REW.com: “The story of German power giant RWE AG exemplifies the crisis facing the nation’s utility industry — and those of many countries across Europe — as nuclear power plants get shuttered in the wake of the Fukushima disaster, renewables steal away revenue, and consumers and companies complain about rising power costs that are three times higher than in the U.S.”
“Chancellor Angela Merkel’s decision in 2011 to shutter all 17 of Germany’s nuclear power stations by 2022 struck a blow to RWE’s profit stream, particularly for a company that has almost no presence in renewables. RWE posted its first loss last year since World War II and may face worse losses going forward.
The Essen-based company, founded in 1898 to produce power for Germany’s industrial heartland, has had no choice except to ramp up production from its profitable coal-fired plants, most of which burn lignite.
The result: RWE now generates 52 percent of its power in Germany from lignite, up from 45 percent in 2011. And RWE isn’t alone. Utilities all over Germany have ramped up coal use as the nation has watched the mix of coal-generated electricity rise to 45 percent last year, the highest level since 2007.
Peter Terium, chief executive officer of the utility’s executive board, “has one of the most difficult tasks in RWE’s history,” said Ernst Gerlach, director of Verband der kommunalen RWE-Aktionaere GmbH, a municipal investor association that represents 23 percent of RWE’s shareholders. Terium will address investors at the company’s annual general meeting this week.
….RWE’s largest competitor, EON SE, has fared somewhat better. It runs a large international business producing power in emerging markets, including Turkey and Brazil, that’s provided some protection from the German power market, where electricity prices hit a record low this month. Even so, the Dusseldorf-based company increased coal generation in Germany last year as it cut profit forecasts.
….“We were late entering into the renewables market — possibly too late,” Terium told reporters at his annual press conference last month, saying the company had “made mistakes.”
Last year, RWE generated 6.4 percent of its power from alternative energy sources, compared with almost double that at EON.
Still, RWE has no plans to back away from lignite. The company is pressing ahead with plans to build a 1,100-megawatt plant at Niederaussem, near Germany’s border with Belgium. Planned to start operation in 2018, if it gets the final go-ahead it will cost cash-strapped RWE 1.5 billion euros ($2.1 billion) to build.”
Future Today
