Renewable energies at 3U HOLDING AG with even more power in future

Depending on the weather conditions, 3U generates an annual average of more than 65 GWh (gigawatt hours) of electricity from the 53 MW (megawatts) of installed nominal capacity of its three wind farms and the solar park. This means that 3U’s electricity production currently corresponds to the consumption of more than 20,000 multi-person households.

Also as a contribution to achieving the national climate targets, it is part of the growth strategy in the 3U Group to significantly expand electricity generation in the Renewable Energies segment. To this end, the company is pursuing two main approaches: repowering, i.e. the replacement of existing wind turbines with more advanced new state-of-the-art turbines, and project development, i.e. the planning and construction of new wind farms. The implementation of both strategy components is dependent on the legal planning requirements as well as on continued complex approval procedures by municipal institutions and state authorities.

Repowering

As a first step, 3U submitted an application for repowering part of the Langendorf wind farm to the Burgenlandkreis district in Saxony-Anhalt in summer 2022. Currently, 15 wind turbines with a nominal output of 1.5 MW each are operated in Langendorf. The application proposes to replace seven of these turbines with five new wind turbines with a nominal capacity of 6.2 MW each. The installed capacity of the wind farm could be increased from currently 22.5 MW to 43 MW with the implementation of the project. Due to their design, the new turbines generate about twice as much electricity per MW of rated output as the existing ones. After repowering, the total electricity production of the Langendorf wind farm would therefore increase from the current average of around 32 GWh to around 100 GWh. The eight remaining old turbines will continue to be operated during the construction phase and afterwards. For the implementation of the project, 3U estimates a financing volume of around EUR 40 million and expects a return on equity of 15 %.

For a possible repowering of the Klostermoor wind farm, 3U has held promising preliminary talks with the local authorities in anticipation of the required application and approval process and has already extended the lease agreements with the land owners of the existing farm. With the planned replacement of the six existing wind turbines with three modern wind turbines, the installed capacity of the wind farm could be increased by a factor of 3.5 from the current 6 MW to 21 MW.

If the legal requirements also allow for the existing wind farm Roge and the other areas in the wind farm Langendorf, additional repowering projects could also be planned there and implemented after official approval.

Project development

The Brandenburg state government has instructed the regional planning authorities to replace the previous "exclusion planning", which limited wind expansion, with "offer planning", which will probably lead to the increased designation of suitability areas for wind energy use. In the course of this, the regional planning for those areas where 3U intends to develop wind farm projects and has already secured rights of use will also be redrawn. Currently, 3U is evaluating various projects in Brandenburg as promising. In part, this concerns areas in which 3U had already built wind farms in the past and subsequently sold them to investors as part of its corporate purpose of increasing value. The construction of further wind farms there appears to be possible in principle.

The planning documents prepared by 2018 indicated a maximum target capacity of more than 80 MW nominal output for the planned projects in Brandenburg. Higher values would be achievable with state-of-the-art turbines.

Currently, 3U is validating the prospects and potential of the projects it has worked on and will prioritise them appropriately – also from the point of view of the internal resources at hand. It is planned to extend the lease agreements with the landowners accordingly and adjust them as necessary.

For the distribution of electricity from wind power, 3U received an average of more than EUR 80 per MWh in the 2022 financial year; in the first quarter of the 2023 financial year, the revenue averaged around EUR 104 per MWh thanks to the new electricity supply contracts negotiated at the beginning of 2022 and the positive market environment.

The 3U Group’s Renewable Energies segment also includes the Adelebsen solar park with a nominal output of around 10 MW and an average annual electricity yield of around 10 GWh. Until 2032, remuneration is generally based on the guaranteed feed-in tariff of EUR 195 per MWh in accordance with the German Renewable Energy Sources Act (EEG).

Business model

In its 2022 financial year, 3U generated revenues of EUR 7.20 million in the Renewable Energies segment from the distribution of generated electricity. Due to the low operating costs optimised in the 3U Group, earnings before interest, taxes, depreciation, and amortisation (EBITDA) of 60 % to 70 % of revenues are achieved on average.

The generation of electricity from wind and sun is dependent on the weather conditions. Solar irradiation and wind yield are beyond the control of the operators. 3U HOLDING AG and its subsidiaries as operators achieve a high technical availability of the plants as a basic prerequisite for electricity generation through professional monitoring and maintenance of the wind farms. The revenue from electricity distribution is calculated as the product of the amount of electricity fed into the grid and the respective remunerated price. Consequently, the price negotiations and arrangements on the part of the management as well as the general electricity price level have an influence on the level of the economic success of the plants. A full implementation of the projects outlined here, both in repowering and through the development of new wind farm projects, would result in electricity generation in the Renewable Energies segment in the 3U Group multiplying and the installed nominal capacity increasing to 150 to 200 MW. While project development is financed from its equity capital resources, 3U relies mainly on bank loans and, where available, low-interest programmes from the KfW Banking Group to finance repowering projects and the construction of new wind farms.

"In our group-wide growth strategy, the segment Renewable Energies is now playing a significantly growing role again," emphasises Uwe Knoke, responsible for strategy and business development on the Management Board of 3U HOLDING AG. "Repowering and project development cannot be realised overnight, but they open up considerable potential for revenues and earnings for us in the medium term. The strong expansion of our power generation from sun and wind is a contribution to achieving the national climate targets, but also to once again realising our corporate purpose of increasing value in the interest of all stakeholders."