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E.ON to increase investments in the energy transition 

German utility group E.ON, is planning to expand its investment program to 33 billion euros until 2027. Out of this, more than 95 per cent will be to meet the EU taxonomy’s strict sustainability criteria.

During the annual results press conference, E.ON CEO Leonhard Birnbaum affirmed that “2022 was an extremely challenging year for us, for all of Europe and especially for energy markets. Yet, we still managed to achieve a strong result in the crisis year. We delivered on our promises and consistently implemented our strategy focused on sustainability, digitalisation and growth. At the same time, our long-term and reliable procurement activities enabled us, amid the crisis, to protect our customers throughout Europe from the at times dramatic price increases in wholesale markets. This is above all the result of our employees’ hard work. They did an outstanding job last year.”

Mr Birnbaum also emphasised that the transformation of the energy system is today more urgent than ever.

“The crisis makes it clear that decarbonisation, the energy transition and the expansion of infrastructure must be massively accelerated,” he said. “This will give enormous impetus to our business of providing reliable energy infrastructure and sustainable customer solutions. We thus see big growth potential for our business in the years ahead. For this reason, we plan to expand our investment program to a total of 33 billion euros until 2027. This underpins our ambition to play a leading role in advancing and shaping an accelerated energy transition in Europe. However, we also expect regulators and policymakers to create the necessary framework conditions.”

E.ON’s operating business remained on course last year despite the challenging market environment. CFO Marc Spieker affirmed that “from an operating perspective, we’re looking back on a strong 2022 financial year, in which we achieved and even slightly exceeded our targets. Amid the severe macroeconomic challenges caused by the energy crisis, our business model again demonstrated how resilient it is.”

The adjusted Group EBITDA rose to 8.1 billion euros in the 2022 financial year and was thus 170 million euros above prior-year earnings and slightly above the forecast of 7.6 to 7.8 billion euros.

Regarding the planned investments for a total of 33 billion euros until 2027, the largest share of them, about 4 billion euros, will go toward energy networks.

In particular, the ambitious expansion targets for renewables are leading to further increased demand in Germany and Europe to connect these facilities to the network and to expand the network capacity. About 15 per cent of Europe’s renewables capacity is already connected to E.ON’s networks. Networks are the backbone of the energy transition, which can only move forward successfully if network expansion keeps pace with the continually growing demand for connections for renewables facilities. The expected increase in demand for hydrogen as a substitute for coal, gas and oil in the industry is ambitious as well and will require investments in energy infrastructure. The increasing prevalence of electric vehicles will also require investments to expand charging infrastructure.

For Germany and Europe to achieve their ambitious energy transition targets, the conditions for investments in energy infrastructure like distribution networks have to be systematically improved. Germany’s current regulatory scheme does not yet sufficiently reflect the challenges arising from massive growth, high inflation, and increased interest rates

Moving forward, E.ON expects an adjusted net income of 2.3 to 2.5 billion euros in 2023, which corresponds to earnings per share of 88 to 96 cents. It also affirms the dividend proposal of 51 cents per share for 2022 and the target of increasing the dividend by up to 5 per cent per year through 2027.

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