Energy for new records?

2G Energy AG posted impressive figures in the first half of 2025 and reached a historic high on the stock market in August. There are plenty of growth topics. The question now is what price potential the stock still has.

When Christian Grotholt and Ludger Gausling founded the company in 1995, they built combined heat and power plants for customers in the agricultural sector in order to supply stables with a continuous supply of electricity and heat. Today, 30 years later, combined heat and power generation is still part of 2G Energy AG's core business. But the scale is completely different: The company is now a leading international manufacturer and system provider of decentralized energy supply systems. After achieving sales of €375.6 million in 2024, the threshold of €430 million is expected to be exceeded this year. If the forecast at the end of the year proves accurate, the business volume will have grown by around 185% over the past ten years. The EBIT margin would rise from around 3% to 9%.

Generational change in Heek

In terms of personnel, the company underwent a generational change this year. Co-founder Christian Grotholt handed over the chairmanship of the Executive Board to the previous Chief Sales Officer Pablo Hofelich on June 12, 2025, in order to move to the Supervisory Board. Hofelich now wants to continue on the growth path and sees considerable potential for the company in internationalization and its diversification strategy (see interview below).

In terms of share price performance, Hofelich is starting at a high level. The share price of 2G Energy reached a historic high of €39.60 on August 19, 2025. When we last discussed the share in issue NJ 8/24, we last looked at the stock and considered a price target of €39 to be realistic at the then price of €22.55. In the meantime, the stock is trading around 19% lower than its record high. The current price is €32.10 on the stock exchange.

The stock market is reacting, among other things, to the 2025 interim report, which, although very positive, limits the forecast for the full year. Revenue, which was previously expected to be in the range of €430 to €450 million, is now limited to the lower range between €430 and €440 million. The EBIT margin is now expected to be between 8.5 and 9.5%, after previously being forecast at 8.5 to 10.5%. The reason is that the so-called “Biomasse Paket” (biomass package) was approved by the EU Commission later than expected. With the approval granted on September 18, 2025, the way is now clear for a whole series of orders.

Order backlog at record level

Nevertheless, the order backlog remains at a record level, and the Management Board describes demand in the H1 report as “unbroken high.” The forecast for 2026 is therefore being maintained, with sales expected to be between €440 and €490 million and the EBIT margin between 9 and 11%. In the first half of 2025, 2G Energy's sales rose by 29.5% to €169.9 (131.2) million. This was due in particular to the booming new equipment business, which grew by 55.3% to €82.7 (53.2) million. The service business achieved an increase of 11.9% to €87.2 (77.9) million. New orders recorded dynamic double-digit growth in all core regions. Overall, new order intake increased by 18.6% to €110.7 (93.3) million. With growth of 12% to €219.8 (196.1) million, the order backlog reached a record level and ensures full capacity utilization until around mid-2026.

The high increase in sales was also reflected in the profitability. EBIT climbed 39% to €5.7 (4.1) million. The EBIT margin reached 3.3 (3.1)%, despite negative currency effects of €-0.8 (0.7) million. The bottom line is a consolidated net income of € 3.5 (2.7) million. The equity ratio is 54.3 (53.2) %.

Potential in America and Asia

2G Energy's business is still predominantly located in Europe. In H1 2025, 50.7 (59.7) % of sales were generated in Germany. The rest of Europe accounted for 35.4 (20.6) %. The strong increase in sales is attributable to the enormous demand in Ukraine. In North and Central America, 7.9% (8.9) was generated. There is undoubtedly still considerable potential in internationalization, particularly in the USA and Asia. Most recently, the management level for the Indian market was expanded. The business outlook for the coming years remains bright in the existing core markets. In Germany, 2G is benefiting from a generally improved mood, which is leading to a renewed willingness to invest.

In addition, some regulations are having a positive effect. After the introduction of the KWKG and EEG amendments significantly boosted demand, 2G Energy now expects further momentum in the biogas sector from the aforementioned approval of the biomass package by the EU Commission under state aid law. Some orders were subject to reservation and can now be processed following approval. The Management Board expects the announced reduction in electricity prices for large industrial companies to provide a boost for sales of large heat pumps.

Hope for demand response

In the US, tariffs have not yet had a negative impact on business. The 15% tariff is still being absorbed due to the enormous demand in the market. The Executive Board is optimistic about the coming months in North America, as the project pipeline is well filled and demand response aggregates are now also being introduced to stabilize the grids. “Especially in the US, the grids are massively overloaded,” explains CEO Pablo Hofelich. Therefore, anything that stabilizes the grid is in extremely high demand in the United States. The company is also expanding its activities in Europe.

Therefore, 2G Energy is first introducing the concept of demand response in the USA before implementing it in Europe. Higher sales will not yet result from the offerings this year; certification is currently still underway, and distribution is in the starting blocks. To this end, a cooperation agreement has been signed with CK Power from St. Louis. Sales of demand response units could be reflected in the US figures from 2026 onwards.

Another trend in the US: Where high availability is essential, e.g., in data centers, companies are increasingly becoming independent of the power grid and setting up isolated solutions for energy supply. “This is leading to high demand for electricity and also for heat and cooling generators,” says Hofelich. This trend is now also reaching Europe. The CEO expects a similar development in all G20 countries.

New business segment for Data Center Solutions

The Data Center Solutions business unit was newly established. Since data centers are among the fastest-growing energy consumers worldwide, the Executive Board wanted to create a separate specialized organizational unit for this market. In particular, 2G Energy offers standard solutions based on CHP and Gas2Power systems to make the energy supply of data centers independent of the public grid.

To improve profitability, the Executive Board is striving to maintain the high proportion of service revenue in business. Service revenue is more stable than equipment sales. Due to the high demand for new equipment, the service ratio is naturally under pressure at present. Although the high growth in the new equipment business will also have a positive effect on service revenue, this will only occur after a time lag. The goal is to keep the service ratio from falling below 40% even in times of high demand in the new plant business.

In order to take advantage of growth opportunities as comprehensively as possible, 2G Energy is investing in its own infrastructure. The IT landscape has been reorganized and modernized, including the introduction of a new ERP system. On July 1, 2025, an operationally oriented holding structure was also introduced. Therefore, the focus of acquisitions is currently on smaller companies in the service sector that are easy to integrate. In the new plant sector, the Executive Board currently wants to grow from within.

CEO Hofelich sees risks for the company's own business in connection with general economic, geopolitical, and regulatory uncertainties. As an example, he cites the recently delayed approval of the “biomass package" (Biomasse Paket). Due to the uncertainty surrounding when approval by the EU Commission will be granted, investment decisions have been postponed and orders have only been placed with reservations.

For 2024, 2G Energy paid a dividend of €0.20 (0.17) per share. However, the focus is more on growth, meaning that profits are primarily being invested in further expansion opportunities. As a result, the dividend yield of 0.6% is not particularly exciting and does not constitute an argument in favor of the stock. Nevertheless, if management assumes that the next profit level has been sustainably achieved, the dividend will also be adjusted. The distribution has now risen for the second time in a row by €0.03 per share.

“The overload of the power grids opens up great opportunities“

2G Energy AG has delivered strong figures for the first half of 2025. In an interview, Pablo Hofelich explains why he continues to expect high growth rates for his company.

NJ: In your opinion, what are the best arguments in favor of 2G Energy shares?

Hofelich: 2G Energy has an impressive story to tell about the last 30 years — from a start-up to an intelligently diversified and globally positioned company. Today, we are a full-service provider for decentralized energy supply concepts worldwide. We pursue technological leadership for all our products and solutions, with a particular focus on sustainability. We can ensure this through system efficiency in the lifecycle, the use of green molecules such as hydrogen or biogas, and sustainable refrigerants. We also score points with our corporate culture, which I find to be very young and dynamic and which is shaped both by the founding families and by the capital market.

NJ: With sales growth of around 30% in the first half of the year, you are well above your long-term growth target of 10%. Order intake was also up 18%. Are your expectations too defensive?

Hofelich: I don't think the 10% plus inflation is an average over several years. The fact that we are so significantly above that this year has to do with an enormous surge in orders in the last quarter of 2024 – driven by the expiring Inflation Reduction Act in the US and the situation in Ukraine, which triggered a large number of new orders. We processed most of these in the first half of the year. But for 2024 as a whole, we were just under 3% – out of the ordinary – and even below the 10% growth mark in sales.

NJ: What do you see as the biggest growth driver for your business in the coming years?

Hofelich: The overload of the power grids opens up great opportunities for the 2G product portfolio. The existing grids are reaching their capacity limits in many places, leading to high demand for peak load generators or isolated solutions. In Germany alone, the Federal Network Agency expects new reserve capacities of over 20 gigawatts to be built. Many grids worldwide are affected by this structural weakness, especially in markets that operate with high quotas of renewable energies or in markets that experience high spikes in demand due to the “electrify all” trend — for example, through the use of heat pumps, electric mobility, or data centers. This is pushing the previously centrally organized grids to their limits.

NJ: You have set up a separate business unit. What opportunities do you see there?

Hofelich: Yes, we have the business unit Data Solutions Center. The big topic is electricity, electricity, electricity. With our proven 2G CHP and Gas2Power systems operators can design their energy supply independently of the public grid – a decisive advantage in view of increasing volatility and bottlenecks in the power supply. We offer flexible and powerful container concepts. As standardized solutions, they can also be scaled to over 100 MW. At the customer's request, we can also integrate the cooling of the data centers by adding absorption refrigeration systems. Our entry into the data center market is therefore a consistent strategic step. We combine security of supply with efficiency and sustainability – a triad that is essential for operators of critical infrastructures.

NJ: These supply solutions are based on the natural gas. How dependent are you on fossil fuels?

Hofelich: The good thing is that we are coming out of the world of green molecules. After, for example, the EU Commission has approved the biomass package, we can increase the proportion of the plants sold with biogas again significantly. At the same time, we have been focusing on hydrogen we have also relied on hydrogen, and we are pushing further. We see ourselves as technologically leader in hydrogen units and have installed several dozen of hydrogen-powered systems in recent years. We can handle any concentration and quality of hydrogen, even 100% – it is now recognized that everything works very well.

NJ: And what's the problem?

Hofelich: What is missing is hydrogen in large quantities. But we have systems for that. That's why I find the topic of backup gas power plants so exciting. The systems that we build, our customers can later run with hydrogen, which brings investment security.

NJ: You have expanded your portfolio to include large heat pumps. How is this business developing?

Hofelich: This year, we will exceed €10 million in incoming orders. Next year, this segment will certainly grow disproportionately compared to the company as a whole. The demand comes from municipalities with high heat requirements and from industry, where large heat pumps are economically viable with favorable electricity prices. The heat pumps are an important part of our diversification strategy. In a way, they run counter to combined heat and power (CHP), where high electricity prices support sales. For the sale of heat pumps, low electricity prices are beneficial. These technologies are often economically very attractive for our customers when used in combination.

NJ: Do you have an example?

Hofelich: We have a solution that we call Green Cube. It’s a combination of green electricity sources, such as wind and solar, together with a heat pump. The system operates extremely efficiently as long as the green electricity is available. Since that is not always the case, we combine it with a CHP unit. I think it’s unique that these technologies and the control software come from a single source at such a high level.

NJ: You have already mentioned that you see potential in the area of internationalization. What do you have in mind?

Hofelich: You only need to look at where we have subsidiaries. At the moment, they are very strongly focused on Europe and North America. In Asia, we also see great opportunities. Additionally, there are still countries in Europe where we want to expand our activities. But it’s not just about entering new markets; it’s also about rolling out our complete product portfolio in the countries where we are already present. For example, we currently sell heat pumps mainly in Germany and the Netherlands. From 2026, we will certainly take the step into the rest of the EU.

NJ: Mr. Hofelich, thank you for the conversation.


The interview was conducted by Michael Gneuss.
Source: Nebenwerte Journal