trade receivables.
An impairment analysis is performed at each reporting date using a provision matrix to measure
expected credit losses. The provision rates are based on days past due for all customers. No
segmentation of customers is done as all customers show similar loss patterns. The intercompany
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 20 of 76
trade receivables are excluded as there is no credit risk. In addition, the trade receivables with a
pending commercial dispute are excluded to avoid double entry of provisions.
The provision rates are based on the payment profiles of sales over a period of 36 months before
31 December or 1 January of the reporting year, respectively, and the corresponding historical
credit losses experienced within this period. As the sales and payment profile of its customers
has been very stable over the years, the Group assesses the historical credit losses as a good
proxy for future (expected) credit losses.
Subsequently, a loss given default is calculated as the percentage of the amount of trade
receivables that is not covered by a bank guarantee. This percentage is multiplied by the
outstanding trade receivables.
Offsetting financial instruments
Financial assets and financial liabilities are offset, and the net amount reported in the consolidated
statement of financial position if, and only if, there is a legal right and intention to settle on a net
basis, or to realize the assets and settle the liabilities simultaneously.
Derecognition of financial instruments
Financial assets are derecognized if the rights to cash flows from financial assets have expired
or if the right to receive the cash flows has been transferred and the Group has substantially
transferred all risks and rewards incidental to ownership.
A financial liability is derecognized when the obligation under the liability is discharged or
cancelled or is expired.
3.4. Intangible assets
Intangible assets are measured at cost upon recognition and amortized over the respective useful
life using the straight-line method. Amortisation is based on the following percentages:
Standard software incl. licenses 20.00%
Operation specific software 20.00%
Additional impairment losses are recognized, if required.
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 21 of 76
3.5. Property, plant and equipment
Property, plant and equipment are measured at cost. Cost includes any costs directly attributable
to bringing the asset to the condition necessary for it to be capable of operating in the manner
intended less accumulated depreciation (with the exception of land and assets under
construction) and accumulated impairment losses. Costs for easement rights and dismantling are
included in the cost of the related item of property, plant and equipment.
All directly attributable costs as well as appropriate portions of overheads are included in the cost
of the asset. Borrowing costs that are directly attributable to the acquisition, construction or
production of a qualifying asset within the meaning of IAS 23 are capitalized as part of the cost of
that asset.
The following percentages are used when measuring depreciation. Depreciation on property,
plant and equipment is recorded using the straight-line method. Depreciation is generally based
on the useful lives prescribed by the regulatory framework, and which appropriately reflect the
economic usability of the asset.
Administrative buildings 1.67%
Industrial buildings 2.00%
Overhead lines 2.50%
Underground cables 2.50% - 5.00%
Switchgears 2.50% - 5.00%
Substations 2.86% - 5.00%
Secondary technology (station control technology, protection
technology 4.00% - 20.00%
Other network facilities, property facilities 2.86% - 4.00%
Other operating and office equipment 6.67% - 20.00%
The residual values and economic useful lives are reviewed at each reporting date and adjusted
if necessary. Should the carrying amount of an item of property, plant and equipment exceed its
recoverable amount, the carrying amount is adjusted for the impairment loss, accordingly. No use
is made of the revaluation method.
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 22 of 76
3.6. Impairment of non-financial assets
Assets which have an indefinite useful life are not depreciated. They are instead subject to an
annual impairment test. Assets which are subject to regular depreciation or amortisation are
reviewed for impairment if conditions or changes in circumstances indicate that the carrying
amount of the asset may not be recoverable. An impairment loss reflects the excess of the
carrying amount over the recoverable amount. The recoverable amount is the higher of fair value
of the asset less costs to sell and value in use. For the purpose of impairment testing, assets are
summarized at the level of the cash-generating unit. Non-financial assets subject to an impairment
loss in the past are reviewed at each reporting date to determine whether a reversal of the
impairment is required.
As in the previous year, no impairment of non-financial assets was recognized in fiscal year 2021.
3.7. Inventories
Inventories relate to raw materials, consumables as well as supplies.
Raw materials, consumables as well as supplies are stated at the lower of cost of conversion or
net realizable value. Generally, they are measured at average prices. Net realizable value is the
estimated selling price in the ordinary course of business.
3.8. Trade receivables
Trade receivables relate to the goods and services sold in the Group’s core business during the
ordinary course of its business.
See note 3.3 Financial instruments for a detailed description of recognition and measurement.
3.9. Cash and cash equivalents
Cash includes cash, checks and bank balances. Cash equivalents are short-term, highly liquid
investments that are readily – or within a period of no more than three months – convertible to
known amounts of cash and which are subject to an insignificant risk of changes in value.
Cash and cash equivalents are recognized at fair value upon recognition and at amortized cost
in subsequent periods.
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 23 of 76
3.10. Trade payables
Trade payables are payment obligations for the Group relating to the goods or services purchased
in the Group’s core business during the ordinary course of its business. They are classified under
current liabilities if the payment obligation falls due within one year or within the normal business
cycle. Otherwise they are recognized under non-current liabilities.
See note 3.3 Financial instruments for a detailed description of recognition and measurement.
3.11. Income taxes
The current tax expense/income is determined on the basis of the taxable income for the year.
Taxable income differs from the net profit for the year taken from the statement of profit or loss
as it does not include expenses and income that are never or become only taxable or tax
deductible in later years. Liabilities or receivables at Eurogrid from current taxes are calculated
on the basis of the applicable tax rates in Germany due to the fact that the Group operates here
and generates taxable income.
In accordance with IAS 12, deferred taxes are generally recognized on all temporary differences
between the tax carrying amounts and the carrying amounts pursuant to the IFRS financial
statements if this results in tax relief or liabilities in the future. Deferred tax assets are recognized
to the extent that it is probable that taxable profit will be available against which the deductible
temporary difference can be offset. Deferred tax liabilities for taxable temporary differences
associated with investments in subsidiaries are recognized unless the timing of the reversal of
the temporary differences can be controlled and it is probable that the temporary differences will
not reverse in the foreseeable future.
Expected future tax reductions from loss carryforwards, interest carryforwards and tax credits are
recognized if it is likely in the foreseeable future that sufficient taxable income will be generated
and offset against unused tax loss carryforwards or tax credits.
Deferred taxes are measured using the tax rates and tax law enacted or substantively enacted
by the reporting date and that are expected to apply to the period when the asset is realised, or
the liability is settled. Deferred tax assets and deferred tax liabilities are offset if these income tax
claims and liabilities relate to the same tax authority and the same taxable entity. Deferred income
tax assets and liabilities are recognized and carried such that – depending on the treatment of
the underlying item – they are recognized either under income taxes though profit or loss or
directly in equity in the appropriate equity item.
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 24 of 76
3.12. Pensions and other long-term employee benefits
The entities included in the Group have both defined benefit and defined contribution plans. A
defined benefit plan involves a fixed pension to be paid to an employee upon retirement, which is
usually based on one or several factors such as the employee’s age, years of service and salary.
The provision for defined benefit plans recognized in the statement of financial position
corresponds to the present value of the defined benefit obligation (DBO) as of the end of the
reporting period, the past service costs less the fair value of the existing plan assets. The DBO is
calculated annually by an independent actuary using the projected unit credit method. The present
value of the DBO is calculated by discounting the future expected cash outflows using the interest
rate on top-rated corporate bonds. The corporate bonds are denominated in the currency in which
the benefits are paid and have the same maturities as the pension obligations.
Provisions for defined benefit plans are measured on the basis of the 2018 G mortality tables of
Klaus Heubeck for the earliest possible statutory retirement age.
Actuarial gains and losses based on experience adjustments and changes in actuarial
assumptions are recorded in other comprehensive income. Past service cost is recognised
immediately in profit or loss.
The amounts payable to the pension funds for defined contribution plans are presented under
personnel expenses.
The provision for long-service bonuses as well as long-term working accounts was calculated in
accordance with actuarial principles taking into account an appropriate markdown allowing for
employee turnover and discount rate on top-rated corporate bonds.
The provision for working lifetime accounts is netted with the corresponding plan asset recognised
as a result of the contractual trust agreement.
Vacation provisions and flextime accounts are measured at the daily rates or the average hourly
rate including the social security contributions due.
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 25 of 76
3.13. Provisions
Provisions for compensation payments to easement providers, environmental protection
measures, dismantling obligations and litigation are recognised when the Group has a present
legal or constructive obligation from a past event, it is more likely than not that its settlement will
lead to an outflow of resources and the amount of the provision can be determined reliably.
Provisions are not recognised for future operating losses.
Provisions are measured at the present value of the expected cash outflows using a pre-tax
discount rate that reflects current market assessments of the time value of money. Increases in
provisions from unwinding the discount are posted to the statement of profit or loss as interest
expenses.
The Group records provisions for dismantling obligations for offshore platforms, sea cables and
transformer substations. Dismantling costs are stated at the present value of the expected costs
to settle the obligation using cash flows and are recognised as part of the cost of the relevant
asset. The cash flows are discounted at a current pre-tax rate. The unwinding of the discount is
expensed as incurred and recognised in the statement of profit or loss under interest expenses.
The estimated future costs of decommissioning are reviewed annually and adjusted as
appropriate. Changes in the estimated future costs or in the discount rate applied are added to or
deducted from the cost of the asset.
3.14. Regulatory items
The Group is subject to the regulatory framework, which has a direct and significant impact on
the grid revenue. Based on the revenue cap determined by the Federal Network Agency for each
calendar year relating to the expected or budgeted cost approaches for the regulatory activities
of the transmission system operator as well as the permitted returns, there are regularly
corrections that are subsequently made to the originally determined revenue cap. In addition to
determining and, if necessary, subsequently correcting the revenue cap, the Federal Network
Agency also determines other important compensation-related issues for charging in subsequent
periods; such subsequent charges are made by specification of or in consultation with the Federal
Network Agency.
The IFRS standards and interpretations subject to mandatory application in the EU are not
currently applicable to regulatory items; a basis for recognizing the issues described here in the
consolidated financial statements is therefore lacking. Referring to IAS 8.10 et seq., management
believes that the regulatory items must be included in the consolidated financial statements in
order to give a true and fair view of the Group’s net assets, financial position and results of
operations as this is the only way to provide a basis for the economic decision-making of the
users of the financial statements. Failing to present these regulatory items would result in the
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 26 of 76
regulatory framework that is of such importance for the Group as well as the true impact on the
economic situation of the Group not being adequately considered in the consolidated financial
statements.
Regulatory claims and obligations are recognised in these consolidated financial statements.
Claims arise if the Group can expect higher grid revenue in future periods as compensation for
expenses or losses already incurred; obligations arise if lower grid revenue is expected in future
periods as compensation for income or cash inflows already received. The same procedure
applies if other expenses and/or income are only compensated for in subsequent periods under
the regulatory framework. The Group is able to determine the effects of such recalculations very
accurately on future periods.
Regulatory claims and liabilities are netted and recorded in the statement of financial position on
the equity and liabilities side.
The effect of regulatory items on profit and loss is recognised directly in revenue. The
corresponding interest effect is included in the financial result.
3.15. Grants and subsidies
Payments from public institutions are handled in such a way that reflects the conditions at which
they are granted, depending on whether they are allocated to individual assets or certain
purposes. They are recognized as liabilities and released over the term of the corresponding
asset.
Investment-related grants and expense subsidies are generally amortized over the useful life of
the asset concerned.
3.16. Revenue recognition
The IFRS 15 revenue recognition standard establishes a five-step model to account for revenue
arising from contracts with customers and requires that revenue is recognised at an amount that
reflects the consideration to which an entity expects to be entitled in exchange for transferring
goods or services to a customer.
Revenue from contracts with customers is recognized time-related when performance obligations
are fulfilled. The Group typically satisfies its performance obligation upon completion of service
and payment is generally due within 10 to 90 days from completion.
Adjusting for the non-profit business, revenue largely results from the transfer of electrical energy
via grids, additional services relating to the grid-based business, the establishment and operation
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 27 of 76
of power lines and the related facilities for connecting offshore connection systems to an electricity
transmission or distribution grid, regulatory corrections as well as payments for grid connection.
Interest income is recognised using the effective interest method.
3.17. Leases
The Group as a lessee
The Group recognizes a right-of-use asset and a lease liability at the lease commencement date.
Assets and liabilities arising from a lease are measured on a present value basis at initial
recognition, discounted using the Group´s incremental borrowing rate.
The right-of-use assets are subsequently reduced by accumulated depreciation, impairment
losses and any adjustments resulting from the remeasurement of the lease liability.
The lease liability is subsequently increased by the interest cost on the lease liability and reduced
by lease payment made. It is remeasured when there is a change in future lease payments arising
from a change in an index or rate, a change in the estimate of the amount expected to be payable
under a residual value guarantee, or a change in the reassessment of whether a purchase or
extension option is reasonably certain to be exercised or a termination option reasonably certain
not to be exercised.
The Group has applied judgement to determine the lease term for lease contracts containing
renewal options.
All lease contracts are part of the “grid business” segment.
The Group as a lessor
Leases that substantially transfer all the risks and rewards incidental to ownership of an
underlying asset are recognised as finance leases.
All other leases that do not transfer all the risks and rewards incidental to ownership of an
underlying asset are recognised as operating leases. Lease payments received are recognised
as income on a straight-line basis over the lease term.
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 28 of 76
4. Segment reporting
Segment reporting is performed in line with the Group’s reporting and organizational structure
underlying its internal management reporting system. The financial and economic situation of the
segments is assessed on this basis and decisions are made on the allocation of resources to the
segments.
The chief operating decision-maker for the allocation of the Group´s resources is Eurogrid’s
supervisory board and shareholders´ assembly. The supervisory board and the shareholders
assembly have essentially delegated all operating decisions to the management of 50Hertz
Transmission/Eurogrid. The management assesses the result of the business segments on the
basis of net profit (group profit) of the reporting period. The supervisory board is responsible for
overseeing the preparation of the consolidated financial statements and the group management
report in accordance with IFRSs and German GAAP.
Segment reporting comprises the reportable segments “Non-profit business” and “Grid business”.
The segment “Non-profit business” primarily comprises – based on the EEG and its regulations –
the entire purchase and sale of EEG feed-in volumes to the electricity exchange remaining after
deliveries to other transmission system operators for settling the burdens nationwide on the
transmission system operators stemming from the EEG. The costs not covered by sales revenue
are compensated for by levying a standard nationwide EEG cost allocation on the electricity
distributors. Furthermore, this segment also reports services rendered for third parties if they do
not have any impact on profit for the Group, with the exception of any agreed fees for services.
In addition to the settlement of the EEG, this segment also includes the cost allocation procedures
in accordance with the KWKG, Sec. 19 (2) StromNEV as well as in accordance with the AbLaV.
The entire settlement process of this allocation procedure has no impact on the profit and loss
and equity of the Group.
The segment “Grid business” primarily comprises grid provision and grid management as well as
balancing group management.
After-tax profit (group profit) was selected as the segment result.
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 29 of 76
Segment reporting by business segment for the period from 1 January 2020 to 31 December
2020
EUR m
Non-profit
business
Grid
business
Total
Revenue 9,686.1 1,364.7 11,050.8
Other income - 90.1 90.1
Total turnover 9,686.1 1,454.8 11,140.9
Cost of materials and purchased services (9,686.1) (734.9) (10,421.0)
Personnel expenses - (131.5) (131.5)
Depreciation - (245.2) (245.2)
Other expenses - (3.1) (3.1)
Result from equity investments accounted for using the equity
method
- 0.1 0.1
Net finance expenses - (62.6) (62.6)
Finance income - 4.1 4.1
Finance expenses - (66.7) (66.7)
Profit before tax - 277.6 277.6
Income taxes - (84.9) (84.9)
Profit for the year from continuing operations
-
192.7
192.7
Group profit
-
192.7
192.7
Timing of revenue recognition
At a point in time 9,686.1 1,363.2 11,049.3
Over time - 1.5 1.5
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 30 of 76
Segment reporting by business segment for the period from 1 January 2021 to 31 December
2021
EUR m
Non-profit
business
Grid
business
Total
Revenue 6,238.6 1,621.8 7,860.4
Other income - 95.1 95.1
Total turnover 6,238.6 1,716.9 7,955.5
Cost of materials and purchased services (6,238.6) (1,011.7) (7,250.3)
Personnel expenses - (151.4) (151.4)
Amortisation - (260.3) (260.3)
Other expenses - (20.6) (20.6)
Result from equity investments accounted for using the equity method - 0.1 0.1
Net finance expenses - (34.8) (34.8)
Finance income - 2.1 2.1
Finance expenses - (36.9) (36.9)
Profit before tax - 238.2 238.2
Income taxes - (72.8) (72.8)
Profit for the year from continuing operations
-
165.4
165.4
Group profit
-
165.4
165.4
Timing of revenue recognition
At a point in time 6,238.6 1,620.4 7,859.0
Over time - 1.4 1.4
The settlement of the EEG gives rise to interest income and interest expenses for the Group,
which are refinanced via the EEG cost allocation. These items do not have any impact on profit
for the Group and are shown to fully present earnings generated in the operating non-profit
business within cost of materials and purchased services. In the reporting year, this related to
interest expenses of EUR 1.0 m (prior year: EUR 2.2 m). In addition to interest, cross-charges
include personnel (2021: EUR 3.9 m, prior year: EUR 4.1 m), IT (2021: EUR 1.8 m, prior year:
EUR 2.0 m) and other expenses (2021: EUR 0.4 m, prior year: EUR 0.8 m) which are allocated
to the non-profit business.
All revenue was generated with external customers. There is one customer in the grid use
segment with which revenue of more than 10 percent each of total revenue from grid use is
generated. Revenue from this customer amounted to EUR 199.8 m (2020: EUR 173.0 m).
Revenue generated with external customers from other countries is immaterial in terms of
amount.
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 31 of 76
Segment reporting by business segment as of 31 December 2020
EUR m Non-profit business Grid business Total
Non-current assets - 5,776.0 5,776.0
Current assets 1,542.6 449.0 1,991.6
Non-current liabilities - 3,645.6 3,645.6
Current liabilities 805.5 1,178.9 1,984.4
Equity and regulatory items - 2,137.6 2,137.6
Segment reporting by business segment as of 31 December 2021
EUR m Non-profit business Grid business Total
Non-current assets - 6,423.3 6,423.3
Current assets 624.9 3,500.1 4,125.0
Non-current liabilities - 4,334.6 4,334.6
Current liabilities 2,757.0 1,080.1 3,837.1
Equity and regulatory items - 2,376.6 2,376.6
Of the current assets and liabilities from the non-profit business, EUR 505.8m (prior year:
EUR 1,376.8m) and EUR 2,599.2m (prior year: EUR 570.6m) relates to the development of the
EEG business, respectively.
Additions to non-current assets relate primarily to property, plant and equipment (EUR 963.5m,
prior year: EUR 504.4m) and grid business.
The carrying amount of the equity-accounted investee EGI (EUR 3.0m, prior year: EUR 2.9m) is
allocated to the grid business.
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 32 of 76
5. Notes to the statement of profit or loss and other comprehensive
income
The statement of profit or loss has been prepared using the cost-summary method.
The following explanations are based on the statement of profit or loss from the segment
reporting.
Total revenue and expenses are presented below and broken down into their components.
Segment reporting contains a breakdown of revenue into the segments “Non-profit business” and
“Grid business”.
5.1. Non-profit business
In addition to revenue from the grid business, the Group largely generates income from the non-
profit settlement of the EEG and the KWKG, services rendered for third parties, Sec. 19 (2)
StromNEV as well as from the cost allocation for interruptible loads. Starting 2021, other non-
operating income and expenses are offset (prior year: EUR 645.5m)
This revenue is matched by expenses of the same amount.
EUR m 2021 2020
EEG income 5,715.9 8,586.0
KWKG income 257.2 209.5
Sec. 19 (2) StromNEV income 259.5 237.4
Other non-operating income - 645.5
AbLaV income 6.0 7.7
Cost-matching income 6,238.6 9,686.1
EEG expenses (5,715.9) (8,586.0)
KWKG expenses (257.2) (209.5)
Sec. 19 (2) StromNEV expenses (259.5) (237.4)
Other non-operating expenses - (645.5)
AbLaV expenses (6.0) (7.7)
Income-matching costs (6,238.6) (9,686.1)
EEG income contains a EUR 2,160.0m federal grant received during fiscal year 2021.
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 33 of 76
5.2. Revenue from the grid business and other income
5.2.1. Revenue from the grid business
Revenue from the grid business breaks down as follows:
EUR m 2021 2020
Revenue from contracts with customers 1,621.8 1,364.7
Revenue from incentive regulation 963.7 813.5
Revenue from offshore regulation 294.7 300.0
Electricity revenue 354.9 246.8
Construction cost subsidies 1.4 1.5
Other revenue 7.1 2.9
Revenue 1,621.8 1,364.7
Net income from regulatory items is disclosed under revenue from incentive regulation together
with agreed grid revenue and portrays the influences on the result for the period resulting from
mechanism of incentive regulation and offsetting an increase or decrease in agreed grid revenue.
An increase in regulatory claims compensates for expenses already incurred by the Group which
will flow back to the Group in subsequent periods via increased grid fees. An increase in
regulatory obligations compensates for income already generated by the Group which will lead to
a decrease in grid revenue in the future periods.
A key driver of revenue from incentive regulation is the inclusion of investments using budget cost
estimates in the revenue cap which at the same time are included in the grid fees upon approval
of the investment measures. Revenue from offshore regulation is recognised based on a so-called
'cost-plus' regulation with an annual settlement of actual operating and investing costs.
In fiscal year 2021, the period effects resulting from regulatory items excluding the interest portion
led to a EUR 51.9m increase in consolidated net income (prior year: increase of EUR 11.2m).
Considering the interest portion and a tax rate of 29.72%, the recognition of regulatory issues led
to a change in group result of EUR 41.0m (prior year: EUR -0.5m).
Opening and closing balances of trade receivables (under 6.6) result primarily from contracts with
customers.
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 34 of 76
5.2.2. Other income
EUR m 2021 2020
Services and technical expertise 9.1 5.8
Own work capitalized 53.9 51.2
Communication income 2.3 2.6
Sundry other income 29.8 30.5
Total 95.1 90.1
Sundry other income contains primarily income from cross-charging and IT.
5.3. Operating expenses
5.3.1. Cost of materials and services grid business
EUR m 2021 2020
Cost of materials 103.6 67.2
Cost of materials 103.6 67.2
Electricity expenses 764.8 514.7
Third-party services and other operating expenses 24.8 46.4
Cost of grid utilization offshore acc. to the old mechanism (17.4) 6.4
Cost of the new offshore regulation 135.9 100.2
Purchased services 908.1 667.7
Electricity expenses contain the following items:
EUR m 2021 2020
Expenses for system services 118.1 35.0
Expenses to cover grid losses 111.7 112.3
Expenses for measures pursuant to Sec. 13 EnWG 180.3 39.6
Expenses for Sec. 14/15 EEG compensation 15.5 37.8
Expenses for balance energy 47.4 25.1
Expenses for unwanted exchange 12.1 1.4
Expenses for reserve costs 271.6 253.5
Expenses for cross-border redispatch 5.7 6.9
Other electricity expenses 2.4 3.1
Electricity expenses 764.8 514.7
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 35 of 76
5.3.2. Personal expenses
Personnel expenses comprise the following components:
EUR m
2021 2020
Salaries and wages 117.0 100.1
Social security contributions 19.7 17.7
Pension and welfare expenses 7.2 6.0
Other personnel expenses 0.8 0.7
Change in personnel provisions 6.7 7.0
Total
151.4
131.5
2021 2020
Administrative employees 427 377
Technical employees 883 802
Total 1,310 1,179
Trainees 25 27
Employee figures are calculated on an average basis using the final figures for each quarter.
5.4. Financial result
EUR m 2021 2020
Finance income 2.1 4.1
Interest income 1.0 2.3
Other finance income 1.1 1.8
Finance expenses
(36.9)
(66.7)
Interest portion of euro bonds and other interest expenses (53.3) (62.0)
Capitalized borrowing costs 13.4 11.4
Interest portion of provisions (2.2) (3.2)
Interest portion of regulatory items 6.5 (11.9)
Interest cost on leasing (1.3) (1.0)
Foreign currency translation 0.0 0.0
Financial result (34.8) (62.6)
The total net gain relating to the measurement category “loans and receivables” amount to
EUR 0.1m (prior year: net loss: EUR 1.2m). Finance income relating to the measurement category
“measured at fair-value through OCI” amounts to EUR 0.9m (prior year: EUR 0.9m). Interest
expenses relating to other financial liabilities amount to EUR 55.8m (prior year: EUR 65.0m).
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 36 of 76
5.5. Income taxes
Eurogrid, as the parent of the tax group, concluded a profit and loss transfer agreement with
50Hertz Transmission effective 1 June 2010 and established a consolidated tax group for income
tax. The domination and profit and loss transfer agreement in place between 50Hertz
Transmission and 50Hertz Offshore since 1 January 2008 still exists with 50Hertz Transmission
as the interposed parent.
Income taxes break down as follows:
EUR m 2021 2020
Tax expenses for current year 60.2 81.5
Tax expenses for prior years 0.2 1.0
Current taxes
60.4
82.5
Deferred taxes 12.4 2.4
Deferred taxes 12.4 2.4
Taxes recognised in the statement of profit or loss
72.8
84.9
The deferred tax expense of EUR 12.4m (prior year: expense: EUR 2.4m) relates to temporary
differences that originated or were reversed in the current year. The following reconciliation
presents the differences between the expected tax expense and the disclosed tax expense/rate
in the Group:
EUR m
2021 2020
Profit/loss before income taxes 238.2 277.6
Group tax rate 29.72% 29.65%
Expected income taxes 70.8 82.3
Changes in tax rates 0.2 0.1
Non-deductible expenses 2.1 2.5
Adjustment for prior years (0.1) (0.3)
Other tax-free income (0.2) (0.1)
Other 0.0 0.4
Effective tax expenses
72.8
84.9
Deferred taxes were calculated using an overall tax rate of 29.72%. The tax rate comprises the
corporate income tax rate in Germany of 15.0% plus solidarity surcharge (5.5%) and the trade tax
rate of 13.90%, which reflects the weighted levy rate of all the municipalities within Eurogrid’s
consolidated tax group for 2020.
The effective tax rate amounts to 30.56% (prior year: 30.58%). The difference between the actual
tax expenses and the imputed tax expenses is primarily due to trade tax addbacks.
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 37 of 76
5.6. Total comprehensive income
Total comprehensive income comprises all components of the statement of profit or loss as well
as other comprehensive income. Total comprehensive income is the change in equity in a period
resulting from business transactions and other events with the exception of changes resulting
from business transactions with owners and those presented in the statement of changes in
equity.
Other comprehensive income within the Group primarily comprises remeasurements of defined
benefit pension plans and related deferred taxes, changes in the fair value of other investments,
changes in the fair value and related deferred taxes relating to cashflow hedge.
EUR m 2021 2020
Recognised actuarial gains/losses 2.8 (3.7)
Deferred taxes on changes in provisions for employee benefits
recognised directly in equity
(0.8) 1.1
Changes in the fair value of other investments - 14.9
Cashflow hedge - Effective portion of changes in fair value 355.6 -
Cashflow hedge - Deferred taxes on effective portion of
changes in fair value
(105.7) -
Total other comprehensive income after taxes 251.9 12.3
6. Notes to the statement of financial position
6.1. Property, plant and equipment
Under property, plant and equipment, the Group primarily recognizes high-voltage overhead and
underground connections as well as substations including transformers.
We refer to 6.16 for more details on leasing and similar rights.
Prepayments on property, plant and equipment and assets under construction primarily comprise
services already rendered for high-voltage grid systems and substations under construction and
prepayments thereon.
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 38 of 76
The development of property, plant and equipment and its key components breaks down as
follows:
EUR m
Land and
buildings
Plant and
machinery
Furniture and
fixtures, vehicles
Leasing and
similar rights
Prepayments on
property, plant
and equipment
and assets under
construction
Total
COST
As of 1 January 2020 236.4 4,892.6 179.6 55.8 815.0 6,179.4
Additions 3.0 97.4 17.8 7.0 597.8 723.0
Disposals (1.1) (3.4) (2.4) - - (6.9)
Reclassifications 0.6 71.4 6.7 - (78.5) 0.2
As of 31 December 2020 238.9 5,058.0 201.7 62.8 1,334.3 6,895.7
As of 1 January 2021 238.9 5,058.0 201.7 62.8 1,334.3 6,895.7
Additions 9.9 113.9 24.1 21.5 680.8 850.2
Disposals (0.5) (15.2) (27.4) - - (43.1)
Reclassifications 26.4 252.5 35.0 - (314.6) (0.7)
As of 31 December 2021 274.7 5,409.2 233.4 84.3 1,700.5 7,702.1
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 39 of 76
EUR m
Land and
buildings
Plant and
machinery
Furniture and
fixtures, vehicles
Leasing and
similar rights
Prepayments on
property, plant
and equipment
and assets under
construction
Total
DEPRECIATION AND IMPAIRMENT
As of 1 January 2020 (24.3) (886.6) (85.0) (6.9) - (1,002.8)
Depreciation (3.7) (198.4) (23.9) (5.8) - (231.8)
Disposals 0.4 1.6 2.4 - - 4.4
As of 31 December 2020 (27.6) (1,083.4) (106.5) (12.7) - (1,230.2)
As of 1 January 2021 (27.6) (1,083.4) (106.5) (12.7) - (1,230.2)
Depreciation (4.5) (206.7) (28.2) (6.7) - (246.1)
Disposals 0.0 7.2 24.7 - - 32.0
As of 31 December 2021 (32.1) (1,282.9) (110.0) (19.4) - (1,444.3)
Carrying amount
As of 1 January 2020 212.1 4,005.9 94.7 48.9 815.0 5,176.6
As of 31 December 2020 211.3 3,974.6 95.2 50.1 1,334.3 5,665.6
As of 1 January 2021 211.3 3,974.6 95.2 50.1 1,334.3 5,665.6
As of 31 December 2021 242.6 4,126.3 123.4 64.9 1,700.5 6,257.8
Borrowing costs totaling EUR 13.5m (prior year: EUR 11.4m) were recognised in the fiscal year
in accordance with IAS 23. The weighted average interest rate amounted to 0.9769% (prior year:
1.126%).
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 40 of 76
6.2. Intangible assets
Intangible assets break down as follows:
EUR m
Software Licenses Total
COST
As of 1 January 2020 89.5 33.4 122.9
Additions 14.9 - 14.9
Disposals - - -
Reclassifications (0.2) - (0.2)
As of 31 December 2020 104.1 33.4 137.6
As of 1 January 2021 104.1 33.4 137.6
Additions 30.2 - 30.2
Disposals (1.8) - (1.8)
Reclassifications 0.6 - 0.6
As of 31 December 2021 133.1 33.4 166.6
EUR m
Software Licenses Total
AMORTISATION AND IMPAIRMENT
As of 1 January 2020 (47.7) (14.0) (61.7)
Amortisation (11.9) (1.4) (13.3)
Disposals - - -
As of 31 December 2020 (59.6) (15.4) (75.0)
As of 1 January 2021 (59.6) (15.4) (75.0)
Amortisation (12.7) (1.4) (14.1)
Disposals 1.6 - 1.6
As of 31 December 2021 (70.7) (16.8) (87.5)
CARRYING AMOUNT
As of 1 January 2020 41.7 19.5 61.2
As of 31 December 2020 44.6 18.0 62.5
As of 1 January 2021 44.6 18.0 62.5
As of 31 December 2021 62.4 16.6 79.0
As of 31 December 2021, there were no indications of existing or potential impairment. No
internally generated intangible assets were recognised.
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 41 of 76
6.3. Other financial assets
EUR m
2021 2020
Other investments 43.5 43.5
Derivatives 355.7 -
Total 399.2 43.5
The Group holds 5.4% of the shares in European Energy Exchange (EEX), Leipzig, Germany, of
a total value of EUR 42.7m as of the reporting date. These shares are disclosed under other
investments as well as a 4.0% shareholding in JAO Joint Allocation Office S.A., Luxembourg,
Luxembourg, a 7.9% shareholding in CORESO SA, Brussels, Belgium, a 6.7% shareholding in
TSCNET Services GmbH, Munich, Germany, and a 10.4% shareholding in the foundation Stiftung
Kurt-Sanderling-Akademie des Konzerthausorchesters Berlin, Berlin, Germany.
Other investments are measured at fair value. At each reporting date, a re-measurement is
performed to re-evaluate these investments. Any deviation from the previous period is recorded
under other comprehensive income. The difference in the fair value in the prior year 2020 relates
to the valuation of the EEX shares.
The Group introduced hedge accounting for the first time at the end of the year and now
recognised derivatives from price hedge of grid losses. These derivatives are accounted at fair
value in other comprehensive income.
6.4. Equity-accounted investees
50Hertz Transmission holds slightly less than 50%, or approximately EUR 2.5m, of the Elia Grid
International NV/SA, Brussels, Belgium, share capital.
The following table summarises the financial information of the investment, based on its IFRS
financial statements, and reconciliation with the carrying amount of the Eurogrid Group’s interest
in the consolidated financial statements of Elia Grid International NV/SA.
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 42 of 76
Elia Grid International NV/SA
EUR m 31.12.2021 31.12.2020
Shareholding in %
49.99
49.99
Non-current assets 1.6 0.9
Current assets 23.4 44.4
Non-current liabilities 0.8 0.1
Current liabilities 18.1 39.3
Equity 6.0 5.9
Investment carrying amount 3.0 2.9
EUR m 2021 2020
Revenue and other income 15.4 22.7
Profit before tax 0.8 0.5
Income taxes (0.7) (0.4)
Net profit for the year 0.1 0.1
Total comprehensive income 0.1 0.1
Dividends received from associates - -
6.5. Deferred taxes
Deferred tax assets and liabilities are presented in the following tables:
2021 2020
EUR m
Deferred tax
assets
Deferred tax
liabilities
Deferred tax
assets
Deferred tax
liabilities
Intangible assets - (11.0) 0.0 -
Property, plant and equipment 23.8 (185.9) 2.9 (161.0)
Other financial assets - (105.7) - -
Other receivables and assets 1.3 0.0 1.1 (0.3)
Interest-bearing loans and other
financial liabilities
27.8 (3.0) 24.2 (2.9)
Employee benefits 10.3 - 9.6 -
Provisions 25.4 - 26.8 -
Anticipatory liabilities - (1.5) - (2.0)
Regulatory items 22.3 - 22.7 -
Off-balance corrections 13.0 - 0.8 -
Other items 0.6 - 14.3 -
Deferred tax assets/liabilities before
netting
124.5 (307.2) 102.4 (166.2)
Offsetting (124.5) 124.5 (100.9) 100.9
Deferred tax assets/liabilities after
netting
- (182.7) 1.5 (65.3)
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 43 of 76
In 2021, deferred tax assets of EUR 124.5m (prior year: EUR 100.9m) are netted with deferred
tax liabilities. Deferred tax assets on off-balance corrections of EUR 13.0m were recognised in
2021 (prior year: EUR 14.3m). Temporary differences in accordance with IAS 12.81(f), for which
no deferred tax liabilities were recognised, amount to EUR 0.0m (prior year: EUR 0.0m). All
deferred taxes are non-current.
The Group does not have any unused corporate income tax or trade tax losses.
The following table shows the development of net deferred taxes as well as their recognition:
EUR m
As of
1 January
Recognised
in the
statement of
profit or loss
Recognised
in OCI
As of
31 December
2020
Intangible assets 0.0 0.0 - 0.0
Property, plant and equipment (159.0) 1.4 - (157.6)
Other receivables and assets 1.2 (0.2) - 1.0
Loans and borrowings 12.3 (1.4) - 10.9
Employee benefits 7.4 1.2 1.1 9.7
Provisions 26.5 0.3 - 26.8
Anticipatory liabilities 7.5 0.2 - 7.7
Regulatory items 25.3 (2.7) - 22.6
Off-balance corrections 15.8 (1.4) - 14.4
Other items 0.4 0.2 - 0.6
Total (62.6) (2.4) 1.1 (63.9)
2021
Intangible assets 0.0 (11.0) - (11.0)
Property, plant and equipment (157.6) (4.6) - (162.1)
Other financial assets - - (105.7) (105.7)
Other receivables and assets 1.0 0.3 - 1.3
Loans and borrowings 10.9 13.8 - 24.8
Employee benefits 9.7 1.4 (0.8) 10.3
Provisions 26.8 (1.4) - 25.4
Anticipatory liabilities 7.7 9.3 - (1.5)
Regulatory items 22.6 (0.3) - 22.3
Off-balance corrections 14.4 (1.4) - 13.0
Other items 0.6 0.0 - (0.6)
Total (63.9) (12.4) (106.5) (182.7)
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 44 of 76
The column "Recognized in the income statement" of the current year includes reclassifications
within the financial positions with no impact on the profit of the year.
Of the deferred tax assets and liabilities recognised, a total of EUR 106.5m (prior year: EUR 1.1m)
was recorded in total comprehensive income within OCI. EUR 105.7m relate to the fair value
changes of the derivatives booked within OCI. The remaining deferred taxes (EUR 0.8m) relate
to the actuarial gains and losses for defined pension obligations and similar obligations.
6.6. Current trade receivables and other receivables
(including anticipatory items)
EUR m 2021 2020
Trade receivables 740.8 662.1
Prepayments 1.0 1.3
VAT and other taxes 36.6 23.7
Other 153.4 993.7
Anticipatory items 11.8 8.3
Total
943.6
1,689.1
Trade receivables are due within 12 months.
Other receivables primarily comprise claims in connection with the settlement of the cost
allocations as well as margins at EEX, Nordpool and EXAA electricity exchanges. The increase
results primarily from the EEG-business.
The maturities of trade receivables and prepayments break down as follows:
EUR m 2021 2020
Not past due 723.2 625.9
0 to 30 days past due 4.9 3.3
31 to 60 days past due 2.2 0.7
61 days up to one year past due 11.9 0.5
More than one year past due 1.3 34.0
Total (excluding valuation allowances) 743.5 664.4
Doubtful debts 197.4 197.6
Valuation allowances (197.4) (197.6)
Provision for expected credit losses (1.7) (1.0)
Total 741.8 663.4
Trade receivables and prepayments of EUR 741.8m (prior year: EUR 663.4m) were fully
recoverable as of 31 December 2021. Trade receivables past due by less than two months are
not regarded as impaired by the Company. As of 31 December 2021, trade receivables of
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 45 of 76
EUR 20.3m (prior year: EUR 38.5m) in total were past due but not impaired. The amount of
receivables of 61 days up to one year past due has remained stable. For non-impaired trade
receivables, there were no indications of an urgent need for impairment. The maximum credit
exposure on the reporting date corresponds to the recorded net value of the receivables.
The Group's exposure to credit and currency risks as well as expected credit losses related to
trade, and other receivables are shown in note 7.1. “Credit risk” at the end of the notes.
The Group received security deposits of EUR 4.3m (prior year: EUR 3.9m).
All impairments were accounted for by means of specific bad debt allowances.
6.7. Cash and cash equivalents
Cash and cash equivalents relate to bank balances, largely in the form of overnight or weekly
deposits.
EUR m 2021 2020
Call deposits 2,457.3 193.0
Balance at bank 399.9 103.6
Total
2,857.2
296.6
6.8. Equity
The share capital of Eurogrid is fully paid in, split in 25,000 shares of EUR 1 and therefore
amounts to EUR 25,000. 80% of the shares are held by Eurogrid International and 20% by Selent.
Changes in equity as well as comprehensive income are presented separately in the statement
of changes in equity and the statement of comprehensive income.
Other reserves comprise actuarial gains and losses and related deferred taxes as well as changes
in the fair value of other investments.
As a result of the newly established hedge accounting in the financial year 2021 for the Group's
grid loss procurement, the value of equity increases significantly as of the balance sheet date.
Taking deferred taxes into account, this effect includes the recognition in equity of the derivative
from the price hedging carried out to date for fiscal years 2022 and 2023.
There was no inefficiency from hedging as of 31 December 2021.
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 46 of 76
In 2021, there was an amount remaining from the net profit of the Group for 2020 (EUR 192.7m)
of EUR 72.7m in the retained earnings following a distribution to the shareholders in fiscal year
2021 of EUR 120.0m (prior year: EUR 120.0m).
For fiscal year 2021, there was a consolidated net income of EUR 165.4m.
Deferred taxes recorded directly in equity relate to the effect from the measurement of the pension
provisions recognised in comprehensive income as well as the changes in the fair value resulting
from cashflow hedges.
EUR m
2021 2020
Actuarial gains/losses recognised in other comprehensive income
(10.5) (13.3)
Deferred taxes
3.1 3.9
Changes in fair value of other financial assets designated at fair value through
OCI
23.0 23.0
Cashflow hedge: Effective portion of changes in fair value
355.6 -
Cashflow hedge: Deferred taxes on effective portion of changes in fair values
(105.7) -
Accumulated amounts recognised in other comprehensive income
265.5
13.6
We refer to the Group’s statement of changes in equity and the statement of comprehensive
income.
6.9. Financial liabilities
The composition of financial liabilities is presented in the following table:
EUR m 2021 2020
Bonds
3,630.0 3,130.1
Lease liabilities
58.6 47.1
Liabilities to banks
150.0 150.0
Total non-current loans and borrowings
3,838.6 3,327.2
Liabilities to banks
- 700.4
Lease liabilities
7.1 3.8
Deferred interest
26.4 21.7
Total current loans and borrowings
33.5
725.9
Total
3,872.1
4,053.1
In fiscal year 2021, EUR 50.9m was paid for liabilities to banks and bonds.
We refer to 6.16. for more details on lease liabilities.
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 47 of 76
Information concerning the terms and conditions of the outstanding interest-bearing loans and
borrowings is given below:
EUR m Maturity
Nominal
value
Carrying
amount
Coupon
Bond as part of Debt Issuance Programme 2015 2025 500.0 498.6 1.875% p.a. (fixed)
Bond as part of Debt Issuance Programme 2015 2023 750.0 749.4 1.625% p.a. (fixed)
Bond as part of Debt Issuance Programme 2015 2030 140.0 139.3 2.625% p.a. (fixed)
Bond as part of Debt Issuance Programme 2016 2028 750.0 747.7 1.500% p.a. (fixed)
Bond as part of Debt Issuance Programme 2020 2032 750.0 747.5 1.113% p.a. (fixed)
Bond as part of Debt Issuance Programme 2020 2040 200.0 199.4 0,875% p.a. (fixed)
Bond as part of Debt Issuance Programme 2021 2033 500.0 498.1 0,741% p.a. (fixed)
Registered bond 2014 2044 50.0 50.0 3,000% p.a. (fixed)
Total
3,640.0
3,630.0
The bond 2020 as part of the Debt Issuance Programme amounting to EUR 750.0m was issued
for a special purpose (green financing).
Information concerning the contractual maturities of the Group's interest-bearing loans and
borrowings (current and non-current) is given in detail in note 7.1. “Financial risk management
and factors”.
All bonds are placed on the Luxembourg Stock Exchange and measured at amortised cost using
the effective interest method. The fair value of bonds presented under financial liabilities is
disclosed in note 6.15.
The non-current liabilities to banks relate to a syndicated loan agreement.
Information concerning the maturity profile of the Group's financial liabilities based on contractual
undiscounted payments is given in note 7.1. “Liquidity Risk”.
6.10. Provisions for employee benefits
General description of existing plans in the Group
In addition to the benefits provided by state pension insurance institutions and private pension
provision, there are also company pension benefits in place for employees in the Group. Company
pensions are based on collective bargaining and works agreements as well as on individual
contract regulations. In place are defined benefit and contribution obligations, which grant old
age, disability and surviving dependents’ pensions.
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 48 of 76
Defined contribution plans
In the case of externally financed defined contribution plans, the Company’s obligation consists
solely of paying the contributions. For those defined contribution plans recognised in the form of
direct guarantees there are pledged congruent employer’s liability insurance policies in place.
The defined contribution plans which are financed via a congruent reinsured benefit fund and
congruent reinsured direct guarantees grant old age, disability and surviving dependents’
pensions.
The following defined contribution plans exist in the Group:
Pension obligations for executives as a result of the agreement with the spokesmen of
officers from 2003
This relates to individual contractual pension obligations based on an agreement with the
spokesmen of officers in the version from 10 November 2015 valid as of 1 January 2015.
Pension obligations for executives as a result of the agreement with the spokesmen of
officers from 19 August 2008
This relates to individual contractual pension obligations based on an agreement with the
spokesmen of officers on a company pension plan with the Vattenfall Europe Group on 19 August
2008 in the version from 10 November 2015 valid as of 1 January 2015.
Collective bargaining agreement on the company pension scheme
This relates to pension obligations based on the collective bargaining agreement on 50Hertz
Transmission’s company pension scheme on 28 November 2007. These only apply to employees
that had joined the Company by 31 December 2006.
Direct insurance
This relates to direct insurance policies for all former employees that worked at Vereinigte
Energiewerke AG (VEAG) from 1993 to 31 December 2004, with the exception of managers.
Individual commitments
There are individual commitments in place which are financed exclusively by external pension
funds (welfare fund and pension fund).
In fiscal year 2021, expenses related to defined contribution plans amounted to EUR 2.8m (prior
year: EUR 2.7m).
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 49 of 76
Defined benefit plans
Defined benefit plans give rise to direct pension claims of the employees against the Company;
provisions are recognised in the statement of financial position for this purpose. If plan assets are
created, which solely serve to fulfil pension obligations, the amount is offset against the present
value of the obligation.
For one individual contractual obligation, a plan asset was recognised in the form of a congruent,
pledged employer’s liability insurance policy.
The following defined benefit plans exist within the Group:
Group works agreement on the company pension scheme
In accordance with the group works agreement on the company pension scheme, employees are
granted a company pension plan on the basis of a defined contribution plan (effective 1 January
2007). This agreement applies to all employees within the meaning of Sec. 5 (1) BetrVG
[“Betriebsverfassungsgesetz”: German Works Constitution Act] and joined the Company on or
after 1 January 2007. Participation in the scheme is voluntary. The scheme grants pension
benefits upon reaching the statutory retirement age, upon taking early retirement from the
statutory pension insurance, in the event of occupational disability as well as in the event of death.
Current pension benefits are increased by 1% p.a.
The scheme is based on a defined building block approach and comprises:
• Building block A: Employee contribution
• Building block B: Employer’s contribution
• Building block C: Additional employee contribution
Individual contractual and other contribution plans
Individual contractual contribution plans are in place for management board members and
executives. These include old age, disability and surviving dependents’ pensions. The
contribution plans are based on the 1996 pension scheme for head management
[“Ruhegeldordnung leitender Führungskreis 1996”] from 10 May 1996 as well as on pension
agreements with individual employees. They all relate to pension obligations that depend on years
of service and remuneration. Plan assets were recognised for one of these commitments in the
form of a pledged pension insurance policy. These plan assets solely serve to fulfil pension
obligations; the present value of the corresponding obligation was therefore offset against the
plan assets. Pension obligations also still exist for individual employees that were acquired as a
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 50 of 76
result of their employment at Vattenfall Europe (e.g., 1991 pension scheme, additional regulation
to the old-age and life provident scheme for pension fund members).
TVV Energie
This relates to direct guarantees resulting from the collective bargaining agreement from
16 October 1992 (collectively bargained agreement on the termination of the collectively
bargained agreement on the company’s additional agreement concerning the AVEU’s
[“Arbeitgeberverband energie- und versorgungswirtschaftlicher Unternehmen”] tariff category
“energy” (TVV Energie) dated 20 July 1990/9 October 1990/8 November 1990. This pension plan
was closed for new hires from 1 January 1993. These contribution plans apply to employees that
worked at Vereinigte Energiewerke AG until 30 November 2001 and whose vested benefits are
allocable to Vattenfall Europe Transmission GmbH upon its formation (now 50Hertz Transmission
GmbH). This relates to pension obligations that depend on years of service and remuneration and
that grant old age and disability pensions, but none for surviving dependents. The indexation of
current post-employment benefits due for the first time after 1 January 1993 is not possible.
The Group also has following obligations that are included under other personnel obligations:
• Obligations for long-service benefits
• Obligations from German phased retirement schemes
• Obligations for working lifetime accounts.
Not all of these benefits are funded and, in accordance with IAS 19, these post-employment
benefits are classified as defined-benefit plans.
Existing plan assets serve only to fulfil pension commitments and are not available to creditors
even in the event of insolvency. The plan assets for working lifetime accounts are based on a
contractual trust agreement which also provides insolvency protection. For this reason, the
present value of the obligation is offset against the value of the plan assets.
The total net liability for employee-benefit obligations contains:
EUR m
2021 2020
Defined benefit plans 33.9 32.9
Post-employment benefits other than pensions, thereof: 7.9 7.3
Obligations for long-service benefits 0.8 0.8
Obligations from working lifetime accounts 7.1 6.5
Total provisions for employee benefits 41.8 40.2
Of the total obligations, an amount of EUR 1.7m is current (prior year: EUR 1.9m).
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 51 of 76
In the following tables, details are given of the outstanding provision for employee benefits, with
the split between pension cost (“Pensions”) and non-pension costs (“Other”), which encompasses
long-service benefits and working lifetime accounts.
Pensions Other
EUR m 2021 2020 2021 2020
Present value of defined benefit obligation (34.0) (33.0) (39.7) (32.9)
Fair value of plan assets 0.1 0.1 31.8 25.5
Net obligation (33.9) (32.9) (7.9) (7.3)
Movement in the present value of the defined benefit obligation
Pensions Other
EUR m 2021 2020 2021 2020
As of 1 January (33.0) (26.6) (32.9) (26.7)
Current service cost (4.1) (3.0) (6.6) (5.9)
Interest expenses (0.3) (0.3) (0.3) (0.3)
Gains/losses recognised in other comprehensive
income
Change in actuarial parameters: 2.8 (3.7) - -
1) Change in financial assumptions 2.9 (2.2) - -
2) Change from experience adjustments (0.1) (1.5) - -
3) Demographic changes - - - -
Benefits paid 0.6 0.6 0.1 -
As of 31 December (34.0) (33.0) (39.7) (32.9)
Movement in the fair value of the plan assets
Pensions Other
EUR m 2021 2020 2021 2020
As of 1 January 0.1 0.1 25.4 21.7
Employer payments 0.0 0.0 6.3 3.8
Benefits paid 0.0 0.0 0.0 (0.1)
As of 31 December 0.1 0.1 31.8 25.4
All plan assets comprise insurance agreements.
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 52 of 76
The plan asset for one individual contractual obligation under a defined benefit plan discloses an
actual return of 5.62%.
Amounts recognised in the statement of comprehensive income
Pensions Other
EUR m 2021 2020 2021 2020
Service cost
Current service cost (4.1) (3.0) (0.3) (2.0)
Benefits paid 0.6 0.6 0.1 0.0
Utilizations 0.0 0.0 0.0 (0.1)
Net interest expense
Interest expense (0.3) (0.3) (0.3) (0.3)
Amounts recognised in the statement of profit or
loss
(3.8) (2.7) (0.6) (2.4)
Actuarial gains/losses
Actuarial gains/losses
1) Change in financial assumptions 2.9 (2.2) - -
2) Change from experience adjustments (0.1) (1.5) - -
3) Demographic changes - - - -
Remeasurements of net defined benefit
liability/asset recognised in other comprehensive
income (OCI)
2.8 (3.7) - -
Total (1.0) (6.4) (0.6) (2.4)
Actuarial gains and losses from defined benefit plans for pensions are accrued and recognised in
full. They are recognised outside of the statement of profit or loss in the statement of
comprehensive income.
Expected payments for defined benefit plans in 2021 amount to EUR 0.6m (prior year: EUR 0.6m).
Breakdown of defined benefit obligations
EUR m
2021 2020
By type of plan participants: (73.7) (65.9)
Active plan participants (63.8) (55.3)
Terminated plan participants with defined benefit entitlement (0.7) (0.6)
Retired plan participants and beneficiaries (9.2) (10.0)
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 53 of 76
By type of benefits: (73.7) (65.9)
Retirement and death benefits (34.0) (33.0)
Working lifetime accounts (39.0) (32.1)
Long-service awards (0.8) (0.8)
Risks
The Group is exposed to various risks: falling interest rates, an increase in life expectancy as well
as rising wages and salaries cause the defined benefit obligations to increase. There are no
concentrations of risk.
Actuarial parameters
(in %) 2021 2020
Discount rate 1.26% 0.97%
Future expected wage and salary increase 4.15% 4.00%
Expected inflation rate 2.00% 2.00%
Expected increase in social security costs 2.25% 2.25%
Future expected pension increase 0,0/1,0/2,0 0,0/1,0/2,0
Average retirement age (in years) 65 65
Biometrics
2018 G Heubeck
mortality tables
2018 G Heubeck
mortality tables
Life expectancy for a 65-year-old on 31 December
(in years):
male 20.5 20.4
female 24.0 23.9
Sensitivity analysis
Effect on defined benefit
obligation
EUR m Increase Decrease
Discount rate (+/- 0.5%) (7.0) 8.2
Wage and salary increase (+/- 0.5%) 2.8 (0.2)
Pension increase (+/- 0.25%) 0.4 (0.4)
Life expectancy of a pensioner (+1 year), male and female 1.6 -
Maturity of defined benefit obligations
The average term of defined benefit pensions plans is 28.7 years of working lifetime accounts
obligations 10.0 years and of long-service benefits obligations 14.0 years. The maturities of the
benefit payments break down as follows:
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 54 of 76
EUR m < 12 months 1-5 years 6-10 years > 10 years
Pensions 0.6 2.2 2.9 44.0
Other 1.8 7.7 7.8 30.3
Total 2.4 9.9 10.7 74.3
6.11. Other provisions
Other provisions break down as follows:
EUR m 2021 2020
Provisions for environmental protection measures 1.7 1.8
Provision for dismantling obligations 89.0 92.9
Provision for archiving costs 0.1 0.1
Other non-current provisions 90.8 94.8
Provisions for environmental protection measures 0.5 0.4
Provision for litigation risks 3.9 3.3
Other current provisions 4.4 3.7
Total other provisions 95.2 98.5
Current portion of other personnel obligations 1.7 1.9
Total provisions
96.9
100.4
The item litigation risks contain anticipated burdens from current lawsuits which consider the
principal claim as well as any interest payable.
The obligation for the Group arising from easement rights in accordance with Sec. 9 GBBerG
[“Grundbuchbereinigungsgesetz”: German Land Register Adjustment Law] is known on its merits;
the actual amount as well as the utilization date are based on experience and assumptions. Due
to the time limitation for claims, the provision was fully reversed in 2020.
The provision for dismantling obligations has been set up for offshore platforms, sea cables and
several transfer stations. If the estimated pre-tax discount rate used in the calculation had been
1% higher than management´ estimate, the carrying amount of the provision would have been
EUR 13.3m lower. If the pre-tax discount rate had been 0%, the carrying amount of the provision
would have been EUR 15.4m higher.
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 55 of 76
The development of other provisions can be seen in the statement of changes in provisions below
(without the current portion of other personnel obligations):
EUR m
Environmental
protection measures
Litigation
risks
Easement
rights
Dismantling
obligations
Other Total
As of 1 January 2020 2.3 4.7 6.0 87.7 0.1 100.8
Addition - 1.4 - 3.9 - 5.3
Reversal - (2.1) (5.9) (0.3) - (8.3)
Utilization (0.1) (0.7) (0.1) - - (0.9)
Unwinding of the
discount/change in
interest rate
- - - 1.6 - 1.6
As of 31 December 2020 2.2 3.3 - 92.9 0.1 98.5
Non-current 1.8 - - 92.9 0.1 94.8
Current 0.4 3.3 - - - 3.7
EUR m
Environmental
protection measures
Litigation
risks
Easement
rights
Dismantling
obligations
Other Total
As of 1 January 2021 2.2 3.3 - 92.9 0.1 98.5
Addition - 1.3 - 0.9 - 2.2
Reversal - (0.2) - (6.2) - (6.4)
Utilization - (0.4) - - - (0.4)
Unwinding of the
discount/change in
interest rate
- - - 1.4 - 1.4
As of 31 December 2021
2.2
4.0
-
89.0
0.1
95.3
Non-current 1.7 - - 89.0 0.1 90.8
Current 0.5 3.9 - - - 4.4
The expected utilization of other provisions (without the current portion of other personnel
obligations) is summarized below:
EUR m
Carrying amount as of
31 December 2020
2021 2022 to 2025 from 2026
Environmental protection measures 2.2 0.4 1.8 -
Litigation risks 3.3 3.3 - -
Dismantling obligations 92.9 - - 92.9
Other 0.1 - - 0.1
Total 98.5 3.7 1.8 93.0
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 56 of 76
EUR m
Carrying amount as
of 31 December 2021
2022 2023 to 2026 from 2027
Environmental protection measures 2.2 0.5 1.7 -
Litigation risks 3.9 3.9 - -
Dismantling obligations 89.0 - - 89.0
Other 0.1 - - 0.1
Total 95.2 4.4 1.7 89.1
6.12. Other non-current liabilities
EUR m 2021 2020
Grants and subsidies 143.9 79.4
Other 38.5 40.6
Total
182.4
120.0
The group received an investment grant of EUR 69.2m during the fiscal year 2021.
Sundry other non-current liabilities comprise construction cost subsidies (2021: EUR 31.2m) a
deferred income item with a term until June 2026 (2021: EUR 5.2m) as well as liabilities from the
pension plan (2021: EUR 1.8m) and other personnel obligations (2021: EUR 0.3m).
6.13. Trade payables and other liabilities
EUR m 2021 2020
Trade payables due to third parties 553.6 356.0
VAT and other taxes 2.3 1.1
Other liabilities, personnel 5.4 3.3
Other liabilities, sundry 568.5 282.2
Accruals and deferrals 2,637.6 595.6
Total 3,767.4 1,238.2
Sundry other liabilities relate primarily to liabilities from compensation mechanisms of
EUR 117.2.0m (prior year: EUR 172.0m) as well as securities towards the electricity exchange of
EUR 356.0m (prior year: EUR 16.8).
Accruals and deferrals primarily comprise obligations resulting from the settlement of the EEG of
EUR 2,549.2m (prior year: EUR 454.7m) as well as additional cost allocations of EUR 41.0m
(prior year: EUR 84.0m).
All trade payables and other liabilities are current.
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 57 of 76
6.14. Anticipatory equity and liabilities
Deferred income relates to a cost reimbursement and income received in advance for the use of
the German section of a high-voltage direct current transmission link.
6.15. Financial instruments – fair values
Based on the consolidated statement of financial position, the recognised financial instruments
refer to the following measurement categories:
Carrying amount Fair value
EUR m
Fair value
through OCI
Amortised cost
Other financial
liabilities at
amortised cost
Total
Level 1
Level 2
Level 3
Total
Other financial assets 43.5 - - 43.5 - - 43.5 43.5
Loans and receivables - 1,655.8 - 1,655.8 - - - -
Cash and cash equivalents - 296.6 - 296.6 - - - -
Loans and borrowings - - 4,002.3 4,002.3 3,984.0 - 296.7 4,253.7
Lease liabilities - - 50.9 50.9
Trade and other payables - - 1,163.7 1,163.7 - - - -
Total as of 31 December 2020 43.5 1,952.4 5,216.9 7,212.8 3,984.0 - 313.2 4,297.2
Carrying amount Fair value
EUR m
Fair value through
OCI
Amortised cost
Other financial
liabilities at
amortised cost
Total
Level 1
Level 2
Level 3
Total
Other financial assets 399.2 - - 399.2 355.6 - 43.5 399.2
Loans and receivables - 894.6 - 894.6 - - - -
Cash and cash equivalents - 2,857.2 - 2,857.2 - - - -
Loans and borrowings - - 3,806.4 3,806.4 3,677.2 - 247.8 3,925.0
Lease liabilities
65.7 65.7 - - - -
Trade and other payables - - 3,747.0 3,747.0 - - - -
Total as of 31 December 2021 399.2 3,751.8 7,619.1 11,770.1 4,032.8 - 291.3 4,324.2
Fair value is the amount for which an asset could be exchanged, or a liability settled in an arm's-
length transaction. IFRS 7 requires, for financial instruments that are measured in the statement
of financial position at fair value, the disclosure of fair-value measurements by level in the
following fair value measurement hierarchy:
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 58 of 76
Level 1: The fair value of a financial instrument that is traded in an active market is measured
based on quoted (unadjusted) prices for identical assets or liabilities. A market is considered
active if quoted prices are readily and regularly available from an exchange, dealer, broker,
industry group, pricing service or regulatory agency, and those prices represent actual and
regularly occurring market transactions on an arm’s-length basis.
The derivative from the price hedge for grid loss procurement, which is measured at fair value in
OCI without affecting profit or loss, falls under level 1 of the measurement hierarchy. Its value is
determined on the basis of the reporting date valuation of the existing futures contracts, which
are fully contracted via the EEX electricity exchange and quoted there. Credit and default risks
are avoided with this form of price hedging via exchange transactions.
The Group recognizes derivatives for an amount of EUR 355.6m. The futures contracts were
concluded during the fiscal year at prices between € 40 and € 145 per MWh. As of the balance
sheet date, the futures were quoted on the EEX at € 220 per MWh, resulting in a correspondingly
high positive derivative value. As of the balance sheet date, the Group had already price-hedged
a volume of 3.2 Tw for its expected physical demand for grid loss energy in subsequent years.
Level 2: The fair value of financial instruments that are not traded in an active market is
determined using valuation techniques. These maximize the use of observable market data where
it is available and rely as little as possible on entity-specific estimates. If all significant inputs
required to assess the fair value of an instrument are observable, either directly (i.e., as prices)
or indirectly (i.e., derived from prices), the instrument is included in level 2.
Level 3: If one or more of the significant inputs used in applying the valuation technique is not
based on observable market data, the financial instrument is included in level 3.
Due to the short-term nature of the current financial assets and current financial liabilities, their
carrying amount is assumed to be the same as their fair value. For the majority of the non-current
receivables, the fair values are also not significantly different to their carrying amounts.
On the reporting date, other financial assets at FVOCI had a total fair value of EUR 43.5m and
fall under level 3 in the fair value hierarchy. The fair value has been determined by reference to
an evaluation method using discounted cash flows and therefore non-observable market data.
The Group uses third party qualified valuers to perform the valuation. In prior year, the new
valuation led to a remeasurement gain of EUR 14.9m. In fiscal year 2021, the Group received a
dividend from other financial assets valued at FVOCI with an amount of EUR 0.9m (prior year:
EUR 0.9m).
The fair value of the bonds is EUR 3.527.2m (prior year: EUR 3,133.4m). Fair value was
determined by reference to published price quotations in an active market (classified as level 1 in
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 59 of 76
the fair value hierarchy). The fair value of the registered bond is EUR 64.0m as of 31 December
2020 and was determined by reference to third party information, such as pricing services
(classified as level 3 in the fair value hierarchy). The fair value of the private placement amounts
to EUR 183.8m (classified as level 3 in the fair value hierarchy).
A change in the assumptions used to calculate the fair value classified as level 3 in the fair value
hierarchy will not result in a significantly different outcome.
The credit quality of financial assets that are neither past due nor impaired is determined based
on available credit ratings or past experience of default rates of business partners. No new terms
were negotiated in the fiscal year for an asset that would otherwise have been impaired or past
due. No financial assets deemed to be material by the Group are past due or impaired.
6.16. Leasing
The Group as a lessee
The Group leases buildings, cars, optical fibres, a portion of an overhead line and other
equipment.
The valuation period is used according to the contractual term. Where no fixed term is agreed
and an ongoing prolongation is subject to the contract, a termination date has been assumed by
the responsible department. In case the lease contract contains a lease extension option, the
Group assesses whether it is reasonably certain to exercise the option and makes its best
estimation of the termination date.
No rental contracts were modified due to the coronavirus pandemic.
Information about leases for which the Group is a lessee is presented below.
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 60 of 76
Right-of-use assets
Right-of-use assets are presented separately within property, plant and equipment and break
down as follows:
EUR m
Use of land
and overhead
lines
Rent of
buildings/offices
Cars
Optical
fibers
Other Total
As of 1 January 2020 38.7 3.0 4.4 0.7 2.1 48.9
Additions 0.4 1.8 2.8 0.9 1.1 7.0
Depreciations (1.1) (0.8) (1.8) (0.2) (1.9) (5.8)
As of 31 December 2020 38.0 4.0 5.4 1.4 1.3 50.1
EUR m
Use of land
and overhead
lines
Rent of
buildings/offices
Cars Optical fibers Other Total
As of 1 January 2021 38.0 4.0 5.4 1.4 1.3 50.1
Additions 3.2 15.8 2.1 0.4 - 21.5
Depreciations (1.1) (3.2) (1.8) (0.4) (0.2) (6.7)
As of 31 December 2021 40.1 16.6 5.7 1.4 1.1 64.9
Lease liabilities
Information concerning the maturity of the contractual undiscounted cash flows is given below:
Maturity analysis - contractual undiscounted cash flows in EURm 2021 2020
< 1 year 4.8 4.7
1-5 years 14.4 13.6
> 5 years 45.6 47.8
Total undiscounted lease liabilities on 31 December
64.8
66.1
Lease liabilities in the statement of financial position at 31 December 65.7
50.9
Current
7.1 3.8
Non-current
58.6 47.1
Amounts recognised in profit or loss
In addition to the depreciation disclosed above, the following amounts were recognised in profit
or loss during the current fiscal year:
EUR m 2021 2020
Depreciation expense of right-of-use assets 6.7 5.8
Interest on lease liabilities 1.3 1.0
Expenses relating to short-term leases 0.1 0.0
Expenses relating to low-value assets 0.5 0.2
Total 8.6 7.0
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 61 of 76
Amounts recognised in the statement of cash flows
The total cash outflow for leases amounts to EUR 6.7m in 2020 (prior year: EUR 5.4m) and is
disclosed within cash flows from financing activities under the item “Repayment of borrowings”.
The Group as a lessor
The Group leases out optical fibres, land and buildings presented as part of property, plant and
equipment. The leasing business only represents an ancillary business, however.
Contracts that do not relate to separately identifiable assets or in which the customer cannot direct
the use of the asset or does not obtain substantially all the economic benefits associated with the
use of the asset do not contain a lease.
The Group has classified these leases as operating leases as they do not transfer substantially
all the risks and rewards incidental to the ownership of the assets.
Rental income recognised by the Group during 2020 was EUR 1.3m (prior year: EUR 1.2m).
The following table sets out a maturity analysis of lease payments, showing the undiscounted
lease payments to be received after the reporting date and considering the best estimation of the
contractual term:
EUR m 2021 2020
within 1 year
1.6
1.5
1 to 2 years
0.9
0.7
2 to 3 years
0.8
0.7
3 to 4 years
0.8
0.6
4 to 5 years
0.8
0.6
more than 5 years
3.4
6.8
Total 8.3 10.9
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 62 of 76
6.17. Regulatory items
On the reporting date, the Group has an obligation surplus resulting from comparison of regulatory
claims and obligations.
EUR m 2021 2020
Regulatory claims 5.9 7.5
Regulatory obligations (450.8) (510.8)
Total (444.9) (503.3)
The obligation surplus as of 31 December 2021 of EUR 444.9m (prior year: EUR 503.3m) is the
nominal amount of EUR 447.1m (prior year: EUR 498.2m) less an interest effect of EUR 2.2m
(prior year: plus EUR 5.1m).
On the basis of current assumptions, the nominal figures reported at year-end spread over the
subsequent periods as follows:
(in Mio. €)
Nominal amount
Less than 1 year 1-5 years More than 5 years
2020
regulatory items 498.2 115.5 274.9 107.8
(in Mio. €)
Nominal amount
Less than 1 year 1-5 years More than 5 years
2021
regulatory items 447.1 147.4 159.6 140.1
(in Mio.€)
Regulatory
claims
Regulatory
obligations
Total
As of 1 January 2020 8.9 (511.4) (502.5)
Increase 4.5 (147.1) (142.6)
Decrease (5.9) 159.6 153.7
Unwinding of discount/interest rate change - (11.9) (11.9)
As of 31 December 2020 7.5 (510.8) (503.3)
(in Mio €)
Regulatory
claims
Regulatory
obligations
Total
As of 1 January 2021 7.5 (510.8) (503.3)
Increase 5.9 (15.6) (9.7)
Decrease (7.5) 69.1 61.6
Unwinding of discount/interest rate change - 6.5 6.5
As of 31 December 2021
5.9
(450.8)
(444.9)
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 63 of 76
7. Other notes
7.1. Financial risk management and factors
Principles of risk management
Group-wide risk management focuses on the uncertainty of developments on financial markets
and aims at minimising potential adverse effects on the cash flows of the Group. Risk
management is performed in accordance with the policies issued by management. It identifies,
assesses and hedges financial risks in close cooperation with the operating units of the Group.
Management defines principles for cross-functional risk management and issues policies for the
handling of currency, interest and credit risks, the use of derivative and non-derivative financial
instruments as well as the use of liquidity surpluses.
The Group recognizes derivatives as price hedges for the future procurement of physical grid loss
requirements that are expected in subsequent periods and are covered in each case by short-
term procurement transactions on the spot market. The Group counteracts the procurement price
risk for grid loss energy by hedging prices at an early stage using futures contracts on the EEX
power exchange. The futures contracts serve as hedging transactions for the price of the physical
demand for electrical energy to cover grid losses (underlying transaction). Due to the availability
and liquidity of futures trading, the hedging period for the intended price hedging covers a period
of up to two years from the balance sheet date.
The Group pursues a conservative hedging strategy based on the regulatory framework and the
ability to roll over the electricity procurement costs incurred, which enables timely and predictable
price hedging. The Group aims to fully hedge the expected volume of grid loss energy.
As a result of the Group’s operations, Eurogrid and its subsidiaries are generally exposed to a
variety of financial risks.
Market risk
The market risk takes into account negative effects on the financial position and cash flows of the
Group arising as a result of price changes on the market which cannot be avoided otherwise. The
activities of the Group extend to the electricity market – in particular as part of selling the electricity
generated from renewable energies as well as procurement of energy to cover grid energy losses
– as well as to the market for short-term deposits. The Group counteracts the procurement price
risk for grid loss energy by hedging prices at an early stage using futures contracts on the EEX
electricity exchange.
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 64 of 76
The Group is not subject to any foreign currency risks for its investments. The procurement of
commodities relates only to electricity in a regulated volume.
Risks from energy procurement
The Group counters the procurement price risk for grid loss energy by hedging prices at an early
stage using futures contracts on the EEX power exchange. Price hedging by means of futures
serves to fix the best possible price within the regulatory framework set by the BNetzA for
refinancing the costs of grid loss energy (setting of the so-called reference price in accordance
with the applicable FSV). The hedging transactions are contracted with a lead time of up to 18
months. Price hedging is carried out continuously, taking into account the volume forecast for the
expected grid losses.
Foreign currency risk
The Group is only exposed to an insignificant foreign currency risk as a result of the very limited
volume of transactions it performs in foreign currency.
Interest rate risk
The interest rate risk takes into account any negative effects (e.g., resulting from a fall in market
liquidity and/or the rating) by means of changes to the interest rates available on the market. It
reflects the danger of the Group making repurchases with its financial resources at poorer
conditions. The Group actively manages interest rate risks by continuously observing the market
as well as regularly following up on short and mid-term financial planning, allowing it to manage
risks and optimise its cash and cash equivalents. Given a long-term financial strategy, the fixed-
interest bond of EUR 3,590m issued in 2015, 2016 and 2020 forms the basis of the Group’s debt
financing, protecting the Group from short-term interest rate risks, along with the registered bond
of EUR 50m issued in 2014 and the syndicated loan agreement taken out in 2016.
Liquidity risk
The liquidity risk can generally arise at any time as a result of a major deviation between incoming
and outgoing cash flows. Liquidity risks can arise from the core business of the group entities
50Hertz Transmission and 50Hertz Offshore if the actual financial requirements deviate
significantly from the underlying financial planning in the short term. In particular in connection
with the obligation to accept and provide payment for electricity generated from renewable
energies as well as the sale of this electricity on the electricity exchange, there are considerable
liquidity fluctuations that arise everyday which the Group tries its best to anticipate.
The high volume of contracted futures contracts also has an impact on the Group's liquidity
management. The daily cash settlement of futures contracts with the exchange can have short-
term effects on liquidity, which largely follow the general price trend on the electricity market.
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 65 of 76
In accordance with agreed maturity dates and interest due, the contractually agreed cash outflows
from financial liabilities will be as follows in the future:
EUR m
Carrying
amount
Expected
cash
outflows
6 months
or less
´6 to 12
months
1-2
years
2-5
years
> 5
years
Unsecured bonds 3,151.9 (3,519.7) (29.0) (19.1) (48.1) (1,369.9) (2,053.6)
Unsecured bank loans and other loans 850.4 (858.6) (701.0) (0.7) (1.4) (4.5) (151.0)
Total as of 31 December 2020 4,002.3 (4,378.3) (730.0) (19.8) (49.5) (1,374.4) (2,204.6)
Unsecured bonds 3,656.4 (4,016.0) (32.7) (19.1) (801.8) (609.4) (2,553.0)
Unsecured bank loans and other loans 150.0 (159.5) (1.1) (0.9) (2.3) (155.2) -
Total as of 31 December 2021
3,806.4
(4,175.5)
(33.8)
(20.0)
(804.1)
(764.6)
(2,553.0)
The Group’s short-term and medium-term liquidity position is regularly monitored to manage
liquidity risks. The Group is soundly equipped with funds and credit lines that can also be drawn
at short notice for any liquidity needs that arise. The credit lines available to the Group but not
drawn total EUR 900.0m and are provided by various banks.
Details of the used and unused back-up credit facilities are set out below:
EUR m Maturity
Available
amount
Amount used
Amount
not used
Confirmed credit line 26 February 2025 750 - 750
Confirmed credit line unlimited 150 - 150
Confirmed credit line 14 December 2026 150 150 -
The solvency of the Group and its Group entities is secured at all times.
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 66 of 76
Following table shows the changes in financial liabilities including changes in cash and non-cash
transactions:
EUR m
Loans and
borrowings
Balance at 1 January 2020
2,901.3
Changes in cash flow from financing activities
Cashflow: Repayment of borrowings
(505.4)
Cashflow: Proceeds from withdrawal of borrowings
1,655.2
Total changes in cash flow from financing activities
1,149.8
Other changes
Changes in interest accruals
2.1
Other miscellaneous changes
0.0
Total other changes
2.1
Balance at 31 December 2020
4,053.2
Balance at 1 January 2021
4,053.2
Changes in cash flow from financing activities
Cashflow: Repayment of borrowings
(706.7)
Cashflow: Proceeds from withdrawal of borrowings
498.0
Total changes in cash flow from financing activities
(208.7)
Other changes
Changes in interest accruals
4.7
Increase in lease liabilities
21.5
Transaction costs
1.5
Total other changes
27.6
Balance at 31 December 2021
3,872.1
Credit risk
The credit risk is managed across the Group. When entering into contractual relationships as well
as concluding transactions, the credit rating and creditworthiness are reviewed as standard
practice. Business transactions are generally only conducted with partners recognised as being
creditworthy. To limit the credit risk on a case-by-case basis, suitable measures are taken to
prevent any damage to the Group or subsidiaries. The long-standing customer relationships in
some areas and the resulting partnerships also allow the Group to manage potential credit risks.
Observing an investment policy, the Group participates in the short-term investment of freely
available funds with various banks with good credit ratings. Investments are only made up to the
deposit protection limit. As such, there are no significant risks posed for the Group as a result of
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 67 of 76
the short-term nature of the term deposits and the high rating requirements placed on the banks.
No credit limit was exceeded during the reporting period.
The Group considers a financial asset in default when contractual payments are 60 days past
due. However, in certain cases, the Group may also consider a financial asset to be in default
when internal and external information indicates that the individual assessment of the customer
or contractual relationship could have a negative impact on the group profit.
The maximum credit risk on the reporting date was equivalent to the total of the loans and trade
and other receivables (EUR 894.6m; prior year: EUR 1,655.8m). On the basis of past experience
of actual defaults, the actual credit risk is deemed to be low.
Valuation allowances on trade receivables break down as follows:
EUR m Doubtful debts
Valuation
allowances
Balance
As of 1 January 2020 195.6 (195.6) -
Changes in the fiscal year 2.0 (2.0) -
As of 31 December 2020 197.6 (197.6) -
As of 1 January 2021 197.6 (197.6) -
Changes in the fiscal year 0.0 0.0 -
As of 31 December 2021 197.6 (197.6) -
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 68 of 76
31 December 2020
Not past
due
0-30
days
past due
31-60 days
past due
61 days
- 1 year
past
due
1 year -
2 years
> 2
years
Total
Expected loss rate 0.05% 4.75% 39.06% 100.00% 100.00% 100.00%
Carrying amount - trade receivables 190.6 0.8 0.0 0.3 0.6 - 192.3
Loss given default
95.42%
Valuation allowance 0.1 0.0 0.0 0.3 0.5 - 0.9
31 December 2021
Not past
due
0-30
days
past due
31-60 days
past due
61 days
- 1 year
past
due
1 year -
2 years
> 2
years
Total
Expected loss rate 0.03% 3.02% 20.33% 13.05% 100.00% 100.00%
Carrying amount - trade receivables 172.8 1.4 0.2 7.9 0.7 - 183.0
Loss given default
93.39%
Valuation allowance 0.1 0.0 0.0 1.0 0.6 - 1.7
Loss given default is calculated as the percentage of the amount of trade receivables that is not
covered by a bank guarantee. This percentage is multiplied with the outstanding trade
receivables.
Receivables from compensation mechanisms are out of scope from the calculation of the
expected credit loss and the corresponding valuation allowances due to the existing legal
compensation right from third party in the amount and at the time of the default.
7.2. Capital management
As part of its medium to long-term planning, the Group uses a projected statement of financial
position, taking into account the requirements of capital maintenance. Management of the
Group’s equity ratio is aimed at maintaining its financing capability and credit rating. This objective
is constantly monitored, actively managed and supported by the Group’s regulatory management.
The Group is not subject to any statutory or other such provisions on capital maintenance.
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 69 of 76
No changes were made in the objectives, policies or processes for managing capital in fiscal year
2021.
EUR m
2021
2020
Total financial liabilities
7,619.1
5,216.9
Less: cash and cash equivalents
(2,857.2)
(296.6)
Net debt
4,761.9
4,920.3
Equity
1,931.7
1,634.3
Total capital
6,693.6
6,554.6
Debt ratio*
71%
75%
* Debt ratio calculated as ratio of net debt to total capital
7.3. Commitment and contingencies
Contingent rents, purchase options and restrictions
The Group has no contracts which include either contingent rental payments or purchase options
agreed in the significant lease contracts. Furthermore, these significant lease contracts do not
include any escalation clauses or restrictions that are significant to the use of the respective asset.
Purchase commitments
On 31 December 2021, there was a purchase obligation for investments measures of
EUR 1,661.5m (prior year: EUR 1,575.1m).
The purchase commitment for maintenance measures amounts to EUR 16.3m (prior year: EUR
13.7m) as of 31 December 2021.
Other contingencies and commitments
Offshore expenses between 50Hertz and TenneT arising from the horizontal settlement gives rise
to financial obligations for 50Hertz in future periods. The total amount of these future cumulative
amounts comes to EUR 3.9m (prior year: EUR 10.5m) and will be reflected in 50Hertz’s network
user charge calculations in the next years following the corresponding billing by TenneT.
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 70 of 76
7.4. Related party disclosures
Within the meaning of IAS 24, the Group defines the following entities and bodies as related
parties:
Controlling entities:
Via Eurogrid International, Elia Group holds an 80% stake in Eurogrid and thus obtained control
in 2018. KfW contributed its 20% shareholding to Eurogrid GmbH to Selent in 2019.
No business transactions were entered into with Kfw in fiscal year 2021.
Various service agreements have been in place between Elia Transmission Belgium and 50Hertz
Transmission GmbH. Costs for consulting projects and other services are also cross-charged. In
fiscal year 2021, revenue of EUR 22.8m was generated (prior year: EUR 7.9m), while expenses
amounted to EUR 11.7m (prior year: EUR 8.5m). On the reporting date, there were receivables
of EUR 4.0m (prior year: EUR 2.3m) and liabilities of EUR 20.5m (prior year: EUR 4.3m).
Service agreements on general management and service functions are in place between Eurogrid
and Eurogrid International. In fiscal year 2021, this resulted in expenses for purchased services
of EUR 0.3m for the Group (prior year: EUR 0.3m). Trade and other payables remained at EUR
0.3m.
Furthermore, the Group distributed EUR 120.0m (prior year: EUR 120.0m) to the shareholders
Eurogrid International and KfW (via its subsidiary Selent).
Associates:
Elia Grid International NV/SA, Brussel, Belgium, is an associate company of the Group and is
consolidated at equity in the Group. Assets under construction based on service agreements with
EGI for consulting and engineering services in the area of grids and system services have been
recognised in the amount of EUR 14.0m as of the end of the fiscal year 2021 (31 December 2020:
EUR 39.8m). Furthermore various service agreements have been in place between EGI and
50Hertz. There are expenses for an immaterial amount.
Key management personal includes Eurogrid International´s board of directors, who are
responsible for monitoring the activities of Eurogrid. Key management personal also includes the
board of management of 50Hertz Transmission and the supervisory boards of Eurogrid and
50Hertz Transmission. Key management personnel did not receive stock options, special loans
or other advances from the Group during the year.
In fiscal year 2021, the general managers of
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 71 of 76
50Hertz Transmission received EUR 3,135,164.98 in consideration, which breaks down as
follows:
• Fixed basic salaries EUR 1,472,607.01
• Variable salary components – short-term EUR 461,620.00
• Variable salary components – long-term EUR 657,149.24
• Pension scheme (company pension scheme and direct insurance) EUR 364,104.48
• Other benefits and allowances (including stock options) EUR 179,684.25.
Pension obligations to former members of the board of management of 50Hertz Transmission
amount to EUR 4.1m (prior year: EUR 2.0m). Thereof EUR 0.6m are covered by reinsurance.
There were transactions with entities in which the members of Eurogrid International board of
directors, the board of management of 50Hertz Transmission or the supervisory boards exercise
a significant influence (e.g., holding positions such as CEO, CFO or members of the management
committee) in the amount of EUR 3.9m (expenses) and 0.0m (income) in the fiscal year 2021. No
other material transactions took place.
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 72 of 76
7.5. List of shareholdings as of 31 December 2021
7.6. Subsequent events
Up to the date of preparing the consolidated financial statements, no significant events were
performed that had an effect on the Group’s net assets, financial position and results of operations
in the reporting period.
7.7. Auditor’s fees in accordance with Sec. 314 (1) No. 9 HGB
BDO AG was appointed as auditor during fiscal year 2021.
The auditor of Eurogrid’s consolidated financial statements, BDO AG, Wirtschaftsprüfungs-
gesellschaft, Berlin, (prior year: Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft, Berlin)
received fees for audit services of EUR 224k (prior year: EUR 263k) in the fiscal year. Fees for
Nam e
Country of
establishment
Headquarters
Com m ercial
register
number
Eq u i t y ( EUR
m)
Net result
(EUR m )
2021 2020
JAO Joint
Allocation
Office S.A.
Luxembourg Rue de Bitbourg 2
B0142282
6,8 (annual
report
31.12.2020)
0,3 (annual
report
31.12.2020)
4.0 4.0
3,7 1,0
(annual report
31.12.2020)
(annual report
31.12.2020)
542,8 69,7
(annual report
31.12.2020)
(annual report
31.12.2020)
7,4 0,6
(annual report
31.12.2020)
(annual report
31.12.2020)
basic assets
EUR m 0,1
basic assets
EUR m 0,1
´10.4
Stiftung Kurt-
Sanderling-
Akademie des
Konzerthausor
chesters Berlin
Germany
Gendarmenmarkt
10117 Berlin
-
´10.4
6.7
TSCNET
Services GmbH
Germany
Dingolfinger Strasse 3
81673 Munich
HRB 214951
6.7
5.4
European
Energy
Exchange AG
Germany
Augustusplatz 9
04109 Leipzig
HRB 18409
5.4
49.99
49.99
Other investments
7.9
CORESO S.A .
Belgium
Avenue de Cortenberg
71
1000 Brussels
808.569.630
7.9
Associated companies accounted for using the equity
method
Elia Grid
International
NV /SA
Belgium
Boulevard de
l Empereur
1000 Brussels
549.780.459
100.0
50Hertz
Offshore
GmbH
Germany
Heidestraße 2
10557 Berlin
HRB 108780 B
100.0
Fully consolidated companies
Stake (%)
100.0
50Hertz
Transmission
GmbH
Germany
Heidestraße 2
10557 Berlin
HRB 84446 B
100.0
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 73 of 76
audit services mainly comprise fees for the statutory audit of the consolidated financial statements
and the separate financial statements of the group entities of Eurogrid. In addition, the auditor
received EUR 21k (prior year: EUR 181k) for other services.
7.8. Exemption options pursuant to Sec. 264 (3) and Sec. 264b HGB
The German subsidiaries with the legal form of a corporation do not make use of the exemption
regulations in accordance with Sec. 264 (3) and Sec. 264b HGB.
7.9. Supervisory Board
During the fiscal year the supervisory board contained the following members:
Christiaan Peeters, Chairman, Chief Executive Officer, Elia Group NV/SA, Elia Transmission
Belgium NV/SA and Elia Asset NV/SA, Korbeek-Lo, Belgium
Dr. Lutz-Christian Funke, Vice Chairman, Secretary of KfW Banking Group, Oberursel,
Germany
Catherine Vandenborre, Chief Financial Officer, Elia Group NV/SA, Elia Transmission Belgium
NV/SA and Elia Asset NV/SA, Rixensart, Belgium
Peter Michiels, Chief HR and Internal Communication Officer, Elia Group NV/SA, Elia
Transmission Belgium NV/SA and Elia Asset NV/SA Antwerp, Belgium
Markus Berger, Chief Infrastructure Officer, Elia Transmission Belgium NV/SA and Elia Asset
NV/SA, Braine- l´Alleud, Belgium
According to the articles of association of Eurogrid no remuneration is paid to members of the
supervisory board.
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 74 of 76
7.10. Management
Management comprised the following members during the fiscal year:
Stefan Kapferer, Managing Director/CEO of 50Hertz Transmission GmbH, Berlin, Germany
Yannick Dekoninck, Investor Relations Officer of Elia Group NV/SA, Beersel, Belgium
The managing directors were not employed at the Company. No remuneration was paid.
Berlin, 11 February 2022
The management of Eurogrid GmbH
Stefan Kapferer Yannick Dekoninck
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 75 of 76
Financial terms or Alternative Performance Measures
The consolidated financial statements contain certain financial performance measures that are
not defined by IFRSs and are used by management to assess the financial and operational
performance of the Group. The most important alternative performance measures used by the
Group are explained below.
The following APMs are explained in this document:
• Capex (capital expenditures)
• EBIT
• EBITDA
• Free cash flow
• Net finance costs
• Net financial debt
CAPEX (capital expenditures)
CAPEX (capital expenditures) = Acquisitions of property, plant and equipment and intangible
assets. Capital expenditures, or CAPEX, are investments realised by the Group to acquire,
upgrade, and maintain physical assets (such as property, buildings, an industrial plant,
technology, or equipment) and intangible assets.
EBIT
EBIT (Earnings Before Interest and Taxes) = Earnings from operating activities used for the
operational performance of the Group. The EBIT is calculated as total revenue less costs of raw
materials, consumables and supplies and of purchased goods, of purchased services and other
goods, of personnel and pensions expenses, of amortization, depreciation and impairments, of
changes in provisions and other operating expenses and plus the share of the equity investments
accounted for using the equity method.
EUR m 2021 2020
Result from operating activities 272.9 340.1
Result from equity investments accounted for using the equity
method
0.1 0.1
EBIT 273.0 340.2
EBITDA
EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) = Earnings from
operating activities plus amortization, depreciation and impairment, changes in provisions as well
as the share of the equity investments accounted for using the equity method. EBITDA is used
Eurogrid GmbH Consolidated financial statements as of 31 December 2021
Page 76 of 76
as a measure for the operational performance of the Group, thereby extracting the effect of
amortization, depreciation and impairment and changes in provisions of the Group.
EUR m 2021 2020
Result from operating activities 272.9 340.1
Add:
Amortization, depreciation and impairment 260.3 245.2
Changes in provisions 0.9 (6.6)
Result from equity investments accounted for using the equity
method
0.1 0.1
EBITDA 534.2 578.8
Free cash flow
Cash flow from operating activities minus cash flows from investing activities. Free cash flow
gives an indication of the cash flows generated by the Group.
EUR m 2021 2020
Net cash flow from operating activities 3,720.7 (796.3)
Deduct:
Net cash used in investing activities (831.4) (730.1)
Free cash flow 2,889.3 (1,526.4)
Net finance costs
Net finance costs represent the net financial result (finance costs minus finance income) of the
Company.
Net financial debt
Net Financial Debt = Non-current and current interest-bearing loans and borrowings (incl. lease
liabilities under IFRS 16) minus cash and cash equivalents. Net financial debt is an indicator of
the amount of interest-bearing debt of the Group that would remain if readily available cash or
cash instruments were used to repay existing debt.
EUR m 2021 2020
Non-current loans and borrowings 3,838.6 3,327.2
Add:
Current loans and borrowings 33.5 725.9
Deduct:
Cash and cash equivalents 2,857.2 296.6
Net financial debt 1,014.9 3,756.5