EON AG, Germany’s biggest utility, will invest 7 billion euros ($9 billion) in renewable energy in the next five years as the country abandons nuclear power.
EON plans to build at least three offshore wind projects, including the 1 billion-euro Amrumbank West farm in the German North Sea, the Dusseldorf-based company said today in an e-mailed statement. It’s also investing in new power lines in northern Germany.
“Renewables are a cornerstone of our strategy, and offshore wind is one of EON’s growth areas,” Chief Executive Officer Johannes Teyssen said in the statement. “We intend to commission a new offshore wind farm every 18 months.”
Germany, Europe’s biggest economy, is seeking to install 10,000 megawatts of sea-based wind turbines this decade as it raises the share of renewables in its energy mix. EON is cutting as many as 11,000 jobs and will book a charge of about 3 billion euros this year as it copes with an accelerated nuclear phase-out following Japan’s Fukushima disaster.
“Utilities have to invest in renewables if they want to keep market share,” Peter Wirtz, an analyst at WestLB AG, said by phone from Dusseldorf. “If you build a coal-fired plant today you don’t know for sure how the returns will be over 30 years. With renewables, because of stable subsidies, you have that visibility.”
Siemens AG, Europe’s largest engineering company, will supply the 288-megawatt Amrumbank West project with 80 of its turbines.
EON plans a 219-megawatt wind farm off the U.K. and a 48-megawatt facility off Sweden’s southern Baltic Sea coast. Both projects, which have a combined cost of about 970 million euros, will use turbines supplied by Vestas Wind Systems A/S, EON said.
It’s “increasingly obvious that the big German utilities are no longer being dragged, kicking and screaming” into offshore wind, Jerome Guillet, head of Green Giraffe Energy Bankers in Paris, said by e-mail.
Investment in new power lines includes a high-voltage line linking the North Frisian coast that took a year to build and became operational this week.
Japan’s Fukushima Dai-Ichi disaster in March spurred Chancellor Angela Merkel to reverse her nuclear energy policy with a plan to shut the country’s 17 reactors by 2022. Merkel shut the eight oldest reactors in March, two of them operated by EON, the country’s biggest generator of nuclear energy.
“At a time of increased pressure on utilities, balance sheets and competition for capital across numerous technologies, EON’s commitment to their offshore wind investment program is welcome news for the sector,” Ronan O’Regan, director of energy and renewables in London at consultant PricewaterhouseCoopers LLP, said by e-mail.