GERMANY Trends and Developments Contributed by: Udo Olgemoeller, Nicolaus Ascherfeld, Johann von Pachelbel and Janina Müller, A&O Shearman
The TenneT Germany transaction illustrates the emerging model. In September 2025, TenneT Hold- ing sold a 46% stake to a consortium of APG, GIC and NBIM for EUR9.5 billion, at an enterprise value of approximately EUR40 billion (EV/RAB multiple of 1.09). In February 2026, KfW (on behalf of the Ger- man state) agreed to acquire a further 25.1% stake for approximately EUR3.3 billion. TenneT Holding will retain at least 28.9%. TenneT’s CEO described the dual involvement as reflecting the “increasing investment agenda and the new geopolitical reality”. Following completion, the German state will hold minority interests in three of the four TSOs, alongside existing positions in 50Hertz (20%) and TransnetBW (24.95%). Similar transac- tions include Apollo’s co-investment in Amprion, and TransnetBW’s partial sale to an investor consortium. The calibre of investors and the premium to the regu- latory asset base confirm strong private appetite for regulated transmission infrastructure. The investment thesis rests on regulated revenue certainty, long-dated capex programmes providing visible growth, and the essential nature of these assets. However, the con- current increase in state influence raises questions about governance dynamics and the extent to which private investors can exercise meaningful influence over strategic decisions. Distribution: fragmentation, consolidation and financing The distribution sector presents a fundamentally dif- ferent challenge. Germany has over 860 distribution system operators (DSOs), managing more than 1.8 million km of grid – a fragmented landscape domi- nated by municipalities and their Stadtwerke . Invest- ment needs are rising rapidly, driven by electrification, e-mobility, heat pumps, data centres and distributed renewable integration. Hundreds of smaller munici- pal utilities are struggling with the capital required for smart grids and digitalisation. Platform models are emerging as a response, consolidating systems into joint holding companies, creating investment capac- ity and improving capital markets access. Structures such as HanseWerk and the Thüga model demon- strate the practicality of such combinations.
Municipalities generally wish to retain strategic influ- ence, which limits outright disposals but opens space for minority investments and structured financing. Financing is diversifying towards SPV/bond struc- tures, ABS-like tranche instruments, and EU debt fund lending – all designed to channel institutional capi- tal into a historically municipal asset class. Distribu- tion charges are set under incentive-based revenue cap regulation, but the adequacy of that framework depends on the ongoing incentive regulation reform of the Federal Network Agency ( Bundesnetzagentur – BNetzA). Grid Infrastructure: Connection Scarcity and Regulatory Reform The maturity-based allocation procedure The introduction of the maturity-based allocation pro- cedure ( Reifegradverfahren ) at transmission level from 1 April 2026 represents a paradigm shift: grid con- nection is no longer allocated on a “first come, first served” basis, but competitively as a scarce resource; the technically available connection points are already reserved for the coming five years. Applications must be accompanied by a fee of EUR50,000 and a realisation deposit of EUR1,500/ MW. Projects are scored on land and permitting sta- tus, technical concept, the applicant’s capability, and grid benefits; where capacity is insufficient, only the highest scoring projects are awarded, with reserva- tions lapsing upon milestone non-compliance. For lenders, this creates a new development risk cat- egory affecting conditions precedent and financial close timing. The subjective scoring elements intro- duce administrative discretion that may give rise to legal challenges by unsuccessful applicants. Grid fee reform The BNetzA’s Allgemeine Netzentgeltsystematik Strom (AgNes) procedure – a fundamental reform of the grid fee framework expected to conclude by the end of 2026 – may introduce grid fees for generators and storage, as well as multiple tariff components (capac- ity, volumetric and dynamic charges). A generator-side grid fee would materially affect the investment cases of renewable generators, storage assets and flexible loads. Projects reaching financial close before the
118 CHAMBERS.COM
Powered by FlippingBook