Dusseldorf A week ago, the energy company RWE adjusted its forecast upwards by 1.5 billion euros. It is now clear why: in the first half of the year alone, the Essen-based company was able to increase its profit (adjusted EBIT) by more than a third to 2.8 billion euros.
The “Water, Biomass, Gas” business area in particular contributes to this, with adjusted operating income (Ebitda) more than doubling compared to the previous year – from EUR 297 million to EUR 755 million. “In the first half of 2022, we significantly increased our earnings,” said CEO Markus Krebber on Thursday.
RWE is less affected by the current developments because the company receives “comparatively little” gas from Russia.
The prices for electricity, gas and other energy sources have been rising massively for months. As a result, RWE’s profits increase. Trading in electricity and gas had already given the company its best result in years in 2021.
In the past few weeks, due to the high energy prices, calls for an excess profit tax have repeatedly been heard on the consumer side. “The high profits literally fall into RWE’s lap,” criticizes Sonja Meister, energy expert at the Urgewald environmental protection association.
High energy prices create additional profits for RWE
In fact, profits at RWE and other energy companies are increasing: the war between Russia and Ukraine had catapulted the already high energy prices even higher since the end of February.
Because this in turn endangers systemically important companies such as the gas trader Uniper, the federal government has agreed to introduce a gas levy from October to absorb the additional costs of the record gas prices. As a result, consumers are faced with significantly higher gas prices – in the worst case, this can mean more than a thousand euros per year for a family of four.
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Other member states in the European Union have now introduced a special tax on so-called excess profits in times of crisis in order to relieve the burden on the population. In Germany, however, the discussion does not seem to have any consequences for the time being.
RWE boss Krebber tried on Thursday to steer the focus away from the power plant operator’s bubbling profits: “We will not accept the gas surcharge and will bear the additional costs of the replacement procurement ourselves,” said the manager. However, he cannot yet quantify how high these additional costs are for RWE.
He did not want to comment on the discussion about a possible excess profit tax. “We will invest our profits in the energy transition. We don’t plan to increase our dividend either,” Krebber said.
Wind power creates profits
Meanwhile, the high electricity prices in trading are also ensuring a decent increase in profits at RWE in the business with renewables. The Triton Knoll mega-offshore wind farm in the North Sea is now up and running – and favorable wind conditions have boosted profits in the offshore wind division by almost EUR 200 million.
And without a cold snap in the US state of Texas, the “onshore wind” division is also making profits again. In the first six months of the year it was around 491 million euros. For comparison: A year earlier, RWE had to record a minus of 42 million.
In the first half of the year, RWE invested around two billion euros in the expansion of renewables, and investments are expected to increase to five billion by the end of the year – also because more money is available thanks to the high profits. The production of electricity from green energies increased by 20 percent compared to the previous year.
The group can fall back on bulging coffers. At the end of June, net assets amounted to 1.9 billion euros, after 360 million at the end of 2021. At group level, RWE expects an EBITDA of five to 5.5 billion euros for the full year 2022 instead of the previous 3.6 to four billion euros.
“If RWE makes good money, the green energy world wins,” said Krebber on Thursday. The RWE boss emphasized that the situation on the European electricity market is currently “very tense”. Due to the nuclear power plant failures in France, low water levels in several countries and the challenging procurement of hard coal, the situation has worsened massively compared to spring. The stress test that the transmission system operators are currently holding for the German power grid is therefore very important.
Nevertheless, Krebber remains critical of a renaissance of nuclear power. “The capacities are manageable, and the effect is limited when you look at the gas crisis,” and there are also legal hurdles.
In the future, therefore, new gas-fired power plants will be needed above all in order to be able to provide secure output even after nuclear and coal are phased out. “We are currently examining whether gas-fired power plants can be converted to hydrogen earlier,” says Krebber. That was actually only planned for 2035 – now they are trying to make the switch at the beginning of 2030.
“But then enough green hydrogen must also be available,” emphasized the RWE boss. The only thing that helps is building the infrastructure of the new energy world as quickly as possible.
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