Pocerady Power Plant

William Malcolm

E.ON To Invest 27 Billion Euros By 2026 Into Europe’s Energy Transition

The German energy group E.ON will invest around 27 billion euros (more than 687 billion CZK) by 2026 to prepare distribution networks and customers for the transition to renewable energy sources. The company also set goals in terms of profit generation and a dividend payment plan. E.ON has thus joined its rivals, who have either already outlined similar plans or are preparing to do so.

Around € 22 billion will go to modernizing the electricity and gas distribution network, which is the longest in Europe. The company then set aside around five billion euros for customer solutions, through which E.ON provides services to approximately 50 million customers in several European countries.

The announced investment program comes about a week after a similar plan was introduced by RWE, which is the largest electricity producer in Germany. RWE outlined an investment plan for 50 billion euros (1.27 trillion CZK), which will go to expand the capacity of renewable resources. European energy companies are trying to speed up preparations for the so-called green future in order to meet the targets agreed at European Union level.

E.ON shares remained unchanged this morning. According to Reuters, one of the traders noted that the announcement of the planned investments does not contain “any positive surprises” and that the company will have to convince investors only at the conference it will hold.

The five-year plan also envisages that E.ON will receive two to four billion euros from the sale of part of the assets and partnerships. Another 500 million euros should bring savings. Adjusted gross operating profit (EBITDA) from the main activity should be around 7.8 billion euros in 2026. This would mean that in the period from 2021 to 2026, the compound annual profit growth will reach about four percent.

“The decarbonisation of the European economy puts the energy sector on the verge of a key decade of growth,” said Leonhard Birnbaum, CEO, who took office in April.

E.ON also proposed to pay a dividend of 0.49 euros per share this year, which is an increase of more than four percent compared to last year’s dividend of 0.47 euros. This is also in line with the expectations of analysts in the Refinitiv survey. E.ON will extend its current dividend policy, which envisages annual growth of up to five percent, by three years, or until 2026.

In the Czech Republic, the E.ON Group supplies electricity through its distribution network to approximately 1.35 million customers, mainly from southern Bohemia and southern Moravia. Its market share in this sector is about 21 percent. The length of the company’s distribution network exceeds 65,000 kilometers. In gas distribution, E.ON has a network of more than 4,000 kilometers and its share of the gas market in the Czech Republic is approximately 10.5 percent.