RWE, the largest power generator in Britain, is reducing its investment in green energy due to uncertainties caused by the changes in net zero policies introduced by Donald Trump. The company, responsible for producing around 15% of the UK's power, anticipates lower profits this year and plans to decrease investments by €10bn (£8.4bn) over the next five years.
With the unpredictable shifts in US energy policies, specifically concerning low carbon energy expansion, RWE finds it challenging to forecast the impact on global clean energy development. As the world's second-largest developer of offshore wind farms, RWE has substantial renewable energy capacity in the United States, where Trump has shown opposition to offshore wind projects.
The company expects a decrease in net income for 2025, projecting figures between €1.3bn and €1.8bn, compared to €2.3bn in the previous year. RWE's CEO, Markus Krebber, emphasized the necessity for cautiousness in the face of increased uncertainties.
This decision reflects the broader landscape of geopolitical risks, supply chain difficulties, and reduced industry returns. Other energy companies such as Orsted and BP are also adjusting their investment plans in response to rising costs and challenges in the supply chain, with BP shifting its focus back to oil and gas.
RWE, which operates gas-fired power stations in the UK, is exploring options to convert them to use green hydrogen or implement carbon capture and storage technology. However, progress on these plans might face delays due to the investment cutbacks.
Despite RWE's efforts towards decarbonization, coal still constitutes a significant portion of its power generation, accounting for about 30% of its total output last year. The company aims to implement carbon capture technology in various power stations to reduce emissions, but there is a long way to go in achieving full decarbonization.
The implications of RWE's reduced investments on UK decarbonization initiatives are uncertain, but the company is also facing pressure from some investors to prioritize share buybacks over extensive spending on new projects.