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Eon wants to become bigger and more digital – massive network expansion is planned

Germany’s largest electricity supplier Eon wants to benefit from the energy transition and invest 27 billion euros in the next five years. The money will mainly flow into the expansion of the power grid. “Eon is now starting a comprehensive growth and investment offensive to build a CO₂-free, digital energy world,” said Eon CEO Leonhard Birnbaum on Tuesday. The growth should also pay off: by 2026, the annual payout per share should increase by up to five percent. For this year Eon is proposing a dividend of 49 cents per paper.

Eon is Germany’s largest electricity and gas provider and by far the largest distribution network operator. The group is also one of the largest energy companies in Europe. At the end of June, Eon had more than 52 million customers in Europe, 14 million of them in Germany.

Eon wants the 27 billion euros according to company announcement Invest 22 billion in the expansion of the energy network, more than half of it in Germany. Around ninety percent of the 22 billion will flow into the electricity network, the rest into the gas network. Eon intends to use the money to build new lines, substations and local grid systems, among other things, against the background of increasing demand for electricity.

Electricity and gas networks are regulated. This means that in Germany, for example, the Federal Network Agency determines under what conditions and at what price electricity and gas providers can use the networks for delivery. According to its own statements, the authority ensures that “the network operators can master the major tasks of the energy transition without placing excessive financial burdens on consumers”.

Eon expects to connect additional renewable energies with a capacity of 35 to 40 gigawatts to its own grids in the next five years. “Each of these systems helps us to achieve the Paris climate goals. In addition, there is the expansion of millions of heat pumps, battery storage systems and electromobility,” said Eon board member responsible for grids, Thomas König. The company plans to invest around two of the 22 billion euros in the digitization of network planning, monitoring and control.

Eon intends to invest the remaining five billion euros in the expansion of business with customer solutions, i.e. the sales area. “Digitization is the decisive factor here as well: We will have a digital platform in all markets by 2026 and use it to serve all of our customers efficiently and in a customer-friendly manner,” said Patrick Lammers, the board member responsible for sales.

Eon also wants to earn money with sustainable energy systems in houses and in electromobility. The company announced the construction of around 5000 fast charging points by 2026. Eon sees further growth potential in the hydrogen economy. The company is primarily focusing on industrial medium-sized companies.

Investors didn’t like the Eon plans. On Tuesday afternoon, the share was at times more than four percent in the red. Overall, the goals didn’t allow for a strong imagination, said one trader.

Eon is not the only energy company in Germany that is aligning its business with investments worth billions on the energy transition. The former competitor had only last week RWE announcedto want to invest around 30 billion euros net in core business by 2030. RWE includes electricity generation from renewable energies and gas as well as energy trading.

EnBW (Karlsruhe) in the south-west also wants to spend a lot of money, which made climate neutrality a top issue at the end of 2020 in order to reduce CO₂ emissions to zero by 2035. In the period from 2021 to 2025, the company plans to invest around twelve billion euros in expanding renewable energies, power grids, electromobility and telecommunications.

One submitted almost a year ago Study by the Federal Association of Energy and Water Management had calculated that climate measures alone in the German energy industry will trigger investments totaling 320 billion euros.

Birnbaum expressed confidence in relation to the future federal government. He does not want a green light, but “a concrete one that really brings action”. Birnbaum cited the acceleration of approval procedures as an example.


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