Energy. Water. Life.

Full Report 2018/19

Forward-looking.

Goal-oriented.

Sustainable.

Interview with the Executive Board Stefan Szyszkowitz and Franz Mittermayer.

Our shareholders can depend

on EVN for stability and continuity.

Franz Mittermayer and Stefan Szyszkowitz on changing customer expectations, climate protection and renewable energies, extensive investments and success in the international project business.

"In 2020 we will have reduced our CO2 footprint in Lower Austria by roughly two thirds in comparison with 2005 – through the massive expansion of our renewable generation and the earlier-than-planned shutdown of hard coal-fired production in Dürnrohr."
Stefan Szyszkowitz,
spokesman of the Executive Board

To begin with: What is the core message behind the slogan for this report, “Energy. Water. Life.“?

Stefan Szyszkowitz: Our customers have clear expectations: high-quality supplies in the form of a broad portfolio of products and services that support and facilitate – and frequently also form the basis for – their daily living and working routines. The indispensable foundation for all this is a highly developed technical infrastructure, from generation to distribution through our networks.

Franz Mittermayer: That’s not only true for energy, but also for drinking water. In order to guarantee reliable, high-quality supplies for our customers, we’ve been making massive investments in water supplies for many years. This investment programme will undoubtedly continue for at least another decade, with special weight on the expansion of the pipeline infrastructure. As you know, a cross-regional network – and here we are currently speaking of a total length of approximately 2,800 km – allows us to establish both a quantitative and qualitative equilibrium and, in this way, protect supplies for our customers.

What do change and challenges mean for EVN’s employees?

Stefan Szyszkowitz: We are open to new forms of communication and cooperation – which is what we mean with the “new EVN Working World“. Additionally, we are using the opportunities created by digitalisation to make internal processes more efficient and to help us find the answers to customers’ changing requirements. In order to meet these demands, we need motivated colleagues who are receptive to change and have the necessary positive mindset. Our ideas and actions can’t simply stop at the department or company door. Of course, we naturally want to keep our focus on our customers’ needs. It’s also interesting to see the changes on the labour markets in our core countries. One solution for these challenges is dual training, like the programmes we created together with partner schools in Bulgaria and North Macedonia. Innovative methods for human resources development are also part of our future approach in Lower Austria: here we are launching a new course of studies that will allow our employees to complete training to become a “digitalisation master“.

"Supply security means that our electricity customers always have the desired quantity of electricity when it is needed – and here I mean the 50 Hertz frequency quality that is standard in Europe."
Franz Mittermayer,
member of the Executive Board

In August 2019, EVN produced electricity in the Dürnrohr power plant for the last time with hard coal. How did you reach this decision?

Franz Mittermayer: The German-Austrian electricity price zone was terminated on
1 October 2018, which means it’s no longer possible to have our thermal power plants, including Dürnrohr, under contract to serve as reserve capacity for southern Germany as we had in previous years. That eliminated a major reason to keep these plants in operational readiness, particularly since the price of CO2 emission certificates had nearly tripled by the end of May 2019 – over a period of only one and a half years. In the end, we decided not to order any more coal, and the ship with the final delivery for Dürnrohr arrived in late May 2019. Apart from business considerations, this decision will make an active contribution to climate protection: by terminating operations before the end of the plant’s technical useful life in 2025, we will avoid approximately 3.6m tonnes of CO2.

Stefan Szyszkowitz: However, this shutdown creates a major challenge for supply security, and other power plants in Austria will need to step in. As long as the electricity produced from water, wind and the sun can’t be stored in sufficient volumes to protect supply security, we will need alternative forms of reserve capacity. Here I am thinking, above all, of fast-starting gas turbines, comparable to the ones in aircraft, which can be bundled into flexibly deployable energy stations. In order to create the necessary framework conditions, we need a coordinated approach – not only in Austria, but at the European level.

And what lies in the future for Dürnrohr?

Franz Mittermayer: Dürnrohr will be assigned new responsibilities as a key energy location. Our thermal waste utilisation plant will continue to generate process steam for industrial customers, in addition to conventional electricity and district heating. In order to meet our obligations towards these customers, for example in the event of maintenance-related downtime, we are currently installing an additional gas-fired boiler for steam production. We are also planning to construct a sewage sludge incineration plant and install a largescale photovoltaic plant – and are currently studying the optimal capacity. It could range up to 20 MW, which would make it Lower Austria’s largest photovoltaic facility – all things considered, a very nice alternative for the site of a former coal-fired power plant.

In recent months, public discourse has increasingly turned to climate protection. What answers does EVN have for climateconscious customers?

Franz Mittermayer: Our latest answer is joulie, a highly innovative web-based package that supports the use of photovoltaic equipment in private households. joulie – which is an EVN innovation – not only optimises generation and consumption for the equipment’s operator, it also markets the surplus electricity. This future-oriented step will transform us from a pure supplier into an energy manager for our climateconscious household customers.

Stefan Szyszkowitz: This is only one of many offers. For many years, our customers have been able, for example, to purchase electricity from 100% renewable generation through our “Nature“ product line. Here we can see a welcome trend in that large customers – companies as well as municipalities – are increasingly and directly asking for green electricity. In recent years, we have also changed our supply mix to substantially reduce the share of electricity with a CO2 footprint. And we intend to make further progress in this area over the coming years.

Keyword: investments. What were the focal points in 2018/19, and what are your plans for the future?

Stefan Szyszkowitz: Our projects are concentrated on the network infrastructure because the current schedule includes a higher investment cycle for the distribution network of the future. During the next three years, we also expect to invest additional funds for the introduction of smart meters in Lower Austria. At the same time, we are continuing to invest in renewable generation: during the past financial year, we significantly accelerated the expansion of our wind power capacity and completed five projects. That means we have reached our medium-term expansion goal of roughly 370 MW one year earlier than originally planned. We want to expand EVN’s wind power capacity to roughly 500 MW by the end of 2023, subject to appropriate framework conditions. This goal is based on a pipeline of roughly one dozen projects in Lower Austria, which have already been developed and, in part, approved by municipal authorities. However, we are also evaluating the feasibility of large-scale photovoltaic equipment in our supply areas and currently see a potential of up to 100 MW for the EVN Group as a whole. The third focal point for our investments – as previously mentioned – is drinking water supplies for Lower Austria. Translated into figures, this means investments will be in the range of EUR 400m per year over the next four financial years. And roughly three quarters of this annual total will account for Lower Austria.

And what is the latest news from the international project business?

Franz Mittermayer: Here we are looking at an exciting new field. Our attention has recently turned to the development of concepts and solutions for the drying and thermal utilisation of sewage sludge – which is an issue with great potential for the future. With our know-how in the planning, construction and operation of these types of plants, we have exactly the right solutions in our portfolio. WTE Wassertechnik is currently working on contracts for the construction of sewage sludge incineration plants in Germany, Lithuania and Bahrain.

In conclusion: What expectations can shareholders have for EVN?

Stefan Szyszkowitz: Stability and continuity are two factors our shareholders can definitely depend on. Our strategic positioning for EVN reflects a clear focus on regulated and stable activities that safeguard the company’s plannable cash flows and, in turn, its fundamental stability. This explains the concentration of our investments in these business areas and our very conservative approach to additional growth in fields with a higher risk-return profile. Sustainability is a further important aspect that also has a significant influence on our company’s capital market operations. Our strategy is closely tied to responsible and sustainable actions. We believe this makes the EVN share attractive, above all for people who are interested in sustainable financial investments.

Since our goal is to secure ratings in the solid A range, we place high priority on balancing the use of funds between investments and distributions to our shareholders – and follow a dividend policy that is focused, above all, on stability. We plan to ask the Annual General Meeting to approve an ordinary dividend of EUR 0.47 per share for the 2018/19 financial year. Our shareholders are also interested in planning their cash flows and, to make their work easier, we will work to hold this ordinary annual dividend at least constant in the future. The past financial year marks the 30th anniversary of EVN’s listing on the Vienna Stock Exchange: we want our shareholders to join us in this celebration and will also ask the Annual General Meeting to approve a bonus dividend of EUR 0.03 per share.

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