E.ON, Europe’s largest energy network operator, has called on Germany’s incoming government to improve returns on energy networks. The company highlighted that competitive profit margins are vital to encourage greater investment. This request presents an early task for the new administration, expected to be led by Friedrich Merz of the CDU party, following recent elections. E.ON and other grid operators have expressed concerns that Germany’s current regulatory framework does not adequately support the significant funding needed to upgrade and sustain critical power infrastructure.

 

E.ON, along with other grid operators, has criticised Germany’s grid regulation for not being conducive to attracting substantial investments.

CEO Leonhard Birnbaum pointed out that returns in Germany lag behind those in most European countries, where conditions are more favorable. He stated: “Like any company that operates sustainably, however, we never invest at any price. The prerequisite for this in Germany is a return on our network investments that’s competitive by international standards.” He added: “We cannot invest billions that need to be refinanced […] if we don’t get sufficient interest.” E.ON plans to maintain its investment level at €43bn ($45.13bn) from 2024 to 2028, but emphasized that expanding network investments hinges on improved regulations.

Despite these hurdles, E.ON’s stock increased by 3.8%, hitting a near four-month peak. For 2024, the company recorded an adjusted group EBITDA of €9bn, aligning with the upper limit of its projected range of €8.8bn to €9bn. With elevated investments planned for 2025, which promise better network returns, E.ON now projects an adjusted EBITDA exceeding €11.3bn by 2028, up from an earlier estimate of over €11bn. The company also forecasts adjusted group net income to reach approximately €3.4bn by 2028. E.ON has put forward a proposal to increase its 2024 dividend to €0.55 per share, compared to €0.53 for 2023.

Birnbaum commented: “In 2024, we delivered again. Strong group earnings prove that our business model is robust even in an environment of political and macroeconomic uncertainty. Our investments of €7.5 billion set a new benchmark for our financial strength and operational performance.” He continued: “Since our reorganisation, we’ve never invested so much. For this I’d like to say thank you to our employees. With our investments, we significantly contribute to making new energy work in Europe.” The company’s focus remains on supporting Europe’s energy transition through substantial financial commitments, despite the regulatory challenges in Germany.