I'll analyze TenneT Holding B.V.'s capital structure and the appropriate role of hybrid bonds.

**Current Capital Structure Analysis:**

- Total Equity (2023-01-01): €7,713M
  - Equity attributable to ordinary equity holders: €5,133M
  - Hybrid Capital: €2,125M (constant across both years)
  - Non-controlling interests: €455M
- Total Long-term Borrowings: €19,006M
- Total Assets: €38,509M

**Hybrid capital as % of total equity:** €2,125M / €7,713M ≈ 27.5%
**Hybrid capital as % of (equity + long-term debt):** €2,125M / (€7,713M + €19,006M) ≈ 7.9%

**Key Observations:**

1. **Regulated utility with stable cash flows:** TenneT is a transmission system operator (TSO), which is a regulated infrastructure business. These businesses benefit from hybrid bonds because rating agencies typically grant 50% equity credit, helping maintain investment-grade ratings while keeping cost of capital manageable.

2. **Significant capital expenditure needs:** CapEx was €4,424M in 2022, growing from €3,711M the prior year. The company is in a heavy investment phase (energy transition infrastructure), requiring substantial financing.

3. **Operating losses:** The company reported operating losses of -€976M and net losses of -€879M, largely driven by energy transmission charges and regulatory timing differences. This makes pure equity issuance expensive/dilutive.

4. **Already uses hybrid capital:** The €2,125M hybrid capital has been stable, representing a meaningful but not dominant portion of the capital structure.

5. **State-owned entity:** Owned by the Dutch State, which provides implicit support but also means limited access to equity markets. The €1,230M capital contribution in 2022 shows the state is willing to inject equity.

6. **High leverage:** With €19B+ in long-term borrowings and growing, maintaining rating-agency-friendly metrics is critical. Hybrids help bridge the gap between debt and equity.

7. **Rising interest rates:** The swap curve shows significant rate increases in 2022, making the cost differential between senior debt and hybrid debt important. However, for a regulated utility, the equity credit benefit of hybrids remains valuable.

**Assessment:**

For a regulated utility like TenneT, hybrid bonds serve an important but complementary role. They help optimize the capital structure by:
- Providing equity credit from rating agencies
- Being less dilutive than pure equity
- Maintaining financial flexibility during heavy capex periods

However, hybrids should not dominate the capital structure because:
- They are more expensive than senior debt
- Rating agencies cap equity credit (typically at certain thresholds)
- The company needs substantial senior debt capacity for its €4B+ annual capex
- Pure equity (from the state) remains necessary for adequate capitalization

The current ~27.5% of equity from hybrids is reasonable. A moderate allocation around 25% of the capital structure reliance on hybrids is appropriate - significant enough to benefit from equity credit and cost optimization, but not so large as to create excessive subordinated debt risk or lose rating agency equity credit benefits.

<answer>25%</answer>