„It will be challenging without long-term planning“ – Interview with Martin Lawin and Felix Dehmel

Cologne (energate) – The energy system transformation demands massive capital investment. Despite a shifting interest rate environment, funding remains available for the energy sector — provided that companies and their shareholders approach the process with solid preparation and long-term strategic planning. In an interview with energate, Martin Lawin and Felix Dehmel of corporate finance advisory firm HKCF explain the current dynamics.

energate: The energy transition requires investments in the billions — some even speak of trillions. Can today’s capital markets, shaped by rising interest rates, accommodate these volumes?
Lawin: There is ample debt capital available in the market. Banks continue to be interested in providing long-term investment loans and are generally willing to do so. However, we’re seeing a growing expectation that shareholders also contribute—either through direct equity injections or through retained earnings, i.e., by foregoing dividend distributions.

energate: Expansion of renewables and grids, the heating transition, digitalization — the investment needs are vast. What does that mean for companies?
Lawin: There’s no question that balance sheets are undergoing fundamental changes. In some cases, we’re seeing total assets triple over the long term. This comes with significantly higher capital requirements. Banks now demand far more granular and reliable data during credit due diligence and expect tighter post-disbursement reporting to actively monitor company performance. This marks a clear increase in lender expectations compared to the past.
Dehmel: Let’s not forget—the energy transition has been underway for years. Many companies have already made significant investments. What’s happening now is a shift into an even more capital-intensive phase. However, not all companies have sufficient financial buffers left. That’s why it’s crucial to consider both the debt side and the equity base of the capital structure.

energate: Are all companies facing the same challenges, or are there notable differences?
Lawin: Not all municipal utilities are alike. A utility with a strong electricity grid portfolio is far more attractive to the capital markets than one also running public transport or municipal swimming pools — and possibly already carrying significant debt.
Dehmel: Gas grids, which for decades offered stable, low-risk returns for owners and investors, can no longer be considered safe by default. In fact, they may become liabilities unless companies can present a clear, sustainable and credible long-term usage case to capital providers. The market is undergoing a fundamental shift in this respect.

Christian Seelos

Source: energate messenger+