Energinet taps Siemens Energy in transmission expansion tender

Danish TSO Energinet has signed an agreement with Siemens Energy on a comprehensive expansion of the power grid in Western Denmark.

The framework agreement with Energinet runs for up to eight years and will see Siemens Energy responsible for construction and reinforcement of approximately 50 new 150kV high-voltage substations in Jutland and on Funen.

By 2030, Denmark must quadruple its electricity generation from wind and solar power, with more to come in the following decades.

During the same period, electricity consumption is expected to multiplied with the switch to EVs and electric heat pumps and convert solar and wind power to hydrogen and green fuels for shipping and industry.

Henrik Riis, CEO of Energinet Electricity Transmission, commented in a statement: “In just a few years’ time, many more high-voltage substations on the electricity grid’s ‘motorways’ will be needed in order to secure that the renewable electricity can be connected to the grid and transported around the country.

“We are incredibly pleased that with Siemens Energy we get a long-term, strategic partnership, thus ensuring that we can keep up with the dramatic development.”

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Siemens Energy won the contract after a tender involving three other companies also bidding for the task.

The number of high-voltage substations Siemens Energy is to build or expand, and where this is going to happen, will depend on where the new green electricity generation and electricity consumption will be placed in the western part of Denmark.

Some high-voltage substations are already on the drawing board, while other expansions and reinvestments will be added on an ongoing basis. Therefore, states the company in a release, the agreement is also a framework agreement of up to approximately DKK10.5 billion (€1.4 billion; $1.6 billion).

Added Tim Holt, member of the Executive Board for Siemens Energy: “There is no energy transition without transmission, and that can only happen with the availability of switchgears and transformers.

“Grid investments are accelerating dramatically in Europe and worldwide, and customers are competing for manufacturing slots. This agreement enables Siemens Energy to plan its capacities, which will benefit both Danish and European energy infrastructure. We are excited to be trusted to deliver on the grid acceleration in Denmark.”

Cancelled tenders

Concurrently with the agreement, Energinet has cancelled two other tenders, including a similar tender for the expansion of high-voltage substations in Eastern Denmark and another for cable laying throughout the country.

According to the company, increased global prices of components and materials have created uncertainty regarding partnerships and projects. Additionally, the risk of taking on long-term partnerships has affected the offers they received.

In the cable area specifically, Energinet believes that the tender prices were too high: “Out of consideration for the total costs, we choose to proceed with the substation agreement in Western Denmark only,” said Riis.

“Otherwise we risk a major delay on our construction projects. That would compromise the green transition. The risk of delay is not as high in Eastern Denmark. Here we estimate that we ourselves can achieve the necessary progress, spending less money and with other forms of contracts. With Siemens Energy handling the expansion in Western Denmark, we can devote more of our own resources to Eastern Denmark.”

Added Riis: “We still need external suppliers to ensure rapid and significant expansion of the electricity transmission grid.

“The task is enormous, and we will not reach our goal by using the same methods as we did a few years ago. We will continue to offer large and many projects of cable laying and high-voltage substations in Eastern Denmark – just in packages with known projects, where the delivery model is adapted to the nature of the projects.”