MVV: Climate neutrality is achievable

Climate protection and growth are no contradiction for the Mannheim-based energy company MVV. “As two sides of the same coin, they reinforce each other within our strategy,” stressed MVV’s CEO, Dr. Georg Müller, at the company’s Annual General Meeting on Friday.

Due to the current coronavirus situation, this year’s AGM was held solely on a virtual basis. By consistently implementing its investment programme focused on sustainability and the climate-neutral energy system of the future, in its past 2020 financial year (1 October 2019 – 30 September 2020) the group of companies not only took a leap forward on its way to reaching its own climate targets and expanding renewable energies, but also maintained its positive earnings performance.

Despite a moderate reduction in sales to Euro 3.5 billion due to the coronavirus, MVV managed to increase its operating earnings by Euro 8 million to Euro 233 million. Summarises Dr. Müller: “All in all these are good results and, given the current backdrop, impressive results for a special year”. According to the CEO, the company had robust business models that complemented and balanced each other within the overall portfolio and was therefore well positioned in terms of its structures: “If we factor out the impact of coronavirus, we even generated year-on-year earnings growth in all our segments.”

MVV intends to maintain this course in the current 2021 financial year as well and at least to match the previous year’s level of sales and earnings. The company has therefore confirmed the outlook issued in December. It underlined this expectation which, depending on coronavirus restrictions, also includes the possibility of more positive developments, by posting a strong start to the current financial year. Based on almost unchanged sales, the company increased its operating earnings by Euro 17 million to Euro 98 million in the first quarter.

First increase in dividend for twelve years
According to its CEO, MVV’s positive business performance in recent years meant that the company had reached a sustainable level of earnings in which shareholders should also participate. The Supervisory and Executive Boards therefore proposed raising the dividend by 5 cents to 95 cents per share for approval by the AGM. With this, the first increase in twelve years, the share would offer a dividend yield of 3.7 percent based on the closing price at the end of the financial year on 30 September 2020. “That is an attractive dividend for shareholders with a sustainable and long-term focus”, stressed Dr. Müller.

Heading for climate neutrality
Alongside economic efficiency and supply reliability, climate protection is an indispensable component of the strategy at the Mannheim-based group of companies. Dr. Müller: “That is what all our business activities have in common.” The company is committed to the requirements of the Paris Climate Accord and bases its approach here on the 1.5 degree target, which is intended to limit the global warming caused by climate change. “As we head for climate neutrality, we reached some major milestones once again in the past financial year,” explained the CEO. “This means we are ahead of our target path in many areas”.

MVV intends to reduce its own direct energy industry CO₂ emissions to well below two million tonnes a year by 2030. In the past financial year, these emissions fell by nearly nine percent to their current total of around 2.4 million tonnes. This means that, over the past four years, MVV has reduced its CO₂ emissions by a total of 35 percent. At the same time, the group of companies has expanded its proprietary renewable energies generation capacity by a further eight percent to its current total of 512 megawatts. In the past year, renewables-based electricity generation rose by eleven percent to 1.2 billion kilowatt hours.

On the way to Green Heat
In parallel to the electricity sector, in its climate protection strategy MVV has a particular focus on heating energy. “District heating is absolutely crucial for decarbonising heating energy”, underlined Dr. Müller. “Just as Mannheim was one of the pioneers of what was then the new district heating supply in the 1950s, in the 2020s we will prove that again in terms of making the supply greener.” As it moves towards Green Heat, the company took a major step forward last spring by connecting its plant in the north of Mannheim to the central district heating grid. This way, it can already cover around 30 percent of its annual heating energy requirements from this climate-neutral source.

“With our Green Heat we are therefore not just discussing ideas, and not talking about tomorrow or the day after. We have already completed nearly a third of the journey and will reach our goal in good time ahead of the coal exit.” Here, the company had sufficient technological options available in the fields of biomass, river heat, geo-thermal energy, solar-thermal energy and waste heat.

This was also confirmed by the “Energy Framework Study Mannheim”, which was commissioned by MVV from the internationally renowned Wuppertal Institute and presented at the beginning of March. “Climate neutrality is achievable,” added Dr. Müller. The publication of this study meant that a scientific basis was now available for the necessary dialogue and consensus within society.

Call for further improvements in political framework
Local and regional climate protection efforts such as those outlined above will have to be promoted and facilitated in future by a suitable political framework on national and international levels. Here, Dr. Müller referred to the amendment to the German Renewable Energies Act (EEG) which took effect at the beginning of the year as “the right step, but one that will have to be followed up with further improvements”.

The same applied to the further expansion of renewable energies for electricity generation, and in particular to measures to boost onshore wind power and photovoltaics, as well as to the need for additional momentum in the heating sector. With the new “Federal Subsidy Programme for Efficient Heating Energy Grids” (BEW), the Federal Government had developed a suitable subsidy instrument that, without being restricted to any specific technologies, would now have to be provided with the necessary funding and adopted at the earliest possible opportunity.

The Mannheim energy company also called for the regulatory practices applicable to energy grids to be adapted to the realities of the financial market, particularly in terms of regional and municipal distribution grids. According to MVV’s CEO, this would determine whether the energy and heating turnaround actually reached consumers: “The grids are the backbone of the energy turnaround, but sadly also its Achilles’ heel.” Given the billions of investment needed, there should be no further reduction in the equity returns for distribution grids.

Further investments on the way towards climate neutrality
The company’s ambitious investment programme forms the foundation for its future growth in the years ahead. Here, MVV is consistently pursuing its own sustainability and climate targets which also allow the Group’s performance to be transparently measured. Unless impeded by developments in the coronavirus pandemic, MVV intends to further increase its investment volume in the current financial year over and above the Euro 322 million invested in the previous year, while upholding the same investment focuses. Dr. Müller: “We see climate protection, and thus reducing and avoiding CO₂ emissions, not as a business risk, but rather as an opportunity and motivation to develop new business models and to generate future growth at our company.”