Renewables to be E.ON's 'mainstay'

Renewables has become a “mainstay” of E.ON’s earnings, as the German utility continues its relentless cost-cutting programme amid sagging profits.

Dusseldorf-based E.ON today reported a net income for 2013 of €2.2bn ($3.1bn) – down 4% year-on-year – on an EBITDA of €9.3bn (down 14%).

That compares favourably to RWE’s full-year net loss of €2.76bn – its first in more than 60 years – and EnBW’s tiny net profit of €51m in 2013.

With more than 5GW of wind and solar capacity on its books, renewable energy represents one of the few bright spots for E.ON, admits chief executive Johannes Teyssen.

“Renewables are more than just a signficant component of our generation portfolio,” says Teyssen. “After just seven years of focused growth, they’re above all a mainstay of our earnings.”

Teyssen notes that E.ON’s wind fleet is “one of the most reliable and profitable in the industry”.

Over the past year E.ON saw its London Array and Karehamn offshore wind farms commissioned, and its Amrumbank West project is under construction.

In addition to its large US renewables portfolio, E.ON is investing heavily in renewables in Turkey, where it commissioned 745MW of wind and hydro capacity last year via its Enerjisa joint venture with local group Sabanci.

Among other assets, Enerjisa owns the recently commissioned 143MW Balikesir wind farm, Turkey’s largest.

E.ON managed to stay profitable in 2013 due in large part to cost savings it has achieved via its “E.ON 2.0” programme, launched in 2011, which has already led to nearly 8.000 jobs being cut, mostly in Germany.

Like all German utilities, E.ON’s traditional power-generation business remains an anchor around its neck, and the company today revealed plans to shutter another 13GW of capacity – more than one-quarter of its conventional European fleet.

“There are few indications that our market environment will rapidly or tangibly improve,” says chief executive Johannes Teyssen, who added that a capacity mechanism market – paying utilities to keep spare generation capacity on line – is “urgently needed” in Germany.