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We've increased our fair value estimate for RWE by 11%, to EUR 50 per share from EUR 45, due to a 42% raise in our 2022-24 adjusted earnings per share forecast on skyrocketing power prices. We maintain our long-term power price assumption of EUR 60 per megawatt-hour, so our long-term earnings estimates are not materially affected. Our fair value estimate implies an average 2022-23 price/earnings of 16.7 and enterprise value/EBITDA of 8.8.
Since the deal with E.On, RWE is refocused on power generation, mostly in Europe. It owns 38 gigawatts of power generation capacity: 25% from lignite and hard coal plants, 37% from gas plants, 29% from renewables, 4% from nuclear (which will be shut down by 2022), and 5% from pumped storage and batteries. Besides Germany, RWE’s power plants are chiefly located in the United Kingdom, the Netherlands, Turkey, and the United States for many onshore wind farms.
