Federal Network Agency approves investment budget of around € 4.3bn

Kurth: "We have set positive signals for the much-needed investment in German electricity and gas grids"

In 2009, the Federal Network Agency took a decision on over 200 applications for the approval of investment budgets submitted by gas and electricity companies. All in all, investments totalling around € 4.3bn were approved, around €4 bn of which account for investment in (electricity) transmission grids, approx. € 80 million which account for investment in (gas) pipelines systems and around € 230 million which account for investments in electricity distribution grids.

"Our decisions set positive signals for the much-needed investment in the energy grids and make an important contribution towards enhancing supply certainty in Germany. They also give crucial impetus for growth and employment especially in the current economic climate", the President of the Federal Network Agency, Matthias Kurth, said.

Under the Incentive Regulation Ordinance, transmission system operators may apply for investment budgets for major projects. This may be the case where investments are needed to guarantee the quality of supply, to integrate new power plants into the system and to arrange for the transfer of energy from renewable sources, particularly by means of the connection of offshore wind parks. In accordance with the approval issued, transmission system operators will be able to adapt the revenue cap specified by the Federal Network Agency as part of incentive regulation to the cost of capital incurred by the approved investment projects as from 1 January 2010.

"Our decisions enable transmission system operators to generate a reasonable return on capital. The transmission system operators are now in a position to deal adequately on a safe basis with the system requirements arising from pan- European gas and electricity trading and the desired promotion of renewable energy. This means we have managed to strike the right balance between the conflicting interests of low network charges on the one hand and necessary transmission grid investments on the other" Mr. Kurth said.

In 2008 and 2009, the Federal Network Agency received about 480 applications for the approval of investment budgets. Around 200 applications have already been approved, the remaining 280 are currently being examined. The investment budgets total approximately € 13bn. The majority of the investments applied for worth roughly € 11bn were earmarked for the power sector. Of these, the larger part amounting to about € 9bn involved transmission system operators.