Annual Report 2017 Enovos Luxembourg S.A.

24 25 Part I Our Mission 6 Part II Our Achievements 14 Part III Annual Accounts 22 Annual Report 2017 Enovos Luxembourg Enovos has onboarded the energy transition trend towards a more digitized and service-oriented business environment, supported and documented by the new European Clean Energy Package legislation as well as by the “Rifkin” initiative launched by the Luxembourg Government. Aware of these material challenges, Enovos entered 2017 in deep strategic analysis that will re-orient its core activities in the mid- to long-term. HIGHLIGHTS Commodity Sales In 2017, natural gas sales increased to 25.8 TWh compared to 22.5 TWh in 2016. These volumes include the quantities sold by the subsidiaries of Enovos Luxembourg S.A. Sales in the Luxembourg home market remained high and steady in all customer segments. The gas sales increase in Germany, mainly contributed to higher sales volumes in 2017. Electricity sales have decreased overall by 1.8 TWh to 11.0 TWh. These volumes include the quantities sold by the subsidiaries of Enovos Luxembourg S.A. Power sales in Luxembourg were in line with the previous year and new products could be offered to our residential and professional customers. In Germany, the market environment has been very challenging, which is illustrated by the decline of our electricity sales mainly in the large scale customers segment. The same is valid for both Belgium and France, where sales volumes could not be increased at the speed and to the level expected. In Germany, Enovos Energie Deutschland GmbH, affiliate of Enovos Deutschland SE, restructured its country-wide sales organisation and concen- trated its overhead functions on one site; both initiatives were accompanied by a reduction of workforce and hence improved cost position. In the Belgian market, the development of com- mercial activities in the residential market in Wallonia has been the main focus during 2017. About 10,000 energy contracts were signed through different sales channels, and consider- able effort was spent testing and launching a new IT platform as well as in the implementa- tion of operational processes both executed by Enovos’ telecom partner (JOIN). The commercial and operational success of the new household customer business-line remained, in the end, well below expectations, and, at the beginning of 2018, Management decided to exit the activity and to impair the related investments. Regarding its business with industrial, commercial and profes- sional customers in Belgium, Enovos delivered, in close partnership with a local technical installer (Ecoparfait), the first energy services (enosolar, enolight and energy audits) and participated in the implementation of a new commodity offering platform (“one crm”). Thus, Enovos maintained its positions in a highly competitive commodity B2B market. Activities on the residential and MANAGEMENT REPORT In 2017, Enovos Luxembourg S.A.’s home energy markets, mainly Luxembourg and Germany, showed remarkable strengths in terms of economic dynamic, growth and energy consumption. Whereas the company could maintain most of its traditional market positions, the professional customer segments witnessed a severe increase in competition coupled with decreasing margins. The annual results were affected by disappointing operations in Belgium and France, negative impact of long-term contracts, as well as by several impairments and provisions on renewable energy generation assets. professional markets are the result of a close collaboration between the Enovos Belgian branch (7 persons located near Brussels) and the Luxembourgish head office assuming back-office and support functions. In 2017, Enovos had to adapt its offer to 2 major market evolutions in France: the implementation of the Power production capacity mechanism, and the evolution of the regulation for gas stor- age obligations. Following the strategy defined in 2016 to cover the SME sector, Enovos France enhanced its dedicated sales team with a network of independent Sales Agents active in the entire French territory. Energy Solutions & Services During 2017, Enovos Luxembourg S.A. continued developing and selling products and services not linked to commodity-contracts, targeting the residential, municipal and business customer segments in Luxembourg. For example, in 2017, Enovos nearly tripled sales in Luxembourg of enosolar (compared to 2016). enosolar is an all-inclusive residential solution for small photovoltaic systems. In order to address new topics, which are not yet supported by the existing economic and regulatory framework, Enovos is continuously exploring storage solutions in first pilot projects with partner companies. It is expected that, subject to supporting regulation and commercial conditions, storage and self-con- sumption of own production e.g. from PV, will play a role in Luxembourg in the future as is already the case in Germany and Belgium, and Enovos targets a leading role in that. Another new topic in the early development phase, is to identify suitable options for the application of the concept of local energy communities in Luxembourg. Enovos’ existing position as a leader in e-mobility in Luxembourg was further developed and strengthened; with more than 200 newly installed charging points for our residential, business and public customers, we kept our key role as infra- structure and service provider in that growing market. With our new mobility product line eno- drive we issued around 1,000 new mKaarts allow- ing e.g. access to the public Chargy infrastructure, and secured a leading position as mobility service provider in the Luxemburgish market. In the field of energy efficiency, additional projects of the product enolight – a replacement of lighting of large industrial buildings with more efficient LED solutions – have been initiated including e.g. a large installation at Cargolux. Together with its subsidiary Agence de l’Energie S.A., Enovos sup- ported many Luxemburgish companies to qualify for and obtain the mandatory Energy Audit. A substantial part of 2017 activities was again focused on the fulfilment of the European Energy Efficiency Directive’s energy saving objectives and obligations. With its subsidiary Agence de l’Energie S.A. and its partner programme and IT platform enoprimes, an increase of 25% in energy savings to approximately 82 GWh out of more than 2,869 new energy saving projects was achieved. Enovos continued to enhance this programme with a new software platform in order to further expand the number of energy saving projects in 2018. In the area of digitalisation and Internet of things (IoT) Enovos Luxembourg S.A. sold smart heating or smart consumption solutions for more than 250 homes in an ongoing pilot phase. These solutions help customers achieve energy savings, while improving their comfort (enosmart Tado and enocoach). For the market in Belgium, the Energy Solutions & Services Department and a regional installation partner, sold several leasing and contracting solutions for rooftop PV and re-lighting for business customers (in total 850 kWp, investment of approximate EUR 1 million). Furthermore, Enovos Luxembourg S.A. developed and implemented activities of an open innovation approach, e.g. pilots with start-ups, testing their solutions for the Luxembourgish market. One strategic objective is to get closer to innovative start-ups and identify promising new products, technologies and business models early on. Energy Management and Trading (EMT) During the course of 2017, the EMT organization was adjusted to make our gas and power activities more coherent, simple, transparent and cost effective. Bundling pricing activities of gas and power as well as both portfolio management activities, was put in place to: