EIB Grants €400 Million Loan for Green Energy Grid Expansion in Thuringia

EIB Grants €400 Million Loan for Green Energy Grid Expansion in Thuringia

(IN BRIEF) The European Investment Bank (EIB) is providing a €400 million loan to Thüringer Energie AG (TEAG), a municipal energy supplier in Thuringia, Germany, to upgrade and digitize the electricity grid. This investment, totaling around €600 million, aims to modernize the grid infrastructure, facilitate the integration of renewable energy sources like wind and solar power, and support the energy transition. TEAG plans to double its investments in energy networks, hiring at least 300 additional staff to implement the ambitious program. The project, crucial for climate action and environmental sustainability, is part of the EU’s efforts to accelerate the transition to renewable energy under the REPowerEU plan.

(PRESS RELEASE) LUXEMBOURG, 16-Apr-2024 — /EuropaWire/ — The European Investment Bank (EIB) is lending €400 million to municipal energy supplier Thüringer Energie AG (TEAG) to upgrade and digitise the electricity grid in Thuringia. The co-financed EIB project totalling around €600 million will upgrade and expand the grid in rural areas to meet the needs of the energy transition.

TEAG is the leading energy service provider in the German federal state of Thuringia. It supplies the region with electricity, natural gas and heating as well as providing telecommunication services and public charging infrastructure for e-mobility. Around 620 municipalities and towns in Thuringia hold the majority share (84.8%) of the company, which was brought back into public ownership in 2013 after previously belonging to energy supplier EON.

In the coming years, the network operations of TEAG’s subsidiary TEN will focus on transforming electricity grids. TEAG is set to double its investments in energy networks and facilities over the next several years. Its municipal shareholders increased their equity for this purpose in 2023. At least 300 additional staff, most of them technicians, will be hired by 2028 to see through the ambitious investment programme, with the recruitment campaign set to begin shortly.

As part of the investment programme, new power cables and overhead lines of all voltages will be installed, and others will be replaced. Substations will also need to be built and modern network components will be required for automated and digital dispatching. The investments are necessary to upgrade the grid to connect more decentralised producers and users of solar and wind power, among them consumers who want to connect solar-panels, heat pumps and wall boxes to benefit from the digital transformation.

The overarching goal is to ensure a reliable and safe power supply in Thuringia as the demand for electricity will grow. TEAG is a good example of how a municipal energy service provider and grid operator can implement an extensive network expansion and digitisation project at a regional level with access to favourable European Union financing.

Germany’s power grids currently often are a bottleneck to the rapid expansion of renewable energy. Grid development is therefore crucial for the energy transition. With support of the EU’s REPowerEU plan seeking to accelerate this transition, the EIB can finance more than the usual maximum of 50% of this project.

EIB Vice-President Nicola Beer, who oversees EIB financing in Germany, said: “Modern power grids are vital for ensuring a future-proof and sustainable energy supply for people and businesses in Thuringia. The grid needs to be readied to handle the feed-in of larger volumes of electricity from wind and solar power. The development of the grid also in rural areas will help to reduce greenhouse gas emissions and improve energy security for the people of Thuringia.”

TEAG Chief Executive Officer Stefan Reindl said: “Like the rest of the German energy industry, TEAG faces an enormous challenge as the overhaul and expansion of energy networks requires huge investments. Without access to reliable and affordable financing opportunities, these network infrastructure projects would be impossible to implement. Utilities such as TEAG need strong financial partners such as the EIB to help us with projects of this scale. We will now be able to double our planned investments by 2028.”

Background information

EIB

The European Investment Bank (ElB) is the long-term lending institution of the European Union, owned by its Member States. It finances sound investments that contribute to EU policy objectives. EIB projects bolster competitiveness, drive innovation, promote sustainable development, enhance social and territorial cohesion, and support a just and swift transition to climate neutrality. EIB projects bolster competitiveness, drive innovation, promote sustainable development, enhance social and territorial cohesion, and support a just and swift transition to climate neutrality.

The EIB Group, which also includes the European Investment Fund (EIF), signed a total of €88 billion in new financing for over 900 projects in 2023. These commitments are expected to mobilise around €320 billion in investment, supporting 400 000 companies and 5.4 million jobs.

All projects financed by the EIB Group are in line with the Paris Climate Accord. The EIB Group does not fund investments in fossil fuels. We are on track to deliver on our commitment to support  €1 trillion in climate and environmental sustainability investment in the decade to 2030 as pledged in our Climate Bank Roadmap. Over half of the EIB Group’s annual financing supports projects directly contributing to climate change mitigation, adaptation, and a healthier environment.

Approximately half of the EIB’s financing within the European Union is directed towards cohesion regions, where per capita income is lower. This underscores the Bank’s commitment to fostering inclusive growth and the convergence of living standards.

EIB and energy security: Between 2023 and 2027, the EIB will provide an additional €45 billion to finance renewable energy in support of the REPowerEU objective of ending Europe’s dependence on Russian fossil fuel imports. In December 2023, the EIB also announced that it would provide €5 billion in guarantees as part of the EU wind package to support lending to the wind power industry. Through these measures, the EIB is making a significant contribution to Europe’s energy independence.

TEAG: With around 2 000 employees, the TEAG Group is Thuringia’s leading energy service provider. The municipal company operates a 33 000 km electricity grid in Thuringia through its subsidiary TEN Thüringer Energienetz GmbH. In total, the company provides energy and other services to more than 500 000 customers. TEAG’s seven-network strategy covers charging networks (e-mobility), lighting networks (street lighting), fibre optic networks (communication), water networks, heating networks (district heating, etc.), gas/hydrogen networks and electricity networks. TEAG is the driver of the energy transition in Thuringia.

Media Contact:

Donata Riedel
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+352 4379 – 86192

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SOURCE: European Investment Bank