The Problem With Renewables Is That You Eventually Run Out Of Other People’s Money
German wind energy giant Prokon filed for insolvency on Wednesday, leaving tens of thousands of investors worried about their money. The company advertised itself as a safe bet offering eight percent returns.
Prokon, which builds and manages wind parks, has been a leading player in Germany’s ambitious plan to switch to renewable energy. It managed to attract 75,000 investors through a successful advertising campaign.
But after months of speculation that the company was close to ruin, Prokon filed for insolvency. Investors had reportedly pulled €227 million of a total investment of €1. 4 billion, leaving the company far short of the 95 percent capital investment it needed to stay solvent.
Prokon said it would remain operational and was confident “the present difficulties could be overcome.” However as the situation currently stands, the company can only afford to pay its 1300 employees for the next three months.
“It’s in the interest of this state that manufacturing continues,” said Reinhard Meyer, economics minister of Schlewsig-Holstein, where the company is based.
Prokon offered investors so-called “participation rights,” which – while offering high returns – did not entitle them to any part in decision-making.
According to the Süddeutsche Zeitung, lawmakers are now considering pushing forward regulation aimed at preventing high-risk companies from misleading investors.