In April, more solar and wind energy was generated in one day in the Netherlands than we used. The result: a negative electricity price. Nice, the energy transition, but not always attractive for energy companies in this way. The solution: better storage options for such an electricity surplus.
Energy storage: let that be one of the three divisions of Alfen, the company that once started as a maker of transformer houses. Alfen developed a kind of gigantic ‘batteries’ that can be used, among other things, to store a surplus of generated electricity.
Alfen also still makes transformer houses, now as part of the division with the trendy name ‘Smart grids’. There is also potential there: after all, the gas connection is disappearing in more and more houses and an electric car is on the doorstep. It is therefore necessary to adapt the power network.
And then of course there are the charging stations, Alfen’s third and most important industry. At least, if you look at the turnover. The charging station division recorded a turnover growth of no less than 184 percent in the first quarter of this year. “This is mainly due to the public segment: hotel chains, restaurants and companies that install charging stations,” said David Kerstens, analyst for Jefferies. “It can lead to large orders, which have a significant impact on quarterly growth.”
The bandwidth of the total revenue forecast for 2022 was increased from 330-370 million to 350-420 million in May. The share price rose steadily, even to above 115 euros per share at the beginning of August. Expectations are high in the run-up to the presentation of the half-year figures next Thursday. But last week the share price suddenly fell by as much as ten percent.
“Probably because competitors in the European market for charge points showed a weaker result than expected this week,” says Kerstens. “For example, Garo from Sweden, who reported a 13 percent drop in sales.” According to Kerstens, investors may have been shocked by this; Are Alfen’s expectations perhaps too high?
The energy transition may be following the tide due to geopolitical tensions that have repercussions on the fossil market, but shortages of materials such as electronics, copper, aluminum and steel are a major problem for the charging station sector, says Kerstens. “Garo was therefore unable to deliver in the past quarter.” Nevertheless, Kerstens remains optimistic about Alfen in that regard. Although the company is equally affected by those shortages, he says it is currently in a better position than competitors. “Alfen started looking for new suppliers at an early stage, so as not to be solely dependent on China, for example.”
What Kerstens does wonder is whether Alfen can continue this level of growth in the long term. Alfen started making charging stations in 2008, when there were hardly any electric cars on the road. This has given them a competitive advantage and a market share of 40 percent in the Netherlands. But in all European countries that share is only 5 percent. “It is a recurring question from investors: to what extent can Alfen retain its competitive advantage, also outside the Netherlands? For consumers, there is little difference between a charging station from Alfen or from a local player, the products are now almost the same.”
Kerstens has set the price target at 98 euros, below the current value. “It has already taken into account that the market share outside the Netherlands will grow from 5 to 15 percent in the next five years. So that is already quite a high expectation.”
A version of this article also appeared in the newspaper of August 22, 2022