EnBW has just received the largest capital injection in Europe so far this year: 3.1 billion euros. The energy group structured the transaction as a rights issue, offering shares to all existing shareholders. The participation rate reached 98.9%. In addition to the two main shareholders, all three municipal associations participated fully or partially, as did the small investors.

EnBW is owned roughly 47% each by the state of Baden-Württemberg and the municipal utility association Zweckverband Oberschwäbische Elektrizitätswerke (OEW).

„The firm subscription commitments from our two major shareholders were essential and brought significant advantages,“ said Deputy CEO and CFO Thomas Kusterer in an interview with Börsen-Zeitung. „Before the subscription period began, the state and OEW gave binding commitments to fully exercise their rights and each invest 1.5 billion euros in the capital increase.“

According to Kusterer, the binding commitments from the two major shareholders significantly reduced both market and placement risk, providing strong transactional security. As a result, transaction costs were cut sharply – down to just 0.1% of the proceeds, or around 3 million euros – making it far more cost–effective than a prospectus–based transaction.

„It was the first transaction in Germany under the new EU Listing Act, and instead of a several hundred page securities prospectus, we only had to submit an eleven page „prospectus–substituting document“ to the financial regulator BaFin,“ Kusterer explains, highlighting the benefits of the streamlined process. „That also makes things easier for investors. The so–called „eleven pager“ is much more concise and transparent, as it presents key information and risk factors in a compact format.“

The firm subscription commitments demonstrated the strong confidence of the main shareholders in EnBW’s long–term corporate strategy, and its positioning as the only major integrated energy company in Germany, covering the entire value chain, from generation and trading to grid operations and the sale of electricity, gas, and heat. The transaction’s novel documentation format was supported by advisors DZ Bank and Citigroup, with law firms CMS advising EnBW, and Willkie Farr & Gallagher representing the banks.

EnBW plans to invest up to 50 billion euros in gross capital expenditures between 2024 and 2030 to help transform the energy system. Nearly 26 billion euros is slated to be deployed between 2025 and 2027 – primarily for expanding transmission and distribution networks, building new wind and solar farms, developing hydrogen–ready gas power plants, establishing the planned core hydrogen network, and further scaling up electric mobility.

„Around 60% will go toward expanding transmission and distribution grids, and about 30% will be invested in wind and solar parks as well as hydrogen–capable power plants,“ Kusterer explains. „We will continue to raise around 2.5 to 3 billion euros annually in long–term financing for investments and for refinancing existing liabilities. For this, we can draw on our broadly diversified financing sources across various markets and currencies.“ Another aim of the capital increase, he adds, is to maintain EnBW’s strong credit rating, which compares very favourably with industry peers.

EnBW is already building three hydrogen-ready gas power plants in the Münster district of Stuttgart, Altbach/Deizisau, and Heilbronn, the first of which recently went into operation. „The market urgently needs additional controllable power capacity that can step in when renewables, due to a lack of sun or wind, aren’t generating enough electricity,“ says Kusterer. „The new Power Plant Security Act is intended to create a suitable incentive framework. The new federal government plans to tender generation capacity through an auction,“ he adds. „Federal Minister for Economic Affairs Katherina Reiche recently announced that new gas power plants with a total capacity of 20 gigawatts are to be built by 2030.“

In addition, a capacity market is planned, which would compensate providers for making such capacity available, similar to systems already in place in other European countries. Kusterer emphasizes that for successful implementation, a stable and reliable legal framework needs to be put in place quickly and pragmatically.

EnBW is also working on securing the hydrogen volumes it will need in the future and is focusing on diversifying its supplier relationships. „We expect that around 80% of the hydrogen required in the future will need to be imported,“ says Kusterer. Transport will often take place in the form of ammonia, with supply sources including the United States, the Middle East, and Norway. „In addition, we’re investing one billion euros in the development of the core hydrogen network.“

According to a study from think tank Aurora, commissioned by EnBW, the total investment cost of the electricity system through 2045 is projected to reach 3.4 trillion euros. That’s an enormous sum – one that could lead to competitive disadvantages for Germany as a business location, and reduce public acceptance of the energy transition. However, the study suggests that the total could be significantly reduced through a variety of measures. „Up to 700 billion euros, or 20%, could be saved,“ says CFO Thomas Kusterer. „What’s needed is a combination of efficiency improvements and a demand–oriented expansion of generation capacity and grid infrastructure.“