Corrected: RWE cuts 3.1GW of power plant capacity
In the first paragraph, the third sentence should have read, "An additional 900MW could be cut", not 900GW. A corrected story follows.
German electricity utility RWE is taking 3.1GW of power plant capacity offline in Germany and the Netherlands, the company said on Wednesday. RWE will also dispose of its German hard coal-fired power plants, with a combined capacity of 1.2GW. An additional 900MW could be cut, with the closure of one hard coal unit in Westfalen and three lignite units in Frimmersdorf and Goldenbergwerk under consideration.
The group generated 111.3TWh electricity in the first half of this year - roughly 1% less than the same period last year - mainly as a result of power station closures. Fossil-fuelled power generation dropped by 6% year on year to 84.3TWh. By contrast, power generation from renewable energy sources surged 30% to 9TWh.
Electricity sales volumes were pushed down by 4.1% year on year, mitigated somewhat by cheaper hard coal but exacerbated by non-subsidised emission certificates, which have weighed on German wholesale electricity prices.
The fact that RWE sells most of its electricity production two or three years in advance on the forward market is still a plus, chief financial officer Bernhard Gunther said in a press conference accompanying the results. However, he added that the price advantage would gradually decrease over time.
From 1 January 2014 until the end of the year, RWE plans to mothball its Gersteinwerk I gas plant and two of its Weisweiler plants: units G VGT and H VGT, according to RWE's website.
Earlier this year, the utility was under pressure to keep German electricity plants on line. It said it would assess the plants' economic situation every quarter (see EDEM 5 March 2013).
The company does not disclose hedging prices, but said that for 2014 delivery in six months' time, outright German nuclear and lignite-based power generation volumes were up to 80% hedged, with up to 60% of profit margins for German, UK and Dutch hard coal and gas-fired generation. For 2015, or delivery in 18 months' time, 40% of RWE's nuclear and lignite output was hedged, with up to 20% of German, UK and Dutch dark and spark spreads hedged.
According to one analyst, RWE's hedge speed is similar to the last quarter, with no unexpected changes in the hedge pattern. However, in contrast to other central European utilities, RWE is slowing its hedging speed and is staying below its historical average.
RWE reported a 38% drop in first-half net profit to €979m. However, its gas midstream business posted a €1.9m recurrent after-tax profit, due to settlements made on natural gas supply contracts with Russian supplier Gazprom. Nicole Tovstiga
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