RWE share: What makes the energy supplier’s share so exciting

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by Klaus Schachinger, Euro on Sunday

Et is an important step for Germany’s gas supply should supplies from Russia be significantly reduced or even interrupted in winter. By March 2024, RWE and the two suppliers Uniper and EnBW/VNG will take over the supply of liquid gas terminals in Brunsbüttel and Wilhelmshaven, which are scheduled to go into operation at the turn of the year, from tankers.

The LNG tankers are landed on special ships that serve as floating terminals. They have facilities to convert the LNG to the gaseous state in order to inject it into a system of pipelines for transportation overland. The infrastructure for this should be in place by the end of the year. RWE has leased two floating terminals in a consortium with the Dutch pipeline operator Gasunie, which is expected to operate the business alone in the long term. The two stationed in Wilhelmshaven and Brunsbüttel should be busy from day one. Together they can supply 12.5 billion cubic meters of gas per year. For comparison: Nord Stream 1 has 55 billion. Germany’s annual requirement is 95 billion cubic meters.

Independence from gas supplies from Russia is still a long way off and will take some time. As things currently stand, a further increase in electricity and gas prices is to be expected for the winter. This benefits suppliers like RWE, which are also active in energy trading. Presumably also in order not to appear in the wrong light, RWE will forego the funds from the gas surcharge, which will apply from October.

In addition, the group invests its surpluses from the high energy prices in the expansion of capacities for green electricity from wind, sun and, in the medium term, also hydrogen. Five billion euros are to flow into this area in the current year, two billion of which have already been spent. The sum is 30 percent higher than originally planned. Wind and solar systems with a capacity of 1.2 billion gigawatts were connected to the grid in the first six months, and a further 4.8 billion gigawatts are under construction, said CEO Markus Krebber when presenting the half-year balance sheet.

Prognosis significantly increased

Thanks to the high electricity production and the good results in energy trading, RWE was able to increase its profit forecast for the full year by 1.5 billion to five to 5.5 billion euros from operating profit (Ebitda) even before the balance sheet was presented. In the first half of the year, the utility earned 2.4 billion euros in its core business of electricity from sun, wind and gas power plants as well as energy trading, twice as much as in the previous year. With electricity from coal and nuclear energy, it was 2.9 billion euros.

Russian gas producers have contractually guaranteed capacities for 15 terawatt hours of energy until 2023. RWE announced that they are currently only receiving a fifth of the agreed quantities. The good news for investors: RWE has fully covered the risk, including a complete failure of deliveries, with hedging transactions.

upwards: The significantly increased profit forecast and the prospects in electricity trading and green electricity push the share.

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