Good morning, ladies and gentlemen. I declare open this year's AGM of RWE AG and would like to welcome you very warmly on behalf of the Executive Board and the Supervisory Board. I would like to extend special greetings to our shareholders and shareholder representatives, the representatives from the media, and all other guests who are following the AGM today on the Internet. Ladies and gentlemen, the coronavirus pandemic is continuing. Large events similar to an AGM with physical attendance are not possible. The Executive Board, with the approval of the Supervisory Board, decided to hold today's AGM just like the regular AGM of 2020, as a virtual annual general meeting without physical presence of the shareholders or their proxies. We are making use of the possibility given to us by the legislator through the so-called COVID-19 Act, which is still valid until the end of 20
Within the scope of the specifications of this law and what is technically feasible, we intend to implement the rights of our shareholders in the best possible manner. Thank you very much that you are following today's annual general meeting live on the Internet. The persons who are here today, or the number of persons here today, has been limited to the number of participants necessary. In addition, the safety and security of the event is ensured by a comprehensive hygiene and test concept. I would like to welcome the Chairperson of the Audit Committee, Dr. Erhard Schippers, from the Supervisory Board. Also, I would like to welcome the Executive Board members, Dr. Rolf Martin Schmitz, Dr. Markus Krebber, Mr. Svein Harald Øygard, and Dr. Michael Müller. As in the previous years, the notary public, Dr. Illinger, will take the minutes.
On the Board, we also have the Head of the Legal Department of RWE AG, Dr. Rust. The other members of the Supervisory Board will be participating by means of video and sound transmission. They're going to follow the AGM via the Internet and are able to make a contribution if required. Now, let us continue with some necessary formalities and organizational remarks. The invitation to the Annual General Meeting was published in due form and time in the Federal Gazette on 16 March 2021. It was made accessible to the European Union. Together with the agenda, the proposed resolutions of the management on agenda items 2 to 13 were published. At the same time, the invitation and the other documents to be submitted were made available on the Internet under or at www.rwe.com/hv.
The documents will also be available there today, and they are also available here in the Assembly Room. The Executive Board also delivered the invitations to the annual general meeting to the recipients defined in Section 125 of the German Stock Corporation Act. The counter-motions submitted by shareholders in due time and the comments of the Executive Board have been made available on the company's website at www.rwe.com/hv. Today's entire annual general meeting, including a simultaneous translation into English, will be broadcast live and publicly via webcast. You can select the language on the website. My speech and the contributions by Dr. Schmitz and Dr. Krebber will be recorded and will be available on the website of the company as from tomorrow.
Together with the service providers commissioned, we carefully checked the necessary technical preconditions for live transmission so that the virtual AGM can be held properly and without any interferences. Should interruptions occur nevertheless, please be patient for a few minutes. In the event of persistent technical problems, we will provide you with information on our website under www.rwe.com/hv. Please refresh the web page if required. The participants' register will be kept and updated here, and the participants' register will record the proxies of the company present and the shareholders represented. I would now like to read out the current attendance as recorded in the participants' register. The proxies represent a total of 398,324,313 shares with an equal amount of voting rights. That corresponds to an attendance of 58.91% of the registered share capital. In addition, we have postal votes in the amount of 11,096,238 non-PAR shares.
In total, 409,420,551 votes are represented at the annual general meeting, which corresponds to 60.55% of the registered share capital. Virtual annual general meetings do not provide for the right to speak and ask questions. However, registered shareholders were able to submit questions via the investor portal until the day before yesterday, that is the 26th of April, midnight. These questions will be answered by the Executive Board and myself in a few minutes. After the Q&A session, we will proceed to the voting process. Shareholders or their proxies may only exercise their votes by postal vote or by authorizing the proxies of the company. Before the annual general meeting, it was possible to vote by postal vote and to authorize proxies by way of a form sent by post, email, or telefax.
Through the Internet-based investor portal, you will also be able to use the possibilities to vote during today's AGM. Casting a vote via the investor portal is possible until the time when I start determining the voting results. Until the voting procedure is closed, you will be able to change or revoke your vote via the investor portal. I will remind you of the closing of the voting portal and the voting process in due course, but would also like to encourage you to cast your vote early enough. The company's proxies will vote according to the instructions by releasing the votes entered in the system. Also, the postal votes will be taken into account for determining the voting result.
Via the investors' portal, shareholders will also be able to file objections against one or several resolutions of today's annual general meeting and have this recorded by the notary public until the end of the annual general meeting. I will remind you of the closing of the possibility to object before the end of this time and the end of the event, but I would like to remind you that you should not wait until the last second if you would like to submit an objection. The voting process and the technical preconditions are monitored and checked by the notary public, just like the functioning and the reliability of the system used for submitting objections. So much for formalities and organizational remarks. Ladies and gentlemen, before we continue with the agenda, I would like to make a few comments on another topic.
All of you have probably heard that today's annual general meeting will be the last that Rolf Martin Schmitz will be attending in his role as the CEO. Dear Mr. Schmitz, an AGM is hardly the right place to sufficiently and adequately appreciate your professional life, not least because I do not have enough time to do so. I will not even succeed in giving a rough account of all your achievements in the energy industry over the last three decades. Dear Mr. Schmitz, your retirement represents the end of an era for the RWE Group. You have shaped the company in the past 12 years and in the past 6 years as the CEO, so that it became one of the most important green power producers in Europe. Who would have imagined in 2016 what RWE's current situation is today?
The nuclear phase-out and the coal exit have been agreed on the basis of a social consensus and in a socially compatible way for the employees. Secondly, the independence and the IPO of Energy and the transaction with E.ON have been completed successfully, and the RWE Group has a solid financial position as reflected in the recent rating improvements. This comprehensive and successful transformation of the company has changed our country's energy industry in a sustainable way and has changed the company, of course. RWE has proven that the energy transition can succeed, and for this, you deserve the utmost respect, recognition, and gratitude on the part of all parties involved, the employees of the company, the shareholders, and society, which is already appreciating this to a large extent. Sustainability and social responsibility are the compass that you used to safely steer the company with a forward-looking approach.
With its realignment under your leadership, RWE has made an essential contribution and is now positioned in a way that Germany will be able to achieve the climate targets for the next decade. That is not all. At RWE, you've built up an excellent team, and you made sure that a well-organized succession at Executive Board level can be achieved. That is also a sign of entrepreneurial vision, building up a successor and handing over the business in a state that makes it possible to generate growth. Dr. Schmitz, one thing is certain: if we were in the Gruga Hall today and not at this rather small event, our shareholders would give you a huge round of applause. On behalf of the entire Supervisory Board, I should like to wish the best for your retirement. Now you will have more time for your family and your many interests.
I am certain that you will not be bored, and you will be able to look forward to fulfilling and exciting years. On behalf of myself and all of us, I would like to express our heartfelt deep gratitude for your cooperation and dedication to our company, RWE. The Supervisory Board decided to appoint Dr. Markus Krebber as the successor and the new CEO effective 1 May. We do not have to really introduce him here. As a highly competent CMO, he was also responsible for designing RWE, played a key role in shaping it. He will continue the strategy. With effect from 1 November 2020, the Supervisory Board also appointed Zvezdana Seeger and Dr. Michael Müller as new Executive Board members. Zvezdana Seeger has the CHO role and also is responsible for IT.
Michael Müller is responsible for finance, taxes, and business services, and as of the 1st of May, he will assume the role of CFO. The Supervisory Board has two excellent and experienced managers who, together with Markus Krebber, will continue the transformation of the company and develop RWE further as a sustainable, value-creating, and responsible company and attractive employer. On behalf of the Supervisory Board, I would like to wish good luck and all the best to the new three-member executive board. We also will witness changes at Supervisory Board level. Agenda item 6 relates to the election of new Supervisory Board members because the term of office of the current Supervisory Board members will come to an end. From the current Supervisory Board, Mrs. Mühlenfeld, Mr. Ottmann, and Mr. Schüssler will not be available for re-election. Mrs.
Mühlenfeld, after 15 years as a member of the Supervisory Board, you are going to leave the Supervisory Board. How much has changed? With your determined and active participation, we have been able to transform the company. You know better than anybody else what RWE has achieved. As the former Lord Mayor of Mülheim an der Ruhr, you've been able to contribute your vast political and municipal experience. You also represent the roots, our roots, in the Ruhr region, which is the region of this company, the home of this company. The next Supervisory Board will—Mr. Ottmann will also resign from the Supervisory Board. You also contributed your experience in the area of local self-government and your roots in North Rhine-Westphalia and in the Rhenish Lignite mining area. As the Managing Director of the Association of Municipal Shareholders, you were the voice of the municipalities.
This voice, together with an energy industry experience and the commitment that you showed, will also be required in the future. You stood up for what is right. Mr. Schüssler will also leave us. Your international experience, especially at European level, gave us a broader view of geopolitical and strategic developments. That was definitely to the benefit of the company. There are very few companies that have had an EU Council president on its Supervisory Board, and we truly developed from your strategic farsightedness. Mrs. Mühlenfeld, dear gentlemen, all of you have one thing in common: your advice, your dedication, and your experience helped steer the future and the development of RWE. You discussed with a lot of passion, and you fought for your opinions and monitored the business of the company to the benefit of the company.
You contributed to RWE surviving the difficult times and now being faced with a bright future. On behalf of the Supervisory Board, we would like to extend our heartfelt thanks to all of you, but also on behalf of our shareholders. In order to find the best possible candidates as replacements, the nomination committee started this selection process early on. The basis is the qualification profile decided by the Supervisory Board. At the end, we extended additional competencies so that they now also include knowledge in the area of renewable energies and digitalization. To replace the three members who will not be running for re-election, the Supervisory Board suggests Mrs. Hauke Stars, Mrs. Helle Valentin, and Dr. Hans Bünting as new members. The candidates are experts in the area of digitalization and new technology, or in the area of renewable energies.
The three of them would like to introduce themselves personally in the form of a video message. Mrs. Stars.
Dear shareholders. My name is Hauke Stars, and I'm delighted to have the opportunity to introduce myself personally. It would have been an honor—it would be an honor—to become a member of the Supervisory Board and contribute to RWE AG developing successfully in the future and is able to make a contribution to a sustainable society. My professional life is closely associated with information technology. I started applied computer science at the Technical University of Magdeburg and then graduated as a graduate engineer in 1991. Then I continued my studies and graduated as I earned a Master of Science in Engineering in the U.K. in 1992. I started my professional career in 1992 in the IT area of Bertelsmann.
I worked in various functions and closely cooperated with the Chief Information Officer of Bertelsmann. Afterwards, in 1998, I joined the IT service provider Triathlon, a subsidiary of thyssenkrupp AG. First of all, I was responsible for software development, and as from 2000, as a member of the management, I was responsible for sales and marketing. Triathlon was purchased by Hewlett Packard in 2004, and then I continued my career in this truly global IT group. For Hewlett Packard, I led IT services in the Netherlands from 2004 to 2007. From 2007 to 2012, I led the Swiss country organization and was responsible for a business with sales of CHF 2 billion. Now, it was always important to me to not just see IT from a technological but also from a business perspective. IT is more than a necessary substructure.
If it is established well and implemented well, IT is always a driver for new business opportunities, innovation, and above all, earnings growth. In 2012, I made a very interesting change in my career. I became a member of the executive board of Deutsche Börse AG. Deutsche Börse is one of the DAX 30 companies and one of the largest exchange organizations worldwide. As a member of the executive board, I was responsible for information technology, and I was in charge of the securities trading business and also the labor director of this company in the last years. Deutsche Börse is, above all, a technology company. Modern IT solutions can be found in all offerings of the company. What was always important to me is to have a robust IT infrastructure, which is both cost-effective and flexible.
In order to use IT as a driver for innovation and new business opportunities, I spent considerable time on future technologies such as cloud solutions, blockchain, or artificial intelligence. After two terms in office and eight years in total, I decided to leave Deutsche Börse AG at the end of 2020. Since then, I've been focusing on my Supervisory Board mandate and am also a senior advisor at the private equity company Lindsay Goldberg of the United States. In addition to my professional activities, I am also a member of the Supervisory Board since 2019 and have been able to gain extensive experience. From 2009 to 2016, I was a member of the Supervisory Board of GfK SE. At the time, it was a listed company and one of the largest market research companies worldwide. From 2011 to 2016, I was a member of the Supervisory Board of Klöckner & Co. SE.
SE, one of the largest producers of steel and steel distributors worldwide. Since 2016, I'm a member of the Supervisory Board of Fresenius and also a member of the audit committee. Fresenius is one of the DAX 30 companies which operates globally with products and services for the medical industry, dialysis, hospitals, outpatient services. Since 2016, I've also been a member of the administrative council of Kühne & Nagel and a member of the HR committee. Kühne & Nagel is one of the leading global logistics companies. Now, a few personal words: I'm married, I have three children, and I live in Königstein, close to Frankfurt. I hope that I will be able to make a contribution with my wide experience in technology, in the operational business, and in HR matters, and will be able to help RWE succeed.
I would also like to contribute my knowledge and experience in corporate governance topics as a member of the Supervisory Board. Thank you very much.
Thank you very much, Mrs. Stars. I would now like to ask Mrs. Valentin to speak.
Ladies and gentlemen, I'm delighted to have the opportunity to introduce myself within the scope of today's annual general meeting. My name is Helle Valentin. I'm 44 years old, and I'm from Denmark. That's where I live together with my husband and my son, and I'm the managing director of IBM Nordics. I studied engineering at the Technical University in Copenhagen. Throughout my career, I've worked in various countries and positions and was responsible for areas such as strategy, digitalization, transformation, sustainability, acquisitions, and integration at regional, local, and global level.
I've worked in Denmark, the United States, France, the U.K., Morocco, and finally, five years in the south of Germany. I came to Germany, to Stuttgart, and worked for IBM as a COO of IBM Germany, Austria, Switzerland. I was in charge of strategy and transformation and also cooperated closely with the Works Council. That gave me a lot of insights into the German codetermination system. Afterwards, I was also co-founder and the global chief operating officer of Watson Internet of Things based in Munich, which was established at the time. Since I have a lot of experience from various industries. Since 2017, I've been a member of the Supervisory Board of the European construction company, Royal WAM Group, based in the Netherlands. In addition, for more than eight years, I've been a member of the Supervisory Board of IBM Denmark.
For four years, I have also been a member of the administrative council of PFA Holding and PFA Pension with a balance sheet total of more than EUR 120 billion. Finally, in 2019, I won the Women's Board Award. It would be a great honor to design the success of RWE AG together with you in the future. The future of RWE, its change and the change of the industry is something that I've been following with a lot of interest, and I am certain that the future will be exciting. Based on my international experience, I would like to make a contribution to your success in the future. Thank you very much.
Thank you. Now, Mr. Bünting.
Thank you. My name is Hans Bünting. I'm 56 years old. I'm married, and I live in Mülheim an der Ruhr.
I would like to be the candidate for the Supervisory Board based on my professional experience. After studying economics in Bochum, I worked there for five years as a research fellow and also earned a PhD there. Following my university, my academic work, I joined RWE Energy AG in 1995 as a controller. In the first years, I had management positions in the area of controlling, accounting, risk controlling, energy trading, and risk management throughout the group. In 2008, a very exciting task was given to me. At that time, RWE Energy was founded. It combined the renewable activities of the group. At the time, it was not very much, but the plan was to drive growth forward quickly. I became the CFO and the member of the management board. In 2012, I took on the role of the CEO and enjoyed this role until 2016.
In 2016, the RWE Group was split into RWE and innogy, and I was appointed to the board of innogy SE, where I was responsible for renewable energies and for innovation management. I was also the CFO on an interim basis for a few months. In October 2019, the takeover of innogy by E.ON was finalized, and I resigned from my office as executive board member by mutual consent with the Supervisory Board. Since 2020, I have been working as a freelance business consultant, and I am also active as a business angels investor and as an investor in startups. The 25 years of relevant experience in the energy industry, of which I was also in many leadership positions of a listed company, make me a qualified candidate for membership in the Supervisory Board.
Mr. Stars, Mr. Valentin, Mr.
Bünting, thank you very much for your trust in RWE and your willingness to support the company in its new phase. In addition to these new candidates, we have Dr. Keitel, Mag. Dr. Kircher, Mr. Schwartz, Dr. Scheppereit, Mr. Zierow, and myself. We are all candidates who are up for election again. On behalf of my colleagues on the Supervisory Board, I would like to thank you for your trust over the past few years. I would be delighted if you could show us, would show us your trust for the next years as well so that we can continue our dedicated and constructive work for the company. Additional information on all candidates who are up for election will be available in the invitation to today's AGM.
The invitation will also show you the memberships of these persons in other Supervisory Boards in Germany and memberships in similar domestic and international control bodies of other corporations. After today's AGM, the term of office of the other members of the Supervisory Board will also come to an end, and that's of the employee representative. However, they are normally voted or elected by the assembly of delegates, and there is no opportunity for this assembly to meet currently. There is no legal solution for that currently. Based on the motion of the Executive Board and in agreement with the employee representatives, the local court decided on the 24th of March 2021 to keep the existing employee representatives and to reappoint them to the Supervisory Board as from the end of today's AGM.
This legal appointment will end as soon as the assembly of delegates will be able to meet again and will be able to elect new employee representatives. Ladies and gentlemen, I would like now to continue with item one of the agenda: presentation of the adopted financial statements of RWE Aktiengesellschaft and the approved financial statements of the group and the Supervisory Board report of fiscal 2020. I would like to ask the Executive Board to discuss the presentations and to give an outlook on the future developments in the current fiscal year. For technical reasons, the speech by Dr. Schmitz was recorded before this AGM. The recorded speech will now be played and incorporated into this event.
Dear shareholders, friends, and guests, welcome to the RWE AGM, also on behalf of my fellow board members Markus Krebber, Zvezdana Seeger, and Michael Müller. Dear Mr.
Brandt, thanks ever so much for your friendly words. I love to listen, and many, many of the things that you said about me I can only give back. The cooperation with you, with the Supervisory Board, was really outstanding, and it was always a support for my endeavors, even though we had to debate in cases, in some cases, very swiftly. Dear shareholders, your health and that of our guests and employees takes absolute priority. This is why we are seeing each other on screens once again today. I would have loved it to be different for my final AGM, but it is unavoidable if you want to act responsibly. In these turbulent times, many people are worried about the virus or its consequences. It is good that it is one thing they do not have to worry about, and this is having a secure electricity supply at all times.
I am sure that on behalf of all of you, I can express high praise and a big thank you to all our employees. We can now see the light at the end of the tunnel, and more importantly, we are getting closer. We are getting there. Vaccination is on its way. One year ago, it was something we could only dream about. Scientists, and also in particular in Germany, have done an amazing job in a very short period of time. It goes without saying that RWE will be part of the vaccination drive as soon as company doctors are included in the campaign. Our medical department has extensive experience in this area, thanks to the annual flu injection program. We are prepared to start immediately at our locations as soon as the vaccines arrive.
Ladies and gentlemen, 2020, that was a year of very special circumstances and a year that proved to be excellent for RWE. I'm standing here in Essen with a wonderful view across our new campus. We moved in a year ago, and it offers ideal conditions for us to collaborate closely and effectively while making use of the opportunities presented by digitization. Taking our campus from a building site to a state-of-the-art facility in a very short time frame is really a rather perfect symbol of the excellent progress RWE has made in recent years. We did a very good job of overcoming the challenges posed by the transaction with E.ON, one of the largest in the history of German industry ever. Today, we're one of the world's leading companies in the area of renewables.
Of course, we stand by our responsibility for the phase-out of nuclear energy and phase-out of coal. Let's take a detailed look. Based on last year's results, we exceeded our forecast significantly. Our Adjusted EBITDA amounted to EUR 3.2 billion, which means it increased by about 7% compared to the pro forma result of the prior year. For 2021, we're expecting a figure of between EUR 2.65 billion and EUR 3.05 billion. Our net income reached EUR 1.2 billion. The target for 2021 is between EUR 0.75 billion and EUR 1.1 billion. The performance of our energy trading business was outstanding. The result in this area was much higher than the forecast range, and that was really outstanding, a great achievement. Our result for offshore wind was also very good in 2020, with a growth of 11%.
Offshore and onshore wind solar also grew positively and grew by 7% compared to the prior year. Many German media reported about the extreme cold temperature in Texas at the beginning of this year. The extremely cold temperature in combination with freezing rain that were totally unusually led to substantial outages in electricity generation across all technologies. Our onshore wind farms were also affected in the current year. This segment will therefore close below last year's level. As expected, our result for hydro, biomass, and gas in 2020 was slightly below the result of 2019. We benefited in particular from the want of payment from the reinstatement of the British capacity market. In the coal nuclear segment, however, we earned over 60% more than in 2019. This was mainly due to higher wholesale prices hedged on the forward market, and this was something that was expected.
Ladies and gentlemen, the financial situation of the RWE Group has improved even further, thanks to strong growth in earnings from operating activities and thanks to our capital increase of around EUR 2 billion. It was oversubscribed by a factor of three. This shows how strong confidence in RWE is. Our net debt that year amounted to EUR 4.4 billion. Our leverage factor measures as a ratio of net debt to Adjusted EBITDA of our core business ranges around 1.7. Our objective is not to exceed three times our core Adjusted EBITDA, so we're well within the safe zone. Once again, we saw an improvement in our equity ratio. At the end of 2020, it was at a comfortable 29%. Our excellent financial situation means we can continue to invest heavily, and this is what we're doing, and nearly exclusively in green energy.
In 2020, this amounted to about EUR 1.9 billion in wind power and solar plants. 84% of our capital expenditure meets the taxonomy criteria for environmentally sustainable investment as proposed by the EU Commission. The level of sustainable capital expenditure as a proportion of our overall capital expenditure on property, plants, and equipment also plays a major part in terms of our syndicated credit line. It is one of three major features of very specific sustainability criteria that we have agreed on with the banks for a part of our own credit line for the first time and on our initiative. This also includes fixed targets for carbon reduction and the share of renewables in our overall capacity. This demonstrates that we are making every effort to ensure RWE becomes more and more sustainable, and we keep our promise.
Ladies and gentlemen, dear shareholders, only recently, rating agencies Moody's and Fitch upgraded our rating. Moody's rates a long-term rating from Baa3 to Baa2 with a stable outlook. Our assessment for subordinated hybrid capital bonds and the short-term rating, the rating is also improved. Fitch also upgraded RWE's long-term credit standing by one level to BBB+ with a stable outlook. The short-term credit score and the rating pertaining to subordinated hybrid bonds were also raised. These positive assessments are further proof of the fact that RWE's strategic realignment is being recognized and honored. You will be particularly pleased to know that this has also been reflected in our share price. It has performed consistently well. In 2020, RWE was once again one of the top DAX companies, a repeat performance of 2017, 2018, and 2019. Our enterprise value is growing.
Of course, as shareholders, we wish you to benefit from this positive trend. In 2019, our dividend was set at EUR 0.80 per share. For 2020, the Executive Board and Supervisory Board are proposing to increase this to EUR 0.85 per share. I may ask you to approve this proposal. The Executive Board expects this trend to continue in 2021, with an increase in the planned dividend to EUR 0.90 per share. Ladies and gentlemen, RWE continues to focus on value-added growth for its portfolio. We are spending a lot of money in order to achieve our wind and solar capacity target of more than 13 GW by 2022, between 2020 and 2022, and that total of EUR 5 billion, EUR 1 billion of which are invested in Germany. In 2020, we commissioned approximately 800 MW of new wind power and solar capacity.
Our wind power, photovoltaics, and storage portfolio has therefore increased to 9.4 GW. Another 3 GW are now under construction. A prerequisite for these many construction projects is a well-filled project pipeline. Ours now comprises more than 30 GW, which includes the Nordex development pipeline, which we acquired in summer 2020, involving projects mainly in France and Poland. We are in a very good way to achieving our target and to growing even beyond this target. Let me give you some examples. In March, we made the financial investment decision for the Sofia project off the British coast. With a capacity of 1.4 GW, it will be the largest offshore project globally. The investment totals about GBP 3 billion. Work is beginning this year.
Against fierce competition, we are also successful in the latest British offer auction for seabed rights and were awarded a potential total capacity of 3 GW on Dogger Bank. In Poland, the government put the legal framework in place in January to financially support wind farms in the Baltic Sea, which smoothed the way for a 350 megawatt project, Baltic II, for which we have established a bilateral contract for differences in place since the beginning of April. This is still subject to approval by the EU Commission. We are making good headway when it comes to the two large-scale offshore wind farms. At the end of February, Triton began feeding electricity into the British grid. The wind farm will be completed in 2022 with a generating capacity of 857 MW. Kaskasi, now our third offshore wind farm off Heligoland, will also go into commercial operation next year.
The installed capacity will be 342 MW. Ladies and gentlemen, offshore wind pods far from the coast, to design these, to build these, and operate these is really an art in itself. This is an art which we at RWE have mastered. Just take the Kaskasi project for which 38 huge wind turbines are being transported out to the open sea. We anchor them in the seafloor at a depth of about 25 meters, and they soar above the water with a hub height of 110 meters. Our wind turbines are state-of-the-art. Their fiberglass blades are perfectly aerodynamic and ensure an ideal energy yield. For me as an engineer, it's something to really be proud of. Offshore wind power is really by far the most attractive form of renewable electricity generation. It's particularly valuable for the energy transition and for RWE.
It is exactly in this very segment that we are world leaders. This is where we want to stay. This is why we do not just produce electricity using state-of-the-art technologies, but we also do pioneering work, researching new opportunities such as wind turbines that float on the sea and that we are calling floating offshore. We are also pressing ahead when it comes to onshore wind power. Onshore projects with a total capacity of 1.6 GW have been definitely approved and are now under construction in the U.S. and in our European core markets. Again, we are exploring new technologies such as kites in order to tap into further potential in the future. Ladies and gentlemen, offshore, onshore, solar, these form the foundation of a climate-friendly electricity production inseparably linked to these powerful storage systems, which help to further minimize the use of conventional power stations.
A fascinating technology is Redox Flow, in which energy is saved in liquid chemical compounds. In November, we completed the first step away from the lab into the practice by installing a test facility here at our campus in Essen. We are also exploring whether and how we could use our underground gas storage facility to store hydrogen made from green electricity. We also require small and short-term storage facilities to offset fluctuations in electricity production and keep the grid stable. Here, the development is even more progressed. A good example is the United States, where we made a number of investment decisions in favor of large battery storage facilities by the end of 2020. We can use these to store more than 200 MWh of electricity. For the foreseeable future, we will still need to use conventional power stations to ensure security of supply.
Modern gas-fired power stations are ideally suited to this task. They're capable of reaching quite lengthy periods with no wind or no sun using green gas in the longer term. This is where the German Federal Network Agency agrees, and it has therefore put out a tender for the construction of small-scale power stations, the so-called grid reserve plants. They will be used only if requested by the network operators. RWE has been awarded the contract to build and operate a 300 MW plant of this type in Biblis. It's expected to go into service in autumn of next year. In Great Britain and the Netherlands, we are also continuing to play our part in maintaining security of supply. The upgraded Kingsland gas-fired power station in Great Britain has boosted our fleet since the beginning of 2020. It has a capacity of 382 MW.
In the Netherlands, we put our Claus C power station back on the grid last year, featuring a capacity of 1,300 MW. Ladies and gentlemen, in addition to green electricity, the second pillar of the energy transition is hydrogen. It offers a realistic opportunity to decarbonize the areas that cannot be electrified. That is industry above all. This is the only way to achieve climate goals at a worldwide level. Also for RWE, hydrogen features a huge potential. We have everything we need under one roof: green electricity, expertise in production, storage capacity, and trading know-how. There remains a lot to be done. Investment in green hydrogen is not really yet financially viable because there is no market for green hydrogen yet. There is no established legal framework, and we do not have the conditions in place for a fast market ramp-up.
It will still be some time until we see large-scale investment in this area. Here at RWE, we are already working hard. We want to be part of the activities. This is why we created a dedicated portfolio for hydrogen within the Board of RWE Generation. In this way, we're pooling our skills within the group, driving projects forward, and forging alliances. We're working with strong partners to give ourselves an edge from the start. We are currently involved in 30 innovative projects in Germany, the Netherlands, and Great Britain. As you can see, the subject of hydrogen is really on everybody's lips in the energy industry. If you're interested in more details, I would recommend watching the videos on our social media channels and our websites. Ladies and gentlemen, for me, the two things go together.
We're building up a state-of-the-art and climate-friendly electricity production system. At the same time, we're taking our leave from the world of energy based on coal and nuclear power. We are approaching this consistently, responsibly, and with great respect for our workforce. We still have around 1,400 employees working in nuclear. They had to put up with a lot of public, and from my point of view, unjustified criticism in the past. Our employees have never let up. They're highly motivated day by day. They are working through to the end to maintain reliable electricity production and just as conscientiously to dismantle the plant. I really take my hat off to them. Also, there is more clarity regarding the compensation provisions for the accelerated phase-out of nuclear energy. This is good. Germany's Constitutional Court had repeatedly called for a definitive arrangement to regulate the question of compensation.
This agreement is an important step towards achieving legal certainty for everyone involved. It is also a good signal for boosting confidence in Germany as an industrial location and thus to encourage the substantial investments that are now needed to transform the energy system. Ladies and gentlemen, we are also bringing the chapter on coal to a close. In spring of 2020, we closed our last hard coal-fired power station in Great Britain. At the end of December, our last two hard coal-fired power stations in Germany. The Netherlands will phase out coal by the end of the decade, which we fully support. Our EMA power station is already operating with 80% biomass, and for the plant at Ems-Haven, that figure is 15%. Both power stations have thus succeeded in reducing their carbon emissions and helped to maintain security of supply.
In the process of phasing out lignite in Germany, we signed an agreement under public law with the German government in February. In anticipation of that agreement, we took our first lignite unit at Niederau offline two months earlier. Another three units will follow this year. By 2030, we will have decommissioned two-thirds of our lignite-fired power station capacity. Two-thirds of our open cast mines will have been closed by then. 6,000 of 10,000 positions will be cut by 2030. That is, in the first year, we will carry the lion's share of Germany's phase-out of lignite. We will observe our responsibility to our employees who will lose their jobs with the same commitment as our obligations to recultivate the land because we are as good as our word. You can count on RWE. No doubt, the phase-out of coal is a historic step for RWE.
It's an emotional one for many of our employees. I do understand this because coal is part of our more than 125-year history and the history of our country whose prosperity is heavily dependent on this energy. It is important for me to express my respect for our employees. They are working hard to provide a reliable supply of electricity, just as policymakers and societies have expected of them for decades. Ladies and gentlemen, our carbon emissions are declining substantially. Between 2012 and the end of 2020, we reduced them by more than 60%. By 2030, this figure will be at least 75%, and by 2040, we will be carbon neutral. That is 10 years faster than both Germany and the EU have set as their targets. That is, we really are active, and this is being acknowledged.
For example, the high-profile Science Based Targets initiative has certified that our strategy is in line with the Paris Agreement. We have also received a positive assessment from the Transition Pathway Initiative, a global initiative of financial institutions and asset managers. Ladies and gentlemen, 2020 was an excellent year for RWE, and it was also a successful year for the energy transition. It is gaining momentum worldwide. If you look at the statistics, this is shown quite clearly. 2020 was the seventh year in a row in which global investment in renewables exceeded the $250 billion mark. It did that by a clear mark, that is, at more than $300 billion. It continues. The world has set new standards with the Paris Agreement. This calls for a massive transformation of industry, the economy, and society as a whole.
It comes with clear conditions, important milestones, and a defined goal that is carbon neutrality. This will be the key decade in this regard. Now, we're here to put everything into practice. You know that first steps are crucial in defining what happens next. The initial passes on the first notes at the concert, and when you start your day, really to start at the end of the right foot. It's no different that we work toward carbon neutrality. The first steps are vital. Policy requirements that are both ambitious and realistic, conditions that ensure carbon-neutral products are competitive, appropriate stimuli to encourage businesses to make more green investments, and meaningful financing instruments to support the transformation of the industry. When all these elements come together, we can really take off. The Green Deal and the ambitious measures taken by many countries provide a very good launch pad.
Assistance with economic recovery following the pandemic may also provide a turbo boost to expand climate-friendly technologies even more quickly. The signs are already here. In Europe, capital investment in renewables climbed to about $82 billion in 2020. This is the highest level since 2012, a plus of 52% vis-à-vis 2019. The front runner is Great Britain with more than $16 billion. In the Netherlands, capital investment more than doubled in 2020 to more than $14 billion. In Spain, about $10 billion were invested. The things are buzzing. What is the state of affairs in Germany? We invested about $7 billion in renewables. This is really half as much as in the Netherlands. Even so, that's a 14% + on the prior year. There was a strong decline even in 2019.
I do hope that this marks a turnaround and a trend in Germany. We can really get better. The basic circumstances have definitely improved. Germany's policymakers reformed the Renewable Energy Act, and this has been necessary and the right thing to do. Germany should not let up now. There is a huge competition for investment. This is why we are very hopeful that new areas are regulated. For example, the reduction of the EEG fee. With a view to the phase-out of energy and coal, we need a lot more dynamism in the expansion of renewables because how fast we proceed with the expansion of renewables and the grids will be one factor that determines the timing for the phase-out of coal. The coalition in Berlin has also set itself the task of gradually reducing the levy under the Renewable Energy Act. Part of this is also the CFDs.
They are the best possible tool in order to hedge renewables. This is in particular true for capital-intensive technologies such as offshore wind. CFDs have now become the standard in Europe. They were developed and perfected in the U.K. It is therefore no coincidence that the largest offshore projects to date are being tackled over there. Let me repeat, Germany should do the same and also use CFDs because it makes economic sense for the country, because it keeps costs for consumers as low as possible, and because it creates more certainty for the energy transition in Germany. Let me come back to hydrogen. We need a clear legal framework and suitable conditions in place. Quickly, those are the preconditions for being able to actually generate, transport, and use green hydrogen cost-effectively.
The EU has announced it will put forward the appropriate proposals by the end of the year. I'm pleased that the German government wants to lead the way in this area. However, instead of designing, regulating, and financing gas and hydrogen networks separately, the existing gas network regulation should be extended to cover hydrogen. This would allow for meaningful integrated planning. We also need to clear up uncertainties regarding. Fine. It is now the time for renewables. Ladies and gentlemen, and really, eventually, a big thank you from me. First of all, to you, our shareholders. You've always supported RWE. You've supported me personally. Without your support, our transformation would never have been possible. Every bit as important have been the many comments, suggestions, inquiries, and constructive criticism. All this is helpful. That way, no one thinks they can just sit back and take it easy.
I would. Our values of trust, performance, and passion are more than just words on paper. They live them in their daily lives and in the work they work together. Our employees are a real deal. They're enthusiastic on the job with a wealth of expertise and always looking for opportunities to improve things. Ladies and gentlemen, the team RWE is about to get a new boss, Markus Krebber, and I'm really pleased. Together with Zvezdana Seeger and Michael Müller, he will see to it that you, as our shareholders, continue to enjoy your RWE. I'm absolutely sure this is going to be the case. I wish you all the best and stay healthy.
Thank you very much, Dr. Schmitz, for your speech. Accessible by a few pieces of equipment at 10:35 A.M. The reason for this was an attack on the systems.
Our technical measures were affected very quickly so that the disturbance only existed for a few minutes, and the transmission was not really affected. Mr. Krebber, you have the floor.
Thank you very much, Dr. Brandt. Ladies and gentlemen, the German Stock Corporation Act requires the Executive Board to expressly explain certain documents to you at the Annual General Meeting, which I will gladly do. The Executive Board made the comment and commented on the takeover-related disclosure required pursuant to sections 215A and 289A of the German Code in the review of operations and in a separate written report. This disclosure is not out of the ordinary. Details can be found in the commentary in the review of operations on pages 79 and following of the annual report, as well as in the separate written report, which has been published on RWE's website.
Ladies and gentlemen, we successfully conducted a capital increase in August 2020. The gross proceeds on the issuance of approximately EUR 2 billion have given us financial headroom to make investments in the additional short-term expansion of our renewable energy portfolio, the continued development of our project pipeline, and in further growth opportunities arising in the medium and long term. The Executive Board has submitted an extensive written report on the detailed features and implementation, which can also be found on our website. I would like to put those reports in a nutshell for you. By performing the capital increase, we exercised the authorization we were issued by the 2018 Annual General Meeting. Through accelerated book building, we issued shares corresponding to nearly 10% of the company's capital stock at the time from the authorized capital. Shareholders' subscription rights were excluded.
It was necessary to exclude subscription rights in order to be able to take this measure at short notice and flexibly while generating the highest proceeds possible. As accelerated book building does not require extensive preparation or have fixed deadlines, we were able to react quickly and flexibly to a favorable window on the market, last institutional investors within a few hours. It would have been impossible to react to the favorable market conditions so quickly if we had been obliged to grant a subscription deadline of at least two weeks. The longer period between the establishment of the price and the completion of the capital increase triggered by granting subscription rights would also have meant that the shares could only have been placed at a high discount relative to the quotation on the stock exchange.
By contrast, thanks to the structure we opted for, we managed to realize a price that was close to the then current stock exchange quotation. The uniform placement price was at EUR 32.55 per share and reflected a discount of just 4.9% compared to the closing quotation in ETC trading on the Frankfurt Stock Exchange immediately prior to the passage of the resolution. This enabled us to minimize the commercial dilution of our shareholders' stakes in the company. In addition, shareholders who wanted to maintain their relative shareholding in the company were able to do so on the stock exchange at a price close to the placement price. Their interests were thus safeguarded appropriately. In view of these issues, the exclusion of subscription rights was objectively justified on the whole.
As we used part of the authorized capital to conduct the capital increase, we propose under agenda item 9 of today's agenda to reestablish this instrument. This will ensure that we will remain capital capable of reacting to future developments and, should the need arise, raise additional capital both quickly and flexibly without having to carry out a capital increase by virtue of resolution by the annual general meeting, which may prove impossible due to time constraints. Furthermore, under agenda item 10, we propose to authorize management to issue convertible and/or option bonds, including conditional capital, in order to expand the company's financing options. Although we do not have any plans to use these instruments at present, capital authorizations belong to every DAX company's toolbox. The proposed details of the features of these instruments are in line with customary market standards.
Please refer to the complete draft resolutions and the invitation for details. Ladies and gentlemen, on behalf of the Executive Board, I ask you to approve the resolutions proposed by the Executive Board and the Supervisory Board regarding the items on today's agenda. I would like to hand the floor back to Mr. Brandt.
Ladies and gentlemen, this brings me to the report of the Supervisory Board for the fiscal year that just ended. I would like to focus on the main points of the Supervisory Board's work. Further details can be found in the written Supervisory Board report, which has been published on pages 11 to 17 of the annual report. Ladies and gentlemen, who could have predicted at the beginning of 2020 the huge challenges the. They have made. Lockdown measures are important to protect the health of all of us.
However, they have pushed many companies and entire sectors to the brink of failure. In 2020, Germany's economic output declined substantially for the first time after 10 years of uninterrupted growth. RWE has demonstrated impressive resilience in this environment. The company maintained its course, pressing ahead. Growth experienced an additional surge thanks to the capital increase conducted in August 2020 and the acquisition of Nordex's European Development Business. By exiting the coal business, RWE also tackled the second major challenge with resolve. Both of the company's hard coal units placed winning bids with the first shutdown option held by the German network agency. They were closed at the end of 2020. At the same time, RWE is implementing the legally mandated lignite phase-out. RWE is thus right on track in terms of climate protection and is doing more than what is required by law.
This course meets with broad acceptance in general and on the capital market in particular, as evidenced by our shares' strong performance. Irrespective of the coronavirus pandemic, RWE shareholders received a total return consisting of the increase in share price and the dividend of 30%. It was with great conviction that the Supervisory Board endorsed these developments, which placed their mark on our business in fiscal 2020. The Executive Board kept us abreast of these events, on which we advised at our meetings, which have all been held via online video conferencing since last spring. Another focal point of our activity last year was the restaffing of the Executive Board. We came up with a solution which I believe is very good. I already mentioned this in my speech previously. The nomination could be focused on preparing the new elections to the Supervisory Board, which will be held today.
Besides shortlisting suitable candidates, this also involved establishing the future system for staffing the Supervisory Board. As you can see from the agenda, we propose to set up a staggered board, which entails establishing varying tenures for the board's members. To this end, we will propose that five candidates be elected at this AGM with a term of four years, with another five having a term of three years. It is envisaged that future elections will be held for terms of three years in order to maintain a staggered board. This structure will avoid having to re-elect all shareholder representatives on the Supervisory Board at the same Annual General Meeting, which can cause the board to lose valuable experience. In addition, this will increase the continuity of the board's staffing while making it more flexible.
The introduction of the staggered board will require amendments to be made to the articles of incorporation, which we propose in agenda items 11 and 12. Another topic to which we dedicated significant attention was the remuneration of this Executive Board and the Supervisory Board. ARUG 2, the law on the implementation of the second German shareholder directive, obligates listed companies to regularly present the remuneration system for the Executive Board to their annual general meeting for approval and to pass a resolution on the remuneration of the Supervisory Board. Therefore, these two matters feature in agenda items 7 and 8 of today's agenda. Let me begin with the remuneration of the Executive Board. The Supervisory Board revised it in cooperation with an external consultant and decided to adopt the new version at its meeting on 25 June 2020.
It has been in force since 1 January 2021 and is being presented to you for approval today. When creating the new system, the Supervisory Board's main objective was to link the remuneration of the Executive Board closely to the achievement of RWE's strategic goals. As a result, the remuneration system makes a major contribution to managing the company in a manner that is sustainable and successful over the long term while increasing the company's value. It's a central tool for bringing Executive Board remuneration in line with the interests of the company, its shareholders, and other stakeholders, while providing key incentives for implementing our business policy. The basic structure of the remuneration system was preserved, however. This means that Executive Board remuneration still consists of the fixed salary, the pension installment, the performance-related bonus, and share-based payment. No additional special payments are made.
The performance targets, which determine the level of variable remuneration, are determined by the Supervisory Board in advance of each assessment period. The level of variable remuneration cannot be changed retroactively. Target amounts of variable remuneration, which together with fixed remuneration result in total target remuneration, are determined for a target achievement of 100%. Maximum remuneration caps the achievable amount of payment. It includes all remuneration components. Let me take you through the major changes reflected in the new remuneration system. Share-based payment, which is based on virtual shares, is now oriented towards the development of adjusted net income, as well as two additional success factors of equal weight relating to RWE's sustainable and long-term development. One of them is the carbon footprint of our generation portfolio. To determine this factor, we define clear milestones en route to achieving the company's strategic goal of becoming carbon neutral by 2040.
Another success factor is based on the total shareholder return, which puts the total return on the RWE share in relation to that of other European utility stocks. As before, the third success factor is the development of adjusted net income. These three success factors determine the number of conditionally granted virtual shares that are finally granted on expiry of a three-year performance period. These performance shares must be held for an additional year thereafter. The vesting period is thus four years as before. Our share ownership guidelines are a further new element of the remuneration system.
We intend to bring Executive Board remuneration more in line with the interests of our shareholders by obliging the Executive Board members to invest a certain minimum sum in RWE shares and to hold these shares for the duration of the membership of the Executive Board, plus an additional two years from the end of the membership. The personal investment is 100% of the annual gross fixed salary for the ordinary members of the Executive Board and 200% for the Chairman. A minimum of 25% of the gross variable remuneration paid must be invested in RWE shares every year until the target amount is reached. Last but not least, the old malus rule has been supplemented by a clawback mechanism, which is common practice of the market.
In the event of a breach of duty, it enables the Supervisory Board to withhold variable remuneration components that have not been paid out and to reclaim such components that have already been paid. This clawback mechanism is applied also if the consolidated financial statements are found to contain errors. Special rights of termination in the event of a change of control and severance payments in this context have been abolished. The new remuneration system has been fully implemented in the employment contracts of Michael Müller and Zvezdana Seeger. The same will apply to the contract of Markus Krebber once he assumes chairmanship of the Executive Board on 1 May of this year. Only the contract of Rolf Martin Schmitz, which will soon expire, does not reflect the new remuneration system, with the exception of the new share-based payment. This rounds off the overview of the Executive Board remuneration.
Details can be found in the extensive presentation, the invitation to the annual general meeting, and the supplementary information published on our website. Now let's move on to the remuneration of the Supervisory Board, which today is addressed in agenda item 8. Its current remuneration was established in the articles of incorporation by the 2013 annual general meeting. It envisages the members of the Supervisory Board receiving annual fixed remuneration and additional compensation for their work on the committees of the Supervisory Board. This basic structure has proven itself and should be maintained along with the level of annual fixed remuneration. The Supervisory Boards also assume a voluntary obligation to spend 25% of the remuneration they receive on purchasing shares in RWE and to hold them for a duration of their membership.
However, compensation for work done on committees is to be increased to a level customary in the market and, in principle, paid for every office held on a committee, subject to certain exceptions. This is because the scope of and time spent on this work, as well as the associated responsibility, have risen considerably in the past few years. This raise ensures that the company remains capable of recruiting highly qualified candidates to the Supervisory Board. Ladies and gentlemen, the financial statements of RWE Aktiengesellschaft and the consolidated financial statements, as well as the combined review of operations of RWE AG and the group, have been audited by the independent auditors, PricewaterhouseCoopers GmbH, which has issued an unqualified audit opinion. Furthermore, PricewaterhouseCoopers has reviewed the non-financial report to obtain limited assurance and certified that the Executive Board has established an appropriate early risk detection system.
The Supervisory Board's Audit Committee concerned itself with the parent company and consolidated financial statements, as well as the audit reports, in depth, and recommended that the Supervisory Board approve them and endorse the Executive Board's proposal for the appropriation of distributable profit. The Supervisory Board has reviewed the parent company and consolidated financial statements, the combined review of operations, the proposal for the appropriation of distributable profit, and the separate non-financial report, and discussed these documents extensively at its balance sheet meeting. The independent auditors reported on the material findings of their audit, and we reached the conclusion that there was nothing objectable to object. Thereupon, the Supervisory Board approved the result of the audits by the independent auditors of both financial statements and adopted the financial statements of RWE AG, as well as the consolidated financial statements. The parent company financial statements are therefore adopted.
The Supervisory Board endorsed the Executive Board's proposal for the appropriation of distributable profit, which envisages paying a dividend of EUR 0.85 per share. Ladies and gentlemen, RWE continued its impressive transformation process at full speed despite the coronavirus pandemic. This was accomplished not by individual employees, but by the entire staff. They dedicated themselves to the company tirelessly, day in and day out, demonstrated substantial adaptability considering the crisis, and were disciplined in abiding by the infection control rules in their daily work. On behalf of the entire Supervisory Board, I would like to say a very big thank you to all our employees. [Foreign language] , ladies and gentlemen, we will now answer all questions submitted by our shareholders in good time in the run-up to the AGM.
is for us of central importance to make the best possible use of the framework of the virtual AGM and to offer our shareholders transparent information. This is why the company published the manuscript of the speeches by the Chairman of the Board of Management and the Chief Financial Officer, as well as my comments on the website last Friday. We consider this transparency in advance to be an important compensation for the speeches not provided for at the virtual annual general meeting. Thus, shareholders could ask very specific questions before the actual AGM. As further elements in strengthening the shareholders' rights and for the broadening of the information base for the questioning process, we have created the opportunity for our shareholders to submit written comments for publication on the website in the run-up to the AGM.
The question process will be moderated by Susanne Lange and Jerome Herdemann, both of whom work in the company's investor relations department. Welcome. Ms. Lange and Mr. Herdemann will take on the role of shareholders today and alternately in blocks present the questions submitted, which will be answered by Dr. Schmitz, Dr. Krebber, Mr. Säger, and Dr. Müller on behalf of the executive board and by me on behalf of the supervisory board. Let me give now the floor to Dr. Schmitz.
Thank you very much, Mr. Brandt. Ladies and gentlemen, before we start to answer the questions, let me give you an overview over the questioning process. By the end of 26 April, 235 questions had been received from 26 shareholders via the investor portal. Many thanks for this. By way of comparison, we received 176 questions at the virtual AGM 2020.
We will answer each of the questions submitted today, and this is why, Mrs. Lange, there you go.
Yes, good afternoon, dear shareholders. We will start answering questions from the DSW, the Deutsche Schutzvereinigung für Wertpapierbewehrer, represented by Mr. Hertzschfischer. The first questions are addressed to you, Mr. Krebber. Against the background of the current infection situation, he understands that RWE AG has again invited to an online AGM. Is it foreseeable that you will return to a face-to-face AGM as soon as the pandemic situation has eased?
Thank you, Mr. Hertzschfischer. Outside the corona emergency legislation, of course, virtual AGMs have not been provided at all. However, we welcome further legal developments of the traditional AGMs in which there is a balance of interest between the shareholders and companies. Mr.
Hertzschfischer also believes that the impact of the COVID-19 pandemic on the company's economic situation has been manageable so far. What will the future be like in view of the current development? Does the Executive Board expect a negative impact on revenue and earnings? Mr. Hertzschfischer, this is true. Overall, we've felt a little impact of the corona crisis on our business. There have, of course, been some delays in the commissioning of new onshore wind farms. The pandemic also has an impact on electricity market prices and market demand. This could be observed in 2020. We have modeled the possible consequences for RWE in a scenario analysis, and we do not see a high risk for our business. This is also reflecting our earnings forecast for 2021.
Mr.
Krebber, DSW refers to a press release of 8 April in which we report on the conclusion of a CFD for an offshore wind farm in Poland. Why is this model not being used in Germany? How many comparable contracts has RWE concluded in the meantime?
Thank you, Mr. Hertzschfischer. Together with other companies and associations, we have really campaigned for the introduction of bilateral contracts for difference as a funding regime in Germany. Politicians are divided on this issue. At the end of the day, details of the support model have been adjusted, but essentially, it remains with the so-called sliding market premiums. We continue to hope that politicians will reconsider the design of the support regime in order to make Germany more attractive again for investments and renewables.
The second part of your question, overall, the range of marketing mechanisms for renewables in the different markets is very broad. Comparable contracts for difference exist, for example, in the U.K., France, and Italy. In total, we hold one- or two-sided contracts for difference for about 1.9 GW in our renewable portfolio, and this does not include the latest contract in Poland.
Thank you, Mr. Krebber. DSW would like to know the following. The picture that RWE is currently presenting is clouded by the severe onset of the winter in Texas and the resulting burden on earnings. What has become of the announcory appraisal analysis of the events at the political, regulatory, and legal levels?
Of course, in mid-March 2021, it has been reported that it was still too early to draw conclusions and has that changed?
It is indeed still too early to make a final assessment of the consequences. There are various developments in the processing of the events. AG, with regard to the possible correction of the artificially raised electricity prices by the Texas lower house and personnel replacements in the Public Utility Commission of Texas. RWE Renewables America has initiated legal action against the actions of the PUCT and the responsible transmission system operator, ERCOT. We keep you posted.
Mr. Schmitz, next question for you. The compensation payments for the planned lignite phase-out in Germany are being subjected to an in-depth examination by the EU competition authority. First of all, the government will have the opportunity to provide comments. Does RWE have any possibility to exert some influence, and if so, which? What is the worst-case scenario for RWE in this respect?
According to press reports, the compensation payments, of course, involve the same. Address it. They're also taking action against the transaction between E.ON and RWE. What is the state of affairs in this release?
Mr. Hertzschfischer, the EU state aid investigation was expected by all parties involved. Although the compensation of EUR 2.6 billion is still subject to state aid, however, it's significantly lower than the damage actually incurred and proven by expert opinions. We therefore see ourselves in a very good position with regard to this audit. The process or the procedure are formally between the EU Commission and the Federal Republic of Germany. However, RWE, as a recipient of the compensation, has the opportunity to participate in the proceedings, e.g., by submitting statements and expert opinions. This is what we're going to do.
In the proceedings against the two clearance decisions of the EU Commission on the RWE E.ON transaction, pleadings have been exchanged in writing so far. An oral hearing has not yet taken place. RWE will submit its own statement as intervener. We don't see any reasons to doubt the substantive correctness of the clearance decision.
Thank you, Mr. Schmitz. In the context with the coal phase-out in the Netherlands, RWE initiated an arbitration proceeding against the Netherlands in February 2021. Uniper recently announced that it had also initiated court proceedings. The question is, what compensation for disadvantages does RWE hope to receive in these proceed ings?
As you know, and I also explained it during my speech, of course, RWE is committed to the energy transition. It's making a significant contribution, and this is why we do understand the goals of the Dutch government.
We cannot accept the encroachment on our property without compensation, especially since we built the Eemshaven power plant against the background of the Dutch government's express wish for a new coal-fired power plant. We remain open to any constructive proposal for a solution. With the right support, both power plants Amer and Eemshaven can play an important role in the energy transition, for example, by using biomass.
Does RWE consider a sale or spin-off of the fossil energy division? Or, according to Pressburg, a spin-off like in the case of E.ON Energy.
Of course, this is speculation. Incidentally, the public law agreement on the coal phase-out defines narrow limits for such measures, which would have to be adhered to. In any case, we do not plan to distance ourselves completely from fossil fuels in the future.
Gas as an energy source will temporarily play an important role in security of supply due to its lower CO2 emissions and flexible application.
Last number of the DSW that is on hydrogen. Mr. Schmitz, how does RWE see itself in the field of green hydrogen? One of the last or most recent press releases on this topic, a lighthouse project near Heligoland, was presented. According to this, the project is to make a decisive contribution to the German European hydrogen strategy by 2035. Are you in the leading position, or is there a danger that others will get there faster?
We are currently gathering experience in over 30 hydrogen projects in order to be at the forefront when the hydrogen economy becomes established. We basically operate along the entire value chain. We can generate green electricity from renewables as well as green hydrogen via electrolysis.
We bring the expertise for trading and marketing, and we have a very good network consisting of business customers and potential project partners. The project you're referring to is Aquaventus. This is one of the many projects, some of them international, in which we are involved. First of all, the regulatory framework conditions and suitable funding programs need to be in place in order to have the possibility to implement electrolysis projects. We are convinced that we can position ourselves strongly in the hydrogen economy as an experienced company that operates along the entire value chain and holds our own against competitors.
Okay, now the first block of the SDK, the Schutzgemeinschaft of Kapitalanleger. Mr. Kregel asked about the effect that corona will have. That is, are there different effects? Is there a difference between the infection rates in Germany and abroad? Have there been any casualties?
He would also like to know to what extent are home offices used in administrative functions, are masks and testing facilities available to employees in sufficient numbers? Can vaccinations be given by RWE company doctors? Mr. Seeger, would you answer that?
Yes, of course, dear Mr. Kregel. We very early started to introduce measures to contain chains of infections at work, including very stringent hygiene measures, distance rules, and the obligation to wear masks. In addition, wherever possible, we've created rules and regulations and actual possibilities for comprehensive and largely mobile working. Thus, the infection rate at RWE is below the average infection rate of the markets in which we operate. So far, infections have almost without exception originated in the private sphere. Unfortunately, however, two of our employees have died as a result of the COVID disease.
We offer masks and self-tests to our workers across all companies and carry out rapid tests. We have already completed preparations for possible vaccinations as soon as the vaccine is available. Our occupational health and health and medicine is able to vaccinate employees.
Mr. Seeger, working conditions, can you explain what workplace conditions apply to employees abroad? If internal RWE rules are more stringent than national law, what about the OECD initiatives and UN initiatives on workers' rights abroad?
Dear Mr. Kregel, national law is only really ever a minimum standard for us. If internal RWE rules and regulations deviate from the national law applicable abroad, that is, to the benefit of the employees there, then these more favorable RWE regulations are applied, of course. Your question regarding the OECD and UN initiatives, the following: Since January 2004, RWE has been a member of the United Nations Global Compact.
By signing the underlying 10 principles, RWE undertakes to respect human rights and labor standards. As part of our social charter, we're also committed to the core labor standards of the International Labor Organization, ILO.
Some questions to Mr. K rebber . Mr. Kregel would also like to know whether RWE already meets future requirements for implementing the EU taxonomy. If this is not the case, he asks what measures still need to be initiated. The SDK is also interested in the rating within the framework of the Global Reporting Initiative. What has been the result?
According to the current interpretation of the EU taxonomy regulation, RWE has introduced all necessary measures to meet the future reporting requirements. The delegated act on the reporting requirements of the taxonomy regulation is still being reviewed following a consultation phase, and therefore, certain adjustments or amendments might be in place in the future.
Now, regarding rating within the framework of the Global Reporting Initiative, a GRI, our sustainability report was prepared in accordance with the international standards of the GRI. Compliance with the GRI criteria was audited and confirmed by the auditing firm PricewaterhouseCoopers. Likewise, GRI has confirmed our compliance with the GRI criteria in the so-called Materiality Disclosure Service.
Mr. Krebber, what about the profitability of lignite-fired power plants? Against the background of rising prices for pollution rights as from 2030 onwards, what is the analyst view? The RWE share with regard to the RWE share, when does the share become interesting for sustainability funds? Because it has a very good ESG rating.
Regarding your first question, such a long-term outlook is associated with great uncertainty, e.g., with regard to the expansion of renewables and the development of commodity prices.
In the mid-run, that is, after phasing out nuclear energy in 2022, we expect that the EBITDA and the coal and nuclear energy will be around EUR 0 and EUR 200 million. Our CO2 hedging strategy will also benefit there. The second question: overall, RWE's transformation into a climate-neutral company is being positively received by the capital market. For example, with the certification of the Science-Based Target Initiative, we've shown that our goals are demonstrably in line with the Paris Climate Agreement. This has been reflected in the share price. RWE is already included in some sustainability funds instead of taking hard limits into account on RWE's transformation. In our view, this is really the only possible and correct approach.
The next question is posed by the SDK against the background that Germany will not only have to replace electricity from nuclear, but also from oil due to the rapidly growing demand from e-mobility. What quantities of electricity will have to be provided nationally by 2030? What share will RWE take, and what investments will be necessary on your part?
The central task in the future will be to ensure security of supply under the above-mentioned circumstances. The expansion targets for renewables must be raised considerably, and we need reliable plants such as gas-fired power plants that can step in whenever there's no wind and no sun. The extent to which RWE participates in tenders in Germany also depends on the support regimes.
Thank you, Mr. Kregel.
The following question to you: How can EUR 322 million in external sales in the offshore wind segment become an EBITDA of EUR 1,069 million? What prices does electricity from offshore achieve?
The offshore segment is not marketed to external customers, and this is why there is a low external turnover because it is really marketed to sister companies. The electricity is generally sold within the group at arm's length conditions so that the profit from external plus internal sales is generated directly in the offshore segment.
Transactions in the renewables business: What benefits does RWE expect from the takeover of the Nordex development business? Have rather small-scale projects in four countries with onshore wind and solar been brought? What risks do these projects carry? Are there many opportunities similar to the construction sector, but also a lot of risk in project development? Why has Nordex sold the project pipeline?
Is offshore wind more promising? What needs to be invested for the commissioning of the 2.7 GW, less than EUR 2.3 billion? RWE has also announced that it has sold shares in various wind farms. Mr. Kregel asked what the business idea was behind the sale of the shares in Hamburg and the four onshore wind farms in Texas. What management fee will RWE receive for operating the wind farms? If only 25% are still owned, will the 25% be sold in the midterm, and is there a put or a call option?
Thank you very much for the questions, Mr. Kregel. The acquisition of the Nordex development pipeline enables us to enter the onshore wind market quickly and broadly.
In France, project risks can arise primarily in the construction approval process, for example, as a result of specific environmental requirements, but also due to inadequate wind conditions, high development costs, or local opposition, or limited grid capacity in the respective regions. I can only speculate as to why Nordex has jettisoned the project pipeline and would ask you to address this question directly to Nordex. RWE has not yet decided which of the projects in the entire 2.7 GW pipeline are to be built by RWE Renewables itself. With a given technology mix, investment costs of around EUR 1.1 billion per gigawatt would theoretically be incurred, that is, about EUR 3 billion, which would extend over a period of several years into the second half of the decade.
Now, the question on sales, rotations, and the plant portfolio are primarily about diversification technologically, geographically, and also from a risk management perspective. This was also the case with the profitable sale of the shares in Hamburg, the four onshore wind farms in Texas. RWE will continue to take over the operational management for these wind farms within the framework of a service contract that includes maintenance, servicing, and operational management at standard market conditions. However, confidentiality was agreed on the specific terms of contracts.
Mr. Kregel has another question concerning the situation in Texas. Please explain the electricity interconnected system in the U.S. compared to Germany. Why is RWE obliged to supply electricity in the U.S. despite the lack of wind, unlike in Germany? Does this also apply to the collapse of power lines?
What costs were incurred due to the loss of wind power generation in Texas and the need to purchase spot market electricity at short notice? How can such a high risk b e ensured? Were there bilateral agreements with other electricity producers, including conventional ones, to compensate for blackouts or similar risk situations?
While the European electricity markets are interconnected, Texas is not connected to the surrounding electricity systems of the other US states. This is a special feature here. Whether there is an obligation to deliver electricity despite the lack of wind feed-in depends on the individual contract design. In fact, for certain quantities, we also have no obligation to deliver. In this case, the damage has essentially arisen for the part of the production for which we have undertaken price hedging transactions via bilateral trading transactions, OTC, or the NGX IC trading platform.
Here, we enter into delivery commitments for the production quantities that are expected within the high degree of probability by means of liquid, that is, relatively low-risk products, in order to hedge against long-term price risks and to achieve long-term predictability of sales. The damage caused by the Texas icing event amounts to around EUR 400 million. Property and business interruption insurance is in place for RWE in North America, so there was no insured property damage in connection with the winter event in Texas, and consequently, there were no business interruption losses requiring compensation. There are no bilateral agreements with other electricity producers in Texas to compensate the one-off weather effects such as the Texas icing event.
Mr.
Kregel also asks, in which other countries in which RWE is active with renewable energies, do hedging strategies have to be implemented, as there is no automatic matching of supply and demand at the expense of traditional electricity suppliers? What additional costs will RWE incur annually from 2022 onwards in order to hedge a Texas risk in the future?
Within the framework of a detailed investigation, we will analyze whether and in which other markets similar situations as in Texas could arise. It is still too early to estimate the additional costs that may be necessary to avoid this before the investigation is completed.
Thank you very much, Mr. Kleibach. Let's continue with questions from SDK on investments and the capital increase. Mr. Kleibach, to what extent does RWE plan to invest in renewable energies, especially offshore wind power, in the next few years?
Will further capital increases be necessary to finance renewable energy growth? Does the existing leverage, that is, equity-to-debt ratio, also apply to the EUR 2 billion equity that RWE raised through the capital increase of last August? How can the surprise effect of carrying out a capital increase in the middle of the holiday season, with the exclusion of subscription rights for existing shareholders, be eliminated next time? Why was not the money invested as of 31 December 2020?
Tangible assets are down, but cash is up. In March last year, we announced that we want to expand renewable energies to over 13 GW by 2022. To achieve this, we are planning net investments of EUR 5 billion or EUR 8 billion-EUR 9 billion gross. Around 45% of this to be in the offshore wind segment alone.
With the capital increase of August last year, we have strengthened the necessary financial flexibility for additional accelerated expansion of the renewable business. The timing of the capital increase was good, but it is true that we were only able to invest part of the capital directly, namely to acquire the Nordex pipeline. The reasons for the capital increase are not short-term. We will make additional investments beyond the previous targets in the medium and long-term expansion of the renewables portfolio and the further development of our project pipeline. However, there are currently no plans for a further capital increase. Now, concerning the leverage question, we have defined the leverage factor, that is, the ratio of net debt to Adjusted EBITDA of the core business and not the ratio of equity to debt.
Our goal is for net debt not to exceed three times the Adjusted EBITDA of the core business. We have met this target for the 2020 financial year, and incidentally, this would have also been the case without the capital increase.
With regard to hydrogen, Mr. Kregel would like to know what contribution to turnover RWE expects from hydrogen technology in the next five years. Will RWE itself engage in hydrogen production, or will it only make its gas networks available? Mr. Schmidt, are there already first results from the pilot project with thyssenkrupp for the conversion of steel production from coking coal to hydrogen?
At the moment, Mr. Kregel, our goal is to gain as much experience as possible to be at the forefront when the hydrogen economy becomes established.
We are involved in a number of projects, but it will certainly take a few years before money can be made with green hydrogen. Until then, we need a supportive regulatory framework and appropriate subsidies. As I explained earlier, we are basically active along the entire value chain. We can generate green electricity from renewable energies as well as green hydrogen via electrolyzers. We have the expertise for trading and transport, and we have a good network consisting of business customers and potential project partners. On the project with thyssenkrupp Steel, we are in partnership to supply the thyssenkrupp site in Duisburg with green hydrogen. This green hydrogen is then to replace coking coal in the blast furnace route and/or natural gas in newly built direct reduction plants in steel production. However, the testing of the technologies is up to thyssenkrupp Steel. We're not involved in this.
Thank you, Mr.
Schmidt. The last question of SDK goes to Mr. Krebber. Mr. Krebber would like to know why no videos and audio statements and no follow-up questions are allowed during the annual general meeting.
In our view, the legal framework of the COVID-19 Act, which was amended in December 2020, does not make it possible to allow questions during the general meeting in a legally secure manner without jeopardizing the legal validity of the resolutions. In particular, there is no secure means of limiting abusive use of the right to ask questions at the AGM. Similar considerations apply to video and audio recordings. We also do not consider it permissible to offer this option only to individual shareholders for reasons of equal treatment. Instead, we have strengthened shareholder rights in advance through various measures.
Our shareholders had the opportunity to submit written statements in advance for publication on the website, and the Executive Board and Supervisory Board also published their speeches in advance. In this way, we created the broadest possible information basis for the questioning process in advance.
Mr. Schmidt, let us now proceed to the questions from the VIP, that is, the Association of Institutional Private Investors, represented by Mr. Buhlmann. His first questions regard the general situation of global trading and the impact on RWE. Schengen, he said, would no longer be applied at home retroactively, but borders would be creatively and selfishly erected for global trade. Instead of supply chains, autarky would return to our value system and displace insights from free global trade. How would this affect RWE's organization and business model in the short term and medium term?
Are we capable of acting in self-sufficiency, and do we need to evaluate the situation not only, but especially in Russia? He also wants to know the following. Deglobalization is everywhere. Decoupling, coupled with sanctions, is more dramatic and faster. For instance, if Russia leaves SWIFT, how much does this—to what extent does this affect us?
For me, global trade is something very positive and the basis of our prosperity. Our business model in power generation is robust and can fend off trade restrictions because our business is global, but then it's mainly local. In Russia itself, we do not have local business, but we do have Russian trading partners. If Russia were to leave or be excluded from SWIFT, the entire European gas industry, including the gas business of our subsidiary RWE Supply & Trading, would be affected. It is therefore a political issue for us.
Mr.
Buhlmann reported a press release from the Federal Network Agency, according to which three fine proceedings for market abuse in electricity trading had been initiated in Q3 2020 as a result of an imminent large-scale blackout on 6, 12, and 25 June 2019 in Germany. Mr. Müller, to what extent is RWE affected here?
Thank you, Mr. Buhlmann. Neither RWE nor RWE employees are affected.
The VIP would also like to know where we stand with regard to the energy transition. What payments have been made and which are still to come? Specifically, Mr. Buhlmann asks about the compensation for the nuclear and coal phase-out and the capacity market in the U.K. Mr. Schmidt, please.
I will start with the compensation for the nuclear phase-out. In March of this year, we reached an agreement with the federal government on compensation for the accelerated nuclear phase-out.
In our case, this concerns unusable generation quotas amounting to 25.9 MMTWh and investments that have become worthless, amounting to around EUR 40 million. The federal government has promised us a compensation of EUR 33.22 per megawatt-hour for the electricity quotas. In addition, we are to be reimbursed for half of the devalued investments. The agreement with the federal government had no impact on the 2020 consolidated financial statements, but approval of the draft law by the Bundestag is still pending. We have agreed on compensation of EUR 2.6 billion with the federal government for the phase-out of lignite. The EU Commission's examination of the coal phase-out agreement under state aid law is still pending. Only after approval will compensation payments begin. We were successful with our last two German hard coal-fired power plants in the first nationwide decommissioning auction last year.
In the tender process, we were able to secure compensation of EUR 216 million for them. As soon as the responsible transmission system operators confirm that the units are not necessary to maintain grid stability, we will decommission them. Regarding the last part of your question concerning capacity payments in the U.K., which is still to be expected, the following can be said. In 2020, we were successful in several auctions. Details can be found in the annual report on page 45. In 2021, we were also successful at the auction in March. In total, RWE secured contracts amounting to 6,544.1 MW for delivery in 2024-2025 at a price of GBP 18 per kilowatt per year. Sorry.
Mr. Kleibach, is Polish wind power struggling with Polish hard coal or competing with Polish hard coal? Or why do projects like FEW Baltic II take five years to prepare?
What is the impact of the so-called CSD mechanism on the risk-reward portfolio of the RWE earnings?
Polish regulation has granted us a bilateral contract for difference for the FEW Baltic II offshore wind project swiftly after the National Energy Plan and the Offshore Wind Act came into force at the beginning of this year. The EU Commission's examination of the offshore subsidy under state aid law is still pending. Experience shows that a project decision can take up to a year. The planning of an offshore wind farm is much more time-consuming than for a wind farm on land, especially since the responsibility for planning and implementing the sea and land-based grid connection also lies with the investor. We welcome the support based on a bilateral difference compensation mechanism at the market price.
Mr. Kleibach, another question on the Icing event in Texas.
Trading and Texas is the cause of one of a balance sheet total, which was reduced by one-third in 2021. Please be more specific. Is nothing insured?
I already answered this question, a similar question that was raised by Mr. Kregel. The financial damage caused by the events in Texas amounted to EUR 400 million. The business interruption insurance covers loss of earnings as a result of an insured property damage, which did not occur. Consequently, there were no business interruption losses for which compensation is payable. Supply and trading with its trading business did not suffer any negative effect from the events in Texas.
Mr. Buhlmann's question on hydrogen. Mr. Schmidt, until the end of the last decade, hydrogen was only the subject of, well, games or strategy of Linden and Ehrlich Heath.
Now, RWE is involved in the North H2 project alongside oil and gas companies where green hydrogen is to be produced. What is the project goal, and what is RWE's long-term hydrogen strategy? If green electricity produces hydrogen, will the missing electricity perhaps also be substituted by coal-fired electricity in the future?
The last option would not be a good one. The project goal of North H2 is to make the north of the Netherlands the hub for the supply of green hydrogen to the northwest of Europe. To this end, a system of offshore wind farms and electrolyzers will be built, and gas storage facilities and gas pipelines will be converted for the use of their hydrogen.
As already explained on the DSW and SDK questions, we want to be involved along the entire green hydrogen value chain from renewable electricity generation to the production of green hydrogen down to trading and marketing. The coal phase-out in Germany and in the Netherlands has been decided. We therefore do not see coal power compensating for electricity shortages in the long term.
The next question goes to Mr. Krebber and relates to our new RWE campus. Working from home is modern, and not only because of the coronavirus pandemic. It's a pity about the beautiful new office space around the RWE plants. Are areas now going to be converted into housing? Then employees could move in there and also work from home there.
That's a very nice idea.
Even if mobile working will remain an integral part of everyday working life, some tasks are then still better done from the office. Therefore, we will certainly use the office space more again in the future, like last summer, for example, when the infection figures were very low. The infection rates were very low. Let's continue with a question about dividends.
Mr. Krebber, dividends are a burden on cash unless RWE distributes E.ON shares. Is that conceivable, advisable from a tax point of view, or does the RWE management see rapid price increases coming from E.ON?
To a certain extent, together with the lignite compensation claim against the federal government, we're going to use our E.ON shareholding to cover mining provisions. A reduction of our E.ON share would lead to the loss of tax benefits and is currently not planned, especially not via a dividend in kind.
Mr.
Buhlmann also has questions concerning the elections to the Supervisory Board. Mr. Brandt, this is your question. The explanatory statement on agenda item six states that the members of the Supervisory Board are to be elected for three years, but the articles of incorporation continue to speak of five years. Why is there no corresponding amendment to the articles of incorporation on the agenda? Was it forgotten? In addition, the explanatory memorandum on agenda item five states that the only reason for the staggering of members, the staggered system, is to avoid the risk of a loss of experience. Does the administration consider the entirety of its shareholders to be stupid? Do they think this risk can occur? Isn't it rather just the opposite? The Supervisory Boards are applying for or going to build up a fortress against shareholder majorities.
Why does the Supervisory Board protect itself with formalities instead of convincing through performance?
Mr. Buhlmann, thank you for this provocative question. The current articles of incorporation already make it possible to elect the shareholder representatives for only three years. This opportunity already exists today. You also heard that the employee representative will be re-elected, and that is for a period of five years. That is why we are not proposing a general amendment of the articles of incorporation. The staggered system also ensures flexibility of the body. The composition of the shareholder side can be adapted more flexibly to a changing environment. Incidentally, even more so in combination with the shorter terms in office, that is, three years. For these reasons, staggered boards are also seen by many investors as a positive factor for good corporate governance.
The last question from the VIP were about the remuneration system. Mr. Brandt. Mr. Buhlmann asks about the purpose of discussing the remuneration system. There would be unlimited opening clauses as well as a target adjustment during the year, which can turn the result upside down. Moreover, even agreed upper and lower limits can be skipped. What use is the resolution of the AGM, really? Mr. Buhlmann goes on to say that so far, only very few companies have linked the achievement of the ESG target to the remuneration of top management. If this is changing, will the target still be clear? Hasn't environmental and social always been an intrinsic part of the goal, which only finds great repeal in the current marketing?
Buhlmann, on your first question, the Supervisory Board sets all performance targets at the degree of achievement of which determines the amount of remuneration as binding for the upcoming assessment period. As I said, a subsequent change of the target value is excluded, and I do not see an unlimited opening clause. What we see in page 17 of the invitation is a reference with a view to section 87A, paragraph 2 of the Stock Corporation Act, and it says that if this system can be deviated from under quite extraordinary developments, for example, in the face of a national disaster or special criteria, and this would not only affect RWE but all other companies. The way we described it on page 17 of the invitation, this is the way it should be interpreted.
On the ESG criteria, a remuneration system is designed to provide incentives for the sustainable, successful development of RWE and to align the interests of the company, its shareholders, and other stakeholders. I think this is only possible if financial performance indicators and sustainability or ESG objectives are taken into account equally and explicitly. This is what we have done in terms of the long-term remuneration.
Now, let us turn to a junior investment. Dr. Pönsen, Head of Sustainability of Portfolio Management, asked, "We continue under what conditions can we expect RWE to bring forward its current target of becoming CO2 neutral by 2040?" A question for you, Mr. Krebber.
Thank you, Mr. Pönsen. Our goal of a climate-neutral electricity generation by 2040 is ambitious, even compared to other companies in the energy industry. Such targets and transforming companies are always embedded in a social-political discussion.
In order to phase out coal from electricity generation even more quickly, the main task is to create the necessary conditions. This includes, among other things, the further expansion of renewables and transmission grids, or the sufficient availability of long-term electricity storage and CO2-neutral fuels for a gas-fired power plant.
Another question. What criteria and investment alternatives would have to be met to justify the sale of a 15% stake? Mr. Müller,
a sale of our 15% stake in E.ON would be conceivable in order to fund further growth in our coal business at attractive returns.
Thank you, Mr. Müller. Next question for Mr. Schmidt. Mr. Pönsen asks, "At what time will RWE announce details of the hydrogen strategy, in particular the investment requirements, the plant scope, and the profitability development?" Mr. Schmidt.
Hydrogen, and primarily green hydrogen, will contribute significantly to reducing global CO2 emissions.
Decarbonizing industry in parts of transport such as aviation or heavy goods vehicles will not work without hydrogen, and we at RWE wish to play an important role in this. I mentioned earlier that we are currently working on 30 projects in Germany, the Netherlands, and the U.K. We have established a board department at RWE Generation, and we are continuously expanding our activities, and we're constantly sharpening our strategy. We're only at the beginning of the development, and we must admit this, and this is why we cannot come in on your questions, that is, on profitability and scope and strategy.
The next question for Mr. Brandt. What are you doing to further improve corporate governance and diversity at RWE?
Thank you, Mr. Pönsen. Responsible management and sustainable value creation when managing a company is very important for us.
RWE fully complies with the recommendations of the corporate governance code. Governance statutes only work well if you have the right people who stand up for them. This starts with the Supervisory Board, for which we have adopted a profile of skills and competencies and requirements that we are constantly refining in line with our development at RWE. Most recently, for example, we've added expertise in the field of renewables and digitalization. The profile also includes diversity on Supervisory Boards. The proportion of women on the Supervisory Board currently meets the statutory quota at 30%. With the candidates proposed for election today, we would achieve a share of 40%. The proposed staggering terms of office is intended to contribute to the continuous and flexible development of the composition of the Board. Diversity is also an important element for the Board.
In addition to professional and life experience, appropriate gender representation is also important. With the latest replacements on the Executive Board, we've lived up to our claim. The proportion of women on the new Executive Board from May 2021 is 33%. Incidentally, the feedback of our investors is very important to me in the further development of corporate governance. It's a feedback, really, that is really to enter into qualified dialogues with you throughout the year.
Dr. Pönsen also says that Dr. Schippers, as chairman of the Audit Committee, is not independent. He would like to know whether it's conceivable that he will give up the chairmanship of the Audit Committee before the end of his term in order to meet the demands of investors and proxy advisors for an independent Audit Committee chairman. Mr. Brandt.
We consider Dr. Schippers to be an independent representative of the shareholders, Dr. Pönsen.
This also applies according to the criteria of the German corporate governance code. It's particularly important for us during these times, and also in the interest of the company, to maintain the outstanding financial expertise of Dr. Schippers and the Audit Committee so that the personnel change in the Executive Board and the upcoming rotation of auditors can still be accompanied or prepared by him with the respective continuity. This is really a very good reason to suggest and propose Dr. Schippers to be a member of the Supervisory Board.
Deka Investments is the next group. Mr. Krebber, in which of the three segments offshore wind, onshore wind, solar, and hydrobiomass gas will the most investment be made in the next few years? How will the decline in earnings from 2023 onwards be offset by the discontinuation of the nuclear energy segment?
Is a continuous increase in the dividend also planned in the light of the decline in earnings in 2023?
First of all, the question on investments. We wish to further grow in the field of renewables. The investment volumes are distributed over the mid-run in the following order: first, offshore wind; second, onshore wind, solar; and third, hydrobiomass and gas. It is correct. At the end of 2022, we will shut down the last nuclear power plant as from 2023 onwards, the current coal nuclear segment will experience a considerable decline in earnings. However, the delta will gradually be filled by growth in renewables. On the dividends, our dividend policy is based on the growth of our core business, and this is critical.
Deka's next questions concern the wind and solar business.
In detail, the following questions: What proportion of the 34 GW project pipelines or projects are most likely to be realized? In which regions will RWE grow the most in the future? What risks do you see in respect of the new offshore projects in terms of raw material prices, inflation rates, as well as expenses for maritime rights? What precautions will be taken to avoid high losses in the future, such as those caused by the coal snap index this year? With the oil majors, new competitors for wind projects are entering the scene. What means will RWE use to keep up? What are RWE's advantages over the oil majors?
Thank you for the rather detailed questions. Let me start on the pipeline. The 34 GW project pipeline includes 10 GW in offshore wind. The remaining projects are in onshore wind, solar, and two small electron batteries.
We are distributed with almost 16 GW in North America and 8 GW in Europe. The likelihood of realization depends on the individual project and can therefore not be answered in general terms. However, we see an unbroken growth momentum, such as the new climate plans in the United States. These developments positively influence the chances of our projects in many ways, as additional projects are naturally needed in the market for the more ambitious decarbonization path. The project risks. We update our assumptions regarding commodity price developments, inflation, and other costs for each individual auction, and generally price our expectations and possible risks into our bids. In addition, we continuously monitor price and inflation developments. The losses suffered in Texas.
It is important to remember that the extreme cold snap, it really was a once-in-a-century weather event, combined with exceptionally high electricity demand and an unprecedented number of icing-related power infrastructure outages, including outages at natural gas pipelines, conventional power plants, and wind turbines. It remains fundamentally difficult to prepare conclusively for such extreme scenarios. We are currently working through the incident in full, also in order to gain insights for the entire power generation fleet of our group. All aspects are being covered, including not only our hedging strategies but also asset management and our investment decisions. This review is not yet fully completed. On the question of the competitive situation in the wind energy market, we believe that there are sufficient opportunities in the market for market participants.
We consider ourselves to be very well positioned in the competition for new renewable energy projects and have sufficient financial strength. RWE has a strong presence in many important growth markets, has a diversified technology portfolio, and can draw on a wealth of experience of our employees from years of successful project implementation, especially in the offshore wind sector. We are therefore very confident that we continue to compete successfully for the best projects and ideas.
Mr. Müller, the following questions concern the energy trading segment. RWE Supply & Trading achieved an outstanding result of EUR 539 million in Adjusted EBITDA in the 2020 financial year. What were the reasons? In the current financial year, the target is again EUR 150 million-EUR 350 million. What factors speak for such a range of results?
In the past financial year, the trading business showed an above-average performance across all trading desks.
The gas and LNG business also made a very strong contribution to Adjusted EBITDA. The trading business is a volatile business by nature. Against this backdrop, the outlook for the current financial year 2021 is in line with a long-term average earnings expectation. In the following, it's about the dismantling activities in the field of nuclear.
Mr. Schmitz, please explain, where does RWE stand with the dismantling of old nuclear power plants? How much money will this dismantling cost in total? When will RWE receive the compensation payment agreed with the federal government in March? Can the experience regarding costs in dealing with employees be transferred to the dismantling of the coal-fired power plants?
The Atomic Energy Act provides for the immediate dismantling of nuclear power plants after the end of operation. We are implementing this.
We have created the technical and licensing requirements or are currently doing so for the plants in Großremingen and in Sand. The dismantling work, e.g., in the area of large components, is running at full speed in Biblis, Mülheim-Karlsruhe, and Lingen. RWE Nuclear is undergoing a major transformation from a reliable operator to a successful dismantling company. The cost framework for dismantling is covered by the provisions formed. The payment of total compensation of around EUR 880 million for RWE is expected at the end of November 2021. The experience from nuclear can only be transferred to the coal phase-out since, in contrast to the shutdowns in Lingen, many employees are still needed for dismantling in nuclear energy. It's much more complicated. Also, in the course of the dismantling process, we will reduce the workforce, and we've already agreed on arrangements with the social and industrial partners.
Analogous to nuclear energy, the demand for a status update is in Lingen.
What is the state of affairs in dismantling of open-cast Lingen mining, and what options are there for the employees in the affected power plants?
Following the agreement between the federal government and federal state on the coal phase-out in January 2020, RWE submitted an open-cast mine plan adapted to the agreed decommissioning plan. The Northern German State Government has, on the 23rd of March 2021, published a new guiding decision that sets guidelines for Lingen planning. On this basis, the existing permits will now be adapted to the agreed decommissioning path. Within the framework of the existing permits, open-cast mine development has already been aligned with the new planning in many places. Then, the employees.
On the 28th of August 2020, RWE reached an agreement with the Trade Union Authority and IGBCE on the collective agreement for the socially acceptable implementation and support of the coal phase-out in the RWE group. With the collective agreement on the coal phase-out, special regulations for the socially acceptable accompaniment and implementation of the personal adjustment measures are made for companies affected by the Coal Electricity Termination Act. Nobody will be left behind.
Thank you, Mr. Schmitz. Now, Mr. Krebber, what risk does RWE face from the EU lawsuit filed by the municipal utilities against the payment for the Lingen phase-out?
We are not aware of any legal action and it would not be admissible at this point because there is no approval yet.
At the moment, the perfect and normal state aid investigation procedure on the coal phase-out between the Federal Republic and the EU Commission is simply underway. The procedure was expected and is already reflected. Anyone who feels affected by the negotiated coal phase-out under state aid law can submit their own comments. Some municipal utilities have done so, and the press has pointed that out, and we will do the same.
Next questions range around hydrogen. At RWE's subsidiary RWE Generation, a separate board department for hydrogen has been established. What are the next steps in this area? When do you estimate that hydrogen will be used on a large scale? Mr. Schmidt.
I have already explained a few things about this today.
The hydrogen department is working on the hydrogen strategy for the RWE group and driving forward the various projects and thus trying to position RWE in the hydrogen sector. As things stand today, green hydrogen will become relevant on an industrial scale in the second half of this decade, so it will take some time.
Mr. Krebber, the next question to you concerning net debt. At the end of the financial year, it was around EUR 4.4 billion, resulting in a net debt factor that is net debt in relation to Adjusted EBITDA of the core business of 1.7. The goal is not to exceed three times the Adjusted EBITDA. Is a high level of debt planned in order to finance future inve stments?
We already had the target of a debt factor of 3 for 2020.
The lower net debt in 2020 was, among other things, largely determined by the capital increase in August. As for further development, with further investments in renewable energy, the debt will also increase.
Let us continue with questions concerning sustainability. Firstly, the management report should already contain information on the basic premises of the structural change resulting from the Paris Climate Agreement in order for investors to assess the future viability of the company. To what extent are RWE's financial forecasts already based on the Paris Climate Targets? Which RWE business units benefit from programs to combat climate change, such as the Green Deal or the Sustainable Finance Initiative? Secondly, with the EU taxonomy regulation coming into force, which came into force in mid-July 2020, and a possible new Supply Chain Act, the Supervisory Board will also have to deal with this in the future.
How is the Supervisory Board preparing for the audit obligation of certain key figures on sustainable economic activities of the new EU taxonomy? Which persons or committees are dealing with this issue? How is RWE prepared for the possible new Supply Chain Act? How are the supply chains already controlled today?
Now, let me start by answering these questions. Part of our corporate strategy is to meet the Paris Climate Targets. Last year, the recognized Science-Based Targets Initiative acknowledged that our targets are in line with the Paris Climate Agreement, especially with regard to carbon emissions reductions. For this reason, they're, of course, part of our financial forecast. On the Green Deal and sustainable finance, basically, the wind, onshore and offshore, and hydrobiomass gas sectors can benefit from the programs in power generation. Mr. Brandt is going to talk about the questions related to the Supervisory Board.
I could give you some information on the supply chain control and the operational business. For RWE, the respect for human rights in our own company and in the supply chain is an important concern. Since signing the UN Global Compact in 2004, at the latest, we have also made a public commitment to this. We have implemented risk assessments for our own activities as well as for the auditing of suppliers and are implementing the necessary measures. One example for this is Bettercoal. RWE is well positioned for the introduction of the Supply Chain Act. Mr. Brandt,
thank you. Mr. Krebber, the Supervisory Board is already preparing intensively for the audit according to the EU Taxonomy regulation. Among other things, this was the subject of an information forum for the Supervisory Board held on the 26th of August 2020 on the topic of green finance.
In preparation for the audit obligation that will apply from 2022, the members of the Audit Committee dealt with the taxonomy regulation and its implementation at RWE at their committee meeting in March 2021. This year, further dates are scheduled in which sustainability and thus also the requirements of the taxonomy regulation will be addressed. This will be an additional information forum in June, a meeting of the Strategy and Sustainability Committee in late summer of this year, and a Supervisory Board meeting in late summer.
The last question of Deka relates to the aspect of good corporate governance and the composition of the Supervisory Board. Deka says the Supervisory Board's industry expertise for the global wind energy market is hardly represented. Therefore, they are asking, how is it planned to expand or to build up this expertise in the Supervisory Board?
With the candidates nominated for this year's Supervisory Board election, we are very well positioned. One of the candidates is Hans Bünting, who also introduced himself today, who for many, many years gained international experience in the renewable energy business. That's a real stroke of luck for us because you should not forget that the wind energy business is still a fairly young business, which is growing quickly. The experts in this field are still active in the operational business and are urgently needed there worldwide. We now have a member of the Supervisory Board who has a lot of expertise and experience in this area.
Thank you, Mr. Brandt. Back to you, Mr. Schmitz.
Our investor, Amundi, is concerned with RWE's coal phase-out path. It is acknowledged that RWE has taken some important steps towards decarbonization in 2020.
However, RWE's full coal phase-out is not scheduled to take place until after 2030, which is not really in line with the recommendations of the International Energy Agency for achieving the goals of the Paris Agreement. Hence the question whether RWE would consider a phase-out of thermal coal-fired power generation and coal mining by 2030. RWE has undertaken to gradually reduce coal-fired power generation in accordance with the coal phase-out path agreed with the German government. Security of supply for Germany was also a precondition when designing the coal phase-out path. Should the federal government want to bring the date forward, we are ready for talks with the federal government, and the market will develop further, but we'll have to see. We'll have decreased capacities by 2030, and the few power plants that will still be online will probably not be operating very much.
Another question from Amundi goes in a similar direction. In 2019, 11 million tons of lignite produced by RWE were destined for external customers. Is RWE considering stopping all sales of coal-based products to external customers?
Currently, we refine lignite into briquettes, lignite dust, and lignite coke. Briquetting will be discontinued at the end of 2022 in the course of the coal phase-out. Pulverized lignite is primarily purchased by small and medium-sized industries, which use it in distributed CHP plants. Production will continue in line with demand. The same applies to hearth furnace coke, which is used for effective flue gas and wastewater purification and has proven itself in environmental technology.
Let's continue with questions from DWS Investment GmbH, which is represented by Hendrik Schmidt. Mr. Schmidt praises RWE for its success in an extraordinary year of 2020 and congratulates on the closing of the transaction with E.ON.
In this context, he would like to know how extensive the business relations between RWE and E.ON or their respective subsidiaries were in the past financial year and will be in 2021. He also asked about the mandate on the Supervisory Board of E.ON. Last year, it had been pointed out that there had been no decision to date as to whether Mr. Schmitz will continue to hold this mandate, this membership. Is a replacement being considered here? How will RWE's interest be represented on the E.ON Supervisory Board in the future?
In addition to the conclusion with the transaction with E.ON in 2020, we maintain business relationships primarily through RWE Supply & Trading, which has extensive trading relationships with E.ON. In addition, marketing contracts for renewables existed in 2020 and still exist today, some of which were continued as existing contracts after the transaction was completed.
The same applies to service contracts in the areas of IT, HR, and financial services. In addition, E.ON held a 20% stake in the Rampion project, which was and is being operated by RWE Renewables until 31 March 2021. With regard to the Supervisory Board membership, Rolf Martin Schmitz will continue to be a member of the Supervisory Board of E.ON. He does not yet believe that RWE considers the five-year term of the proposed capital authorizations to be too long and asks why the proposed capital measures, what they are for. I already elaborated on that, but the authorizations to hold capital in reserve are part of the standard toolbox of DAX companies. They enable us to react quickly and flexibly to future developments that are not yet foreseeable. Currently, we have no plans to use these authorizations.
The details of the structure correspond to today's usual standards, as does the term. We consider five years to be an appropriate time horizon for reserve capital, which is also the basis for the German Stock Corporation Act.
We are going to continue with questions on the remuneration system of the Executive Board by DWS. You highlighted that a carbon emissions reduction target is now anchored in the long-term component, but that adjusted figures continue to be adhered to as targets for the short-term and long-term remuneration components. The questions are: What is the CO2 target for the first performance period? In what order of magnitude were adjustments made in the past two years, and what resulted in the three largest items in each case? Mr. Brandt, could you elaborate on that?
Thank you, Mr. Schmidt.
The Supervisory Board has set an average that is for the period from 2021 to 2023 to achieve a carbon intensity of 366 grams of CO2 per kilowatt of installed capacity per full load hour. That's the target value, the average target value. The 366 grams is the average value for the three years. Now, concerning the adjustments, we transparently presented or present the adjustments to Adjusted EBIT and adjusted net income in the remuneration report. In 2020, Adjusted EBIT was raised by EUR 29 million, which corresponds to 3%, and adjusted net income was reduced by EUR 170 million, equivalent to 14%. These adjustments resulted primarily from time shifts in investment income impairments in 2019, the subsequent effects of which were not taken into account in the target value, and the technical allocation of the dividend from the 15% stake in E.ON.
Another adjustment related to the flat tax rate used to calculate the adjusted net income. In 2019, Adjusted EBIT was reduced by EUR 205 million, which corresponds to 15%, and adjusted net income was reduced by EUR 363 million. That's an equivalent of 30%. The main reasons were that no income from a possible reintroduction of the U.K. capacity market had been planned for 2019 in EBIT target. Furthermore, impairments on power plants in 2016 and evaluation results from provisions for impending losses and earnings effects from the acquisition of minority interest in the Lingen and Gundremmingen nuclear power plants had to be taken into account.
DWS criticizes the omission of a deductible for the D&O insurance and that the independence of the Audit Committee Chairman is no longer given due to the now intensive business relationships, due to the fact that the intensive business relationship between RWE and E.ON no longer exists. In addition, the term of office of the partner responsible for the audit was too long.
How did the Audit Committee deal with this issue after the last AGM? Mr. Schmidt went on saying that DWS was critical of the accumulation of mandates, memberships of several members of the Supervisory Board. Specifically, this concerns Dr. Brandt, Dr. Schippers, Mr. Schwartz, Ms. Kircher, and Ms. Valentin. The questions are: How is the Nominating Committee dealing with this issue? Will the aforementioned candidates resign mandates in the course of the next 12 months? If so, which ones?
Mr. Schmidt, thank you for your questions.
First of all, we do not share your assessment of—let me start with the deductible. We simply followed the statements according to the Corporate Governance Code. Now, with regard to Dr. Schippers and Dr. Schippers's independence, because this has already been mentioned earlier, at Supervisory Board level, we believe that Mr. Schippers is independent. He is also an independent member according to the criteria of the German Corporate Governance Code. Furthermore, he has not worked for E.ON since 2006, which is why, 15 years later, we see no evidence of dependence if RWE now maintains business relationships with E.ON. Of course, when appointing the auditor—oh, of course, we also talked about overboarding and other issues at Supervisory Board level. I talked to all candidates which are up for reelection or are available for new appointments.
If you look at the documents included in the invitation, you will be able to see that all the candidates have enough time to carry out this membership. Now, with regard to the appointing of the auditor, we comply with the statutory regulations on external and internal rotation. The Audit Committee of the Supervisory Board did not see any reasons not to exhaust the legal framework for auditor rotation. We are aware of the fact that the topic that I just mentioned, so-called overboarding, is being appreciated differently by various investors. The Nomination Committee cannot consider all requirements equally. If it did that, we would not get the candidates that we think we require for the future of the Supervisory Board. Whether Supervisory Board members resign mandates or memberships or stand for reelection in other bodies is solely up to their decision and communication.
As far as I am concerned, I can only say that I will make decisions in due course in consultation with my colleagues on the respective boards. Let me repeat: All Supervisory Board members who are up for reelection today or for election in the first place said that they have enough time for this very important membership at RWE.
Let us continue with the last questions of DWS, and they go to you, Mr. Schmidt. How many questions did you receive for today's AGM? How many questions will you answer? According to which criteria will the answers be given?
We received 235 questions, and we will answer all of them broken down by the questionnaire.
Now, let us start with the questions by private shareholders. Mr.
Krebber, we have received a question from a shareholder asking whether we can avoid overlapping dates of AGMs, such as today with Munich Reinsurance Company, in future by making appropriate arrangements with the other DAX companies. When planning an AGM, various legal deadlines and key dates have to be taken into account so that not every date is equally suitable. In such a regulated framework, overlaps can unfortunately occur. However, we try to avoid conflicts of dates where possible. The same shareholder suspects that the recording of images and sound of the annual general meeting is prohibited. He asks whether this is a legal prohibition, and if so, how a violation will be punished, and what the purpose of such a law or order is, and how you would even come to know about any violations of it. Mr. Krebber, could you answer that?
We have not prohibited recordings of the livestream of our annual general meeting, and they could not be avoided given the state of technology, and there is no corresponding legal prohibition either.
I would like to read out the following question from the same shareholder. "It is a fact that quite a few general meetings are extremely protracted due to questions that seem to me personally as if their only purpose is to damage the reputation of the company, in some cases in a very lasting way. I am referring to the general behavior of the so-called DACH Verband der kritischen Aktionärinnen and Aktionäre. Is there any way to expropriate such shareholders of their shares and thus counteract the anti-corporate efforts?
I mean, every employee will face some kind of consequences at some time for disloyal behavior towards their company." Thank you for this question.
In conducting the annual general meeting, we strictly adhere to the legal requirements. However, we would welcome legislative reforms that would reduce the misuse of the AGM as a publicity platform for individuals in favor of a broad and objective information process. We would be in favor of that. That is certain. The Supervisory Board of the Board of Directors can arrange for the auditor to present his report in detail and provide his risk assessment at the 2022 AGM because I think this would be more credible and where the resolution can be passed by the shareholders at the AGM. The auditor reports extensively to the Supervisory Board, and the Supervisory Board takes this into account in its reporting to the AGM.
According to the law, the auditor himself has no right to speak and no duty to provide information and cannot be dismissed from his duty of confidentiality by a resolution of the general meeting.
H err Lutz, the next question comes from Mr. Lutz. He also asks about the purpose of filing an opposition. An objection on the record opens the power of challenge under the Companies Act in conjunction with the provisions of the COVID-19 Act. An objection does not prevent the resolutions from taking effect. I ask the following question: Why is there such a large number of counter-motions? What is wrong in our society?
The possibility to oppose certain resolution proposals of the administration is a quite regular shareholder right. We can see nothing unusual in the fact that five shareholders of our company have also made use of it in the context of this AGM.
We have commented on the content of the motions and recommend their rejection.
The next question by Mr. Kutz on the dividend. Why does RWE not pay a dividend of more than EUR 1, which is considered as more appropriate?
Mr. Kutz, we've announced that we will increase the dividend in line with the growth of our core business for the 2020 financial year. We have raised the dividend by EUR 0.05 per share. The payout ratio of about 45% corresponds to a level that still allows us to make growth investments. For the 2021 financial year, we've set ourselves a goal of increasing the dividend by a further EUR 0.05 - EUR 0.90 per share.
He also asks about the remuneration system, and I would like to ask you, Mr. Brandt, to answer the question. Why is RWE presenting the extensive new remuneration system for virtual AGM?
No questions are allowed during the AGM.
Thank you for the question. After the IRIB II came into force, a resolution on the remuneration system must be passed at this year's general meeting. Of course, we cannot meet in person, unfortunately, because of the pandemic, and this is why we need to decide upon it on the basis of the virtual general meeting. Questions on the remuneration system, of course, could be asked in accordance with the regulation applicable to the virtual general meeting.
Mr. Kutz would like to know why the remuneration of the Executive Board and the Supervisory Board does not correlate much more pronouncedly with the dividend payments.
Mr. Kutz, the remuneration of the Executive Board is linked in several dimensions to the operational success of the company.
In our opinion, the absolute amount of the dividend is not a suitable parameter for measuring the remuneration of the Executive Board. For the Supervisory Board, dividend-based remuneration does not, in our opinion, do justice to the board's independent control function and should not be done. We get a fixed remuneration as suggested by the German Governance Code and then, of course, a nomination fee when working and the committed fee.
Okay, final question by Mr. Kutz for Mr. Krebber. When does RWE produce more than 50% of its electricity from renewables, and by when do they only and exclusively generate electricity from renewables?
Thank you, Mr. Kutz, for your questions. I can't give you an exact date, of course, when this will be the case permanently, but it's quite clear that even today, in individual hours or days, more energy is generated from renewables than from conventionals.
We will continue to drive forward the expansion of renewables in a targeted manner and will therefore continue to invest in the growth of these technologies in the coming years. In accordance with our strategy, we are pursuing two pillars in addition to renewables. Security of supply is the second guiding theme. Flexible gas plants will become increasingly important in the future, and for this reason, we have made a conscious decision not to exclusively be a pure renewables player, but also to be able to offer security of supply through low CO2 plants.
Mr. Seeger, a shareholder raised this issue of a discrepancy between the level of remuneration of the Executive Board and the Supervisory Board on the one end and the salaries of the employees. He asked for an explanation as to why no measures are taken to increase the remuneration of the employees.
RWE offers all employees at all levels and in all function groups very attractive financial framework conditions. This includes not just wage and salary components, but also a wide range of social benefits. The appropriateness is systematically ensured by means of market and industry comparisons. RWE is perceived as an extremely attractive employer in the job market.
The next question is from Mrs. Ruf. She asks for information on the remuneration of the Executive Board. Mr. Brandt, firstly, with reference to the proposed remuneration regulation for the Executive Board, please tell us the following figures for the Executive Board in its composition as of 31st of December 2020: overall the lowest, then the highest possible value of remuneration for a financial year, as well as the pro forma value of remuneration in 2020 under the previous system and according to the new system. Mrs.
Ruf also wonders why the remuneration system is so complicated. Is it true that managers spend hours, even days, addressing the details of the system and its design and then need the expertise of expensive consultants to put this all into practice? How much does all of this cost?
Mr. Ruf, thank you for your question. The remuneration of the Executive Board for the calendar year 2020 can be found in the annual report for each member of the Executive Board individually, and this is why I'm not giving any exact figures. Let me point out that the lowest remuneration corresponds to the monthly basic remuneration. The bonus can amount to a maximum of 180% of the target value, and the long-term incentive is limited to 200%. The change in the remuneration system is not accompanied by an increase nor by a reduction in remuneration.
The structure of the Executive Board remuneration system is linked to various legal requirements and expectations of our stakeholders. In order to meet all these requirements in the best possible way, an external consultant has been consulted, in particular to have market comparisons made and to be able to properly take into account legal and code changes. The cost for the external remuneration consultant amounted to approximately EUR 200,000.
Thank you, Mr. Brandt. The remuneration of the Executive Board is now followed by questions regarding the Supervisory Board's remuneration. Mrs. Ruf asks for information on how much the Supervisory Board would have cost in total after today's election in 2020 and with the same number of meetings, how much it will cost in 2021. In addition, what is the highest possible remuneration for the chairman of the Supervisory Board, for his deputy, and for a normal member? Mrs.
Ruf asks why the range is so high. Would a ratio of one for Supervisory Board members, 1.5 for the deputy chairman, and two for the chairman suffice?
At least this is how it is regulated in many—how is this done in many other AGs or stockholding companies. You can see from the remuneration report on page 83 of the annual report that a total remuneration of the Supervisory Board for 2020 ranged around EUR 2.9 million. Based on the higher remuneration for committees' activities now proposed, the total remuneration in 2020 would have been around EUR 3.5 million with the same constitution of the Supervisory Board. The figure for 2021 is similar. The increased committee remuneration is intended to take into account the increased time and professional requirements.
The highest possible remuneration is a purely theoretical figure, which is calculated by simply adding the statutory remuneration for work on all committees to the statutory basic remuneration. In terms of the actual time spent, however, the Supervisory Board members will naturally not be able to serve on all committees. In fact, we will try that each and every member of the Supervisory Board will participate in one or the other committee, and the ratio of the basic remuneration for chairperson, deputy, and other members of the Supervisory Board of three to two to one is customary in the market.
Furthermore, the shareholder would like to know when selecting candidates did the Supervisory Board also consider the age that proposed persons will reach by the end of the election period?
The shareholder is of the opinion that persons who are older than 70 at the time of taking office would be better off doing quieter work than performing new duties for the Supervisory Board. Another question in this context: Does RWE have age limits for board members in the articles of association? What are they, and if no, why not? This is a follow-up question. Do RWE Group companies have such limits? In which countries and at which companies? Mr. Brandt, Mr. Schmitz?
When selecting candidates for the Supervisory Board, we naturally also look at the age of the candidates. The Supervisory Board has set itself a standard age limit of 72 years, but in individual cases, there may also be good reasons for proposing older candidates, as is the case for Mr. Keitel and Mr. Schiepreit at this annual general meeting.
We have explained in the invitation to the annual general meeting the specific reasons for the renewed nomination. There is also a standard age limit for Executive Board members. It is 63 years. After that, reappointment is possible for one year at a time, but at most until the age of 65.
Mr. Schmitz now?
May I supplement the answer with the information on the group subsidiaries? No age limits have been set for Executive Board members in the subsidiaries of RWE AG in recent years. No appointments have been made beyond the age of 63.
Mr. Brandt, next question from shareholder deals with the resolution modalities for the discharge.
Why did the Supervisory Board not provide for individual discharge for the members of the Executive Board and for the members of the Supervisory Board, although there has been a lot of criticism about this in the media, also in the business press, NGOs, and shareholders? The shareholder requests that items three and four of the agenda be voted on individually by person.
According to the statutory model, the discharge of the Executive Board and the Supervisory Board is decided uniformly in each case. This corresponds to the principle of joint responsibility, according to which all board members are jointly responsible for the actions of the board. The discharge modalities are not accessible to any motion in the virtual general meeting.
However, in the interest of the further development of our corporate governance, we are examining the extent to which it might be sensible and appropriate to propose individual discharge from the outside in the future.
Thank you very much. Now, more questions, and Mr. Krebber, this is for you. How many companies are mentioned in the annual financial statements, and why are they not numbered consecutively? Mrs. Ruf suggests that the respective parent company should be given a number, as other tax companies do. This would increase transparency and make it easier for shareholders to assess RWE's investment policy. Would it be feasible to implement this in the next annual financial statements? Mrs. Ruf further asks whether RWE does not have too many subsidiaries and second-tier subsidiaries. What do their administration, auditors, and tax and legal advisors cost? Isn't it possible to achieve sustainable cost savings by mergers, discontinuations, etc.?
Furthermore, she asks for a list of the companies that made a loss of more than EUR 5 million in the business year. She would also like to know where the loss of EUR 455 million at RWE Eemshaven Gold Holding, the Wege Trudenberg, which has thus almost completely lost its equity capital of EUR 503 million, comes to. Finally, what business is the Pearl Petroleum Company Ltd. doing in the British Virgin Islands? Saving taxes? Who are the great partner companies?
Ms. Ruf, let me take the first question. A total of 703 companies are named in the list of shareholders. The presentation of the list fulfills the legal requirements of the German GAAP and IFRS presentation. When designing the annual report, we regularly review the prevention of the individual sections and always strive for improvement.
Regarding the second question, the number of companies depends, among other things, on country-specific legal requirements. Approximately EUR 15.7 million were incurred in the 2020 financial year for the audit of a fully consolidated company and for other services provided by the auditors, PwC. The other costs for the administration of the companies consist in a variety of cost items. A total amount of cost is not charged. The necessity of companies is regularly reviewed, also against the background, of course, if possible, companies are merged or liquidated. Forty companies without profit and loss transfer agreement made a loss of more than EUR 5 million. On the third question, the main reason for the loss of RWE Emshavn Holding is the unscheduled depreciation of the Emshavn Power Plant as a result of the Dutch coal phase-out.
Now, to our last question, Pearl Petroleum, in which we hold a 10% minority stake, is active in the business of gas exploration and production. The company is incorporated under laws of the British Virgin Islands but does not do business there. The co-shareholders are Dana Gas, Crescent Petroleum, as well as the Austrian OMV and the Hungarian MOL.
Okay, next question for Mr. Schmitz, the last question of Mrs. Ruf. What donations have been made and what amounts to political parties, foundations, lobby organizations, and NGOs? Is it possible to publish a list of these in the sustainability report as of next year?
Simple answer here. Nothing. We do not give anything. RWE is impartial in terms of party politics and does not make donations to political parties or to foundations that have a close relationship with political partners, nor does RWE make donations to NGOs.
Consequently, we do not disclose any such information. RWE is a member of associations whose remit includes participation in the exchange of public opinion in their respective countries. RWE pays annual contributions to these organizations with total in the mid-single-digit million range.
Ladies and gentlemen, I would like to thank the arrangement board for the answers given thus far. At this juncture, I would like to thank our hosts and the Executive Board, and I will call for a 15-minute break. The AGM will then be continued with the next block of questions. Thank you very much for your understanding, and we are going to resume at five minutes to half past one.
Our short break is over, and we can continue the AGM as announced with the next block of questions and answers. Mr. Herdemann, you have the floor.
Thank you very much indeed, Mr. Brandt.
Mr. Krebber, when a shareholder asks about the 2020 capital increase, why do the Executive Board and the Supervisory Board carry out a transfer from the share price to the clearing account, meaning the dividend, which is taxable for shareholders, and at the same time make a capital increase? Why is the centrally administered dividend payment not offset? Will shareholders continue to finance the centrally managed and taxable dividend through capital increases in the future?
The dividend is an important cash flow for many of our investors and is oriented towards the operational development in our core business. The equity from the capital increase clearly and purposefully serves additional growth and is not distributed as a dividend. We currently have no plans for a further capital increase.
Another question from the same shareholder concerns the remuneration system of the Executive Board.
Literally, he submits, "In the proposed remuneration system, there are some elements that seem to misinterpret sustainable corporate value enhancement and thus lead to a trade-off between sustainable corporate value enhancement and employee motivation, CSR, and CO2 intensity. Why do these components get so much weight and are not anchored where they belong? That is, in the corporate values." Dr. Brandt, would you answer this question?
Yes, of course. Our Executive Board remuneration is equally linked to key financial indicators, which are EBIT and adjusted net income, and rewards whether we live up to our corporate responsibility claim. Keywords here are ESG and CSR, as well as employee motivation, and pays into RWE's sustainable and long-term development, especially via the reduction of CO2 intensity and the develo pment of total shareholder return.
This is not a contradiction but a balanced harmony to align the interests of the company, its shareholders, and other stakeholders, and to set important incentives for the implementation of our business policy.
Mr. Brandt, the same shareholder would like to pose a question regarding the remuneration system. Is the Executive Board compensated according to Adjusted EBIT and not according to profitability ratios, for example, return on invested capital or return on capital employed? How is EBIT adjusted, and how is creative accounting prevented from being used to manipulate it? Against the background of dilution, how is it ensured that the board does not enhance Adjusted EBIT through capital increases?
Thank you very much for that question. Of course, let me say that creative accounting does not take place with RWE. Of course, profitability ratios play a role in investment.
[Foreign language] To determine the Adjusted EBIT, the non-operating result is deducted from the EBIT. In order to determine the remuneration-relevant EBIT, adjustments are then made in exceptional cases for special effects, e.g., results from disposals, changes in provisions, and unscheduled depreciation. We present the adjustment values and reasons for them transparently in the remuneration report, and I did so for the years 2019 and 2020. Regarding capital increases, these are not recognized in profit or loss and therefore have no impact on EBIT. Dilution only occurs in earnings per share due to the increased number of shares in circulation.
Let's move on to the last question of this shareholder.
Why did RWE distribute profit by means of a tax-inefficient and misallocated dividend, while the group seems to have positive NPV projects? Mr. Krebber, please.
Mr. Bogusz, in our view, our dividend proposal fulfills both the desire of our shareholders for an attractive dividend yield and the preservation of sufficient capital to secure further growth.
Two questions of the next shareholder concern impairment tests in the context of future electricity consumption development. Mr. Krebber, I'm addressing this to you. Please state which parameters were used to calculate the discount rates for the offshore wind segment of 4.25% and 4% in the previous year.
Specifically, this concerns the value for the following parameters: base rate, beta factor, market risk premium, and the cost of equity calculated from these parameters, the equity ratio, and the share of the cost of equity in the discount rate resulting from the multiplication of the cost of equity and the equity ratio, the cost of debt, the debt ratio, the tax rate, and the share of the cost of debt in the discount rate calculated from the multiplication of these three parameters. The discount rate, the WACC, should result from these values. Furthermore, the shareholder asks for information on the peer group, that is, the basis for the beta factor, as well as information on the beta factors, both levered and unlevered, of the individual companies in the peer group, as well as the method for deriving the beta factor, that is, the median or arithmetic mean.
If you do not provide the details for the previous year, the shareholder asks at least for an explanation why the discount rate has increased compared to the previous year, while it has decreased from 5.5% to 4.25% for the energy trading unit.
Mr. Büchele, I will go through your questions one after the other, although we have to go into detail. The calculation of the cost of capital for the offshore wind unit in fiscal 2020 was based on the following data: base interest rate 0.2%, beta factor levered 0.8%, market risk premium 7.25%, cost of equity 6.29%, equity ratio 59%, equity discount rate 3.71%, cost of debt before tax 1.87%, tax rate 23.64%, cost of debt after tax 1.43%, borrowed capital ratio 41%, borrowed capital discount rate 0.59%, which results in a WACC of 4.3%, rounded to 4.25%.
For the wind offshore cash-generating unit, an unlevered beta factor of 0.61 or a levered beta factor of 0.8% was derived for the 2020 goodwill impairment test. The arithmetic mean of the last five years was used for the calculation. The following peer companies were taken into account in the 2020 fiscal year: Falck Renewables S.p.A., EDP Renewables, Saeta Yield S.A., PNE AG, Acciona S.A., and Energias de Portugal. The average unlevered betas of the individual peer companies ranged from 0.49 to 0.95. The unlevered beta factor of the offshore wind generating unit was then converted into the levered beta factor, taking into account the debt situation of the peer companies. In the RWE annual report 2020, a discount rate of 4.25% was reported for the cash-generating unit energy trading. Compared to the previous year, the discount rate of 5.5% decreased by 1.25 percentage points.
The decrease is mainly due to the sharp decline in the base interest rate compared to the previous year. For the offshore wind cash-generating unit, a discount rate of 4.25% was reported for the 2020 financial year. In the previous year, there was no explicit discount rate for the offshore wind cash-generating unit.
The shareholder also refers to an article in the Handelsblatt newspaper, which compares the federal government's forecast for electricity consumption in 2030 with a forecast by the Institute of Energy Economics at the University of Cologne (EWI). In contrast to the federal government, the EWI assumes a significant increase in electricity consumption from 576 TWh in 2019 to 685 TWh. He asked whether, in your view, the forecast of the federal government or that of the EWI was preferable.
After the growth assumptions in RWE's impairment test, he has the impression that, at best, the forecasts of the federal government are used as a basis if a growth rate of 0% is generally assumed for the cash-generating unit offshore wind of 0.5% after three years, and if realistic assumptions are made, the capitalized earnings value of the cash-generating units is far more than EUR 0.2 billion above their book value. Why do they not apply a business-approved three-step planning model that takes into account their long-term strategic planning up to 2030 with differentiated growth trends? In evaluation according to IFRS, the principle of prudence does not apply, but estimates should correspond to the expected value. Mr. Krebber,
please understand that we cannot publish our market assumptions because this is competition-relevant information. It is true that there are many different views and expectations regarding the future demand for electricity.
The groups you mentioned, i.e., the federal government and the EWI, are far apart, but our expectations lie within this range. The impairment test for the goodwill includes a detailed planning phase and a continuation phase. The duration of the detailed planning phase varies depending on the segment and is up to 11 years. Due to the long detailed planning phase, a three-phase model with an additional rough planning phase does not lead to a more reliable data situation for the purposes of the impairment test.
Thank you. Mr. Schmitz, another shareholder is concerned about the future security of supply in Germany, citing the lack of adequate storage solutions and high conversion losses when using hydrogen. Is the group preparing for the possibility that the energy transition could fail? If so, to what extent?
The energy transition is by no means childplay, but for it to succeed, particular things need to be done. For example, we have to have respective support schemes to make investments in renewable energies plants in Germany, whereby the expansion of the grid infrastructure and the construction of gas-fired power plants and electricity storage facilities that contribute to grid stability and security of supply are, in our view, further important aspects for the energy transition to succeed. As an engineer, I would say you can do that, and we will not fail because, on the other hand, what is the alternative? It is not an option, if you ask me. It is all doable, and we will be able to manage.
There is Mr.
Levoba, and he's asking the following question about the future profit development of RWE through the use of renewable energies and the stop or minimization of CO2 emissions and the end of nuclear power generation. How will profits develop in the new business areas in the short, medium, and long term? What opportunities can be realized nationally and internationally? What are the prospe cts for the shareholders? Mr. Krebber.
Thank you, Mr. Levoba. The business with renewable energies and other low CO2 technologies for power generation, i.e., security of supply, is the very focus of our strategy, and we will grow in this area nationally as well as in our international focus markets. A detailed forecast for 2021 can be found in the annual report on page 66. For 2022, we expect an increase in EBITDA in the renewable energies business.
Earnings from co-nuclear energy, however, will decline significantly in the next few years. On the one hand, due to the end of electricity generation from nuclear energy in 2022, and on the other hand, due to the agreed shutdown plan in Lingen, we have not published a long-term forecast. For our shareholders, we intend to keep the dividend stable at today's level over the next couple of years.
Mr. Schweig comes to the situation in Texas and wants to know from you, Mr. Krebber, why does RWE give electricity supply guarantees in Texas? Why is there no risk management system? Why is there no insurance cover against consequences of business interruptions? Why are there no backup suppliers? How is provision made today against the consequences of blizzards and tornadoes?
As in all other markets, it is perfectly normal in Texas to sell electricity forward in order to hedge against market price fluctuations in the long term. It is precisely part of the existing risk management system, also for Texas, to hedge highly probable expected generation volumes against long-term price risks by means of liquid, i.e., relatively low-risk products, and to achieve long-term predictability of sales. The usual insurance cover, which we also have in Texas, covers business interruptions and loss of earnings as a result of insured property damage. During the winter event in Texas, however, there was no such property damage. The plants simply froze and were temporarily unable to produce electricity. On the question of backup supply, in principle, RWE has wind, solar, and battery capacities in Texas.
However, the solar and battery capacity is currently too low to compensate for the entire outage on the wind side. A whole range of measures are being taken as precautions against such natural events such as blizzards or tornadoes already taken into account. In the design of the wind farms, there are emergency plans for extreme weather conditions, which are also the subject of the practical trainings and exercises.
Now, there is a question about Texas icing events. Do you not have the operational risks under control, and what are your countermeasures?
Thank you very much for asking, and please allow me to refer to my detailed explanations in advance. I would like to emphasize once again that the Texas event is due to a weather condition that we have not seen on this scale for over 100 years.
It is simply not possible to fully hedge against singular events of this magnitude. We have stable and established risk management processes, which, on the other hand, have protected us from even greater losses in this case, but which, on the other hand, are constantly revised and improved if we see need for improvement. This is what we are going to do in this case as well.
Thank you, Mr. Krebber. Could you please also explain to us at what capacity utilization an onshore wind farm plant from RWE becomes unprofitable?
It is difficult to give a general answer to this question as this is determined to a large extent by local and technical conditions, but in particular by the respective revenue level in the country where the wind turbine is located. This revenue level, in turn, is in many cases also determined by the regulatory framework conditions.
The utilization rate of our onshore wind turbines averaged around 20%-35% in 2020.
Mr. Müller, referring to page 132 of our annual report, the shareholder asked for the discount rate for onshore wind.
For the cash-generating unit onshore wind solar, the discount rate was 3.5%.
Thank you. Now, back to you, Mr. Krebber. The shareholder asks, why was a sale of shares to E.ON not an option for financing the Nordex transaction in addition to using the authorized capital with the exclusion of subscription rights?
In principle, a partial sale of the shares in E.ON would also have been a possible option for financing the Nordex transaction. However, a significant tax advantage would have been lost as a result of the sale and the drop in the shareholding ratio to below 15%.
This, together with the favorable market environment, made the capital increase appear more favorable than the sale of shares in E.ON.
Mr. Müller, can you please explain whether the E.ON shareholding is hedged against price fluctuations?
We are watching the price development of the E.ON share very closely. The share price has not yet been hedged due to an internal cost risk assessment.
Thank you very much. The last question of that shareholder refers to RWE's view on the following statement. Greenpeace calls RWE a bankruptcy and takeover candidate crushed by CO2 prices. Mr. Krebber, can you please comment on this?
We have strategically realigned the group and are successfully on a growth path with our core business. We know the exit path for the coal and nuclear energy business area and adapting to it in a cost-optimal way. With regard to rising CO2 prices, we are hedged against the market.
All in all, the figures speak for themselves, and there is nothing more to say.
Another shareholder is interested in emission certificates. Mr. Müller, how does RWE see the development of trading in CO2 certificates over the next five years? What earnings opportunities will result from this?
Trading in CO2 certificates will intensify due to the development of the political framework conditions for CO2 emitters. Please understand that we cannot make any statements on individual trading strategies. With the CO2 certificates we already have, we essentially hedge the operative business.
The same shareholder asks about RWE's business areas in the year 2070. What future scenarios has the Executive Board drawn up? Mr. Krebber?
It is difficult to predict exactly what the market will look like in 50 years.
However, we are certain that power generation from renewable energies, efficient storage solutions, and green hydrogen as a sustainable energy carrier will still play an important role 50 years from now. Our future scenarios consistently see a significant global increase in demand in these business areas in the coming decades in order to be able to achieve the global climate protection goals.
Thank you very much. Mr. Schmitz, another shareholder would like to know what economic potential the subsequent use of the open cast mining areas in the Rhenish mining area has for the company, especially with regard to the tourist use of the planned open cast lakes. As of when do you expect to make a positive contribution to the balance sheet with the subsequent use of the open cast mining areas?
We already see a high potential of the re-cultivated areas.
This applies both to the use as a local recreation area and to the use as residential, commercial, and industrial areas. We expect positive impulses for the economic development of the region from the tourist use of the open cast lakes. The extent to which land will be developed in the future directly by RWE together with partners is not yet foreseeable, but I do not think that we are going to turn into a kind of TUI and develop in this direction.
Thank you. In addition, the shareholder asks how high RWE estimates the burdens arising from severance payments for employees in open cast lignite mining until 2028. Mr. Seeger can you say something about this?
We currently assume that the job cuts to be made by 2028 will be carried out in a socially responsible manner, mainly through the adjustment allowance provided for in the Coal Exit Act, including compensation for the disadvantages in the statutory pension. Severance payments will therefore play a subordinate role until 2028. We expect this to result in a burden in the single-digit million range.
Let us now turn to the questions from Mr. Dufner, who, as you know, is the Managing Director of the Umbrella Organization of Critical Shareholders. Mr. Dufner has submitted a large number of questions, some with several sub-questions. The first set of questions concerns Urenco, in which RWE is a minority shareholder with one-sixth of shares. First of all, he has some general questions about RWE's shareholding. Mr.
Krebber, you can certainly answer the following question: How high was the dividend in 2020 that RWE received for the Urenco stake? Where in the balance sheet can this be read? Addressed to you, Mr. Schmitz, who currently represents RWE on the board of directors of Urenco and in which capacity? How often did the RWE representative at Urenco in 2020 inform the RWE executive board about Urenco activities? What were the specific topics discussed?
RWE received a dividend of EUR 50 million for the 2019 fiscal year and an advance dividend of EUR 25 million for the 2020 financial year from Urenco. We report the dividend as part of the result from investments accounted for using the equity method, and you will find that on page 126 of our annual report. I would like to continue. I would have missed your questions unless you had mentioned Urenco. Dr.
Franz Weiger, CEO of RWE Power AG, is a member of the so-called board of directors, where he has the function of a non-executive director. The Executive Board of RWE AG is looking at Urenco when RWE's role as a minority shareholder of Urenco is concerned. Operational topics and issues are the sole responsibility of Urenco itself.
Thank you very much, Mr. Schmitz. The next question: What knowledge does RWE have about talks between Urenco and representatives of the U.S. Pentagon and Urenco and representatives of other U.S. ministries or government agencies in 2020 and 2021? Who was involved in these talks, and on what topics were they held?
In addition, what is RWE's assessment of Urenco's announced entry into the EDF-led consortium for the possible construction of the Sizewell C nuclear power plant in the U.K. and its entry into preparations for the construction of a nuclear power plant in the Netherlands? Does RWE see itself on the way back to the nuclear age through the new construction plans and the involvement of RWE-led companies here in Northern Australia?
Regarding the first part, dear Mr. Dufner, you had already asked similar questions last year referring to an article in Physics Today. Therefore, we ask you again for your understanding that we do not comment on individual press articles concerning Urenco. In general, like every year, let me tell you, please directly contact Urenco's communications department if you have any questions of this kind. We are only a minority shareholder and not involved in the operational business.
Regarding the second part, RWE is neither involved in the development nor in the construction of new nuclear power plants. We do not want to go back into the nuclear age due to its minority shareholding of one-sixth. RWE has only a very limited influence on Urenco's strategic decisions.
Now, Mr. Dufner has a large number of questions concerning Urenco's operational business. What is the current status on the construction of a HALU production with up to 19.75% enriched uranium-235 in the United States? What concrete preparations is Urenco currently making to build so-called mini-reactors? To what extent is the Urenco subsidiary, Central Technology Group in Gronau, and the subsidiary Enrichment Technology Company in Jülich involved in the development of these mini-reactors? How many tons of depleted uranium hexafluoride left the Gronau uranium enrichment plant in 2019 and 2020, respectively, bound for Russia?
How does RWE assess the study by Professor Dr. Wegner from the University of Erlang that these exports violate the EU's dual-use export sanctions against Russia? Are there any current plans for continued exports from Gronau to Russia in 2021 or beyond? If so, what are they? Has depleted uranium from Gronau reached Russia via France and/or the U.K. and/or the Netherlands in recent years? If so, when and how much? Are there any plans for such uranium transports via the transit countries mentioned? According to a list of export licenses on the website of the Federal Environment Ministry, enriched uranium is also exported from Gronau to Russia, although enriched uranium is also mentioned on the dual-use EU sanctions list. What actually happens to this enriched uranium in Russia? How does RWE assess the well-founded suspicion that these exports are also illegal?
Are there tangible plans for the commissioning of the uranium oxide storage facility at the Urenco site in Gronau? If so, what are these plans? With which power plant operators in Europe has Urenco concluded supply contracts for enriched uranium? Mr. Schmitz, these questions go to you again.
Mr. Dufner, with pleasure. Please let me pull in front of the parentheses. Urenco is committed to the peaceful use of nuclear energy through intergovernmental agreements and is closely monitored by governmental and international institutions. This, of course, also applies to its enrichment facilities in the U.S. Regarding the mini-reactors, together with Urenco, several internationally active companies are developing a small modular gas-cooled reactor within the framework of EU Battery. Please contact Urenco's communication department if you have any questions about who is actually involved in the project.
With regard to your questions about the exports to Russia, Urenco's site planning and its supply contracts, we can only keep clarifying the operational business is the responsibility of Urenco. Please contact them. When you asked about our opinion on the expert opinion of Professor Wegner in connection with exports, we can only say from here that all transports have the necessary permits from the competent authorities. Your question regarding the list of export licenses of the Federal Ministry for the Environment should be self-answering. It lists, as the name already indicates, exports that have been approved by the competent autho rity according to the law.
More questions on Urenco, Mr. Schmitz. When did RWE last talk about Urenco with the federal government and when with the North Rhine-Westphalian state government? What were the specific topics discussed? Are there currently talks or negotiations for the sale of Urenco shares?
If so, with whom and with what results?
Generally speaking, please understand that we cannot comment on any talks with the federal government or the state for reasons of confidentiality. Regarding our divestment intention, RWE is still interested in selling its minority stake in Urenco. However, this process will still take some time, and we will keep you informed about the progress in due course. We have been looking for a buyer for 10 years, and unfortunately, it has been impossible to divest the company.
Mr. Schmitz, the following questions are about our nuclear power plants in Lingen-Emsland and Grongramming. First of all, I would like to ask you a number of questions about the refueling outage at both power plants.
During the refueling outages in 2019 and 2020 at the Lingen and Emsland nuclear power plant, wall thickness weaknesses were found and, according to RWE, have been repaired in Gundremmingen. Defective fuel assemblies were discovered in 2019 and 2020, which led to a temporary shutdown of the nuclear power plant. How has the situation developed in each case since the last general meeting? Are there any new findings? When will this year's nuclear power plant refueling outage take place in Lingen and Gundremmingen? What restrictions will there be during the refueling outage in view of COVID-19 with fewer skilled personnel? If so, why? How many and which originally planned refueling outage assignments for the NPP in Lingen will be canceled altogether or only carried out in a restricted or shortened form, and why? Are inspection orders also being cut in Gundremmingen, and if so, why?
What work was not carried out or only carried out to a reduced extent during last year's refueling outage in Lingen will be made up for this year? What percentage of the steam-generated tubes at Lingen nuclear power plant will actually be inspected during the year's refueling outage? How many steam-generated tubes are there in absolute numbers, and according to what criteria is a selection made here?
This is now really our business, so I can give you very detailed answers here. Emsland, wall thickness weaknesses, the course has been eliminated. Safe plant operation continues to be fully ensured. The refueling outage in Emsland will take place scheduled between the 30th of April to 19th of May. Due to the COVID-19 situation, a comprehensive hygiene concept for the deployment of the required specialized personnel was agreed with the competent health authority.
None of the plant test assignments required by the Atomic Energy Act for the 2029 refueling outage will be shortened or carried out in a restricted manner. We have already got quite a lot of experience with that. The Emsland nuclear power plant has carried out all the work and inspections required by the German Atomic Energy Act 100% in the 2020 refueling outage. For this reason, follow-up inspections are not required since the course of the wall thickness weakening has been demonstrated eliminated and confirmed by the supervisory authority and the expert consulted. No further inspection of steam-generated tubes will be performed. Gundremmingen, there are currently no indications of defective fuel assemblies in Gundremmingen, you see no refueling outage for Gundremmingen this year.
Mr. Dufner is interested in various figures regarding the loading and unloading of the reactors in Gundremmingen and Lingen.
Will fresh fuel assemblies still be loaded into the reactors in Lingen and Gundremmingen this year? If so, how many? How many will there be in Lingen in 2022? How many CASTOR containers have been and will be loaded with spent fuel assemblies in Lingen and Gundremmingen in 2020 and 2021? How many will be loaded in Lingen in 2022? How many CASTOR casks will still have to be loaded after the end of operation due to the removal of last fuel assemblies? How many tons of highly radioactive nuclear waste will be produced by the operation of the Lingen and Gundremmingen nuclear power plants in 2021? How many in Lingen in 2022? In addition, Mr. Dufner wants to know what the current plans are for the start and scope of demolition work in Lingen and Gundremmingen after the end of operation.
In particular, he is interested in the following aspects: When is demolition work at the Lingen NPP and at Gundremmingen C NPP to begin in concrete terms? What is the current situation regarding the demolition of Gundremmingen B nuclear power plant? How many tons of medium and low-level radioactive nuclear waste does RWE expect to produce during the demolition of respective reactors? Which nuclear waste processing facilities will RWE build for this purpose on the respective operating sites of Lingen and Gundremmingen NPPs? What will happen to the processed intermediate and low-level nuclear waste in Lingen and Gundremmingen? How much nuclear waste will probably not be processed and stored in Lingen or Gundremmingen, but elsewhere? Please state the reason and the expected processing and disposal site. To which landfill sites is the free-measured nuclear waste to be taken that will be produced during the demolition work?
Mr.
Dufner, I mean, you have given us all these specific questions, and you handed them in early, so we can give you a fully fledged answer because we had the time to do our research, because at the end of the day, those are figures that are not always at your fingertips. In Emsland, 52 fresh fuel assemblies will be used this year and none next year in Gundremmingen. See, no reloading is planned in 2021. In Lingen, no CASTOR casks were or will be loaded. Spent fuel elements in the years 2020 and 2022. In Gundremmingen, 11 CASTOR casks were loaded in 2020, and in 2021, 23 CASTOR casks are planned. After decay in the decay tank, after the respective end of operation, about 40 CASTOR casks will still be loaded for Lingen and about 75 CASTOR casks for Gundremmingen.
See, regarding the amount of highly radioactive waste in Lingen, a nuclear power plant of this size produces an average of about 20-25 tons of spent nuclear fuel every year, which corresponds to two to three loaded CASTOR containers. For Gundremmingen, since we no longer plan to use fresh fuel assemblies in 2021, the operation of the reactor in 2021 will not increase the amount. Now let me talk about the dismantling of the plant. The preparatory work, such as the licensing procedures, are already underway. It is planned to start the dismantling immediately after the end of the respective power operation. That is beginning 2022, Gundremmingen, and at the beginning of 2023 for Emsland. This is provided for by the Atomic Energy Act, and it is in our interest to do it as fast as possible because that is going to save costs.
The dismantling of Gundremmingen B is proceeding as planned within the framework of the license granted on the 19th of March 2019. We expect approximately 11,500 tons of medium and low-level radioactive waste for Gundremmingen B and C together, approximately 4,250 tons for Emsland. At the Gundremmingen site, we operate a technology center in the form of Unit A for processing and treating residual materials and waste. In Emsland, the necessary facilities will be set in the existing buildings. The radioactive waste will be packaged by experts and will then be handed over to the federally owned company for interim storage. Radioactive waste can be conditioned on the size of the external service providers. Whether or how much use is made of this depends on their availability. Radioactive waste is intended for final disposal and is not sent to the landfills. Radioactive waste cannot be measured free.
Non-radioactive materials intended for disposal, for example, building rubble, are disposed of at suitable and acceptable landfills in accordance with the German Circular Economy Act.
Thank you very much, Mr. Schmitz. Now, the last questions submitted by Mr. Dufner on our nuclear power plants. What sales revenues and net profit does RWE generate from the operation of the Lingen nuclear power plant and Gundremmingen NPP, respectively, in 2020? Is RWE considering taking the Gundremmingen C nuclear power plant and the Lingen nuclear power plant off the grid, if necessary, before the legally agreed maximum dates, the end of 2021 and 2022, respectively, in order to support the energy transition towards renewable energies and avoid further nuclear waste production? If so, what is the shutdown date? Mr. Schmitz, can you both answer that?
Power operation, our nuclear power plants are laid down in the Atomic Energy Act, which hereto, based on his side, we are not loading the system any longer, and therefore the changes of the waste that is emitting radioactivity is reduced. Let me talk about Kernkraftwerk Lippe MCMBH. Reported sales revenues of EUR 227 million and earnings after taxes in the amount of EUR 18 million as part of the cost allocation from electricity generation to RWE Nuclear. Grongrammingen GmbH was merged with RWE Nuclear in 2020. The revenues can therefore no longer be seen in the financial statements. Since the electricity from all German power plants in the portfolio is marketed, the associated electricity revenues on the wholesale market are n ot reported separately.
We will get a question on hard coal from the Organisation of Critical Shareholders.
From which countries does RWE currently obtain hard coal for its own coal-fired power plants? How many tons of hard coal did RWE import in total for its own coal-fired power plants in 2020, and how many as an intermediary? How many tons came from Russia, Colombia, and how many tons from other countries? Which countries would that be, and how many in each case? How much hard coal was imported for the UNTRA coal-fired power plant, and from which countries specifically? Second part. Russian environmental organizations like EcoDefence have been criticizing the extremely poor environmental protection conditions in the Russian coal mining areas in the Siberian coal spots for years. Similar criticism has come from Colombia, for example. How does RWE monitor compliance with environmental and human rights standards on site?
Thank you very much, Mr. Dufner, for the question.
We currently purchase hard coal for our own coal-fired power plants from the U.S. and Russia. In 2020, we burned 2.2 million tons of domestic and international hard coal in our coal-fired power plants. Of this, 1.5 million came from Russia, 0.1 million from Colombia, 0.2 million from the U.S., and 0.3 million tons was domestic coal from Germany. The remaining part of the total input came from the U.K. and other countries. The Hamm power plant used 0.58 million tons of hard coal. The quantities came mainly from the U.S. and Colombia. We also traded about 30 million tons of hard coal as an intermediary. Now, regarding the second part of your question, RWE founded the Better Coal Initiative back in 2012 together with other large hard coal consumers. The aim of Better Coal is to continuously improve the conditions under which hard coal is extracted and transported.
Among other things, Bettercoal has developed a globally recognized standard for coal mining and uses this as a basis for audits. You can find more information in the suitability report published on our homepage and also on Bettercoal's homepage.
Thank you very much. In the following block, various questions are asked on coal and gas-fired power generation. These questions go to you, Mr. Schmitz. What is the current status of the two decommissioning procedures for the coal-fired power plants in Hamm and in Büren that are to be taken off the grid? Is RWE currently still involved in any other hard coal-fired power plants? If so, in which ones?
Is RWE also considering unscheduled closures of lignite and hard coal-fired power plants in order to drive forward its transformation into a green RWE and at the same time guarantee compliance with national and international climate protection targets? Are there already concrete plans for this? What is the current status of the legal dispute over the binding purchase of coal-fired electricity from the Datteln IV coal-fired power plant? Finally, what is RWE's assessment of the economic situation for the group's own gas-fired power plants? Are there closure plans there as well? If so, what are they specifically?
Regarding Hamm and even Büren, the Federal Grid Agency is currently still reviewing the system relevance of the hard coal-fired power plants that were awarded contracts in the first tender round.
As soon as it confirms that the power plants are not required to ensure grid security, we will finally shut them down. These are the two last coal-fired power plants. About our stakes there in Germany, RWE has a 40% stake in the Großkraftwerk Mannheim AG, which operates hard coal-fired power plant units. In our two power plants in the Netherlands, where we are increasingly using biomass, hard coal firing is still required for technical reasons. For the closures, we shut down the Niederaußen D lignite unit at the end of 2020, thus removing 1.9 GW of power plant capacity from the grid right at the start of the German coal phase-out. We are implementing the agreed and legally anchored lignite phase-out as planned. We also shut down the last hard coal-fired power plant in the U.K. in 2020.
The validity of the contracts for the purchase of electricity from the Datteln IV power plant was legally established in 2020. Uniper declared in May 2020 that it would commission the Datteln IV power plant on the 30th of May 2020. The rights and obligations resulting from this and other contractual points are in dispute between the parties. Regarding gas as an energy source, as already explained today, gas will play an important role in future security of supply due to its lower CO2 emissions and flexible use. Closures are not planned at present.
Thank you very much. Mr. Dufner asked further questions in connection with the arbitration proceedings on the Dutch coal phase-out. RWE blames the democratic decision of the Dutch Parliament to phase out coal-fired power generation for an alleged loss of EUR 1.4 billion, he says.
When could RWE management have foreseen that limits on coal-fired power generation could become a state policy option? When did RWE realise that the era of coal-based energy was coming to an end, and why did you then continue to expand your coal investments? How do you justify EUR 1.4 billion in future lost profits, given that the economic value of coal-fired power plants in the Netherlands will fall dramatically over the next decade due to increasing demand for sustainable energy and rising carbon prices? More specifically, do you also estimate the carbon price for greenhouse gas emissions for 2030 in this forecast to be also around EUR 65-EUR 70 per tonne CO2 equivalent, as several studies, including the EU, do? Or do you calculate it lower and at what rate, with the consequence that the projected loss would increase?
What is the amount of subsidies RWE has received or been awarded and will receive from the Dutch government to finance the conversion of the Eemshaven power plant to biomass? Will receive at least until 2027? How much of this was deducted from the claimed future lost profits? The last question: What were the specific promises made by the Dutch government to RWE regarding the investment in the Eemshaven power plant, which are contradicted by the law on the phase-out of coal-fired power generation?
Mr. Dufner, on your first question, the Paris Climate Agreement of November 2016 and the global community's first-ever goal of limiting warming to below 2 degrees and, if possible, below 1.5 degrees, was a milestone in international climate policy, together with the quantitative basis that the IPCC has drawn up on the remaining budgets for greenhouse gases.
The concrete transformation path is, of course, very different in the individual countries because the preconditions and the framework conditions are also very different. Now, to the coal phase-out in the Netherlands. We are not claiming lost profits, to make that very clear, but the loss of market value of the Eemshaven power plant caused by the coal phase-out, that is the standard to be applied under international law to the calculation of damages. We have commissioned a recognized independent expert to determine this loss of value. Since the forecast period relevant here extends far into the future, namely until the end of the at least 40-year lifetime of the Eemshaven power plant, the expert used a wide range of possible prices, including CO2 prices, as a basis.
Therefore, in the context of the legal dispute against the Netherlands, it would not be accurate to give a tangible figure for the year 2030. The subsidy for biomass in the Netherlands is primarily based on the high production costs of biomass. It is essentially paid depending on the amount of electricity produced and the electricity price on the wholesale market. For the Eemshaven power plant, the maximum subsidy amounts to around EUR 800 million. In 2020, we received a low to mid-double-digit million euro amount. Subsidies for biomass operation until 2027 are irrelevant for the damage calculation, as the claimed compensation amount results from the fact that the Eemshaven power plant can no longer be operated from 2030 onwards due to the coal phase-out. The Dutch government has deemed the construction of new hard coal-fired power plants necessary for the security of supply and competitiveness of Dutch industry.
The investment decision for the power plant was then taken on this basis back in 2009. Until 2017, the government repeatedly emphasized that coal-fired power plants would be needed until around 2050.
Mr. Schmitz, Jürgen Möllmann refers to a podcast from April this year with the business editors of die Watt, in which you explain how RWE has succeeded in detaching itself from coal as a resource and directing the company towards renewable energy. Mr. Möllmann goes on to say, almost at the same time, RWE is suing the Netherlands under the Energy Charter Treaty (ECT) because of its decision to phase out coal-fired power generation by 2030. In view of the new strategic orientation of the group, is it not wiser to withdraw this lawsuit in order to prevent Dutch business partners from turning their back on RWE in the long run?
Thank you very much, Mr. Möllmann.
The decision to go down this road was not an easy one for us. We fully accept the Dutch government's decision to end coal-fired power generation. What we cannot accept is the interference with our property and business activities, especially since we made the investment decisions against the background of the Dutch government's explicit wish to build new coal-fired power plants. To our regret, the Dutch government has so far not proposed any solutions. It is our corporate duty and responsibility towards our shareholders to request compensation. However, we remain open to any constructive proposal to reach an amicable solution with the Dutch government. Let me remind you that we have succeeded in doing that in Germany concerning nuclear energy in March this year, where RWE was in a similar situation, and Germany has been an example here in this respect.
We come to the questions from Johannes Steffens.
Mr. Schmitz, you would like to know how many lobbyists are currently employed by RWE and what costs are incurred annually for lobbying and advertising. He also asked about the Executive Board's assessment of whether this money could not be better invested in an early coal phase-out and the resulting improvement in reputation.
Mr. Steffens, we do not have lobbyists. We have employees, and they are all the same. They have different activities. We have offices in Berlin and Brussels, each with four employees in the group. Another floor of employees are also involved in lobbying in addition to other tasks. Expenditure on offices and lobbying totaled around EUR 1.65 million in 2020. Expenditure on advertising measures in the core markets of Germany, the Netherlands, and the U.K. as part of the new RWE image campaign amounted to about EUR 12 million in 2020. Mr.
Steffens, we have agreed a clear shutdown roadmap with the German government for a socially acceptable coal phase-out. We currently see no reasons why we should deviate from this roadmap.
Mr. Steffens also asked how high RWE estimates the yield losses resulting from the disappearance of fertile lost soils and to what extent these are taken into account in the overall economic analysis.
The restoration of productive soils has a very high priority for us. In this way, we have already been able to return more than 10,000 hectares of re-cultivated agricultural land to farmers because that is the system that we will return the land. The yield capacity of the land depends primarily on the good rootability and the high water storage capacity of the soil. It is comparable, often even higher than on the old land.
Any remaining additional expenditures, mainly due to the increased nutrient requirements of young cultivated soils. However, this additional expenditure is not recorded separately but is compensated for within the framework of existing guarantee agreements with the farmers.
Next question, also addressed to Mr. Schmitz. There have been several reports in the media in recent weeks about the EU Commission's examination of billions in compensation for the coal companies. What risks are associated with this for RWE, and how does the Executive Board mitigate these risks?
The EU state aid investigation was expected by all parties involved. This is just normal daily business. The compensation of EUR 2.6 billion for RWE is significantly lower than the damage we actually incurred, which has been proven by expert reports. The Federal Ministry of Economics has also stressed that this is a normal step and that the coal phase-out will continue without delay.
The contract also contains clauses in the event that the Commission has doubts about state aid law. However, we are optimistic about our damage position, as you can tell from our balance sheet. Another shareholder refers to a project in which a storage power plant is currently being tested in the Port of Hamburg that stores heat with the help of volcanic rock.
Mr. Schmitz, RWE's decommissioned coal-fired power plant is also suitable for this. What plans are there for the power plants, and could not the open cast likes also be used as pump storage?
We are currently conducting studies on the technical and economic feasibility of the technology you mentioned in our existing coal-fired power plants in the Rhineland.
I mean, as an engineer, I must say it is not really very lucrative or profitable, so I do not really think that we are going to do that. Anyway, in general, we strive to find a sustainable and structurally effective use for the facilities and land at the power plant site after it has been decommissioned. Using it as storage is probably the best option. Anyway, regarding the open cast mining lakes, the use of the open cast mining lake as a pump storage power plant is not possible from a technical, economic, and regionally compatible point of view. The horizontal distance on the drop height between the open cast lakes is not sufficient for this.
The construction of up and lower reservoirs with regularly fluctuating lake water levels is not geotechnically feasible in a loose rock open cast mine and would also have a considerable negative impact on the ecology.
The same shareholder would also like to know whether the operation of lignite-fired power plants is still profitable at all, taking into account rising CO2 prices and whether the sale of CO2 certificates on the stock exchange would not be more profitable. To what extent is the decision guided by the RWE code of conduct? The shareholder here refers in particular to the third principle of environment. We are committed to the responsible use of natural resources and promote the use of environmentally friendly technologies. This is what it says there. Mr. Schmitz,
the profitability of lignite-fired power plants does not depend solely on CO2 prices.
Rather, the combination of electricity price and CO2 price in particular must be considered. Put simply, if the combination of these variables is positive, the lignite-fired power plants will be used. The decision is continuously reviewed and optimized. The CO2 certificates we already have secure the operational business. The progress we have made in recent years in reducing CO2 speaks for itself when we think of our motto, our new company purpose. When we commit ourselves in our code of conduct to the responsible use of natural resources and the application of environmentally friendly technologies, this does not mean CO2 reductions for decommissioning at any price.
As long as we are dependent on the fossil fuels to ensure security of supply, it also means that we reduce emissions of pollutants as much as possible and compensate as far as possible with the interference with nature associated with the extraction of fossil fuels, for example, through suitable re-cultivation measures. It is very important that we get as much renewables as possible because then the residual amount required will be reduced, and that, of course, will reduce CO2 emissions.
Thank you very much. Now we will continue with a more comprehensive block of questions from a shareholder referring to the annual report. Mr. Krebber, can you explain in which income statement item or subgroup and in which balance sheet item or subgroup the compensation claim for the decommissioning of the Ibbenbüren and Westfalen hard coal-fired power plants of EUR 260 million is included?
In the income statement, the compensation claim is included in the other operating income in the subgroup. Other in the balance sheet, the compensation claim is included in the receivables, in other receivables, and other assets in the subgroup miscellaneous other assets.
The shareholder also notes from the explanations on the non-operating result on page 55 of the annual report 2020 that this includes charges from impairments on power plants in open cast mines as well as the Dutch power plant park of EUR 1.8 billion. Of this amount, EUR 1,579 million is likely to be due to the value adjustments, which are explained in more detail on note 5 on page 124 of the annual report. This leaves EUR 221 million, for which it is not explained to what extent these are due to non-operational or periodic effects of special circumstances.
Which facts with which amounts are hidden behind the EUR 221 million that are not explained further? In which income statement items or in which subgroups thereof, as well as in which balance sheet items or in which subgroups thereof are the EUR 221 million not further explained included?
Impairments on power plants and open cast mines totaled EUR 1.77 billion in the 2020 financial year, rounded to EUR 1.8 billion in management report. The difference between the impairment on property, plant and equipment explained in the notes on page 124 and the impairments on power plants and open cast mines, including the non-operating result in the amount of EUR 191 million, relates on the one hand to impairments of EUR 135 million on current assets that had to be written down in connection with the local coal phase-out.
On the other hand, as a result of the coal phase-out, further unscheduled write-downs on investments in the Hambach open cast mine and on buildings amounting to EUR 55 million were made.
The result reported under other in the non-operating result was EUR -2.02 billion in the reporting year. The items explicitly explained on page 55 of the annual report add up to a result of EUR -1.584 billion. This includes write-downs on power plants and open cast mines of EUR -1.8 billion, less compensation claims of EUR +216 million. For a further EUR 436 million, there are no explanations as to what extent these are due to non-operational or periodic effects or special circumstances. Which facts with which amounts are hidden behind the EUR 436 million that are not explained further?
In which income statement items or in which subgroups thereof, as well as in which balance sheet items or in which subgroups thereof, are the EUR 436 million not further explained included?
The items in the other category of the non-operating result, which are not explained in the management report, relate on the one hand to additions or provisions in connection with the coal phase-out in the amount of EUR 422 million. These are included in other operating expenses. On the other hand, the non-operating result includes IT and project costs in the amount of EUR 166 million, which are also posted as other operating expenses. In addition, a provision for regulatory risk in the amount of EUR 173 million was released in other operating expenses. The remaining difference is attributable to a large number of individual items that may continue.
Income taxes amounted to EUR 363 million, which in view of RWE's taxable profit situation corresponds to a relatively high tax rate of 30%, as can be read on page 56 of the 2020 annual report. Write-downs on deferred tax assets were the main reason for this.
How high were the burdens from write-downs on deferred tax assets in the year under review? For what reasons were write-downs on deferred tax assets necessary in the reporting year?
The charges from write-downs on deferred tax assets amounted to around EUR 350 million in the 2020 financial year. Deferred tax assets are recognized if the realization of future tax benefits is problematic. The tax benefits can be used with sufficient certainty. Due to the group's tax result situation, deferred tax assets were written down because they are not expected to be utilizable.
Mr. Müller, next question comes your way.
The other financial result deteriorated by EUR 202 million in the reporting year from EUR 16 million to EUR -186 million, which can be read on page 56 of the annual report 2020. One reason for this was that losses from securities investments were realized. On the other hand, the explanations under note 8 on page 127 show that a profit of EUR 11 million resulted from the disposal of securities. Furthermore, the unfavorable developments of interest rates and exchange rates led to changes against earnings from financial transactions. What explains the different presentation in connection with the disposal of securities? How high was the impact on earnings from financial transactions in the reporting, and how can they be differentiated?
The decline in the other financial result is mainly due to expenses from market valuation of securities, which increased by EUR 193 million compared to the previous year.
These relate to securities whose realized and unrealized changes in market value are recognized in the income statement in accordance with IFRS 9. They include the realized losses from securities investments mentioned in the management report on page 56. In contrast, the gains from the disposal of securities in the amount of EUR 11 million mentioned in the notes on page 127 result from debt instruments whose changes in market value are recognized in equity under other comprehensive income in accordance with IFRS 9 and only recognized in the income statement after realization.
Mr. Krebber, the reconciliation to the adjusted net result on page 57 of the annual report 2020 shows that the adjusted financial result in the reporting year amounts to EUR -315 million. Adjustments of EUR 139 million were thus made. Unfortunately, no corresponding explanations could be found in the annual report.
Which facts with which amounts are hidden behind the not further explained adjustments of the financial result?
On the one hand, the financial result was adjusted in the amount of EUR 108 million for the expense from interest rate changes in the mining provisions and the Dutch nuclear energy provisions. On the other hand, expenses of EUR 89 million from the currency translation of positions with Energies Renewable Energy Companies that could not be secured until the legal acquisition were eliminated. In addition, the financial result was adjusted for the income from the reversal of the tax provision for tax interest in the amount of EUR 58 million. In connection with the sale of the installation vessel Sea Breeze 2, which is shown on page 113 in the 2020 annual report, there was a profit in the mid double-digit million euro range.
How high was the specific capital gain from the sale of the installation vessel? Why did RWE not include this capital gain in the non-operating result under result from disposals?
The sale of the installation vessel Sea Breeze 2 resulted in a capital gain of EUR 49 million, which was already recognized in the non-operating result under other in the first quarter of 2020.
Thank you very much indeed, Mr. Krebber. The shareholder also addresses the unscheduled depreciation of property, plant, and equipment, which is explained on pages 123 to 125 in the annual report. Impairment losses on property, plant, and equipment amount to EUR 1.712 billion in the reporting year. From the explanations given, however, only unscheduled depreciation on property, plant, and equipment of EUR 1.579 billion can be reconstructed. This leaves EUR 133 million, which are not explained further.
What are the reasons and what amounts are hidden behind the non-scheduled depreciation of property, plant, and equipment that cannot be traced?
The other unscheduled write-offs in the amount of EUR 54 million are attributable to various projects in the renewable energy sector. Reasons included lower market prices, delays in completion, and low prospects of success. In addition, as a result of the coal phase-out, unscheduled write-downs of EUR 55 million were made on investments in the Hambach open cast mines and buildings. The remaining unscheduled depreciation of EUR 24 million is attributable to a large number of individual items.
Mr. Krebber, under note 6 on page 125 of the annual report 2020, the expenses from leasing are stated at EUR 30 million and EUR 42 million in the previous year.
In contrast, RWE reports leasing expenses on page 137 totaling EUR 101 million under impact of leases on earnings and cash flow compared to EUR 32 million in the previous year. The shareholder would like to know how this difference between the year under review and the previous year can be explained. The difference is due to the fact that expenses for leasing are recognized both in other operating expenses, which are presented on page 125 in the annual report, and in the cost of materials. The same shareholder asks, note 7 on page 126 of the 2020 annual report shows that the result from non-consolidated subsidiaries deteriorated significantly from EUR 1 million to EUR -82 million. How can the significant deterioration of the result from non-consolidated subsidiaries be explained? Which non-consolidated subsidiaries contributed to this and to what extent?
The decline in the result from non-consolidated subsidiaries essentially results from write-downs on affiliated companies, which were EUR 72 million higher in the 2020 fiscal year than in the previous year. They were primarily attributable to projects of supply and trading, EUR 62 million, and companies in the renewables division to the tune of EUR 8.2 million. Let's continue with questions from the same shareholder on accounting details in the 2020 annual report. In note 12 on pages 138 to 139, RWE explains the investments accounted for using the equity method. Based on the information presented, the shareholder has calculated a result from investments accounted for using the equity method of EUR 435 million and EUR 322 million for the previous year.
In contrast, the result from investments accounted for using the equity method is shown under note 7 on page 126 of the annual report at EUR 375 million in the previous year, EUR 321 million.
Mr. Krebber, how can the difference in the reporting year be explained? In the 2020 financial year, the equity result from Ambryon was EUR 124 million, Klark EUR 46 million. In the previous year, the equity result for Ambryon was EUR 131 million, for Klark EUR 44 million.
These amounts cannot be derived from the table in the annual report on page 138, as the equity valuation is based on other earnings figures than those stated in this table. With the above-mentioned results for Ambryon and Klark, the result from investments accounted for using the equity method is EUR 375 million for 2020 and EUR 321 million for 2019.
A look at the other receivables and other assets detailed in note 15 on page 140 of the 2020 annual result shows a significant increase in miscellaneous' other assets from EUR 3.22 billion to EUR 3.7 billion. The shareholder would like to know, what are the facts behind the miscellaneous' other assets and what is the reason for the increase?
Significant items reported under miscellaneous' other assets are alternative energy certificates, investment and research grants, loans, receivables, tax receivables, and prepaid expenses. The major reason for the increase in miscellaneous' other assets is the compensation claim for the German coal phase-out, which was recognized under this item in 2020 in the amount of EUR 260 million. In addition, in the area of renewable energies, prepaid expenses increased by EUR 65 million and miscellaneous' other assets by EUR 117 million due to various individual items.
The remaining change in miscellaneous' other assets is attributable to a number of other individual items.
Thank you. In note 27 on page 179 of the 2020 annual report, RWE explains the gross carrying amounts of the financial instruments within the scope of the impairment model. The gross carrying amounts of trade receivables are reported at EUR 3.068 billion compared to EUR 3.465 billion in the previous year. The net carrying amounts of trade receivables shown in the balance sheet on page 103 amount to EUR 3.007 billion in the previous year, EUR 3.621 billion. Accordingly, the provision for risks on trade receivables should amount to EUR 61 million and EUR -156 million for the previous year. However, RWE shows the risk provision on page 178 at EUR 42 million and for the previous year, EUR 32 million. Mr.
Krebber, how can the difference in the year under review, and especially with regard to the previous year, be explained?
Trade receivables in the balance sheet and in the context of the notes reporting on the impairment model cannot be reconciled in the manner presented. For example, in the notes reporting contract assets within the meaning of IFRS 15, I included, which are shown in the balance sheet under other assets. In the case of trade receivables in the balance sheet, certain advance payments received are deducted, unlike in the notes.
Now the last question of this shareholder. In the segment reporting under note 29 on page 183 of the 2020 annual report, RWE reports impairment losses of EUR 1.819 billion and in the previous year, EUR 2 billion, of which EUR 1.73 billion is attributable to property, plant and equipment and intangible assets.
In the prior year, it had been EUR 1.968 billion. Thus, unscheduled depreciation on investments accounted for EUR 89 million in the reporting year and EUR 33 million in the previous year. Why did the unscheduled depreciation on participations increase so significantly in the reporting year? Which companies had to be written down in the year under review or in the previous year for what reasons and in what amounts?
Possibly, this is the last accounting question that I may answer in this AGM, so I really enjoy it. In the 2020 financial year, impairment losses on investments mainly related to projects of RWE Supply & Trading that were EUR 62 million due to deteriorating business prospects and to companies in the field of renewable energies that was EUR 8 million. They were written off due to a lack of prospects of success.
In the previous year, two main projects of RWE Supply & Trading in the amount of EUR 90 million were written off due to operational risks or project cancellations, and companies in the field of renewable energies in the amount of EUR 8 million were written off due to a lack of profitability.
Right now, let's continue with questions from the umbrella organization of critical shareholders that deal with climate protection, the coal phase-out, and the energy transition. First, the Science-based Target Initiative has confirmed that RWE's climate protection targets are aligned with the Paris Climate Agreement and the goal set there of limiting global warming to well below 2 degrees Celsius. Does this also apply to the actually desirable goal of limiting global warming to 1.5 degrees? This is precisely what the initiative does not seem to.
Own gas-fired power plants emit little carbon dioxide, but how high were their greenhouse gas emissions in 2020 if they also include the entire gas supply chain, including the problems of methane leaks? Can you compare the total lifecycle climate balance of your 2020 lignite, hard coal, and gas consumption? If so, how does this comparison turn out? Mr. Krebber, these questions are for you.
As you correctly state, the Science-based Target Initiative has confirmed that RWE's climate protection targets for 2030 are in line with the goals of the Paris Climate Agreement. The initiative based its assessment on scenarios with climate pathways that limit global warming to well below 2 degrees. RWE regularly reviews the setting and adjustment of targets and participation in initiatives. This includes the business ambition for 1.5 degrees Celsius.
RWE publishes a detailed overview of all direct and indirect greenhouse gas emissions in the sustainability report, scope 3. It also includes upstream emissions from the gas supply chain, including methane leakages. Even if the entire value chain is included, the comparison of the emissions of the energy sources, lignite, hard coal, and gas does not show a significantly different picture.
Now, questions about electricity prices and yields and CO2 price hedging. What exactly was the yield from coal-fired power in 2020? How is the future development estimated? How high were the negative electricity prices that had to be paid in 2020? For which electricity generation processes did they occur and in what proportion? How many CO2 certificates does RWE hold in reserve? Up to what year is lignite-based electricity generation hedged against rising CO2 prices? What does this hedging cost RWE every year?
What hedging transactions for lignite have you made for the period after 2030?
Our financial reporting is done on a segment basis, and the Adjusted EBITDA for coal nuclear energy amounted to EUR 559 million in the financial year. For the current financial year, the outlook is EUR 800 million-EUR 900 million for 2022, EUR 550 million-EUR 650 million for the years from 2023. The Adjusted EBITDA will be between EUR 0 and EUR 200 million. The periods of negative electricity prices on EPEX spot are steadily increasing due to the increasing feed-in of the renewable energy sources. RWE uses all the way to manage its power plant portfolio in a commercially optimal way without violating technical restrictions of the plants or contractual agreements with third parties.
The commercially effective means not only on the power plant deployment decision and the process on IPAC's spot on the previous day, but also on previous hedging decisions. A quantification of the associated costs, as well as the allocations to sources of energy, cannot be meaningfully presented standalone, as there are opposing effects from contractual agreements and hedging transactions. Regarding the CO2 position, RWE is financially hedged against the effects of CO2 price changes until 2030 for the competitive reasons. We cannot publish a statement on the CO2 inventory and thus also not a statement on the annual hedging costs.
Now, lots of questions concerning the lignite phase-out. With reference to EU state aid investigation into compensation payments, they ask, to what extent has RWE included the compensation sum of EUR 2.6 billion in its balance sheet, or is planning firmly with this amount?
How does RWE intend to prove that it would make a profit by operating lignite plants until 2051? What arguments does RWE put forward against the Commission, having doubts about the reliability of the assumptions on useful life, both from a technical and an economic point of view? Environmental Minister Svenja Schulze expects coal-fired power plants to be phased out in 2030 as a result of the EU's stricter climate targets of - 55% in 2030. What studies does RWE have of its own on the EU's stricter targets for lignite-fired power generation? How do you explain the discrepancy between Ms. Schulze's statements and the calculations involving billions in compensation? Regarding the BET report, consequential costs of the lignite-based electricity generation, what information on open-cast mine planning did RWE provide to the experts from BET Energy and EU? What influence did RWE exert on these scenarios in the report?
Regarding your first question, I mean, this is now really getting exciting, and I will now give my last answers as a CEO. The compensation claims are recognized in consolidated financial statements as other operating income and other assets. This can be read in the annual report. In our internal corporate planning, we see a financially viable lignite-based power generation in the future as well. These internal assumptions are confirmed by external expert opinions. Our power plants have been modernized through extensive measures on a regular basis. With regard to the electricity generation from lignite, RWE Power therefore has extensive experience with plants that have been in operation for almost 50- 60 years. Of course, we have also got a cost savings program in the lignite segment; otherwise, we could not make it. With regard to Ms.
Schulze's statement, I can say that the national climate target for 2030 was already 55% before the tightening of the EU climate target, and the reduction target for greenhouse gas emissions in the energy sector was 61%-62%. The target is also the basis of the coal phase-out roadmap agreed in Germany, which we will follow. We were not involved in the preparation of the report by BET and EY on open-cast mining scenarios. Therefore, we could not and did not provide any information for the preparation of the report and thus did not exert any influence on the scenarios.
Okay, thank you. Now, we would like to talk about resettlement. Mr. Schmidt, so how many court proceedings against expropriation and forced resettlement of residents or villages near open-cast lignite mines are currently pending?
How many more procedures does RWE expect in the years 2021, 2022, 2023, 2024, 2025, and 2026? How high were the costs for the compensation of resettled persons in the area of the Garzweiler open-cast mine? In the area of the Hambach open-cast mine and Inden, in view of the EU climate target for 2030, how is the obtaining of a land concession order against a farm in Erkelenz, Lützerath, justified? In addition, Mr. Schmidt, the umbrella organization wants to know in various questions whether and when you have once made yourself a picture of the situation on site, have a picture of the working conditions of the RWE employees there, and have spoken with the people affected.
The legislature has explicitly confirmed the energy economic necessity of the Garzweiler open-cast mine and thus the necessity of the resettlement in the Garzweiler open-cast mine and the Coal Electricity Termination Act. This is also confirmed by the new guiding decision published by the NRW State Government on 23 March 2021 on the basis of the current meta-study. We are getting a comprehensive picture of the resettlement localities and are in constant and lively exchange with people throughout the entire resettlement process. They are involved in many ways from planning to implementation. They receive comprehensive support from the lead authorities, municipalities, and our companies. Your concerns also play a central role in the necessary approval procedure. The average cost of acquiring residential properties in 2020 in Garzweiler and Hambach open-cast mines was around EUR 500,000. In the Inden open-cast mine, the resettlement program has already been completed.
For the ongoing resettlements in Hambach and Garzweiler mining areas, a land transfer procedure had to be initiated for reasons of imminent mining claims after many years of negotiations with comprehensive compensation officers. At the same time, we continue to be available for talks on an amicable settlement. For the coming years, too, we assume that at most individual land transfer procedures for the development properties will become necessary. Just to reassure you, yes, I was on site, and I had a look at the new places and the old places. Of course, I always talk to people.
The umbrella organization also has got loads of questions about the main operating plan for the Hambach open-cast mine. On page 10 of the main operating plan for the Hambach open mine, various water management requirements are listed. When will they be made available to the public?
Regarding page 15 of the main operating plan, when specifically will the current Kostler Atlas be used as the basis for providing a retention area? Page 18, why are the open-cast mine boundaries from 1977 being continued? NRW Prime Minister Laschet promised a reduction. Page 18, the appeal proceedings of BUND NRW RUE, i.e., rest. How did this rest come about? Who decided this? When will the proceedings be resumed? When can a decision by the court be expected? What exactly are the relevant legal requirements for the main operating plan approval according to sections 55(1) and 48(2) of the Federal Mining Act? Were they examined in full, independently, or only, as it says on page 13, taken note of? The examination under mining law is only a note and not an examination. How can the contradictory statement be explained? What was the actual procedure?
Thank you very much for giving us the time to prepare the answer to this question, and I'm very glad that we've got such wonderful staff who researched it. The water management requirements addressed under reference to page 10 of the main operating plan deal, among other things, with issues of marshing. The water law permit for the marshing of the Hambach open-cast mine can be viewed on the website of the Ansberg District Government. The question of the possible publication on the open government portal would have to be addressed to the responsible authorities. The current Kostler Atlas that referred to page 15 of the main operating plan will be used as a basis for all future proofs of the retention area. There can be no question of continuing with the open-cast mine boundaries of 1977.
For example, the spatial boundary of the main operating plan of Märzenich area and with the exclusion of Hambacher Forst has been significantly reduced. The forest area at the Gochertrack adjacent to Steinheide is also retained. The new main operating plan takes full account of the requirements of the Coal-fired Power Generation Termination Act and the new guiding decision. The state planning framework will be adapted to the coal phase-out in the lignite plan procedure that is now beginning. All pending litigation by the plaintiff BUND concerning the Hambach open-cast mine has been settled or suspended. It remains to be seen whether the BUND's lawsuits will be reopened despite the now legally stipulated coal phase-out, including the preservation of the Hambach Forest. The conditions for approval, which must be examined by the competent authority, are specified in the above-mentioned provisions of the Federal Mining Act.
They were actually examined by the mining authority and deemed to be fulfilled. As a result, the mining operator was entitled to be granted the permit.
Okay, now there is a second block of the umbrella organization regarding the main operating plan for Hambach open-cast mine. The water law permit for Hambach open-cast mine had so far only been ordered, apparently not yet granted. How could the main operating plan still be approved? How exactly will the requirements of the European Water Framework Directive be implemented in the water law permit? How and when will the requirements of the European Water Framework Directive be met? How exactly will compliance be ensured, and what measurement methods will be used to back this up? Which monitoring procedure does RWE use to document the situation of surface and subsurface water changes?
Is the modeling of regionalized emissions model system favored by the Federal Environment Agency used? If not, what conditions would have to be met for it to be used? Does the drinking water supply of the affected population have priority over the use of the water by RWE? Are limit values set for this? In what way has RWE AG taken the dry years into account in its planning? What precautions are being taken for the future? How measurable?
First things first. Permission under water law has been granted in the meantime. Within the framework of the approval procedure, a technical expert report on water law is being prepared, which comprehensively assesses the compatibility of the project with the objectives of the Water Framework Directive. This is part of the application document submitted to the authorities. There are defined management objectives for the mining-related status of the water bodies.
The basic principles and the background are described in detail in the background paper in Lignite, which is part of the management plan of the State of North Rhine-Westphalia. The changes in the water bodies are predicted by the district-wide officially agreed groundwater model. Furthermore, monitoring exists for the individual open-cast mines under the auspices of the responsible authorities or ministries. In principle, if the groundwater level is affected by mining activities, the additional expenditure for water extraction is compensated in accordance with the legal provisions. In the use of the pumped water, priority is given, among other things, to the provision of substitute water, in particular public drinking water supply, and the provision of eco-water. Climatic developments are also taken into account in the planning process. For example, expert opinions on climatic developments are part of the planning process.
The use of around about 20,000 hectares of arable land is offset by a corresponding reclamation of about 12,000 hectares. The overall land development is continuously measured and reported. In addition, within the framework of quality management, it is monitored whether the reclaimed arable land meets the yield capacity of the arable land taken up. Finally, the new land is officially valued within the framework of the standard valuation under tax law. The intervention characteristics of the land take are determined within the framework of the legal provisions. The redesign of the landscape also makes it possible to include new and additional aspects via the compensation measure for use, protection, and recreational function of the landscape. Furthermore, we are engaged in exploring new utilization and yield opportunities in agriculture or implementing our own biodiversity strategy.
Now to the third block of questions concerning the Hambach open-cast mine.
What methods are used to measure and record the damage to the arable soils in the Juli-Silber-Berde? How are the damages or destructions accounted for? Where can such balances on ecological damage be found? What measures are being taken by the group to repair the damage caused? What provisions have been made or will be made for this purpose until the open-cast mines are phased out? Are these provisions legally secured? In what way? Is the type of protection crisis proof? What CO2 storage capacities have been lost in the area of the landscapes used by the open-cast mines? Please list CO2 storage capacities separately by forest, soil, and other.
The use of about 20,000 hectares of arable land is offset by a corresponding reclamation of about 12,000 hectares. I already mentioned that. The overall land development is continuously measured and reported.
In addition, within the framework of quality management, it is monitored whether the reclaimed arable land meets the yield capacity of the arable land taken up. Finally, the new land is officially valued within the framework of the standard valuation under tax law. The intervention characteristics of the land take are determined within the framework of the legal provisions. The redesign of the landscape also makes it possible, that was mentioned before, to include new and additional aspects via the compensation measure for the use, protection, and we are also committed to biodiversity. According to the legal requirements, mining-related provisions have been set aside for all recultivation obligations. They are regularly audited by the auditor. This will be continued to an adjusted extent until the open-cast mines are phased out. The provisions are secure. Rest assured of that. RWE is liable for the mining-related provisions with its entire group assets.
The mining authority regularly reviews the adequacy of the mining provision as well as its financial coverage. Carbon storage potentials are not lost as a result of the land reclamation that goes hand in hand with the land claim. For example, humus bodies are transferred from the open-cast mine for fields to newly created forest and arable land. The forest cover on the recultivated forest areas also provides an additional carbon store. The balance of forestry land in the area is already balanced. So far, a good 7,300 hectares of forest have had to make way for the open-cast mines, and more than 7,300 hectares have been newly planted.
Thank you. The following are questions on political talks. According to information from Greenpeace, there were 30 meetings between RWE and the Ministry of Economic Affairs, DMW, between May 2018 and June 2020.
Can you confirm this number, and are you prepared to provide full transparency about the meetings? What specific agreements or arrangements have been made between the Ministry of Economic Affairs and RWE with regard to the coal phase-out? Are you prepared to publish a complete list of all appointments and talks with politicians, especially with Minister-President Armin Laschet? What meetings have taken place with Armin Laschet? What agreements have been made between the two of you? How often and on which dates exactly have RWE representatives met with the Northern Westphalian Minister-President?
As a large energy supply company as we are, we are always in dialogue with ministries and politicians at the state and federal level on issues that are important to us.
This naturally also applies to the Ministry of Economic Affairs and the North Rhine-Westphalian State Government, for example, on issues such as the expansion of renewable energies, market design, the ramp-up of the hydrogen infrastructure, and of course, the coal phase-out. We do not publish any information on the content of individual talks. The agreement with the federal government on the coal phase-out is publicly available. I think that was the last question I ever answered on an AGM. That's true because we continue with Mr. Krebber
concerning human rights due diligence. Can you already ensure that the requirements of the planned Supply Chain Act for risk management to identify and proactively reduce human rights risks in your own supply chains are met? What specific grievances were identified in supplier audits in 2020? Please name countries or regions. What do you specifically do in these cases?
Are you in direct contact with the companies concerned, and by when must you have remedied the grievances?
RWE is well positioned for the instruction of the Supply Chain Act. After the law has been passed, we will identify any need for action. In 2020, RWE again audited business partners before entering into and during a business relationship. If grievances are discovered during audits and do not lead to termination of the business relationship, concrete measures are developed with the respective partners in individual cases, and implementation deadlines are agreed.
Finally, a few questions about various stakeholders, Mr. Krebber. The French asset manager and RWE investor Amundi criticizes RWE's coal phase-out strategy as incompatible with the 1.5% target of the Paris Climate Agreement and demands that RWE phase out lignite-fired power generation in Germany earlier than 2038.
What coal phase-out plan will RWE present to Amundi that is fully in line with the recommendations of Climate Science? The insurance group AXA has announced that it would exclude services for RWE until the end of 2022 because of criticism of the coal phase-out plan. Which insurers still want to cover RWE AG's risks? How much more expensive will it now be for RWE to take out new insurance? Please give us an absolute sum in EUR. How have the exclusion by AXA and the announcement by Amundi affected RWE AG's rating?
First of all, on Amundi, you were able to hear our answers to Amundi today at the annual general meeting itself. We are also in constant dialogue with our shareholders outside the AGM. This also applies to our insurance.
We have a large international group of insurers who provide a wide variety of insurance services for our businesses and with whom we have long-standing and trusting business relationships. Our insurers understand and support the comprehensive transformation of RWE. Regarding the rating, we are pleased with the recent upgrades by both rating agencies Fitch and Moody's. This is a real success and fully reflects the strategic and financial cause of the company.
Thank you very much indeed. Thank you very much also to the facilitators. Thank you very much to the members of the Executive Board for answering the questions in such detail. I assume that my answers also conclusively address the questions to the Supervisory Board. That concludes the part with the response to the question.
Ladies and gentlemen, I would like to announce that voting by postal vote and proxy voting via the internet-based investor portal will be closed shortly after I have explained to you the agenda items to be voted on today and the resolutions proposed by the Executive Board and the Supervisory Board, and when I will start to determine the voting results. If you still wish to cast, change, or revoke your vote via the investor portal, please do so promptly. Before we come to the vote, I would like to once again inform you about the current attendance, which is as follows: the voting proxies represent a total of 400,544,190 shares with just as many voting rights. This corresponds to an attendance of 59.23% of the registered share capital. In addition, we have absentee votes of another 18,234,140 no-value shares.
Of these, a total of 418,778,330 votes are represented in the AGM, which corresponds to 61.93% of the registered share capital. Now we will proceed with the vote. I will once again call the agenda items and the proposed resolutions of the Executive Board and Supervisory Board as announced in the notice convening the meeting. No resolution is required on agenda item one. Item two, appropriation of distributable profit. The Executive and Supervisory Boards propose that RWE AG's distributable profit for fiscal 2020 be appropriated as follows: distribution of a dividend of EUR 0.85 per dividend-bearing share, which is EUR 574,787,440.80. Profit carried forward EUR 25,220.47. Distributable profit EUR 574,812,261.37. Agenda item three reads approval of the acts of the Executive Board for fiscal 2020.
The Executive Board and the Supervisory Board propose that the acts of the members of the Executive Board in the 2020 financial year be approved for this period. Agenda item four reads approval of the acts of the Supervisory Board for fiscal 2020. The Executive Board and the Supervisory Board propose that the acts of the members of the Supervisory Board in the 2020 fiscal year be approved for this period. In this connection, I would like to draw attention to section 136 of the German Stock Corporation Act. According to this, members of the Executive Board may neither vote themselves nor on behalf of another person nor be represented by a third party in the resolution on their own discharge. The same applies to members of the Supervisory Board when their acts are approved. The corresponding shareholders are therefore not entitled to vote on the respective agenda item.
Agenda item five reads appointment of the auditor for fiscal 2021 and the auditor for the audit-like review of the half-year financial report and of the interim financial reports. Based on the recommendation of the audit committee, the supervisory board proposes that PricewaterhouseCoopers GmbH, Wirtschaftsprüfungsgesellschaft Frankfurt am Main, Essen Branch be appointed as auditor for fiscal 2021 and as auditor for the audit-like review of the condensed financial statements and the interim management reports as part of the half-year financial report and the interim financial reports as per June 30, 2021, September 13, 2021, and March 31, 2022. The audit committee has stated in its recommendation that this is free from undue influence by third parties and that no selection-limiting clause within the meaning of article 16 paragraph 6 of the statutory audit regulation has been imposed on it. Agenda item six, election of new supervisory board members.
As I explained at the beginning, the term of office of the shareholder representatives on the Supervisory Board will end at the close of today's Annual General Meeting, so new elections are necessary. The new elections are intended to introduce a staggered structure on the Supervisory Board. Five candidates will therefore be proposed for election for a term of three years and five further candidates for a term of four years. Based on the recommendations of the Nomination Committee, the Supervisory Board proposes that the following persons be elected by individual vote with effect from the end of this Annual General Meeting as shareholder representatives on the Supervisory Board. Under item six one, myself. Under item six two, Dr. Hans Bünting, self-employed management consultant. Under item six three, Mrs. Ute Gerbaulet, personally liable partner of Bankhaus Lampe KG. Under item six four, Professor Dr.-Ing.
Hans-Peter Keitel, self-employed management consultant. Under item six five, Mrs. Mag. Dr. h.c. Monika Kircher, self-employed management consultant. Under item six six, Mr. Günther Schartz, county commissioner of the Trier-Saarburg district. Under item six seven, Dr. Erhard Schippers, self-employed management consultant. Under item six point eight, Mr. Ulrich Sierau, self-employed management consultant for newly found companies. Under item six point nine, Mrs. Hauke Stars, member of various supervisory boards. Under item six point ten, Mrs. Helle Valentin, general manager, global business services Nordic of IBM Corporation. The suggestion is that the election of Dr. Bünting, Mrs. Mag. Dr. Kircher, Mrs. Stars, Mrs. Valentin, and myself is to last until the end of the AGM that decides on the approval of the acts for fiscal 2024. Mrs. Gerbothe, Professor Dr. Keitel, Mr. Schartz, Dr.
Schippers and Mr. Sierau are to be elected for the period of time until the end of the AGM that is to decide on the approval of the acts for fiscal 2023. For further detailed explanations of this agenda item, please refer to the invitation. Agenda item seven is approval of the remuneration system for members of the Executive Board. Based on the recommendation of its Personnel Affairs Committee, the Supervisory Board proposes that the remuneration system for the members of the Executive Board described in the invitation and resolved by the Supervisory Board with effect from January 1, 2021, be approved. Please refer to the invitation for a detailed presentation of the compensation system and further details on this proposed resolution. I will only briefly mention agenda items eight to thirteen below, each of which contain very detailed resolution proposals.
Here too, you will find all the details in the invitation. Mr. Krebber has already given you some explanations this morning on the capital authorizations proposed under items nine and ten. Agenda item eight, passage of a resolution on the remuneration of the members of the Supervisory Board and corresponding amendment to the articles of incorporation. Agenda item nine, renewal of authorized capital and corresponding amendment to the articles of incorporation. Agenda item ten, authorization to issue convertible and/or option bonds, formation of conditional capital and corresponding amendment to the articles of incorporation. Agenda item eleven, amendment of article eight paragraph four of the articles of incorporation, that is, by election to the Supervisory Board. Agenda item twelve reads amendment of article nine paragraph one of the articles of incorporation, election of the Chairman and Deputy Chairman of the Supervisory Board.
Agenda item thirteen reads amendment of article fifteen paragraph two of the articles of incorporation, proof of authorization to participate in the annual general meeting. The counter motions sent prior to the annual general meeting and requiring disclosure were published on the company's website. The Executive Board had commented on these and recommended that the counter motions be rejected. The statement is also published on the website. The Supervisory Board dealt with this statement at its meeting today and concurred with the recommendation of the Executive Board to reject the counter-motions. In accordance with the amended legal concept of the COVID-19 Act, the published counter-motions will be considered as having been submitted during the virtual annual general meeting, as they were sent by shareholders who registered for the annual general meeting in due time and provided proof of share ownership.
As Chairman of the meeting, I order that the proposals of the Executive Board and Supervisory Board be voted on first. If these are approved by the required majority of votes, the counter-motions will be disregarded. Ladies and gentlemen, I would like to take this opportunity to announce once again that in a few minutes I will close the voting via the internet-based investor portal. The resolutions of the annual general meeting on agenda items 2 to 13 require a simple majority of votes. The resolutions on items 8 and 11 to 13 additionally require a simple majority of the capital stock represented when the resolution is adopted, and the resolutions on agenda items 9 and 10 additionally require a majority of three-quarters of the capital stock represented when the resolution is adopted.
The voting results are determined using the so-called addition method, that is, both yes and no votes are counted. Abstentions have no influence on the result. Ladies and gentlemen, I would now like to start determining the voting results and announce that I will close the voting by postal vote, and at 3:38 P.M. I will finally close the postal vote and the authorization of the company's proxies via the internet-based investor portal. Until then, we will interrupt the transmission of the annual general meeting. Ladies and gentlemen, it is 3:39 P.M., and we can resume the meeting. The absentee ballots and proxy-holder voting is no longer possible, as announced previously. I would like to ask the support staff to take that into consideration. Via the investor portal, however, you still have the possibility to raise objections with the notary public.
The proxy-holders will now release the votes in the system in line with the instructions they have been given. The voting has thus come to an end, and we will start counting the votes. We will take the votes, the proxy-holders, and the absentee ballot votes. As soon as I have them at my availability, I will announce them. I will interrupt the AGM up until then, asking for your patience. The notary public will supervise the... Ladies and gentlemen, we have now got the voting results concerning agenda items 2 to 13. I would like to announce the voting outcome. Let us first talk about appropriation of distribution or distributable profit. Here we had valid votes for 421,244,128 shares, which is 62.29% of the stock capital.
The resolution proposed by the Management Board and the Supervisory Board as far as the appropriation of distributable profit is concerned was adopted with 421,197,875 ayes and 46,253 nos, which is 99.99% of the votes cast. I would like to communicate that the dividend of EUR 0.85 per dividend entitled share certificate will be paid on the 3rd of May 2021. Agenda item 3. This is approval of the acts of Executive Board of Fiscal 2020. Here we have votes for 419,627,724 shares, which is 62.05% of the stock capital. The members of the Management Board in Fiscal 2020 have been approved for their activities on the board with 419,420,778 ayes and 206,946 nos. This is 99.95% of the votes cast. The acts of the Executive Board have been approved.
Thank you very much for your trust, ladies and gentlemen, and I'd like to take the opportunity and express words of thanks on behalf of the Supervisory Board. Thanks for your hard and dedicated work for Fiscal 2020. At the same time, please pass these words of thanks on to all the employees who made important contributions to our success. Now, agenda item 4. This is approval of the acts of the Supervisory Board for Fiscal 2020. Here we have votes for the 419,093,465 shares, which is 61.98% of the stock capital. The members of the Supervisory Board in Fiscal 2020 were granted approval of acts of their activities for Fiscal 2020 with 404,189,935 ayes and 14,903,530 nos, which is 96.44% of the votes cast.
I would like to express my gratitude for the trust expressed also on behalf of my colleagues, and I would like to take the opportunity and thank my colleagues for all their support on the Supervisory Board. Now, agenda item 5. This is the appointment of the Auditor of Fiscal 2021. Here we have votes for 419,631,249 shares, which is 62.06% of the stock capital. The proposed resolution submitted by the Supervisory Board as far as the election of the Auditor for Fiscal 2021 is concerned, including the audit-like review of the half-year financial report and of the interim financial report, was adopted with 384,175,029 ayes and 35,456,220 nos, and that is an acceptance of 91.55% of the votes cast. Now, elections of the members of the Supervisory Board. Ten individual ones, 6.1.
For me, we had valid votes for 416,589,100 shares, which is 61.61% of the stock capital. The proposal submitted by the Supervisory Board to elect my person was adopted with 385,031,284 ayes and 31,557,816 nos. That is an approval rate of 92.42% of the votes cast. The vote on 6/2. Here we have valid votes for 419,928,429 shares, which is 62.10% of the stock capital. The proposal submitted by the Supervisory Board to elect Dr. Hans Bünting as a member of the Supervisory Board was adopted with 418,628,261 ayes and 1,300,168 nos, and that is an approval rate of 99.69% of the votes cast. Now, the vote on 6.3. Here we've got valid votes for 420,865,291 shares, which is 62.24% of the stock capital.
The proposal submitted by the Supervisory Board to elect Ute Gerbaulet into the Supervisory Board was adopted with 416,935,989 ayes and 3,929,302 nos, and that is 99.07% of the votes cast. Item 6.4. Here we've got valid votes for 414,602,526 shares, which is 61.31% of the stock capital. The proposal submitted by the Supervisory Board to elect Professor Dr.-Ing. Hans-Peter Keitel to become a member of the Supervisory Board was adopted with 413,941,166 ayes and 661,360 nos, and that is an approval rate of 99.84% of the votes cast. 6.5. Here we've got valid votes for 419,097,633 shares, which is 61.98% of the stock capital. The proposal submitted by the Supervisory Board to elect Mag. Dr. Monika Kircher to the Supervisory Board was adopted with 408,445,621 ayes and 10,652,012 nos, and this is an approval rate of 97.46% of the votes cast.
six percent were in favor of her membership. Now, 6.6. We have valid votes for 420,336,984 shares, which is 62.16% of the registered stock capital. The proposal submitted by the Supervisory Board to elect Günter Schartz to become a member of the Supervisory Board was adopted with 397,947,863 ayes and 22,389,121 nos. This is an approval rate of 94.67% of the votes cast. Now, 6.7. Here we have valid votes for 420,887,426 shares, which corresponds to 62.24% of the stock capital. The proposal submitted by the Supervisory Board to elect Dr. Erhard Schippers to become a member of the Supervisory Board was adopted with 398,207,136 ayes and 22,680,290 nos, which corresponds to 94.61% of the votes cast. Now, 6.8. Here we have valid votes for 420,811,130 shares, which is 62.23% of the stock capital.
The proposal submitted by the Supervisory Board to elect Ulrich Seyraus to become a member of the Supervisory Board was adopted with 411,481,089 ayes and 9,330,041 nos, which represents 97.78% of the votes cast. Now, 6.9. Here we have valid votes for 419,936,631 shares, which is 62.10% of the registered stock capital. The proposal submitted by the Supervisory Board to elect Hauke Stars to become a member of the Supervisory Board was adopted with 419,462,254 ayes and 474,377 nos, which represents 99.89% of the votes cast. Finally, 6.10. Here we've got valid votes for 419,739,462 shares, which is 62.07% of the registered stock capital. The proposal submitted by the Supervisory Board to elect Helle Valentin to become a member of the Supervisory Board was adopted with 398,761,014 ayes and 20,978,448 nos, which represents 95% of the votes cast.
All the candidates elected have already given us their acceptance of the election, and I would like to again thank you very much for the trust that you have placed in us, and I look forward to committed and constructive collaboration with the existing and newly elected candidates in the best sense of the company. Agenda item 7. Here we have valid votes for 418,244,593 shares, and this is 61.85% of the stock capital. The proposal submitted by the Supervisory Board to approve the remuneration system for the members of the Executive Board was adopted with 389,762,812 ayes and 28,481,781 nos, and this is a majority or an approval rate of 93.19%. Now, agenda item 8. Here we have valid votes for 416,615,828 shares, which is 61.61% of the registered stock capital.
The proposal submitted by the Executive Board and the Supervisory Board as far as the resolution is concerned, concerning the remuneration of the members of the Supervisory Board and the respective Articles of Association's amendment, was adopted with 415,159,654 ayes and 1,456,169 nos, and this is 99.65% of the votes cast and is adopted also by the represented stock capital. Agenda item 9. Here we've got valid votes for 421,136,121 shares, which is 62.28% of the registered capital, and the proposal submitted by the Executive Board and the Supervisory Board as far as the renewal of the authorized capital and the respective amendment to the Articles of Association was adopted with 409,308,556 ayes and 11,827,565 nos, and this represents an approval rate of 97.19% of the votes cast, and this also represents the stock capital presented. Agenda item 10.
Here we have got valid votes for 421,010,482 shares, which is a representation of 62.26% of the stock capital. The proposal submitted by the Executive Board and the Supervisory Board when it comes to the authorization to issue convertible and/or option bonds, formation of conditional capital, and corresponding amendment to the Articles of Incorporation was adopted with 407,567,602 ayes and 13,442,818 nos, which is an approval rate of 96.81% of the votes cast, and at the same time, the stock capital representation approved of the resolution. Agenda item 11.
Here we have valid votes representing 418,963,361 shares, which is 61.96% of the registered stock capital, and the proposal submitted by the Executive Board and the Supervisory Board as far as the resolution concerning the amendment of the Articles of Association, i.e., by elections under Section 84, was adopted with 413,803,130 ayes and 5,160,231 nos, and this is an approval rate of 98.77% of the votes cast and also the respective stock capital representation approved of the resolution. Agenda item 12. Here we have valid votes for 421,195,596 shares, which is a representation of the stock capital of 62.29%.
The proposal submitted by the Executive Board and the Supervisory Board when it comes to the resolution of the amendment of Section 91 of the Articles of Association, here we are talking about the election of the chairperson of the Supervisory Board and his or her deputies, we have an approval rate of 416,032,074 ayes and 5,163,522 nos, which is an approval rate of 98.77% of the votes cast, and there is also the respective stock capital representation that supports the resolution. Then agenda item 13. Here we have got valid votes for 421,183,000, I repeat again, 421,183,564 shares, which is a representation of 62.28% of the stock capital. 62.28%.
The proposal submitted by the Executive Board and the Supervisory Board when it comes to the resolution of the amendment of Section 15-2 of the Articles of Association, this is here the proof of authorization to participate in the annual general meeting, was adopted with 421,115,851 ayes and 67,713 nos, which is 99.98% of the votes cast. At the same time, the represented stock capital approves of the resolution as well. That means that all the counter motions are dealt with in that they are rejected. Ladies and gentlemen, we are done with the agenda. I'm going to close the AGM in a minute, and that, of course, is the end of the possibility to lodge objections against the resolutions of the meeting with the notary public via the investor portal. I thank you very much for your attendance via the screens.
I would like to thank all the employees who helped prepare and execute the AGM. Without your hard and dedicated work, mostly from your home offices, this event would not have been possible in this particular fashion. I would like to say thank you so much for that. The next AGM meeting will be the 28th of April 2022. I would now like to say goodbye. I wish you all the best and stay healthy. I conclude today's AGM of the RWE AG, and once again, thank you very much for participating.