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RWE’s expansion of its green portfolio picks up speed

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RWE is making strides toward putting its Growing Green strategy into practice. In the first nine months of 2022, the company added 1.3 gigawatts to its green portfolio (GW). The portfolio will increase by 9.4 GW as a result of ongoing projects and acquisitions that have already been publicized. Included in that is the acquisition of Con Edison Clean Energy Businesses, a prominent US operator and developer in the renewable energy sector. RWE is acquiring 3 GW or so worth of renewable energy facilities with this acquisition. The deal represents a significant step in RWE’s plans to expand in the US because, once completed, it will elevate RWE to the country’s fourth-largest renewable energy provider.

RWE stated that it would be prepared to completely phase out coal as early as 2030. As a result, the company can now base its emission reduction strategy on the 1.5-degree path. RWE is currently temporarily opening up an extra 2.1 GW of lignite capacity to boost supply security because of the energy crisis: The company will postpone the decommissioning of two additional units, which was originally scheduled for this year’s end; additionally, the Emsland nuclear power station will continue to generate electricity past this year’s end until mid-April 2023. The company has already restarted three plants from a lignite reserve.

At the end of the first three quarters of 2022, adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) at the Group level was €4,127 million, a significant increase over the same period the year prior (Q1-Q3 2021: €2,397 million). Additionally, adjusted EBIT increased to €2,965 million from €1,339 million in Q1–Q3 2021. Net income after adjustments reached €2,118 million (Q1–Q3 2021: €1,025 million). In contrast to the German coal and nuclear energy businesses, adjusted EBITDA in the company’s core international business increased in the first nine months of 2022 to €3,494 million (from €1,677 million in the prior-year period).

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The following three factors primarily contributed to the company’s core business’s positive earnings trend: RWE was able to generate 22% more green electricity from its own plants thanks to the expansion of its portfolio of renewable energy sources. High levels of RWE’s generation fleet deployment were also caused by the confluence of high demand and constrained European generation capacity. An unusually robust international trading performance coincided with this. Additionally, a detrimental one-off effect weighed down the results from the previous year. RWE affirms the fiscal year 2019 outlook published in July 2022. (see table below). For fiscal 2022, the dividend target of €0.90 per share remains the same.

Offshore Wind: In the first nine months of 2022, adjusted EBITDA for the Offshore Wind segment was €859 million, up from €656 million in the same period last year. The commissioning of new capacities and higher wind levels compared to the prior year were responsible for this increase in profits.

Onshore Wind/Solar: The Onshore Wind/Solar segment’s adjusted EBITDA totaled €649 million in the first three quarters of 2022. Additionally available capacity as well as better wind conditions helped in this case. The severe weather in Texas significantly reduced the prior year’s result from €36 million to about €400 million.

Hydro/Biomass/Gas: The segment’s adjusted EBITDA rose significantly to €1,164 million from €430 million in the prior year. Higher short-term asset optimization earnings and higher international generation margins were the main causes of this.

Supply & Trading: Revenues from Supply & Trading increased from the already impressive €609 million result from the prior year to €942 million. In a volatile market environment, this result was attained across almost all commodities and regions.

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German coal and nuclear energy businesses yield lower profits for RWE

In the Coal/Nuclear segment, adjusted EBITDA was €633 million, down from €720 million during the same time last year. Earnings fell as a result of declining production following the closure of power plants. Prior to the start of the current energy crisis, RWE had also sold forward the electricity production from its German lignite and nuclear power plants.

 

strong investment activity and a stable financial situation

The Group’s net debt as of the reporting date of September 30, 2022, was €360 million (net assets as of December 31, 2021: €360 million). The company’s active investment activity was one of the main causes of the increase in net debt. RWE made a total of €3.1 billion in investments in its core business, with a focus on the growth of renewables, in the first nine months of 2022. The acquisition of Con Edison Clean Energy Businesses is not yet included in this.

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