Germany's E.ON sells power grid to Dutch TenneT

German electricity provider E.ON has sold its high-voltage grid to the Dutch network operator TenneT for 885 million euros, making TenneT the first cross-border grid administrator in Europe.

TenneT is the grid administrator for the entire Dutch electricity network, and is fully owned by the Dutch government. Its acquisition of E.ON's German grid is part of the liberalisation of the electricity sector in Europe.

TenneT director Mel Kroon said the expansion into Germany should lead to lower electricity prices in the Netherlands. Prices are historically lower in Germany because many power stations there run on coal, which makes them cheaper than the gas-powered stations that dominate in the Netherlands. Lower prices should improve the competitiveness of large customers such as steel company Corus and chemical company AkzoNobel, Kroon said.

Earlier this year there was criticism over foreign energy companies buying up Dutch companies. Essent and Nuon were taken over by RWE from Germany and Vattenfall from Sweden respectively. It was feared the Netherlands would lose control of its energy supply. Now a Dutch state-owned company is doing the same abroad.

With the E.ON acquisition the Netherlands is on its way to becoming the energy hub for Northwestern Europe. The largest gas storage facility in Europe is being built near Bergermeer. Two years ago Gasunie, another state-owned company, bought a large gas network in Northern Germany.

TenneT will assume control over the E.ON network on January 1, 2010. The acquisition is financed through ING and the Royal Bank of Scotland.