The bankruptcy of the largest European solar operator: is the German Enerparc's bankruptcy a systemic alarm for European energy security?

Enerparc AG from Hamburg, one of the largest independent operators and owners of solar power plants in Europe, has officially filed for bankruptcy with the competent court in Hamburg, reports Oilprice.com (and other world media). The provisional bankruptcy administrator was appointed Stefan Denkhaus from the BRL insolvency firm, while the group's debts are estimated at around 3 billion euros, of which the largest part relates to project financing

Otherwise, Enerparc in its portfolio has about 5.5 gigawatts of installed capacity across more than 500 solar parks, but only 3.8 gigawatts have been successfully connected to the grid. The collapse followed in June after negotiations for financing new hybrid projects (solar paired with storage/batteries) collapsed, leaving the company unable to service its obligations to suppliers.

However, if you thought this was an isolated case – it isn’t: earlier this year the German wind and solar company SoWiTec also filed for bankruptcy, while giants such as BayWa r.e. and ABO Energy are forced into deep financial restructurings, as reported by world media.

Comment: LCOE mathematics in collision with reality

The bankruptcy of Enerparc represents a corporate event, but its causes are purely systemic, political, economic, and even politico-economic (the latter: we would say crucial). This is the first (or one of the first) “black on white” evidence that the German energy transition (Energiewende) has created a system that generates financial (and practical) unsustainability on its own.

Germany was adding solar and wind capacities faster than the grid, storage and baseload energy could absorb them, so on sunny days production drastically exceeded demand and wholesale electricity prices on the market went negative – during which solar parks did not receive compensation. 

We also add that for years the public has been fed the idea of “cheap solar” based on LCOE calculations (Levelized Cost of Electricity). But LCOE calculates the price per kilowatt-hour at the plant gate “as if” every kilowatt-hour were equally valuable at any time of day or year. However, LCOE completely ignores: the price of backup capacity (gas and coal plants that must stay ready for periods without sun and wind – Dunkelflaute); the costs of grid reinforcements; inertia and frequency stability that non-dispatchable and intermittent sources do not provide on their own, so it must be provided by additional systems.

Costs of shutting down nuclear reactors

This collapse comes as a direct consequence of political moves in Berlin: Germany in April 2023 shut down its last nuclear power plants – which provided stable baseload energy. The premature shutdown of baseload capacities pushed the German industry into a very unfavorable position. 

Admittedly – the shutdown of baseload capacities was not only premature, it was also organized with the help of manipulation that was on the edge of illegality. And we remind that German media two and a half years ago revealed that the Ministry of Energy, whose minister at the time was Robert Hebek, delivered to the deputies who were deciding on the future of nuclear plants “manipulated” data. And we also recall the power of the ideological hegemony of the time: we are fairly sure that the entire parliament knew that a “manipulated” report stood in front of them, and we are almost sure that every engineer in Germany knew that a “manipulated” report was in front of the deputies’ noses – and almost all of them kept silent. 

What is very likely is that retaining the last German reactors (the option at the time was to purchase another fuel reload for those reactors, which would have kept them on the grid for an additional year and a half) would have reduced gas imports and noticeably lowered electricity prices, but instead the German industry (chemical, steel, and automotive) today pays electricity at prices that are several times higher than those in the USA, China and France, which leads production facilities to massively shut down or relocate abroad. At the same time, the average price of electricity for households in Germany reaches about 37 cents per kilowatt-hour.

Lesson for decision-makers: unreliable, unpredictable and intermittent sources without baseload energy are not a substitute for baseload loads

The Enerparc example shows that a solar fleet with the capacity factor typical for Germany simply cannot replace baseload energy. For developing countries and the Western Balkans region, the German scenario is a very clear warning: without stable and controllable, baseload and carbon-neutral sources – and these are nuclear energy and hydro capacities – the transition becomes a financial bubble that is ultimately paid for by industry and citizens.

S.A.