10 questions, 10 answers.

10 questions, 10 answers.

Stefan Szyszkowitz and Franz Mittermayer on EVN’s road into the energy future.

1

1

#mission2030:
a positive energy policy framework

#mission2030: a positive energy policy framework

How would you evaluate #mission2030, the new climate and energy strategy announced by the Austrian federal government?

Stefan Szyszkowitz: #mission2030 gives Austria a concrete climate and energy policy perspective. It is built on the results of the UN‘s Paris Climate Conference and the goals defined in the European climate and energy guidelines. We see this as a positive step because – apart from taking a comprehensive view of our energy system – it deals with issues like seasonal storage or new technologies for sector coupling which are also essential for supply security. With our investments in renewable energy generation and network expansion, we have been making a very real contribution to the reduction of greenhouse gases for many years. And, as an integrated energy company, we will continue to be a logical partner for the realisation of these goals that reflect our corporate strategy.

As a listed company, we believe political goals must also be followed by a concrete legal framework on which we can sustainably and reliably realise our strategy. A broad social discourse over targets, measures and the use of resources is also needed to ensure the necessary acceptance. Initial estimates by Oesterreichs Energie, our industry association, indicate that the target set by the political sector – which calls for 100% renewable electricity generation for Austria by 2030 – will require investments of roughly EUR 50bn in renewable generation capacity and the necessary network infrastructure. We must make sure the ambitious timetable for 2030 in no way jeopardises national supply security or network stability for a single second.

2

2

Valuable impulses for
Lower Austria and EVN

Valuable impulses for Lower Austria and EVN

How important is #mission2030 for Lower Austria and, in turn, for EVN?

Franz Mittermayer: Our corporate strategy sets clear priorities and, in one very major point, coincides completely with #mission2030: EVN is currently the leading wind power producer in Lower Austria, and we want to maintain this position in the future. Assuming appropriate framework conditions, we will continue to invest in new wind parks in Lower Austria during the next few years and, in this way, contribute to the targeted increase in the share of electricity from renewable generation. Specifically, we want to raise our wind generation capacity from the current level of 318 MW to 370 MW by the end of 2019/20 and to roughly 500 MW over the medium term.

Another central point of our corporate strategy calls for massive investments in the network infrastructure over the coming years. As we have already mentioned, the goals set by #mission2030 will create additional, wide-ranging responsibilities for our networks. The wind conditions in certain sections of our supply area are particularly attractive and regularly face us with the challenge of integrating not only new EVN wind power plants, but also third party wind power facilities in our network. At the same time, we need to make sure this wind electricity is transported into the metropolitan areas. Other issues, like the “100,000 roof-mounted photo voltaics” programme that is anchored in #mission2030 or the growing importance of e-mobility, will require further investments to protect network stability.

3

3

Investments in the networks, renewables
and drinking water supplies

Investments in the networks, renewables and drinking water supplies

Where else do you see EVN’s investment focal points for the next few years?

Stefan Szyszkowitz: In total, we are planning investments of up to EUR 400m each year over the near and medium term – whereby approximately EUR 300m will be directed to the network infrastructure, renewable generation and drinking water supplies in Lower Austria. Our continuous investments in South Eastern Europe – here, our focus remains on reducing network losses – will also protect supply security for our customers in Bulgaria and Macedonia.

4

4

Thermal power plants
as reserve capacity

Thermal power plants as reserve capacity

What role will EVN’s thermal power plants play in the future?

Franz Mittermayer: The fact that our thermal power plants are frequently called on to support network stability throughout the entire year – in 2017/18 on 157 days – sends a clear message. A system that relies on 100% renewable electricity generation will only be able to guarantee 24/7 supply security when conventional power plants are available to stabilise network operations by providing control and balancing energy. In any event, this will be the situation as long as there are no marketable storage technologies.

5

5

Continued evolution
of the corporate DNA

Continued evolution of the corporate DNA

Are the challenges of the energy future changing EVN?

Stefan Szyszkowitz: Internal and external networks are becoming increasingly important. Let me explain this with a specific example: EVN has developed a real-time information and control system for the energy sector, in short EZISSE, to optimally integrate and manage our own generation units and the decentralised generation facilities operated by our customers. This innovative digital platform can synchronise supply and demand in the second and also forms the technical basis for joulie, our highly regarded new photovoltaic and energy management product. joulie was introduced in 2018 and – with the use of Google Maps – allows customers to configure photovoltaic equipment and arrange for a non-binding offer easily and comfortably with a few simple clicks. However, joulie can do much more because this web-based assistant also controls and optimises the customer’s equipment and even handles the marketing of surplus electricity through our network. The implementation of these types of innovations is only possible with the close cooperation of all market participants, including customers, and our specialists at EVN. For that reason, and with a certain degree of pride, I want to mention these developments as positive examples of how our DNA is evolving together with the energy system!

6

6

Summer-winter equalisation
as the new challenge

Summer-winter equalisation as the new challenge

What solutions do you see in the area of seasonal storage?

Franz Mittermayer: The growth of renewable generation has created a problem for the energy industry throughout Europe because water, wind and sun lead to substantial surplus production, above all during the spring and summer, but are unable to cover the demand for electricity during the winter months. The longerterm, seasonal storage of electricity – which we also refer to as summer-winter equalisation – is becoming more and more the central challenge for our energy future. EVN has, of course, already started to address this subject – we are currently evaluating various possibilities for cooperation and carrying out a number of research projects together with partners. One definitely interesting approach is the conversion of electricity into renewable natural gas, which can be used, as needed, to operate gas turbines and, in turn, to generate electricity. The next step towards the development of marketable technologies is to clarify the technical details and, above all, the issues related to profitability and financing.

7

7

Active innovation as the source
of continuous new solutions

Active innovation as the source of continuous new solutions

How is EVN positioned with regard to research and innovation?

Stefan Szyszkowitz: Active involvement with the changes in our industry is decisive for our success. As a network operator, that is the only way we can guarantee supply security. Test series – like the one we recently carried out with a transformer station and wind park at our large storage battery pilot plant in Prottes – help us, for example, to evaluate innovative solution approaches to equalise voltage fluctuations in local networks. In general, the integration of decentralised generation is an elementary challenge. We need to develop and examine intelligent solutions from different perspectives to support prosumers in the optimal utilisation of their own production and in the operation of the local networks. We are also one of the supporters of the “Green Energy Lab”. This wide-ranging innovation project for green energy is designed to develop new technologies and concepts for the energy system of the future.

8

8

Future issue:
drinking water

Future issue: drinking water

Drinking water supplies are also a future issue for EVN – what are the latest developments in this area?

Franz Mittermayer: The high temperatures and low rainfall during the past summers underscore the need for massive investments in drinking water supplies for Lower Austria during the coming years. Moreover, demographic trends – Lower Austria has seen a substantial population influx from Vienna for some time now – and economic growth have led to a general increase in the demand for water. That, in turn, creates a need for further crossregional transport pipelines to improve supply security in the individual communities. For us, the careful use of our valuable natural resource water also means regularly monitoring our local water networks with special equipment to localise potential leaks and stop the loss of drinking water as quickly as possible. We also make an important contribution to supply quality with our increasing number of local natural filter plants, which reduce the hardness of the water by environmentally friendly means and without chemicals.

9

9

Digitalisation, data
security and cybersecurity

Digitalisation, data security and cybersecurity

The many possibilities created by digitalisation are contrasted by challenges like data security and cybersecurity. How are you handling this?

Franz Mittermayer: Very carefully – above all when the protection of legitimate customer interests is involved. Our IT experts take great care in dealing with issues like cybersecurity and the protection of critical infrastructure. Data protection is also an important issue for customers and has taken on a completely different meaning, for example in connection with the smart electricity meters preferred by the EU. In spite of the advantages created by these intelligent devices – which give interested customers the opportunity to exactly analyse and manage their consumption patterns – quality and data security are our top priority. We therefore consider it our responsibility to carry out particularly extensive tests on the quality of the hardware and software required for smart metering.

10

10

Solid perspectives
for investors

Solid perspectives for investors

How will shareholders benefit from EVN’s focus on the energy future?

Stefan Szyszkowitz: We remain committed to a reliable dividend policy, and our shareholders can depend on stable and plannable distributions. The basis for these dividends is formed by our solid business model with its focus on stable activities in Lower Austria like network and wind park operations and drinking water supplies. As you can also see in this year’s full report, we are, at the same time, taking an active approach to the changes in our industry that are created by digitalisation and other developments. These challenges will not only influence and advance network operations, but also our product offering in the future. Profitable and secure business fields and a healthy capital structure will remain the key requirements for protecting our position as a reliable player on the capital market in the future.

Y