Solar energy boom hits coal and gas-fired power plants in Germany and the Netherlands

In a recent statement, utility company RWE announced that it would reduce 3100 MW of power generation capacity at its coal and gas-fired power plants in Germany and the Netherlands.

Persistently low prices on the electricity markets have placed burdens on the energy sector, and RWE has claimed this has impacted its operations. In H1 2013, RWE saw an increase in revenue to €28.5 billion, however, net income for the company fell by 37% to about €1 billion. The company indicated that the main reason for this fall was the loss of €800 million at its Dutch generation portfolio.

Power plants taken offline

Due to the continuing boom in solar energy, many power plants in Europe are no longer profitable to operate, RWE said. During H1 2013, the Conventional Power Generation Division’s operating result fell by almost two-thirds. The reduction in power plant profit margins is a significant factor in thus development.

RWE said that it benefited 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 currently stand. However, this effect will decrease year by year, the longer the downward trend in prices persists.

After analysis of market trends, RWE have decided to take 3100 MW of generation capacity offline in Germany and the Netherlands. The group said it was continuing to assess all its power plants, and considering all options to improve the company’s economic efficiency.

Electricity generation

RWE produced 111.3 billion kWh of electricity. This represented a 1% decrease to the previous year.

Cold weather conditions led to a 17% increase in gas sales, representing 194.2 billion kWh. The company’s operations in the Czech Republic, however, were negatively affected by mountain competition in the country.

Coal-fired power plants still under construction

REW announced that two dual-block hard coal power plants remained under construction. The power plants are being constructed at Hamm and Eemshaven.

Progress is being made at German utility RWE’s 1600 MW Hamm coal-fired power plant, as the first 800 MW unit of the new 1600 MW upgrade is expected to begin commercial operations in the coming autumn. The upgrade is comprised of coal-fired units D and E, both with capacities of 800 MW.

The new plant will reportedly require 20% less coal than current coal-fired united used by RWE at the site. The company hope to improve efficiency by 46%.

Outlook

Despite the increase in gas sales, RWE said they saw this as a “one-off” and partly the result of “a gas procurement contract with Gazprom” meaning that it cannot be extrapolated for the year as a whole.

The surge in the use of solar energy in Europe, and the currently weak market, has meant RWE expect a net income for the financial year to be around €2.4 billion.

Adapted from press release by Sam Dodson

Read the article online at: https://www.worldcoal.com/coal/15082013/coal_and_gas_lose_to_solar_in_germany_and_the_netherlands_317/