Juwi's indecent proposal
Among the thousands of suits at the stiflingly hot Intersolar trade show in Munich, a youthful-looking middle-aged man is wandering around in blue and pink sneakers, black trousers and a grey T-shirt with an orange print that shouts, “My indecent proposal to the chancellor”.
The message worn by Matthias Willenbacher, co-founder of German renewables developer Juwi, is the title of his new book, the product of an extremely short conversation he had with German chancellor Angela Merkel earlier this year.
On a 13-hour flight back from Chile, where he had travelled with Merkel as part of a German trade delegation, he approached her and asked if she could discuss the country’s energy transition for a few minutes. The chancellor cut him short. “Write me a letter,” she barked.
Somewhat disappointed, but refusing to give up, the energetic entrepreneur instead wrote her a book — proposing that he will donate his 50% stake in Juwi to Germany’s 500-plus renewable-energy co-operatives if she can lead the country to 100% renewable electricity by 2020.
With a current level of 22%, such a proposal seems overly ambitious and unrealistic, but how is it “indecent”?
Willenbacher smiles. “I wanted to get attention,” he admits. And he certainly did, creating a stir at Intersolar in June and across Germany’s mainstream media, which rarely reports on the privately held company.
While the word “indecent” may have been little more than a publicity stunt, the book is a serious attempt to lay out how the 100% target could be met, and also gives an insight into the origins and workings of one of the most successful renewables firms in Germany.
The idea for Juwi was born in a hospital bed in July 1995, when Willenbacher, then a postgraduate physics student, was receiving treatment for a torn cruciate ligament. After reading a newspaper article about a wind turbine being erected on a nearby farm, he decided to do the same on his father’s farm. When he told his father of the 1m-deutschmark (about $650,000) plan, Willenbacher Snr told his son that if he dared to go ahead with it, he would not be allowed home.
With almost no capital of his own, he went ahead regardless, persuading friends and acquaintances to provide some funding, before managing to get a bank loan and financial support from the state of Rhineland-Palatinate — all in the space of two weeks.
Within five weeks, he had received the necessary planning permits. He also had to overcome hostility from the local utility, which initially told him it would be impossible to connect the turbine to the grid but later backed down.
The pair launched Juwi — a portmanteau of the first two letters of their surnames — and Willenbacher abandoned his “boring” doctoral thesis.
In Juwi’s first few years, the pair faced considerable opposition. Utilities, fearing competition from small-scale renewables companies and co-operatives, mobilised “not in my backyard” groups to paralyse wind projects, using arguments including birds dying, shadow flicker and plummeting property prices. On occasion, Willenbacher was shoved by angry campaigners and threatened with physical violence.
At that time, German utilities even published a series of adverts claiming that the country’s grid could never absorb more than 5% renewable energy. Today, almost five times that share has been reached.
From day one, Willenbacher and Jung’s philosophy was to reinvest profits in new projects, with a grand view of helping Germany reach 100% renewable energy.
Focusing on small-scale projects and working closely with regional utilities and energy co-operatives, growth was achieved at a steady pace — in contrast to other German renewables companies, such as Conergy, that rushed to expand and suffered the consequences.
Willenbacher and Jung were adamant that they did not want Juwi to go public, in spite of the cash injection such a move would offer, to ensure that the company philosophy could not be derailed by stakeholders who did not share their views.
Since that first turbine was erected in 1996 (on Willenbacher’s uncle’s farm in the end, due to better wind speeds) Juwi has developed 100 wind projects, encompassing 660 turbines with a combined capacity of 1.28GW. And since its first solar project in 1999, the company has developed 1,500 arrays around the world with, coincidentally, the same cumulative capacity.
Most of these developments were sold, but the company still owns 300MW outright or as part of joint ventures.
In its 17-year history, Juwi has never made a loss, and last year took in revenues of €1.1bn ($1.4bn), which it hopes to increase this year. The privately held firm does not release profit figures, but Willenbacher assures Recharge that it will “clearly” make a profit this year.
“We are a very healthy and stable company,” he says.
Karsten von Blumenthal, a clean-tech analyst at First Berlin Equity Research, concurs. “Juwi certainly is one of the most successful project developers in the renewable-energy sector,” he says.
Despite running a global firm with 1,800 employees, Willenbacher does not have the serious disposition you might associate with company bosses. This chief executive is energetic, jovial, easy-going and smiles a lot. His natural charisma and passion for the industry enable him to enthuse his employees, according to company sources, and goes some way to explaining why Juwi received 20,000 applications for 200 job vacancies last year — although the stunning headquarters and laid-back work culture probably helped.
“Willenbacher is very agile and convinced of what he’s doing,” one German wind industry official tells Recharge. “Of course, he is pushing through his agenda. He has an extroverted personality and consciously wants to interfere with the election campaign.”
But Willenbacher has not had everything his own way.
Cuts to PV feed-in tariffs (FITs) last year and rising module prices due to EU anti-dumping tariffs on Chinese PV kit have made new solar developments in Germany almost unviable, the company complains.
It expects to install less than 10MW in PV developments in Germany this year, down from about 100MW last year. Due to this downsizing, the firm had to lay off 40 people earlier this year, on top of some 100 redundancies in 2012.
But Juwi seems to have played its solar cards well, profiting hugely from the boom of a few years ago, and putting on the brakes when it needed to.
“Juwi has recognised early on that ground-based solar arrays in Germany are hardly viable any more and in consequence had adapted its business model in time,” says von Blumenthal.
Juwi is now refocusing its solar business outside Germany. It is building five solar parks in Thailand with a combined capacity of 48MW and it has recently completed two arrays in Rajasthan, India, totalling 26MW.
“Solar US, solar India and solar Thailand are foreign markets that work very well,” says Willenbacher.
In stark contrast to the PV situation, Germany is still Juwi’s key wind market. It installed a record 250MW there in 2012, and plans 300MW this year. To finance part of the current wind expansion, Juwi is aggressively placing ads in German media to sell up to €30m in company bonds.
Projects totalling another 600MW are close to gaining approval from the authorities and financing has already been secured for much of it. Another 6GW in German wind projects are in various phases of the development pipeline.
But much of Juwi’s future expansion hinges on the speed of the renewables build-up in Germany. All the political parties campaigning in the election have pledged to continue the energy transition away from nuclear power.
Yet some members of Merkel’s Christian Democrats (CDU), such as EU energy commissioner Günther Oettinger — as well as Rainer Brüderle, the chairman of her Free Democrat (FDP) coalition partner — are pushing for a slow-down or halt to new wind and solar installations until the country’s renewables legislation has been reformed to ensure power prices remain “affordable”.
As Recharge went to press, polls showed that Merkel was expected to keep her chancellery, but without the CDU and FDP having enough votes between them to form a majority coalition. If Merkel does stay in office, her next government could repeat its attempt to push through harsh cuts to FITs, a plan that was blocked earlier this year by Germany’s powerful states.
So it is safe to say that Merkel is not going to accept Willenbacher’s “indecent” proposal. It was never a serious proposition.
But perhaps the idea will help Merkel and colleagues keep the bigger picture in mind when it comes to renewable energy. As Willenbacher says in the last words of his book: “Mrs Chancellor, give our Earth air to breathe.”