He is supposed to convert the fossil company into a green company.
(Photo: dpa)
Dusseldorf The Essen-based energy group RWE intends to invest 50 billion euros in the expansion of renewable energies over the next few years. An average of five billion euros is to be invested annually, primarily in wind, solar, storage and hydrogen. “Our extensive strategic realignment has been successfully completed,” said CEO Markus Krebber on the occasion of the presentation of the Group’s new strategy.
RWE wants to expand green capacities with an output of 50 gigawatts by 2030. By way of comparison: that is almost as much as onshore wind power is currently producing in all of Germany.
The change from the dirtiest company in Europe to one of the largest renewable energy companies on the continent is above all an economic necessity: RWE expects growth of up to nine percent per year thanks to the green investment offensive. By 2030, the profit from new energies is expected to double to up to five billion euros compared to the current financial year.
It has been almost exactly three years since thousands of activists, citizens and demonstrators went to the barricades in front of a small forest near Cologne for weeks against the largest CO2 emitter in Europe. The Hambach Forest has remained. Nevertheless, a lot has changed since then.
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The exit from coal is a done deal, probably as early as 2030. Long-time RWE boss Rolf Martin Schmitz has retired and with him the old, dusty image of the Essen-based energy company. The new RWE, as CEO Krebber likes to say, is younger, more modern and, above all, greener.
Green conversion does not come voluntarily
Germany’s largest electricity producer is facing the most important change in its history: from a dirty coal company to a green global player. A turnaround that is anything but voluntary. The exit from coal is politically wanted, the CO2 price will make fossil energies a loss business after 2030 and the climate targets from Berlin and Brussels leave little room for alternatives.
In fact, RWE is only just beginning its conversion. Last year, the Essen-based company produced 147 terawatt hours of electricity – one fifth of which came from the renewable sources of water, wind, sun and biomass. In the first nine months of the year, the company even produced almost 40 percent more electricity from coal than a year earlier. Earnings before interest, taxes, depreciation and amortization (Ebitda) in the coal / nuclear energy division climbed 75 percent to 549 million euros.
Over 30 percent of the electricity is currently still generated with lignite and hard coal, 14 percent with nuclear energy. But this business also has an expiry date: The nuclear phase-out in Germany was decided in 2011, and RWE’s last nuclear power plant will have to be taken off the grid at the end of 2022. Krebber rejects debates about extending the term recently initiated by managers such as Linde boss Sanjiv Lamba or ex-BASF boss Jürgen Hambrecht and Volkswagen board member Herbert Diess.
Most recently, the criticism of the decision at that time had grown again. Proponents of nuclear power argue with security of supply and high electricity prices – after all, it is unclear how Germany can cope with the increasing demand for electricity and the simultaneous withdrawal from coal-fired power generation. But you also argue with climate protection, after all, power plants that generate almost CO2-free electricity would be taken off the grid.
There is still a long way to go before we can achieve climate neutrality
In any case, RWE’s classic business model no longer has a future. Now the green power generation should become the core business. RWE succeeded in doing this primarily through the swap deal with competitor Eon at the beginning of 2018. While Eon took over the grid and sales divisions from RWE subsidiary Innogy, RWE received the renewable energies from Innogy and from Eon in return. Since autumn 2019, when the deal was sealed, RWE has officially been one of the largest producers of renewables in Europe.
Wind, solar and biomass are to become the new core business. RWE even wants to become climate neutral by 2040. But there is still a long way to go before then. CO2 emissions have been falling for years, by 19.2 million tons last year alone. But they are still extremely high at 68.9 million tons.
To change that, 2.5 gigawatts of wind, solar and storage are now to be added to the portfolio per year. That would be an increase of a good 70 percent. This also includes two gigawatts of electrolysis capacity for green hydrogen over the next eight years. “Our new strategy not only paints a clear picture of how our company will develop up to 2030. It also shows that we have the financial tools to do this and are financing our green growth in a green way, ”promises CFO Michael Müller.
RWE has already increased its forecast for 2022 due to good results. The shareholders should also benefit from this: the dividend for this year will rise to 90 cents per share.
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