This week’s Smart Energy Finances looks at the reported sale of German virtual power plant and battery energy storage developer sonnen by Shell as a part of its retail divestment strategy.
Also on the radar are a €140 million ($150 million) financing round for investor EIT InnoEnergy as Europe is set to update energy policy, and a triple acquisition of US gas utilities by Canada-based Enbridge.
Shell to reportedly sell sonnen
On Thursday, German publication Handelsblatt reported that oil giant Shell intends to sell sonnen, the German developer of energy storage systems.
The report comes in as Shell moves to divest its retail operations within the UK, Netherlands and Germany as part of a strategic restructuring.
The strategy follows the company’s review of market conditions, announcing in June its retail exit.
Kicking off the strategy late last week, Shell sold its UK and German domestic operations to energy major Octopus Energy.
Shell’s Dutch operations are winding down and in the process of transition.
Shell acquired sonnen back in 2019. According to Handelsblatt, the sale will be a significant deal for Shell, which acquired the Bavaria-based company for €500 million ($535 million); the sale is expected to be valued between €1.35 billion ($1.4 billion) and €1.8 billion ($1.9 billion), according to Handelsblatt.
So far, sonnen has had a very strong 2023 with an expected turnover of €450 million ($482 million). Earlier this year the company announced increased capacity of its German VPP at 250MWh, marking the largest in Europe.
The company is expecting to grow the demand response tech, which consists of tens of thousands of intelligently-controlled sonnenBatteries throughout Germany, to 1GWh in the coming years.
Shell has declined to comment.
EIT InnoEnergy’s private placement round
Dutch energy investment company EIT InnoEnergy has received over €140 million from strategic players in industrial, financial, training and digital sectors in a private placement round.
According to the company, proceeds from the financing will be used for increasing new deal flow, launching new industrial initiatives, tapping opportunities from new regulatory frameworks and expanding in the US.
InnoEnergy’s portfolios focus on early-stage innovative technologies and teams in clean tech, normally CAPEX heavy.
InnoEnergy currently has a portfolio of 200 companies, three of which are unicorns, on track to generate €110 billion ($118 billion) in revenue and save 2.1G tonnes of CO2e accumulatively by 2030.
According to InnoEnergy, these companies have collectively raised €9.7 billion ($10.4 billion) in investment to date.
Tabled earlier this year, the European Union has been expecting to pass several policies in mind of better enabling its industrial capacity within the energy sector.
Namely, the European market design has had a proposed reform and the Green Deal Industrial Plan – within which are contained the Critical Raw Materials and Net Zero Industry Acts – will aim to upskill the workforce, develop European clean tech supply chains and lower barriers to deployment.
Part of the private placement round will, states InnoEnergy, also be used for training and upskilling:
“The new skills, and the larger workforce we will need to fulfil net zero objects, are significant, so with our shareholder make-up of those in industrial and financial sectors, and also in academia and research, we are perfectly placed to deliver progress,” stated the company.
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Earlier this week, the European Network of Transmission System Operators for Electricity (ENTSO-E) hosted the first High-Level Electricity Grid Forum, of which EIT Innoenergy was a collaborator, during which the grid was placed high on the agenda as a strategic focus for future investments.
New investors in the round include Societe Generale, Santander CIB, PULSE – CMA CGM Energy Fund, Renault Group, Stena Recycling and NIIT.
Existing shareholders Siemens Financial Services, Schneider Electric, Capgemini, Volkswagen Group, ING, Koolen Industries, GROUPE IDEC and Engie were also among the strategic players.
Commenting on the announcement, Diego Pavia, CEO of EIT InnoEnergy, said: “New strategic players have joined InnoEnergy’s outstanding cap table, several shareholders have reinvested, and altogether we have secured sufficient fresh financial resources to double our on-going impact.
“The accelerated energy transition in Europe and in the world, and an increased re-industrialisation ambition in the western world are unique opportunities for InnoEnergy, its portfolio companies and our trusted ecosystem partners. We have geared up for the journey ahead.”
Details on individual investor contributions have not been disclosed.
Triple gas utility acquisition
Canada-based energy company Enbridge has acquired three US-based gas utilities to create what it is calling the largest natural gas utility franchise in the US.
Enbridge entered three separate agreements with Dominion Energy to acquire EOG, Questar and PSNC for the purchase, which totals $14 billion after deductions, including $4.6 billion of assumed debt.
Enbridge owns and operates pipelines throughout Canada and the US, transporting crude oil, natural gas and natural gas liquids. The company also generates renewable energy, touting a growing European offshore wind portfolio.
Upon the closings, Enbridge will add to its portfolio gas utility operations in Ohio, North Carolina, Utah, Idaho and Wyoming, representing a significant presence in the US utility sector.
The acquisitions will double the scale of the company’s gas utility business to approximately 22% of Enbridge’s total adjusted EBITDA and is hoped to balance the company’s asset mix evenly between natural gas and renewables, as well as liquids.
Enbridge states that following the closings, its gas utility business will be the largest by volume in North America with a combined rate base of over CDN$27 billion ($19.8 billion).
In a press release announcing the acquisition, Enbridge cites how “high-quality, utility cash flows from the gas utilities” will reduce its business risk.
Michele Harradence, president of GDS and executive vice-president at Enbridge, commented that the utilities, each being based in the US, offer strategic advantage when it comes to regulation, namely how they “operate in regions with very attractive regulatory regimes” while offering diverse, low-risk growth opportunities.
However, earlier this week, credit ratings agency Moody’s changed Enbridge’s outlook from stable to negative, a result of the acquisitions.
“The negative outlook on Enbridge is prompted by the company’s announcement that it would acquire US gas utilities… adding pressure to an already weak financial profile that we expect to persist following the transaction close,” said Gavin MacFarlane, Moody’s vice-president – senior credit officer.
“Although Enbridge’s business risk profile improves modestly with the transaction, it is not enough to offset ongoing pressure on the company’s financial profile.”
What are your thoughts on Shell‘s reported strategy to move away from the residential market? If the reports are correct it will be interesting to see who manages to acquire sonnen, which has only been growing.
I will also be attending Bentley’s upcoming Going Digital Awards in Infrastructure in Singapore in October. Will I see you there?
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