The Dutch central government and shareholders have reached an agreement on an equity contribution to Stedin

The Dutch central government and the Shareholders’ Committee of Stedin Group have reached an agreement on the central government becoming a new shareholder. The transaction is subject to approval by the Dutch States General and the current shareholder of Stedin.. As a result, the government will strengthen Stedin’s equity by €500 million and will take an 11.9% shareholding in the grid operator. Stedin requires additional capital to continue to invest in the expansion and reinforcement of the electricity grid.

Maarten Struijvenberg, chairman of the Shareholders’ Committee and alderman responsible for finance in Rotterdam: “It is great news that we as shareholders have reached an agreement with the Central government. The government becoming a shareholder is an important step.. With this equity contribution we jointly work towards sustainable energy supply for the inhabitants and entrepreneurs in the service area of Stedin. As shareholders, we have already contributed €451 million. With the additional capital from the government, Stedin can continue with its planned investments to reinforce and expand the grid for sectors such as residential construction.”

Danny Benima, CFO of Stedin: “This is a boost to the energy transition in the provinces of Utrecht, Zeeland and Zuid-Holland. With the prospect of €500 million additional capital, we can continue with the much-needed investments, which means more distribution substations, transformer stations and cabling. Now that the Central government is becoming a shareholder, their equity contribution also has a positive effect on our credit rating. Altogether will this also result in an addional borrowing capacity of approximately €1.7 billion.”

In the coming week, the agreed transaction will be dealt with in the current shareholder bodies and presented to the municipal councils.

Demand for electricity to double

Stedin is working on reinforcing and expanding the electricity grid because the demand for electricity is set to double by 2030. To connect homes and to ensure that businesses can switch from fossil fuels to sustainable electricity, as well as installing more charging points and solar and wind farms, Stedin is investing heavily in the expansion of the electricity grid: at least €8 billion by 2030.

Koen Bogers, CEO of Stedin: “In recent years, electrification has gained momentum. In the short term, this requires additional capacity in the electricity grid and means that Stedin has to ramp up its investments swiftly. This year, it is expected to invest €825 million, which is double the amount of five years ago. This acceleration means that Stedin needs additional equity if it is to continue to adequately meet its borrowing needs. The government shareholding provides us with more certainty for the years ahead.”

Different approaches

Stedin is working on different approaches to tackle the capital issue. First and foremost, it is working more efficiently and saving costs. This approach has allowed Stedin to achieve a structural saving of €166 million in recent years. The current 42 shareholders, predominantly municipalities in the province of Zuid Holland, have in turn contributed €451 million. If the States General and Stedin’s shareholders agree, the government will invest a further €500 million, which means that, after years of talks, Stedin will have a high level of certainty when it comes to its capital requirements. The provinces of Utrecht and Zeeland have recently stated that they are also interested in becoming shareholders and Stedin remains in discussion with them about this.