Germany's RWE Earmarks Big Investment for U.S. Power Sector

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Written by Eric Funderburk for IIR News Intelligence (Sugar Land, Texas)

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Summary

German power company RWE has announced planned global investments of 35 billion euro (US$40.3 billion) through 2031, with a little less than of this allocated for projects in the U.S.

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Big U.S. Spending Plans

After reining in U.S. investments in order to get a better grasp on the country's tariff policies, renewables incentives and permitting policies, Germany's RWE is targeting projects in the U.S. power sector with renewed vigor.

This week, the company announced global investment plans of 35 billion euro (US$40.3 billion) across the world through 2031, with 17 billion euro (US$19.6 billion) of this going toward projects in the U.S.

The company plans to grow its U.S. generation portfolio from 13 gigawatts (GW) today to 22 GW by 2031.

New Direction

That existing 13-GW portfolio comes primarily from solar and wind installations, along with battery energy storage systems (BESS), and those types of projects still seem to represent the bulk of RWE's planned spending.

But the company is introducing a new element to support its U.S. renewables buildout: natural gas-fired peaking stations to be used in times of high regional power demand. To be sure, the company's gas-fired plans lie outside or on the tail end of its 2031 investment plans, with RWE Chief Executive Officer Markus Krebber saying at this week's earnings results presentation that the first U.S. peaking units would be online by the end of this decade, with more than 3 GW of a possible 5 GW of gas-fired plants installed by 2035.

As RWE is targeting peaking plants rather than larger baseload facilities, its capacity goals could lead to several of the smaller plants. Industrial Info is tracking four natural gas-fired peakers presently under construction in the U.S., ranging from less than 20 megawatts (MW) of additional power to more than 440 MW, employing both turbines and reciprocating internal combustion engines. Subscribers to Industrial Info's Global Market Intelligence (GMI) Power Project Database can learn more by viewing the related project reports.

As with so much of the power sector, the buildout of new energy-hungry data centers is a prime driver in RWE's planned foray into U.S. gas-fired peaking plants. "They perfectly complement our renewable energy portfolio, as they can supply electricity particularly quickly to meet short-term demand," Krebber said during the earnings call. "A reliable supply is especially important for electricity-intensive customers such as data centers."

Krebber added the plants were planned at locations where RWE has existing grid access, narrowing the focus on destinations somewhat, although Industrial Info's GMI Power Plant Database shows operational RWE facilities spanning 17 U.S states, with Texas--containing more than 40 RWE facilities--the largest destination.

Texas featured most prominently in RWE's additions of 2 GW of solar, wind and BESS power in the U.S. last year, which also included completed projects in Arizona, Kentucky, New York, Illinois, Louisiana and California.

Renewables Still Heart of Spending

While the gas-fired plants represent a new direction for RWE in the U.S, they represent only a small fraction of the more than US$19 billion that RWE plans to invest in the U.S. over the next six years.

Industrial Info's GMI Power Project shows eight U.S. RWE renewables facilities under construction, including solar, wind and BESS projects, with Texas--on the receiving end of more than 1 GW of these projects--the prime recipient.

Pending Plans

What are some of the projects that may be part of RWE's U.S. plans? Industrial Info is tracking more than 80 RWE projects in the U.S. that are in the planning or engineering stage with a future kickoff date in the cards, but a number of these have been deemed as having a low probability of starting as planned. RWE's recently announced spending plans could increase the feasibility of seeing these projects get started in the future. Focusing solely on projects with a medium or high probability of moving forward as planned, several projects remain, most set for a near-term kickoff date.

While Texas features in RWE's future projects, two of its largest active projects (both rated as high-probability) are set for Indiana. The company is expected to begin turning dirt on its planned 200-MW Prairie Creek Windfarm in Blackford County this summer, entailing construction of more than 50 wind turbines.

Solar and BESS also feature in RWE's Indiana's plans in La Porte County, where an initial 275 MW of solar power will be joined by the addition of 125 MW of more solar capacity and an accompanying 100-MW BESS unit.

The full solar and BESS facility is planned to be completed next year, followed by the Prairie Creek Windfarm in 2028. Subscribers to Industrial Info's GMI Project Database can learn more by viewing the project reports related to RWE's Indiana plans. While the Indiana projects are estimated to cost more than $1 billion combined, this spending represents only a fraction of what RWE has now announced is on its way to the U.S. in the coming years.

Key Takeaways

• RWE has announced that nearly half of its planned spending through 2031, accounting for 17 billion euro (US$19.6 billion) out of a total of 35 billion euro (US$40.3 billion), will go toward U.S. projects.
• While the bulk of the spending will remain in keeping with RWE's U.S. projects to date--wind, solar and BESS projects--the company has announced it will pivot into the construction of natural gas-fired peaking plants as well.
• RWE hopes to lift its U.S. generating portfolio from 13 GW currently to 22 GW by 2031.

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About IIR News Intelligence
IIR News Intelligence is a trusted source of news for the industrial process and energy markets, powered by Industrial Info Resources' Global Market Intelligence (GMI).

About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 250,000 current and future projects worth $30.2 Trillion (USD).