RWE AG

Thank you, and good afternoon, ladies and gentlemen. Thanks for joining on the RWE Conference Call on Full Year 2024.

Our CEO, Markus Krebber; and our CFO, Michael Muller, will first guide you through our presentation and then we'll start our Q&A session. And with this, I hand over to you, Marcus.

Yeah. Thank you, Thomas.

And a warm welcome to everyone. Despite some headwinds from a sharp decline in European commodity prices at the beginning of '24, we delivered on our promises.

Our robust business portfolio has enabled us to put in a strong operational and financial performance. And we have proven our ability to debt quickly and reallocate capital to our shareholders by introducing a €1.5 billion share buyback program in Q4 of last year.

While the market fundamentals for power demand are promising and significant investments in additional power generation capacity are needed in all our core markets, we are experiencing higher uncertainty in the investment environment. We will therefore be even more cautious with regards to additional investment commitments.

We will target the leverage ratio to be at the conservative end of our range to maintain a strong balance sheet in more uncertain and volatile times. We have increased our return requirements across all technologies and markets.

And we will apply stricter investment criteria, especially in the US. Consequently, we have significantly reduced our 2030 investment program.

For the years '25 to 2030, we have cut our planned investments by 25%, or €10 billion euro, compared to our Capital Markets Day 2023. Part of our CapEx optimization is an active sell down and partnering strategy for our offshore portfolio to reduce the burden from capital employed under construction.

With 12.5 gigawatt projects under construction across all technologies, our committed net cash investments currently stand at €13 billion. These projects will deliver attractive returns.

While our planned investments in '25 are fully committed, we have a high degree of flexibility in our capital allocation from '26 onwards. Our financial targets are confirmed.

We expect EPS to grow from '25 to '27 at a CAGR of 18% reaching €3 per share. We also confirm our long-term target of €4 adjusted earnings per share in 2030.

We confirm our increased dividend for 2024 and target another increase by $0.10 to €1.2 per share for 2025, and our current share buyback program of €1.5 billion runs until Q2 '26. Let us briefly look back at 2024.

We have delivered a strong financial and operational performance on the back of the robustness of our integrated generation portfolio. Adjusted EBITDA stood at €5.7 billion and exceeded the midpoint of our guidance range.

Adjusted earnings per share stood at €3.1, also clearly exceeding the guidance midpoint. At the same time, we have made progress in decarbonization.

In '24, our CO2 emissions dropped by another 13% compared to the prior year. Over the last 12 months we closed six lignite power plants with a total capacity of 2.4 gigawatt and we have converted our Dutch plant Amer to run on 100% biomass.

After a thorough review process in December, the Science Based Target initiative confirmed that RWE's climate targets to reduce its emissions are in line with the 1.5-degree pathway. Given the recent market developments, we have updated our capital allocation plans until 2030.

On the one hand, the power sector continues to show strong fundamentals in Europe and the US. Power demand is expected to increase significantly, driven by general electrification and the need for additional data centers to fuel research in artificial intelligence.

Power generation from renewables in combination with batteries and the backup from gas is set to deliver the necessary additional supply. Significant investments are needed in renewables, batteries and gas generation in all our core markets.

However, for massive investments a stable and reliable investment framework is key and unfortunately here we experience much higher uncertainties. Questions over the energy policy direction in the US and overall geopolitical tension have potential implications for international trade.

We need to reflect this environment on our future investment decisions, and therefore, we now take a more cautious approach. We have increased our return targets.

We have introduced stricter investment criteria, especially in the US. We will maintain our strong balance sheet in the current environment and target the more conservative end of our leverage range.

Consequently, we have adjusted our 2030 investment program and reduced planned net investments by around 25% or €10 billion. In the period '25 to '30, we now plan to invest €35 billion net.

Part of our optimized capital allocation is an active portfolio management of our offshore wind business. Here we also aim to reduce the burden from capital employed for projects under construction.

We follow a systematic approach. We look at projects in all three phases of either development, construction or commercial operation.

Depending on the risk and capital intensity, we decide about the optimal timing of farming down a project and the respective size. In some cases, we see value in keeping the project majority in other to deconsolidate and allow for project finance respectively.

Page seven shows that we have already implemented and what we plan to do. We have successfully farmed down a minority stake in our 3-gigawatt UK Dogger Bank South project to Masdar with the goal to partner early and reduce capital needs on our balance sheet.

And we have partnered with TotalEnergies for our 800-megawatt OranjeWind offshore project in the Netherlands as well as for our 4-gigawatt Windbostel development project off the German coast, and we will do more. We plan to further farm down stakes of our projects under construction.

We are well advanced with the sell downs of Thor and Nordseecluster and expect to be able to make a positive announcement shortly. For the Norfolk portfolio, we plan to farm down prior to FID as well as project finance after a CFD is secured.

And finally, we will farm down 49% stake in our highly attractive project Sofia which will be commissioned next year. Under the new investment plan, we expect net cash investment of around €19 billion from '25 to '27.

As one should expect, for the current year, our net investments are committed. From '26 onwards, the share of uncommitted investments will increase significantly.

This gives us a high degree of flexibility in our capital allocation. Executing our outright farm downs of Sofia and Norfolk will increase flexibility further compared to what is indicated on page eight.

Further share buybacks are part of any capital allocation consideration going forward. We will decide on the optimal capital allocation for the flexible part early next year when we expect clarity on future US and German investments.

Let's now take a closer look at our running investment program on page nine. Currently we have 12.5 gigawatt of capacity under construction, well balanced across technologies and regions.

For the investment decisions taken, we have achieved an average IRR of 8.3 at FID, clearly exceeding our previous 8% target. We also actively risk management our construction projects.

All of our offshore and onshore wind projects are on time and on budget, and we continuously reduce our merchant offshore exposure by locking in attractive offtakes. For our Nordseecluster offshore wind projects, we have already secured the first 400 megawatts.

We have signed a PPA with Tesla to supply clean electricity from a Pan European wind portfolio including 100-megawatt from Nordseecluster. In addition, an agreement has been signed with TotalEnergies to supply 30,000 metric tons of green hydrogen per year for its refinery in Leuna from 2030.

The hydrogen will be producing our 300-megawatt electrolyzer currently under construction in Lingen, planning to use renewable electricity from our Nordseecluster offshore wind farm. With that we have not only implicitly hedged 300-megawatt of offshore wind, but also contracted our H2 production from the electrolyzer investment.

The supply chain for our US onshore wind project is largely derisked. Equipment for projects under construction is secured, thanks to our well-established domestic supplier relations.

We see only very limited tariffing risk. With all relevant permits in place, we don't have risk from federal permitting.

Across our whole onshore wind and PV construction portfolio, more than 95% have a secured offtake. For all future investment decisions, we have increased our return requirements.

We have lifted the spread over WACC by 50 basis points to a new range of 150 to 350. Accordingly, our new average target IRR will be above 8.5%.

And we have introduced very strict requirements for US investments given the current market environment. We will only bring projects to FID that have all federal permits in place where all relevant tariff risk is mitigated, the offtake is secured and tax credits are safe harbor.

Despite the discussed changes in the market environment and our reduced investment plans, we are set to deliver our earnings targets. We confirm our '27 and 2030 adjusted EPS targets which we set out back in our Capital Markets Day in '23.

Our strong existing portfolio, attractive returns from our committed investments and the flexibility in our capital allocation going forward will deliver an adjusted earnings per share CAGR of 18% from '25 to '27. We offer attractive midterm shareholder returns with a current dividend yield of close to 4% and the target to increase the dividend by 5% to 10% per annum, through bottom line earnings growth with an 18% EPS CAGR to '27 and with our existing share buyback program of €1.5 billion which runs until Q2 '26.

With dividends and the share buyback program, we will distribute almost €4 billion in capital to shareholders until '27. Let me summarize.

RWE is a highly attractive investment with a significant upside to its current valuation. We have a strong track record of operational and financial performance.

In the last five years we have outperformed our guidance every year. Our committed investments will deliver attractive returns, and we have a clear focus on capital allocation discipline with high flexibility from '26 onwards.

We have clear visibility on our EPS growth and have confirmed our mid and long-term EPS targets for '27 and '30. And finally, we have a highly attractive shareholder remuneration through continuous dividend growth and our current share buyback program will continue until next year.

And with that I hand over to Michael.

Yeah. Thanks Markus.

And also, good afternoon from my side. Let's first take a closer look at the financials for 2024.

We've delivered a strong financial performance in 2024 and exceeded our expectations from November. Adjusted EBITDA stood at €5.7 billion, thanks to its strong performance in our Flexible Generation and Supply & Trading businesses.

Depreciation was minus €2.1 billion due to a one-off effect on US assets that were commissioned prior to the RV E.ON assets swap. Our adjusted financial results improved due to lower tax, interest and interest provisions.

Additionally, interest during construction had a positive effect. At the bottom line, adjusted EPS exceeded the midpoint of the guidance range.

2025 will be the earnings trough as earnings in flexible generation and trading normalize. From '25 to '27, earnings will grow on the back of all investments.

For offshore wind, we expect 2025 EBITDA to be in the range of €1.3 billion to €1.7 billion which is comparable to '24. From 2025 to '27, the offshore EBITDA CAGR amounts to 24% driven by the commissioning of new assets.

All our projects under construction are well underway, on time and on budget. The most advanced project is Sofia.

We expect COD in the second half of 2026. To date, more than half of the offshore foundations have been installed.

The offshore converter station, onshore substation and the onshore and offshore export cables are in place. Last week we saw the arrival of the turbine installation vessel which will start installation shortly.

In addition, the first 150 recyclable plates have been manufactured and are ready for installation. We expect the first-generation in revenues later this year.

After commissioning, the project will benefit from a 15-year inflation linked CFD. In addition, our Nordseecluster project in Germany is well underway and we have signed all major supplier contracts.

The fabrication of foundations and substations is progressing well and first offshore works to prepare for the installation of the foundations have started. We intend to bring the project online in 2027.

Our 1.1-gigawatt Danish offshore project Thor is also progressing as planned. Onshore construction works are well underway and 50% of the foundations have already been delivered to Eemshaven port.

They will be installed this summer. We expect to commission the project in 2027.

2027 EBITDA is also driven by the effect from lease accounting of the long-term charter of installation vessels. At EBIT level, this effect is neutral.

Our guidance does not include any book gains. Let's now turn to onshore wind and solar.

The increase in our '25 earnings is driven by organic growth. We expect adjusted EBITDA to be at €1.65 billion to €2.15 billion, and we expect further growth in the coming years.

2027 EBITDA will range between €2.5 billion and €3 billion. The implied annual growth rate stands at 20%.

The key drivers for the development from 2025 to '27 are growth from our existing asset base already under construction, and we also expect earnings from projects that are not yet under construction. These FIDs are, of course, subject to our strict investment criteria, increased return requirements and depend on our capital allocation.

Lower power prices will partly counteract the earnings growth. Similar to our offshore guidance, we did not include book gains into our guidance for onshore solar.

Over the past few years, our flexible generation business benefited from high power prices and volatility. For the future, we assume normalized levels for both drivers.

2025 adjusted EBITDA is expected to range between €1 billion and €1.4 billion in line with the midterm average we guided a year ago. For the Flexible Generation segment, we have introduced a EBITDA earnings floor.

The earnings floor consists of capacity payments and regulated incomes as well as margins that we have already secured or that are very certain. For 2025, the EBITDA floor amounts to €900 million.

In 2027, adjusted EBITDA will range between €1.1 billion and €1.6 billion. This implies an annual growth rate of 6% from 2025 to '27, driven in particular by higher capacity payments in the UK and the commissioning of battery projects in Germany.

However, our new EBITDA target is lower than expectation at the CMD due to lower margins and lower investments. The 2027 EBITDA floor stands at €1 billion, driven by higher capacity and regulated payments.

Let me highlight that these secured payments are set to continue for longer. Just last week we secured more than 6.4 gigawatt in the UK T-4 capacity auction for the delivery year starting October 2028.

This will provide us with an income of roughly £400 million plus inflation. In 2024, our existing business generated an adjusted operating cash flow of €5.9 billion.

Despite lower EBITDA in '25, the business will continue to deliver strong cash flows going forward. For the coming years, we expect an adjusted operating cash flow of €5 billion on average.

This is driven by strong cash contribution from our growing core business. The adjusted operating cash flow also includes the cash flow from our phaseout business as well as cash financial result and cash taxes.

Over the period from 2025 to '27, we also expect positive effects from working capital. In the current market environment, we will maintain our strong balance sheet.

We will, therefore, target the more conservative end of our 3.0 to 3.5 leverage range. Our net to adjusted EBITDA leverage factor at the end of '24 stood at 2.0.

For 2025, we will get closer to 3.0. And we will maintain our solid investment rating of Baa2 from Moody's and BBB+ from Fitch.

Let me summarize. We have delivered a strong operational and financial performance in 2024 with adjusted EBITDA and net income, both exceeding the midpoint of the guidance range.

This was driven by a robust portfolio and in particular by the strong performance of Flexible Generation and Supply & Trading, with high visibility on our earnings growth in each segment until 2027. On the back of our robust portfolio, we will generate €5 billion cash on average over the years 2025 to '27.

And we will maintain our strong balance sheet and solid investment grade rating. And with that, let me hand back to Thomas for Q&A.

Thank you, Michael. And with that we start our Q&A process.

Operator, please kick it off.

Yeah. Good afternoon, Peter Bisztyga here.

So two questions if I may. First one on this 20 gigawatts of CCGT that the German or incoming German government is talking about, could you scope out for us, how much of that could be RWE installations?

What sort of CapEx are we talking about here potentially for you? How quickly could you turn around and begin construction?

And what sort of framework do you need from the government to do that investment, please? And then secondly, on data centers, digitization is part of, again, the new German coalition strategy.

Wondering if you could talk about how you see the opportunity to monetize data centers where you are in kind of discussions about using your land with connections to site data centers. That would be very helpful.

Thank you.

Yeah. Thank you, Peter.

Let me start with the first one, the 20 gigawatts. I think we have a very good position to get -- if we get that framework.

And there is a clear willingness of the future coalition to get that done very fast and very pragmatic. So I would expect probably it's being simple gas plant and no additional burden on decarbonization.

So it depends on, I mean, how successful we are. But I think we are very well advanced with planning.

We have great sites. We have precontracts with suppliers, so we have reserved turbine slots.

And our current market share in the German market is 20%. So maybe that gives you an indication.

But in the end, the only invest if we have very good returns, especially for that business. I would expect very attractive business cases because you have not so much competition.

On data centers, we have three angles to that. One is we sell significant PPA volumes to data center providers and it's in the gigawatts in the last year, and we continue that, so seeing good demand and ongoing discussions for further PPAs.

Second is if we have land which we don't want to use in future where we don't see good opportunities for us to develop batteries or gas backup or whatever, we can sell it. And the third angle is to go for more sophisticated solutions to use our existing infrastructure where we make them available, maybe back them up with 24x7 power supply and green PPAs.

But we would not sell the land there, we would lease it long-term, because we see it as an attractive opportunity for the future. And I wouldn't be surprised if you see more announcement on all three angles this year, but we will not promise anything.

We will tell you about the delivery.

Okay. Thank you very much.

Thanks, Peter.

Afternoon. Hi.

Thank you for taking my questions. I have two.

The first one is quite specific on earnings. I understand, Michael, that the '27 EPS does not include any asset rotation gain.

Am I right in saying that in the 2023 CMD for 2027 you were assuming like €250 million asset rotation gains. So, it's like $0.30 of EPS.

So, what I'm trying to understand is one, is this correct? And two, it seems an underlying upgrade of 10% versus the previous plan like-for-like without -- excluding assets rotation.

So where is it coming from? Is it just the buyback or anything else that you can maybe discuss below the EBITDA line?

The second question is on capital allocation. You just recently announced a buyback for the first time in your history, so I was not expecting you to just already tell us something today.

However, can you be if possible a bit more specific of where you rank your share buyback versus any opportunity, for instance, the Germany infrastructure plan. Is your balance sheet capable of coping with incremental investment and/or buyback, and/or is there a share price at which you would rank share buyback at the top.

I don't know if the shares are below €35. I mean definitely going to expand the buyback and the shares are higher we need to think about it.

Is that how you're thinking about it or what's your logic, please? Thank you so much.

Yeah, Alberto. I just start with the first one.

So, your assumption is right. So, the CMD initially had like €300 million of book gains incorporated in the numbers which are not anymore incorporated now.

On the share buyback question, Alberto, so let me you ask a couple of questions. The one was what is the balance sheet good for in terms of additional investments?

I mean, first, in this more unstable environment we said we're going to go to the conservative end of our leverage target range. Of course, if the situation improves, we can go for higher leverage again, but not for the time being.

I mean that may be a decision for the future. Then if you look at this chart where we say how much uncommitted capital CapEx we have until -- from '26 onwards, this is significant and it does not yet include the planned farm downs from Sofia and the Norfolk project.

So, if we are successful on that next year, it will be even more flexibility and headroom for flexible capital allocation decisions from '26 onwards. Now what is the metric?

Of course, we don't have a formula, but you already touched up on the relevant questions. We need to achieve higher returns than in the current market environment.

If we don't achieve higher returns for new capital commitments then we will return the capital to the shareholders. Is there a specific share price?

No, but it's part of the consideration. But maybe to give you a flavor if you would need to take that decision in the current market environment, sitting now at 26 at the flexibility, current market environment we would go for an additional share buyback.

That's very clear. Thank you.

Thanks, Alberto.

Thank you for taking my questions. I had two.

Firstly, just on the 2030 EPS. I'm just wondering how you are confident about meeting the €4 per share.

Although, incrementally CapEx is lower by €8.5 billion in today's announcement. I'm already assuming the one and a half before in the nine-month stage with the buyback.

So that's the first question. So, what are the levers to still keep the EPS for 2030?

And second question is for the subsidy free offshore wind projects, Thor and Nordseecluster you do mention you would be farming it down and maybe something imminently in '25. Could I check whether your partners are therefore happy to take the PPA risk, or are you signaling that you could be signing even more PPAs to make this farm down more attractive?

If you could just talk about how that would work and maybe it's more risk sharing rather than gains for those projects. Thank you.

So, Deepa, I take the questions that first start with the 2030 EPS. I mean, first of all, one lever clearly is also our higher return expectations which also should lead to higher EPS.

The other one is -- I mean, effectively you can balance between investments and a combination of share buybacks as we said. And so, you either benefit on the side that you simply have less shares and then obviously also the less you invest, the less you then have, say, depreciation, financing costs.

And probably we would also then have to look at the platform and lower some of the P&L direct. So that would have an impact.

Or the other direction, if the environment turns attractive, then you would actually stick to the investments and achieve the return by attractive investments. It's ultimately that balance.

And given that it's 2030, we do clearly see sufficient flexibility to steer towards that number. Second question on Thor and Nordseecluster, I mean, please excuse that we can't reveal any details yet.

So, there are conversations ongoing and once we have more clarity, we will also obviously communicate to you the deal in more depth.

Thank you.

Thanks, Deepa.

Yes, hi. Thank you.

Two questions from my side. My first question is just on the €9 billion CapEx reduction program.

Could you split that between let's say gross CapEx reduction and how much of that is farm downs and disposals? And I guess a subpart to that.

Is there any sense you can say about how much -- so how much of those sort of farm downs disposal proceeds do you expect to 2027? My second question is just in terms of AR7 and the potential CCGTs in Germany.

If those investments were to come through, would they be -- would they make a meaningful difference to the CapEx profile to 2027 or would that be beyond that period? Thank you.

Ahmed, I take the two questions. One on the CapEx, we still net CapEx and you can already see where we going to invest less.

One is what we already announced in the last call, US offshore. We do not expect any US offshore investments in the planned period.

We will also significantly lower our hydrogen investments already announced in the last call, and we also see that going forward. We also expect significant lower CapEx at least in the next years, not additional committed CapEx in the next years in the US before we have clarity about energy policy, environment, permits and tariff risks.

And we also expect significant less net offshore CapEx. This partly comes from the announced farm downs, but also given the environment we see you have followed the auction in Denmark, in the Netherlands there is no willingness to take additional merchant risk in the current environment.

So, we also expect those investments to be lower. And the second part of the question I translated into, I mean, is what we announced as capital -- a flexible capital location sufficient to even go for a very successful AR7 and a good investment framework in the German gas plant build out.

And the answer is yes. So that would fit into the capital -- flexible capital location we have announced.

Thank you.

Thank you, Ahmed.

Hi. Wanda Serwinowska, UBS.

Two questions from me. One is in the UK mostly.

Can you share your thoughts on the wake and blockage effects? There are ongoing disputes between the developers and how does it impact your LCOE assumptions.

And when we look at the UK offshore wind generation year-to-date, it seems that Triton Ore [ph], for example, is down 30% or 40% year-to-date versus last year. Is it the low wind speed or what is happening in the UK?

And the second question is on the German policy. There's a lot of noise about the climate fund, infra funds, infrastructure fund and so on.

But how RWE can benefit from the new energy policy apart from the CCGT, no longer hydrogen ready. Thanks.

Wanda, let me start with the last question first. So, I think the clear positive sign is that the future of the next German government has getting back the economy on track as one of the key pillars of their future agenda.

And we can expect significant spending from the government itself by loosening the debt break. And we can expect the government to support energy intensive industry to stay competitive in the international market.

Both is clear positive signal for future, energy and power demand in Germany where we are the largest beneficiary. And the third one is the clear intention to solve the security of supply problems with a build out plan of 20 gigawatt of gas.

Here I think no government money is actually needed, we just need a good investment framework and then private money will do it. But I think the first -- so I don't expect any, let's say, competition from the infrastructure funds to our potential investments, but I think the overall business environments should be much better given the significant spending from the German government, willingness to support energy intensive industries and, of course, all the other methods which have been announced which make our product cheaper.

So, lowering taxes on power to the bare minimum and supporting grid charges, things like that. The other one, on the wake and blockage, I take that -- I think Michael takes a specific one on the asset.

I think there's a lot of noise now and in the specific, let's say renewable releases, you can see it almost every day. It's overblown to be really.

It's for us not a big topic. I mean, we know the potential wake and blockage effect.

We have factored them in. It's not a new thing.

I think we are definitely with all our assessment, what we see also when we talk with partners on the conservative end of that. I would say the current noise you see, especially because the legal ground, how to sort it out and how to deal with it, is unclear.

And that is why everybody is positioning himself now. But for our investments, for our existing assets, we think we know what can happen worst case.

And it is factored.

Yeah. On the wind [ph], the whole wind.

So also Q4 has seen low winds and indeed also the first quarter has started with lower wind. So that's a fair assessment.

Thank you. Can I just one -- can I have one follow up on the German politics?

Marcus, I think the CDU and SPD, they were thinking about bringing the assets from the strategic reserve or from the reserve capacity back to the merchant market to lower the power price. Do you think it's likely to happen?

And is there anything other people can bring on the table?

This is now political speculation where I typically refuse to enter the discussion. But I want to be very clear.

I think this is not a great idea and I've made that also clear to the decision makers. Because on the surface, it sounds great bringing back these plans, but you're going to create significant negative effects because you would immediately dampen the investment appetite to go for batteries.

But batteries are also needed not only for the high price, it also needed for the negative prices to carry the power into the hours where it is needed. Second, you would give an incentive to close even more plants.

That's definitely not wanted by the government, because we could even think about closing our plants. You get a guaranteed cost coverage and then you can put them into the market and earn additional margin.

I think bad idea. And last, bad incentive from that idea is you disincentivize long-term power purchase agreements because everybody who is a long-term contract doesn't suffer from the high prices.

So only those who speculate short term suffer from the prices. And I think that incentive is also not wanted.

So, in a nutshell, I would be very surprised if that idea comes to life.

Thanks a lot.

Thanks, Wanda.

First question for me, please, is you've already stipulated that part of the reason for cutting the €10 billion or being €10 billion lower, sorry -- in your net investments is due to expectations in the US. I guess the question I have is, if you do now more investment in the US onshore be more what's committed in 2025 and '26 and under a reasonable assumption for what you a reasonable outcome for what you might expect from the German gas auction and the level of investment you think you might require there and any investment you might require under AR7 under a reasonable outcome.

Do you still think under that scenario you still have balance sheet capacity to do buybacks at least to the same size that you announced the €1.5 billion in '26 and '27? Just trying to get a sense of if the reasonable outcome of the investments you expect if you think you would still have balance sheet capacity to do buybacks if you wish to.

And then just on the AR7, have you got any indication on the potential size of that? And when we might expect to hear any views when we might further details on the AR7 auction and parameters in it?

Thank you.

Yeah. Olly, maybe on the biggest part the Norfolk projects, what we said today is we want to farm down before FID, so we will not commit to further CapEx without having farmed it down.

And we want to farm down to 50% and deconsolidate so that at CfD award we can go for project finance. That gives you already an indication that the net CapEx from that is not very significant in our net CapEx.

On the gas plan in the US, I mean this is now speculation how much you want to do. I mean, we're going to answer the question on capital location given the drivers we have said and one part of it is also share price and the returns we can expect.

We will give that answer in -0- when it's due when we have the capital allocation flexibility which is in '26. So, we decided later this year, early next year.

And when you expect to hear from when AR7 process potentially the potential…?

Sorry, yeah, I missed that one. So, I think the consolidation is in still swing -- still full swing.

The Ministry is discussing with all relevant parties. I think they're going to come to a conclusion early and from all indications I get, they don't want to push the auction out to the last quarter.

So, we're probably going to see it in Q3, so we should get clarity maybe before the summer break.

Thanks.

Thanks, Olly.

Hi. Thanks very much for taking my question.

So, a couple of relatively fundamental ones. The first one's on something that we don't talk about that much anymore in the sector of -- my observation, which is installed costs for renewables.

What are you seeing at the moment? The sort of last time we were focused on this installed costs, I'm thinking mainly for onshore and offshore wind had sort of plateaued and stabilized and we were less worried about inflation.

You sort of mentioned the Danish and the Dutch auctions. Developers not wanting to take merchant price risk.

But a big component this is obviously are installed costs going to come down and might that make those auctions more likely to succeed in the future? So, interested to hear your views on what installed costs are doing, both turbine prices and the balance of spend.

That's the first one. And then the second one on new build gas, the supply chain.

What's your take on the supply chain here? So, you sort of hear from other utilities, both UK and US, that supply chain is quite stretched already.

New build gas is talk of some of the components interrelating with defense procurement as well. Is there a risk that it takes longer and is more expensive to build the 20 gigawatts of CCGTs than we currently expect?

And what's the risk of having another sort of non-productive capital employed situation like we've had in offshore wind emerging CCGTs if they're taking longer to build or you're struggling to get hold of critical components. Thanks.

So, Harry, what we see currently on the cost side when we buy, it is plateauing. It's definitely not going up further.

Looking into the future, I would even expect an ease on the supply chain because given the slowdown in US and actually a stop of US offshore wind. So, overall, I would expect on the wind side that the supply situation should get a bit easier.

But I think that will not result into developers willing to take significant more merchant risk. We have always said the merchant risk you can take is depending on the market size and the depth of the PPA market.

So, we are good with the gigawatt in Denmark and the Netherlands, but we are not willing to do more and with Germany, we probably also have already reached the ceiling of what we are willing to take and we also constantly farm down. So, overall, in this uncertain environment, what I hear in the market, and we have the same view, there is very, very little appetite for merchant risk -- or more merchant risk that has been auctioned in offshore.

And I think policymakers, and that's what we are telling them, they need to adapt, it needs to move to -- I mean I think inflation adjusted double sided CfD model to get the investments. You would also lower the investment returns.

And I think especially when you now move to the UK, they are heading the right direction because part of the consultation is even to extend the CfD period from 15 to 25 years. And having a 25 inflation adjusted government guaranteed income stream is, of course, much better and would lower cost for consumers as well because you can go for higher leverage.

On the new gas side, it's also a very, very interesting situation. I mean what I heard at CERAWeek last week from the big suppliers is that you want to buy a gas turbine, you probably have a delivery date now '28.

So, it actually fits a bit with the German schedule if you are fast. But as I already said to a previous question, we have reserved certain products slots.

So, I think for what we want to buy -- for what we want to build, we have the supply chain secured. And I think that's more on a side note, if we would release these production slots, we could even make a bargain today.

Okay. Thank you.

That's quite interesting. Effectively you've got a competitive advantage with your build slots.

And do you think that's something that your competitors in the potential new build CCGT market have? Or do you think that's something that you could use to basically generate higher returns?

Sounds like you could, right?

That's speculation. But I think we would not give away that benefit.

That is clear. I mean benefit of actively managing the supply chain, we have done the same in offshore in certain cases, as you know, with securing equipment there.

We want to keep that benefit for us. I mean, that is clear.

Yeah. Makes sense.

All right. Thank you very much.

Thank you. Thank you for taking our questions.

At least a few left. Firstly, I haven't heard the word Amprion mentioned in any of the materials are in the call yet.

Last we heard, you started a sales process to sell the 25.1% stake and I think there was some media articles that was just receiving or had received bids, and so maybe just ask for an update. And is that capital, shall we say, spoken for in the plan you've presented today or is that, shall we say, unspoken for capital that could be used for additional distribution or commit to some of these other CapEx plans which might firm up in due course?

That's the first question. The second one is, as we look at 2027 guidance and accepting, there's obviously, same EPS and the cap gains has changed.

Within the EBITDA range, there's two quite significant changes. One is on FlexGen where HPG has gone down around about 400 million delta for both the top and the bottom end whilst offshore wind has gone up around 200.

Could you maybe give a bit of color as to what's going on there? Thank you.

Yeah. Rob, let me take the first one.

Michael will talk about the earnings profile. On Amprion, we have always said given the significant capital needs they have, we're going to explore all options to find solutions to that, because we think it shouldn't be RWE who is investing in the TSO business here, but we want to keep the cards close and want to keep all options.

So, we are in the market. Yes, that is correct, but we are in the process of exploring what is the best solution for that.

That could also end into partly selling it down. Doesn't need to be, but could be.

We are definitely -- we don't want to put investments into that anymore, but we want to find solutions for that. If we partly sell it down and get proceeds, these proceeds are not yet included in the net CapEx we have displayed in the presentation.

Yeah. Rob, on EBITDA '27, fair observation.

FlexGen indeed is lower on the back of lower expected prices in flexible generation. In offshore, there are basically three main drivers.

One is at the CMD we still assumed OranjeWind to be fully consolidated. That is not anymore the case.

As you know, we have sold it to 50% with TotalEnergies, so that is leading to a lower EBITDA. And on the positive, there are two effects.

One is that's an accounting treatment around our lease ships. So what happens is that the lease itself, since it's capitalized, goes through the EBITDA.

So, there's a positive EBITDA effect, but at the same time the leases lead to a higher depreciation so the positive effect in EBITDA is then compensated fully by high depreciation, so that the EBIT effect is the same as we had it at the Capital Markets Day. And the third positive effect -- the third effect is a positive effect is from Thor, where we now take those lease payments which that are paid by a kind of CfD mechanism in the first one and two years.

And what we have done now, we will distribute them as a lease payment over the entire life cycle of the project and that leads to a slightly higher EBITDA effect in '27 and '28 in Thor.

That's very clear. Thank you very much.

So fundamentally nothing has changed.

Exactly. That's the key message.

Got it, got it. I'm sorry, Marcus, whilst you're in the mood for follow ups, I mean just on the first one, appreciating all options open on the TSO situation.

I mean if you were to receive proceeds, could that go to higher distributions to shareholders in terms of revisiting the share buyback and/or dividend policy?

We don't want that direct connection from €1 going to that or that -- I mean, but as we said, the proceeds are not included in, let's say, the flexible capital allocation part we have. So, if we get some, it would increase that.

What we do with it, needs to be decided the moment we have it and decision needs to be taken, but no automatism.

Fair enough. I will turn it over.

Thanks very much.

Thanks, Rob.

Yes. Hello, everyone and thank you for taking my question.

Maybe coming a little bit more towards the end of the year, a qualitative one. How conservative do you think your plan is now?

I mean, for some of your peers we have gone through multiple iterations of downgrades. For you, on the very positive side, there don't seem to be any execution issues.

I mean, your offshore execution seems to go very well and the PPA signing you seem quite confident. But on the future CapEx, like how confident are you that this is now the conservative plan and we are not looking at further downgrades?

That would be my first question. And the second one, just sort of like one topic we haven't touched upon yet is battery development.

What are your current plans looking like and sort of like what markets are you looking currently at for your battery ambitions? Thank you.

Micheal?

Yeah. So, Meike, I take the first one.

I mean, I think you did a fair summary of the situation. I mean, we didn't have any difficulties with our offshore business.

It's progressing well. And I also laid that out in my speech that on all the current offshore projects we are on budget and on time, so very confident that we'll deliver that.

And having said that, we are very confident that we'll also deliver the plan. I mean, by the way, also if you look at our performance in 2024, beginning of the year, we took a more conservative stance given the commodity price environment.

But you also saw by the end of the year, we turned out to be actually above consensus, which demonstrates also the robustness of our portfolio and the ability to deliver.

On the CapEx plan and the batteries, maybe on the CapEx plan. Whether it's conservative or not.

I think what we want to convey is we're going to be disciplined with CapEx and we are willing. If the environment is not there and the investments are not attractive enough, we're going to reduce.

And we have announced a share buyback in the last call. Now we announced that we go for lower CapEx until 2030 because we see higher risk and require higher returns.

And let me take that opportunity to talk a bit about the market and then I address your battery question. We are actually in a -- let's say, you could call it very interesting, but also contradictory environment.

You have three elements. One is the fundamental growth of the product.

Power is there. You've got to see power demand going up in all markets.

That means you need significant investments. What I also observe is that competition is actually easing.

People are exiting, can talk about big oil or other exiting and we see also some peers struggling under financial stress. But on the other hand, the investment environment is not that you like doing big investments in this environment because you have tariff risk, permitting [ph] risk, energy policy uncertainty.

It's a contradictory environment. But what it means is a company like ours who are able to invest with the balance sheet needs to be very disciplined.

And we're going to urge our teams to push for higher returns. We need to achieve higher returns.

We cannot get them in that market environment. We shouldn't invest.

That's a perfect lead to batteries, which is an investment we like very much in the current environment, also from what we see how they operate in the market and what returns they make. Our key battery markets are Germany, where we have commissioned significant battery capacity in the last week, over 200-megawatt.

We have announced other investments of 600 megawatts. So, we're going to see more battery investments there.

We do battery investments in the UK. And we also colocate battery investments in the US, especially with solar.

And this is an area where we have currently not scaled back our investment plans.

Perfect. Very helpful.

Thank you.

Thanks, Meike.

Hi. Good afternoon, everybody.

I have two questions. So, the first one I wanted to ask you about the implication for the long-term targets of this higher return threshold that you announced.

You gave us a rule of thumb over 10 times multiple contribution of whatever euro you spent on 2030 or as you go, is that the multiple is now lower. So, nine times and this €36 billion which you have remaining to spend will contribute more.

And can you say how much? And then does this -- assuming you get a lower CapEx, does this have an implication for your OpEx?

You build up quite a machine to develop new projects and it seems some of the pipeline may be not meet your threshold, but maybe you can reduce some of the costs. Like we've seen the headline on the US Offshore that you -- is it meaningful or that's not meaningful at all.

Thank you.

Yeah. Piotr, good question.

I mean that is obviously all incorporated into the numbers. So that goes back to the question Deepa asked in the very beginning.

Why are you confident to achieve the 2030 numbers? Obviously, that is exactly the balance you will see.

So, with less investment opportunities obviously would also have an impact on the overall cost structure also in development. So that's very clear.

Okay. Thank you very much.

Yes. Thank you.

Good afternoon. I got two questions as well.

First is on your Supply & Trading business. You're still guiding for €100 million to €500 million in EBITDA.

And given that you've basically exceeded that number quite materially so for so many years now. I'm wondering how to look at that guidance.

I think there was an understanding before that you would try to potentially so keep the trading guidance cautious in order for it to work as an offset if something in the renewables business goes wrong, in which case in a normal environment there's a good chance you keep surpassing that guidance. That would be the first question.

And on the second, trying to understand your slide 18, can I ask on the '25 guidance you give a range of €1 billion to €1.4 billion and a floor of 900. What exactly is the difference between the low end of the range and the yet bit lower floor?

And related to that you are guiding for €1.27 billion, as a floor once again and higher range of €1.1 billion to €1.6 billion including additional expected earnings. Can I just clarify, I think you have been saying your distinction before was existing earnings and earnings from new assets which would indicate investments.

But now you say additional earnings. For example, the two points you're making from capacity payments.

This is an additional income that comes without the CapEx outlay. I suppose while your commissioning of battery projects does have some CapEx to it.

Can I just ask, without spending on expansion in that segment, what would be the range we would be looking for in 2017, if that's possible to say. Thank you.

Yeah. Ingo, let me first start with the Supply & Trading business.

I mean, I can just give the standard answer. I mean, the guidance we give is always based on kind of the long-term earnings expectations that we have in Supply & Trading.

And as we always said, kind of if market conditions are attractive, there is upside to the numbers. But this is kind of the guidance we have done through the last years.

And as you know, the last years have been very attractive in the actuals, but the guidance is kind of this 100 to 500 and nothing has changed with respect to the guidance this year. Second question on Flexible Generation, look, what is the expected outcome of the Flex [ph] segment, that is exactly the guidance range.

So, for '25 we expect 100 to 400 and for '27, we expect [Technical Difficulty]. When we were on the road, people typically asked how can we best model that?

And therefore, we felt maybe it's good to kind of give an earnings floor. And this is really a very conservative assessment.

So, we looked through the margins and really identified those positions that we feel are very certain. And if you go through the different position, it's clearly capacity incomes in Germany and in the UK that have been locked in.

It's also other regulated incomes that we have in the business. It's obviously also hedge margins and it's also those incomes where we are very certain that they will realize the actuals.

And that leads you to the 900. But as you rightly asked, there is a delta and clearly the lower end of what we effectively expect as an outcome is higher because we do believe that also some of the positions that are not fully certain yet they will outturn, at least in the lower range of the guidance.

But having said that, there is also clearly upside, especially in tighter markets. That's why the range is then 1 to 1.4 in '25 and 1.1 to 1.6 in '27.

And the numbers obviously do include the upper range, also those investments that we have taken. So, there are additional battery investments Markus talked about included in the numbers.

Thanks. Michael, can I just ask for the increase in capacity payments in the UK are in the €1 billion floor figure for '27.

They are included in the €1 billion. But if you go from '25 to '27, '25 obviously has already a higher share of hedged income.

That's why even though -- the income from the capacity market is higher than €100 million, but it's actually like €200 million or even a little more, that is the increase in the UK capacity market. But at the same time, you have less margins get hedged and that's why the increase is only €100 million.

But that already gives you an indication that this is really kind of the conservative low end of what it's like. It's a floor.

A very conservative floor.

Thanks very much.

Thanks, Ingo.

Thank you for your patience. And those two I think I guess are for Michael again.

One, I'm a bit surprised that you say no fundamental change at all, because if I'm not mistaken, at the EBITDA you said that you are removing about €300 million from asset rotation gains. But I suspect the lease effect is about 100 to 150, and it's fully eliminated at the EBIT level because the DNA goes up.

So -- that's actually on an underlying basis. Sounds like an upgrade to me.

Am I forgetting something or getting something wrong? That's the first.

The second, please, is when you talk about your three times leverage, you don't seem to be thinking about your E.ON stake, which is €5 billion. Can I ask you if at some point, if E.ON continues to perform very well and RWE is behind isn't -- shouldn't you just basically sell your own stock to buy back your own stock?

But how are you thinking about E.ON more broadly? Because your three times leverage, if I actually adjust for this, which is the monetizable asset, is way lower than that.

So again, am I right? How are you thinking about it?

Thank you so much.

Okay. So, I go for my message on.

Fundamentally nothing has changed. I mean, you're right, €300 million is a change, but that's not just offshore.

So that was part of all the segments. And the other one with the leasing, I mean that's just an accounting treatment.

So, if you look at the EBITDA number of nothing has changed. So this leasing effect is just an accounting effect where it brings a higher EBITDA, but then also higher depreciation.

So that on EBITDA the effect was neutral.

Very clear. So, if you still do deliver €3 EPS, there is an upgrade somewhere above -- below the line, but there is somewhere an upgrade, otherwise it would be much lower EPS.

Yeah.

Thank you.

Alberto, on the E.ON stake, you know that the lignite provisions are not part of our net debt definition, because you have the offsetting E.ON stake against it. So, you sell E.ON, we need to incorporate the provisions into our net debt and that's -- this ring fence approach that we say we're going to pay for the lignite provisions from the state claim we still have where we get annual payments.

They're going to offset part of the negative cash flow of that business and when we start utilizing the provisions, we have the E.ON stake. So, it's kind of a virtual CTA.

It's not a formal one, but it's a virtual one. It's a closed box of financial assets.

E.ON offsetting the lignite provisions.

Thank you and thank you for your patience.

Thanks, Alberto.

Yes, thank you. Thank you for taking the follow up question.

Just one from my side. Marcus, in one of the sort of the responses to the buyback versus CapEx questions, your response seemed to imply to me that you're sort of suggesting that conditions, market conditions will need to improve for you to sort of put that sort of uncommitted CapEx that you show in slide eight to be translated into committed CapEx.

The question is, is there -- are there any sort of specific clearing events in your mind for the next 12 months that will sort of help us -- that will sort of help you make those decisions of sort of moving from the uncommitted flexible to the committed part? Thank you.

I think you have three relevant factors other than the share price, Ahmed. As you rightly pointed out, to move from uncommitted to commit committed CapEx, we want to see the higher returns.

We need to have clear visibility of better returns than today. Second, the uncertainties, the risk part of it.

It's currently very difficult to take investment decisions in parts of our business where you have looming permitting risk, tariff risk and so on. So, if you have a more stable environment and you know you have foresight for the next 12 months, you are more comfortable.

Even if the returns are higher, we are not willing to take significant more risk. That's a bad offset.

And then the third element is the progress on our disposal program. So, we have the plans.

We are very far advanced with two of the disposals where we said you're going to expect -- you can expect an announcement shortly. And we not talk about quarters here, we talk about weeks.

That gives us higher confidence about the headroom and, of course, also how are we -- how successful and when do we deliver the Sofia and the Norfolk farm now, because it would even increase the uncommitted net CapEx.

Understood. Thank you.

Yeah. Two last ones from me, please.

So, firstly on the UK, what's your view on locational pricing? And if the government does decide to go for it, what could be the implications for your assets?

And secondly, any change to your view on the merits of investing in sort of US CCGT? Do you think any interesting opportunities sort of could come up there?

And is there any -- is that an area that you could use some of your flex for? Thanks.

Yeah. Thank you, Peter, for the questions.

On the UK, our general view is, and we have also signed that industry letter, we think in an environment where you need billions of investments into the system to move from one pricing system to another one, it is a bad timing. I have no view what is a better system if you could introduce it overnight.

But it's a question of is this the right timing because you create significant uncertainties if you move from the one price zone into zonal pricing in the next year. So, I think it's a bad idea.

What would it mean for us? I mean, it depends on the details, but maybe two observations.

I mean, one is clearly that the UK government wants to ensure that investments happen. That's why part of the consultation for offshore for the AR7 is also what kind of protection do you need in case we decide for solar pricing.

So, I assume that all renewable investments are immunized against changes in solar pricing. And when you look at the map on the non-renewable assets, you're going to see that all our CCGTs are in the south, so in the probably higher price.

But I don't want to speculate on anything, because fundamental even if you would benefit relatively to others, we think moving now from one system to the other is a huge disruption and it actually risks investment and it shouldn't be done. Now on the US CCGT side, I mean, you see the valuation level of CCGTs in the US.

And I can clearly rule out that here at our side is any plan for any M&A transaction not only for CCGTs, but also no other. So there's no M&A in the cards.

It can't be more clear. Thank you very much, Markus.

Thanks, Peters.

Thank you, operator and thank you everyone for dialing in today. Thank you, Marcus and Michael for your time.

As you know, the IR team is at your disposal anytime, looking forward on the one hand for your questions and secondly to meet many of you during the roadshows that we have scheduled for the coming weeks. Have a great rest of the day.

Bye-bye.