Karlsruhe. “Expanding renewable energies is and will remain an important focus of our investment for growth.” With this statement, Hans-Peter Villis, CEO of EnBW Energie Baden-Württemberg AG reaffirms the position of renewable energies as one of the group’s essential strategic moves. “In addition to the approximately 3,100 megawatts of installed capacity from renewable energies already in place, we intend to build, to the extent possible, a further 3,000 megawatts or so of new generation capacity by 2020. This means that we would virtually double our output in the area of renewable energies over the next 10 years. Around € 8 billion would be necessary to shoulder this huge investment in expansion.
External factors curtail leeway for investment
One prerequisite for such investments, however, is for the conditions prevailing in the energy industry not to restrict the company’s ability to make investments. As a consequence of the nuclear fuel rod tax decided upon by the government in 2010, the prepayments into the fund to promote renewable energies and the changed market conditions, EnBW has already been forced to adjust its investment planning to the changes in the general conditions and cut its investment plans for the period from 2011 through 2013 to € 5.1 billion gross, equivalent to € 3.3 billion net.
In order to retain the option of making investments in future despite these external burdens, EnBW is planning to make divestitures totalling up to € 1.8 billion over the period from 2011 to 2013. Over the same period, various programs to boost efficiency and reduce costs in effect within the company will gradually free up a mid-range nine-digit amount on a sustainable basis by 2013.
“EnBW is undertaking great efforts to be able to make these investments. However, every euro that we intend to invest has to be earned beforehand. All unscheduled downtimes of our power stations and all further burdens arising from government energy policy will painfully limit our leeway for investment,“ says Villis.
Responsibility means thinking things through
The accelerated restructuring of the German energy supply system apparently desired by the political decision-makers gives rise to major challenges for EnBW.
Villis says: “We will deal with these challenges in a responsible manner. For us, responsibility means thinking things through and we consider the restructuring to be an opportunity as well. We are committed to our nuclear power plants and we are convinced that our facilities are safe. But we do not treat nuclear power as an end in itself. We acknowledge that the majority of people in Germany reject the use of nuclear power in Germany, especially after the events in Japan. The next few weeks will reveal what the political decision-makers have in mind for nuclear power and when this will end. Today, just five weeks after the events in Japan, of course, the political conditions can hardly be expected to be in place for the restructuring of the energy supply system in Germany. It is still too early for this. Similarly, one should not expect quick-fix solutions for the restructuring of the German energy system. It is too complex an issue.”
EnBW wishes to make an active contribution to this discussion which will be of vital importance for the company, for Germany, and also for Europe. EnBW repeats its offer of an open dialogue, which we have already made to political decision-makers and the general public alike.
Business model of an integrated supply company is our specific strength
EnBW is convinced that it can make an important contribution to restructuring the German energy supply system. As an integrated supply company is has a specific strength as it operates in all relevant markets – in generation, wholesale, regulated markets and the end customers market – and manages the entire value added chain. This business model was also one of the major prerequisites for the good operating results seen in 2010.
With unit sales of electricity of 147 billion kilowatt-hours and unit sales of gas of 54 billion kilowatt-hours, EnBW reported revenue of € 17.5 billion in the fiscal year 2010. Adjusted EBIT came to € 1,932.6 million, exceeding the comparable prior-year figure by 7.7%. Adjusted group net profit in terms of the profit shares attributable to the equity holders of EnBW AG came to € 988 million, a rise of 12.4% in comparison to 2009. Cash flow from operating activities came to € 2,560.9 million in 2010, which constitutes a rise of 4.8% on the comparable prior-year figure. On the other hand, free cash flow before financing fell from € 1,292.1 million in 2009 to € 1,060.1 million in the current reporting year 2010. This decline was due to capital expenditure on intangible assets and property, plant and equipment increasing by € 315.4 million in comparison to the prior year. Capital expenditure on intangible assets as well as property, plant and equipment came to € 1.6 billion in 2010, following € 1.3 billion the year before.
In the fiscal year 2010, total investments of the EnBW group came to € 2.3 billion, around 65% of this amount was invested in growth projects that will secure the future of the company. The remaining 35% was attributable to replacement and renewal measures, in particular for power stations and grid infrastructure, thus serving to maintain the value of the company.
Investment volume adjusted – programs to boost efficiency launched
The good results of the fiscal year 2010, the operational strength and the good balance sheet structure are a sound basis to successfully manage future challenges.
“In recent years, we have invested in growth in a targeted manner, thus expanding EnBW’s operational strengths. At the same time, we have maintained its good standing on the capital market and the good balance sheet structure. This strategy has proven itself in practice. There is, however, no doubt in our mind that the coming months will entail considerable economic risks,” says Villis.
Local generation – Climate protection – Municipalities
In addition to central energy generation, EnBW intends in future to also place greater emphasis on local generation facilities. As an operator of power stations and also as a grid operator, EnBW already has the necessary expertise and experience to bundle local generation units to form “virtual power stations.” Building on such expertise, EnBW intends to offer even more energy solutions locally for its customers in future. To this end, EnBW intends to develop new partnership models for municipalities, municipal utilities as well as for manufacturers and system service providers. The aim is to establish and operate local renewable energy plants in close cooperation with towns and municipalities as well as with SMEs. The objective is to provide a service portfolio for a “sustainable city” with a view to optimizing renewable energy generation and energy application. “Local energy generation – Climate protection – Municipalities: these three points will have to form an even better triangle,” says Villis.