(Bloomberg) -- The collapse of Denmark’s Better Energy A/S, a once-hyped solar park developer, is sending repercussions through the Nordic country’s financial system and bringing eerie reminders of the recent problems for another green energy champion, Northvolt AB, in neighboring Sweden.
Better Energy on Thursday said it will start a reconstruction process of two of its main units, blaming poor market conditions and an unwillingness from its investors to provide more funding.
Among those burnt are Sydbank A/S, Denmark’s third-largest listed lender, which cut its 2024 financial outlook on Thursday and said Better Energy’s collapse could lead to 450 million kroner ($63 million) in impairment charges. Sydbank shares tanked as much as 8% in Copenhagen, the biggest one-day drop since March.
Denmark’s biggest pension fund, ATP, which owns about 15% of Better Energy, will lose a three digit million-krone amount, a company spokesperson told Bloomberg. ATP invested 696 million kroner in 2022, Better Energy’s earnings report for that year shows. ATP said earlier this week it’s taking a major hit on its 2.3 billion-krone stake in troubled battery maker Northvolt, in which the Danish pension fund was one of the largest owners with a stake of about 5%.
“It’s a very disappointing situation,” ATP’s head of Danish equities, Claus Wiinblad, said in emailed comments. “Better Energy has found itself in a situation where the shareholders’ money can’t be saved.”
Northvolt, a maker of electric vehicle batteries, last month filed for protection under the US Chapter 11 bankruptcy code after failing to make enough cells at a sufficiently good quality. The collapse came as a shock after the Swedish company had been touted as a European champion to rival China’s rising dominance in green technology.
Like Northvolt, Better Energy expanded at a fast pace, backed by institutions eager to invest in the green transition. Since 2020 the Danish company has been behind about half of all newly-commissioned land-based renewable energy projects in Denmark, it says. Better Energy was founded in 2012 and has built more than 110 solar parks, according to information on its website.
Other lenders include Swedish private credit investor P Capital Partners, which last year provided a €175 million six-year credit facility to Better Energy, as well as the Export and Investment Fund of Denmark. Industriens Pension, Andel, AP Pension, Nykredit and Jyske Bank are also listed as joint venture partners, according to Better Energy’s 2023 earnings report.
Better Energy said its problems are caused by a toxic cocktail of volatile energy prices, higher interest rates, supply chain issues and higher input costs. The company said it hopes the reconstruction process will enable it to continue its operations in 2025, when it will attempt to raise enough working capital to exit the reconstruction.
(Updates with comment from ATP in 5th paragraph, lender details in 8th paragraph)
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