Green Growing Pains

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Hoping to Benefit from Shift to Renewables, Bilfinger Boss Stumbles Amid Power Glut

roland koch bilfingerjpg
Roland Koch stepped down as Chief Executive from the German firm Bilfinger after three years.
  • Why it matters

    Why it matters

    Mr. Koch’s departure from Bilfinger highlights the challenges posed to both traditional power providers and those companies hoping to benefit from Germany’s broad expansion of green energy sources such as wind and solar.

  • Facts

    Facts

    • Roland Koch, former state premier of Hesse, was once one of Chancellor Merkel’s biggest political rivals.
    • Mrs. Merkel ordered the phaseout of nuclear energy after the Fukushima disaster in March 2011.
    • Germany intends to produce 80 percent of its power from renewable sources by 2050.
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    Audio

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Once considered a potential political challenger to Angela Merkel, Roland Koch has seen his business career crushed by economic developments arising from the German chancellor’s energy policy.

His resignation on Monday highlights the challenges facing many businesses that have hoped to benefit from Germany’s ambitious expansion into green energy sources such as wind and solar. Chief among them: a glut of cheap electricity that is driving down prices not only for energy purchasers but also for companies building infrastructure, such as Bilfinger.

Mr. Koch, who left politics in 2010 to take the helm of the Mannheim-based construction and industrial services company, said in a statement on Monday that trust in his leadership had been “shaken” following two profit warnings in quick succession.

Germany’s federal government has set a target for renewable energy’s share of electricity production of at least 35 percent by 2020. That figure is intended to rise to 80 percent by 2050.

Renewable energy producers currently receive guaranteed prices on the power market, helping fuel the current glut.

“Prices on the electricity exchange are undoubtedly low at the moment and that’s making it harder to justify investment in new power plants,” Aike Müller, a senior project manager at the Berlin energy consultancy Adelphi, told Handelsblatt Global Edition. “We have a large overcapacity at the moment and renewables are a part of that.”

As fate would have it, Mr. Koch joined Bilfinger in March 2011 – the same month a tsunami caused the Fukushima nuclear disaster in Japan. That dramatic event prompted Mrs. Merkel to phase out nuclear energy in Europe’s largest economy and ramp up the use of renewables.

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