RWE is transforming into a leading integrated renewables and conventional power generator.
We lead the way in conventional electricity generation in our three core markets of Germany, the UK and Benelux. Our broad power station portfolio, including gas, coal, lignite, nuclear, hydropower and biomass makes us strong in the face of the market risks that affect individual energy sources. Our power stations ensure grid stability and security of supply, making us the go-to partner for the energy transition in Europe.
As a result of the agreed swap of business activities and participations with E.ON, we will become Europe’s No. 3 in renewable energy. By taking over the renewable energy activities of E.ON and innogy, RWE will receive 8 GW of zero-carbon electricity generation capacity. In addition to existing plants, we will receive an attractive project pipeline with which we can expand our renewables position in both Europe and North America. RWE will become a broadly diversified power producer, ensuring security of supply with its flexible power stations while playing a proactive role in transitioning the energy sector towards climate-friendly electricity production.
As a result of the asset swap with E.ON, RWE will establish a stronger position for itself not just strategically, but also financially. We anticipate that the Group’s leverage factor, which is the ratio of net debt to adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) and was 3.5 in fiscal 2017, will fall below 3.0 after the transaction closes. The renewables business, which is characterised by a large portion of stable regulated income, is envisaged to then contribute more than half of the RWE Group’s adjusted EBITDA.
RWE remains the backbone of supply security in the three core regions.
With regard to the increased feed-in of renewables and the temporary or permanent decommissioning of conventional as well as nuclear power stations, we believe that security of electricity supply will be seen as an increasingly critical factor in the success of the energy transition. Our business model ties in with this: We see ourselves as the backbone of supply security in our core regions of Germany, the UK and Benelux.
Experts estimate that for our home market of Germany, for instance, contingencies of over 60 gigawatts will be necessary over the long term to secure the electricity supply. We want to be able to provide some of this, particularly with our flexible power stations. In future, we want to increase our focus on innovative technologies (such as energy storage), provided that this is technically possible and cost-effective. Continuity is our focus when it comes to the task we want to fulfil, rather than the technologies by which we want to accomplish it.
RWE Supply & Trading offers attractive returns and opportunities for organic growth.
Energy trading describes the diverse remit of RWE Supply & Trading, which functions as the commercial interface within the RWE Group. Its core business, energy trading, is the commercial link between the elements in our value chain, the regional markets and the various commodities. RWE Supply & Trading primarily trades in electricity, gas, coal, oil, CO2 certificates and biomass.
Furthermore, it creates additional value through the commercial optimisation of our power plant dispatch. In addition to trading-based portfolio management, it also offers long-term supply concepts to large industrial companies and trading partners. Another focus is the gas midstream business, which includes the procurement, transportation, storage and sale of gas. In the coming years, we focus on organic growth of RWE Supply & Trading.
RWE is committed to a sustainable dividend policy.
For fiscal 2018, we are aiming for a dividend of €0.70 per share and see growth potential for the following year. The basis for this is operative inflow, which is available to us over the long term.