EnBW Energie Baden-Württemberg AG (EBK) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by. I'm Stuart, your Chorus Call operator. Welcome, and thank you for joining EnBW's Investor and Analyst Conference Call Full Year Results 2021. [Operator Instructions] I would now like to turn the conference over to Marcel Münch, Head of Finance, M&A and Investor Relations. Please go ahead.

Good afternoon, ladies and gentlemen. Thank you for joining us for today's investor and analyst conference call on EnBW's annual results. I do admit that it's somewhat challenging to focus on business, but let alone business as usual while we're witnessing the atrocities committed in Ukraine and the first one in Europe for decades. Having said that, we still want to use the next minutes to walk you through how EnBW has fared financially during the year 2021. And for that, I'd like to hand over directly to our CFO, Thomas Kusterer.

Thank you, Marcel. Ladies and gentlemen, in light of the fact that the military effect on a sovereign country and people is taking place in Europe as we speak, I cannot and I do intend to start today's conference call as usual. We are shocked and appalled by what has happened and is happening in Ukraine these days. We, at EnBW, fully condemn the aggression in the strongest possible terms and fully support the measures taken by the German government. At the same time, we feel for the people in Ukraine and hope that our chip and fear will soon become a thing of the past. We also have colleagues, who come from Ukraine, were extremely worried about their homeland and safety of their loved ones. Our company and our employees feel the need to do something for the Ukrainian people who want to help. In addition to this human tragedy, this war naturally also has an impact on our operating business. That is why I would like to give you an overview of how EnBW is acting in this exceptional situation. In doing so, I'm fully aware that you may have questions to which currently we do not have all the answers yet. Politics and business are acting hand in hand when it comes to Ukraine. We are in close dialogue with the German government and at European level and fully support all sanctions that have been put in place. Now in the future, as a large German energy supplier, we acknowledge our special responsibility to ensure security of supply in our country. We do not have any direct investments in Russia or Ukraine, but a certain exposure to Russia in terms of sourcing natural gas and coal. As you might be aware, around 55% of gas volumes consumed in Germany come from Russia. Our trading department procured significant volumes of gas for our customers on the wholesale market. As of today, our subsidiary, VNG, has 2 direct import contracts from Russian contractual partner. These 2 contracts accounted for 99 terawatt hours or about 20% of EnBW's total procurement volumes in 2021. The short-term contract expires at the end of this year, and we are not considering the conclusion of any new supply contracts in this situation with Russian counterparties. Therefore, the direct import volume from Russia will reduce noticeably from 2023 onwards. EnBW itself has no direct import contracts with Russian counterparties. In 2012, we concluded long-term gas purchase agreement with the Swiss-based subsidiary of Novatek for gas supply at a German trading point. This contract expires in around 6 months before the start of the 2022 heating season. In this context, please note that we stepped up our efforts to achieve diversification of gas, supply already a few years ago by building up competencies in trading and purchasing of LNG, an activity which we plan to expand further. We are, therefore, well prepared for the expansion of LNG supply from overseas markets. Against this background, we highly welcome the Energy Corporation that Federal Minister, Habeck has initiated with various supplier regions in recent days. They will help diversify German's overall gas procurement. Ladies and gentlemen, let me add some remarks on our exposure to Russian coal. Russia continued to be the primary provider of coal to Western Europe in 2021 and at EnBW, we imported about 86% of our coal supply of 3.6 million tonnes from Russia last year. The rest was secured in Colombia and South Africa. Having said that, already at the end of last year, we began to further diversify our procurement portfolio. Our hard coal supply is currently running largely and disturbed. Already today, we have coal on stock and secured from non-Russian sources that will take us well into the current year, even in a very unlikely event if imports from Russia were to stop completely. Further procurement options each from the U.S., Australia or Indonesia are being examined. This screening process is based on our principles of conduct for responsible procurement of raw materials. The impact on environment and human rights as well as the technical question of compatibility of the coal for our power plants are taken into consideration. In these times of war, our strategy EnBW 2025 with a clear focus on infrastructure has become a dimension of urgency. We strive to ensure security of supply and achieve climate neutrality in parallel combined with less dependency from Russia. In this stringent response to that challenge is the implementation of our existing strategy without ifs and buts. With our integrated setup, along the entire value chain, we focus on the expansion of renewables, a high-performance grid infrastructure as the backbone of the energy transition and smart infrastructure for our customers. All of these intentions go hand-in-hand with the targets of the German government and the EU, driving neutrality, integration of European energy markets as well as the reduction of import dependency and further diversification. Our well-balanced and integrated portfolio of activities has proven very robust during these challenging times, not least because we generally apply a forward-looking long-term procurement and hedging strategy. As of December 31, 2021, we have completely hedged our internal generation portfolio for 2022 in accordance with our policy. 2023 is hedged between 60% to 90% and 2024, between 30% to 50%. This prudent hedging policy helps to balance out fluctuations in operating earnings. Having said that, the currently elevated volatility in commodity markets require stringent and forward-looking liquidity management. To cover liquidity requirements, EnBW has, in addition to the operating cash flow, access to variety of debt instruments such as bilateral bank lines, syndicated loans, commercial papers, bonds, bank loans and promissory notes. To prepare for potential future liquidity requirements or margin calls, we carefully evaluated a number of scenarios, including stress tests. We forecast potential margin movement over the short and long term to ensure coverage of potential risk positions by variation -- various liquidity sources accordingly. The last week and especially since the start of the war against Ukraine, liquidity movements have been elevated, but stayed within the scenarios analyzed. We proactively strengthened our liquidity position even further by adding bilateral bank lines, drawing our syndicated loan facility, issuing commercial papers and by actively managing our hedging position. However, we do live in highly volatile times and cannot predict how markets will develop. Therefore, we manage our liquidity position extremely carefully. Let me now continue with the financial details for fiscal year 2021. Our adjusted EBITDA at group level increased by 6.4% in 2021 to EUR 2.959 billion. A major contributor to the positive development was the increased use of our thermal generation to meet electricity demand and ensure system stability and the positive earnings contributions from trading activities in electricity and gas as a result of the higher volatility. This allowed us to more than offset the weather-related reduction in earnings from renewables. Our operating results in financial year 2021 was, hence, at the upper end of our guidance range of EUR 2.825 billion to EUR 2.975 billion. After publishing initial disclosures under the Draft EU Taxonomy Regulation last year, we are expanding this reporting for 2021. Adjusted EBITDA from environmentally sustainable activities was around EUR 1.9 billion, representing about 63% of our adjusted EBITDA. And now let's take a closer look at the performance of our 3 business segments on the following slides. On Slide 5, let me get started with smart infrastructure for customers, which contributed some 11% to consolidated earnings in 2021. Despite a slight reduction in adjusted EBITDA by about 4% to EUR 323 million, the segment result was well within our original guidance range of EUR 300 million to EUR 375 million. In the wake of high-end, very volatile homes and market prices, some energy providers had to file for insolvency, notably due to less forward-looking procurement, while others stopped supply to customers altogether. For EnBW, this resulted in an unpredictable increase in the number of customers in basic service, which led to substantial additional procurement costs. We also had to recognize bad debt allowances on a moderate scale. Without these effects, adjusted EBITDA would have meaningfully exceeded the prior year's figure. This brings me to System Critical Infrastructure on Slide #6. The share of 44%, this segment contributed slightly less than half of our operating results in 2021. Adjusted EBITDA was about 4% down on the prior year at EUR 1.289 billion. This means earnings are slightly short of our guidance range of EUR 1.3 billion to EUR 1.4 billion. The main reasons for this development were significantly higher expenses for plants in grid reserve and the procurement of balancing energy to maintain security of supply. Personnel expenses also increased mainly due to the necessary credit expansion. On the other hand, higher grid revenues, we are not able to entirely offset these additional expenses. By contrast, as shown on Slide 7, we recorded strong growth in sustainable generation infrastructure, which accounted for about 52% of earnings. Compared with the previous year, adjusted EBITDA increased by 20% in 2021 to EUR 1.535 billion, and hence, even exceeded our guidance range of EUR 1.375 billion to EUR 1.475 billion. Let me elaborate on the main drivers behind these developments. In Renewable Energies, adjusted EBITDA fell by about 5% in 2021. This is largely due to poor wind conditions throughout Germany in 2021, which were not only poor compared with the prior year period, but also well below long-term averages. This affected all wind operators in Germany are like, be it in the North Sea, the Baltic Sea or onshore. The generation volumes from renewables well below average in 2021. Our thermal generation plants we used much more frequently than in 2020 to meet the higher energy demand. These additional volumes in combination with higher electricity prices contributed to a meaningful earnings increase. The elevated volatility in the wholesale markets resulted in higher earnings from electricity and gas trading. Consequently, adjusted EBITDA went up by more than 67% to EUR 741 million. Let's take a look on Slide 8 on the electricity volumes generated in 2021, which also include long-term purchase agreements and partly owned power plants. The volumes electricity generated by renewables was largely unchanged despite the growth in generation capacity during the year caused by poor wind conditions, as already mentioned. However, high market prices and increased demand that significantly increased use of our thermal generation capacity. As a result, in 2021, our overall generation increased by 21% to 42.4 terawatt hours. The proportion of total electricity generated from coal was 39%, while renewals accounted for 28%. This trend in power generation was to be seen throughout Germany last year and had a direct impact on our carbon intensity. For EnBW, carbon intensity increased year-on-year to 478 gram per kilowatt hour in 2021. 2020 was a year with exceptional low carbon emissions. Therefore, we forecast a target range for CO2 intensity in 2021 of between the previous year's level and an increase of 15%. In 2021, in line with our forecast, economic activities recovered as a catch-up effect combined with strong demand for energy and commodities. Plus, below-average wind availability and market-driven developments then resulted in a forecast range for CO2 intensity being exceeded. In this context, it is important to note that our thermal generation units were needed for and made an important contribution to security of supply in 2021 again. Fundamentally in our control is our renewable generation capacity. This is why our key performance targets is the percentage of the generation capacity accounted for by renewables, which amounts to 40% as of the end of 2021. During the year, the installed capacity of our renewables portfolio increased by 235 megawatts, mainly due to the expansion of our solar as well as our onshore wind activities. The length of approval procedures, especially for onshore wind farms in Germany is currently still a significant roadbook preventing a more accelerated build-out of capacities. Based on the impetus contained in the new German government's coalition agreement and recent market developments, we expect that actions will be taken to improve these processes significantly. This brings me to our investments in financial year 2021 on Slide 9. We primarily invested in the expansion of electricity transmission networks and renewables and, thus, with strong focus on the energy transition. Total investments last year came to just over EUR 2.8 billion, implying an 11% increase year-over-year. Investments in smart infrastructure for customers made up about 10% of that, and we are predominantly focused on further expanding our network of high-performance charging infrastructure for e-mobility. System Critical Infrastructure accounted for more than half of our total investment during 2021. In particular, this enabled us to push ahead with the expansion of our electricity and gas transmission and distribution grid. With these projects, we are making a significant contribution to upgrading and expanding the grid-based energy infrastructure in Germany, the backbone of the energy transition. In Sustainable Generation Infrastructure, we invested around EUR 840 million, predominantly in offshore wind. Together with our partner BP, we plan to develop an offshore wind portfolio of just under 60 gigawatts in Great Britain of the Scottish shore and in the RSC. Against the background of these growth opportunities and the ambitious expansion targets of the new German government in offshore wind, we intend to focus even more strongly on our European core markets. We have, therefore, decided to sell our offshore activities in the United States after winning the land auction for an area of the coast of New York at the end of February to our previous partner, TotalEnergies. This brings me to our next slide and the development of our retained cash flow. As illustrated, EBITDA increased by EUR 141 million in 2021. This positive EBITDA development is reflected in our retained cash flow, which rose by nearly 9% or EUR 145 million to EUR 1.784 billion. Changes in other positions largely offset each other, for example, high dividends we are paid on euro EnBW share after EUR 0.70 in the prior year. But on the other hand, we also achieved a higher net interest income and received higher dividend payments. On Slide 11, let me expand on the significant reduction of our net debt. Since year-end 2020, net debt dropped by almost 40% or EUR 5.6 billion to about EUR 8.8 billion, mainly due to the following effects in addition to our RCF. Firstly, net margin payments received in our trading business increased substantially based on the commodity price development in 2021. Secondly, receivables under German Renewable Energy Act reduced by about EUR 2.2 billion. These 2 effects, which led to a significant reduction in working capital during 2021, are particularly temporary in nature and may, to a certain extent, reverse during the current year. Furthermore, investments, acquisitions and divestments had a net effect of increasing net debt by almost EUR 2.5 billion. Lastly, pension provisions decreased by more than EUR 670 million, following an increase in the discount rate from 0.75% to 1.15%. With an increase in retained cash flow and sharp reduction in the net debt, our debt repayment potential of 20.3% in 2021 is well above the target for 2021 of 11.5% to 12.5%. Adjusting for the effects related to the German Renewable Energy Act Account, which is outside our influence with the debt repayment potential at slightly above 17%. We remain committed to our goal of a solid investment-grade rating and manage our financial profile accordingly. On Slide 12, let me continue with our adjusted group net profit and our dividend proposal. Adjusted group net profit attributable to the shareholders of EnBW AG increased by 76% to EUR 1.203 billion. Alongside the rise in our operating earnings, our financial results improved significantly. This is primarily due to a gain on marketing securities to market as a consequence of the positive market trend last year. At year-end 2021, this led to a very high market valuation of securities that we hold to cover our long-term obligations. The dividend proposal calculated on group net profit was adjusted for this IFRS 9 effect. Our dividend proposal for 2021 is EUR 1.10 per share, marking a 10% increase on the previous year's dividend. This implies a total distribution of EUR 298 million, which equates to a payout ratio of 36%. We are thus proposing a dividend slightly below the target range of between 40% to 60% of adjusted net profit. These proposals further strengthens our balance sheet and leaves additional funds in the company to finance future growth. Now let me elaborate on our outlook for financial year 2022 on Slide 13. Overall, the current situation is marked by a high level of uncertainty as a consequence of the war in Ukraine. Developments are very dynamic, which causes us to expect a high volatility of our results overall. Based on our preliminary update of opportunities and risks anticipated, we do currently, however, not see reasons for significant deviations from the forecast. In Smart Infrastructure for customers, we expect adjusted EBITDA of between EUR 350 million and EUR 425 million this year, and that's an increase of between 8% and 32%. In System Critical Infrastructure, we expect adjusted EBITDA this year to be between EUR 1.225 billion and EUR 1.325 billion, which is in the range between minus 5% and plus 3% relative to the previous year and hence, broadly in line with the level in 2021. Adjusted EBITDA in Sustainable Generation Infrastructure will increase further in 2022. We expect adjusted EBITDA to be between EUR 1.650 billion and EUR 1.750 billion, an increase of between 7% and 14%. After full wind year in 2021, renewables are expected to contribute around EUR 900 million to operating earnings. In addition, we expect an increase in earnings from our thermal power plant portfolio in 2022 due to higher wholesale market prices and spreads. At group level, we again expect earnings to increase by plus 2% to plus 7% in 2022 to between EUR 3.25 billion and EUR 3.175 billion, again, depending on the development in Ukraine, this might change in the course of the year. And with this, I would like to conclude the presentation and hand over to the operator for Q&A.

[Operator Instructions] First question is from the line of Andrew Moulder from CreditSights.

Andrew Moulder from CreditSights. I must say I totally agree with your initial statements on Ukraine. Yes, sad situation there. Can I just ask about LNG? You talked about increasing your trading and sourcing operations there. So -- but we've also heard talk of building 2 new LNG terminals in Germany. So I mean, what's your sort of situation there? Would you be investing in those terminals? How quickly do you actually sort of realistically think those 2 new terminals could be built? And then can I perhaps ask -- I've got quite a few questions, but maybe just 2 more. You didn't talk at all about the potential sort of strategic review of Transnet and whether you're actually looking to sell a small stake in that. Could you just comment a little bit on how that's going? And maybe also just give me the RAB value for Transnet, please? And finally, I just had to ask about your earlier sort of attempt at the bond market, which I think was not particularly successful. So what -- how were you actually coming to the bond market? I mean, as far as on the way you had already refinanced the hybrids, so you didn't actually have any maturities coming up this year. So what's the purpose of doing that? I mean was it purely to try to increase your liquidity? And what can we expect for the rest of the year in terms of bond issuance from EnBW? So I'll stop there for a minute.

Andrew, actually, thanks a lot for your questions. Let me get started with LNG. Indeed, we already expanded our activities there, and we have all the regasification capacities already signed up in Northwest and Europe, however. I think it's absolutely right what you indicated. The bottleneck currently are the terminals, and we assume that at least 2, potentially 3 terminals might be built in Germany. We will predominantly be there as an off-taker. However, also, of course, looking into potential equity investments, however, as I said, but our main focus would be to be one of the off-takers in that potential capacities. In terms of time line, hard to tell. But at least from my perspective, 4 to 5 years, before an offshore and LNG terminal will be up and running here in Germany. You have planning time and then you have contraction. So 4- to 5-year might be a quite realistic time line here. As regards to TransnetBW, yes, indeed, actually, we announced that we are currently evaluating better to sell minority stake in TransnetBW. We are still in an internal process. So we do, for the time being, did not go into the market. So we didn't talk to any kind potential investors yet. We made this early announcement to ensure that we do not get any kind of rumors or something like this in the market. That's where we currently stay. And as, Andrew, you might not be surprised, but in terms of value, I cannot give you any kind of indication as we are currently in a situation of evaluating the potential transaction. So as regards to the bond market, yes, indeed. And in hindsight, it was probably not a perfect day for us to go into the market. Quite busy day and also volatile, at least for a name like EnBW. News flow was not perfect either. Biden, at this day, announced the embargo of oil from Russia in U.S., which added some uncertainty. So we decided actually not to push through, but rather to pull back. And in terms of what was the purpose, it was actually for a long-term growth financing and not for liquidity purposes. So we might -- we will reengage with our investors in due course somewhere, and we will be back in the market whenever the time is right. Does that answer your question, Andrew?

Yes, that does. I said I would have liked the RAB on Transnet though.

Fully understood.

[Operator Instructions] Our next question is from the line of Alessandro La Scalia from BlackRock.

I have 4 questions. My first one is on your guidance on your thermal generation, well, in general for your power generation, but particularly for thermal generation going into 2022. I was wondering also considering that if I'm right, you're going to have also the phaseout of our nuclear plant, I was wondering whether you can give us more color about how much of that is going to be trading activities in your estimates? And how much is going to be thermal activities and in particular, how strong you expect core contribution being to that business line? The second question is on interruption risk on your procurement. I mean I appreciate and thanks for that, that you aren't particularly -- I mean your exposure to Russian gas is limited, but you do have a strong exposure in terms of procurement for your coal plants. So I was wondering, assuming that sanctions are decided against Russia, also on gas and on coal, what would be your, let's say, EBITDA at risk? Because my understanding is that probably you shouldn't need to go and buy gas in the open market, given force majeure clauses and given emergency at a systemic level. I was wondering whether it's correct to say that apart from that risk, what you have at risk is essentially the margins that you're making on your coal plants and actually very little on downstream, given that you are mostly out of the B2B segment and possibly the B2C is going to come higher in the order of, let's say, the clients that could be disconnected. So essentially over that, this should be sort of a more limited disruption if that makes any sense. So this was long, but third question on margin calls. You had a hugely positive swing in 2021, which also increased your overall liquidity. Your cash at end is more than EUR 6 billion. This was in a context where, anyways, power and gas prices were increasing. So what we should expect for 2022 and particularly for Q1? I mean, is there a risk -- I mean, Q1 is now almost finished. So you probably -- you already see what is the level of pressure on your overall positions. So I was wondering, again, whether you can comment if we are talking about something that is much bigger than that, but with a negative sign in front of it or in general, on the dynamics of that part of cash flows. Final question, very simple, just your guidance on CapEx/investments for 2022.

Alessandro, thanks a lot for the questions, actually. Regarding guidance, you asked actually what is the proportion of our thermal power generation split. What I said earlier, I mean, the overall guidance is between EUR 1.650 billion, EUR 1.750 billion. So let's assume EUR 1.750 billion for the sake of this split. What I also said is in EUR 900 million will be potentially from renewables energies. So we're talking roughly EUR 800 million in thermal power generation and that includes our nuclear and our hard coal and nuclear power stations and also our trading activities. Further split actually -- I don't have the split further available actually as we speak, but that's potentially what we're looking at, the thermal power generation will account for apically EUR 800 million in 2022. As regards to procurement, gas and coal and what you indicated actually what -- if I got you rightly, it's a question actually what we are procuring from Russia and what that really means. I think within this presentation, I already gave some indications to it. I think you made the right point as regards to systematic issues and force majeure clauses when it comes to gas and the stop of the gas supply. It's a bit different when it comes to coal. I think the situation is much more diverse here because you have more sources to procure coal. We procured last year 3.6 million tonnes of coal from Russia, which accounts for 86% of our overall coal supply. However, having said that, we already started at the back end of last year to more diversify our sources and we already do have contracts with other suppliers, especially from Colombia and also South Africa. So that's what we are currently doing already. And we also, as I said, we're looking into sourcing from other regions like the U.S., potentially also in Indonesia or Australia. But besides the first mention, it's potentially in the U.S. So that's to our procurement and you also said the B2B, B2C is not a big issue and that's absolutely right. So that's not something we are concerned about.

Thomas, sorry if I interrupt you. But again, does this mean essentially that if I look at that from my perspective, your risk in case of a disruption of -- or complete interruption, let's say, of flows from Russia in terms of gas and coal is essentially limited to the margins that you are making from your coal plants in case you cannot operate them because you have no alternative, I mean assuming that you are not able to finance that course.

Alessandro, I think that risk of not being able to source coal is extremely limited. We don't see that. We currently do already have enough coal on stock. Actually, that would bring us even with an immediate stop well into autumn. So we do have the time actually to procure more coal from other sources. The risk is not running our power stations. It's a potential higher cost in sourcing the coal. That might be a potential risk. But as I just said, we already do have coal which brings us into the autumn. So there might be a risk when it comes to 2022 for the last 2 or 3 months. That's the max risk and here is a question of coal prices. But again, if we see elevated coal prices, that should also actually transfer in wholesale market prices. So there might be some offsetting factors here, too. So we are not -- we do not see, for the time being, significant risk from coal procurement in 2022. Does that answer your question?

Yes, it does, Thomas.

Okay. Then the third question actually was around margin coals. And we did have actually an inflow -- significant inflows at the end of the last year, as I mentioned before. And we've seen outflows and inflows in a significant amount already in the course of this year. What it means for year-end, and that's actually how I understood your question is actually that we do see unwinding some of the short positions in the market due to our power generation, given that they go into delivery. On the other hand, we do have, on the commodity side and especially CO2 side, some bigger -- long-term positions, which will not unwind until year-end. So I do see a certain reduction in this positive margin inflows, but not actually in an extreme way, and we should also -- that's why, I'm a bit cautious -- we do not know actually how market price, in the end, will really unfold until the year-end. So that's why I'm a bit cautious. So we do see some movements here. And I would assume we will see a reduction, but again, the exact amount very much, of course, depends on the market prices also at year-end. Does that answer kind of answer your question?

Yes. Thomas Of course, sort of in the sense that of course -- I mean, I personally understand your conservativeness, but maybe it would have been good to have a flavor of what already happened, let's say, in Q1 this year and also if you had any significant movement there that you will...

I can give you a bit more clarity on that. We've seen significant outflows, especially after the beginning of the war in the billions. However, at least the same magnitude we have seen, again, inflows since then. So the risk we've currently -- we've seen so far is the fluctuation in the market, the high volatility and the elevated levels of volatility we have seen. And that's actually been the reason why 2 weeks ago, we decided as a precautious measure actually to draw our syndicated loan facility to be prepared for whatever is going to happen. Having said that, until then, we have seen significant inflows from margin payments. But I mean, we do have a quite uncertain time, and we want to be prepared. That's how we look at it. We don't want to be surprised by significant swings in margin payments. CapEx, not where actually -- if I might need to help me, Alessandro. You were asking for a total gross CapEx, is that right or?

Yes. Yes. I was asking -- yes, for guidance on your gross CapEx for 2022.

So actually, the CapEx for this year is around EUR 3 billion. That's our investment plan for this year.

Next question is from the line of Carlos Razuri from Schroders.

I had a few questions. Firstly, German transmission peers have increased their medium-term CapEx guidance considering the larger renewable capacity targets in Germany. And I was wondering how does that change, if at all, your investment guidance of EUR 12 billion for the next several years?

Carlos, you were referring actually to our transmission network predominantly? I got that right.

Yes, I know that total it's a total figure.

Yes. We didn't have -- there is a so-called network plan, which actually is provided by the -- by our German regulator. And on the back of that, we do not have to increase the EUR 12 billion guidance we have currently given. So we are still in line to EUR 12 billion, and it's our net investment of EUR 12 billion we are looking at.

Okay. Also on your 2025 targets, after you're exiting -- sorry, second question. After you're exiting the U.S. offshore market, should we expect any changes in your 2025 EBITDA target for renewables, specifically?

No, not at all. We didn't actually expect to have any installed capacity in the U.S. by 2025 in our plan.

So that's already factor in...

Yes, that would have been something beyond 2025. Given the current pipeline we are having in the U.K, we are well -- actually -- we have a very good pipeline as we speak with the 6 -- sort of 6 gigawatts together with BP in Scotland and in the So the -- if anything, actually through 2023, there's an upside in the downside.

Okay. I had a question on EEG related working capital. My understanding is that the funding of the EEG cost allocations, the electricity prices will be changed for next year. And I was trying to understand what the impact will this have in EnBW's cash flow volatility, in particular in the working capital line? I know that because of the receivables, you've seen a large outflow in 2020 and now you saw some inflow in 2021. Should we expect that volatility to be managed over time?

Yes, actually, Carlos. As of this year, our EEG account will probably go up again, and then it's going to go down indeed in 2023. So yes, actually, in the longer term, we do expect that the EEG account will balance out. And that's -- and we were talking actually about EUR 2 billion roughly of our EEG account.

Final question. Can you quantify the EBITDA contribution from trading within the generation segment?

We don't give the split actually of trading. We just give the overall number for thermal power generation, and that's the rough number we were just talking about when Andrew was asking, that's the EUR 800 million I was referring to.

Is the assumption that most of the EBITDA growth compared to last year, instant trading?

A significant part. But actually, we've also seen actually our thermal power stations, we're running with more hours than originally expected. So it was both not just trading. It was also actually the power station as such with more full-load hours as originally planned.

I actually had one clarification. I don't know if I misunderstood this, but when you said, you gave us a guidance for carbon intensity and you said that you can see it up to 15% higher this year. I was wondering what the generation mix assumption to see an increase in carbon intensity? Is it because you would run more hours at your coal fire power plants or?

Exactly. That's exactly what it is.

And what's the percentage? I think it's about 34% now of the electricity output. Should we see this increasing even higher?

Honestly, very much depending on the renewable performance in 2022. We have seen a very poor performance last year. Assuming that we do have a kind of average performance and given also actually that we increased our installed capacity, I don't think so. But again, that very much depends on the performance of the renewables.

[Operator Instructions] Next question is from the line of Frank [indiscernible] from Credit Suisse.

I just had a follow-up question on margin cost and liquidity. Now that you have fully drawn the 1.5 RCF, are you planning to increase it? That's my first question. And my second question, even if unpredictable, you mentioned that you negotiate new bilateral credit lines. Based on Slide 25, at the end of last year, it was EUR 1.3 billion. What is the amount of the credit line as of today, if you can disclose that information?

Frank, thanks for the question. Sorry, actually, but we do not disclose actually what the current amount is, but it's above the EUR 1.3 billion you were just referring to. And as regards to the syndicated loan facility, no, we do not intend actually to increase our syndicated loan facility. As I said earlier, it's been a precautious measure. As we speak, we do have ample liquidity. So we don't see the need actually to increase the syn loan, as we speak. Does that answer your question, Frank?

Yes.

Next question is a follow-up question from the line of Andrew Moulder from CreditSights.

Just on the liquidity question, I just -- I mean we've seen Uniper getting loans from KFW. And I just wondered what the view is perhaps of your major shareholder, particularly the State of Baden-Württemberg. I don't know the banks in Baden-Württemberg but are there any of the banks in that area that would be prepared to advance your liquidity, if you needed additional liquidity? What's kind of the state's view in terms of providing additional liquidity to EnBW, if it's needed? My second follow-up question really on the thermal generation. I just wondered really how much of the extra generation is down to EnBW, deciding to generate extra or is there any that's down to the grid operator needing extra coal on the system in order to ensure security of supply and to balance the system? And finally, just a very minor question. You talked about selling out your U.S. offshore wind. And I just wondered if that also includes the floating wind developments that you're looking at in California?

Andrew, yes, let me get started actually with your third question, which is yes. So we decided to exit the U.S. and then that includes actually also our current holdings in the West Coast of United States. As regards to thermal, it's a fair point. It's both, to be honest with you. It's a security of supply and redispatched for ensuring security of supply, and it's auto market-driven. It's really both. When you look at 2021, and it's, as we speak, it's currently exactly the same. And depending on the renewables, actually, we might see in the performance of the renewables, we might see more security of supply demand, but that's something we need to be seeing in as the 2022 unfold. So it's both. It's market as well as the security of supply from the grid operator. Liquidity, your first question, could you repeat that again? I'm not sure if I got that right.

Yes. Really, I just wondered whether you're -- one of your main owners at Baden-Württemberg, yes.

Yes. Andrew, we do have our normal banks and relationship banks, and that's sufficient. There is no need for additional support from our shareholders to be honest. We do have the liquidity we need. We need to do have all the access. We need to the capital market. There is no need actually for any additional support from our shareholder.

Okay. Can I perhaps ask just one more question, which actually just occurred to me. When you were talking earlier, you seem to indicate that if Russian gas and coal flows were to stop, you would be able to invoke force majeure on those contracts. When E. ON gave their presentation a couple of days ago, they seem to indicate that they weren't so sure that, that would apply. And I just wonder if you could sort of clarify your statements there. Do you definitely believe if gas stopped flying from Russia, you would be able to terminate other contracts through force majeure?

Actually very much depends on the contracts. We were looking at our portfolio and for the better part of it. That's how we look at it. However, actually, if gas supply from Russia were to stop actually, it's not a question anymore of direct imports from Russian gas. 55% of German gas supply is from Russia. So we would potentially run immediately into a systematic risk. And with the systematic risk, actually, we would get into a kind of a gas shortage situation, and there's a statutory regulation and intervention by a regulator in that case in Germany. So we would be in a totally different situation, not in the market situation anymore. That's actually how we look at it.

There are no further questions at this time, and I would like to hand back to Marcel Münch for closing comments. Please go ahead.

Thank you, Thomas, for your answers and comments and thanks to everyone on the call for attending today's presentation. We look very much forward to welcome you again in presenting our Q1 figures 2022 on our next call on May 13. Meanwhile, of course, if you have any further questions, please do not hesitate to contact our Investor Relations team. Until then, stay safe and healthy and talk to you soon. Bye-bye.

Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephones. Thank you for joining, and have a pleasant day. Goodbye.