Two of Europe’s main utilities have demonstrated the indicators of a post-coronavirus lockdown restoration, highlighted by rising renewable capacities.
French and German utility giants EDF and RWE each reported their Q3 outcomes on the finish of final week. Whereas softer demand because of the COVID-19 lockdowns has trimmed demand for electrical energy over the interval, sustained renewables deployment and related income was a vivid spot for each corporations.
RWE stated it anticipated to finish 800 megawatts of wind and photo voltaic in This autumn, on high of the 500 MW already commissioned. It expects its wind and photo voltaic capability to succeed in 10 GW by the top of the yr, on its approach to a 13 GW goal by 2022.
The altering era mixture of the German firm has been laid naked within the first 9 months of 2020. The mixed output of the agency’s lignite and laborious coal vegetation are down greater than a 3rd within the 9 months of 2020 in comparison with the identical interval final yr. The output from wind and photo voltaic, in the meantime, almost tripled from 6.1 billion kilowatt-hours to 17.1 billion kilowatt-hours.
This pattern will proceed as Germany’s coal phase-out continues and RWE provides extra renewable capability at tempo. In September it received 1.eight GW of latest seabed leases for offshore wind initiatives within the U.Ok. Within the first week of November, it closed the €400 million ($473 million) deal to amass an onshore wind and photo voltaic pipeline of two.7 GW from wind turbine OEM Nordex. The vast majority of the initiatives, 1.9 GW, are in France.
In income phrases, the corporate made €1.6 billion ($1.9 billion) of income from its wind and photo voltaic property in 9M 2020 in comparison with €743 million ($879 million) within the first 9 months of final yr.
EDF’s pipeline swells
EDF posted a lower in gross sales of four.zero p.c to €48.eight billion ($57.eight billion) for 9M 2020 in comparison with €51.zero billion in 9M 2019. In keeping with EDF, gross sales would have been “nearly secure” if the impacts of the coronavirus pandemic are counted for.
Gloomy forecasts for the EDF’s nuclear output have partly recovered over the course of 2020, with a rise introduced in Q3 to 325-335 terrawatt-hours. In April it had been decreased to 300 TWh. Earlier than COVID-19 took maintain, the forecast had been 395 TWh.
As with RWE, renewables supplied some welcome excellent news.
The corporate is at the moment focusing on a complete renewables portfolio of 50 GW by 2030. In February, Jean-Bernard Lévy, EDF’s chairman and CEO, stated it will revisit that concentrate on as a result of “it actually seems like we’re going to exceed it and by fairly a major hole.”
The French state-majority-owned EDF has amassed a worldwide portfolio of 32.5 GW of renewables, together with 9.eight GW of wind and photo voltaic and 22.three GW of hydropower. In keeping with figures launched alongside its Q3 outcomes, the present wind and photo voltaic pipeline is 39.1 GW with 14.2 GW in North America and 15.four GW in Europe. It’s broadly anticipated that photo voltaic and wind will present the vast majority of the remaining capability.
In October, EDF Renewables acquired the four.5 GW photo voltaic growth pipeline of Geenex, situated in PJM territory.
In India, its EDEN Renewables enterprise received 1,350 MW of photo voltaic capability in Rajasthan. It additionally commenced building on a 400 MW onshore wind challenge in Saudi Arabia.
Funding outlook on the up
RWE famous that 85 p.c of its funding in 2020 was ‘inexperienced,’ the place that definition of inexperienced is set by the EU’s so-called taxonomy guidelines for what does and doesn’t qualify for the designation.
That is a essential challenge with tons of of billions of euros value of inexperienced stimulus funding up for grabs. Most just lately, pure fuel has been denied the standing as a “transition gas.” Something with 100g of CO2 equal per kWh received’t be thought of sustainable. That determine is linked to the brink required to maintain international warming under 1.5 levels Celsius.
RWE CFO and CEO-elect Marcus Krebber advised an investor analyst name that the financing outlook for renewables was enhancing.
“We see decrease price of capital as a result of now we have had low inter3est charges for a very long time they usually may go decrease,” stated Krebber explaining that its price of capital is calculated utilizing common rates of interest over 6-18 month durations.
As renewable applied sciences mature and deployment builds out MWs of capability in addition to expertise for these concerned, the price of the dangers concerned fall.
“You’re going to really feel extra comfy with the chance profile after getting executed 5 or 6 offshore building initiatives with the identical accomplice,” he stated.
Krebber additionally stated that the revenue ranges had now additionally stabilized for initiatives, with these bidding extra aggressively in auctions unlikely to fulfill buyers’ calls for for returns. The top result’s that RWE will not be too involved about funding its renewables surge, whereas additionally anticipating the worth of its growth pipeline to develop in a optimistic monetary surroundings.
RWE launched a capital increase in August, rising the quantity of its shares by 10 p.c and elevating €2 billion within the course of. In its quarterly report, RWE stated the proceeds of the deal could be used to implement initiatives from the Nordex pipeline.
RWE has additionally been growing a Inexperienced Bond framework to fund wind and photo voltaic initiatives. In April, three European utilities, EDP, EnBW and SSE, all issued their very own inexperienced bonds and raised €2.5 billion in whole. Engie, E.ON, Iberdrola and offshore wind developer Ørsted have additionally launched Inexperienced Bonds this yr.