Energy segment

Economic environment for the energy sector

In the 2018/2019 fiscal year, forward market prices for electricity for delivery in 2020 in Austria moved within a comparatively wide corridor of EUR 8.7/MWh with a slight downward trend. The main influencing factors here were the prices for coal and CO₂ allowances. The price for the annual base of 2020 in the price zone Austria reached its highest value on 8 October 2018 at EUR 57.3/MWh, and the lowest value on 25 March 2019 at EUR 48.6/MWh. At EUR 52.5/MWh the average price was around one-quarter higher than the previous year's value.

Also on the spot market, prices increased compared with the same period of the previous year. In the 2018/2019 fiscal year, the average European Power Exchange (EPEX) spot price base for delivery in Austria was EUR 45.1/MWh. Due to the increasing feed-in of electricity from wind power and photovoltaic systems, the market continued to be volatile with hourly prices between EUR -59.8/MWh and EUR +141.3/MWh.

In the majority of the reporting period, electricity prices were significantly influenced by the prices of CO₂ emissions allowances and coal. As of September 2019, the major relevance of coal prices was replaced by gas prices. Although oil prices no longer have a direct influence on coal and gas prices and thus also on electricity prices, they are indicators of global price developments on the energy markets.

Hard coal prices have significantly lost value in the past twelve months. Starting at USD 99.6/t at the beginning of the 2018/2019 fiscal year, the All Publications Index#2 (API2) for delivery in 2020 to the Amsterdam-Rotterdam-Antwerp Coal Trading Area (loco ARA) had dropped to only USD 66.2/t by the end of September 2019. The reasons for this were a large global supply and comparatively weak demand.

The oil price fell from a high of USD 81.6/barrel of Brent crude oil for delivery in December 2019 to a low of USD 52.2/barrel at the turn of the year 2018/2019. After a few upward and downward swings, the price of Brent was quoted at USD 59.3/barrel at the end of the fiscal year. The average price in the fiscal year 2018/2019 was USD 64.5/barrel.

The NetConnect Germany (NCG) gas price for the year ahead 2020 fell from EUR 23.6/MWh at the beginning of October 2018 to EUR 18.4/MWh at the end of September 2019. The peak value was EUR 24.0/MWh on 5 October 2018, the lowest value EUR 17.1/MWh on 2 September 2019.

The most significant fluctuations were recorded in the price of CO₂ emissions allowances. In the 2018/2019 fiscal year, prices fluctuated between EUR 15.9/t and EUR 29.8/t. In particular, the concern about an unregulated Brexit and the associated effects on the European emissions trading system repeatedly provoked rapid price movements.

Price development on international energy markets

Sources: EEX, Reuters

Business development in the Energy segment

In the 2018/2019 fiscal year, the Energy segment achieved a sales increase of 18.0% with total sales of EUR 1,057.5 million. Declining sales revenues from gas management were more than offset by increased sales revenues in electricity trading and the higher use of the CCGT power plants in Timelkam and Laakirchen.

The EBIT of the Energy segment was EUR 117.3 million in the reporting period; this is equivalent to an increase of 43.6%.

The Energie AG Group was the sole limited partner of Energie AG Oberösterreich Vertrieb GmbH & Co KG until 31 March 2019, but did not exercise control over that company due to ENAMO GmbH being its sole general partner (previously consolidated at equity). Acquisition of the remaining interests in ENAMO GmbH on 1 April 2019 resulted in the Group also gaining control over Energie AG Oberösterreich Vertrieb GmbH & Co KG.

Due to acquiring control over the aforementioned companies, the equity share previously held was revalued to fair value in accordance with IFRS 3. The revaluation amounts to EUR 48.2 million.

Moreover, increased electricity price expectations and the positive effects of the new System Utilisation Tariff Ordinance resulted in reversals of impairment in the amount of EUR 7.9 million for the Timelkam CCGT power plant.

In the previous year, an impairment in the amount of EUR 2.5 million had been recognised for the Timelkam CCGT power plant. In addition to this, the EBIT was adversely affected by impairments in the amount of EUR 3.2 million for the 7Fields natural gas storage facility and further minor impairments. By contrast, a reversal of impairment in the amount of EUR 1.9 million for Cogeneration Kraftwerke Management Oberösterreich GmbH (CMOÖ GmbH) had had a positive effect on EBIT in the previous year.

In addition to the value adjustments mentioned above, EBIT for the reporting period was affected by lower earnings contributions from electricity and natural gas sales due to higher procurement costs as well as lower earnings contributions from the use of the Timelkam CCGT power plant for grid reserve and congestion management. By contrast, the significantly higher water level in the 2018/2019 fiscal year compared with the previous year had a positive effect on the EBIT of the Energy segment.

More thermal electricity generation, above-average electricity procurement from hydroelectric power

Total electricity procurement in the Energy segment in the 2018/2019 fiscal year totalled 16,617 GWh and was therefore 8.7% higher than in the previous year (15,289 GWh). This significant increase was mainly due to increased external electricity trading and the increased use of the CCGT power plants Timelkam and CMOÖ GmbH in Laakirchen. As a result, proprietary electricity procurement of 3,639 GWh in the reporting period was 19.7% higher than in the previous year (3,039 GWh).

Electricity production from thermal capacities in the Energy segment increased from 578 GWh to 1,000 GWh (+73.0%). This is attributable on the one hand to the increased utilisation of the CCGT power plant Timelkam, which was used for grid reserve and congestion management throughout the 2018/2019 fiscal year. On the other hand, rising electricity prices coupled with relatively stable gas prices in certain months of the year under review meant that, where contractually possible, use on the electricity market became economically viable again.

CMOÖ GmbH also benefited from the market situation, where marketable use of gas turbines was again possible in the winter months of the 2018/2019 fiscal year, which in turn boosted earnings.

A water supply around 2% above the long-term average and 6.5% above the level of the previous year contributed significantly to the positive development of proprietary electricity procurement in the hydraulic power plants, despite a wide range of fluctuations in the course of the reporting period. The hydro coefficient of the Group's own power plants and procurement rights was 1.02.

In fiscal 2018/2019, the decision to build a replacement for the Dürnau hydropower plant was taken. The building work started in September 2019. The fish ladders at the Marchtrenk, Traun-Pucking and Partenstein power plants were put into operation on schedule by the end of 2018. In spring 2019, the work was completed with the recultivation of the site.

In addition, the preliminary projects for building a new hydropower plant in Weissenbach and a construction to replace the Traunfall power plant were started in order to expand electricity generated from renewable energies.

Ennskraftwerke Aktiengesellschaft, in which Energie AG holds a participating interest of 50%, reported electricity production slightly above the long-term average in the 2018/2019 fiscal year, with a hydro coefficient of 1.01.

Energie AG's wind power portfolio in Austria comprises investments in three wind parks with a pro rata overall performance of nearly 14.7 MW. Generation from wind power in the reporting period was 35 GWh (previous year: 31 GWh). 

In the photovoltaic (PV) business area, Erzeugung GmbH is the 100% owner of Energie AG Oberösterreich Renewable Power GmbH and the Italian companies ECO-FE S.R.L. and Salvatonica Energia S.R.L. Together with the other PV and PV contracting systems, the Energie AG Group has a total PV capacity of around 10 MW_p.

The distribution of 237 GWh of district heating from the power plant locations in Riedersbach and Timelkam was approximately at the same level as the previous year (234 GWh).

At the Kirchdorf location, the proportion of heat generated from the highly efficient combined heat and power (CHP) plant increased compared with the previous year. As deliveries from the heat recovery plant of the adjacent cement plant fell slightly, heat generation from the hot water boilers remained almost unchanged.

The Gmunden district heating supply project successfully started trial operations for gas boilers and heat extraction from the cement plant in September 2019. The capital investments in the other district heating supply networks were mainly attributable to grid consolidation measures.

In Laakirchen, CMOÖ GmbH supplies a key account customer with electricity and process heat through a CCGT power plant, as well as several adjacent companies with district heating. The volume of process heat and district heating generated in the 2018/2019 fiscal year was 802 GWh and thus 15.6% up on the previous year's figure of 694 GWh.

On the price-controlled district heating networks of Vöcklabruck, Kirchdorf and Riedersbach, heat sales prices rose by around 5.1% on 1 October 2018, keeping pace with consumer prices. On index-linked grids, prices were adjusted in line with sliding scale prices.

Total heat procurement in the Energy segment in the 2018/2019 fiscal year was 1,381 GWh (previous year 1,468 GWh). Heat procurement in the Energy segment previously also included heat procurement in the Czech Republic. From the 2018/2019 fiscal year, the Czech heat procurement of currently 191 GWh is allocated to the Czech Republic segment. The heat procurement remaining in the Energy segment increased during the reporting period.

Successful customer retention in spite of challenging conditions

In addition to the economic development and the general energy policy conditions, the customers' switching behaviour is of fundamental importance for Vertrieb GmbH. According to E-Control Austria, in the first half of 2019, the number of customers switching their electricity and gas providers reached the highest level in the industry since the electricity and gas markets were liberalised in 2001 and 2002. While the number of customers who switched electricity providers increased compared to the previous year, almost the same number of natural gas customers switched suppliers in the reporting period as in the previous year.

In addition, the temperature trend is also hugely important for Vertrieb GmbH's results. In the year under review, 2018/2019, the temperature level in Upper Austria was 4.2% above the previous year and 6.3% above the average for the past five years.

Electricity

Electricity sales volume

in GWh

At 7,898 GWh, Energie AG's consolidated electricity sales volume was 8.3% above the previous year's figure of 7,294 GWh.

Electricity sold to private, commercial and municipal customers remained stable compared with the previous year despite milder weather conditions. The industry average switching rates in this customer area were at a similarly high level as in the previous year. Contrary to the industry trend, Energie AG was able to reduce the switching rate for business and private customers in its premium customer segment for the second time in succession.

In the business and industrial customer segment, electricity sales were at a slightly higher level despite the competitive situation, which continues to be intense.

Natural gas

Natural gas sales volume

in GWh

At 6,031 GWh, the volume of natural gas sold by the Energie AG Group in the 2018/2019 fiscal year was 21.1% above the previous year's figure of 4,980 GWh.

Although the sales volumes to existing space-heat-driven business and private customers fell, this effect was more than offset by the significant increase in volumes resulting from winning the Association for Consumer Information's (VKI) auction in 2018. The main reason for the massive increase in volumes compared with the previous year lay in the key account segment, where a number of new customers was acquired thanks to professional and personal customer service.

Fortunately, the switching figures for natural gas in the private households sector were also significantly lower than in the previous year.

Heat

Heat sales volume

in GWh

The total heat sales volume in the Energy segment was 1,264 GWh in the 2018/2019 fiscal year (previous year 1,327 GWh).

The heat sales volume in the Czech Republic was previously also included in the Energy segment's figures. From the 2018/2019 fiscal year, the Czech heat sales volume of currently 175 GWh is allocated to the Czech Republic segment.

The heat sales volume in Austria that remained in the Energy segment increased despite the mild winter.

Telecommunications

Vertrieb GmbH is active on the Upper Austrian telecommunications market in the business and private customer areas with offers in the fields of internet, telephony and TV. In the scope of the broadband strategy for 2030, the existing infrastructure is increasingly being replaced by high-speed fibre-optic technology. The professional personal customer service and the broad range of services offered enabled a positive business development with numerous new acquisitions in the business customer segment despite a competitive environment which continues to be challenging.

At the end of the 2018/2019 fiscal year, more than 5,500 private customers were already actively using the products from the portfolio. There were just over 3,200 customers at this time in the previous year.

Energy services

In the energy contracting business area, heat is supplied to customers such as public institutions, the housing industry, trade and commerce via modern energy centres. In the 2018/2019 fiscal year, the sales volume was 136 GWh, slightly above the previous year's figure of 135 GWh.

In the course of the 2018/2019 fiscal year, ten new PV contracting systems with an output of 2,200 kW_p were installed on the basis of a contracting service.

Electromobility

The focus of Energie AG's electromobility activities is on charging solutions for the private and business sector. Parallel to this, the targeted installation of public charging stations including operations management and service packages with local partners such as municipalities was continued in the reporting period.

In December 2018, Energie AG launched its own charging card on the market; it can be used throughout Austria to purchase electric vehicle charging services at publicly accessible charging points. A digital charging station management system was installed for data management and customer billing.