Above average winds in most of continental Europe coupled with higher electricity prices have boosted earnings in Innogy’s renewables segment during the first half of this year, ahead of the likely re-incorporation of the German utility’s green generation business into parent RWE.
Adjusted earnings before interest, taxes, depreciation and amortisation in renewables rose to €415m ($464m) in the first half of 2019, compared to €322m in the same period a year earlier.
Innogy’s renewable generation business together with that of rival E.ON will be bundled under a new RWE, while Innogy’s grids and retail segments are slated to go to a beefed-up E.ON if a complex share and asset swap deal wins final approval by competition authorities – a move expected in September by E.ON.
Wind levels in North-Eastern, Central and much of Southern Europe – regions where most of Innogy’s onshore wind farms are located – during the first half were higher than the long-term average, more than compensating for lower winds in the UK, Ireland and the Netherlands.
That helped the utility’s output from renewable sources to rise to 5.5TWH, from 5.3TWh in the year-ago period.
Rising electricity prices in the UK and Germany also pushed earnings higher, although some 60% of Innogy’s renewables earnings are quasi-regulated due to fixed feed-in tariffs (FITs) in Germany.
A positive contribution to earnings came also from operational improvements of the existing portfolio in part from a bonus for timely, on-budget completion of the Galloper offshore wind farm in the UK and higher earnings at the Belectric project development subsidiary.
“In Renewables, the fact that we extended our scope to international markets right from the outset has paid off,” said chief executive Uwe Tigges.
“We currently have three large-scale projects simultaneously under construction: the Limondale solar plant in Australia, the Triton Knoll offshore project in the UK, and the Scioto Ridge onshore wind farm in the US.”
Earnings were also bolstered by onshore wind farms commissioned in 2018 and 2019 in the UK, Ireland and Italy.
Innogy’s overall adjusted Ebitda fell to €2.14bn during the first half compared to €2.25bn in the same period in 2018, while net profit went down to €488m compared to €662m during the first half of 2018, as lower grids and retail earnings pulled results down.