2022 was a great year for Germany’s electricity companies – at least if the import of Russian gas is not part of their business model, as is the case with Uniper. On Tuesday evening, the electricity supplier Eon informed investors that earnings were above expectations. The complete balance sheet figures will not be presented until March, but Eon has already announced that the operating result was probably eight billion euros, exceeding the forecast by a good two percent. In 2021, the people of Düsseldorf had earned a similar amount. The Swedish Vattenfall Group also reported good business on Wednesday. And RWE had already announced two weeks ago that the annual profit was higher than predicted.
However, Eon’s CEO Leonhard Birnbaum emphasizes that his company is not a crisis winner who is benefiting from increased electricity prices: “Except for Isar 2, we no longer have any generation and have to stock up on the market,” he said at an industry event last week. Isar 2 is Eon’s nuclear power plant in Bavaria; it should only run until April. In fact, electricity and gas prices have very different effects on Germany’s energy companies – because they have different business models. For example, Eon earns its money by operating electricity grids and selling electricity and gas to consumers, although the company has to buy this energy itself beforehand. In Germany, Eon has 14 million customers, but no power plant apart from Isar 2.
The fact that the profit was now higher was due, among other things, to the “non-core business segment”, as the statement says. Behind it is Isar 2, the reactor that will soon be mothballed – and here Eon has certainly benefited from the increased electricity prices. However, the fact that profits from operating electricity grids and supplying consumers have increased at the same time has nothing to do with electricity prices. Or just indirectly: The group recently announced that it has won more than a million new customers across Europe since the beginning of the energy crisis. Many of them probably came from suppliers who had gotten into trouble because of the high prices. It should also have helped Eon as a reseller of gas that the gas price has fallen significantly again since the summer.
Unlike Eon, the Essen rival RWE operates numerous power plants. When the company announced its unexpectedly high profits, CFO Michael Müller justified the “increased use of our power plants” and the “increase in capacity in the field of renewable energies”. The background is that the gas-fired power plants ran more frequently because there was unusually little wind in Germany and the wind turbines in the country were able to feed in less electricity. The gas-fired power plants were then able to sell the scarce electricity at high prices.
The lousy wind conditions weighed on the results of RWE’s eco-energy divisions. But that was more than offset by the fact that new wind and solar farms were coming online and electricity prices were so high. Overall, RWE is much more of a beneficiary of the high electricity prices than Eon.
Uniper burns many billions – but less than feared
Last week, the crisis group Uniper also announced that its annual figures were better than expected. Although that is very relative: In November, the Düsseldorf-based company had calculated that a loss of 40 billion euros was booked from January to September – a sad record in Germany. The company is the largest German gas importer. Because Russia has stopped its deliveries, Uniper now has to buy the raw material on the markets at high prices in order to fulfill supply contracts. However, the company has now announced that a loss of only 19 billion euros is to be expected for the year as a whole.
However, this is not due to the fact that the Düsseldorfers suddenly made incredibly high profits between October and December. Rather, the cause is that expected future losses from the gas business were included in the deficit of 40 billion euros. Since the prices of the raw material have fallen, Uniper was able to reduce these forecast losses from 30 to six billion euros – which explains why the annual loss was lower.
The Karlsruhe energy group EnBW is also suffering from the Russian gas supply freeze because the subsidiary VNG imported the raw material. But the business with Russian gas was much less important for EnBW than for Uniper. As a result, the company continues to make profits, albeit lower than in the previous year. Compared to Uniper, however, this seems like a luxury problem.