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German utility and trader RWE plans to spend about $7 billion
(€5 billion) a year to install wind, solar, batteries, flexible
generation, and hydrogen globally ahead of closures for its
profitable German nuclear and coal plants.
The company released its "growing green"
investment strategy on 15 November, revealing how it will add up to
50 GW, or about 2.5 GW annually, of renewables and green solutions
through 2030 in Europe, North America, and Asia, which it called
"attractive markets."
Almost all of the investment (90%) is going to renewable energy
sources and batteries, currently operating only in Germany, the
utility's CFO Michael Müller said. Its offshore wind capacity
will triple from 2.4 to 8 GW, while growing its combined onshore
wind and solar capacity from 7 to 20 GW.
What remains of the investment will be used to grow RWE's
flexible power supply in its traditional markets in Germany,
Benelux, and Great Britain, where it operates many gas-fired power
plants.
RWE doesn't have much renewable capacity outside the West and
Australia, but it was looking into offshore wind prospects in
Japan, South Korea, and Taiwan alongside plans to grow its trading
activities.
Despite the renewable pledge, most of RWE's generation capacity
in Europe and Turkey came from gas-fired and lignite coal power
plants over the first three quarters of the year.
Nuclear and coal-fired power plants boosted the company's third
quarter profits, thanks to high wholesale energy prices
and less maintenance on its nuclear power plants. Its lignite
coal-fired power plants in Germany recorded the biggest gain of all
in meeting higher post-pandemic electricity demand.
But RWE is being forced out of its most profitable segments in
Germany as the country plans to phase out nuclear by 2022,
following on from the 2011 Fukushima Daiichi disaster in Japan.
Germany has pledged to phase out coal by 2038 at the latest.
At the same time, RWE is being pushed to transition by activist
investor ENKRAFT, which called for the company to spin off its
lignite coal power and grow renewables in a September letter to
RWE's CEO Markus Krebber.
RWE said that its German nuclear and coal plants "will lose
importance due to exit roadmaps established by the government." It
closed three coal power plants
in Germany at the end of 2020.
Green hydrogen produced from offshore wind
RWE also announced a new target for 2 GW of owned electrolysis
capacity on top of 30 green hydrogen projects it is already
building with partners.
Last week, RWE and Shell agreed to look into investing
green hydrogen production using offshore wind power in England,
amid a flurry of greening announcements
coinciding with the COP26 climate summit last week, by energy
companies striving to reach internal net-zero targets.
The green hydrogen produced might be sold to the mobility sector
in Germany, the Netherlands, and the UK.
RWE is already paired up with Shell and Dutch state-owned gas
network operator Gasunie on a green hydrogen production project in
German waters.
The AquaVentus project will produce hydrogen from offshore wind
farms from the German island of Helgoland. It is linked to the
AquaDuctus project, a 10-km pipeline that could potentially offer
green hydrogen transport to several countries in northern
Europe.
Other RWE projects include the German hydrogen pipeline project
GET H2, and the Dutch project to produce hydrogen from offshore
wind, NortH2.
UK offshore wind growth
In the UK, RWE is looking to grow its offshore wind capacity
after securing the rights to build 3 GW of offshore wind capacity
at a state auction in February.
It reached a final investment decision on the 1.4 GW Sofia wind
farm in the UK North Sea off the North East coast of England the
following month.
The company then increased its stake in the existing 400 MW
Rampion offshore wind farm off the South coast of England from
30.1% to 50.1% in April.
Nevertheless, RWE's UK plans offshore wind capacity plans remain
dwarfed by its gas-fired power capacity plans.
RWE won gas-fired power subsidies in a UK auction tendered in
March, amounting to 6.5 GW of mostly gas-fired power.
It currently has 7 GW of gas-fired power plant capacity
generating 10% of the UK's electricity, but it is mulling using
blue hydrogen and CCS to decarbonize its gas-fired power plants
through the Shell deal.
Posted 17 November 2021 by Cristina Brooks, Senior Journalist, Climate and Sustainability
