©50Hertz
The 50Hertz group wants its grid to be 100% supplied by renewables by 2032 – up from 72% today. To meet its bold ambition, the group, which provides electricity in northern and eastern Germany, including Berlin and Hamburg, is set to invest EUR21 billion by 2028 to expand and enhance its infrastructure to ensure it can transmit electricity safely and securely from centres of generation of renewable energy to commercial customers as well as individual consumers.
“That’s a huge challenge. Nobody has done that before, and these numbers are mind-boggling. Nevertheless, we took up the challenge,” says Leonhard Bayer, Head of Treasury at 50Hertz/Eurogrid, which is a subsidiary owned by Belgian Elia Group (80%), and the German state-owned investment and development bank, KfW Bank Group (20%).
He adds: “We are reliant on capital markets as the cornerstone of our capital structure, and that’s why we continuously need strong banking partners like BNP Paribas… They have excellent investor access internationally, which is required because only getting the funding from within Germany would not be enough.”
Over the past 13 years, BNP Paribas’ partnership with 50Hertz has evolved from cash management services to raising capital on the markets. BNP Paribas has helped 50Hertz significantly diversify its funding sources, including the company’s first green bonds in 2020 for which proceeds were used to connect two offshore wind farms with a capacity of up to 1.5 gigawatts to the grid.
“We suggested launching a green bond because this is clearly a green project. We know investors that like to put their money into the energy transition, and that’s why we were able to launch the bond,” says Christian Alisch, a Senior Banker at BNP Paribas. “We have global outreach, and that’s how we can source new funding for the company. We will continue to support 50Hertz with future funding plans because we like the business, and we understand the CapEx plans. It’s a close collaboration.”
Most recently, BNP Paribas helped syndicate a EUR3 billion revolving credit facility inter alia to back up the group’s investment programme, and advised on a EUR650 million bond issuance in 2023 for investments into its grid infrastructure expansion.
With electricity consumption in the EU expected to increase by 60% by 2030, Marco Nix, Chief Financial Officer of 50Hertz, observes: “The grid is the backbone of the energy transition…that’s something we need to prepare ourselves for.”