ANALYSIS: Mitsubishi not enough for Germany

Japan’s mighty Mitsubishi Corporation on Wednesday sealed two deals with transmission system operator (TSO) TenneT to buy into German offshore wind grid-connections.

It closed a €240m ($320m) investment agreement for the high-voltage cable projects BorWin1 and BorWin2, and confirmed another €336m for two more offshore hubs, HelWin2 and DolWin2.

The news was certainly a relief for Germany’s fledgling offshore wind sector, which has suffered grid connection delays that threaten to derail the country’s target to reach 10GW of offshore generation capacity by 2020, and 25GW by 2030.

But how much comfort can the embattled industry really take from the Japanese investment?

The Mitsubishi deal at least shows that the amended German Energy Law – passed by parliament late last year, and capping the liability of TSOs for delays or damage to grid links – is having an effect, says Ronny Meyer, managing director at WAB, a network for the wind industry in Germany’s northwest.

“But it’s not enough,” Meyer tells Recharge. “It is obvious that this investment doesn’t resolve the fundamental problems of all grid connections.” Additional investors need to come on board, Meyer says.

Mitsubishi may well bring more to the party than just investment, points out Hans-Josef Fell, an energy expert and MP from the opposition Green Party.

The global industrial giant may contribute know-how to overcome technological challenges in the fairly new offshore wind sector, Fell tells Recharge.

Those technological issues aren’t trivial, not least because of the water depths at planned German offshore parks.

But TenneT’s capital resources are very thin. The TSO has committed almost €6bn in German offshore infrastructure, and Mitsubishi’s investment represents a mere tenth of that. TenneT will still need to find further investors, Fell agrees.

An alternative would be a capital increase at the TSO itself.

But that is highly unlikely. TenneT belongs to the Dutch state, and the Netherlands’ triple-A sovereign debt rating remains on a negative outlook at ratings agency Standard & Poor’s.

The Hague will think twice before pouring billions into a company to help Germany overcome its offshore wind grid connection problems.

Some in the offshore wind industry are lobbying for a role for German development bank KfW instead. “The KfW should enter with a minority stake,” Fell claims, pointing to a demand of his party to that effect.