District energy resurgence as German cities respond to Energiewende

Date: 24 July 2017

Many German public utilities have had a difficult time adapting to the challenge of the government’s Energiewende policy, however cities such as Munich and Hannover are leading initiatives to transform their organisations.

Michael Solić, press spokesperson for Stadtwerke Munich (SWM) says his organisation has positioned itself well in response to the demands of the transition. He said, “We have been working on that topic since 2008 and will soon – with the inauguration of Sandbank offshore wind farm in July – have a generation capacity of 3.9 billion kilowatt hours of green electricity – a figure that already corresponds with more than 50 per cent of Munich’s electricity requirements.”

The Munich municipality has recently released a document outlining its renewable energy expansion strategies for green energy and district heating, which you can access here.  By 2025, SWM is aiming to produce as much green electricity at its own plants as required to power the entire city of Munich. This would make Munich the first city worldwide with over a million residents to have achieved this target.

SWM also aims to make Munich the first German city to use district heating generated exclusively from renewable sources by 2040.

“In addition, we are extending our district cooling network (M-Fernkälte) in Munich. We use groundwater and underground ditches (medieval moats). Thanks to our natural enhanced system, we can help customers to save up to 70 per cent energy compared to conventional air-conditioning systems.  That is why district cooling in Munich is increasingly helping to replace conventional systems. “

Meanwhile Bianca Bartels, press spokesperson for EnerCity, brand name of Stadtwerk Hannover, says the city is responding to the challenge.“From a conservative and conventional provider of classical energy, Enercity is currently transforming into a service and novelty oriented customer solutions company, with the main focus on offering the best and most up to date solutions for our clientele.”

The city has identified aspects of decentralized energy generation and the shared energy economy that will suit the city’s resurgence in the energy field. They are also evaluating their potential for electromobility and aim to double their number of customers throughout Germany.

“By strongly focusing and promoting our five new business areas – decentralized generation, electro mobility, energy efficiency, smart technologies and energy network services – we will be able to increase our earning up to 70 million Euros,” Bartels predicts. “Please note that our company’s supervisory board passed our corporate strategy on April, 26th. So we have just started with implementing our new strategy.”

According to analysis by Euler Hermes Rating, the independent European rating agency, financial indicators for two-thirds of Germany’s public utilities will “deteriorate considerably” by 2020.

In addition, the agency predicts that the average margin on earnings before interest, tax, depreciation and amortization will drop from 10.8 percent last year, to 8.4 percent in 2019. The return on capital employed (ROCE) will decline from 8.2 to 2.5 percent over the same period. These bottom line figures show why many of Germany’s 900 plus stadtwerke are accelerating an embrace of decentralized energy technologies.

Source: Decentralised Energy