First Read: RWE "Focus on trading and German CCGTs auctions." (Buy) Serwinowska

Research evidence excerpt

First Read: RWE "Focus on trading and German CCGTs auctions." (Buy) Serwinowska

e German 12/26E 2.46 2.68

risk-free rate has increased by c70bps since Nov 2023). The CFO flagged that 12/27E 2.96 3.19

considering the range, projects in Germany should be at the lower end of the range 12/28E 3.70 3.43

(given the country risk) and the CFO also expects a higher share of regulated earnings

(which again implies the lower end of the range). Wanda Serwinowska, CFA

Analyst

wanda.serwinowska@ubs.com

Comments on the trading environment +44-20-7568 3980

Commenting on the weak performance of the trading business, the CFO flagged that

Christabel Kelly

the source of volatility is key. The CFO stated that RWE traders "do not like" the current

volatility. The CFO also flagged that compared to the 2022-23 energy crisis, the current christabel.kelly@ubs.com

energy crisis is global (while the previous one was Europe-focused) and there has been a +44-20-7568 2358

much smaller impact on power prices; see our analysis European Utilities "Energy crisis

Mark Freshney

v2 - is it different from 2022-23?". This is in line with comments from Verbund and Analyst

Engie. Verbund's CFO sees the current trading environment as "very difficult" as it is not mark.freshney@ubs.com

driven by the data (supply and demand), but by the daily newsflow and market +44-20-7568 3989

assumptions regarding the Middle East conflict; see our note. During the Q1 results,

Engie highlighted more challenging conditions in electricity markets in both Europe and

the US. This resulted in limited opportunities to capture value from volatility. Comparing

the current energy crisis to the one in 2022-23, Engie stated that the current crisis is an

oil crisis worldwide and the gas impact is much lower. From a pure trading business