2023-11-28 17:38:37
Germany’s largest electricity producer RWE has set higher growth targets for the current decade and wants to significantly expand its investments. The Essen-based DAX group announced this on Tuesday at its capital market day in London. RWE wants to invest 55 billion euros net globally between 2024 and 2030, for example in the construction of wind turbines, photovoltaic systems, electrolyzers for the production of hydrogen and gas power plants, which can then be operated with them. This is intended to expand the renewable energy generation portfolio from the current 35 gigawatts to more than 65 gigawatts.
In order to expand its capacities by 26 to 35 gigawatts since 2021, the group says it has already invested 20 billion euros net. Two years ago, RWE presented its “Growing Green” growth strategy for the first time. The energy producer, which for years has made its profits primarily from mining and burning coal, wants to become climate neutral by 2040. The share of nuclear energy and coal in earnings is constantly being reduced while the company is focusing on renewable energies as it expands.
The company currently has 100 projects under construction in ten countries. Of the 55 billion euros in the next few years, 11 billion are to be invested in this country, which corresponds to an increase of a fifth compared to the previous investment planning. In Great Britain, the pace is to be maintained; overall, well over half of the investments are in Europe – the Essen-based energy company is also relying heavily on the United States, where 20 billion euros are expected to flow by the end of the decade.
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CEO Markus Krebber expects an annual increase in adjusted operating earnings before interest, taxes, depreciation and amortization (Ebitda) of an average of 14 percent, and by 2030 it should be more than 9 billion euros. The adjusted net result is then expected to grow to 3 billion euros, an average of 12 percent annually. Previously, the targets were around 5 billion euros for operating profit with generation capacities of 50 gigawatts. “We are growing sustainably and increasing our earnings while at the same time decarbonizing our portfolio even faster,” said Krebber, according to a statement.
Dividends are expected to increase by 5 to 10 percent per year
The expected growth in earnings should also benefit the shareholders: RWE plans to increase the dividend by 5 to 10 percent annually. In this financial year, RWE wants to pay 1 euro per share, which is also set as a lower limit for the coming years. For the 2024 financial year, the distribution is expected to be 1.10 euros per share. This was well received on the stock market: the power producer’s shares rose by almost 3 percent over the course of the day, putting them at the top of the Dax in a rather weak environment. The stock has gained a fifth since the beginning of October, almost making up for the losses since the beginning of the year.
The long-term strategy and the short-term supply situation are in contrast: Due to security of supply, RWE’s coal-fired power plants are currently in reserve and more than a thousand employees have been brought back. In the coal phase-out plan by 2030, they were actually already heading towards retirement. The hundred projects currently underway are expected to bring 7.8 gigawatts of capacity. For comparison: According to RWE, the Neurath lignite power plant, which is fed with coal from Garzweiler, currently has a net output of 3.6 gigawatts.
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According to Federal Economics Minister Robert Habeck (Greens), the reactivated coal-fired power plants are to be taken offline in 2024 as soon as the three liquid gas terminals in Germany are completed. At the same time, more coal and oil power plants should remain on standby in the event of a lack of electricity from gas generation, for example due to insufficient delivery quantities. According to the federal government, the coal phase-out should “ideally” be completed by 2030.
Of the 55 billion euros that RWE plans to invest in green energies by then, 40 percent should flow into the expansion of onshore wind and solar systems, with solar capacity expected to quadruple. Just over a third of investments are earmarked for offshore wind projects. A quarter of the money is earmarked for battery projects, flexible generation and hydrogen.
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