Reuters/Mannheim, Germany

MVV Energie expects profits to recover from next year, its chief executive said, as Germany’s fifth-largest utility banks on investments in wind and biomass projects to escape a crisis in conventional power generation.

Hit by a massive decline in wholesale power prices, Mannheim-based MVV has seen its profits shrink by 14% over the last four fiscal years and like larger peers E.ON , RWE, EnBW and Vattenfall’s German unit, is cutting costs and investing in new businesses.

For fiscal year 2013/2014, which started on October 1, MVV expects adjusted earnings before interest and tax (EBIT) to fall to the lower third of a €170-185mn ($232-252mn) target range.

“We are convinced that we will be able to get out of this dip in the coming years. That’s not going to be the case this year, but most certainly after that,” Georg Mueller told Reuters in an interview at the company’s headquarters.

MVV has shouldered nearly €400mn of investments to build an energy-from-waste plant and a biomass site in Britain, both scheduled to become operational next year, which will help drive the profit recovery, Mueller said.

Apart from being active in Britain, MVV is also present in the Czech Republic, and in May announced it had formed a joint venture with French group Semardel to manage energy-from-waste plants in France.

“We’re not ruling out entering further markets in the future if we are convinced,” said Mueller, who joined MVV from RWE in 2009.

He said the company also planned to significantly expand its onshore wind park portfolio - currently at 174 megawatt (MW) – in the coming years, but was not more specific.

MVV will invest €3bn in key areas including renewable energy and energy efficiency by 2020, about €2.2bn of which has either been invested or decided upon.

“Of course we are working hard to make sure cash-flows will continue to progress well so we can invest more than the €3bn. But it’s too early to say,” Mueller said.

The deep crisis in conventional power generation, also caused by a massive rise in renewable energy and tepid appetite for electricity across the continent, has led utilities to shut down or idle thousands of megawatts-worth of plant capacity.