TenneT invests €1.9bn in substations construction and modernisation

Transmission system operator (TSO) TenneT has signed a €1.9 billion ($2 billion) framework contract for the upgrade of substations, including the supply of 110 compensation coils and 160 power transformers for Germany and the Netherlands.

The framework agreement, signed between TenneT and Siemens Energy, Hitachi Energy, GE Grid, and Royal SMIT, allocates €1.16 billion ($1.23 billion) for the modernisation of German substations and €730 million ($772.7 million) for Dutch substations.

In total, 98 power transformers were tendered for Germany and 61 for the Netherlands. Sixty-eight compensation coils were allocated for the Netherlands, and 38 for Germany. These assets will be deployed not only in maintenance projects but also in new construction projects.

The substations are tasked with taking over system services for frequency and voltage stability, roles previously fulfilled by conventional power plants.

The framework agreement also underscores a strategic partnership with the four suppliers, each of whom secures roughly a quarter of the total contract volume.

The contract has a minimum term of two years with the option to extend it up to five times, each for one year. The transformers and compensation coils procured under the contract will be deployed in both maintenance and new construction projects.

Tim Meyerjürgens, COO of TenneT, explains: “The energy transition requires a complete system overhaul, not only with new power lines but also with state-of-the-art substations. To enable the integration of renewable energies into the transmission grid via the distribution grid, we need a significant number of new high-performance transformers.

“At the same time, our substations will assume system services for frequency and voltage stability, which were previously provided by conventional power plants. For this, we require additional equipment such as compensation coils.”

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Substations – a critical role

Substations play a crucial role in the energy distribution network, acting as connectors between TenneT‘s transmission grid and distribution grid operators.

Their primary components are transformers, responsible for converting electricity to lower voltage levels.

Substations increasingly handle the reverse process, enabling the transportation of locally generated renewable energy back into the transmission grid.

This dual role allows substations to supply electricity to local regions and transport renewable energy to demand centres.

As part of the energy transition, substations are increasingly taking on system services for frequency and voltage control.

An important tool for voltage control are compensation coils. Their main function is to provide inductive reactive power to the grid, compensating for capacitive reactive power.

Reactive power is essential for the flow of electricity, used to adjust the voltage in the power grid as needed, either raising or lowering it to maintain a stable voltage level.

However, reactive power reduces the capacity of the power grid for usable active power, which is the energy that actually reaches the consumer.

Therefore, it is important to maintain the right ratio of active to reactive power: if the reactive power component is too low, voltage drops, limiting the transmission of electricity. If the reactive power component is too high, it can block the grid, reducing the transport of active power. Compensation coils help maintain this balance.