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Business

Volkswagen races into the energy sector

It's one of those couplings that raise eyebrows: A year after announcing their liaison, VW and LichtBlick say they are poised to transform Germany's energy landscape.

Names LichtBlick and Volkswagen on a white background

Volkswagen is exploring new territory

They could not have picked a more timely moment if they had tried. In the week that winter arrived in Germany and the ground got its first dusting of seasonal snow, car manufacturer Volkswagen and ecological energy provider LichtBlick installed their first-ever home power plants, moving closer to their goal of a decentralized energy network.

LichtBlick CEO Christian Friege described the launch of the small-scale power plants, which are suitable for both residential and commercial customers, as a "major milestone." He believes the technology has the potential to fundamentally change the face of the German energy market.

And that change essentially comes in the shape of a large white box, which customers install in their cellars. Inside the box is a VW two-liter natural-gas engine -- the same one used in the car manufacturer's popular Touran and Caddy models -- and the promise of up to 40 percent greater energy efficiency.

A virtual grid

A man stand up against a large white box. Trees in the background

The big white box

Over the coming years, the ecological energy company aims to install 100,000 of the two-liter gas generators, which are produced at the VW Salzgitter factory, across the country. If that goal is achieved, plant users could collectively produce electricity equivalent to the annual output of two nuclear reactors. That would mean the birth of Germany's largest virtual gas power plant.

Hitting that target will take some time, but LichtBlick spokesman Ralph Kampwirth told Deutsche Welle there are enough incentives in the scheme to make it attractive and viable both environmentally and economically.

"Customers save money and they get to be part of the energy revolution by providing electricity to integrate into renewables," he said, adding that home power plants generate more energy than their users are likely to need so any excess is stored in a special facility kept on the user's premises.

Part of the solution

The scheme removes the need for gigantic landscape blotting power stations and also means those who invest in it can sell the electricity they generate back to eco-energy supplier LichtBlick -- at a price of between 0.5 and 2.5 cents per kilowatt -- to use when the weather has not provided enough wind or solar power to feed the national appetite.

A field of solar panels under the sun

LichtBlick will supplement renewables with power from the VW generators

According to Kampwirth, electricity is very hard to store and that a major problem for Germany is its lack of storage facilities. "We are part of the solution," he said.

That solution, however, comes at a price. Customers don't only have to have nine square meters of cellar space standing around empty; they also have to be prepared to pay a one-off fee of either 5,000 or 8,000 euros, depending on the model they opt for. But LichtBlick says it's a good deal.

"Our customers are already planning on buying a new heating system, so they look around at what is on offer," Kampwirth said, adding that a more conventional gas heating system will set customers back between 8,000 and 11,000 euros.

VW prestige

VW Touran

The VW Touran and home power plant share an engine

The fact that Volkswagen is mass producing the home power plants means they can be sold for a fair price, gives the product prestige and offers VW a foot into a brand new market. It's a win-win for the two companies, which are locked into a seven year exclusivity deal.

"Partnership with LichtBlick is in line with our component strategy, which is to develop future-oriented business areas closely related to the automobile industry," Werner Neubauer, member of the Board of Management of the Volkswagen brand said in a statement. "Every unit we supply to LichtBlick also helps secure future employment at Salzgitter and our other plants."

LichtBlick is planning to install 30 plants in the Hamburg region before the end of the year, but has already launched a sales offensive in other major German cities. Longer-term, the modest energy company is hoping to take its technology overseas and become as much an economic success as an environmental one.

Reporter: Tamsin Walker
Editor: John Blau

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