In an attempt to hedge against future rising energy prices, Volkswagen announced last week that it will invest up to one billion Euros (US$1.45 billion) in renewable energy. The announcement follows the company’s decisions earlier this year to invest in other clean energy projects as well as to launch new electric vehicles.
According to the German language edition of the Financial Times, Volkswagen will become a large investor in two offshore windparks in the North Sea. The investment accomplishes two objectives: to help the car manufacturer meet its renewable energy goals for 2020 as well as give a boost to Germany’s flagging wind power sector.
While Germany has been a leader in solar energy the past decade, wind power has been a different story. Ambitious projects to build wind power farms in the North Sea have suffered from the lack of investors who saw the proposed projects as too risky. Volkswagen had been in talks with wind power developers for several years but had hesitated to commit to the industry. But the moves of other companies, including the American private equity firm Blackstone, helped open the door to increased investment. Blackstone closed a deal on one wind farm last month. Now WV is set to invest in two wind power farms, including one 60 miles (95 kilometers) north of Bokum (pictured left), an island off of Germany’s northwestern coast.
For Volkswagen, the investment goes beyond scoring a few corporate social responsibility (CSR) points. True, VW has pledged to reduce its carbon dioxide emissions 40 percent by 2020. But energy security is a concern for European countries, and companies, who have been rattled by volatility in the Middle East and North Africa as well as Russia’s shutdown of its gas supplies to Europe two years ago. And with Angela Merkel’s promise to phase out nuclear energy by 2022, the time for energy intensive firms like Volkswagen to find different sources of power is now.
To that end, the two wind energy projects to which Volkswagen has committed promise to provide about 400 megawatts of electricity of full capacity, or 40 percent of the capacity of a nuclear power plant. The upshot is that the quest to find sources of energy to complement what currently fuels most companies’ operations will be a long, painful one on both sides of the pond.
Photo at the top of the story is of a wind farm in Neuenkirchen, Germany, courtesy Wikicommons.