The European Investment Bank (EIB) is providing Dutch-German TSO TenneT with a loan of €450 million ($440 million) for the construction of a 185km electricity transmission corridor — the Ostbayernring — connecting Redwitz to Schwandorf in the south-east of Germany.
Ostbayernring. Courtesy EIB.
The project is part of the federal grid expansion plan that aims to increase the grid’s capacity and prepare it for better integration of renewable energy.
The Ostbayernring will play a key role for the Oberfranken and Oberpfalz regions. Along its route, there is already significantly more energy produced from wind power and photovoltaic plants than is needed locally. In the future, this green energy will be transported to the major centres of consumption. It is thus considered an important step for the energy transition and security of supply.
According to the EIB, there has recently been a significant increase in the renewable energy available in the northern parts of Germany near the North Sea and the Baltic Sea, while several thermal and nuclear power plants in Bavaria have been shut down.
The existing grid structure has to be adapted to the challenges of transporting energy from north to south, but also within the regions.
As the existing structure would not be able to fulfil the security of supply criteria in the future without enhancement, the capacity of the transmission network between Redwitz and Schwandorf must be increased.
9th loan from EIB to TenneT
As the project supports the integration of renewable energy, the loan is eligible for climate change mitigation under the EU taxonomy criteria.
The project is expected to deliver extensive economic benefits, as it will help reduce the current, significant grid management costs caused by the existing bottleneck. In the future, it will also set the conditions for increases in cross-border transmission capacity with the Czech Republic, thereby strengthening the European energy system.
With this 9th loan, the overall EIB financing of projects with TenneT has increased to €2.1 billion ($2.05 billion). In Germany it’s the third transaction, including Nordlink, interconnecting Norway and Germany across the North Sea, as well as connecting Offshore windfarms to the German grid.
EIB vice-president Kris Peeters said on the investment: “The new electricity line is crucial for the integration of an increased amount of regenerative and volatile energy into the power grid in Bavaria. The EIB is proud to continue the longstanding partnership with Tennet by supporting its first green-loan project. The upgrade of the Ostbayernring will help reduce greenhouse gas emissions in Germany and benefit energy-security in Europe as a whole.”
TenneT chief financial officer Arina Freitag added: “We welcome the fact that EIB is once again underlining its commitment to our grid expansion projects and thus to the energy transition.
“The Ostbayernring is a good example of how sustainable financing can strengthen security of supply and the green transformation of an industrial region at the same time.”
