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German developer seeking $170 million for portfolio development

Geothermal power plant in Landau, Germany (source: flickr/ webguy63, creative commons)
Francisco Rojas 17 Jun 2015

Geothermal developer Deutsche ErdWärme and Dubai-based Greenstone Equity Partners collaborate on $170 million fundraising efforts for German development.

Greenstone Equity Partners , one of the largest independent fund placement firms in the Middle East, announced its collaboration with Deutsche ErdWärme, a Karlsruhe, Germany-based geothermal development company to raise up to Euro 150 million for the development of a portfolio of geothermal licenses in Germany. The geothermal energy market in Germany is experiencing rapid growth with attractive 20 year tariffs backed by the German Government. This provides investors with long-term high yield investment opportunities.

The new partnership aims to raise up to Euro 150 million in capital to partly-finance the construction of four geothermal projects which will generate a total of approximately 25 megawatts. GCC investors will be invited to invest in a preferred equity structure, with a 10 per cent return, at low risk, as the tariff is backed by the German government. In addition, there is no pipeline risk as the project pipeline is secured and it exceeds the target capital raise.

“Clean energy initiatives are gaining strong popularity, as the world is seeking to enhance global energy security, promote enduring economic growth and tackle environmental challenges,” said Omar Al-Gharabally, President of Greenstone Equity Partners . “Several countries have already achieved tremendous clean energy deployment, while others have announced targets for shifting their energy systems onto a cleaner, more sustainable path. With this acceleration in interest from both public and private sectors in clean energy, we see renewables as strong assets for investors to invest in.”

“Germany was one of the earliest countries in realizing the world’s needs to achieve a clean energy revolution, thus has been a leader in global energy transition efforts. Deployment of renewable energy has been a top priority for the German government that aims to achieve 80 per cent of the German power generation to come from renewable energy by 2050, up from the current 25 per cent,” said Dr. Herbert Pohl, Co-Founder and Managing Director of Deutsche ErdWärme. “Geothermal energy, which is heat from the earth converted into power, is an exceptionally clean and efficient alternative energy source. It is used both to generate electricity and as a natural means of heating homes and buildings. As a clean, base-load, 24/7 source of energy, we believe that geothermal energy has a tremendous potential in Germany.”

Deutsche ErdWärme (DEW) is part of the Jones Pohl Group, a privately-held, Dubai-based firm that invests early-stage capital in fragmented yet growing clean energy markets primarily in Europe, the Middle East and Africa. DEW plans to initially develop a portfolio of several geothermal projects in Germany, and has already acquired data and studies for those projects.

Geothermal energy is an emerging renewable energy market segment in Germany exhibiting strong growth potential. There are currently 31 operational geothermal projects in the country. An additional 43 projects are in development, which will at least double the installed capacity over the next five years. To encourage private investments into this segment, the German government gives attractive incentives to investors and guarantees electricity tariffs without the need to negotiate a power purchase agreement. The effective feed-in tariff for geothermal energy is currently € 0.252/KWh and guaranteed for 20 years once the plant is operational.

Source: Company release via Zawya