Shell acquires Next Kraftwerke to expand power business

Royal Dutch Shell has agreed to acquire Germany-based virtual power plant (VPP) operator Next Kraftwerke as part of plans to expand its business in the electricity market.

The deal, which is subject to approval by regulatory authorities, will enable Shell to acquire 100pc of the Cologne-based trading company. The transaction is expected to be completed in the second quarter of 2021. Shell Overseas Investment is making the purchase, and neither party has disclosed the deal's financial terms.

The purchase will strengthen Shell's Renewables and Energy Solutions division position to become one of the leading providers of green electricity and related services, it said. Shell aims to double its electricity business to about 560TWh by 2030.

Following the acquisition, Next Kraftwerke will operate as a portfolio company in the Shell group under its existing brand and core management team.

The transaction will provide Next Kraftwerke with the resources needed to operate as an electricity trader, especially for more complex trading products, as for the next few years the VPP expects a rapid increase in demand for electricity trading contracts for renewable energy plants that have left support schemes or have been built outside a support regime, Next Kraftwerke co-founder and chief executive Hendrik Samisch said.

The German firm is one of the largest operators of VPPs, digitally networking and controlling more than 10,000 decentralised energy units in Austria, Belgium, France, Germany, Italy, the Netherlands, Poland and Switzerland. These units — including photovoltaic, bioenergy and hydropower — generate electricity that is traded on behalf of Next Kraftwerke's customers on the wholesale electricity markets.

Next Kraftwerke's shareholders include Eneco Smart Energy, High-Tech Gründerfonds and Hamburg FOR Mobile, among others.

All 180 Next Kraftwerke employees will continue working for the company after the acquisition, the firms said.

By Jacqueline Echevarria