RWE Aktiengesellschaft (RWE) Earnings Call Transcript & Summary

Ladies and gentlemen, very warm welcome here from London, from our Capital Markets Day. I'm very pleased that you are interested and that we have so many participants online. Today's press conference is going to be the update of our strategy and our investment planning up to 2030. So our CEO, Dr. Markus Krebber; and our CFO, Dr. Michael Muller, are going to take the floor. And afterwards, you will have the opportunity to ask questions. Before I pass the floor to Markus Krebber, [Operator Instructions]. And now I would like to pass the floor to you, Markus.

Ladies and gentlemen, very warm welcome to our press conference on the occasion of our Capital Market Day from the City of London. Two years ago, we launched our major investment and growth program, Growing Green. With Growing Green, we presented our strategy for how we want to develop RWE by 2030 for the first time. We had ambitious plans RWE was to become greener, bigger, and more valuable. Today, it's time to take stock and take a look at how far we've come. We've been driving towards the transformation of our company at a rapid pace since 2021. And is despite the challenges of recent years, first and foremost, because of the energy crisis. We've delivered on our promises, operationally and financially as well. And we have even exceeded our targets. We have registered profitable growth. We have exceeded our earnings guidance every year in the last 3 years. In 2021, we have invested EUR 20 billion net. We have expanded our green portfolio by 9 gigawatts to 35 gigawatts. And currently, we have 100 additional projects, with a total capacity of 7.8 gigawatts under construct in 10 countries. Thanks to our business development and strategic acquisitions, we have established RWE as one of the leading companies in the field of renewable energy in Europe, U.K. and the U.S. We have significantly strengthened our project development pipeline and our global team, RWE, which is driving toward the energy transition, has grown by 2,800 experts since 2021. So I'm happy to be able to say, RWE is greener, bigger, and also more variable. With Growing Green, we do not only have focused on our expanding of our portfolio, but also have the decarbonization of all our activities with a clear target to come net zero by 2040. Last year, we agreed with the German government and state government of North Rhine-Westphalia that RWE would exit coal by 2030. Eight years earlier r than previously planned. We are thus reducing our CO2 emissions in line with the 1.5-degree target. We expect the renowned Science Based Target initiatives to confirm this by the spring. Ladies and gentlemen, investment in green technologies is shaping our sector and the entire e industrial environment. In addition, the energy crisis has put the issue of energy security back into the political and public spotlight. RWE is perfectly positioned for this with its strategy, integrated business model. Renewables, combined with flexible and firm generation capacity based on modern and increasingly green technologies, and complemented by our global energy trading business within markets and commercialization expertise. At the same time, it's absolutely clear that there is a significant unique investment in all the energy sector in all our core markets in this decade. It's not a question of investing here or there, investment options are everywhere because all countries are working on making their energy system sustainable and secure. We have the prerequisites and capabilities to significantly accelerate our growth once again in this environment. There are 3 reasons why we increase our targets. Firstly, our solid balance sheet and high cash generating operating portfolio gives us significant financial headroom and flexibility. Secondly, our attractive project pipeline of future investment opportunities allows us to pick and choose the investments with the most attractive risk return profile. And thirdly, our teams have set many years of expertise and extensive knowledge along the entire value chain from origination and development, to construction and operations, right through the successful marketing of our projects. All this means that we are capable of delivering even more ambitious investment growth targets. We are going to invest even more into the energy transition. We would now like to present to you in detail what we've planned right through the end of the decade. We're going to increase our investments in the years 2024 to 2030. We want to globally invest EUR 55 billion net in renewables, batteries, flexible generation, and hydrogen projects. We will also accelerate our capacity additions. In 2030, our portfolio will consist of more than 65 gigawatts of generation capacity. This means that more than 30,000 gigawatts of that capacity by the end of the decade. Our growth ambitions are backed by our extensive project pipeline. Today, our total pipeline stands at more than 100 gigawatts across all technologies. That means, compared to 2021, we have almost doubled the capacity of our development pipeline. How will we proceed? Our extensive pipeline broadly diversified across all technologies and markets allows us to choose those investments that are most attractive and have got a good risk return profile. We apply a strict investment criteria when deciding which projects we actually realize. Across all regions and technologies, our average internal rate of fitment for new projects is 8%. We also have a clear picture when it comes to the question in which technologies we should invest. Our existing core markets remain our strategic focus. First and foremost, our German domestic market, the U.K. and the U.S. We also want to continue to grow in the other European core markets and in selected markets in APAC, that's Australia, Japan and Korea. More than half of the EUR 55 billion net that we plan to invest in year 2024 to 2030 is marked for Europe. So Germany is and will remain one of our most important markets. We intend to spend 20% of our total investments in our domestic market in the next 7 years. This means that we want to invest about EUR 11 billion net, which represents an increase of 20% compared to our previous investment plans for the entire decade. We are focused on putting our onshore and solar business in Germany on a broader footing of the past few years. The energy transition is happening locally. This is why we have opened up 7 regional offices in Germany. So the thing is closer to the communities where we realized projects. In addition, in the offshore business, following the successful commissioning of Kaskasi, we have secured the next major project off offshore [indiscernible]. And also we want to build hydrogen-ready gas-fired power plants, batteries and electrolyzer at capacity in Germany. The U.K. accounts for the largest share of our green portfolio. We also want to continue to grow here and maintain the pace of investment. In the years from 2024 to 2030, we want to invest a net total of around EUR 8 billion in the U.K. In addition, the U.S. remains another focus power into investment activities. With our successful acquisition at the beginning of the year, RWE has become the #4 in renewable energy and #2 in solar energy in the U.S. And in offshore business, we have the first offtake contracts that have been awarded for one of our projects. We also want to strengthen our leading market position in the U.S. This is why we have earmarked EUR 20 billion net for future investments here. And we're going to make further investments in Europe and in APAC. Ladies and gentlemen, we are allocating our investments, not only to different markets, but also to different technologies. We are positioning ourselves more broadly. In addition to offshore and onshore wind, we are focusing more strategically than before in solar energy and batteries. 40% of the planned EUR 55 million net is to be invested in the expansion of our onshore and wind and solar business. Our installed capacity in the onshore wind sector is set to increase from 8.6 gigawatts straight to 14 gigawatts by 2030. We'll make by far the biggest leap in solar energy. We're massively expanding our solar portfolio from the current 3.9 gigawatts to 16 gigawatts by the end of the decade. And offshore wind, we want to maintain our leading position. This is why we have earmarked 35% of our capital expenditure for offshore projects. We are set to triple our offshore capacity, reaching 10 gigawatts by 2030. Our target of 10 gigawatts is backed by defined projects. Our build-out plan includes 2 offshore wind projects currently under construction, Sofia in the U.K. and Thor in Denmark. We also have several projects under development in several countries, which are to be commissioned over the coming years by 2030. This includes, to name just a few, in Germany, we've got our Nordseecluster off the island of Juist with 1.6 gigawatts. In the Netherlands, OranjeWind. And in Ireland Dublin Array, each with 0.8 gigawatts. And in the U.S., the first phase of our project Community Offshore Wind with 1 gigawatt. For this project, we were awarded an offtake contract by the State of New York a month ago to obtain and this was at an attractive price. The offshore wind industry is currently in a difficult situation. Even though it's absolutely undisputed, this technology is absolutely necessary, it's indispensable for the transformation of the energy system. For RWE, I can be very clear, realizing offshore project as planned. Not one of our offshore projects under construction or under development is affected by economic difficulties. One reason is we have prepared ourselves for the challenges in the supply chain setting because of our proactive risk management. We have made timely purchases from our suppliers. And at the same time, we have diversified our supplier base. In addition to the profitable expansion of our portfolio, sustainability is also the key part of our renewable energy projects. This is because we want to operate our renewables assets in harmony with the ecosystem. To the extent we rely on innovation such as recyclable rotor blades for offshore wind. The first one is already turning at our German offshore wind farm Kaskasi. That will also be used in our Sofia and Thor projects. And this is just one example of many. Flexible generation capacities are the backbone of the energy transition. Where processes cannot be electrified, hydrogen comes into play. This is why 25% of our investments up to the end of the decade have been earmarked for batteries, flexible generation plants and hydrogen. Batteries are playing an ever-increasing part in our energy system. This is because the buffer the intermittency of renewables and thus ensure great stability. We, therefore, want to significantly grow our battery portfolio from the current 0.5 gigawatts to 6 gigawatts over the next 7 years. The build-out of hydrogen-ready gas-fired power plants is key to the security of supply in many countries. This is particularly true for Germany. We want to end coal-fired power generation by 2030, we, therefore, plan to build at least 3 gigawatt of hydrogen-ready gas assets by 2030. Unfortunately, however, there is still no regulatory framework in place to enable such investments. We are really urgently waiting for this. Depending on the regulatory framework, we could also significantly increase our targets. In addition to new build hydrogen-ready gas-fired power plants, we, at RWE, are working on making our gas fleet capable of net zero operations. In lighthouse projects in the Netherlands and in U.K., we are investigating the conversion of assets to hydrogen as well as CCS. This is another key technology for the decarbonization of our economy. Another element of our future portfolio is a reduction of green hydrogen. Our objective is to have 2 gigawatts of our own electrolyzer capacity by the end of the decade. We're already involved in numerous projects with partners in Germany, in the U.K. and in the Netherlands. As part of Pembroke Net Zero Centre, we are progressing our electrolyzer project to enable the production of hydrogen by 2027. And as part of "Get H2 Nukleus" in Lingen, Germany, our 24-megawatt power plant is scheduled to be commissioned in the spring. Furthermore, we have received permission for the construction and operation for the 200 megawatts and we are waiting for the green light from Brussels for the funding of the project. Ladies and gentlemen, will remain true to our Growing Green strategy in forging ahead at full speed. We're once again increasing our investment significantly so that our green portfolio will grow to more than 65 gigawatts. This is also going to result in strong earnings growth. In 2030, our adjusted EBITDA is going to be more than EUR 9 billion. Our adjusted net income will then be EUR 3 billion. My colleague, Michael Muller is now going to give you further details about our financial objectives and the investment plans.

Thank you, Markus. Ladies and gentlemen, a warm welcome also from myself to our press conference. At our last Capital Markets Day two years ago, we committed to deliver value-added investments and strict risk management. Furthermore, growth and attractive returns for our shareholders. And we've delivered. Despite the energy crisis, RWE has grown profitably and sustainably. We have met our profitability targets for all our investments. We have proved our financial strength, in particular, during the energy crisis. We have always had a firm grip on our liquidity, thanks to our strong and broad core bank portfolio. We've optimally managed the risks on the commodity markets, even in extreme market conditions, and our strong investment grade rating was never risk. You can also see how successful we have been from the development of our share performance. Since our last Capital Markets Day, we have created a total shareholder return of 24%. This means that the RWE share significantly outperformed the utility index. Markus Krebber has just outlined the massive increase in our investments. There is a reason why we are tackling this with such confidence and determination: RWE's strong financial headroom. Our investment and growth program is fully financed until 2030. We financed around 80% of our financial requirements for investments in dividends from a strong cash flow of our operating business. On top of this comes debt capital. We ensure that our liabilities have a long-term balanced profile. This has paid off in view of the rising interest rates over the past 2 years. We want the financing of our green growth to be green using green bonds or other green and sustainable financing instruments. With our new Green Financing Framework, which is aligned with the EU taxonomy, we are further strengthening RWE's position in the market for green financing instruments. 'Sustainable investment' is of great importance to international investors and banks. This demonstrates the great interest in our green bond. Since 2021, RWE has already successfully issued several green bonds with a total nominal volume of EUR 5 billion, thereby establishing a strong position in the green financial markets. With our financings strategy, we are pursuing a clear goal: we want to maintain our strong investment grade rating in the future. Our high investments will lead to steady growth in earnings. Our adjusted EBITDA will grow by an average of 14% each year this decade; adjusted EBITDA is expected to amount to more than EUR 9 billion in 2030. When we launched Growing Green in 2021, our adjusted EBITDA stood at EUR 2.8 billion. Our adjusted net income will also grow this decade every year by an average of 12% to EUR 3 billion in 2030. We also want our shareholders to be able to participate in this strong growth, backed by a new dividend policy. Dividends are set to increase by 5% to 10% annually. And for the fiscal year 2024, our dividend target is EUR 1.1 per share. For the fiscal year 2023, in March, we already announced that we intended to pay EUR 1 per share. And back to you, Markus.

Ladies and gentlemen, Growing Green is more than just the name of our strategy. Growing Green is a commitment to profitable growth. It is our commitment to use this decade for massive buildup of climate friendly technologies. We will deliver on this commitment. To date, we have already achieved more than originally even planned, and now we are taking Growing Green to the next level, EUR 55 billion of net investments within 7 years. In 2030, we will operate a broadly diversified portfolio, which will be well balanced across our European core markets, the U.S. and APAC. Around 60% of our total generating capacities will be in wind and solar, perfectly complemented by battery, flexible generation, and green hydro production. To do this, we are building the most modern plants available worldwide. We're taking old power plants off the market. This is how we are rapidly going to decarbonize our portfolio, always with a clear goal in mind, net zero by 2040. Our strategy is in line with the 1.5-degree path. RWE is the pacemaker of the energy transition. And now we are looking forward to hearing from you with your questions.

Mr. Thank you, Michael, and Thank you, Markus. [Operator Instructions] So here we go, the first question from Christopher from Reuters -- Christopher [indiscernible] from Reuters. Mr. [indiscernible], go ahead, ask your question, please.

I have 3 questions I would like to ask. I would like to know how you feel about the budget fiasco in the German government at the moment. What has that got to do with the energy projects in Germany? What impact will this situation with the German budget have to do with the energy transition in Germany? That's my first question to you, Mr. Muller. And then you might be willing to change the seats. So in principle, would you be willing to consider a sale, is the perspective willingness to do that? And yes, and my third question, I wanted to hear from you, there was a statement you made during the investors webcast, and you said, if you wouldn't be able to find any project that fulfill your return requirements that the shareholders would benefit from that, meaning dividend-wise. Can you imagine there might also be other ways of paying off the shareholders maybe in the shape of a repurchase of shares?

Thank you, Mr. [indiscernible] for your question. Firstly, the question about the German budget. We all agree this is not a very nice situation we're in. And let's hope that this situation can be solved quickly. Your question regarding your what consequences that might have, I cannot answer because I cannot guess how that will be in '23, in 2024 at the moment urgently. So we have to wait and see. For our portfolio, I am currently not expecting massive influence, but I do think it will be very helpful if this budget situation is solved as quickly as possible. Let me answer for [indiscernible]. We are always open for conversation and also in this particular case. But at the other side, or on the other side, we're also very happy with the investments we have made here. So from our point of view, that is not an issue. Your question regarding financing, we have emphasized once more that there is a broad portfolio that we are investing in. We're going to increase it. We have 100 gigawatts in the pipeline, as we mentioned. So there are plenty of attractive investment opportunities. In the case of that shouldn't be an option and something doesn't match our prerequisites, we'll have to reconsider, and in a concrete situation, we would make the decisions as and when how to resolve that. But that's a hypothetical consideration. It's important to think where are we right now, where are we using the capital we have available to us right now? How can we invest in the energy transition?

The next question comes from [indiscernible] Becker from the Newspaper [indiscernible] and then a colleague from the GPA. Ms. Becker, please, over to you.

I hope you can hear me. Unfortunately, I cannot activate my camera at the moment. Can you hear me?

Yes, we can you hear you Ms. Becker.

Okay. Great. I do apologize, I can't activate my camera. I don't know why. But I have 2 questions. Firstly, at the past Capital Markets Day, you emphasized growth and net investments. Today, you've only spoken about net investment, is this because you are also going to consider partial sales for investments? Or how can we understand? That looking at the charge and the details you have presented, it is very clear that 2024, you're expecting certain results. Can you explain that? There is a dip in your expectations in 2024, is that because you have taken out nuclear power, can you explain that?

Thank you, Ms. Becker. Thank you for your question. I can answer the first, and a Michael take the second. We have consciously chosen to emphasize the net investments this time. This is due to the market conditions. Maybe you can remember 2.5 years ago, we spoke about investing as much as possible in certain areas. We had low interest at that point in time. The risk tolerance we had was very high. That was also the desire we understood from the markets. Sales was a growth point and then investments were net. But the investment situation has changed. It is less simple. The interests have increased massively and then why we are focusing on investment promises in net, and that's why the communications are showing the net investment. It could be higher in growth. We do know that it is higher in growth terms because we already have partners with offshore partners and offshore projects these days. But we're not going to set up a target number for that because what ends under the line at RWE is a net result unless we sell part of the portfolio, but we're not going to make any firm promises and commitments about that right now because that is dependent on the developments.

Maybe I can comment on the results forecast for 2024. So we decided to show the nuclear results in the neutral results for 2024, and that's why if you look at the adjusted EBITDA and the adjusted net income it is looking lower. It's just a different depiction of the figures. And if you look at the different results of the nuclear segment, you'll see decreasing margins because the electricity prices are sinking, and we're also expecting a normalization of our trading business where, on the opposite side, we are expecting changes, particularly in the onshore business, where new projects like onshore, solar and batteries especially in this year just gone, we have commissioned Kaskasi and some other areas, we are planning Sofia and Thor up until 2026. So there are going to be increases in capacity, but not until then.

Okay. Let me give the next speaker the microphone. It's Leonie [indiscernible] from the [indiscernible].

Thank you very much. I'd like to speak about the offshore market that you don't seem to be feeling the pay from at the moment. But you have said that you have taken out some more risky markets. You've taken a bit of a step back from the risky markets. Can you explain what those are, the markets that you have taken a step back from?

Yes. Luckily, we haven't struggled with our offshore portfolio. We're happy about that. That's also due to the fact that we've done a good job. We have purchased turbines in time. We have the reserved capacity for installations [indiscernible], et cetera. The markets we had still at the time were 7 European markets like Italy in terms of offshore. At the moment, the market portfolio or market potential is lower there. Our aim was also to consider Taiwan, but we are not in Taiwan anymore, and the Asian market. We were also looking at developing smaller markets, but we have consciously taken a step back from that. The portfolio we have now would have been overburdened if we had still considered those. We don't want to go down the wrong path in order to still achieve what we promised in time.

The next question from [indiscernible] from Bloomberg.

I have 2 questions. One about the gas power plant. Until when do you need clarity? And do you expect a big capacity push from [indiscernible]? And then in terms of phasing our coal, the government and Christian Lindner, now the Minister, are making it a lot more difficult. Is it necessary for you to continue the power plant in the area around the Rhine because this doesn't match your strategy at all?

Thank you. Ms. [indiscernible]. Those 2 questions are very, very strongly linked with each other. Let me answer them very clearly. In the worst case, we need nothing. It wouldn't be good for the country, but if we are not being given frameworks for the gas power plants, we won't be able to build them. And in terms of the coal concept, the forecast is that we have promises for 2030 commitments. We have plans to phase out and decommission those plants. The government has to reserve some capacities if necessary, but we are going to do it based on the instructions of the government, and they've been -- are actually their plants. That is the root map -- their route map that we're following. If not plan for 20 -- if it's planned for 2030, we will need tenders by next year for the hydrogen-ready gas-fired power plants. Over the next 5 to 6 years, we're going to have to work on that. We may be able to accelerate that, but there's a whole chain of approvals needed to achieve that. We will need clarity as quickly as possible. If there are no tenders next year, then phasing out coal by 2030 will be questionable. We don't necessarily need the capacity market or whatever you want to call it, but what we need is remuneration for the performance of those plants. They generate power. There is supposed to be a backup, an emergency service if there is not enough renewable power in the grid. Then we need a clear framework for the remuneration, whether that's a payoff over 30 years, whether that's a payment upfront, it doesn't matter just needs to be an amount of money. And whoever does the best work on the tender will probably be given the contract.

The next question is Peter [indiscernible] from Bloomberg.

Mr. Krebber, are you going to attend the COP Conference as well? And are you going to participate in the talks about the energy, the LNG -- pardon me, the LNG provisions? Because I think there are some very long-term contracts over up to 27 years in discussion amongst European energy providers. Why is that something RWE has taken a step back from, a long-term delivery contracts over the duration of 10 years, considering we are currently in a situation where everything is being decommissioned? And then a quick question about URENCO, is there any thought process about increasing capacities in order to help out other companies in order to get away from uranium from Russia, for example, as a partial owner?

Thank you, Ms. [indiscernible]. I look forward to more interactions with people like you at our road show. We are looking for investors, and I'm also going to stop by for 2 days in the Emirates. And then I travel on to the U.S. So yes, I will also be on the sidelines of the COP 28 meetings. But there are no plans at this event or further around the event to conclude any contracts. We are expecting to make no significant contracts or sign significant contracts any one of those attending or the U.S. We are happy with our portfolio. But we do imagine there might be interest in a long-term supply contract, maybe over 10 years as well. But what is not going to be doable is commitment into the late 30s for deliveries into Europe. It is only possible if a long-term offtake contract is flexible enough to lever into countries who may need natural gas longer. So a firm commitment to deliver into Germany over that time is not going to be made. Regarding URENCO, URENCO is not a uranium company as such. It's uranium enrichment. So I don't know how we can help, but I'm not going to comment actually because we have a financial commitment, and we are not linked into the decision-making of that management. So what I know is the same as what you know is what's publicly available in terms of information. So I cannot comment much more. Otherwise, you would need to ask URENCO U.K. directly.

Mr. [indiscernible].

I've got a general question about the condition of the energy markets to Mr. Krebber. Today in foreign, we see a certain volatility in the markets. And for certain technologies are supposed to be replaced because -- and regulation is supposed to help with this. We can see subsidies of the generators, also the consumers in order to get around the price risks and in order to see the functionalities, their contract conditions, their caps to energy prices, options of offshore wind energy, not including [indiscernible] criteria, capacity numbers for some technologies, but not for others. So the question is, are the best times of the liberalization of the energy market, are they ahead of us? Or are they past -- are they the things of the past? If you see a future for energy market, and how?

Mr. [indiscernible], this is a very interesting question. We could talk about it for a long time. I try to be brief at the end. What I thought you were saying, liberalization of energy markets are good. But I think that was [indiscernible], in charge of the grid, they want to have a proper regulation. So not to depend on the situations and on different energies. So is the situation of the regulatory framework. So in offshore wind park is nothing else, but a partially-regulated installation with a component of competition, so rather than having the monopoly in the grid. So everywhere where you have competition, which, of course, might look differently depending what I've got volatile fossil energies or renewable with a national framework depending on the kind of competition we are talking about. So if the government is not active, but is one of the active of the players, if their go to possibility for development for companies like ours, I do not see any risk in any of the markets that there would be attempt to offer nationalization of the market. But the component of competition is changing. I built a power station, but then also need to have the fuels, but then also have to have a good energy price in the offshore area, but the price is regulated by competition.

Next question is from [indiscernible] from Mr. Stefan Schulte. Before we go over to the U.K. Chad, Hello, Mr. Schulte, a very warm welcome to [indiscernible].

[indiscernible] London in your communications, you said the decarbonization is supposed to be accelerated at the same time. How should we understand it? Should you want to phase out coal even earlier? And did you want to lower the capacity of coal-fired power stations? Or is the coal part going to decrease with more renewables? And then a question about net profit increased by 12%, EUR 3 billion as the final target. When is it going to be worthwhile because you're above that, aren't you, without the hard coal? And also a question about gas. You described the situation. If you still want to have at least gigawatt in extension, is that not enough in order to compensate for the coal if it's phased out?

The second question, the basis is 2021 before the energy crisis, everything is referring to that time between '21 and 2030 as far as our growth rate is concerned. And then the 14% EBITDA, and then we get an increase in income. So to accelerate decarbonization, two elements so that we want to invest more in green technologies. We decarbonize our portfolio much more quickly on average. This is also seen in the science-based target initiative. So the CO2 emissions per average kilowatt hour. And of course, it's going to decrease, if you invest more in green technologies But we want to accelerate the renewables in Germany and this assumption how -- if you look at the utilization rate of our coal-fired power station, you can also see that the capacity has been lower compared to 2 or 3 years ago. And if you look, in 2027, coal only accounts for 10% in terms of capacity and generation. So the [indiscernible] is greater. So the gigawatt gas-fired power station only happens if we get replacement of capacity. Our market share of [indiscernible] is [ 3.4 ] gigawatt. But we also -- in forward an investment and to our investors and to regulate to refrain framework. And I can only reserve it for that. So we clearly said today, if the regulatory framework exists, then if it's decent, we can also increase our targets. But of course, we need to have the right calculation. If you put down a 3 gigawatt we got EUR 55 billion available. But it means we have to take it out somewhere else in order to make sure that the investment conditions are clear. we want to have a proper call for tender for gas-fired power station. But in order to replace the coal certainly not got to happen at the low end with RWE.

Further one is Alex Blackburne from S&P Global. We can't hear you. Sorry for that. Do you have unmuted your mic? Can you hear us? No, we are just checking again 1 moment.

Hello, can you hear me?

Yes. Now we can hear you.

I've got 3 questions, if I may. One is just on the net cash investments this looks like a really significant increase from the last CMD. I think you said EUR 30 billion for '21 to '30 last time around, and now it's on EUR 55 billion in a shorter time frame. So I just wanted to understand exactly what has kind of contributed to such a significant increase. And I wondered how much of it is simply down to the fact that you expect some projects to be more expensive than they were 2 years ago? So that's question one. Two, I'd just like to also understand a bit more about the selective investment criteria that you mentioned about kind of picking and choosing projects based on the best returns. Can you give me any examples on projects where you've done this or kind of projects where you've maybe pushback because of the unattractive returns relatively speaking? And then thirdly, just looking to 2024, there's potentially up to, I think, about 50 gigawatts of offshore wind auctions happening in Europe alone. You obviously already have a significant development pipeline in offshore. So I wondered to what extent you're looking at these new opportunities next year, and in which markets you would be looking at?

So I'll take the first one. So Alex, on first, you are right. This program is a significant step up in our investment program. So now EUR 55 billion in a shorter time frame. And I mean, most of that is coming just from stronger cash flows that we have seen in the last 3 years compared to our initial forecast, and we are also seeing going forward. And obviously, that's been a reinforcing effect. With more of those cash flows being invested into new projects, they also contribute then, especially in the later years to additional cash flow. That's one effect. Secondly, what we have also seen is that we had a very favorable development of our net debt. So we have more capacity on our balance sheet for external financing, and that also gives us additional headroom for investments. At the same time, you also mentioned the second effect. In contrary, we see higher cost for investments. So we see an increase. And that means that though the investment as such, go up, the megawatts or gigawatts we'll put in place relative to that growth slightly go down. But what is most important is that was a topic we intensively also discussed with investors is that higher costs and also higher interest also translate into higher earnings as we just saw in the auction in the U.S. and also the U.K. has lifted the price cap for offshore auctions. So therefore, yes, specific CapEx rates have increased, but we also see higher earnings potential so that overall projects are attractive. And that leads me to the last question you had around returns. I mean, on returns the way how we operate is we have a framework were based on the specific risk of a project, we determine a project-specific internal rate of return that must be matched by a project. So for example, if you have a PV project in Germany, say in our own lignite mine, that comes with a lower risk profile, therefore, our return expectation would be lower than if you go, say, to an offshore project in the U.S. where interest rates in the U.S. are higher. The offshore market in the U.S. still has to mature. So by different return expectation with each project needs to meet we then balance the portfolio and to come to the best allocation of our capital.

And on your question, which projects have potentially failed. It's difficult to tell you exactly for those projects which are developed by the teams because they know what the return expectation is so they will never come with a project, which doesn't meet the return expectation. So they stopped development activity beforehand. So this is typically true for onshore wind and solar. But for offshore, of course, you can name it because you have participated in the auction, and we were not successful. And that means the prices are at levels which you -- where we are not fine with, and then one was the French offshore auction, which was awarded for CFD price around the [ 40s ]. And the other one was the German offshore auction with significant lease payments. These are typical examples where we then did not win. Then your question on the significant auction volume in Europe, I mean, we plan to participate in many of them, that we have already a good pipeline, which backs our investment opportunities. Doesn't mean that we stop here, we will continue to develop because actually these are projects which come significant part of it beyond 2030, but we keep the machine rolling. But of course, clear eye on return expectations. And if we get more projects than we can do ourselves, then I think for good offshore projects, we always find great partners.

The next question is coming from the Netherlands. It's is from Sabina [indiscernible] from [indiscernible].

I have -- can you hear me?

Yes, we can hear you.

Good. I have 3 questions for the Netherlands. The first one is, your company has 4 gas-fired power plants in the Netherlands. Do you plan on making these hydrogen ready? And how much are you planning to invest in these plants? My second question would be, next year, there will be auctions for new offshore wind farms in the Netherlands. Does RWE plan on bidding for these projects? And my last question is, well, you operate power plants, wind on land, offshore wind farms and coal biomass brands in the Netherlands. What will be the main area of investment in our country in the coming years?

Yes. Thank you very much, and [indiscernible] to the Netherlands. I'm glad that you didn't ask this question in Dutch. So first, the question on the gas plants. We're going to decarbonize our gas plants until 2040. And in the Netherlands, the technologies of choice are either converting them to hydrogen, so Magnum, the one in [indiscernible] will probably go that [indiscernible] because it's already hydrogen, partly hydrogen ready. For others, we also look into CCS because, I mean, knowing that the Dutch policies will support CCS, and you get a CCS infrastructure. And then it depends in the end on location, and, of course, necessary investments. So far, I cannot name the amount of investments because there is no policy framework for the decarbonization of gas plants. So probably, it needs another 5 years until we have clear visibility what we're going to do plant by plant, but the teams are developing the different options. On the offshore auctions, I mean, just to reiterate that the Netherlands is also a core market for us in offshore, but I cannot go beyond that because you typically don't communicate exactly what you intend to do in certain auctions. And then you are right, we also operate biomass, also other technologies. Our core investments in the Netherlands will be in all renewable technologies. So offshore wind, you know that we're going to bid on your wind, this is system integration with e-boilers, with batteries and electrolyzer. Then also, we continue onshore wind and solar and also decarbonizing the gas assets. Currently, I don't see that we actually need new gas-fired or H2-ready gas plants in the Netherlands because there is significant capacity, the task is more to decarbonize it.

So the next question comes from Philip [indiscernible] from [indiscernible] and then back to Reuters to [indiscernible].

My question is referring to, is there going to be investments in renewables in projects? If you've got such high targets and if they become more ambitious and also in the wind energy and then the gas-fired power stations 3,000 gigawatts that referring to Germany, not to Europe.

I didn't quite get the beginning of the question.

The first question was, is there going to be, again, organic growth in renewables, we're seeing the....

Yes, understood. So our current target is expected with organic growth at this moment in time to buy a project carriers. Of course, you are always looking what is available and you might buy the project, but the objectives that we put forward today we are able to do so without organic growth. And about hydrogen capable power stations, we're only looking at Germany. I don't think other core markets, such as Netherlands and U.K. would need new gas-fired power stations because they phased out coal much earlier. And in Germany, it was all -- between coal and nuclear. And the amount of gas-fired stations is quite low in Germany compared to the U.K. and the Netherlands, and hence we need more capacity in Germany for gas-fired power station. And hence, we're focusing on Germany at this moment in time.

Next question is from Tom Kaken from Reuters.

And sorry, the camera is not working. The following question because it's a good figures, is RWE not might not be a target for takeover? Are you prepared for this, and has anybody get got in touch with that?

I always like it when RWE looks attractive, but I can reassure you, can reach to us there have been no talks, no conversations, no intense preparation. Our priorities are very clear in order to carry on with our growth path and the best way to be protected against takeovers to have good assessment. And hence, we're happy if the share price is further increasing.

Next question again from [indiscernible] from [indiscernible].

Mr. Krebber, would you be able to explain why you are revising for your expectations in terms of coal cogeneration downwards? Is this because there is low demand from German industry since 2023? Or why do you decrease your expectations in that respect?

So the main reason we were slow what is on the demand side, the demand side Asia in the long run, if you consider that it's quite stable or there's going to be an increase. There's also -- German industry is asking -- has got less of a demand. But in heat generation and France [indiscernible] the demand in energy is going to grow compared to 2021. We also had an increase with renewables in Germany, and there has been an acceleration to that. You can also see it with the current licenses. We're not as aggressive as the federal government would like us to be, but we're looking at more extensions at a higher level than expected 3 years ago. And this is the main reason why we had the capacity of coal being used, which is always the last possibility.

The next question is from [ Paul Stephen ] from [indiscernible].

I had a question about voting offshore wind, which obviously remains an emerging technology, but one which the U.K. would like to be a global leader in. And so I just wondered what role, if any, you thought this would play in the portfolio by 2030 and possibly beyond? Is it an attractive investment prospect, and what you thought the main challenges were to its deployment?

Yes. Thanks for the question. We have no gigawatt plans until 2030 in floating. That will all come beyond 2030. When you look at our portfolio, we have already one commercial lease for floating, which where we're successful, and that is in California, where we are now developing the project. We also expect the auction here in the U.K. for the [ Caltex C ], which might come next year, which is also a very big commercial floating offshore project, but also beyond 2030. We strongly believe that floating will be competitive. It will take some time, maybe another decade to drive costs down, but then also to make use of all the good wind resources, more distance from the shores, it will come, but it might come a bit later. So that's why we are driving it. What is missing besides technology, where we are also actively a contributor to the pilot projects, we have one in Norway, one in Spain. What is also, of course, needed is the regulatory framework and the remuneration framework. I think it's today, floating offshore wind project needs to compete in the same part than a fixed bottom offshore project in a CfD auction, the floating one will not be successful. So I think there is a good case that you start maybe not with big gigawatt numbers but with smaller numbers that you can actually build this industry. And we have seen that in California, and currently, there is also the evaluation of a floating offshore bid in France. So the different countries are driving it. But if you look at your country here in the U.K., there is still huge potential for fixed bottom. I think priority in terms of getting more renewable power into the system is fix the problems we have seen with the last auction rate because, I mean, gigawatts of fixed bottom come to the U.K.

Well, ladies and gentlemen, we do not have any further questions in the line at moment. But if you did have any further questions, that is not a problem at all. You do know our numbers. Please contact our teams should you have any further questions. What remains is to thank you very, very much for your attention and your participation in the name of Markus Krebber and Michael Muller. Thank you for your attention. We look forward to hearing from you. Have a nice afternoon. Goodbye. [Statements in English on this transcript were spoken by an interpreter present on the live call.]