RWE announces northern European plant closures

• 10 years ago (2013-08-17)
• Junior Isles

Europe 1061 Nuclear 640

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RWE AG, Germany’s second largest utility, will be closing power plants in an attempt to put its electricity generating business back in the black, according to a company statement.

The company will close 3100 MW worth of power plant capacity in Germany and the Netherlands, roughly 7 per cent of RWE’s current northern European stock, and look further into idling even more stations, the Essen-based company has said.

RWE suffered the biggest decline amongst the HDAX index of 110 most valuable companies traded in Frankfurt after a year-on-year fall of 62 per cent in its conventional power generation operating profit for the first 6 months of 2013, down to € 690 million ($915 million).

“The massive reduction in power station margins is a major factor” in the decision to shut plants, RWE said. “Further power stations are being assessed and all options to improve the company’s economic efficiency are being explored.”

Weak electricity demand and increased production of renewable energy across Europe has led to a power price slump, hitting margins for gas and coal-fired plants particularly hard.

Thomas Deser, portfolio manager at Union Investment GmbH responsible for the fund’s €54 million stake in RWE, said: “This is only the prelude for the industry’s capacity adjustment… it’s imaginable that even nuclear reactors will be closed early.”

RWE’s stock tumbled 4.5 per cent to close at €21.355 after the announcement, with 2.6 times the three-month average share volume traded.