The demand for photovoltaic systems and electricity storage is booming. It is all the more astonishing that Shell wants to separate from its prominent German solar subsidiary after just four years. There is now speculation about the exact reasons.
The energy company Shell is putting its German solar subsidiary Sonnen GmbH up for sale again after just four years. The exit from the high-growth business with photovoltaic systems and storage is surprising given the high demand for these products. It is also surprising because virtually all private oil multinationals want to reduce their dependence on the sale of fossil fuels.
When asked, Shell neither wanted to confirm nor deny its intention to sell. But according to information from WELT, a recently published report by the “Handelsblatt” is correct.
Sonnen GmbH from Wildpoldsried is something of a rock star among energy transition startups. After being founded in 2010, the company was one of the first to offer the right electricity storage system and intelligent control software for the solar system.
The Sonnen founders Christoph Ostermann and Torsten Stiefenhofer also connected thousands of battery storage units from private solar roof owners across the country to form a “virtual power plant”. The storage capacity was sold to network operators as so-called balancing energy – thus generating additional income.
The company now has 1,500 employees worldwide and production sites in Australia and the USA. It is run like an internet startup: new energy transition products are often presented in a stage show that seems to be inspired by Apple’s legendary iPhone presentations. The fact that the Sonnen founders sold the business to Shell Renewables in 2019 surprised many in the green energy scene at the time.
But now Shell is withdrawing again. One can only speculate about the reasons. Last week, the group announced that it would sell its private customer business in Germany and Great Britain to the British Octopus Energy. Apparently Shell’s profit margins were too low in the very competitive and small-scale business. The new CEO Wael Sawan wants to focus the group more closely on major customers.
Sonnen GmbH’s growth business may also have become too fragmented for Shell. The market is booming because the federal government wants to quadruple the solar capacity installed in Germany by 2030 and has therefore eliminated VAT on solar products.
But at the same time, a fairly large group of companies, some of them young, are fighting aggressively for market share and increasing price pressure. There is now consolidation among providers and some are giving up.
“Many gold diggers entered the solar market”
“In 2022, a lot of gold diggers entered the solar market, from real estate agents to plumbers,” says Mathias Hammer, managing director of the Leipzig solar company “Energiekonzepte Deutschland” (EKD). “This is exactly where the wave of insolvencies is now rolling, as these companies were neither able to meet the quality standards nor have the necessary experience or financial strength.” Their customers, says Hammer, “are now left with inadequate systems and have also lost their contact in Germany when it comes to product guarantees. “’
Solar pioneer Sonnen is unlikely to be affected, or only indirectly, by such turbulence in the hot market. The solar storage business in particular is currently experiencing unprecedented growth rates. According to information from “PV Magazine”, 250,000 photovoltaic home storage systems were installed in Germany in the first half of 2023 – more than in the entire previous year at half time.
Shell’s exit apparently does not mean that Shell wants to concentrate more on the fossil fuel business. Since 2021, the group has been pursuing the goal of reducing oil production by one to two percent per year by 2030. Shell currently expects its oil production in 2030 to be 26 percent below 2019 levels.
On Thursday, the company signed a 15-year power purchase agreement with Germany’s largest solar park, Witznitz. Shell sells part of the solar power to Microsoft via a Power Purchase Agreement (PPA).
This text first appeared on Die Welt.