2011 Annual Report - OTCIQ.com

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48 Technology and Innovation Distribution, Smart Grids The sustainable city project in the Hyllie district of Malmö received funding from the Swedish Energy Agency, which called it a flagship project for Northern Europe. Our project partners are the City of Malmö and real-estate developers. At our power distributors in Germany, we are conducting five smart-grid projects focusing on the integration of renewables into intermediate- and low-voltage grids. Our Group-wide smartmetering program in the United Kingdom is paving the way for full-scale rollouts in that country and in Germany. The rollout is completed in Sweden and under way in Spain. Hydro A small-scale hydro project on the Isar River in southeast Germany that will use a very-low-head turbine is at an advanced stage and can be completed in the next few years. At our existing run-of-river plants on the Main River, we developed new procedures for increasing operational flexibility so that these plants can respond to the increasing load fluctuations in the power system. We also studied innovative potential sites (a former chalk mine in northern Germany and caverns in the Harz Mountains in central Germany) for new pumped-storage hydro capacity. CCGT We conducted research projects whose primary aim is to increase plant flexibility and reduce emissions at partial loads. CCS We successfully tested small-scale pilot carbon-capture plants at power stations in Staudinger (Germany) and Karlshamn (Sweden) and started building a large-scale carbon-capture plant in Wilhelmshaven, Germany. As part of the COORETEC program in Germany, of which E.ON is a partner, successful test firing and capture were achieved at a second-generation carbonate looping plant. Nuclear Our research projects focused on optimizing E.ON’s existing nuclear fleet in several areas (operational support, materials, fuel, safety, and decommissioning). We also ensured that we observe new developments to identify and evaluate new nuclear trends (cogeneration, small modular reactors) so that we can evaluate them. Steam To ensure the stable operation of our existing and new-build plants, we conducted several projects to enhance their operational flexibility to respond to the increased, fluctuating feed-in from renewables. We evaluated new components to help minimize the carbon emissions of our existing plants and will retrofit these components in 2012. We also identified pretreatment technologies that could give us more opportunities to cofire biomass. Gas We launched a project to increase the efficiency of biogas production by testing innovative membrane technologies for carbon separation at our biogas plant in Kirchlengern, Germany, through 2013. We also continued to press for greater harmonization of gas-quality standards in Europe, with the aim of maximizing the injection of hydrogen and other renewable fuels into the gas pipeline system and of helping to remove barriers to the creation of a single European gas market. University Support As one of the world’s largest investor-owned power and gas companies, we feel it is our responsibility to actively promote energy research. Our contacts with universities offer students an opportunity to get to know our company and the focal points of our research. E.ON supports a total of more than 20 universities in Germany, the United Kingdom, Sweden, Denmark, the Netherlands, France, Spain, Greece, the Czech Republic, the United States, and Australia. Two main activities are the: • E.ON Energy Research Center (“ERC”) • E.ON International Research Initiative Our flagship project is the ERC, a public-private partnership with renowned RWTH Aachen University. A key research area is how to efficiently integrate a large percentage of fluctuating renewable energy in the electricity system. We are funding the ERC with €40 million over a period of ten years.
The ERC was founded in 2006. Its mission is to foster major technological and conceptual breakthroughs that promote an efficient, sustainable, and climate-friendly energy supply. Its approach is holistic: instead of looking for solutions to isolated technical problems, it designs comprehensive, interdisciplinary solutions that address all aspects of complex energy issues. It has five institutes: Automation of Complex Power Systems, Energy-Efficient Buildings and Indoor Climate, Future Energy Consumer Needs and Behavior, Applied Geophysics and Geothermal Energy, and Power Generation and Storage Systems. The ERC completed its ramp-up phase in 2011, and now more than 130 employees are carrying out research in renewable energy and energy efficiency. In September 2011, the E.ON International Research Initiative published its fourth call for outstanding projects from universities and research institutes from around the world. The topic, for which awards will be given in 2012, is “Smart Home: A New Customer Relationship with Energy.” The aim is to better understand customers’ needs and behavior and the role customers will play in a future energy system. The E.ON-funded award has been conferred since 2007. E.ON has so far invested €18 million in international research projects in order to find solutions to the challenges of tomorrow’s energy system. The awards for the previous three research topics—energy storage, nanotechnology applications in the CEO Letter E.ON Stock Combined Group Management Report Consolidated Financial Statements Corporate Governance Report Supervisory Board and Board of Management Tables and Explanations energy business, and heat storage for concentrated solar power—have already delivered results that will help make the world of energy cleaner and better. Facts about T&I, Including Research and Development (“R&D”) In 2011, we created a new T&I department at Group Management. This underscores the importance we place on innovative energy technology. We increased our R&D activities in 2011, despite our difficult business environment. Our R&D expenditures on technology totaled about €81 million in 2011 (2010: €61 million). Intangible R&D assets relating to software development totaled €42 million (2010: €27 million). In 2011, 202 employees were directly involved in R&D projects at E.ON. In addition to our investments to optimize and refine technologies, we also actively promote basic research. In 2011, we provided €8 million of support to fund and sponsor energy research at universities and institutes (2010: €6 million). Our total T&I expenditures (which include support for university research, technology R&D, demonstration projects) and software development amounted to €149 million (2010: €120 million). Technology and Innovation, Software Technology and Innovation Software Total € in millions R&D 2011 2010 2011 2010 2011 2010 Technology 811 61 – – 811 Intangible R&D assets 61 Software Other – – 42 27 42 27 Demonstration projects 18 26 – – 18 26 University support 8 6 – – 8 6 Total 107 93 42 27 149 120 1 R&D expenses pursuant to IAS 38 (€59 million; see Note 14 to the Consolidated Financial Statements on page 111) plus other projects that are part of our R&D effort. 49
Page 1 and 2: 2011 Annual Report
Page 3 and 4: Contents 2 CEO Letter 4 E.ON Stock
Page 5 and 6: Europe’s energy markets are conso
Page 7 and 8: Dividend At the 2012 Annual Shareho
Page 9 and 10: Global Units We manage all our oper
Page 11 and 12: How will we achieve all this? The f
Page 13 and 14: Top performance requires efficient
Page 15 and 16: The Energy Roadmap 2050 adopts a sc
Page 17 and 18: Macroeconomic Environment In 2011,
Page 19 and 20: Energy Prices Four main factors dro
Page 21 and 22: Attributable Generating Capacity Th
Page 23 and 24: The Russia unit generated about 94
Page 25 and 26: Gas Sales On a consolidated basis,
Page 27 and 28: Sales Our sales rose by 22 percent
Page 29 and 30: Sales at the UK regional unit decli
Page 31 and 32: E.ON generates a significant portio
Page 33 and 34: Distribution Networks’ EBITDA dec
Page 35 and 36: and coal-fired power stations. Of t
Page 37 and 38: Analyzing Value Creation by Means o
Page 39 and 40: Cash Flow and Financial Position E.
Page 41 and 42: In addition to our DIP, we have a
Page 43 and 44: E.ON AG’s Earnings, Financial, an
Page 45 and 46: Employees HR Strategy The knowledge
Page 47 and 48: Workforce Figures At year-end 2011,
Page 49: Technology and Innovation In 2011,
Page 53 and 54: Risk Management and Insurance E.ON
Page 55 and 56: Strategic Risks Our business strate
Page 57 and 58: E.ON is building a hard-coal-fired
Page 59 and 60: waste.” The draft legislation men
Page 61 and 62: In 2012, Sweden will introduce a ne
Page 63 and 64: Due to lower commodity prices and u
Page 65 and 66: We anticipate Renewables’ earning
Page 67 and 68: Opportunities We conduct a bottom-u
Page 69 and 70: Audit Opinion According to § 322 A
Page 71 and 72: CEO Letter E.ON Stock Combined Grou
Page 75 and 76: Additional information on the State
Page 79 and 80: Business Combinations Business comb
Page 81 and 82: Newly created goodwill is allocated
Page 83 and 84: Subsequent costs arising, for examp
Page 85 and 86: Instruments commonly used are forei
Page 87 and 88: future exercise price. This amount
Page 89 and 90: Contingent liabilities are possible
Page 91 and 92: (2) New Standards and Interpretatio
Page 93 and 94: and joint operations. The provision
Page 95 and 96: The amended standard also contains
Page 97 and 98: Russian Federation. The proceeds fr
Page 99 and 100: The gains on the disposal of invest
Page 101 and 102:
The decrease in tax expense by €3
Page 103 and 104:
Of the deferred taxes reported, a t
Page 105 and 106:
Stock Appreciation Rights of E.ON A
Page 107 and 108:
The fees for financial statement au
Page 109 and 110:
CEO Letter E.ON Stock Combined Grou
Page 111 and 112:
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Of this total, an amount of €160
Page 115 and 116:
(15) Companies Accounted for under
Page 117 and 118:
The individual impaired receivables
Page 119 and 120:
(20) Additional Paid-in Capital As
Page 121 and 122:
Description of the Benefit Obligati
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Description of Plan Assets Defined
Page 125 and 126:
Taking into account periodic additi
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(25) Miscellaneous Provisions The f
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Advance payments made to other wast
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At year-end 2011, the following EIF
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Construction grants of €2,857 mil
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In Sweden, owners of nuclear facili
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Competition in the gas market and i
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Pursuant to the information availab
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The fair value of shareholdings in
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The following two tables illustrate
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Risk Management Principles The pres
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A sensitivity analysis was performe
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Virtually all of the investments in
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Under IAS 24, compensation paid to
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Net book gains in 2011 decreased by
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(34) Compensation of Supervisory Bo
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Notes (36) List of Shareholdings Pu
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In addition to the Company’s peri
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The Supervisory Board has establish
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and the Consolidated Financial Stat
Page 183 and 184:
Compensation of the Members of the
Page 185 and 186:
The Supervisory Board, at its discr
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the E.ON Group’s ROCE and prior-y
Page 189 and 190:
Compensation of the Members of the
Page 191 and 192:
The remaining other compensation of
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In addition, the Board of Managemen
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We examined the Board of Management
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Klaus Dieter Raschke Chairman of th
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At the Board of Management’s disc
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Further information about financial
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Assessment After companies have doc
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Glossary of Financial Terms Actuari
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Prepayments and accrued income Line
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Financial Calendar May 3, 2012 2012
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