With a robust renewables portfolio of over 9 GW and an additional 2.6 GW under construction, thanks to the innogy deal with E.ON, RWE expects renewables to account for 60% of group EBITDA in the future. (Photo Credit: RWE)
- Germany’s RWE has announced its future business trajectory to achieve absolute carbon neutrality by 2040
- It will invest €1.5 billion annually in offshore and onshore wind, solar PV and storage technologies
- With project partnerships, this investment can grow to between €2 billion to €3 billion
- The company said it also plans to focus on biomass and gas-fired power stations primarily powered by green gas
German electric utilities company RWE AG has announced its ambition to turn 100% carbon neutral by the year 2040. It wants to phase out fossil fuel generation and make ‘massive investments’ in offshore and onshore wind, solar PV and ‘high-performance storage technologies’. While the management doesn’t disclose the capacity of renewables it sees adding to its portfolio by the target year, it plans to make a net investment of €1.5 billion ($1.63 billion) annually.
With future project partnerships, RWE sees the potential to increase total investment in renewables to between €2 billion to €3 billion ($2.18 billion to $3.27 billion).
In the future, along with wind, solar PV and storage, the German company will also focus on biomass and gas-fired power stations to be primarily powered by ‘green’ gas it said without sharing details.
A complex merger deal initiated by RWE and Germany’s other major power company E.ON was approved by the European Commission in September 2019 paving the way for E.ON to acquire a 76.8% stake from RWE in the latter’s renewable energy subsidiary Innogy. It will have E.ON acquiring innogy’s distribution and consumer solutions business while RWE will retain the company’s renewables unit and also get a 16.7% share in E.ON with an eye on the company’s clean energy operations. RWE will also get a place on E.ON supervisory board.
The renewable energy generation portfolios of E.ON and innogy together will form RWE Renewables with an installed capacity of more than 9 GW, with an additional 2.6 GW worth of assets under construction. The commission’s approval is conditional on full compliance with a commitments package offered by E.ON. In other words, RWE will become a utility with a power generation portfolio, while E.ON will mostly focus on the distributed business, with distribution grids being a key part.
A Reuters report claims RWE to have a renewable energy project pipeline, comprising onshore wind and solar, of over 18 GW with more than half of it in the US.
RWE has high hopes from its renewables business as it sees this segment contributing as much as 60% of EBITDA to the total business, and 20% coming from conventional business. “Today, our operations are profitable, our processes are efficient, and we offer our shareholders an attractive dividend. We have the financial, strategic and personnel power required to run renewable energy operations all over the world. This is an outstanding basis from which to seize the opportunities of the future,” said CFO Markus Krebber.