The soaring wind and solar capacity installations in Germany have created an unsustainable business and project economics environment in the sector amid slower grid expansion and electricity generation curtailments.
In 2023, Germany crossed the 50% mark of the share of renewable energy in its electricity generation.
This year, renewable energy accounted for a record-high 58% of Germany’s electricity consumption in the first half, up from 55.8% for the same period last year, estimates by industry associations ZSW and BDEW showed in July.
Germany is looking to boost its solar and wind power generation sectors with ambitious goals and legislative changes to ease and streamline the permitting processes. Europe’s biggest economy has a target to install 10 gigawatts (GW) of wind power capacity every year to have renewables account for 80% of its electricity generation in 2030.
While Germany makes progress in its renewable energy capacity additions, some wind and solar energy developers and operators have filed for insolvency in recent weeks amid piling debts.
The capacity increase has outpaced the upgrades and expansions of the grids, which have delayed the connection of some solar and wind power projects to the grid. Additionally, the curtailment of wind and solar output when generation soars forces the electricity generators to reduce renewable energy generation, leading to losses for the wind farm and solar park operators. Spiking renewable power generation also often leads to below-zero day-to-day prices, further weighing on the economics of the projects.
And some developers have struggled to survive.
Just last week, Enerparc AG, one of Europe’s largest solar park operators, filed for insolvency in a Hamburg court. Operations will continue at Enerparc’s solar sites while the provisional insolvency administrators work “to stabilize business operations and the group companies,” the solar developer said.
Enerparc has 5.5 gigawatts (GW) of installed capacity—3.8 GW of which are connected to the grid—and more than 500 solar parks, making it one of Europe’s largest independent solar park owners.
Earlier this summer, German solar and wind developer SoWiTec announced insolvency due to excessive debt.
The worsening project economics could lead to more insolvencies in the near term, Jens Burchardt, co-founder of Boston Consulting Group’s Center for Climate and Sustainability, told Bloomberg.
“Efficient, diversified developers will still make money, just not the kind of money they made during the energy-crisis years,” Burchardt noted.
By Charles Kennedy for Oilprice.com
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