German Utility Giant Eyes Massive $46 Billion Investment

Europe’s giant utility operator, German E.ON, said on Wednesday it was targeting a massive $46 billion in investment in five years for a grid overhaul and expansion to accommodate renewable energy projects as the company’s profit guidance soars. 

Shares in E.ON popped to an almost six-week high on Wednesday following the company’s bullish forecast and its plans to raise its five-year investment target by 27% to modernize Europe’s grid. 

Shares were trading up 6.53% at 12:46 p.m. ET on Wednesday, and are up 3.41% year-to-date, with investors also eyeing its attractive dividend yield of 4.32%. 

E.ON services an estimated 47 million customers, and is now tasked with overhauling the continent’s grid to take in power sources from solar and wind. 

"E.ON will be a major beneficiary of the current strong operating environment. In our view today's medium-term outlook will be a major re-rating catalyst," Reuters quoted Barclays analysts as saying. 

The utility giant is one of the clearest beneficiaries of the European Union’s net zero 2050 climate goals because the entire bloc’s clean energy assets will have to be connected up to the grid in a favorable regulatory environment. 

“What Europe needs now is an intelligent energy infrastructure for sustainable, secure and affordable energy,” E.ON chief executive Leonhard Birnbaum said in a press release. 

“This is exactly what we have focused E.ON on and we are consistently pursuing this course. This means that we will continue to invest massively in order to meet the rapidly growing demand for energy infrastructure,” he added. 

In its latest earnings report, E.ON showed adjusted net profit up 12%, and for 2024 expects EBITDA of between 8.8 billion euros and 9 billion euros, potentially rising to 11 billion euros by 2028. 

By Charles Kennedy for Oilprice.com

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