RWE share: RWE with a multi-billion dollar acquisition in the USA – Older lignite-fired power plants are allowed to generate electricity

According to its own statements, the Essen-based DAX group is taking over Con Edison Clean Energy Businesses Inc (Con Edison CEB), a leading operator and developer of solar systems and storage systems in the USA. Con Edison CEB has approximately 3 gigawatts (GW) of installed capacity and a development pipeline of more than 7 GW.

According to the further information, the purchase price is based on an enterprise value of 6.8 billion US dollars. From the first year, the acquisition is expected to contribute around 600 million dollars to RWE’s consolidated earnings. The acquisition and the additional growth are to be financed through debt instruments and an equity measure by RWE AG. RWE intends to increase equity by issuing a mandatory convertible bond to a subsidiary of Qatar’s sovereign wealth fund, the Qatar Investment Authority (QIA).

The mandatory convertible bond has a total nominal value of EUR 2.428 billion and a term of up to one year. The convertible bond will be converted into new bearer shares, which are expected to correspond to almost 10 percent of the current RWE share capital.

“Our equity measure creates the basis for financing the acquisition of Con Edison CEB and the additional green growth in the coming years,” said RWE CEO Markus Krebber. “I am pleased that QIA is supporting RWE’s ambitions to grow faster and stronger with additional equity.”

According to its own statements, RWE is sticking to the plan to pay a dividend of EUR 0.90 per share for 2022.

RWE describes the transaction as a “milestone”. With the closing of the transaction, which is expected in the first half of next year, RWE will become number 4 in the renewable energy sector and number 2 among solar power system operators in the USA, one of the world’s largest and fastest growing markets for solar energy Renewable energy. The “Inflation Reduction Act” also sets a stable and reliable ten-year framework for investments in clean energies.

The USA plays a key role in expanding the business with renewable energies and in RWE’s goal of becoming climate-neutral by 2040.

Save gas: Older lignite-fired power plants can generate electricity again

To strengthen the security of electricity supply, the energy companies RWE and Leag have the legal opportunity to bring additional lignite-fired power plants back onto the market from this Saturday. There are five blocks that were previously on security standby. In the Lausitz area it is the Leag power plant units Jänschwalde E & F, in the Rhenish area the RWE power plant units Niederaußem E & F and Neurath C. They may initially return to the market for a limited period until June 30, 2023.

During the energy crisis, the lignite blocks are intended to help reduce the amount of natural gas that is converted into electricity. They have a combined capacity of 1.9 gigawatts. For comparison: the three German nuclear power plants each have an output of 1.4 to 1.5 gigawatts.

The companies decide for themselves when exactly they want to bring their power plants back online. The required ordinance was only passed by the Federal Cabinet on Wednesday. It was published in the Federal Gazette on Friday evening.

It is still unclear exactly when the blocks in Jänschwalde will go online. RWE announced on Thursday that the three RWE blocks “should go into operation in the coming days”. It was originally planned that they would be finally shut down on September 30, 2022 and September 30, 2023 respectively.

According to RWE, the restart of the power plants was preceded by extensive work to prepare the plants for longer periods of high utilization. The workforce has been strengthened, for example by employees taking early retirement later. A spokesman for the operator Leag had said that the maintenance work was complex and that components had been replaced. The energy company hired additional employees.

Two coal-fired power plants from the so-called grid reserve have already returned to the market. More are to follow in the coming weeks.

Economics and Climate Protection Minister Robert Habeck (Greens) had repeatedly described the return of climate-damaging coal-fired power plants as bitter news with a view to climate protection. However, the return is inevitable because of the consequences of the Russian war of aggression on Ukraine on gas supplies. “The goal of ideally completing the phase-out of coal by 2030 remains in place,” the federal government had emphasized several times.

FRANKFURT/COTTBUS/ESSEN (Dow Jones/dpa-AFX)

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Image sources: Andre Laaks, RWE, Dennis Diatel / Shutterstock.com

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