Karlsruhe/Stuttgart. "New energy concept. Safe. Hands on." – is the keynote for the strategic reorientation of EnBW Energie Baden-Württemberg AG. This strategic reorientation is how the company is responding to major changes in the energy sector, and with which it aims to tap long-term growth opportunities.
"Our EnBW 2020 Strategy represents a clear commitment to the new energy concept without any ifs-and-buts. We aim to play an active and exemplary role in structuring tomorrow's energy world, concentrating on attractive growth areas in doing so. We will invest billions in restructuring and modernising our generating capacities and infrastructure to this end over the coming years, and reposition our entire portfolio. With our new business models, extensive service offerings and investment opportunities, we wish to become our customers' preferred partner at all times, whether households, industry or local authorities. We will also radically simplify our structures to meet this objective. In other words, we have a clear picture of where we want to get to, and how we will achieve it. And we are starting with the necessary changes here and now. EnBW's employees will make their experience and expertise available in serving the new energy concept and our customers," notes EnBW's CEO Dr. Frank Mastiaux.
Significant changes in the energy sector demand strategic further development
Rapid structural upheaval in the energy sector has urgently necessitated this strategic reorientation. This deep-rooted change is feeding through to drastically lower earnings, especially in the conventional power plant business that has formed the pillar of conventional energy utility companies to date. This change is nevertheless offset by promising growth opportunities – especially in renewable energies in the decentralised generation business, in the network infrastructure area, and in innovative customer products.
Frank Mastiaux: "Continuing as previously is not an option. A new strategic orientation is a must, but also a major opportunity. We need to direct our activities and investments where our customers' demand lies, and where we can reliably generate satisfactory earnings in the future. Then we will achieve sustainable added value in the interests of our employees and our shareholders."
Clear priorities – significant portfolio restructuring – more stable business risk profile
EnBW will drive ahead consistently with expanding renewable energies and the required network infrastructure in order to meet the wishes of its customers and of the company for CO2-free and consequently sustainable energy supplies. The conventional power plant park will also play an important role in maintaining secure electricity supplies over a long transition period, however.
The EnBW 2020 strategy places the focus firmly on customers: consistent innovation management, faster product development cycles and fair partnership models will form core elements. In particular, EnBW aims to bolster its cooperation with local authorities and municipal utilities as equal partners, thereby wishing to distinguish itself from a traditional energy supplier image, and clearly differentiating itself against its competitors. Instead of cumbersome structures that emphasise hierarchies, EnBW favours an agile organisation that can respond rapidly to customer wishes in the service business.
Portfolio restructuring: billions of investments in renewable energies and electricity networks supported by consistent divestment programme
EnBW aims to invest a total of more than EUR 7 billion over the coming years, especially in reorienting its activities. The focus in this context will lie on industrial-benchmark wind and hydro power activities, and the targeted expansion of networks in the transport and distribution network areas – all the way through to so-called smart grids. In addition to previous investment projects, EnBW plans to invest around EUR 3.5 billion – and thereby around 50 percent of these investments – in expanding wind power alone, and a further approximately EUR 3 billion in the network business by 2020. Germany, Austria, Switzerland and Turkey will form the focus of activities by way of expanding out of the Group's core regional market in Baden-Württemberg. EnBW aims to significantly boost its capacities from onshore wind parks from currently around 200 megawatts of installed output to around 1,750 megawatts by 2020, for example. Offshore wind power represents a further growth option.
Frank Mastiaux: "We aim to more than triple our share of renewable energies from today's 12 percent to almost 40 percent by 2020 – a significant increase – thereby also making a tangible contribution to the infrastructure that the energy system requires with our considerable investments in network expansion. Marked revenue growth from innovative products will become a further important pillar of the company's business. Given an earnings target of EUR 2.6 billion in 2020, we aim to generate a total of 40 percent of this from new focus investment areas."
EnBW has significantly expanded its divestment programme to around EUR 2.7 billion in order to maintain the financial headroom.
EnBW's CFO Thomas Kusterer: "As a result, this portfolio restructuring will form the basis for sustainable growth, but also boost the total share of the stable regulated business from currently around 40 percent to more than 50 percent by 2020. This will make EnBW's business risk profile significantly more robust."
"Customer proximity" and "Engine room of the new energy concept".
Not only the "what", but also, and above all, the "how" are key to the success of implementing this new strategy. We will establish two different and interconnected operating models within the company in order to optimally engage with the challenges of the new energy concept in the meaning of more secure and environmentally compatible energy generation and supplies on the one hand, and of our customers' needs, in other words, those of private households, industry and local authorities, on the other hand. These are working hand in hand on the basis of system expertise and market-orientation," commented Frank Mastiaux.
Two "heartbeats" will determine EnBW's rhythm in future: "Customer proximity" and "Engine room of the new energy concept". Both orientations represent equal pillars at EnBW.
The "Customer proximity" heartbeat stands for customer-orientation, new solutions and product innovations, and comprises the electricity and gas distribution business, as well as energy-related services for defined B2C and B2B segments. The business with and for municipal utilities and local authorities is to be expanded as an important segment, primarily based on partnership cooperation models. EnBW aims to win points with customer segment-specific system and complete solutions, clever innovations and a strong brand portfolio. The Group will base this on specific developments, and drive ahead markedly in commercialising them. These include products in the energy management area geared to optimising household and industrial energy consumption, network-related services in the smart grids area, and smart home and electro-mobility applications. The founding of an innovation campus in the near future will support rapid and ground-breaking product development. Especially in the energy-related services area, partnerships or selective takeovers will supplement know-how and complete the product and services portfolio.
The "Engine room of the new energy concept" heartbeat is aimed at safety, simplicity and flexibility in the operation of system-critical infrastructure, and is focused on the energy sector infrastructure required for the new energy concept, in other words, primarily renewable but also conventional energy generation and distribution via transportation and distribution networks. In its "engine room", EnBW is focusing on operational excellence, stringent efficiency and cost orientation for defined quality levels, standardisation, and technological development partnerships to share costs and risks. The partnership idea applies here, too: EnBW is actively offering opportunities to invest in networks and generation plants, especially for local authorities.
"The "Engine room of the new energy concept" is the program – we aim to contribute to the restructuring by way of example, and also place our competences at the service of the secure supplies that must be guaranteed during the change of the energy landscape," notes Frank Mastiaux.
ONE EnBW: Reorientation of organisation according to efficient benchmarks and modern management models before implementation
The EnBW 2020 Strategy is now followed by the corresponding structure. Both "heartbeats" must be driven by an organisation that has made performance-orientation, fast decision-making paths and the best possible efficiency its guiding principles.
As a consequence, a new structural concept and management model for ONE EnBW precede implementation. The focus, in particular, lies in a significant reduction of Group complexity through merging companies, and making the target, processes and responsibilities clearer as part of the management model, thereby boosting employees' sense of autonomy.
The Supervisory Board had already approved the principles of this restructuring at its meeting on 6 June 2013. The detailed structure, especially codetermination aspects, is currently being negotiated between the company's management and the employee representatives, so that the Supervisory Board can reach a related decision within the next month. "I am convinced that, here too, we will reach a constructive and positive result in the spirit of our traditionally good social partnership," as Mastiaux went on to comment.