From a local electricity company to an international power provider – this is a brief summary of the 120-year history of RWE. It all started back in April 1898 with the founding of the Rheinisch-Westfälisches Elektrizitätswerk – or RWE for short – which supplied the city of Essen with electricity from 1900 onwards. The new company really got going in 1902, when Hugo Stinnes acquired the majority stake. With RWE, the industrialist from Mülheim started implementing his vision of a large-scale, efficient (and thus low-cost) electricity supply.
Consistently low-cost electricity
Stinnes’ strategy was to generate electricity at power plants that were as large as possible and had excellent access to transport, providing low-cost electricity to a high-performance grid that included factories and households within the largest possible supply region, and this strategy long remained the basis for RWE’s economic success. When the Goldenbergwerk power plant started converting lignite to electricity in 1914, it was the logical next stage in the strategy. RWE quickly transferred the focus of its generation activities to low-cost Rhenish lignite, commencing lignite mining in the 1920s.
Partner to municipalities
Under Stinnes, RWE was able to quickly expand its supply region, not least because of the close cooperation between the company and the municipalities. Since 1905, cities and districts have been RWE shareholders, with many even holding the majority vote at annual general meetings for a period of decades.
Uniting coal and water
In order to enable the hydroelectricity plants in southern Germany and the Alps to help provide power to western Germany, RWE constructed the North-South Powerline from the Rhenish coalfields to Vorarlberg in Austria. From 1930, the first national 220kV high-voltage power line in Germany enabled the first efficienct interconnected grid system between the thermal power stations in the Rhineland and the hydroelectricity stations in the south.
The global economic crisis in 1929 hit the expanding company hard, with capacities only being fully utilised again during the course of the National Socialist rearmament programme in Germany in the second half of the 1930s. During the Second World War, the RWE plants were working at full capacity until air strikes in the late stages of the war paralysed individual power plants and large swathes of the grid.
This period was followed by years where power consumption could double over the course of just seven years.
Powering the economic miracle
With the reconstruction of the grids and power stations having just been completed at the end of the 1940s, RWE was faced with its next challenge: how to meet the incredible demand for electricity resulting from the new Federal Republic of Germany’s economic miracle. This period was followed by years where power consumption could double over the course of just seven years. RWE was well prepared, with three new lignite-fired power plants going into operation in 1955. These could be expanded during normal operations thanks to the new unit-based plant design. As a result, the Frimmersdorf facility became the largest thermal power plant in the world by 1964. In order to meet the power plants’ continually rising demand for coal, RWE began tapping into new seams in underground lignite mines in the Rhenish coalfields.
Hardly love at first sight
For a long time, nuclear power – much talked about in the mid-1950s but not yet tested – was not seen by RWE as a viable way to meet the huge increase in demand for electricity. However, not least due to pressure from the German government, RWE constructed Kahl, the first nuclear power plant in Germany, in 1961 and the second, Gundremmingen, in 1966, in order to test the new energy source. The continually turbulent growth in demand for electricity led to the decision in 1968 to construct a power reactor, which went into operation in 1975 in Biblis as the largest nuclear power plant in Europe.
Looking for alternatives
The energy crises of the 1970s significantly slowed the growth in demand for electricity and strengthened indigenous fuels such as lignite and coal. As a result, RWE intensified its research and testing of alternative ways to generate energy (e.g. solar thermal energy and photovoltaics) and use it (e.g. in electric cars and heat pumps).
Five billion euros for environmental protection
The 1980s brought with them a major technical and financial challenge for RWE. The drastically lowered threshold values for sulphur dioxide and nitrogen oxide implemented by government in 1982 necessitated the construction of major systems to desulphurise flue gas as well as the implementation of extensive denitrification measures. RWE invested a total of around five billion euros in this comprehensive environmental protection programme.
RWE broadens its base
In the late 1980s, electricity provider RWE turned into a conglomerate with a broad base. Thanks to a series of acquisitions, RWE entered the petroleum, disposal and construction sectors, and this required a fundamental restructuring of the Group. In 1990, Rheinisch-Westfälische Elektrizitätswerk AG integrated its energy business into the newly established company RWE Energie and now led the highly diversified conglomerate as the holding company, renamed RWE AG.
Going back to our core business
In the 1990s, the energy business at RWE was just one area of many. This all changed with the liberalisation of the German energy market and the end to regional monopolies in 1998. The Group now focussed once again on its traditional areas of business and started to sell off its other activities. The merger with VEW AG in October 2000 strengthened the core business, which was now restructured. RWE established independent companies along the entire value chain, for example, for power plants, grids, electricity trading and retail. For the first time, the Group also developed a consistent corporate design.
Keeping an eye on new energy markets
After the merger, RWE continued with the internationalisation of its energy business, which started in the 1990s (e.g. Hungary in 1995). In 2002, the Group entered the energy markets in the UK (innogy), Czech Republic (Transgas), Slovakia (VSE) and Poland (Stoen). However, RWE gradually began to relinquish its international water business in 2005 (Thames Water), which it had acquired in late 2000.
Tough market conditions led to a far-reaching decision in late 2015: RWE would be splitting up.
By the end of 2003, the Group had a newer, simpler structure. All power plants and the lignite mines previously run independently by (RWE) Rheinbraun would be merged into the “new” company RWE Power AG. The company soon launched an extensive programme to upgrade its power plants, resulting in cutting-edge, high-efficiency facilities in Neurath (lignite), Lingen (gas), Westfalen and Eemshaven (coal) from 2006 onwards. The old power plants were shut down. On the other hand, in 2009 the Group consolidated its renewables activities within RWE innogy and engaged in a massive expansion programme. In the same year, RWE became a major player on the Dutch energy market after the takeover of Essent BV.
Conditions get tougher
In light of the reactor accident in Fukushima in 2011, the German government decided to phase out nuclear energy. This, along with the dramatic drop in electricity wholesale prices as a result of the massive expansion of renewables, brought financial difficulties for RWE. Owing to these circumstances, in 2013 the Group decided to consolidate its conventional power generation business in Germany, the Netherlands and the UK into RWE Generation SE, extensively cutting back its power plant capacity. With the sale of the oil and gas extraction business (RWE Dea) in 2014, the Group created some extra financial leeway.
Splitting up to secure the future
The continued difficulties on the market finally led to a far-reaching decision in late 2015. RWE was split up, with its renewables, retail and grid businesses consolidated into the newly founded innogy SE, which went public in autumn 2016. Even though RWE is the majority shareholder, innogy SE functions as an independent company. This means that the RWE Group is fully focussed on power generation, including lignite mining and energy trading. Its primary focus is now on security of supply, and this is enshrined in its new slogan “Powering. Reliable. Future.”
Back to our roots
RWE will soon be returning to its roots in a geographical sense, too. The RWE Campus is being built close to its first power plant site on Altenessener Strasse. From 2020, the campus will consolidate all of the administrative functions of the RWE companies in Essen at a single location – right where it all started 120 years ago.