Earlier this year, the energy company Better Energy, which has accounted for around half of all new onshore renewable energy production in Denmark since 2020, announced that due to a record number of hours with negative electricity prices, the company had decided to postpone three GW of solar energy capacity from the company's Danish project portfolio until after 2030.
Later, there were also announcements that it would lay off 35-40 percent of its employees due to a "new market situation" where it had gone from "hypergrowth" to "normalized growth".
However, the adjustments have not been enough. In any case, Better Energy announced on Thursday that, as a result of a "perfect storm of negative market conditions, reduced investor appetite and deferred payments from key partners," it has requested reconstruction for Better Energy Holding A/S and Better Energy A/S.
The goal of the reconstruction is to look into a "2025 with full focus on continuing to create value, as well as ensuring sufficient working capital to restore sustainable operations as soon as possible and thus declare the reconstructions successful," the company said in a press release.
Two major partnerships have disappointed
Better Energy points out that despite great political ambitions for increased electrification, flexible electricity consumption and green hydrogen production in Denmark, it is becoming increasingly clear to the company from the second to third quarter of 2024 that the rollout of green electricity production risks running ahead of the market.
The changed market situation in the second half of the year has had very concrete consequences for two of Better Energy's joint venture partnerships, which represent the company's most important source of earnings in the form of 50 percent. sale of solar parks. These are collaborations with Andel and Industrien Pension.
Better Energy's partnership with Andel, which was established less than a year ago in December 2023, gives Andel exclusive rights to two GW of solar energy distributed across 15 projects in Better Energy's development portfolio. Upon signing the agreement, four solar parks with a total capacity of around 750 MW will be included in the partnership, after which construction will commence. However, Andel has subsequently been forced to cancel the inclusion of these projects and postpone them indefinitely, which has led to a lack of income from the sale of the projects to Better Energy.
Simultaneously in the third and fourth quarters of 2024, Better Energy's second joint venture partnership with Industriens Pension will be hit by restraint. This means that planned final payments on nine projects are still outstanding.
"These are nine projects that are either fully completed or very close to completion, and where Better Energy has already incurred all significant costs. Therefore, the missing final payments create a temporary but acute imbalance in the overall finances of Better Energy," Better Energy says.
Looking at a challenging 2025
All in all, these factors have led to Better Energy, despite its attempts to adjust the business, not being able to pay its partners on time and meet its financial obligations.
"Both the management and the organization have worked intensively to deal with the financial challenges, but as a result of the current situation, Better Energy has been forced to file a request for reconstruction in order to continue its operations and meet its financial obligations. This concerns two companies in the Better Energy group; Better Energy Holding A/S, CVR no. 31865883 and Better Energy A/S, CVR-nr. 36950676," reads the announcement from the energy company, which also chooses to look ahead.
"Better Energy faces a challenging 2025, where the overriding focus will continue to be on creating value and ensuring sufficient working capital so that the company can restore sustainable operations as soon as possible and thus declare the reconstructions successful."
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