EIB lending €400M to Thüringer Energie to digitise electricity grid in Thuringia

EIB is granting a loan of €400 million to expand municipal power grids in the German federal state of Thuringia

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.”