(Bloomberg) -- Germany is nearing a deal to buy its largest power grid from Dutch state-owned operator Tennet Holding BV within weeks, a move which could help ease the country’s transition to renewable energy.
The parties involved in the transaction came closer on key details at a meeting on Wednesday, people familiar with the matter said. The valuation could come in at the lower end of a previously discussed range of €20 billion to €30 billion, they said.
Both countries aim to strike a deal in principle within the next two weeks and have the Dutch parliament approve it before the start of a recess in late October, and prior to general elections on Nov. 22, some of the people said, asking not to be identified because the information is private.
A representative for TenneT said the discussions with the German state were still ongoing, but declined to comment further on details. A spokesperson for the Dutch finance ministry also declined to comment, as did a representative for the German economy ministry.
The planned acquisition is part of Germany’s efforts to consolidate the country’s power grids and bolster energy security as the network needs investment that the current Dutch owners are seen as unlikely to provide. More control will also help Germany reach its goal of climate neutrality by 2045, an undertaking that requires a massive overhaul of the nation’s grid to link the offshore wind produced in the north with its industrial heartland in the south.
TenneT said earlier this year that it’s exploring a sale of its German business to Berlin because its owner, the Dutch government, is looking for alternatives to finance the business. It noted that “both the Dutch and German government prefer to fund, control and own their national electricity grid.”
The country will need to spend around €15 billion more to upgrade the grid, according to estimates. That investment is a bargaining chip for Germany to try to get the network for a lower price.
The German government plans to finance the TenneT deal without additional federal debt, with officials planning instead to borrow the funds via the state-run KfW bank to avoid breaching the constitutional debt brake, Bloomberg reported earlier this year.
Both TenneT and the governments have already put in place numerous financial commitments to support the sale, and a delay could end up being costly, adding to the deal’s urgency, according to one of the people.
--With assistance from Cagan Koc.
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