By Christoph Steitz and Tom Käckenhoff
FRANKFURT/DUESSELDORF (Reuters) -Germany’s biggest power producer RWE will raise investment in green energy technologies to 55 billion euros ($60 billion) over the next seven years, it said on Tuesday, seeking to become one of the world’s largest renewables groups.
RWE struck a different tone to its larger rival Enel, which last week took a more cautious stance on renewables projects in the wake of inflation and supply chain issues that have gripped the sector.
None of RWE’s offshore wind projects are facing economic difficulties, Chief Executive Markus Krebber said at the group’s capital markets day, in a comment aimed at addressing investor concerns after related writedowns by BP, Orsted and Equinor.
The group raised its target for the internal rate of return on future projects to 8% from the 6% guidance provided two years ago.
“We ensured that we had a very deep dive of our offshore portfolio after what happened,” Krebber said. “We can confirm again that we don’t have any problems with anything that is under construction, under development.”
However, Krebber said the company would no longer pursue offshore projects in markets deemed too risky, singling out Italy and Taiwan, where the risk-return profile no longer meets RWE’s criteria.
‘BACK TO BASICS’
RWE’s newest net cash investment target equates to an annual spending average of 7.9 billion euros in renewable energy, batteries, flexible generation and hydrogen projects, up from an average of 6.7 billion euros for the 2021-2023 period.
Green capacity is expected to nearly double to more than 65 gigawatts (GW) in 2030 from 35 GW now, with most of the investment in Europe and the United States. In terms of technology, more than half will be directed at onshore and offshore wind, the company said.
Shares in RWE were up 2.7% by 1454 GMT, the best performer on Germany’s blue-chip DAX index.
Analysts at Goldman Sachs said RWE’s released roadmap was a “strong ‘back to basics’ plan that rests on higher returns … accelerating investments … and which, in turn, should result in stronger – and well above consensus – profits”.
Adjusted core profit (EBITDA) is expected to rise to more than 9 billion euros in 2030, an increase of as much as 27% from the group’s 2023 forecast for a comparable 6.4 billion to 7.0 billion euros, which strips out contributions from coal.
The group also said it was targeting a dividend of 1.10 euros per share for 2024, up from a 1 euro per share proposal for 2023, marking a year-on-year increase at the upper end of its goal of 5-10% annual payout growth.
($1 = 0.9135 euros)
(Reporting by Christoph Steitz and Tom KaeckenhoffEditing by Miranda Murray, Kirsten Donovan and David Goodman)