The bankruptcy of the Danish company Better Energyonce a major developer of solar parks, is having repercussions on the Nordic country’s financial system and is reminiscent of the recent problems of another green energy champion, Northvolt, in neighboring Sweden. Better Energy announced Thursday that it will begin a rebuilding process for two of its main units, blaming poor market conditions and the unwillingness of its investors to provide more financing.
Among those affected is sydbankDenmark’s third largest listed lender, which this Thursday cut its financial outlook for 2024 and stated that the bankruptcy of Better Energy could mean a deterioration in value of 450 million crowns (about 60 million euros). Sydbank shares plunged as much as 8% in Copenhagen, the biggest one-day drop since March.
The thing doesn’t stop there. He largest pension fund in DenmarkATP, which owns around 15% of Better Energy, will lose a triple-digit amount in millions of crowns, a company spokesperson told Bloomberg. ATP invested 696 million crowns in 2022, Better Energy’s results report for that year shows. ATP said earlier this week that it is taking a major hit to its 2.3 billion crown stake in troubled battery maker Northvolt, in which the Danish pension fund was one of the largest owners with a stake of around 5 %.
“It’s a very disappointing situation,” laments Claus Wiinblad, head of Danish equities at ATP, in comments to Bloomberg. “Better Energy has found itself in a situation where shareholders’ money cannot be saved“, summarizes the expert. Some winds that have already blown Northvolt, the aforementioned Swedish manufacturer of batteries for electric vehicles, which filed for Chapter 11 of the US Bankruptcy Code last month for not being able to manufacture enough cells of sufficient quality. The Bankruptcy came as a shock, after the Swedish company was considered a European champion that would rival the growing Chinese hegemony in the green technology sector.
Like Northvolt, Better Energy expanded at a rapid pace, backed by institutions eager to invest in the green transition. Since 2020, the Danish company has been behind around half of all newly commissioned onshore renewable energy projects in Denmark. Better Energy was founded in 2012 and has built more than 110 solar parksaccording to information on their website.
Other lenders include Swedish Private Credit Investor P Capital Partnerswhich last year granted a six-year €175 million credit line to Better Energy, as well as the Denmark Export and Investment Fund. Industriens Pension, Andel, AP Pension, Nykredit and Jyske Bank They are also listed as partners in the joint venture, according to Better Energy’s 2023 earnings report.
Better Energy claims its problems are due to a toxic cocktail of energy price volatilityrise of the interest ratesproblems in supply chain and increase in input costs. The company said it hopes the rebuilding process will allow it to continue operations in 2025, when it will try to raise enough working capital to emerge from the rebuild.
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