2.0 OurResponsibility 112 2.1Supervisory Board Report113 2.2CorporateGovernance (and Compensation Report) 118 2.3 Workforce 128 2.4Sustainability131 6 3.0 ResponsibilityStatement 137 4.0Consolidated Financial Statements 138 4.1Income Statement139 4.2 Balance Sheet 140 18 14 4.3Cash Flow Statement141 4.4StatementofChanges in Equity142 4.5Notes 143 4.6Auditor’s Report204 FurtherInformation 205 MaterialInvestments 205 10 TheRWE Group’s value management 208 Boards and Committees 210 Glossary 216 Index219 Imprint 221 FinancialCalendar Five-Year Overview (Partofthe Review of Operations) Ourmission: > climateprotection that pays off Protecting the climateisacentral task forus. As one of Europe’s biggestpower producers, we have one of the greatestpotentialsto avoid CO2.Asfar as we’reconcerned,the first step to avoiding CO2 sensibly is to do what- ever we can to prevent emissions in the first place.However,since we areautility, we also feel committed to asecond goal,which is to produce and supply electricityand gas both safely and economically over the long term—in the interestofour customers, share- holdersand employees.And in the interest of current and futuregenerations. Thanks to the largestinvestmentcampaign in ourcompany’s history, we aremaking a considerable contribution to both causes by building new, highly efficient powerplants, significantly expanding ourinstalled renewable energycapacity, and making continued use of CO2-free nuclear power. All told,RWE has the potential to avoid nearly 40 million metric tons of CO2 by 2012 and roughly another 20 million metric tons by 2015.Potential that does notbenefit ourclimatealone. We don’t just makeboldclaims—weinvest billions: If notus, who else! Jürgen Großmann Berthold Bonekamp UlrichJobs Alwin Fitting RolfPohlig RWEengineersare on aconstant questfor new records: They have already used cutting-edge plant technologies to achieve efficiency ratesof43% in lignite-fired powerstations.Furthermore, they arealready capable of fine-tuning hard coal powerplants to a46%efficiency level. Mostrecently, ourengineers have set their sights on obtaining efficiencies in excessof50%using novel materials and methods. Climateprotection throughenergy efficiency Energy thatisnot consumed is themostenvironmentally friendly energy.Therefore,one of ourprime objectivesis: efficiency! Efficiency in theuse of energy throughoutour company, in theproduction of primary energy, in thegeneration of electricity, and in the consumption of energy by ourcustomers. In ourquesttomaximizethe efficiency with which we use energy, we pursue aholisticapproachthatruns along ourentire value chain: from production and generation to transmission and application.The upshot: CO2 emissions are reduced,energy costscan fall,and theenhanced productivityimproves thesecurityofsupply. Energy source: efficiency! From 1991 to 2006, consumed by about 1,000 homes in ayear. German companies reduced the amount of RWEDea is an icon of economicalenergyusage energyrequired perunit of production by some on its Mittelplateoil drilling platforminthe 20 percent. Thereishardly acountry whose NorthSea: Besides state-of-the-artdrilling and industry makes moreefficient useofenergy— production technology, shifting from tanker to aboon to the environment, which needs to pipeline transportation tapssubstantial savings be built upon.Whatthis means forthe energy potential.This eliminates some1,000 tanker sector, forinstance,istouse lesscoal to trips ayear.And that benefits the environment. generate the same amount of electricityas before, or employing lesselectricityand gas More output, fewer emissions. Coal-fired pow- without decreasing the qualityoflife. We are er plants areapivotal element in the energy equipped to take on these challenges.Inour supply system.Todojustice to climate-protection Rhenish lignitemining region,weare collabo- goals, we have been making progressinvarious rating closely with universities and research areas since the nineties throughour power institutes developing energy saving belts for stations: higheroutput, feweremissions and ourconveyorbelt systems,which will reduce improvedefficiency. Ourlignite-fired power powerconsumption significantly because they plants with optimized plant technology (BoA) runmoresmoothly. Today, we already save have set entirely new technologicalstandards: 3.5million kilowatt hours(kWh) every year by high-tech materials,computer-controlled stopping the belts whenthey arenot in use. turbine blades,residualheat recycling and lower This corresponds to the amount of electricity in-housepower consumption. Race forefficiency. With an efficiency rate above 43%, the BoApower plant is roughly twelvepercentagepoints better than the installations that arebeing replaced by the new BoA2&3 powerstations in Neurath,Germany. While maintaining output, CO2 emissions will drop by morethan 30 percentor—in absolute figures—by 6million metric tons peryear.By building apilotfacilityfor lignitepre-drying at ourpower plant in Niederaussem,Germany, we aredeveloping atechnique that could enable an efficiency improvement of afurther four Themeter has its ownbrains: smartmetering percentage points.The next engineering goal is 9 OurClimate- Protection Strategy ThefutureFunit of the new lignite-fired powerplant, Neurath,Germany: on-siteinspection on the boiler frame the “700 degree coal-fired powerplant,”which on athree-tier pyramid model,inorder to promises to deliver yet anotherfourpercentage- increase ourcustomers’awarenessofenergy point gain.This will put lignite-fired power efficiency in the private, commercial/industrial stations with efficiencies north of 50%within and municipalsectors.The second phase reach. encompasses personalized consultation and concreteimplementation measures.Inthis Tangible climate relief. Including the BoA context, we provide ourexpertise with aview 2&3 plants,weplan to invest approximately to saving energy and costs togetherwith our €8 billion in new powerstations on the European customersand being kind to the climate. We Continent through 2012. In addition to agas- provide subsidies primarily targeting street fired powerplant in the German Emsland region, lights and administrativebuildings that have we intendtobuild twohard coal powerstations poor heat insulation. with athermalefficiency of 46%and anet installed capacityofover1,500 MW each. Investing in thefuture! Thepyramid’s third Resulting gains in efficiency will lead to tangible segment is dedicated to research and devel- relief forthe climate. Compared to older hard opment. In order to help ourprivate and coal powerplants with asimilar capacity, CO2 commercial customers makemoreaccurate emissions will decrease by an annual2.5 million electricitycostcalculations,weemploymod- metric tons perpower plant. Twogas power erncomputer technology to develop “smart stations planned by RWEnpowerinthe United meters,” an innovativeproductthat enables Kingdom with acombined installed capacityof one to identify new energy savings potential. morethan 3,600 MW provide potential savings Furthermore, ourengineers have joined forces in excessof10million metric tons of CO2 per with partners to develop the “virtualpower annum if—as intended—old hard coal power plant,”which harnesses electricitygenerated plants aredecommissioned at the same time. by smaller,distributed block-type thermal All in all, by 2015,our replacement and moder- powerstations and wind powerfacilities and nization programmefor ourUKpower stations markets it from asingle source.Atthe same will decrease specificCO2emissions caused by time, the interconnected grid becomes more RWEnpowerbyone third compared to the economicaland efficiency is improved. This 2000 baseline and by half vis-à-vis 1990 levels. is one of the reasons forour participation in the “Energy Efficiency” initiativeofthe German Energy efficiency at ourcustomers’ homes Energy Agency (dena). We will invest €150 and workplaces. In thespring of 2007, we million in this programmeoverthree years. were the first company in oursectortolaunch acomprehensiveinformation campaign based RWEisinvestigatingthe possibilityofbuilding an innovativewavepower plant in the OuterHebrides’ natural environment. Thepower station’s turbines would be driven by airstreams created by the waves. In time, it could supply electricityto1,500 homes and avoid four metric tons of CO2 per household per year,which would otherwise result from the use of fossil fuels. Climateprotection throughenergyfromrenewables In thefuture,energy from renewables—primarily wind and water—will be of central significance in ensuring asustainable supply of energy. Themain reason forthis is that renewables do not release greenhouse gases and thus help protectthe climate.Inthe future,renewables’ marketshare will continue to grow.Thanks,inpart, to ourefforts. Therenewableenergy business. We are profitabilityhurdle and currently offers attractive striving to increase installed renewable energy growth prospects. capacityacrossEurope.Our objectiveisto rank among Europe’s leading providersofelec- Newcompany: RWE Innogy. We will invest tricityfromrenewable resources in the next an average of at least€1billion per annum to decade.Byexpanding ourrenewable energy increase installed renewable energy capacity. base,wewill makeanimportant contribution We established RWEInnogy, anew, independent to achieving the ambitious goalsset by policy- operating managementcompany, effective makersinthisareaatnational and European February 1, 2008. This is the company in which levels.Wehavethusclearly decided