RWE to spend more than $5.2 Billion on renewables

Bloomberg has invested more than originally planned to build renewable energy capacity to make Europe more energy independent as a worsening crisis threatens the region's economy.

Germany's biggest power producer plans to spend more than 5 billion euros $5.2 billion on green technologies this fiscal year, including wind, solar and batteries, as well as ramping up hydrogen, it said in a statement on Wednesday. That is about 30% more than originally planned.

Europe is rushing to boost energy supplies ahead of winter as it looks to stave off a crisis that could result in blackouts and rationing. Governments and politicians in Brussels have been focusing on reducing consumption as natural gas flows from Russia have dwindled and electricity prices have jumped to records.

Markus Krebber, RWE Chief Executive Officer Markus Krebber said in the statement that all this is needed to make energy supply more independent and climate-neutral.

The company wrote off 748 million euros, less than what was estimated earlier in the day, related to a long-term contract to buy hard coal.

RWE has no intention of claim losses due to shortfall of Russian gas supply via a government mechanism that could be activated soon, it said.

The report says that the company still has a supply contract that covers 15 terawatt-hours of Russian gas through the end of 2023, but it has reduced the associated risk to zero by concluding hedges. Krebber told reporters on Thursday that RWE is evaluating potential legal actions given Russia's gas cuts.

Just like its European peers, RWE has been racing to secure alternatives to Russian fuel and add more infrastructure to import liquefied natural gas from across the globe. The company signed a 15-year agreement for US LNG in May, and deliveries are expected to start in 2027, according to a presentation.

RWE keeps option open for extra German Coal Plant This Winter.

The company, which has already boosted its LNG trade, sees its floating import facility in Germany starting in December, which should help the nation this winter after Russia has slashed pipeline gas flows to multiyear lows.

European energy prices have surged recently as a climate crisis curtailed shipments along the Rhine River. In Germany, where most of RWE's run-of-river power plants are located, water volumes remained below the long-term average, it said.

The company raised its full-year outlook last month, as well as higher profits in the first half, but it confirmed its full-year outlook after raising it last month. Earnings before interest, taxes, depreciation and amortization - also in pre-released earlier in the day, jumped 63% to 2.9 billion euros.

RWE benefits from the higher commodity price and volatility environment, increased opportunity on renewables development and limited exposure to the Russian gas shortage, according to a note from JPMorgan analyst Vincent Ayral. The utility has hinted at a guidance upgrade for 2023. Given current uncertainty, this will happen at a later stage.

After five days of gains, the shares were 0.3% lower at 12: 28 p.m. in Berlin.

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