Outlook

The economic and energy policy environment will continue to be dominated by the COVID-19 pandemic in the 2020/2021 fiscal year. The corresponding strategic and operational measures taken by Energie AG during the reporting period, such as the introduction of a task force and proactive risk management by the Risk Committee, will therefore be continued in the 2020/2021 fiscal year, so that critical infrastructure operations can be ensured.

In terms of the statutory environment, a political agreement on the introduction of a deposit on single-use plastic bottles and a mandatory share of reusable bottles in the retail trade, resulting from the implementation of the EU Circular Economy Action Plan and the directive on single-use plastic products, is expected by the end of the year for the Austrian waste management sector. Parliament is also expected to deal with the Renewable Energies Expansion Act in the first quarter of the new 2020/2021 fiscal year. Draft legislation on “green gas” in the building sector and on the national implementation of the EU Energy Efficiency Directive are also expected during this period.

The development of the energy markets in the 2020/2021 fiscal year will strongly depend on expectations of global economic development, which in turn will depend on the further course of the COVID-19 pandemic. The outcome of the Brexit negotiations will also be crucial for Europe, as will the continued implementation of climate targets at EU level, as this will have an impact on CO₂ prices. A situation of oversupply in oil, coal and gas is not expected to be particularly supportive for electricity prices. Bottlenecks on the supply side should not have a lasting effect. Against the backdrop of expected high volatility and major uncertainties, a sideways or downward trend for the 2020/2021 fiscal year seems more likely than a significant upward trend.

Energie AG's electricity production capacities from Group-owned thermal power plants continue to be highly significant for providing grid reserve management. The CCGT power plants of Energie AG will again be available to transmission system operators for national grid support in the 2020/2021 fiscal year.

On the sales side, the impact of the COVID-19 crisis means that the upcoming fiscal year will be characterised by a high degree of uncertainty, with further declines in sales revenues, particularly in the business and industrial customer segment, and higher bad debt losses in all areas. The decisive factor for Vertrieb GmbH will be the extent to which the general political conditions will enable it to position itself more strongly as an energy service provider. Vertrieb GmbH intends to again keep electricity and natural gas retail prices for private and business customers in the premium sector (with the exception of float prices) constant in the next fiscal year.

The statutory environment for the Grid Segment in the current electricity regulatory period has been defined for five years and continues to be viewed as stable. In terms of the general economic environment for natural gas, the decision for the year 2020 is still outstanding; having said this, it can be assumed that the parameters based on the decisions taken for the years 2018 and 2019 will be applied throughout the third regulatory period. The business activities in fiscal year 2020/2021 in the Grid Segment will again be characterised by the advancement of major projects, particularly those associated with the “Electricity Grid Master Plan Upper Austria 2028” (Stromnetz-Masterplan Oberösterreich 2028), as well as the consistent continuation of priority programmes in the grids for natural gas and electricity. Another material focus will be the implementation of the requirements of the Renewable Energies Expansion Act, which is currently under review.

Following completion of the smart meter roll-out and complete digitisation using AMIS technology, continuous ongoing development in the field of smart metering will also be essential in the future. This primarily concerns support for point-to-point and transformer meters to enable customers in very sparsely populated areas to participate in new market models – such as joint generation, electric mobility or energy communities – at a reasonable cost.

Fibre-optic technology is the most reliable method currently available for the future provision of high bandwidth with the necessary quality of service. The future subsidy programmes are currently being prepared at federal level. Telekom GmbH intends to also apply for future calls from these funding programmes. In addition to fibreglass as a landline technology, LTE and/or 5G technology will become firmly established in the mobile sector. For this reason, the intent is to leverage business opportunities by connecting mobile transmitter sites to the company's own fibre-optic network.

The focus in the Czech Republic Segment in the 2020/2021 fiscal year is on further intensifying cooperation between water and heating companies and on leveraging synergies. A further focus will be the integration of VAK Zapy s.r.o., which was acquired on 6 December 2019. In addition, several major concession bidding procedures will take place in the regions currently supported; the Energie AG Bohemia Group and one of its subsidiaries will participate in these in the 2020/2021 fiscal year. The extent to which the COVID-19 pandemic will affect the course of these tenders cannot yet be assessed. This also applies to the short- and medium-term effects on current business. The effects on heating and drinking water sales and waste water generation were not yet significantly tangible in the year under review and cannot yet be reliably assessed with a view to the further development of the pandemic.

In the Waste Management Segment, too, the effects of the COVID-19 pandemic on the further development of prices for recycling materials cannot be reliably assessed at present. During the 2020/2021 fiscal year, activities will focus on reorganising cooperation between Energie AG and eww ag in Wels. In order to be able to supply the town of Wels and the neighbouring areas with district heating in an even better and more efficient way in future, district heating will be extracted from Wels' waste incineration plant to an even greater extent than to date, and district heating supply volumes will be significantly increased. The project will entail appropriate investments in the upcoming fiscal years.

With a view to the currently ongoing COVID-19 pandemic, Energie AG's focus in the 2020/2021 fiscal year will again continue to be on reliable performance of system-critical tasks, especially guaranteeing security of supply for customers, while at the same time ensuring the highest possible levels of health protection for the workforce. The previous strategic goals in the areas of customer orientation, environmental protection, decarbonisation, digitalisation and cost management will remain unchanged.

The impacts of continuing COVID-19 restrictions are expected to persist, for example due to a reduction in energy consumption by customers or price developments on international markets. Recognising the current difficulty in drawing up reliable results forecasts, results for the 2020/2021 fiscal year are expected to develop in a satisfactory manner, although at a lower level compared with the reporting period.

Linz, 2 December 2020

The Management Board of Energie AG Oberösterreich