Half year results: commercial strategy of Essent successful
The commercial strategy pursued by Essent has proven to be successful. The so-called Mijn E (‘My E’) products and services introduced by Essent have contributed to an increase in the total number of customers. Essent offers its customers smart tools to help them reduce their energy consumption by giving them an insight into energy consumption and the associated costs.
The number of electricity customers grew to almost 2.4 million. The number of gas customers also grew to more than 2 million. And the customers are satisfied: Essent’s service is now rated at 7.5 (on a scale from 1 – 10, with 10 as the highest possible note) by its customers. In the first half of this year, Essent recorded operating profits of € 162 million (13 percent less than in the previous year); the pre-amortization operating result (EBITDA) rose by 4 percent.
Financial results Essent
The underlying net turnover remained stable at € 3.1 billion (2011 €3.2 billion). The reported turnover fell by 3 per cent, mainly as a result of a different trading strategy used by business unit Powerhouse. The turnover linked to domestic customers rose by 6 percent.
There has been little change in the challenging economic circumstances in relation to last year. The lagging demand for electricity, combined with increased production capacity, has placed Essent’s earning capacity under pressure.
Essent has also had to absorb the one-off start-up costs for the Claus power station and the power station in Moerdijk.
The lower margins on the production units have largely been compensated by the positive developments in the commercial field, such as rising customer numbers, the successful optimisation of the contracts portfolio and responding correctly to the impact of weather on gas demand.
The synergy benefits (18% fall in influenceable costs compared to 2010) from efficiency programmes started earlier and further integration with RWE (such as joint purchasing) became apparent in 2011.
The advantages of existing programmes were expanded further and new initiatives started up in 2012. This will lead to a further fall in influenceable costs, the result being that the promised synergy benefits of € 135 million in total will be achieved 2 years earlier than expected.
| Main highlights | HY1 2012 | HY1 2011 | Difference '12-11 |
|---|---|---|---|
| Financial (in € mln) | |||
| External revenues | 3.144 | 3.253 | -3% |
| Electricity | 1.070 | 1.160 | -8% |
| Gas | 1.952 | 1.982 | -2% |
| Other | 123 | 111 | 10% |
| EBITDA | 303 | 291 | 4% |
| Operating result | 162 | 187 | -13% |
| Capital expenditure | 292 | 484 | -40% |
| Retail clients (in '000) | |||
| Electricity | 2.382 | 2.324 | 58 |
| Gas | 2.065 | 1.997 | 68 |
| FTEs | 3.695 | 3.888 | -193 |
RWE works on European energy production company
Today, during the presentation of the half-yearly figures, RWE provided an explanation about the establishment of an organisation-wide European energy production company, also incorporated in which will be Essent’s gas and coal-fired power plants (Claus power plant, Moerdijk power plant, Amer power plant and Eemshaven power plant).
The formation of a new European energy production company will enable a greater degree of synergy to be achieved in (among others) business operations and power plant maintenance. In addition, this company would enable RWE to respond to rapidly changing market conditions in a European energy market, such as increased competition and the rise of solar and wind power. The energy production company will be established on 1 January 2013.
Essent staff will continue to be responsible for the everyday business operations and the maintenance of the power plants in the Netherlands. The power plants will also remain part of Essent.
Commercial developments
Essent has welcomed a total of 126,000 new customers. Although Essent is aware that customers are transferring to other suppliers more often, it also notes that customers have a greater and greater need for a simple and straightforward insight into their energy consumption and costs. Essent responds to this with its products and service.
Two years’ ago Essent stopped unwanted and unannounced doorstep sales of energy contracts and recently asked for a “Do Not Ring My Doorbell Register” (comparable to the already existing “Do Not Call Register”), because unwanted and unannounced doorstep selling of energy contracts gives the energy industry a bad image.
‘Mijn E’ (My E) product range
The new ‘Mijn E’ (My E) product range is successful. The products and services that are offered help customers to easily control and gain insights into their energy consumption and costs. The first product to be launched was the remotely operated E-thermostat, of which more than 20,000 have now been delivered. What is more, the so-called Usage Manager App, which allows customers to coordinate their standing orders with their actual consumption, has been downloaded more than 100,000 times. Essent works with its customers on the development of new products and services. Essent will introduce a new product later on this year, which will allow customers to obtain an insight into the costs and energy consumption of domestic appliances.
Sustainable development
Essent contributes to ensuring a reliable, affordable and sustainable supply of energy and is the largest producer of green energy in the Netherlands.
RWE/Essent invests heavily in sustainable energy in the Netherlands and Europe: approximately 10 billion Euros during the 2008-2015 period. These investments mainly go into onshore and offshore wind, biomass and solar energy and a mix of various sources.
Essent has been offering its customers Green Power Product Windforce (green energy generated by Dutch wind turbines) since March. This had already been available to Essent’s large-scale customers since early 2011.
Innovation plays an important role in Essent’s large-scale customers division. On the one hand this means product development along with customers and on the other hand exploring and developing new markets and opportunities. A special help desk for our large customers is a good example of this. The start up of ‘Duurzaam in Bedrijf’ (DuuB) shows that, along with partners and customers, Essent contributes to a sustainable energy future.
Solar power
Essent keeps a close eye on developments in the field of solar power and offers consumers the solar panel bonus package. In addition Essent has nearly 10,000 customers who feed the solar power that they generate back to the grid.
Essent is currently developing a new solar power retail product that will be launched in mid-September.
Electric transportation
Electric transport is important for the transition to a sustainable future. Vehicles create almost a quarter of the total CO2 emissions in the Netherlands. For this reason Essent invests in electric transport. As well as installing recharging points, Essent is also involved in providing services. Essent has developed a charging points map (all public charging points) so owners of electric vehicles can immediately see the closest point where they can quickly recharge their batteries. An App was also developed for this charging point map. Essent is hoping to install its 100th charging point in Amsterdam soon. Companies are also able to approach Essent for charging points.
PowerMatching City, Hoogkerk
PowerMatching City, the smart grid project in Hoogkerk area of Groningen, in which Essent is also involved, is one of the hundred most sustainable projects in the world. This was announced at the Rio+20-top, the UN conference on Sustainable Development held in Rio de Janeiro.
Biobased Economy
Essent supports the Biobased Economy. Earlier this year Essent concluded the ‘Cuijk 2.0’ Green Deal in this connection. With its 100% biomass power plant in Cuijk, Essent wishes to take part in the creation of a Biobased economy.
Research recently performed by Essent at its power plant has shown that the bio fuels that were tested at this power station are suitable for generating sustainable energy. Essent will conduct a new test later this year. In the long term there are plans to connect the power station to a heat network, to supply nearby companies with heat and steam. Research will also be done into the possibilities of drying agricultural waste products at the power station and also generating green gas and making use of bio refining.
Temporary exemption order for the Moerdijk 2 power plant
In May of this year the Council of State cancelled Essent’s permit for the brand-new Moerdijk 2 power station. This permit was granted by the Province of North Brabant. The Council of State deemed that the Province had not sufficiently explained why it had based its application on the European regulations and not the recent stricter Dutch guidelines.
Since then Essent has worked closely with the Province on a new permit application. Because the new power station already complies with the Dutch regulations, a new permit can be expected. In anticipation of this permit, the Province granted Essent a temporary exemption order on the 9th of August.
RWE/Essent builds 'mega wind turbines’ in Groningen
RWE/Essent is constructing two ‘mega wind turbines’ at the Eemshaven in Groningen. Each of the turbines can generate more than 6 megawatts of electricity. The two turbines can together supply energy to more than 10,000 homes.
The type of mega turbine being installed now is actually designed for offshore use. At the end of the day the Nordsee Ost offshore wind farm planned by RWE will house 48 turbines. Expectations are that the two turbines, which are part of the country’s largest wind farm (Westereems), will come on stream in September.
Eemshaven power station
Essent/RWE is constructing a hypermodern flexible power station in the Eemshaven, which can run both on coal dust and biomass. Construction started in 2009 and will be completed in 2014. The power station will then be able to supply 2.5 million homes in the Netherlands with reliable and affordable power. In June it was announced that a permit under the Nature Conservation Act (Natuurbeschermingswetvergunning) would be granted and the power station could be completed.
Claus power station
Essent/RWE opened its new and partly gas-fired Claus power station at the end of June. The Claus B unit was completely refurbished during the past four years and turned into the hypermodern Claus C power plant (1,304 MW, 2 million homes).
This power station is highly flexible and can be turned on at any moment if there is a lack of wind and solar power. The start-up of this fully modernised power station means that RWE has achieved part of its objective of upgrading and replacing a quarter of all of its conventional energy plants by 2014 to make them cleaner and more efficient.
Published: 14 August 2012