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Uniper to aim for climate-neutral power generation

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Energy Global,

Uniper has announced that it intends to make its power generation portfolio in Europe climate-neutral by 2035 at its annual results press conference for the 2019 financial year.

The announcement is part of a fundamental strategic re-orientation focusing on a secure as well as climate-friendlier energy supply. Uniper will gradually reduce its own portfolio’s carbon emissions. At the same time, the company plans to offer its customers products and services that are increasingly climate-friendly. Uniper operates flexible, technologically advanced generation assets, a large gas business, and related infrastructure. The company is in an ideal position to accelerate and shape the energy transition.

Between now and 2022, Uniper will invest more than €1.2 billion in projects that accelerate the transition to a lower-carbon energy world. Moreover, new investment criteria stipulate that all future investment projects must not only make business sense but also contribute to the achievement of the company’s decarbonisation targets.

The plan Uniper published in late January 2020 to exit coal-fired power generation in Germany started the company’s transformation into a climate-friendlier energy provider. Consequently, it is the next important milestone in propelling emission reductions at the European Generation segment from 22 million t currently, to net zero in 2035. Uniper’s hydro and nuclear power stations in Germany and Sweden already produce around 24000000 MWh of zero-carbon electricity. That is equal to about 40% of Uniper’s total electricity production in Europe. In the years ahead, the company plans to significantly increase the percentage of its zero-carbon electricity output, for example by means of long-term power purchase agreements for wind and solar power.

Because gas plays a pivotal role in decarbonisation as well as energy security, it will be a key focus of Uniper’s future strategy. Uniper plans to further expand its broadly diversified gas business and progressively decarbonise it as well. The company is going ahead with the conversion to gas-based systems both at its own facilities and its customers’, for example in Gelsenkirchen-Scholven. With Europe’s gas production declining while demand rises, the need for imports will increase. As one of Europe’s largest gas importers and operators of gas storage facilities, going forward Uniper will continue to help secure Europe’s energy supply with gas and LNG. Uniper is engaged in both pipeline gas (as with the Nord Stream 2 project) and the expansion of LNG infrastructure (as in Wilhelmshaven).

Uniper plans to gradually replace conventional gas with green gas or green hydrogen in both energy generation and energy trading by using power-to-gas technology to produce green hydrogen. The company installed its first power-to-gas unit in Falkenhagen back in 2013, followed by another in 2015 in Hamburg. The company supplemented Falkenhagen with methanisation equipment in 2018.

In addition, Uniper partners with refineries and the automobile industry to conduct a variety of cross-sector, industrial-scale, real-world-laboratory projects that facilitate a swift introduction of hydrogen production under market conditions. “The technologies are out there; what has been lacking is profitability and the right regulatory environment. Technology neutrality and a holistic, pan-European approach will be necessary to foster the development of a hydrogen industry that can prosper and remain in Europe. Uniper wants to actively shape this industry and work together with representatives from industry, science, and politics to propel the development of hydrogen, which a key issue,” Uniper Chief Eexecutive Officer Andreas Schierenbeck commented.

Uniper posted adjusted EBIT of €863 million in the 2019 financial year, which was at the prior-year level (2018: €865 million). Adjusted EBIT benefited from the fact that higher power prices and output enabled the company’s hydro and nuclear power stations to earn more. Another positive contribution came from the business in Russia and from the reinstatement of the UK capacity market. By contrast, earnings were adversely affected primarily by the non-recurrence of positive effects recorded in the prior year and by lower output at a small number of power plants. Uniper recorded IFRS net income of €644 million in the 2019 financial year (2018: -€442 million). The y/y increase is principally attributable to positive effects resulting from the marking to market of commodity derivatives at the balance-sheet date. Uniper uses derivatives to shield its power and gas business from price fluctuations.

Adjusted funds from operations totalled €923 million. At the Annual General Meeting on 20 May 2020, the Uniper Management Board and Supervisory Board will propose that the company pay out a dividend totalling €421 million (€1.15 per share). That will be a 28% increase relative to the prior year.

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