EIB Lends $425.7 Million for Thuringia's Grid Upgrades

The European Investment Bank (EIB) has agreed to back Thüringer Energie AG (TEAG) in upgrading and digitizing Thuringia’s electricity grid with a EUR 400 million ($425.7 million) loan.

The loan will be used in a EUR 600 million ($638.5 million) project that will upgrade and expand the grid in rural areas to meet the needs of the energy transition, EIB said in a media release.

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 provides telecommunication services and public charging infrastructure for e-mobility. Around 620 municipalities and towns in Thuringia hold the majority share (84.8 percent) in the company, which was brought back into public ownership in 2013 from energy supplier EON.

In the coming years, TEAG plans to increase investment in energy networks and facilities. Municipal shareholders upped their equity in 2023 for this purpose, the press release said.

As part of the investment program, new power cables and overhead lines of all voltages will be installed, and others replaced. Substations will be built, and modern network components installed for automated and digital dispatching.

These investments are needed to upgrade the grid to connect more decentralized producers and users of solar and wind power, including consumers seeking to connect solar panels, heat pumps, and wall boxes to benefit from digital transformation. The main goal is to ensure a reliable and safe power supply in Thuringia amid growing electricity demand, the press release said.

In the TEAG project, EIB has been able to account for more than the usual 50 percent of the project fund as the project is supported through the REPowerEU plan, which seeks to accelerate the bloc’s energy transition, EIB 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”, EIB Vice President Nicola Beer, who oversees EIB financing in Germany, said.

“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”.

“Like the rest of the German energy industry, TEAG faces an enormous challenge as the overhaul and expansion of energy networks requires [sic] 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”, TEAG Chief Executive Stefan Reindl said.

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