German Power Giant RWE Shuns M&A for AI-Backed Renewable Growth

By Bloomberg

Sep 26, 2024

image is BloomburgMedia_SKDY7DDWRGG000_27-09-2024_13-10-32_638629920000000000.jpg

Cooling towers emit vapor at the Neurath lignite fueled power station, operated by RWE AG, beyond green houses in Grevenbroich, Germany, on Friday, April 8, 2022. Germany's Economy Minister Robert Habeck last week said the country has already cut its reliance on Russian coal by at least half in the past month as the European Union agreed to ban imports of the fuel from Russia. Photographer: Alex Kraus/Bloomberg

(Bloomberg) -- German power giant RWE AG is prioritizing building renewables to meet AI-led demand growth in the US and Europe and isn’t looking for deals to acquire power generation.

Chief Executive Officer Markus Krebber’s comments in an interview at Bloomberg News in New York Wednesday effectively squashed rumors the company is looking to own gas plants for the first time in the lower 48 states. He declined to offer specifics. There were reports last month that RWE was exploring purchasing a stake in US power-plant giant Calpine Corp.

“We currently have no plans for transactions” for any gas generation in the US or deals more broadly, Krebber said. “We have a good strategy, which we can deliver organically.”

Over the past year, the power needs of AI have been sending shockwaves through the industry and RWE, the largest electricity producer in Germany and third largest renewable developer in the US, sees hyperscalers — some of the biggest data center developers in the world — pushing for even more zero-carbon electricity. Their appetite is so big that Microsoft Corp. is supporting the reopening of the Three Mile Island nuclear plant, which experienced a partial reactor meltdown in 1979, with a two-decade deal to buy power.

RWE has been in discussions with big tech companies to build facilities at shuttered nuclear and coal plants in places like Germany, where they can access the grid and water for cooling, Krebber said. The facilities would tap the grid but would be backed by power purchase agreements for green energy, he said.

In the US, hyperscalers are looking to accelerate the buildout and RWE is seeing strong interest for green PPAs, Krebber said.

Germany is planning a huge build out of gas-fired power plants. Some of these will be required to switch over to hydrogen at some point in the future. Early next year RWE expects to bid as much as 3 gigawatts of gas generation in a German auction, Krebber said.

RWE is still proceeding with building the power plants even after its partner Equinor ASA halted plans to build a pipeline to supply hydrogen from Norway, Krebber said.

By Naureen S. Malik