Solar Shift Sun Rises on RWE and Conergy Deal

The German utility company, faced with the country's shift to renewable energy, has bought a stake in Europe’s former solar leader Conergy and hopes to profit in a growing global market.
Sun won't set on Germany's Conergy after all.

Germany’s second largest utility, Essen-based RWE, is further expanding into sustainable energy by purchasing a stake in Conergy, the solar group from Hamburg.

RWE has been working with Conergy in Europe for the last year, said Andree Stracke, a board member of the utility’s subsidiary, RWE Supply & Trading. RWE offers industrial clients complete solar roof units, which Conergy builds and services.

“We are pleased to be supporting the Conergy Group’s worldwide expansion,” Mr. Stracke said in a statement.

The companies would not say how big of a stake RWE bought. But the solar company said RWE had made the single biggest investment in a $45 million funding round, according to Reuters. RWE will also have a seat on the Conergy board.

New chief executive Andrew de Pass estimated that Conergy revenues amounted to nearly $500 million last year – and he expects that to increase 50 percent this year to $700 million.

RWE hopes to use Conergy to gain a stronger foothold in the growing solar market worldwide, which expanded by a fifth in capacity last year, according to analysts at IHS.

In Germany, RWE has had to write down on its traditional gas and coal power plants due to Germany's shift to renewable energy, a decision taken in 2011 after Japan's Fukushima nuclear disaster. German government subsidies to expand production of solar and wind energy have contributed to a drop in wholesale electricity prices, and made traditional power plants less profitable. Germany will shut down all nuclear power plants by 2022.

For Conergy, the investment by RWE confirms the success of its restructuring strategy. It was once Europe’s biggest solar company, but competition from Chinese manufacturers drove solar module prices down sharply. Like many German solar companies, Conergy got into trouble and filed for bankruptcy in 2013.

The U.S. investment firm, Miami-based Kawa Capital Management, now owns the majority stake in Conergy. Kawa bought the headquarters in Hamburg as well as the company’s project business and operation of solar power stations.

 

Video: Conergy's solar park in Thüngen, Bavaria.

 

In 2013, Chinese company Astronergy bought Conergy’s panel module factory manufacturing plant in Frankfurt an der Oder, in the former East Germany.

While manufacturers from Asia dominate the global market for solar modules, German companies like Conergy and IBC Solar concentrate on planning and building solar parks and roof units. The business is not as risky because many countries offer long-term solar power subsidies or purchasing agreements.

Conergy has returned to profit since it was taken over by Kawa Capital. The new chief executive, Andrew de Pass, was in charge of restructuring, and recently estimated that Conergy revenues amounted to nearly $500 million last year – and expects that to increase 50 percent this year to $700 million.

The company will also focus on partnerships, like the one Conergy recently started with the German municipal utility association, Trianel.

Mr. de Pass wants to use the money from the capital increase “primarily for developing more projects with new and existing partners.”

 

Georg Weishaupt covers construction and the solar and wind energy industry. To contact him: [email protected]