Germany’s biggest utility has recorded a 25 per cent drop in its profit for the first nine months of 2014. However a spokesperson told Power Engineering International that despite that news, it is doing ‘relatively well’ as its renewables division continues to grow.
Difficulty in adapting to the country’s continuing transition to renewable power (Energiewende), divestments, adverse currency effects and an oversupply of electricity in the German market are all cited as causes of the company’s disappointing performance.
Underlying net income declined by a quarter from €1.9bn in the first nine months of 2013 to €1.4bn in the same period this year. Overall underlying net income for the year is expected to be between €1.5bn and €1.9bn, compared with €2.2bn in 2013.
But results don’t tell the full story, according to Georg Oppermann, E.ON’s Political Affairs and Corporate Communications spokesperson, who says the company continues to invest in renewable energies and new, efficient taylor-made energy solutions, while bringing down costs and debt, and ensuring that new markets outside Europe ‘contribute positively’ to their results in the future.
“Each new quarter, our renewables business delivers higher earnings.”
“Despite a really difficult market environment not only in Germany, E.ON is still doing relatively well,” Oppermann told PEi. “We are in the middle of a challenging transformation process, but we have already achieved a lot so far. Each new quarter, our renewables business delivers higher earnings. It now accounts for 17 per cent of our earnings, making it a mainstay of our business.”
Oppermann pointed to particular projects as evidence of the company’s relative health amid trying circumstances.
“Our two large offshore (wind) projects, Amrumbank West and Humber Gateway, are on schedule. Starting in 2015, they’ll further enlarge renewables’ share of our earnings. We expect all 80 turbines of Amrumbank West wind farm, which is located north of the island of Helgoland in the North Sea, to be online by the fall of 2015. As of today, 60 of the 80 foundations are in place, and cables are being laid. Together, the 3.6 MW state-of-the-art turbines will represent 288 MW of capacity and be able to meet the electricity needs of up to 300,000 households. Humber Gateway in the United Kingdom will become operational at roughly the same time. Altogether, we have about 500 MW of offshore capacity under construction.”
The impact of currency on E.ON’s earnings included a sharp decline for its Russian operations. The weakness of the rouble contributed to a 19 per cent drop in E.ON Russia’s ebitda, which fell from €495m to €401m. But the company prefers to look at the positives associated with its business in the east, such as a notable coal-fired power project in Siberia.
“The construction of unit 3, a new 800 MW generating unit at Berezovskaya power station in Russia, is proceeding well. The boiler was installed in October, and successful hydraulic tests were conducted. The new unit, which is part of E.ON Russia’s investment program, will enter service next year.”
“E.ON will manage the current European energy situation better than a lot of the other energy companies.”
The government is considering paying utilities to maintain capacity, but ministers are reluctant to spend public money subsidising excess capacity in the German power market and E.ON isn’t depending on any such outcomes.
For now, Oppermann is in no doubt that the company will emerge from what has been a difficult time, and thrive once more.
“We continue to look into higher efficiency, a slim organizational set-up and a motivating performance culture within our teams. We are confident that E.ON will manage the current European energy situation better than a lot of the other energy companies.”
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