E.ON plans €9bn investment increase to ramp up grid expansion

German network operator E.ON is planning a €9 billion ($9.8 billion) increase to its 2024-2028 investment plan, citing the need for continued grid expansion to connect an increasing number of renewable energy facilities.

Announced alongside the Group’s full-year results, E.ON plans to boost its four-year investment plan from €33 billion ($36 billion) to €42 billion ($46 billion), focusing on energy networks and energy infrastructure solutions.

“Across Europe, there are massive expansion plans for renewable energy facilities that will need to be connected to networks,” said E.ON chief financial officer Marc Spieker in a release.

“Millions of heat pumps, residential electricity storage systems, and charging stations will need to be installed as well. That’s why we’re investing even more and even faster in our power grid infrastructure, which is set to continuously grow by an average of ten percent annually through 2028.”

Within the plan, €34 billion ($37 billion) will go towards E.ON’s energy network business, given a suitable regulatory environment. More than €25 billion ($27.3 billion) – 70% – of network investments will be made in Germany.

Approximately €5 billion ($5.5 billion) will be devoted to energy infrastructure solutions, E.ON’s growth business which provides solutions for industries, cities, and municipalities.

Other areas for investment include digitalisation projects, the rollout of smart meters and intelligent e-mobility charging solutions.

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Said CEO Leonhard Birnbaum during a press conference: “We again defied challenging circumstances in the financial year 2023. And we again delivered very good results that exceeded our expectations.

“This result is proof … that we increasingly benefit from our consistent strategic focus on energy networks and sustainable energy infrastructure and customer solutions.

E.ON investment: 2023 results

The Group significantly accelerated its investments in the financial year 2023, bringing it a total of €6.4 billion ($7 billion), a one-third increase from the year prior.

Specifically, the Group invested €5.2 billion ($5.7 billion) in network expansion, modernisation, and digitalisation and €1.1 billion ($1.2 billion) into customer solutions, of which approximately €700 million ($765 million) went toward its energy infrastructure solutions.

Energy networks delivered the largest share of Group earnings from 2023 with a €1.2 billion ($1.3 billion) year-over-year increase. Higher investments in E.ON’s growing network infrastructure were a key driver, ensuring increased connection rates for renewables, heat pumps and charging infrastructure.

In 2023, E.ON added more than half a million new connections to its distribution networks. Alongside higher investments, the recovery of the energy market environment had a positive impact on the network business. This led to a significant reduction in costs for redispatch in Germany.

Added Spieker: “E.ON looks back on a strong financial year 2023, in which we grew in almost all European markets. The outlook for the years ahead is very promising as well.

“Our network business is a growth business that is in the focus of attention for policymakers, the public and investors. Our energy networks are system-critical for the energy transition, and we’ve again proven that we can successfully and cost-efficiently expand them.”