“It’s time to act,” MVV board member Dr. Hansjörg Roll stressed at this year’s annual general meeting of Mannheim-based energy company MVV Energie AG. Due to the coronavirus pandemic, this was again held on a virtual-only basis. Dr. Roll began his presentation by highlighting the tragedy of the war in Ukraine. It also showed the impact of changes in the geopolitical order on the provision of crucial services and therefore on the reliability of the supply of electricity, heat and water. It was therefore all the more important to focus on the rapid and massive expansion of renewable energies to make Germany independent of fossil fuels, he added and underlined: “The climate reversal and the respect of the trajectory 1.5 degrees should nevertheless remain the top priority of energy policy, even beyond the current geopolitical crisis. The Paris Climate Agreement, the European Green Deal and Germany’s climate goals should also be the compass guiding our trajectory in the future.”
With the coalition agreement and the immediate climate action program presented by the Federal Ministry for Economic Affairs and Climate Action, Germany was already heading in the right direction. However, “not all of the steps necessary to structure the transition from fossil to renewable energy generation have been taken,” Dr Roll noted. He elaborated further on MVV’s appeals to lawmakers: “To make optimal use of wind energy, the energy sector needs at least two percent of the country’s surface to be dedicated to onshore wind power, and this on a legally secure basis. need significantly accelerated planning and approval processes.” For photovoltaics, more stringent requirements were needed nationwide for new and existing buildings. “The heat sector is the crucial lever for making the switch climate,” added Dr Roll. Here, the country urgently needed a subsidy program to decarbonise district heating. In Mannheim and the region, MVV would make its district heating 100% green before the end of this decade Dr Roll: ‘We are deliberately skipping the middle step of using natural gas, and that’s regardless of the current debate.’ On coal exit, he also stressed the need to compensate companies affected by the depreciation of new coal-fired power plants as a result of political decisions. This was necessary to maintain confidence in the political reliability of investments. establishments in Germany as a place to do business.
Strategic focus on climate protection
Thanks to its strategic orientation on climate protection, MVV is always in line with the 1.5 degree trajectory and in compliance with the Paris Climate Agreement. This has also been certified by the international Science Based Targets (SBTi) initiative following extensive scientific review. Dr Roll: “This confirmation of our climate protection targets recognizes our longstanding commitment to sustainability. It also motivates us to move forward at a steady pace on this path.”
With its long-term and large-scale investment program, MVV is gradually and consistently implementing the energy turnaround. The energy company invested 306 million euros in the 2021 financial year alone, once again underlining its pioneering role in the energy turnaround. Examples from the past year include the new energy-from-waste plant in the Scottish city of Dundee, new sewage sludge phosphorus recycling plants in Offenbach and Mannheim, innovative biomass plants and the construction of new wind turbines and photovoltaic systems by MVV subsidiaries Juwi and Windwärts.
Dr Roll saw these projects as proof that MVV is able to “implement its climate-focused strategy in a robust and well-coordinated way”. This was also demonstrated by the fact that MVV achieved one of its sustainability goals ahead of schedule. Thanks to its investment and efficiency initiatives, at the end of the 2021 financial year, MVV succeeded in reducing CO emissions2 emissions in the energy system of one million tons per year – five years before the original deadline.
Financial year 2021: climate protection and commercial success are not contradictory
The fact that our journey towards climate neutrality is also paying off in terms of our business performance is evident from our key financial statements for fiscal year 2021. Here, MVV generated record sales of €4.1 million. With an adjusted EBIT of 278 million euros, it also posted the best results in its history.
Given this significant growth in results during the 2021 financial year, the Management Board and the Management Board have proposed a further increase in the dividend, in this case to 1.05 euros per share. This represents a further increase of 0.10 euro per share. Dr Roll thus confirmed MVV’s guiding principle of “enabling shareholders to participate in profits based on the performance of the business”. Due to the strong increase in the share price, the dividend yield based on the year-end closing price on September 30, 2021 fell slightly to 3.3%. Compared to the company’s competitors, this nevertheless represents “a very good return, especially when you also consider the growth in the share price”, added Dr Roll.
2022 financial year: new potential for profitable growth despite a difficult environment
MVV also maintained the strong performance of the previous year in the first quarter of the current fiscal year 2022. At around 1.3 billion euros, its adjusted sales were 31% higher than a year earlier. This is primarily due to rising electricity volumes and rising wholesale electricity and gas prices, Dr Roll explained.
Thanks to its long-term supply strategy, MVV had been able to mitigate most of the effects of rising wholesale market prices. This primarily benefited existing MVV customers. To cover the energy needs of new customers, the energy company had to procure additional electricity and gas at short notice. These customers had therefore been affected by the volatility of the energy markets and the rise in wholesale prices. Dr. Roll therefore stated very clearly: “Our good first quarter results are not the result of price increases for customers.”
The MVV director expects “energy and fuel markets to remain volatile throughout fiscal 2022 and beyond, especially given the current geopolitical situation. It is not yet possible to predict the effects of the war in Ukraine on the global economy, the reliability of supply, supply chains and the movement of financial funds.” This factor was exacerbated by the coronavirus pandemic, the effects of which could only be predicted to a limited extent. Despite these many challenges in its operating environment, given its strong first quarter results, MVV is basically maintaining its full-year earnings guidance. This is nevertheless subject to changes in the external factors mentioned above. Excluding these risks, from an operational point of view, MVV still expects its adjusted EBIT to show a moderate increase compared to the already high figure of the previous year. Dr. Roll: “In this way, we explicitly affirm that we are on the right track with our strategic focus on climate protection and our broad portfolio. It will also allow us to continue to generate profitable growth in the future.
Accelerating the pace of climate protection with the Mannheim model
With the aim of becoming one of the first climate-positive energy companies in Germany, MVV is further accelerating the pace of its climate protection. In this way, MVV was not just supporting the direction taken by the federal government, but was several steps ahead, Dr. Roll noted. By 2030, MVV will even reduce its CO2 80% emissions instead of the 60% reduction required by law. By then, the company will also have completely converted its district heating production in Mannheim and the Rhine-Neckar metropolitan region to climate-friendly energy. From 2040, MVV’s operations as a group, including its supply chains and products, will be climate neutral. After that, the energy company will even become climate positive, i.e. it will permanently phase out CO2 of the atmosphere.
To achieve this, MVV relies on its Mannheim model, which revolves around three main axes: heat rectification, electricity rectification and “green” customer solutions. With this model, MVV was making a “specific and measurable contribution to achieving the 1.5 degree target set in the Paris Climate Agreement”, explained Dr Roll. He concluded by emphasizing that MVV will continue to set ambitious ambitions.