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European renewables rise on German nuclear news
- 12 years ago (2011-06-01)
- Junior Isles
The share prices of European renewables companies surged after German Chancellor Angela Merkel announced the country will double its 2020 renewables target and close its 17 nuclear power plants by 2022.
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The seven oldest reactors, which were provisionally shut down immediately after the Fukushima disaster, will now remain closed. Mainstream utilities stocks fell on the news, with nuclear unsurprisingly suffering worst.
The decision is expected to be approved by the German parliament, next month. Public protests against nuclear power have been on the rise in Germany following the Fukushima meltdowns.
“This will mean that German utilities will have to divert a large part of their reserves to decommissioning their nuclear power stations just when they need to invest into new cleaner power capacity,” a note by analysts at Jeffries said. “We note that decommissioning costs have in nearly all cases proved to be more expensive than initially foreseen.”
The price of power and carbon allowances in Europe’s Emissions Trading System rose also. But share prices of German solar and wind firms saw the most positive reaction.
German solar cell manufacturer SolarWorld was trading at more than €10, up 13 per cent from the last day of trading before the announcement was made. Competitor Q-Cells was trading above €2, up from a close of €1.77.
However, Lee Clements, London-based investment manager at Impax Asset Management, cautioned that key decisions on the depth of cuts to German solar subsidies from next year are yet to be made. In any case, he noted, the rate of installations is likely to slow, from around 7 GW last year to about 3.5 GW this year.
“These were quite heavily beaten up stocks,” he added.
Offshore wind projects and energy efficiency could be the big beneficiaries of the shift in policy, Clements said. Merkel also reiterated a target to reduce electricity demand by 10 per cent by 2020.
“With most of the prime onshore sites already developed, we would expect offshore wind in the North Sea and the repowering of older sites to be promoted,” said Michael McNamara, an analyst at London investment firm Matrix Capital, in a note to investors.
Matrix predicts that two UK utilities, Scottish and Southern Energy and Centrica, are likely to benefit because of their offshore wind plans.
German wind turbine firm RePower saw its share price rise from a close of €131.10, to trade around €142.00. Nordex was up from a close of €6.00 to around €7.23. Spain’s Gamesa also saw a 1.59 per cent rise in its share price, while Swedish turbine maker Vestas rose more than 2 per cent.