RWE officially opens the Gwynt y Mor project off Liverpool today, and while it’s an impressive project observers say the company is a long way behind where it needs to be in adapting to the ongoing energy transition.

The wind power project is the company’s largest renewables project to date but RWE, with 4.8 per cent of its electricity coming from renewables, half that of rival E.ON, may suffer from its sluggishness in changing its business model to suit new circumstances.
Peter Terium
For comparison, the UK and Germany had 19 per cent and 26 per cent contributions from renewables respectively last year.

“RWE certainly hasn’t focused on renewables in time,” Ernst Gerlach, director of Verband der kommunalen RWE-Aktionaere GmbH, a municipal investor association that represents 23 per cent of the company’s shareholders, told Bloomberg.

“In fact, the company’s cutting back on wind and solar investment. In order to shore up its finances, RWE’s reducing its annual capital expenditure on renewables to a third of 2013’s 1 billion euros ($1.12bn) in the three years through 2017. There’s little prospect of the company ending its reliance on burning coal, especially lignite — a soft type of the fossil fuel.”

According to Thomas Deser, a fund manager at Union Investment and a big RWE shareholder, “RWE lacks financial scope to significantly expand renewables and reduce the gap to more advanced competitors.”

The company “strategically has reached a deadlock because the business model to a big part is based on the production of lignite and the generation of electricity from it and from nuclear power,” he said.

That traditional coal-fired base is being constantly eroded as investment funds opt out of funding coal and government regulations continues to impact.