Letter to shareholders

Following a successful financial year, I would have liked to have begun this letter to our shareholders in a more positive mood. Unfortunately, I find this impossible due to the fact that there is currently a war of aggression being waged on a sovereign country and its people in Europe. I am stunned and saddened by current events. I feel for the Ukrainian people and hope that adversity and fear will soon be a thing of the past for them. As an energy company, it is of course important for us to also make provisions for the possible impacts of this war on our country and our own role in society. We have thus formed a task force to examine the situation from all conceivable perspectives. We are aware of our responsibility for the security of supply and will do everything we can to ensure that energy supplies remain unaffected and stable.

Implementing and delivering instead of talking and procrastinating. This sentiment has shaped the successful transformation of our company over the past ten years. Energy policy now also has to implement and deliver. The target of climate neutrality has been set and has been met with broad consensus within society. The challenge now is to work backwards from this goal and implement the required measures. It will be necessary to significantly accelerate the restructuring of the energy industry, especially in view of current developments. This will mean, on the one hand, cutting the red tape associated with the approval processes for the expansion of renewable energies and, on the other hand, reforming CO₂ pricing to bring market forces more into play. I believe that another important aspect is the total restructuring of the tax, duty and levy system to account for the CO₂ intensity of different energy sources. The list is long and time is short. Against this background, I welcome the ambitious targets set by the German government and the priority must now be to rigorously implement them. We can deliver what the political agenda asks of us – across all areas of the energy supply sector, as well as for the mobility of the future and for highly efficient telecommunications. Something that is frequently forgotten is that there are also huge opportunities associated with the ongoing transformation towards climate neutrality – for companies, for Germany as a place for business, and for the employees and citizens of this country.

We achieved an operating result of almost €3.0 billion in 2021, which meant we were able to increase adjusted EBITDA for the fifth year in a row. EnBW aims to forge a link between economic success and ensuring that we act responsibly on behalf of customers and society, the environment and employees. We took another step on this path in the 2021 financial year, despite the substantial changes on the raw materials and energy markets. At the same time, EnBW once again proved itself to be a reliable partner in the second year of the coronavirus pandemic. Electricity from renewable sources has now become the standard in the product portfolio of EnBW and Yello: 96% of new customers in 2021 decided on green electricity. The expansion of our quick-charging network for e-mobility is progressing rapidly. In 2021, Belgium, Luxembourg and Liechtenstein were added to our EnBW HyperNetwork. In the telecommunications business, we bundled together our main telecommunications activities in 2021 and expanded them to include the self-financed expansion of the fiber-optic network. In our “EnBW connects” participation model, 214 local authorities have now invested in our distribution grid subsidiary Netze BW with a total shareholding of almost 14%, shaping the future of the electricity and gas grids together with us. Some important milestones reached in our growth and climate neutrality strategy were the acceptance of our bid for two offshore wind projects in the Irish Sea with a total output of up to 3 GW at the beginning of 2021 and a second successful bid in an auction at the beginning of 2022 to develop a 2.9 GW offshore wind farm off the east coast of Scotland – we aim to realize these three wind farms in cooperation with bp. We were also successful in another offshore wind auction in the USA in 2022. As our main focus will be the European market in the future, however, we are selling our portfolio of activities in the USA to our former partner TotalEnergies. At the same time, we are making progress with the development of solar parks: The Weesow-Willmersdorf solar park with a total capacity of 187 MW was fully connected to the grid in March 2021 and the two solar parks Gottesgabe and Alttrebbin, each with a capacity of 150 MW, will be gradually placed into operation by the end of March 2022. The share of our generation capacity accounted for by renewable energies stood at 40.1% at the end of 2021 and will increase further over the coming years.

Following the successful conclusion of our EnBW 2020 strategy, the next strategic planning horizon is 2025. We are increasingly placing the company’s focus onto the infrastructure aspects of existing energy-related business fields and exploiting new growth opportunities above and beyond the energy sector. The aim is to make EnBW even more profitable and stable by 2025 than it is today, while being even more agile and sustainable at the same time. Our list of projects for the future includes the expansion of renewable energies, such as offshore wind power, the expansion of the quick-charging infrastructure for e-mobility, the development of the telecommunications and broadband business, the expansion of the transmission grids for electricity and gas, the upgrading of the electricity distribution grids and much more. EnBW is planning total net investments of around €12 billion between 2021 and 2025. In parallel to our business expansion, we aim to continuously improve our sustainability performance. We have transferred our 25-point sustainability program into a comprehensive and strategically oriented sustainability agenda, which we will start to implement in our operating business in 2022. Its central aim is to make the company climate neutral with respect to our own CO₂ emissions by 2035. Our subsidiary Netze BW has been climate neutral since 2021, while Energiedienst has already been climate neutral since 2020. The path to achieving this goal will be marked by the switch from coal to gas, from gas to hydrogen and from hydrogen to green hydrogen – alongside the further expansion and multifaceted use of renewable energies. In our view, some of the current requirements in the EU taxonomy for gas power plants are, however, too ambitious from a technological and economic perspective to enable the transition to a hydrogen economy.

People are key to the success of a company and we have more than 26,000 employees at EnBW. They have been asked over the past few years to help shape the realignment of their company with their ideas, commitment and perseverance. For this, I would like to thank you both personally and also on behalf of my colleagues on the Board of Management. The pace of change will accelerate even further over the next few years and companies must be ready to deal with major uncertainties, as the current situation clearly demonstrates. There will be huge expansion and restructuring of the infrastructure in Germany and around the world, and EnBW wants to play a vital role in this process. Our aim is to generate economic, ecological and social value for all of our stakeholders – by implementing and delivering. That is exactly what is needed.

Yours sincerely,

Dr. Frank Mastiaux
Chairman of the Board of Management