CLIMATE NEUTRALITY AND COMPANY UPDATE" - OCTOBER 2020 - ENBW
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Climate neutrality and company update» October 2020
Overview
1 Climate neutrality
2 Business overview
October 2020
2
Political and regulatory environment is the starting point for
EnBW’s climate strategy
Climate package
-40% GHG emissions by 2020 (-55% by 2030)
German Climate & Energy Policy Goals -20% primary energy consumption by 2020 (-61 to -62% by 2030)
Climate Protection Act Climate protection programme 2030
Target of 65% renewables in 20301 and target ranges
Establishes German climate protection targets by 2050 and
specified for specific technologies, e.g. offshore wind
sets a legal framework.
target raised and 52 GW PV cap lifted.
Climate neutrality by 2050 pursued as long-term target.
New act implements coal phase out by 2038 at the latest.
Annual sectoral emission budgets specified through to
Reduction of coal-fired capacity from ~40 GW to 30 GW in
2030; German government can arbitrarily reallocate
2022 and 17 GW in 2030.
sectoral emission budgets.
Monitoring process for target attainment by 2030: If New act (BEHG) to implement national CO2 pricing system
sectoral annual emission targets missed, department in in transport and heating, starting in 2021 with fixed prices
charge has to submit an immediate action programme. followed by a cap-and-trade system from 2026.
October 2020
1 Specific tender quantities for target of 65% renewables by 2030 are expected to be implemented in pending amendment of EEG.
3
EnBW aims for climate neutrality by the end of 2035
Reasons for choosing 2035 as the target year for EnBW to attain climate neutrality
2030 Climate neutrality in line with Paris climate targets (“well below 2 °C”)
Represents a balance between differing stakeholder expectations
2035
Feasible because remaining emissions low and able to be offset at reasonable cost
2040
Allows sufficient transition time in line with regulated coal exit path
2045
Well positioned compared to competitors in terms of ambition level
October 2020
4
EnBW uses various instruments on the path to climate neutrality
Coal exit/fuel switch Use of climate-neutral Use of green electricity Offsetting Other options
gases
› (Partly) required by › Transition to climate- › Mainly relevant as › Unavoidable residual › Action package to avoid
coal phaseout neutral gases substitute for ‘grey’ emissions offset by relatively small-scale
necessary in medium grid loss purchases in purchase of recognised emissions (such as
› Only latest hard coal term Scope 22 offsetting allowances canteen and building
plants and one lignite (Scope 13) emissions)
plant1 expected to be › Climate-neutral › Surcharge for green
still in operation in hydrogen not expected grid loss purchases › Reduction prioritised › About 2% of total
2030 to be universally over offsetting emissions at EnBW
available until mid-
› District heating/power 2030s
generation fuel switch
to natural gas, biogas/
biomass, hydrogen etc.
October 2020
1 Of EnBW’s coal-fired power stations, only RDK8, GKM9 and LIP currently still expected to be in service beyond 2030, plus electricity from Walsum in 2030
2 Indirect emissions from electricity purchased and used by the organisation.
3 All direct emissions from the activities of an organisation or under their control.
5
EnBW has a clear-cut implementation plan for emission reductions:
50% by 2030, net zero by 2035
Emission targets and measures
2018 By 2025 By 2030 By 2035 Beyond 2035
2
1 2 Net
Mt CO2 17.5 -50% 8.8 -100% zero
Coal-fired 3
generation capacity 4.6 2.1 0.0
(GW)
› Coal to gas fuel switch › First coal-fired power plants › Decommissioning of › Conversion from natural gas
remaining coal-fired power to climate neutral gases
› Reduction in fleet, canteen, decomissioned
plants (hydrogen)
building etc. emissions › Fuel switch › Offsetting of residual fossil
Scope 14 › Continuation of other
› Continuation of other
emissions
reduction measures
reduction measures › Continuation of other
› Offsetting (only if necessary), reduction measures
attainment of H2 readiness
› Start of green grid loss › Green grid loss purchases; possibly additional offsetting measures
Scope 25 purchases (electricity)
October 2020
1 Starting figure for Scope 1 and 2 (mainly power generation and grid losses) 2 Target for Scope 1 and 2 3 As of October 2020
4 All direct emissions from the activities of an organisation or under their control.
5 Indirect emissions from electricity purchased and used by the organisation.
6
EnBW's transition towards climate neutrality is a just transition
Clear climate targets Just transition Financial feasibility
Long-term climate targets for EnBW No additional job cuts Cost management
› –50% by 2030 (currently 3,400 employees in
› –100% by year-end 2035 conventional generation) › No need for offsetting expected
› Offsets for unavoidable residual up to 2035 as 50% target
emissions from 2036 › Attaining EnBW climate neutrality realistically attainable by EnBW
by 2035 does not mean › Offsetting only expected to be
decommissioning coal-fired power needed from 2036 to 2040,
Calculation of Paris-compliant plants in excess of the statutory
residual emission budget on declining trend (notably due to
decommissioning path use of climate-friendly gases in
› Based on German Advisory › EnBW delivers on its social power plants)
Council on the Environment (SRU) responsibility in the exit from coal: › EnBW offsets according to
suitable HR instruments (further Gold Standard and thus complies
EnBW residual emissions budget training e.g.) and forward-looking with prevailing minimum
with 2/3 probability of 1.75°C HR planning requirements
global warming › Former conventional power
[Mt CO2] generation employees are already
contributing their technical
expertise in other areas today,
Germany (SRU): 6,700
such as in offshore wind power
German energy industry:
~ 2,500
EnBW: ~140-160
October 2020
7
SRU: Sachverständigenrat für Umweltfragen
Overview
1 Climate neutrality
2 Business overview
October 2020
8
Portfolio transformation successful – overall EBITDA 2020 target
already achieved in 2019 – overachievement expected in 2020
EnBW Strategy 2020 (published in 2013) 2012 Target 2020 2019 Forecast 2020
0.4-
Generation and Trading 1.2 -80%
0.3 0.4 0.5
0.8-
Renewable Energies 0.2
+250% 0.7 0.5 0.9
1.3-
Grids 0.8
+25% 1.0 1.3 1.4
0.3-
Sales 0.2
+100% 0.4 0.3 0.4
2.4 2.4 2.4 2.75–2.9
October 2020
Adjusted EBITDA in € bn 9
COVID-19: Business model resilient - EnBW takes social responsibility
Effects of corona pandemic on adjusted EBITDA of business segments EnBW takes responsibility at an exceptional time
Adjusted EBITDA H1 2020 on Group level 24/7 security of supply
› Earnings increase driven by Renewable Energies segment due to new › Supply of electricity, gas, water and heat secure at all times
offshore wind farms Hohe See and Albatros
Protecting the health of EnBW’s employees
Sales › Investments in IT and digital infrastructure pay off
› Lower sales to B2B customers and impairments on receivables › 10,000 working from home thanks to the capabilities of modern IT
› Physically separate teams for key units with strict safety measures
Grids
› Earnings performance not significantly influenced Social responsibility beyond energy supply
› Donation of a total of €150,000 to the food banks run by the “Tafel”
Renewable Energies charities in Baden-Württemberg.
› No impact › Support for the book business / book stores in Baden-Württemberg
› Donation of face masks to medical facilities
Generation and Trading › EnBW has restored connections to all those who had their electricity and
› Electricity sold at higher wholesale market prices gas supplies cut off in the first months of 2020
Adjusted EBITDA 1,587
in € m
1,276
+24%
October 2020
H1 2019 H1 2020 10Generation & Trading: On its way to climate neutrality
Phase-out of conventional generation: Regulated generation for grid stability Trading
currently 6.5 GW1 › 2020 generation position
Coal exit › 300 MW plant at EnBW’s power completely hedged one year in
› By 2035 plant location in Marbach advance
› Highly-flexible open gas turbine
Nuclear exit › Planning approval granted by Strategic dimensions
› Final shutdown of KKP 2 Stuttgart regional council in › Regional expansion
July 2020
(1.4 GW) on 31 December 2019 › into CWE and Nordics
› GKN II (1.1 GW) by end of 2022 › Commissioning expected in 2022
› Extension of product range
› Use and operating time in
› e.g. liquified natural gas (LNG)
the responsibility of transmission
Reserve power plants (1.7 GW)2
system operators › Extension of time horizon
Federal Network Agency confirmed › PPA with Energiekontor in 2019
extension of system relevance
until 31 March 2023. → EnBW’s generation business › Smart & digital trading
could be regulated and › digital trading strategies
unregulated
October 2020
1without nuclear; 2 not included in EnBW’s
generation portfolio
11
PPA: Power Purchase AgreementRenewable Energies: core of EnBW’s energy transition strategy
Offshore wind: 945 MW Onshore wind: 878 MW Photovoltaic: 178 MW
Secured pipeline: 900 MW Secured Pipeline 2,200 MW Secured Pipeline 840 MW
Germany Germany France - Valeco
› Hohe See 497 MW › 626 MW › 51 MW + 32 MW equity-accounted
› Albatros 112 MW › Expansion needs further support Germany: currently 102 MW
Sweden - EnBW Sverige AB Project Weesow-Wilmersdorf
› Baltic 1 und 2 with 336 MW › 108 MW › 187 MW under construction
› EnBW He Dreiht ~ 900 MW › Development of further projects › Full commission by end of 2020
FID expected 2023; COD 2025 France - Valeco Project Langenenslingen-Wilflingen
141 MW + 244 MW equity-accounted › 70 MW in planning process
› Project development in › 1,700 MW pipeline › Potential start of operations in
the US and Taiwan summer 2022
→ Experienced and → EnBW prepared to invest further → Expand expertise to
successful offshore developer and
October 2020
when environment develops neighbouring countries
operator favorably
12
FID: First Investment Decision; COD: Commerical operation dateGrids: Backbone of EnBW’s sustainable business portfolio
Electricity distribution grids Electricity transmission grids Gas grids (25,000 km)
(141,000 km) (3,000 km) › Secure, efficient and
› Integration of renewables and › Power transmission in Baden- environmentally-friendly
e-mobility Württemberg, within Germany transmission of natural gas
› Securing grid stability and to other European countries › Products, services and solutions
› Safe grid operation to ensure terranets bw (Baden-Wuerttemberg)
security of supply
Netze BW partnership approach › Nordschwarzwaldleitung:
SuedLink (TransnetBW & TenneT:
› 116 municipalities indirectly Additional connection to the Trans
50:50 cooperation) Europe Natural Gas Pipeline
own 9%
› 2 x 2 GW, > 600 km
› Next investment phase to start Ontras ( Eastern Germany)
1 July 2021 › Definition of corridor ongoing › Completion of the first section
ULTRANET (TransnetBW & Amprion) of EUGAL1 in 2019
→ Joint implementation of the › 2 GW, 340 km, 40 km under Netze BW Distribution grid
TransnetBW
Energiewende › Pilot project H2 island:
› Construction in Philippsburg to Gas infrastructure can already
October 2020
begin this year deliver climate-friendly supply
13
1 European Gas Pipeline Link; 480 km from the Baltic Sea to the German-Czech border, 16% participation of OntrasSales: E-mobility and broadband – delivering sustainability for
our customers
Electricity and gas sales E-mobility Broadband/Telecommunication
› Only limited impact of COVID-19 due › Due to COVID-19 temporary › COVID-19 as mid-term opportunity
to focus on retail customers reduction in number of charges at due to incresed importance of
public stations telecommunications infrastructure
› Migration of customers to new › Building ambitious strategy
EnPower system › Leading position in DC based combining fibre infrastructure
charging footprint with sophisticated
› Further reduction in product
› Fast–charging locations today: >390 products & services portfolio
portfolio
› Plusnet
› Realise further synergies between EnBW mobility+ is Germanys
brands most popular e-mobility app, › ~25,000 telecommunications
with access to over 100,000 charge business customers
→ State of the art IT systems: first
points › Strong sales force >300 partners
huge powercloud user, highly › PMI process close to completion
efficient → EnBW offers largest network NetCom BW
coverage in DACH1 › ~ 56,000 customers,
October 2020
1 Source:https://www.p3-group.com/pressemitteilung-e-mobility- (7,700 commercial and industrial)
excellence-enbw-mobility-bietet-das-groesste-ladenetz-in-der-dach-
region-und-kunden-zugang-zu-knapp-90-der-verfügbaren- › ~ 15,200 km of fibre optic cable
ladeinfrastruktur/ 14
PMI: Post merger integrationEnBW 2025 Strategy:
Developing into a sustainable and innovative infrastructure partner
From portfolio transformation to growing profitability
Adjusted EBITDA in € bn
Sustainable generation infrastructure System-critical infrastructure
› Increase wind power capacity › Expansion of transmission system by
construction of Suedlink and Ultranet
› Expansion solar energy portfolio in Germany 1.3 1.3
› First projects in post-EEG phase without subsidies
3.2 › Converting distribution grids into smart grids
and preparing them for future demands such
as e-mobility
› Internationalisation into selected foreign markets
› Enabling the transformation of the gas sector
by getting the gas infrastructure H2 ready
0.6
Smart infrastructure for customers
› Expansion of the quick-charging grid and retaining market leadership
› Growth in the telecommunication sector by infrastructure and service
activities
October 2020
› Transferring EnBW’s core competencies to further new and digital
business models based on infrastructure
15Infrastructure investments fit well with EnBW’s business model and
Sustainable Development Goals
Investment volume 2021-2025 Contribution to the UN Sustainable Development Goals
in € bn
80% growth
› Expanding e-mobility
› Energy solutions
› Broadband › Expanding › Grid
renewables expansion
1.8 › Research on › Infrastructure
renewable energy solutions
› Wind farms 4.2
› Solar parks
€12 bn1
› Infrastructure › Renewable
6.0 solutions energies
› IT solutions › E-mobility
› ULTRANET and SuedLink › E-mobility
› Expansion and upgrading
distribution grid
◼ Sustainable generation infrastructure
◼ System-critical infrastructure
October 2020
◼ Smart infrastructure for customers
1 Rounded figure 16Strong sustainability ratings based on EnBW’s non-financial goals
and integrated reporting
Corporate sustainability ratings Transformation of our generation portfolio
2012 2020 2025
2019 2019 2019
Top 10% Top 24% Top 25% 19%
(“Multi Utilities” sector globally) (“Utilities” sector globally) (“Electric Utilities” sector globally) 40%
50%
B- AA B
Renewable energies
Prime Status Leader Management Thermal power plants
Non-financial key performance indicators
Active engagement to promote disclosure and raise
KPI 2019 Target 2025 awareness on relevant sustainability topics
Installed output of RE in GW and › Technical Expert Group on Sustainable Finance (TEG)
the share of the generation capacity 4.4/31.8 7.5 to 8.0 / > 50
accounted for by RE › Task Force on Climate Related Financial Disclosures (TCFD)
CO2 intensity -10 to -20% › Sustainable Finance Committee
419
(reference year 2020)
› International Integrated Reporting Council (IIRC)
Occupational safety
LTIF for companies controlled by the Group 2 2.1 2.1 Promote sustainable action in all business segments
LTIF overall 3 3.8 3.5 › Integrated Reporting since 2014
October 2020
Supply reliability › Green Bond Impact Reporting since 2018
15 < 20
SAIDI (electricity) in min./year
17Financial profile and financial targets are focused on
credit investors’ needs
Financial profile Key performance indicator used to manage our credit metrics
Internal Financing Capability:
Until
› Solid investment grade ratings 2020 Retained cash flow in relation to net cash
investments
› Diversified and well-established access to capital markets
› Well-balanced financing profile From Debt Repayment Potential:
2021 RCF / Net debt1
› Subordinated capital and partnership models where
necessary
Separate management of financing needs for pension and
› Stable government-related shareholder structure nuclear obligations
› Dividend policy with a payout ratio of 40% to 60% of Group Asset Liability Management Model in place since 2003
Impact on Operating Cash Flow limited to €300 m p.a.2
net profit
Timely coverage of nuclear and pension obligations by
financial assets
October 2020
1 To ensure EnBW's rating target is met, the target value is reviewed annually in line with the requirements of the rating agencies.
2 Adjusted for inflation 18EnBW ideally positioned to implement sustainable strategy and
become climate-neutral
Largest integrated utility in Germany with a high share of low-risk business
EnBW proactively drives the Energiewende in Germany
Expansion of sustainable generation infrastructure
Clear implementation path to climate neutrality by 2035
Financial profile geared towards controlled growth
October 2020
19EnBW IR contacts
Ingo Peter Voigt Peter Berlin
Head of Finance, Director
M&A and Investor Relations Capital Markets
+49 721 – 63 14 375 +49 721 – 63 12 844
investor.relations@enbw.com
Julia von Wietersheim Lea Gantz Regina Martin
Senior Manager Manager Manager
Investor Relations Investor Relations Investor Relations
+49 721 – 63 12 060 +49 721 – 63 13 646 +49 721 – 63 13 613
October 2020
20Disclaimer
Unless indicated otherwise, all data contained hereinafter refers the context, but may also be identified by the use of the words
to the EnBW group and is calculated according to IFRS. “may”, “will”, “should”, “plans”, “intends”, “expects”, “believes”,
“assumes”, “forecasts”, “potentially” or “continued” and similar
No offer or investment recommendation expressions.
This presentation has been prepared for information purposes By nature, future-oriented statements are subject to risks and
only. It does not constitute an offer, an invitation or a uncertainties that cannot be controlled or accurately predicted by
recommendation to purchase or sell securities issued by EnBW EnBW. Actual events, future results, the financial position,
Energie Baden-Württemberg AG (EnBW), a company of the development or performance of EnBW and the companies of the
EnBW group or any other company. This presentation does not EnBW group may therefore diverge considerably from the future-
constitute a request, instruction or recommendation to vote or oriented statements made in this presentation. Therefore it
give consent. All descriptions, examples and calculations are cannot be guaranteed nor can any liability be assumed otherwise
included in this presentation for illustration purposes only. that these future-oriented statements will prove complete,
correct or precise or that expected and forecast results will
Future-oriented statements actually occur in the future.
This presentation contains future-oriented statements that are
based on current assumptions, plans, estimates and forecasts of No obligation to update the information
the management of EnBW. Such future-oriented statements are EnBW assumes no obligation of any kind to update the
therefore only valid at the time at which they are published for information contained in this presentation or to adjust or update
the first time. Future-oriented statements are indicated by future-oriented statements to future events or developments.
October 2020
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