Investing in Germany’s energy transition

Oliver Prange of Swiss magazine Du has talked with Fritz Kaiser about Responsible Investing, the energy transition in Germany and his efforts in supporting offshore wind energy.

Question: You developed a formula for responsible investment with Al Gore?

That was one of our aims in 2005. I looked for a list of the ten drivers that would determine our future over the next ten years. We talked to Harvard University, to the World Watch Institute and others, but ultimately the most effective help came from Gore.

Question: What exactly was Gore’s contribution, and what did you do with it?

He developed the list of nine drivers of global change for us. You have to remember that there wasn’t such a thing at the time. I then invited 60 people – wealthy families and professional advisers – to a workshop forum with Al Gore. Armed with our list of future drivers we worked hard on developing various scenarios which have turned out to be quite prescient.

Question: In hindsight, what effect has this actually had?

More and more people are thinking and acting in an environmentally aware way and are concerned about the environmental legacy. This change in perceptions has prompted a growing group of wealthy people and opinion formers to actively commit themselves to the concept of responsible investing. This commitment is also a major element in the corporate philosophy of my wealth advisory firm Kaiser Partner. It is clear these days that well managed investment strategies directed towards long-term sustainability do better than short-term, speculative investment concepts in terms of both asset security and performance.

Question: This work fed into Al Gore’s recently published book “The Future”, in which he defines six forces that are changing our world. Alongside increasing globalisation these are the shift in geopolitical power relations, a mistaken economic policy that focuses on growth alone, unsustainable treatment of our environment and resources, and the revolutions in digital communications, neuroscience and bio and genetic engineering.

Over the last ten years I have continuously monitored all of these global drivers. We have worked particularly hard on the “internet-driven communication hyper-revolution”, and today we have several of our own business interests and investments in this area. In 2014 we also studied the “Energiewende” in Germany and recently made initial investments there too.

Question: The “Energiewende”, or energy transition, is the move from unsustainable use of fossil fuels and nuclear power to sustainable energy generation using renewable energy sources.

Germany is setting the pace with its “Energiewende”. The German government announced immediately after the Fukushima disaster that it would withdraw from nuclear power generation in stages by 2022. By 2020 it wants to cover 35 percent of its gross electricity consumption with renewable energy sources. Wind power – and especially offshore wind power – will play a significant role in meeting this ambitious goal and putting the “Energiewende” plan into practice. The conditions in Germany are now appropriate for private investors to invest in this sector for the long term. It’s an investment that meets our requirement of being financially attractive but also responsible.

Question: You are investing in the German “Energiewende” yourself. How exactly are you doing this?

Through our company Sea Wind Holding we are investing in the development of offshore wind power, and in January 2015 we took over an offshore wind farm project that found itself in financial difficulties but that will soon be ready to be licenced. The project centres on the construction of a 500 megawatt wind farm. Offshore wind farms are attractive because they can be up to a hundred kilometres out at sea, or even further in future. Nobody can see or hear them. They also benefit from more continuous wind conditions and so can deliver higher production than onshore turbines.

Question: How is the German government supporting projects like this?

Germany sets the long-term legal framework, including purchase assurances with guaranteed prices for a certain period. The price is higher than the market price. The crucial thing for investors in this sector is the plannable purchase guarantee. Given Germany’s creditworthiness and reliability, we believe this guarantee is so secure that a pension fund could invest in the operational phase of a wind farm.

Question: What is the appetite for wind farm investments?

The finances for a professionally structured project are very attractive. An investment in the German “Energiewende” with electricity prices guaranteed by the German government offers an opportunity to invest money sustainably, securely and with attractive interest rates.

Question: Why is Germany closing down its nuclear power stations when its neighbours are continuing to use theirs?

If you think like that, nothing would ever get done. I believe that Germany’s decision on energy transition sends out a strong signal that other countries will follow.

Question: How do you feel personally about the wind power project?

Building huge wind turbines hundreds of kilometres out to sea to generate green power for the world – that really excites my entrepreneurial spirit. We are investing here in new technology so we remain on the right side of global – but also doing so on attractive financial terms.

This is a shortened version of an interview published in the Swiss Du-Magazin (April 2015). Please read the complete interview here (in German).

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