E.ON CEO：热浪冲击欧洲能源供应，电网投资需求巨大

Let's start with the earnings, and then we'll get to the to the broader crisis around what's happening with with the climate and how that's impacting the grid and how you're providing energy to to businesses and and retail as well. How do these earnings set you in the business up for the quarters ahead? What stands out to you from these numbers? Yeah. Our numbers are actually pretty boring because we're hitting the expectations that we have communicated to the markets.

But I have to say we do this in an environment which is anything but boring. And you just mentioned it yourself, extremely volatile markets and on top now additional stress on the system. And lastly, also the need to change the rules, of the transition of the energy transition. We clearly need to modify how we integrate, the energy transition into the overall system to cope with the challenges that we are facing. Where are the pressures most acute right now across the energy system?

Well, obviously, we have three areas where we are challenged. We continue to see a massive increase in connection requests. And we, as the largest grid operator, obviously, can see that everything is pointing towards higher numbers and more infrastructure need. So we see an increase in data center requests. We see an increase in battery requests. We see an unbroken connection of renewables to the system. And we see that in the context of a grid infrastructure, which is already loaded quite a lot.

So clearly, this is, for us, a situation in where our growth potential is huge, but the operational pressure to just deliver against the expectation of all our customers is hard to be met. That's number one. Number two, we see massive volatility in wholesale prices, obviously driven now this year, especially by the events in the Persian Gulf. We have seen yesterday, again, extremely high gas prices, which is putting stress on our customers and in affordability.

And lastly, we clearly right now see a very hot summer that is curtailing output, which is going to lead to short term distortions, which are stressing the system even more. So those are the three things we need to continue, but it's stressful. We have a very volatile environment, and we have additional resilience challenges coming in this case from the heat wave. Leonhard, let's let's pick pick that apart and and kinda deal with some of those those issues individually.

What kind of rate of inflation are you seeing in terms of the grid build? How much does it cost? What are you looking at? Is there a cost of capital issue here? Is there a regulatory issue here? What are the what are the challenges you're facing in getting that delivered? Yes. We have to differentiate between the financial challenges and the operational challenges. Obviously, on the financial side, we need to make massive investments.

E. ON ourselves, we have a 48,000,000,000 investment program, and most of that actually goes into the grid infrastructure, euros 48,000,000,000 for the midterm planning horizon. It's actually possible for us to finance this roughly €10,000,000,000 a year investment program If we get a regulation in which we can refinance ourselves in capital markets, there is the willingness of capital markets to provide that capital if the regulated return is high enough to justify us picking up the bill.

And so if the regulation, and that is something that is redone every few years in every market, if the regulation allows us to make a margin on the cost of capital, then the capital will be there. So financially, the only challenge is a regulation which reflects the requirements of capital markets when it comes to the cost of capital. Operationally, we are faced with the fact that we have too much demand that we can impossibly cope.

I have here the latest numbers. We have, for example, only for data centers connection request only as E. ON of 80 gigawatts. 80 gigawatts is the total demand of Germany in peak times when it comes if you compare it to today. It's outright impossible that we will be able to connect such a number. And so we need to get the tools to prioritize between speculative projects and projects that are going to really make a difference in the economy and our competitiveness.

And currently, we don't have that. So we need to change the rules here so that we can actually satisfy the needs of the customers that really have a need and are not just speculating on a grid connection. Out of that total that you just gave me, how much how much of that is is gonna be useful, productive, and how much of it is speculative? Do I you say you don't have the rules at the moment to determine that. Do you have a sense of what that number looks like?

Yeah. I in In reality, I can't really tell. I have to speculate. But order of magnitude, I would say three quarters is clearly speculative. And we have indications in the past what has then really been realized. So I would disregard maybe 60 gigawatts out of that 80 gigawatts. But still 20 gigawatts would mean that we add 25% to the German system, which is still very significant. And that's only data centers. And then have in mind, we have on top batteries, we have on top truck electric, e mobility charging, we have e mobility charging, we have the heat transition.

So what we can say is probably that we have to double the infrastructure on the electricity side in the next years, even if most of this most of the connection requests are speculative. And if we get a scenario where LNG flows remain constrained, we have some analyst estimates that prices will surge. For you, what's your base case expectation there, and how does that impact Europe Europe's economy? Yeah. That is obviously the question where the gas prices are going to be.

Again, we have seen yesterday TTF price around 60, which is roughly more than 2.5, 3x what we have seen before the war in the Gulf. So clearly, The U. S. President has not done at least Europe a favor by starting that. The distortions on energy markets are massive. And now with that price level, it's clear that it's going to stay on an elevated level for quite some time to come. And the only way to react to that will be, obviously, a demand side reduction.

So I assume we will see demand elasticity kicking in. We have seen in the past demand elasticity coming in first on the Asian side and then depending on the price level also on the European industrial side. So I would expect that markets will get into an equilibrium again, but it will be in a context of an elevated price level. I don't want to speculate on which one. The volatility has been massive. But clearly, it's not gonna return to prewar crisis, prewar levels, in the next, short term future.

Looking a bit further out, this seems like a persistent issue in that Russia Ukraine forced gas prices higher. Even in 2021, you had low inventory levels that created a spike into the winter. Is there a way for Europe to get out of this trap? Yeah. First, Europe has improved its situation compared to the twenty twenty two crisis. So in 2026, we are clearly better equipped. We have now an infrastructure to cope with the challenge, which we did not have in 2022, especially on the LNG side.

Now the solution going forward, however, is clearly further electrification of the European markets. The EU Commission has picked that up in their package. They are actually asking for faster electrification. And also, the German government is picking this up. And I think what we need to do on top is we need to integrate the European markets more. If you look at the crisis right now for especially in Southeastern Europe, where we really are struggling to keep demand to keep supply up, then we need a further and stronger integration of those markets into Europe.

And then we need a better integration between demand flexibility, batteries, renewables and also still dispatchable power generation capacity. If we get that, then we will be less dependent on importe