Germany’s major power producer RWE recently surprised by revealing it was departing from its traditional business model and would “create value by leading the transition to the future energy world”.
Now, RWE is looking for new ways to boost its renewable power business, including partnerships with investors, according to an internal document seen by Reuters Newsagency.
In the past Germany’s largest power producer, has traditionally based its business model based on large-scale thermal power production.
European media reports say the new strategy was decided on at a meeting of RWE’s Supervisory Board in the Polish capital, Warsaw, in September and will be revealed publicly soon.
RWE plans to “develop new partnership models with financial investors” to fund renewable projects, according to the document.
Its technological focus has been on wind power, which is better suited to larger utilities due to its plant-sized parks and requires large investments.
A steep drop in wholesale power prices and a boom in renewable energy, which has driven conventional power plants into loss-making territory, have hit hard at RWE, along with other German utilities E.ON and EnBW.
RWE, which is scheduled to report nine-month results on November 14, could not immediately be reached for comment.
RWE’s “business of renewable energy will provide stable value contributions and remain the only area for growth investments”, Reuters reports the document saying.
T
he company will draw on capital from third parties largely through what it calls a “capital light” approach that reduces the burden on its own balance sheet, the document says.
Renewable energy accounts for just four per cent of RWE’s core earnings, compared with 12 per cent at E.ON.
As a response to falling returns, RWE has been slashing investments, closing power plants and cutting jobs to turn its business around and lower a €35 billion debt pile.
The group needs to cut more costs as earnings are set to drop dramatically, RWE Chief Executive Peter Terium was quoted as saying in a newspaper.
RWE will have to save more than the already planned €500 million at its power generation unit and will also need to reorganise its electricity sales business, Mr Terium said, according to the newspaper.
2 Responses