German energy giant Eon has warned the year ahead will remain a period of “crisis” for the energy sector, despite posting better than expected results for 2022.
Leonhard Birnbaum, the chief executive of one of Europe’s largest energy suppliers, cautioned against being “lulled into a false sense of security” one year on from Russia’s invasion of Ukraine, which caused soaring global energy prices and fears of blackouts.
Birnbaum said that, while the continent had survived the winter and wholesale gas prices had fallen, this “isn’t yet a reason to sound the all-clear”.
He added: “Prices are still at levels we would’ve considered unthinkable just a few years ago. Moreover, prices remain volatile. Nobody knows how prices will develop in the weeks and months ahead.”
Eon, which buys its energy on the wholesale market and did not have direct contracts with Russian providers, reported that its adjusted earnings before interest, tax, depreciation and amortisation rose to €8.1bn in the 2022 financial year — better than the company’s own forecast of €7.6bn to €7.8bn, and €170mn higher than the previous year.
It said the main drivers of the better than expected results were the relatively mild weather, a “significant reduction” in customer
churn in the aftermath of the Ukraine crisis, as well as savings made through synergies.
Analysts said that, for a company that was vulnerable to global energy price fluctuations, Eon was lucky to avoid a cold winter that could have forced it to buy large volumes of gas at high prices.
Birnbaum said that Eon, which has about 51mn customers across Europe, would expand its investments to €33bn in the period to 2027 as part of its efforts to play a role in “advancing and shaping an accelerated energy transition in Europe”.
But he delivered a warning to policymakers in Germany, which has ambitious targets to dramatically expand renewable energy production and make the country carbon neutral by 2045, that they must “finally get serious” about clearing obstacles to the transition.
He called on officials to take meaningful steps aimed at “reducing bureaucracy and ending the country’s parochial approach to planning” so that companies such as Eon could succeed in their efforts to overhaul the country’s energy grid.
About 15 per cent of renewable energy supplies in Europe — and two-
thirds in Germany — are connected to networks operated by Eon.
The company said that to meet renewable energy targets in Germany it would have to double its existing 800,000km of distribution networks in the country by 2030 — a challenge described by Birnbaum as “enormous”.
Eon also said earnings from its nuclear power plant would be invested in projects related to the energy transition. The company runs one of Germany’s three remaining nuclear sites.
The life of the Isar 2 plant, near Munich, was extended as a result of the Ukraine crisis as Berlin sought to dramatically reduce its dependence on Russian gas.
But it will go offline in April as part of the country’s longstanding phaseout of nuclear power production that was announced in response to the 2011 Fukushima disaster in Japan.