RWE has decided to take 3100 MW of generation capacity off-line in Germany and the Netherlands, and reports that "further power stations are being assessed", while "all options to improve the company’s economic efficiency are being explored."
Persistently low electricity prices and the "continuing boom in solar energy" mean that many conventional power stations are no longer profitable to operate. RWE says that during the first half of 2013 its Conventional Power Generation division’s operating result fell by almost two-thirds, largely because of a huge reduction in power station margins.
RWE is still benefiting from the fact that it sold most of its electricity production two to three years in advance on the forward market at prices that were higher than they are now, but this effect will decrease year by year.
In the first half of 2013, net income fell by 38% to about EUR 1 billion,the main cause being what RWE describes as "the market-induced impairment loss of about EUR 800 million recognised for our Dutch generation portfolio."
RWE’s overall first half results for 2013 have benefited from a positive outcome of arbitration proceedings with Gazprom, but that is a one-off.
RWE says its conventional power station modernisation and replacement programme has almost reached completion, with the Denizli combined cycle plant in Turkey starting commercial operation at the beginning of August.
Two twin-unit hard coal power plants remain under construction, one in Hamm, Germany, and the other at Eemshaven in The Netherlands.
E.ON has also reported that its conventional power generation business in Europe is suffering from low capacity utilisation and low wholesale prices, which it ascribes to "Europe’s economic crisis and interventionist energy policies and regulations."