HANDELSBLATT EXCLUSIVE

BMW Battery Baron at Full Power

Stefan Quandt BMW Solarwatt source Solarwatt Ben Gierig
Just as Elon Musk, founder of Tesla Motors, Stefan Quandt, a billionare BMW shareholder, is interested in developing the battery market.
  • Why it matters

    Why it matters

    BMW shareholder Stefan Quandt has become a leading force in Germany’s batter industry via his firm Solarwatt, pitting it against Tesla Motors, Panasonic and others.

  • Facts

    Facts

    • The 49-year-old BMW heir owns more than 90 percent of Solarwatt, a producer of solar power panels and batteries.
    • Experts predict a rapid breakthrough for inexpensive batteries, which could store electricity generated by solar panels.
    • Of the 1.5 million German homeowners with solar panels, only 25,000 have bought electrical storage units, according to the German Solar Industry Association.
  • Audio

    Audio

  • Pdf

The dream of earning millions through solar energy went badly for BMW heir Stefan Quandt at first.

Mr. Quandt, who controls 46 percent of BMW together with his sister Susanne Klatten, was the anchoring shareholder in Solarwatt, the Dresden-based solar panel maker, when it slipped into insolvency in summer 2012. The firm, which once had more than €320 million in revenues, was overwhelmed by Asian competitors and canceled government subsidies.

Other big names in Germany also lost a lot of money investing in solar energy, including screw magnate Rheinhold Würth and Hexal drug company founders Andreas and Thomas Strüngmann.

Solarwatt is on the threshold of its most important deal ever: The firm will engage in extensive cooperation with E.ON, Germany’s biggest energy provider, Handelsblatt has learned.

But while they turned their backs once and for all on the former hope for the future, Mr. Quandt chose the opposite path: The billionaire was ready to come to the rescue.

Together with the management board, Mr. Quandt “committed himself to us fully under two conditions,” Detlef Neuhaus, chief executive of Solarwatt, told Handelsblatt. “First, through a comprehensive restructuring. And second, a strategy with clear direction.”

Together with confidants such as Hans-Peter Villis, former head of the German utility EnBW, Mr. Quandt called for a completely new business model. Solarwatt would go from producing only solar panels to providing intelligent energy systems.

Batteries where electricity could be stored and accumulated were identified as holding promise for the future. Mr. Quandt took over more than 90 percent of shares in Solarwatt and injected €5 million as a loan. But in the restructuring almost a quarter of 430 employees lost their jobs.

Today, almost four years later, Mr. Quandt’s patient persistence is beginning to pay off. With sales having shrunk to €60 million, Solarwatt is admittedly still in the red. But its prospects are superb.

According to information obtained by Handelsblatt, Solarwatt is on the threshold of its most important deal ever. In the future, the Dresden-based firm will engage in extensive cooperation with E.ON, Germany’s biggest energy provider.

Solarwatt will provide Düsseldorf-based E.ON with its home storage battery, “MyReserve,” along with an energy app. According to inside sources, the collaboration will consist of several hundred batteries this year, and add several thousand units per year from 2017 onwards.

Because Solarwatt charges around €5,500 per battery, the overall volume of the partnership could be expected to be in the tens of millions of euros.

 

The Quandt Connection-01

 

The collaboration with E.ON, however, far exceeds a simple delivery contract. With Solarwatt, E.ON hopes to develop its own electrical storage system – tailored to the needs of its customers, who are increasingly producing their own electricity with solar panels on their roofs.

The underlying calculation is clear: Solar batteries for everyone are on the verge of a breakthrough. The London-based consulting firm PwC estimates that by 2017 electrical storage units for households and small businesses could make economic sense, when used with solar panels. The main reasons are constantly rising prices for electricity in Germany and declining subsidies for solar energy.

“The business model of the private photovoltaic system is undergoing fundamental change,” said Norbert Schwieters, an energy expert at PwC.

Subsidies for renewable electricity that is fed into the grid can be expected to be halved to around 6.8 cents per kilowatt-hour by 2020. Over the same period, Mr. Schwieters predicts the cost of electricity will climb to about 34 cents per kilowatt-hour.

So from year to year, it will make more and more economic sense for consumers not only to generate solar energy himself, but also to store the sun’s energy gathered during the day for use at night.

The alternative of obtaining electricity from traditional energy providers would in some cases be twice as expensive.

Of the 1.5 million German homeowners who own solar panels, only some 25,000 have bought electrical storage units, according to the German Solar Industry Association.

But almost all experts are forecasting a boom in coming years. The global market potential for electrical batteries for home use is estimated to be worth up to €1.5 billion per year, or about $1.65 billion

Ever since Tesla’s chief executive Elon Musk announced in April 2015 his intention to revolutionize the energy world with a battery for $3,000, there is no limit to the hype about lithium-ion batteries. But the electric carmaker’s founder is only gradually beginning to deliver his Powerwall in Germany.

Stefan Quandt, meantime, has advanced to being the leading figure in the industry. If in fact the coming years bring a boom in electrical storage units, the investor will be the undisputed battery baron in Germany.

Not only has he positioned himself favorably in the market with Solarwatt, but he is also making his presence increasingly felt in the commercial field through BMW.

Already this year, the Munich carmaker intends to offer batteries for use in private homes. Specifically, the luxury-car manufacturer intends to sell used and new batteries of the electric-car model BMW i3 wholesale. The car batteries could be used as electrical storage units without any changes.

It made sense for the carmaker to look for a secondary use for batteries needed for its electric cars. When the output is no longer sufficient for powering an automobile, using the battery to store electricity in the home can better distribute the high manufacturing costs over the lifetime of the product. BMW is already working together with Bosch and Swedish utility Vattenfall on this added use.

“It’s obvious that other companies that need large numbers of batteries are also looking around for other uses,” said Michael Sterner, an energy storage professor at Technical University in Regensburg.

He sees a bridge for “marrying” various sectors: heat, electricity and mobility.

The involvement of Mr. Quandt in the battery business follows a customary investment pattern of the Quandt business family, which has been an owner of BMW shares since the 1950s.

On the supervisory board, Mr. Quandt and his sister Susanne Klatten have pushed for expansion of electromobility for years. Mr. Quandt is convinced that the future of the energy world will be decentralized and the future of the automotive industry will be electric.

“The battery is the crucial building block,” Mr. Quandt told Manager magazine last year.

With his investments in batteries, Mr. Quandt is also returning to an industry his ancestors were active in. His father and grandfather were both shahorelders and executives at German battery maker Varta from the 1920s to the 1960s.

 

Franz Hubik covers renewable energy for Handelsblatt in Düsseldorf.Markus Fasse covers the aviation and automobile industry. To contact the authors: hubik@handelsblatt.com and fasse@handelsblatt.com

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