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Interview with the Executive Board

2022/23 financial year

The conversion of the energy system is a project for generations

Interview with the members of EVN’s Executive Board, Stefan Szyszkowitz and Franz Mittermayer.

The development of renewable energies – meaning wind and photovoltaics as well as hydropower – has been extremely dynamic. Can we already depend entirely on green electricity? 


Stefan Szyszkowitz: Sometimes yes, sometimes no. I particularly remember the 2 July 2023. There was so much renewably generated electricity in the European electricity system on that Sunday that it was momentarily traded at a negative spot price of EUR 500 per MWh – in other words: you were required to pay for feeding-in produced energy. The result was that renewable capacity was taken off the grid across Europe and wind parks were temporarily shut down. And at the Danube River power plants, water was diverted past the turbines. 


This example leads us to a series of conclusions: First of all, the focus of society and politics on climate protection and the expansion of renewables is making great progress. We also see this in our Lower Austrian network area, above all due to the rapid growth in decentralised photovoltaic facilities. But secondly, as impressive as the expansion of wind and solar electricity is, we urgently need economically and technically mature solutions to use and – even more important – to make the seasonal storage of surplus production possible. The greatest challenge for an emission-free European energy system is the management of energy requirements during the winter – and here, I mean times when we normally don’t have enough wind, solar and hydropower to cover demand.


What approaches do you see here, and what directions is EVN following?


Franz Mittermayer: One obvious approach involves sector integration, for example the use of renewable energy for room heating or as hybrid storage for district heat supplies. Another possibility is the operation of electrolysis plants for the conversion of solar energy into green hydrogen which can be changed back into electricity as needed. Our subsidiary RAG is currently working on a pilot project under the title “Underground Sun Storage“, and we are involved as a cooperation partner. The idea behind this innovation – which is unique in Europe – is to store green hydrogen in RAG’s abandoned geological natural gas reservoirs and to use it for electricity and heat generation at a later date. We are convinced that green molecules will be an important building block for the energy transformation because they help to protect supply security – and that is the most important requirement for an energy provider like EVN.


We are also seeing new ideas for networks that could ease the stress on the system by using special IT solutions that make consumption more flexible and, in so doing, prevent demand peaks. With the acquisition of CyberGrid, which has specialised since its founding in the development of software exactly for this application, we have secured expertise in this area for the EVN Group.


Let’s turn to the numbers. You increased the level of investments again, this time to a range of EUR 700m to EUR 900m per year. What are the reasons behind these plans?


Szyszkowitz: The conversion of the energy system is a project for generations, also from an economic standpoint. Our plans for the further development of the network infrastructure speak a clear language. It’s important to know that we will be making massive investments in additional transformer stations, substations and power lines at all network levels, including the related software. From 2019 to 2023, we doubled our network capacity in Lower Austria from 1,500 MW to 3,000 MW. And we now need to increase this capacity up to 6,000 MW by 2030. That’s the only way we can guarantee the integration of the rapidly growing renewable generation from wind and solar power in the energy system and its transport into consumption-intensive regions. At the same time, the networks must be strengthened to better accommodate the demands of e-mobility and the increasing use of heat pumps. When you take all these issues together, we will need to invest up to EUR 450m per year in the Lower Austrian electricity network alone. In addition, we must address the expansion of renewable generation, the expansion of drinking water supplies in Lower Austria and investments in South East Europe.


Mittermayer: An additional investment focal point in the IT and software area can also be expected in the coming years – because the energy future can only function with the support of state-of-the-art, high-performance IT solutions. Highly efficient data management that meets strict security standards is a basic requirement for a new energy market design.


Continuing with renewables. What is happening here?


Mittermayer: At no point in our company’s history was the increase in renewables as strong as it is now. As of 30 September 2023, we had an installed wind power capacity of 447 MW and, by year-end 2023, we will commission two further projects and add a total output of 30 MW to the grid. At the same time, we started construction on another wind park and a repowering project. We are committed to our expansion goal of over 750 MW for wind power by 2030, which is backed by a pipeline with a large number of different projects in different stages of development. 


Photovoltaic expansion is also proceeding rapidly. Here, we had roughly 42 MWp at the end of this past September – and this volume will double by the end of the year with the commissioning of large-scale plants in Dürnrohr and North Macedonia. Our plans for photovoltaics are consciously focused on regional diversification because we have significantly more sun hours on average in our South East European markets in North Macedonia and Bulgaria than in Lower Austria. Similar to wind power, we can also confirm our photovoltaic expansion goal of 300 MWp by 2030.


What do all these upheavals and changes mean for your employees? 


Szyszkowitz: In any event, a wide range of exciting issues. As the members of the Executive Board, we are impressed by and thankful for the enthusiasm, passion and professionalism with which our colleagues manage their different, important responsibilities every day. The challenges we are facing are wide-ranging and demanding, and mastering them will require, in part, new qualifications. For being well equipped at the personnel level, we are presenting EVN on the labour market as an innovative, future-oriented and responsible employer. We believe we can indeed make a very attractive offer here: Working on the energy future, supply security and customer satisfaction is a meaningful occupation. And in the end, it’s always the people who have the answers to the major questions and challenges in our industry!


At the beginning of October 2023, EVN held its first capital markets day in several years. What topics formed the focal points?


Szyszkowitz: We took advantage of the opportunity to inform the capital market of our expanded investment programme as part of our strategy update. Renewables, possibilities to store surplus energy and network expansion also formed the central content at this event. In addition, we explained the medium-term prospects for our business based on our planning assumptions. We were able to demonstrate that EVN is gradually moving towards an all-electricity future and can cover the increasing demand for electricity.


A further point was the ESG positioning of the EVN share. We are working intensively on the target path agreed with the Science Based Targets initiative to gradually reduce greenhouse gas emissions in all our activities. In this connection, we also announced that we want to strengthen our ambitions in support of climate protection. The science-based reduction goals agreed two years ago are based on the well-below 2°C target, and we are now evaluating an adjustment to the more ambitious goal of 1.5°C. 


The energy supply business to end customers was under massive earnings pressure in 2022/23. What are your expectations for this business in the future?


Szyszkowitz: The historical distortions on wholesale markets had a massive negative influence on the energy supply business during the past two years. However, we have recently seen a gradual decline in spot and futures prices. And we therefore expect a return to a positive earnings contribution from EVN KG in the 2023/24 financial year.


You announced fundamental strategic changes for the international project business in September?


Mittermayer: EVN acquired WTE 20 years ago. Since that time, a variety of projects were successfully completed in East and South East Europe. WTE is currently realising the largest project in its history in Kuwait. This project is a great success for WTE. After corona-related obstacles, unluckily right at the project’s start, everything is now on schedule. The wastewater treatment plant is, de facto, finished, and the pipeline infrastructure is two-thirds complete. With this project – and naturally all the other 120 contracts which were also completed, WTE has references that create opportunities for international growth. The company has also successfully established a position in thermal sewage sludge utilisation with interesting contracts in recent years. We, in EVN’s management, concluded that we want to identify new investors who can better accompany WTE during its next growth phase. EVN will be faced with many challenges and growth opportunities in the energy business over the coming years, and that will require our full attention. 


What does all this mean for the performance of your share and your positioning on the capital market?


Szyszkowitz: As announced in May 2023, we plan to propose a dividend of EUR 0.52 per share plus a special dividend of EUR 0.62 per share for the 2022/23 financial year. 


We are also redefining our dividend policy for the future. Our goal is to pay a minimum dividend of at least EUR 0.82 per share each year, and we are committed to appropriate participation for our shareholders in future earnings growth. Over the medium term, we are targeting a payout ratio equal to 40% of Group net result, adjusted for extraordinary effects. But, at the same time, we want to maintain our ratings in the solid A range.


Mr. Mittermayer, one personal question in conclusion: In view of your upcoming retirement, how would you summarise your professional life and your time with EVN?


Mittermayer: During the last 30 years of my professional life when I worked for EVN, I always had very interesting and responsible assignments. The company – and all my colleagues – were always very flexible in every situation. Challenges were seen as an opportunity for change and progress. I believe this sprit is deeply anchored in our DNA, and the younger employees see this as a positive aspect of our corporate culture that can be further developed from their generation’s viewpoint. I am therefore convinced that we will successfully master the energy future at all levels – and I wish all my colleagues and the new Executive Board team the best of luck.