How much will the future cost?

Amprion is set to invest more than 24 billion euros in grid expansion over the next ten years. How does the company intend to finance this? CFO Peter Rüth talks about his financing plans – and what investors like about Amprion.

Mr Rüth, let's talk about money. What will it cost to make Germany's power grid fit for the energy transition?

Germany's four TSOs alone expect a total investment requirement in excess of 100 billion euros between now and 2035. This includes both onshore and offshore grid expansion, as well as linking the offshore wind farms to the power grid. This will see us make a significant contribution towards the goal of decarbonisation and towards the success of the energy transition, too. These investments, which will be spread over many years, will enable us to build a sustainable energy system that will cover the nation's future electricity needs and also help to ensure Germany becomes climate-neutral.

What investments will Amprion have to make?

Our current plans for the next ten years detail an investment volume of just over 24 billion euros. The relevant projects are all driven by the energy industry and have been approved by parliament. These include four offshore grid connection systems and two DC links to run from northern to southern Germany, as well as a large number of regional, decentralised measures in the AC grid. Their importance in respect of the energy transition is often underestimated. In addition, we will, among other things, integrate new, innovative operating facilities into our grid that will help to keep the voltage stable. All measures planned will play their part toward creating a climate-neutral energy system by 2050 and keeping it secure and stable. As a next-generation TSO, we want to help shape the transformation in the best possible way, and we are also looking for solutions that span different energy sources.

How do your shareholders contribute to financing your investments?

All of our shareholders are in it for the long term. They provided Amprion with additional equity to the tune of 400 million euros in 2015 and did the same again in 2020. We see this as a great sign of confidence. And our shareholders have also already indicated that they would like to continue to work closely with us on the energy transition in the future. They stand firmly behind our investment programme. However, equity capital is just one important component of our financing strategy. There is also self-financing from net cash flow, which enables us to partially finance investments from liquid assets. At the same time, the company can also use retained earnings for investments. We also make use of various debt instruments. In this case, we have raised finance primarily through debenture and registered bonds, supplemented by loans and development loans. However, this mix of financial instruments will not be sufficient to implement our investment programme over the next ten years. We will have to position ourselves even more broadly if we are to succeed in raising such massive funds.

What are you going to do?

In particular, we are considering making greater use of the international capital markets and expanding the circle of debt capital investors through new financial products. One of my tasks as Chief Financial Officer is to make the necessary preparations. It was important to the Supervisory Board at Amprion to strengthen this function within the Management Board. This is why I was brought on board in April 2020. One of my first financing projects was to set up a commercial paper programme in October 2020, with a maximum issue volume of 900 million euros. By introducing this short-term, flexible instrument, we have put the financing structure of our grid business on an even stronger footing. This was followed in November 2020 by the largest debenture and registered-bond transaction to date, with a volume of 350 million euros. We will continue on this path, because we have been receiving some very positive signals from the market.

Amprion investments in grid expansion 2009 to 2030

Up to 2020, Amprion invested a total of around 6.3 billion euros in the expansion and upgrading of the transmission grid. Between now and 2030, we will be investing a further 24.3 billion euros.

Investments 2009 – 2020 * As at December 2020.

Investments 2021 – 2030 (forecast*)

Amprion investments in grid expansion 2009 to 2030

Up to 2020, Amprion invested a total of around 6.3 billion euros in the expansion and upgrading of the transmission grid. Between now and 2030, we will be investing a further 24.3 billion euros.

Investments 2009 – 2020 * As at December 2020.

Investments 2021 – 2030 (forecast*)

What do investors like about Amprion?

It may sound obvious, but we do know our business. We know how to plan and implement projects successfully. Despite the coronavirus pandemic, we pushed on with our grid upgrade and expansion work during 2020 at a cost of more than one billion euros – a record investment! As a TSO, we have a robust and secure business model that is independent of economic cycles. Our grid expansion projects are approved by the Federal Network Agency as the relevant regulatory authority. And real physics are behind every project. We invest in cables, facilities and technologies. That is, we have actual, tangible assets. The whole thing stands on an absolutely sound financial and economic basis, a fact that is acknowledged by external observers. Which is why the rating agencies continue to rank us in the investment grade range.

“No company today can afford to ignore the environmental and social dimensions of its actions.”

Peter Rüth

Amprion scores with stability and safety. What about the prospects for growth?

One thing is clear: a company that is growing profitably is much more appealing to investors than one that has to downsize to return to health. We want to continue to grow at a healthy rate within our existing business model. This includes the offshore sector, too. That said, we will no doubt explore opportunities in neighbouring fields during the course of the energy revolution. One example of this is the matter of hydrogen. Amprion thinks of the energy system in a cross-sectoral way. We are working on the energy transition, not the electricity transition. This is one of the strengths that we want to build on. All this makes us attractive to investors.

What other projects are you working on at the moment?

We have to create conditions that make it easier for international investors to understand what we're about and to appraise us even better. In future, we are therefore going to prepare our accounts in accordance with the International Financial Reporting Standards (IFRS). In this context, we will also be sounding the bell for our move into today's world of SAP HANA. At the same time, we will be focusing Amprion much more strongly on the issue of sustainability. In doing so, we will be guided by the German Sustainability Code, among other things. According to the EU taxonomy for sustainable activities introduced in 2020, we are already considered sustainable with our business model. This is in line with our social responsibility – and is also important to me personally.

In what way?

No company today can afford to ignore the environmental and social dimensions of its actions. At Amprion, we feel connected to mankind, the environment and the economy. It’s part and parcel of our corporate identity: Amprion connects. It's these feelings of solidarity, of being connected, that lead us to act – and to pave the way for a climate-neutral, safe and efficient energy system. At the same time, more and more institutional investors are looking for companies that operate along sustainable lines. These interests find each other in the equity market. And we want to take full advantage of this opportunity.

About Peter Rüth
Peter Rüth has been a member of the Management Board of Amprion since April 2020. As Chief Financial Officer (CFO), he is responsible for the following areas: Finance, Controlling, Investment Management, Accounting, Taxes, Insurance, Regulation Management and Purchasing.
TextVolker Göttsche
PhotosJulia Sellmann