Following the announcement of strong results by German energy major RWE AG for the financial year ending 2019, Mohit Prasad, Project Manager at GlobalData, a leading data and analytics company, offers his view:

“RWE AG’s EBITDA witnessed a jump of around 61% from €1,538m in 2018 to €2,489m in 2019, mainly due to a strong trading performance and its gas and LNG business. The company acquired renewable energy assets from E.ON SE in 2019 which also contributed to its business performance, as €253m was made from the operations acquired from E.ON.

“According to GlobalData, RWE has a cumulative capacity installation of more than 40 gigawatts (GW), out of which close to 27GW is contributed by thermal power plants which include coal, oil and gas power stations. Out of the 27GW of thermal power plants, close to 14.3GW are coal fired which include lignite based plants.

“In Germany, coal and nuclear collectively contribute around one third to RWE’s power mix and with the country phasing out nuclear and coal fired plants, RWE will be looking to shift its generation mix. As part of a growing focus on renewable energy, RWE plans to invest €5bn in renewables by 2020 and around 20% of the investments will be made in Germany. The company will have an additional 4GW of wind and solar capacity in its portfolio.

“Under the transaction between RWE and E.ON, E.ON will be transformed into a provider of energy networks whilst RWE will remain in the generation business. As part of the deal, E.ON acquired innogy SE and innogy’s renewables business will transfer to RWE. By acquiring E.ON’s renewable energy assets, RWE has attempted a major overhaul in its generation portfolio with the aim to become carbon neutral by 2040. E.ON, on the other hand, will consolidate its position in grid networks.

“RWE is adopting various measures to reduce carbon emissions and have more dependency on renewables. These measures include investing in power-to-gas technologies and investing €1.5bn to €2.0bn every year to have a wind and solar portfolio of 13GW by 2022.”