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Nuclear Cuts Vindicate Merkel as RWE Profit Dips
http://www.bloomberg.com/news/2013-07-05/nuclear-cuts-vindicate-merkel-as-rwe-profit-dips-energy-markets.html
Nuclear Cuts Vindicate Merkel as RWE Profit Dips
By Julia Mengewein - Jul 5, 2013
Germany’s $710 billion green-energy drive is cutting production at nuclear reactors, the nation’s most profitable large-scale plants, as power prices slump to a six-year low.
The proportion of hours during which electricity traded at less than 30 euros ($39) a megawatt-hour, the level at which UBS AG says reactors start losing money, rose to 50 percent last month, the most since 2007 and 92 percent more than a year ago, data from the Epex Spot SE exchange show. RWE AG (RWE) cut output at its Gundremmingen plant near Munich 31 times in the first half as solar and wind output jumped, compared with 18 times in 2012, according to data compiled by Bloomberg.
The reductions, which typically last for hours at a time, underscore how Chancellor Angela Merkel’s plan to replace atomic power with renewable energy within a decade is gaining ground at the expense of profit at utilities from RWE to EON SE. The boom in green power, coupled with the lowest demand in 10 years, sent the average operating margin at 15 European utilities to the lowest since 2002, company data compiled by Bloomberg show.
“We will see more of those situations where renewable output is so high, that spot prices collapse below the level of the cash costs for nuclear plants,” Patrick Hummel, an analyst at UBS in Zurich, said July 2 by e-mail. “This really is a double-whammy for power producers. Fewer running hours means less power is sold and that happens at a lower price.”
<snip>
Merkel decided in 2011 to close eight German nuclear reactors and phase out the rest by 2022 following Japan’s Fukushima Dai-Ichi disaster. Public support for the 550 billion-euro plan to expand wind and solar power is rising, even as government subsidies for the “Energiewende,” or energy shift, increase electricity bills. Fifty-nine percent of respondents backed the nuclear phase-out in a Forsa poll for Stern magazine in April, up from 54 percent a year earlier.
<snip>
Nuclear Cuts Vindicate Merkel as RWE Profit Dips
By Julia Mengewein - Jul 5, 2013
Germany’s $710 billion green-energy drive is cutting production at nuclear reactors, the nation’s most profitable large-scale plants, as power prices slump to a six-year low.
The proportion of hours during which electricity traded at less than 30 euros ($39) a megawatt-hour, the level at which UBS AG says reactors start losing money, rose to 50 percent last month, the most since 2007 and 92 percent more than a year ago, data from the Epex Spot SE exchange show. RWE AG (RWE) cut output at its Gundremmingen plant near Munich 31 times in the first half as solar and wind output jumped, compared with 18 times in 2012, according to data compiled by Bloomberg.
The reductions, which typically last for hours at a time, underscore how Chancellor Angela Merkel’s plan to replace atomic power with renewable energy within a decade is gaining ground at the expense of profit at utilities from RWE to EON SE. The boom in green power, coupled with the lowest demand in 10 years, sent the average operating margin at 15 European utilities to the lowest since 2002, company data compiled by Bloomberg show.
“We will see more of those situations where renewable output is so high, that spot prices collapse below the level of the cash costs for nuclear plants,” Patrick Hummel, an analyst at UBS in Zurich, said July 2 by e-mail. “This really is a double-whammy for power producers. Fewer running hours means less power is sold and that happens at a lower price.”
<snip>
Merkel decided in 2011 to close eight German nuclear reactors and phase out the rest by 2022 following Japan’s Fukushima Dai-Ichi disaster. Public support for the 550 billion-euro plan to expand wind and solar power is rising, even as government subsidies for the “Energiewende,” or energy shift, increase electricity bills. Fifty-nine percent of respondents backed the nuclear phase-out in a Forsa poll for Stern magazine in April, up from 54 percent a year earlier.
<snip>
