Bloomberg News

RWE May Invest in Photovoltaic Plants on Lower Costs

April 11, 2012

EON AG (EOAN) and RWE AG (RWE), Germany’s biggest utilities, are stepping up investments in solar energy as falling prices for the technology and the country’s nuclear exit make them chase fresh revenue streams.

EON plans to add 70 megawatts of photovoltaic capacity a year from 2013, compared with a total of 51 megawatts it has built since 2008, Christian Drepper, a spokesman, said by phone yesterday. RWE, which previously has withheld support for photovoltaics, may boost investments in the technology after a decline in the cost of panels.

Solar prices have since dropped “dramatically, more than we have expected,” Hans Buenting, chief financial officer of RWE’s renewable energy unit Innogy, said on a conference call with analysts on April 10. “We are looking at more promising countries in Europe rather than in Germany for first projects.”

The decisions show Germany’s utilities backing away from nuclear power after Chancellor Angela Merkel decided to close the country’s atomic plants following the atomic accident in Japan 13 months ago. Both RWE and EON previously opposed solar power in Germany and lobbied against government support for the technology.

Merkel’s target is to expand the share of renewables to at least 35 percent of Germany’s power mix by the end of this decade from about 20 percent now.

Investment Plans

Dusseldorf-based EON, the country’s largest generator of atomic power, plans to invest 7 billion euros ($9.2 billion) in clean-energy generation in the next five years. RWE, Europe’s biggest emitter of carbon dioxide blamed for damaging the Earth’s atmosphere, is spending about 5 billion euros on renewables, mainly offshore wind farms in the U.K. and Germany, in the next four years.

Solar cell prices fell 58 percent to 52 cents a watt last year as Chinese manufacturers led by Suntech Power Holdings Co. boosted production, according to Bloomberg New Energy Finance data. Germany supported installations with a feed-in tariff guaranteeing above market prices for solar power.

Merkel now is cutting solar subsidies, seeking to curb the pace of installations that made Germany the biggest market for the technology.

RWE, based in Essen, will explore developments in other nations, Buenting said April 10. The company is “discussing” a pilot project in the Desertec initiative, which seeks to build renewable energy plants in north Africa and the Middle East, said Buenting, who takes over as CEO of Innogy in July.

Outside Germany

If RWE considers better solar sites than Germany and the U.K. such as southern Spain, the south of Italy or Morocco, where the Desertec initiative is active, “then costs come down where they are comparable or below offshore wind already now,” Buenting said. RWE would most likely take “only shares” in any Desertec projects, he also said.

EON is looking to France and Italy to develop more photovoltaic capacity and may also build plants in the U.S., possibly at one of its wind farm sites there, Drepper said. EON aims to reduce construction costs of photovoltaic plants 35 percent by 2015, he said.

While the plunge in module prices has strengthened photovoltaics compared to solar-thermal, of which EON has about 100 megawatts in its portfolio, “this won’t stop us from developing both technologies,” he said.

RWE owns a stake in the Andasol 3 solar thermal power plant in Spain. Photovoltaic plants use panels that generate electricity directly from the sun while solar thermal plants use mirrors to focus sunlight and power steam turbines.

To contact the reporter on this story: Stefan Nicola in Berlin at snicola2@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net


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