Wind's Wrath, RWE's Pain: Shaky Start for Germany's Largest Energy Company
RWE experiences financial setbacks
Got the energy blues? RWE, Germany's largest energy provider, is feeling the chill too! The renewable energy behemoth is off to a rough start this year, with a significant slump in profits, particularly in its renewable sector. But fret not, their annual targets remain unscathed, and shareholders can expect a fatter dividend check for last year.
The first-quarter woes were a direct result of a sluggish wind, causing RWE's adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to plummet to 1.3 billion euros, down from a brisk 1.7 billion euros the previous year. The losing streak was mostly due to losses in the renewable energy division brought about by lousy wind conditions.
The offshore wind segment took the hardest hit, with its adjusted EBITDA tumbling from a robust 548 million to 380 million euros. But the onshore wind/solar segment managed to eke out some profits, courtesy of the commissioning of new plants and higher hedged electricity prices in the U.S. The energy trading segment's earnings nosedived to a mere 15 million euros from a robust 251 million euros the year prior. Adjusted net income attributable to shareholders also took a steep fall, from a robust 801 million to a more modest 498 million euros.
Despite the financial setbacks, RWE stood tall, affirming that their forecast for adjusted EBITDA would remain between 4.6 billion and 5.2 billion euros for the full year, and adjusted net income would hover between 1.3 billion and 1.8 billion euros. The dividend is also set to inflate by 10 cents to a dapper 1.20 euros. RWE didn't drop any hints about an extension of their share buyback program, with CFO Michael Müller promising a decision at the end of the current program in May 2026.
RWE: Appeasing the Gods of Growth
But the road to recovery isn't gonna be a breeze. RWE's expanding its renewable energy portfolio, having commissioned a whopping 600 megawatts of new capacity in the first quarter. "This year and next, we'll wrap up plants with a total capacity of 8 gigawatts, including our sprawling offshore wind farm Sofia in the UK," said CFO Müller.
As for the German government's announced tender for gas power plants, RWE's ready to dance if the conditions are favorable. "We're gung-ho about building at least 3 gigawatts if the framework's right," Müller proclaimed. Federal Economics Minister Katherina Reiche recently announced plans to tender "at least 20 gigawatts" of gas power plants to ensure Germany's energy security.
RWE plans to leverage existing power plant sites, with advanced plans in progress at Weisweiler near Aachen and Voerde near Wesel. Concrete projects are in the works at other sites, like Grundremmingen. RWE's already secured turbines for a total of 2.4 gigawatts through forward contracts, involving three combined cycle gas turbine (CCGT) plants, each with a capacity of 800 megawatts.
sources: ntv.de, jwu/rts/DJ
Behind the Scenes:
RWE's current troubles and future plans are more than skin deep. Here's a peek at their overall status and ambitions:
The Present Scene
- Expanding Cross-Continent: RWE has recently expanded its portfolio in the U.S. with a spate of completed energy projects across several states. These include a new wind farm, a repowered wind farm, three new solar installations, and a standalone battery energy storage system (BESS).
- Earnings and the Balance Sheet: RWE's Q1 2025 financial report showed a drop in earnings, with adjusted EBITDA sliding to €1.3 billion. Clinching profits in the onshore wind and solar segment helped to cushion some of the losses.
A Sight of Things to Come
- Offshore Wind: Political hurdles have put a temporary halt to RWE's offshore wind operations in the U.S. Nevertheless, they continue to ramp up investments in offshore wind globally. Offshore wind is expected to contribute €1,300-1,700 million to RWE's adjusted EBITDA for the full year 2025.
- Onshore Wind and Solar: RWE's targeting the expansion of its onshore wind and solar capacity, anticipating a contribution of €1,650-2,150 million to adjusted EBITDA for 2025.
- Flexible Generation: The woes of RWE's Flexible Generation segment in Q1 2025 were chiefly attributed to lower electricity forward sales margins. However, they're investing in this sector to optimize power plant operations.
- Renewable Energy Under Construction: With more than 10.6 GW of capacity across diverse technologies and geographies under construction, RWE's gearing up for long-term growth in the renewable energy sector.
- In an effort to diversify and strengthen its renewable energy portfolio, RWE announced plans to commission 8 gigawatts of new capacity by the end of next year, with its offshore wind farm Sofia in the UK being a significant part of this expansion.
- In response to the German government's intention to tender at least 20 gigawatts of gas power plants to ensure the country's energy security, RWE expressed readiness to build at least 3 gigawatts if the conditions are favorable, leveraging existing power plant sites like Weisweiler and Voerde.
