Germany’s top utility RWE is reducing its investment program for low-carbon energy projects by $10.9 billion (10 billion euros) amid mounting uncertainties about renewable energy policies and profitability.
RWE’s construction projects in renewable energy, totaling more than 12 gigawatts (GW), are progressing as planned, chief executive Markus Krebber said on Thursday in comments to the 2024 financial results.
However, “The company is responding to regulatory uncertainties, constraints in the supply chain, geopolitical risks and higher interest rates,” RWE added.
As a result of higher costs and higher risks, RWE is now raising the required rate of return for new projects from an average of 8% to an average of more than 8.5%.
“As a result of stricter risk management and higher return expectations, RWE will invest less in the coming years than previously planned,” the German electric utility giant said.
The company now guides for a total of $38.1 billion (35 billion euros) of net investment for the period 2025 to 2030, which is about $10.9 billion (10 billion euros) net less than previously planned.
“Given higher uncertainties in the investment environment, we have raised the requirements for future investments. As a result of stricter risk management and higher return expectations, we will invest less than previously planned through to 2030,” CEO Krebber said.
RWE had already warned in November that “Given the results of the US elections, the risks for offshore wind projects have increased. This also affects RWE’s offshore wind project off the east coast of the US, which could be delayed due to outstanding permits.”
RWE also flagged slower-than-expected take-off in the green hydrogen sector in Europe.
“The ramp-up of the hydrogen economy in Europe is also not progressing as quickly as expected. This could delay RWE’s target of building further electrolyser capacity,” the company said in November.
Nevertheless, RWE earlier this month agreed to supply green hydrogen to France’s oil and gas supermajor TotalEnergies in a 15-year deal from 2030, in one of the largest such agreements globally to date.
By Tsvetana Paraskova for Oilprice.com
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