Business News and Economic News: Top Stories

RWE eyes bigger role in energy saving business
by Christoph Steitz and Tom Käckenhoff

Reuters Translate This Article
23 April 2014

ESSEN, Germany (Reuters) - German utility RWE plans to sell more energy saving products, its head of strategy said, as it strives to offset some of the losses made by its power plants across Europe.

European utilities are facing weak energy demand, as well as an uncontrolled expansion of solar and wind power, which is replacing gas and coal-fired plants and pushing many of them into the red.

Sector players, including RWE and smaller German peer EnBW, are now looking to make money by helping customers to save energy instead of selling them more.

RWE is banking on energy management services to corporate and retail clients, including so-called 'smart' products which sell for at least 200 euros ($280) each and let customers control washing machines, lights and heaters via mobile devices.

Last week, RWE struck an agreement with Nest Labs Inc—a maker of smart thermostats and smoke alarms that was acquired by Google earlier this year—to exclusively sell Nest's Learning Thermostat in the UK.

The device tracks household energy usage and employs the data to automatically set temperatures, helping to cut heating bills by up to one-fifth.

'We can very well imagine entering further cooperations in this area,' said Thomas Birr, head of strategy at RWE, Germany's second-largest utility after E.ON.

Birr, RWE's strategy head since 2009, is tasked with finding new business opportunities for the company, which is under pressure from falling earnings and 30.7 billion euros ($42.4 billion) in net debt.

RWE is also selling Philips' Hue wireless lighting system as part of its smart home offering.

While not spelling out concrete earnings targets, RWE has suggested the market for new business areas, including energy services and smart home products, could rise to about 50 billion euros in revenues by the end of the decade.

Birr also said there was interest among investors to enter renewable projects, notably onshore and offshore wind projects—another area where RWE is looking to expand.

'There is investment pressure on international investors and pension funds that are willing to invest in the energy sector,' Birr said, adding RWE was working on several offshore projects.

Offshore wind parks are attractive assets for utilities due to their size, but high investment costs mean cash-strapped energy firms need to tow in investors to finance these projects, usually worth at least 1 billion euros.

Birr said RWE might help realise renewable projects in the Gulf region at some point in the future, adding it would offer know-how, but not build its own power plants there.

($1 = 0.7248 Euros)

(Editing by Mark Potter)

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