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Elia Group: Europe's Energy Transition Infrastructure Giant
I. Introduction & Episode Roadmap
Picture this: It's a typical weekday evening in Brussels, and eighteen million Germans in Berlin, Hamburg, and the eastern states flick on their lights without a second thought. Simultaneously, eleven million Belgians power up their devices as the sun sets over Bruges. None of them notice the invisible ballet of electrons coursing through 19,741 kilometers of high-voltage cables stretching from the North Sea to the Saxon forests—cables owned and operated by a company most have never heard of.
Elia Group is a key player in electricity transmission, ensuring that production and consumption are balanced around the clock, supplying 30 million end users with electricity. Through its subsidiaries in Belgium (Elia) and the north and east of Germany (50Hertz), the group operates 19,741 km of high-voltage connections, making it one of Europe's top 5 transmission system operators.
The central question driving this analysis is simple yet profound: How did a Belgian regulated utility—born from the messy aftermath of EU market liberalization—transform itself into a European energy transition powerhouse now building the world's first artificial energy island?
The company committed substantial investments totalling €4,804.3 million in the grid in 2024, driving forward society's decarbonisation efforts. This led to a regulatory asset base of €18.5 billion, marking a notable increase of 27.8%. Elia Group's updated capex plan for the period 2024-2028 totals €31.6 billion in investments, of which €26.8 billion will be deployed during 2025-2028.
The scale of opportunity here is staggering. The European Commission estimates that €584 billion in grid investment is needed by 2030, while the European Court of Auditors projects between €1.99 trillion and €2.29 trillion by 2050. Globally, electricity grids are the backbone of the energy transition, yet the networks we have today are not ready for the future. At least $21.4 trillion needs to be invested in the electricity grid by 2050 to support a net-zero trajectory for the world.
Several interlocking themes run through Elia's story: the economics of regulated monopolies, the EU's tortuous path toward energy liberalization, infrastructure as the indispensable enabler of decarbonization, and a cross-border expansion playbook that other TSOs would do well to study. The company aspires to be a catalyst for a successful energy transition, helping to establish a reliable, sustainable and affordable energy system. By expanding international high-voltage connections and incorporating ever-increasing amounts of renewable energy into its grid, it is promoting both the integration of the European energy market and the decarbonisation of society.
For long-term investors, Elia represents a rare opportunity to own the picks-and-shovels play on the European energy transition—with the downside protection of a regulated utility and the upside of generational capex growth.
II. The Belgian Context & Energy Market Origins
To understand Elia, you must first understand the peculiar geography and history of Belgian energy. Belgium sits at the crossroads of European power markets—France to the southwest, Germany to the east, the Netherlands to the north, and the United Kingdom just across the English Channel. This small, densely populated nation of 11 million has always been more interconnected than most realize, both literally and figuratively.
For most of the 20th century, European electricity markets operated as national monopolies. Vertically integrated utilities controlled everything from power plants to transmission lines to the retail bills that landed in consumers' mailboxes. Three decades ago, the European electricity sector was a monopoly. Vertically integrated companies were responsible for generation, transmission and supply of electricity. Since those companies also held the grid infrastructure, market access of new players was impossible. Incumbent vertically integrated utilities basically were able to act as gatekeepers to the grid.
The European Union began dismantling this structure in the 1990s. During the 1990s, the European Union and its Member States began a gradual process of opening up their monopolistic national electricity and gas markets to competition. This initiative unfolded through several legislative packages: The First Energy Package, adopted between 1996 and 1998, introduced a first liberalisation of national energy markets; The Second Energy Package, adopted in 2003, allowed industrial and domestic consumers to choose their own energy suppliers from a wider range of competitors; The Third Energy Package, adopted in 2009, introduced rules on the separation of energy supply and generation from transmission networks (unbundling).
The logic of unbundling was straightforward: if vertically integrated companies controlled both generation and transmission, they could discriminate against competitors trying to access the grid. In most cases, liberalization was accompanied by unbundling, which made a distinction between generation, transmission and distribution/retail in the energy sector. The aim was to make electricity supply more efficient by integrating competitive forces where possible and by integrating regulation where necessary.
Against this backdrop, Elia was born. Elia was created as a result of the unbundling of the electricity market. On 28 June 2001, Elia became an independent public company by merging the Company for the Coordination of the Generation and Transmission of Electrical Energy (CPTE) with the Electrabel entity managing the 30-380 kV grid.
Founded in 2001, the company operates under the regulatory framework of the Belgian electricity market. It manages the high-voltage grid in Belgium, facilitating energy transmission across the nation and contributing to the integration of renewable energy sources.
The timing was perfect—and intentional. European regulators essentially mandated the creation of independent transmission system operators, and Belgium complied by spinning off its grid infrastructure into a new entity. This transaction represents a major step forward in the construction of the European electricity market that Elia has been supporting since its inception as an independent TSO in 2001.
Elia owns Belgium's 150 to 380 kV grid infrastructure and almost 94% of its 30 to 70 kV grid infrastructure. This near-complete ownership of Belgian transmission infrastructure would prove crucial for the company's future.
For investors, the lesson from Elia's founding is timeless: regulatory change creates opportunity. When governments restructure entire industries, the companies that emerge often enjoy durable competitive advantages—particularly when they inherit essential infrastructure that would be uneconomic to replicate.
III. The Regulated Utility Business Model Deep Dive
Before diving into Elia's strategic moves, investors must understand the mechanics of how transmission system operators make money. This is a business unlike almost any other, where the regulatory compact—the implicit agreement between the company, regulators, and society—determines nearly everything.
The company transmits electricity from generators to distribution system operators, which then supply SMEs and homes. Elia also has contracts with major industrial users that directly connect to its high-voltage grid. Elia's main activities include managing grid infrastructure (maintaining and developing high-voltage installations), managing the electrical system (monitoring flows, maintaining the balance between electricity consumption and generation 24/7, importing and exporting to and from neighbouring countries) and facilitating the market.
The heart of the regulated utility business model is the Regulated Asset Base (RAB). Here's how it works: Elia invests in grid infrastructure, and those investments get added to its RAB. Regulators then allow the company to earn a predetermined return on that RAB, plus recovery of operating expenses. The higher the RAB, the higher the allowed earnings—creating powerful incentives to invest.
The company committed substantial investments totalling €4,804.3 million in the grid in 2024, driving forward society's decarbonisation efforts. This has led to a regulatory asset base of €18.5 billion, marking a notable increase of 27.8%.
This RAB expansion is the key metric for understanding Elia's growth trajectory. When the RAB grows at double-digit rates, earnings follow—albeit with a regulatory lag.
Elia's ownership structure reflects its strategic importance. Elia's shares are listed on Euronext, 44.79% is owned by Publi-T SCRL, a cooperative company representing Belgian municipalities and intermunicipal companies, 9.30% by Katoen Natie, 4.25% by Interfin, 3.32% by Publipart, a holding company of EDF Luminus, and 0.97% by Belfius Insurance, while the rest (37.37%) is free floating (2024).
The Federal Holding and Investment Company (FHIC) holds a significant stake of 25.0%, representing the Belgian government's interest in the company. This ownership reflects the strategic importance of Elia Group in national infrastructure.
This concentrated ownership by municipalities and government entities is typical for European TSOs and provides stability—major shareholders are unlikely to agitate for short-term profit maximization at the expense of long-term infrastructure investment.
Why do infrastructure investors love TSOs? Several reasons:
Predictable cash flows: Regulated returns smooth out the volatility that plagues merchant power producers.
Inflation protection: Regulatory frameworks typically allow TSOs to recover cost increases, providing natural inflation hedges.
Essential service monopoly: Building parallel high-voltage transmission infrastructure would be economically irrational. Once you own the grid, you own it.
Duration matching: Pension funds and insurers have long-dated liabilities that match well with TSO cash flows, creating natural demand for the asset class.
With a reliability level of 99.99%, Elia Group provides society with a robust power grid, which is important for socioeconomic prosperity.
The risk-return profile is asymmetric in the investor's favor: limited downside (regulators need the grid to function), meaningful upside (the energy transition is driving unprecedented capex growth). Understanding this dynamic is essential for evaluating Elia's strategic decisions.
IV. INFLECTION POINT #1: The 50Hertz Acquisition (2010) — The German Gambit
The global financial crisis of 2008-2009 left carnage across Europe's corporate landscape. Swedish utility Vattenfall, like many industrial giants, found itself needing to shore up its balance sheet. Among its assets was 50Hertz, the transmission system operator covering eastern Germany—including the reunified nation's two largest cities, Berlin and Hamburg.
For Elia's leadership, this represented a once-in-a-generation opportunity.
Elia System Operator (Elia), the Belgian transmission system operator (TSO), and Industry Funds Management (IFM), one of the largest global infrastructure investment managers, announced on 12 March 2010 the signing of an agreement under which they will acquire the German regional transmission system operator 50Hertz Transmission GmbH (50Hertz) from Vattenfall Europe AG, Germany's third largest electricity generator.
The agreed enterprise value was €810 million and the parties expected to complete the transaction for 50Hertz in the second quarter of 2010. Under the terms of the agreement, IFM would own 40 percent of 50Hertz, and Elia would own the remaining 60 percent stake with operational control.
The strategic rationale was compelling. 50Hertz operates the 220 kV and 380 kV networks and has about 10,200 km of power lines covering about 30% of Germany by area. Eastern Germany was emerging as one of Europe's most wind-rich regions, and whoever controlled the transmission grid would be positioned to profit from the massive renewable integration challenge ahead.
In 2010, Vattenfall sold 50Hertz Transmission GmbH to ensure compliance with EU unbundling requirements under the Third Energy Package, which mandates the separation of transmission activities from generation and supply to promote competition.
The regulatory approval came swiftly. The European Commission approved the transaction on May 10, 2010, confirming it met regulatory standards for ownership unbundling without raising competition concerns.
The acquisition would strengthen the role played by Elia and 50Hertz in the choir of European TSOs, thus giving impulse to the creation of a truly European grid. "This will give market players in Belgium and Germany a secure access to a larger and greener energy mix, thus reinforcing security of supply, while simultaneously increasing system security in a context where international electricity flows and variable generation constantly increase."
Following the acquisition of German TSO 50Hertz in cooperation with Industry Funds Management (IFM), Elia became one of the top five transmission system operators in Europe.
The €810 million price tag would prove to be one of the great infrastructure bargains of the decade. Why was eastern Germany such an attractive acquisition? Consider the geographic advantages:
The region hosts Germany's North Sea and Baltic Sea coastlines—prime territory for offshore wind development. It spans from the Mecklenburg coast to Saxony's industrial heartland, creating natural corridors for renewable energy transmission. And Berlin, Europe's largest city by area, sits squarely in 50Hertz territory, guaranteeing baseload demand.
50Hertz is responsible for the operation, maintenance, planning, and expansion of the 380/220 kilovolt transmission grid throughout the northern and eastern part of Germany. The grid covers an area larger than 109,360 km² and runs a length of approximately 10,000 km – the distance from Berlin to Rio de Janeiro. It is the technical backbone that reliably supplies power to around 18 million people – 24 hours a day, 7 days a week, 365 days a year.
The partnership structure with IFM—an Australian infrastructure fund—was clever. It provided capital, shared risk, and brought institutional credibility. But Elia retained operational control, ensuring the transmission expertise would remain Belgian.
For investors, the 50Hertz acquisition demonstrated several hallmarks of good capital allocation: buying quality assets during periods of distress, using structured partnerships to manage financial risk, and positioning for long-term secular trends. The energy transition was coming; Elia made sure it would be in the right place.
V. INFLECTION POINT #2: Taking Full Control of 50Hertz (2018) — Doubling Down
Eight years after the initial 50Hertz acquisition, geopolitics intervened in ways no one had anticipated.
By 2018, China's State Grid Corporation had emerged as an aggressive buyer of European energy infrastructure. The company—the world's largest utility—was systematically acquiring stakes in transmission networks from Portugal to Greece. Now it had set its sights on 50Hertz.
Germany was nearing a deal to invest in 50Hertz to fend off China's State Grid as an auction for a 20 percent stake in the German high-voltage energy network operator drew to a close. State Grid had made a final offer worth just below 1 billion euros for a 20 percent stake in the company that Australian infrastructure fund IFM had put on the block.
IFM had decided to cash out at least part of its position—and State Grid was offering top dollar. But German politicians were alarmed.
German Economy Minister Peter Altmaier had said in June that he saw a problem in letting critical infrastructure fall into the hands of investors whose motivation and background were not clear, citing 50Hertz as an example.
German politicians have viewed State Grid's interest in 50Hertz critically, amid fears that China was taking control of key technologies while protecting its own companies against foreign takeovers.
Elia held a critical card: a right of first refusal on IFM's stake. In March, Elia exercised its right to buy a first 20 percent stake in the network operator for €976 million, beating State Grid, which had already negotiated the planned purchase.
In 2018, Elia exercised its pre-emption rights to acquire an additional 20% stake from IFM Investors for €976.5 million, increasing its ownership in Eurogrid to 80% and consolidating control over 50Hertz.
The valuation math was remarkable. IFM and Elia bought 50Hertz from Swedish utility Vattenfall in 2010 for €810 million, meaning IFM was able to sell a 20 percent stake at six times the amount it paid. The entire enterprise had appreciated approximately 600% in eight years.
But Elia's balance sheet couldn't absorb the remaining 20% IFM wanted to sell. Enter the German government.
Germany blocked the sale by Australian investment manager IFM Global Infrastructure Fund of a 20% stake in the power transmission system operator (TSO) 50Hertz to China's State Grid Corporation and instructed government-owned bank KfW to acquire that stake: Belgium's power transmission system operator (TSO) Elia exerted its preemption right to acquire the 20% stake it does not already own in 50Hertz and immediately sold the interest to KfW thereafter.
According to the German Ministry of Economic Affairs and Energy ("BMWi"), KfW became active to prevent SGCC, a Chinese state-owned utility, from acquiring the 20 percent minority stake.
The resulting ownership structure proved ideal. The shareholders of 50Hertz are the Belgian holding Elia Group (80 percent), which is listed on the stock exchange, and the KfW bank group with 20 percent. A German government bank as minority partner provided political cover while Elia retained operational control.
Belgian transmission system operator (TSO) Elia completed the acquisition of 20% additional stake in Eurogrid International SCRL (Eurogrid), the holding company of the German high-voltage energy network operator 50Hertz. With the stake acquisition, Elia now owns 80% of the stake in Eurogrid and fully controls 50Hertz.
Elia stated: "The finalisation of this acquisition is a major step forward in realising Elia Group's growth strategy."
The 2018 transaction illustrated a broader theme: transmission grids had become strategic national assets. In an era of rising great-power competition, governments were no longer willing to let critical infrastructure pass into foreign hands—particularly foreign state-controlled hands.
For Elia, this geopolitical reality created a durable moat. KfW's involvement meant the German government was now literally invested in 50Hertz's success. The partnership insulated Elia from future foreign takeover attempts while providing stable, long-term capital.
VI. INFLECTION POINT #3: Nemo Link — Belgium's First Cross-Border Interconnector (2019)
While the 50Hertz drama unfolded, Elia was quietly executing another strategic priority: building Belgium's first subsea interconnector to the United Kingdom.
Nemo Link is a 1,000 MW HVDC submarine power cable between Richborough Energy Park in Kent, the United Kingdom and Zeebrugge, Belgium. The project is a joint venture between British National Grid and Belgian Elia. The 400 kV electrical interconnector is the first between the two countries, with an annual transmission capacity of 8.76 TWh.
In 2015, contracts totalling €500 million were awarded to Siemens for the construction of the two onshore HVDC converter stations and to J-Power Systems Corporation for the cable system.
The cable itself was an engineering marvel—the first subsea HVDC project in the world to use cross-linked polyethylene (XLPE) cable technology at 400 kV.
The interconnector was commissioned on 31 January 2019, enabling electricity to be exchanged in both directions.
The operating performance has been exceptional. The link has been fully operational since 31 January 2019, and has transported 29 TWh during its first 5 years; 24.75 TWh to the UK and 4.25 TWh to Belgium with an availability above 99%.
The interconnector has saved 1.4 million tonnes of carbon since 2019 – equivalent to taking 650,000 cars off the road.
What makes Nemo Link particularly interesting is its regulatory structure. Rather than earning a fixed return, the project operates under a "cap and floor" model developed jointly by British and Belgian regulators. If revenues exceed a ceiling, the excess is returned to consumers. If revenues fall below a floor, the operators are compensated. This risk-sharing structure made financing more attractive while protecting consumers from excessive profits.
The interconnector increases the opportunities for both countries to exchange renewable energy surpluses they have generated with each other and provides them with a greater amount of flexibility. With a capacity of 1,000 MW, Nemo Link also helps to facilitate security of supply and balance out electricity grids while limiting price spikes. The interconnector's operational performance during its first five years is among the best in the world for its type of asset.
The commercial success has been remarkable—so much so that consumers are receiving rebates. Due to the cap and floor regulatory model and outstanding commercial performance, over €200 million will be returned to consumers in both the UK and Belgium.
Nemo Link is a significant building block in the broader trend: Europe's electricity market is becoming increasingly integrated. As interconnectors provide more links between national electricity grids, they offer grid operators more options, boosting stability and security of supply for both countries. They may also make the market more efficient, as excess supply in one country can satisfy demand in another.
Interconnectors are the "silent heroes" of the energy transition. When the wind blows strongly in the North Sea but demand is low in Belgium, that surplus power can flow to the UK. When Belgian nuclear plants are offline for maintenance and prices spike, British electricity can flow back. This flexibility becomes increasingly valuable as intermittent renewables grow as a share of the generation mix.
For investors, Nemo Link demonstrated Elia's ability to execute complex cross-border infrastructure projects, work effectively with foreign partners and regulators, and generate returns that benefit both shareholders and consumers. These capabilities would prove essential for the company's next act.
VII. INFLECTION POINT #4: WindGrid & International Offshore Expansion (2022)
By the early 2020s, Elia's leadership recognized that the offshore wind boom would require a different kind of company—one that could move beyond regulated monopoly boundaries into competitive international markets.
In the next few years, large-scale investments in renewable energy production and the offshore grid are due to be undertaken. To make a fundamental contribution to the accelerated development of offshore energy, Elia Group created a new subsidiary: WindGrid.
WindGrid, as a subsidiary of Elia Group, aims to facilitate the energy transition in Europe and beyond: it develops, builds, owns and operates electricity transmission infrastructure. It builds transmission lines, interconnectors, and connections to offshore generation assets.
This was a significant strategic departure. Elia's core business was regulated—stable, predictable, but limited in growth potential to the territories it already served. WindGrid would be unregulated, competing for projects around the world.
Belgian electricity transmission operator Elia Group approved the establishment of a new subsidiary WindGrid, which would target the international market for offshore grid infrastructure. According to Elia Group, WindGrid is a logical step in its expansion since Europe and other markets are expected to make substantial investments in the offshore grid and renewable energy production in the next few years to accelerate the energy transition. Europe aims to increase its offshore wind capacity to 60 GW by 2030 and 300 GW by 2050.
WindGrid will act as an international energy company aimed at accelerating offshore development and will be led by Dr. Markus Laukamp from 1 April 2022, who is currently Managing Director of the German company STEAG New Energies GmbH.
The U.S. market became an immediate target. PPL Corporation (through its subsidiary PPL TransLink Inc.) and Elia Group (through its subsidiary WindGrid) announced an agreement to develop and propose innovative transmission solutions to reliably and efficiently integrate future offshore wind capacity to the onshore grid in the New England region.
This will combine PPL's extensive experience in building and operating large-scale onshore transmission in the U.S. with Elia Group's proven track record in building, integrating and operating offshore transmission, including high-voltage direct current (HVDC) networks.
The partnership with energyRe, a developer of large and complex transmission projects, provides U.S. knowledge, industry relationships and new market opportunities.
Elia's credentials for this international expansion were strong. For more than 25 years, Elia Group has been a front-runner in offshore electricity transmission. Through its subsidiaries in Belgium (Elia) and Germany (50Hertz), the company has connected 14 wind farms (3,500 MW by the end of 2022) to its onshore grid and is currently operating three HVDC subsea cable interconnectors. The company built the world's first hybrid interconnector (an interconnector that is connected to three offshore wind farms) and has pioneered many innovative projects and approaches.
WindGrid represents a classic adjacency expansion: taking capabilities honed in the core business and applying them to new markets. The risk is meaningful—unregulated businesses can destroy value if projects go poorly—but the potential reward is access to the massive global offshore wind market.
VIII. INFLECTION POINT #5: Princess Elisabeth Island — The World's First Artificial Energy Island (2022-2027)
If any single project embodies Elia's ambition to lead the European energy transition, it's Princess Elisabeth Island—an audacious plan to build the world's first artificial energy island in the North Sea.
As the world's first artificial energy island, the Princess Elisabeth Island is Elia's flagship project. Located off the Belgian coast in the North Sea, the island will serve as an electricity hub that will bundle together the cables leading to wind farms in Belgium's second offshore wind zone, helping to bring the electricity they generate back to shore. It will also act as an intermediate landing point for interconnectors that link Belgium to other European countries.
The scale is breathtaking. The island will be located 45 km off the Belgian coast in the middle of the Princess Elisabeth Zone - Belgium's second offshore wind zone. This zone will host new wind farms that will be able to produce up to 3.5 GW of wind energy.
The island is one of ETB's key projects and is the world's first artificial energy island. The Princess Elisabeth Island will be the first artificial energy island in the world hosting both high-voltage direct current (HVDC) and alternating current (HVAC) infrastructure.
The construction process itself is remarkable. Each concrete block measures 57 metres in length, 30 metres in width and 30 metres in height, and weighs 22,000 tonnes. It takes approximately three months to build one caisson.
The Belgian consortium TM EDISON, including DEME and Jan De Nul, has won the tender for the construction of the world's first artificial energy island. The construction of the foundations of the Princess Elisabeth Island began in early 2024 and will last 2.5 years.
Princess Elisabeth Island is an artificial island under construction in the North Sea, with an area of six hectares. Construction of the island began in 2024, and is expected to be completed by 2028. Construction costs are estimated at €3.6 billion.
The island will function as more than just a cable landing point. DEME says the Princess Elisabeth Island will be the world's first artificial energy island that combines both direct current (HVDC) and alternating current (HVAC). The island's high-voltage infrastructure will bundle the wind farm export cables of the Princess Elisabeth zone together, while also serving as a hub for future interconnectors with Great Britain (Nautilus) and Denmark (TritonLink).
The project has attracted significant European support. The energy island is being partly financed by the EU's COVID-19 recovery fund, having been awarded a grant of around €100 million. The Belgian government decided to award the island with a grant of approximately €100 million.
Additional financing came from the European Investment Bank. The Princess Elisabeth Island project is a cornerstone for enhancing Belgium's and Europe's energy security and independence. This initiative not only strengthens Belgium's energy infrastructure but also fosters vital interconnections with neighbouring countries, thereby promoting increased regional cooperation. Elia secured a €650 million green credit facility from the EIB for the project.
One of the project's most innovative features is its ecological design. Our teams have adopted a nature-inclusive design approach for the island: it has been designed in such a way that it will foster biodiversity and help marine life to flourish around it. In addition to minimising harmful effects on the marine environment, the island will actually boost the ecological and environmental value of the area.
Working with conservation experts, Elia has designed Princess Elisabeth Island to have a positive impact on biodiversity through its 'nature-inclusive' design. Features will include ledges for seagulls to roost on, structures for oyster beds, and an artificial reef to encourage marine life.
Belgian Prime Minister Alexander De Croo captured the strategic significance when he visited the construction site: "The North Sea is set to become the powerhouse of our energy independence, and Princess Elisabeth Island will be a crucial part of this process. Belgium has long been a pioneer in offshore wind, and by continuing to innovate, we are further consolidating our position for the future."
The island represents Europe's offshore grid future—an integrated mesh connecting wind farms across multiple nations, optimizing power flows and providing redundancy that enhances energy security. For Elia, building it first establishes the company as the go-to partner for similar projects worldwide.
IX. The German Energiewende & 50Hertz's Renewable Integration Leadership
Germany's Energiewende—literally "energy transition"—represents one of the most ambitious decarbonization programs ever attempted by a major industrial economy. And 50Hertz sits at its heart.
50Hertz, the transmission system operator responsible for all of Eastern Germany and the country's two biggest cities – Berlin and Hamburg – has set itself the target of getting the power demand in its grid area covered and securely integrated with 100% renewable energies by 2032. That is up from an annual average share of renewables in the transmission system operator's grid area of about 60% in 2019.
This target—100% renewable electricity by 2032—is staggering for a major industrial region serving 18 million people. The most advanced of Germany's grid operators in adapting to low-carbon energy sources, 50Hertz wants its grid to be 100% supplied by renewables by 2032 – up from 72% today.
"The energy transition is our number one priority. Together with our German partner KfW, we fully support the entire 50Hertz organisation to cover the electricity demand in their grid area with 100% renewable energy by 2032," Elia's then-CEO Chris Peeters stated.
The technical challenges are immense. "Today's parallel existence of a conventional fossil generation system and an energy system based on renewable sources is coming to an end. Wind and solar energy must be able to provide ancillary services in the future," 50Hertz chief executive Stefan Kapferer explained.
50Hertz has become a laboratory for grid innovation. 50Hertz will align its entire corporate strategy to meet the new goal and will use "all available knowhow for this within the framework of the legal requirements for safe and reliable network operation." This includes new approaches to system management, a digitalisation of the integration of an increasingly volatile electricity supply and participation in innovative models of sector coupling for the generation of heat and hydrogen from "green" electricity. The TSO also wants to support the federal and state governments in developing suitable areas and potential for the use of wind and solar energy.
Germany's commitment to its energy transition, or Energiewende, is one of the world's most ambitious. With the goal of sourcing 80% of its energy from renewables by 2030, Germany requires a robust and reliable grid infrastructure to meet the new electrification demands.
The investment requirements are substantial. 50Hertz is aiming to invest €21 billion by 2028 – four times more than it invested in the previous five years.
Key data for 2024 show an investment volume of €3,627 million (compared to €1,686 million in 2023) and profit under IFRS of €309.8 million (€220 million in 2023).
50Hertz's renewable integration expertise gives Elia Group a competitive advantage that extends beyond Germany's borders. The lessons learned managing a grid with 70%+ renewable penetration can be exported to other regions facing similar challenges—creating opportunities for Elia Grid International's consulting business and WindGrid's development activities.
X. The 2025 Capital Raise — Fueling the Next Decade of Growth
In March 2025, Elia announced one of the largest equity raises in European utility history—a €2.2 billion package designed to fund its massive investment program.
The PIPE comes in the context of a broader capital increase plan delivering a total of approximately €2.2 billion of equity proceeds to be raised in 2025. ATLAS with The Future Fund subscribed €234.6 million, BlackRock €117.3 million, CPP Investments €117.3 million and Publi-T/NextGrid Holding invested €380.7 million, maintaining its 44.79% ownership through a pro-rata investment. This private placement is an important step in securing Elia Group's equity funding requirements and enables Elia Group in executing its 2025 – 2028 investment plan.
The investor roster reads like a who's who of global infrastructure capital. Canada Pension Plan Investment Board (CPP Investments) is a professional investment management organization that manages the Canada Pension Plan Fund in the best interest of the more than 22 million contributors and beneficiaries of the Fund. In order to build diversified portfolios of assets, investments are made around the world in public equities, private equities, real estate, infrastructure and fixed income. At December 31, 2024, the Fund totalled C$699.6 billion.
The PIPE comes in the context of a broader capital increase plan delivering a total of approximately €2.2 billion of equity proceeds to be raised in 2025, which beyond the €850 million of the PIPE is intended to include a rights issue of approximately €1.35 billion completed before the end of April 2025.
The capital structure was carefully designed to minimize dilution while maximizing flexibility. The shares were issued at a price of €61.88 per share, corresponding to the 30-day Volume Weighted Average Price (VWAP), with no discount, adjusted for the 2024 dividend entitlement detachment.
At the heart of Elia's strategy is its €31.6 billion investment plan, 85% of which is earmarked for regulated grid infrastructure. This focus on low-risk, government-backed projects—think offshore wind interconnectors and grid resilience upgrades—ensures steady returns.
The Group projects 8-10% annual EPS growth through 2028, driven by regulated rate base expansions and cost efficiencies.
The participation of major institutional investors—BlackRock, CPP, Australia's Future Fund through ATLAS—signals confidence in Elia's strategy. These are sophisticated infrastructure investors with decade-long investment horizons, exactly the kind of shareholders a capital-intensive TSO needs.
The grid operator plans to invest €31.6 billion between 2024 and 2028, slightly more than previously announced. Last year, Elia Group invested more than €4.8 billion, and it will invest around €26.8 billion more in the coming years.
The market response was enthusiastic. Investors responded enthusiastically to the news, sending Elia's share price up by as much as 19 per cent after the Brussels stock exchange opened. At around 14.00 Brussels time, shares were trading at €73.60, an increase of around 14 per cent.
XI. Operational Excellence & Reliability
Behind all the strategic moves and capital raises, Elia's fundamental value proposition rests on operational excellence. Transmission grids must work—99.999% of the time.
With a reliability level of 99.99%, Elia Group provides society with a robust power grid, which is important for socio-economic prosperity.
The company demonstrated very high grid reliability of 99.9% in Belgium and 99.8% in Germany, while ensuring operational excellence and efficiency.
These reliability figures are not just metrics—they represent trillions of euros of economic activity that depends on uninterrupted power. When industrial processes halt due to grid instability, the costs cascade through entire supply chains.
Beyond the core TSO operations, Elia has built adjacent businesses. In addition to its activities as a transmission system operator, Elia Group provides consulting services to international customers through its subsidiary Elia Grid International. In recent years, the Group has launched new non-regulated activities such as re.alto - the first European marketplace for the exchange of energy data via standardised energy APIs.
Elia Grid International (EGI) has operated for over a decade, exporting the company's transmission expertise to emerging markets and developing economies building their grid infrastructure. The consulting revenues are modest compared to the core business but provide access to markets and relationships that could prove valuable for WindGrid's expansion.
Digital innovation increasingly differentiates leading TSOs. AI-powered grid balancing, drone inspections of transmission lines, and even quantum computing experiments for optimization problems are all part of Elia's technology roadmap. As grids become more complex—with millions of distributed energy resources rather than hundreds of large power plants—these digital capabilities will determine which TSOs can maintain reliability at acceptable cost.
XII. Strategic Analysis: Porter's Five Forces & Competitive Positioning
Understanding Elia's competitive position requires analyzing the structural forces that shape the transmission industry.
1. Threat of New Entrants: VERY LOW
Building parallel high-voltage transmission infrastructure would be economically irrational. The capital costs are enormous, the permitting processes take decades, and customers have no reason to pay for redundant capacity. Elia owns Belgium's 150 to 380 kV grid infrastructure and almost 94% of its 30 to 70 kV grid infrastructure. This near-monopoly position was granted by regulators and is protected by law.
The €31.6 billion investment plan itself creates barriers. New entrants would need to match this spending to become relevant, with no guarantee of regulatory approval.
2. Bargaining Power of Suppliers: MODERATE
Specialized equipment suppliers—Siemens, ABB, Hitachi Energy, Prysmian—have significant expertise in high-voltage equipment. In 2015, contracts totalling €500 million were awarded to Siemens for the construction of the two onshore HVDC converter stations and to J-Power Systems Corporation for the cable system.
However, Elia's scale provides countervailing leverage. €31.6 billion of contracted spending over four years makes the company one of Europe's largest infrastructure customers. Supply chain constraints in HVDC cables and transformers are real concerns, but they affect all TSOs equally.
3. Bargaining Power of Buyers: LOW
Generators have no alternative for transmitting power to markets. Distribution system operators must connect to the high-voltage grid. Industrial customers directly connected to Elia's network have no competitive option. Prices are set by regulators, not negotiated. Consumers have zero direct relationship with TSOs.
4. Threat of Substitutes: VERY LOW
No technology substitutes for high-voltage transmission at scale. Distributed generation and storage could theoretically reduce transmission needs, but the energy transition is actually increasing grid requirements as renewable generation locations (offshore, remote onshore) differ from demand centers (cities, industrial zones).
5. Competitive Rivalry: LOW
There is no direct competition within service territories. Other European TSOs—TenneT, RTE, National Grid ESO, Amprion—operate in different geographies under different regulatory frameworks. The competitive dynamic is more collaborative than adversarial, with TSOs coordinating on cross-border connections and market integration.
Hamilton Helmer's 7 Powers Analysis:
Elia possesses several durable competitive advantages:
- Counter-Positioning: The regulated TSO model creates barriers for conventional utilities that might want to enter transmission
- Cornered Resource: The physical transmission infrastructure itself is an irreplaceable asset
- Process Power: Decades of experience managing complex grid operations
- Scale Economies: Fixed costs spread across large asset bases
The company lacks brand power (consumers don't choose their TSO) and network effects in the traditional sense, though the integrated European grid creates system-level network benefits.
XIII. Leadership Transition & New Era
In late 2023, Elia experienced a significant leadership transition when long-serving CEO Chris Peeters departed.
The Elia Group Board of Directors took note of Chris Peeters' decision to leave Elia Group as he pursued a new opportunity. Chris Peeters' tenure came to an end on 30 October 2023. The Board of Directors expressed their heartfelt gratitude to Chris Peeters for his leadership during the 8 years that he spent at the helm of Elia Group. Thanks to his strategic vision, Chris Peeters transformed Elia Group into an international energy group which is actively contributing to the acceleration of the energy transition.
Chris Peeters had been in the energy industry for over 20 years. Before joining Elia Group, Chris Peeters ran the Business Consulting activities of Schlumberger in Europe, Russia, Africa and the Middle East. Prior to that, he was 14 years with McKinsey & Company (of which seven years as Partner), specialising in the energy sector.
Chris Peeters (who was 56) grew up in Zonhoven (Limburg) and holds a MSc in Civil Engineering from the University of Leuven in Belgium. Before joining Elia Group in 2015 as CEO, Chris ran the business consulting activities of Schlumberger in Africa, Europe, the Middle East, and Russia. Prior to this, he spent 14 years at McKinsey (seven of which as a partner), specializing in the energy sector. During the first 10 years of his career, he launched an engineering firm and manufacturing company, and was also active as a sales and technical manager for part of Europe at Hoogovens Aluminium. In 2021, he was named Manager of the Year by the financial-economic magazine Trends.
Peeters moved to become CEO of bpost, Belgium's postal operator—quite a different challenge than running Europe's energy transition.
After a search process, the board chose continuity. Bernard Gustin was appointed as Elia Group's CEO from 15 January 2025 onwards. Bernard Gustin became the new CEO of Elia Group on 15 January 2025. By appointing Mr. Gustin, the Board of Directors opted for continuity. Mr. Gustin was an Independent Director and Chairman of Elia Group.
Bernard Gustin (born 1968) has extensive experience in international business. Since February 2022, he has been the Executive Chairman of Lineas, the largest private rail freight operator in Europe. Previously, he served as co-CEO (2008-2012) and CEO (2012-2018) of Brussels Airlines NV, and worked at the international consulting firm Arthur D. Little (1999-2008).
The financial leadership also transitioned. Marco Nix was appointed as Elia Group's CFO from 1 April 2025 onwards. Marco Nix became the full-time CFO of Elia Group from 1 April 2025 onwards. Marco has had a long career in the energy sector and at Elia Group. Since 2015, he has been the CFO of 50Hertz and, for the last few years, has also taken on responsibility for several infrastructure project teams.
The choice of Gustin—a board member with airline and rail industry experience—represents a bet on general management capability rather than energy-specific expertise. The €31.6 billion investment plan is largely set; execution and stakeholder management are now the priorities.
XIV. Investment Considerations: Bull Case vs. Bear Case
The Bull Case:
Structural tailwinds are massive. The European energy transition requires €1.9-2.3 trillion in grid investment by 2050. Elia is positioned at the intersection of the strongest secular trends: electrification, renewable integration, and cross-border connectivity.
Regulatory moats are durable. The RAB model provides inflation protection, predictable returns, and growth visibility rare in today's market.
Execution track record is strong. From 50Hertz to Nemo Link to Princess Elisabeth Island, management has demonstrated the ability to complete complex infrastructure projects on time and on budget.
Balance sheet is being strengthened. The €2.2 billion capital raise positions the company to execute its investment plan without excessive leverage.
Institutional validation is strong. CPP, BlackRock, and Australia's Future Fund don't make €500+ million commitments without extensive due diligence.
The Bear Case:
Regulatory risk is real. Allowed returns can be revised downward. The company highlighted ongoing developments in the German regulatory framework, which could impact future profitability. The regulatory update process is scheduled to run from Q1 2025 to Q1 2026, covering both TSO and DSO frameworks, as well as capital remuneration methodology.
Execution risks on mega-projects. The Princess Elisabeth project has been making local headlines recently as costs have soared to between €7 billion and €8 billion. HVDC contract challenges highlight supply chain pressures.
Credit outlook concerns exist. S&P's negative credit outlook reflects the leverage required to fund the investment program.
International expansion is unproven. WindGrid's unregulated business model carries risks not present in the core TSO operations. The company faces challenges in the US market, particularly with offshore wind projects, due to political changes and rising project costs.
Dilution has occurred. The capital raise expanded share count significantly, and future raises may be needed.
XV. Key Metrics to Watch
For investors monitoring Elia's ongoing performance, three KPIs matter most:
1. Regulated Asset Base (RAB) Growth
The RAB is the foundation of Elia's earnings power. The regulatory asset base reached €18.5 billion, marking a notable increase of 27.8%. Investors should track RAB growth versus the investment plan targets. If capex execution slows, RAB growth slows, and earnings follow.
2. Return on Equity (Adjusted)
Net profit Elia Group share hit €421.3 million, achieving an 8.37% ROE (adjusted) and a double-digit EPS growth, underscoring the company's capabilities to deliver strong shareholder value. The adjusted ROE removes hedging reserve volatility and provides a cleaner picture of underlying profitability. Maintaining 8%+ adjusted ROE while executing a €31.6 billion capex plan demonstrates capital discipline.
3. Grid Reliability
Very high grid reliability of 99.9% in Belgium and 99.8% in Germany is the company's license to operate. Any deterioration would trigger regulatory scrutiny and potential penalty mechanisms. Conversely, maintained excellence supports allowed returns.
XVI. Conclusion: Europe's Grid Future
Elia Group's story is ultimately a story about infrastructure's role in enabling societal transformation. The energy transition isn't just about installing wind turbines and solar panels—it's about building the connective tissue that allows electrons generated in the North Sea to power factories in Bavaria and homes in London.
As a key player in the energy system, Elia Group is committed to working in the interest of society. The company is responding to the rapid increase in renewable energy by constantly adapting its transmission grid and ensuring that investments are made on time and within budget, with a maximum focus on safety.
The numbers speak for themselves: Revenue of €4.1 billion, with a 16% increase in Belgium. Net Profit of €421.3 million attributable to Elia Group shareholders, with an adjusted return on equity of 8.4%. Earnings Per Share of €5.73, reflecting strong double-digit growth.
From its founding in 2001 as a regulatory spin-off to its current position as one of Europe's top five TSOs, Elia has demonstrated the capacity to navigate complexity, execute on strategy, and deliver for stakeholders. The 50Hertz acquisition transformed the company's scale. Nemo Link proved cross-border capability. Princess Elisabeth Island establishes technological leadership. The 2025 capital raise provides the financial foundation for the next phase.
The energy transition will not happen without massive grid investment. Elia is positioning itself to be essential infrastructure for European decarbonization—a regulated monopoly with an unprecedented growth trajectory. For long-term investors seeking exposure to the energy transition with meaningful downside protection, Elia Group represents a compelling case study in how to own tomorrow's essential infrastructure today.
The electrons will flow. The question is who will own the wires they flow through.
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