German solar and wind developer SoWiTec has announced insolvency due to excessive debt.
In its announcement, the company said it has opened an insolvency case in the German city of Tübingen due to illiquidity and over-indebtedness. The company’s subsidiaries, SoWiTec International, SoWiTec Projekt and SoWiTec Operation, have also opened insolvency proceedings.
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The company said that insolvency became “unavoidable” in recent days, after management attempted to prevent claims being asserted by “a supplier” and failed to secure a deferment of financial obligations.
SoWiTec expects its operations to continue “initially” after the appointment of an insolvency administrator.
The majority of SoWiTec’s operational projects are wind power assets, mostly in Germany. It is developing around 8GW of solar PV capacity in Brazil, over 2.5GW in Mexico and 335MW in Argentina.
In response to enquiries from PV Tech, SoWiTec’s managing director and CEO, Frank Hummel, said the company “has a long-term business plan, along this plan it should be possible” to recover SoWiTec’s debts. “We have a valuable pipeline under development in south of Germany.”
On the reasons for insolvency, Hummel said: “In addition to the short-term cash flow problem, SoWiTec has been grappling with an increasingly difficult situation in the German wind market over the past 12 months. Tenders for ‘onshore wind’ have been significantly oversubscribed due to numerous newly approved projects. This has led to a sharp fall in prices for electricity supply contracts in the tendering process.” He added that the majority of tendered wind capacity has gone to the north of Germany, and that as a result of falling prices, southern projects are seeing their margins shrink.
“If policymakers do not react immediately with adjustments, we will soon see a cascade of project developers facing insolvency in southern Germany. Larger market players have already initiated restructuring processes,” Hummel said.
Though the specifics for solar PV and wind projects are different, we have also heard reports of challenging market conditions for European solar developers in recent months. Broadly speaking, developed markets where the most solar has been built have seen low, sometimes negative, power prices, which have eaten into project margins. Lack of grid expansion has compounded the issue.
Industry veteran developer and engineering, procurement and construction (EPC) firm Belectric told us last week that the sector faced a “critical” situation without widespread changes (subscription required) and earlier this year the chief of staff at developer Encavis, JP Kock, told us that the sector would likely see consolidation and bankruptcies as the requirements for solar development across the continent change.
