E.ON issues €1.5bn green bond package for energy transition

Image: E.ON

The multinational electric utility announced late on Tuesday (22 August) that it had successfully issued the two bond tranches. The first will mature in March 2029 and the second will mature in August 2033.

E.ON has not disclosed how oversubscribed the bonds were, but chief financial officer Marc Spieker said there was “high demand from investors”.

Proceeds from the bonds will be used to support E.ON’s energy transition plans for 2024. The company’s Green Bond Framework outlines projects eligible for support from the bond proceeds, including wind and solar power generation; low-carbon hydrogen production, storage and distribution; district heating and cooling systems; onsite clean energy solutions for external organisations, and EV charging infrastructure.

Also included in the Framework are projects needed to improve electricity distribution infrastructure to support the addition of extra low-carbon generation capacity to the grid.

Notably, the Framework additionally permits E.ON to invest in various forms of bioenergy including biomass. Biomass has proven to be controversial in recent years. A common form of biomass, the use of wood pellets, has raised concerns around forest impacts and human health in the supply chain – as well as questions about whether the combustion is actually low-carbon.

E.ON states that its Green Bond Framework is aligned with the EU’s Green Taxonomy, which determines which kind of investments are classed as ‘green’ or ‘transition-related’. The Taxonomy is one of the first of its kind and the UK is due to follow suit with its own version within a year.

Speiker said: “We want to invest a total of €33bn in the energy transition by 2027. Green bonds are an important financing instrument to do this, and we will continue to use them for our financing in the future.”

Linklaters confirmed last month that investors pledged $351bn to green bonds issued in the first six months of 2023 – a record high for the first half of any year. 2023 could, therefore, well be a record year for issuance, with Europe likely to remain home to the world’s largest green bond market.