Bloomberg News

ABB Sees German Renewables Risk Decision in Third Quarter

April 24, 2012

ABB Ltd. (ABBN), the world’s biggest power-grid supplier, expects Germany to decide by the third quarter on large transmission projects’ risk-sharing that may help push European industry investment in renewable energy.

“Germany is a leader, clearly,” as its government promotes resources such as solar and wind energy to replace nuclear power and reduce fossil-fuel use, Brice Koch, ABB’s power systems head, said in an interview yesterday at the Hanover trade fair. Regulations there for next-generation power networks are likely to be a model for other countries, he said.

Power-industry players including Zurich-based ABB and transmission-network operators are holding talks with German authorities on how to upgrade the country’s grid. The European Union needs 140 billion euros ($185 billion) of investment in power transmission over the next 10 years as utilities expand into renewable energy, the European Commission said on Oct. 19.

“Much of this investment still has to materialize,” Koch said. “Hopefully we should see an acceleration, once we get through some of the economic uncertainty in Europe.” Any delays in decisions on spending “could affect Europe’s ability to integrate renewable-energy sources and meet climate-change objectives.”

ABB competes with Munich-based Siemens AG (SIE), Europe’s biggest engineering company, and France’s Alstom SA (ALO) to produce high- voltage direct-current power lines. Germany has set a target of producing 35 percent of its electricity from renewable sources by 2020.

Sharing Risk

Financial risk for new projects should be spread more evenly to include such parties as the government and renewable- energy suppliers instead of the current system of placing the bulk of responsibility on the network operator, Koch said. German discussions on the topic are likely to be completed in the third quarter, he said. Spokesmen at the German Economy Ministry weren’t immediately available to comment.

ABB has spent about $1 billion on high-voltage direct current and related technologies in the last two to three years, about the same as the company’s total planned capital expenditure for this year, Koch said.

The manufacturer is “investing heavily in production,” and is looking forward to more contracts along the lines of its record $1 billion order from Dutch-German network operator TenneT Holding BV to link offshore North Sea wind farms with Germany’s main grid, Koch said.

To contact the reporter on this story: Patrick Winters in Zurich at pwinters3@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net


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