Sunday, December 9, 2012

EON Loses as RWE’s Coal Plants Win Germany’s Green Shift

Bloomberg reports on outcomes of Germany's Energiewende, but it's diagnosis leaves something to be desired.

Slide 7, Power Markets of the Future
Other generators do not compete with "renewables" as the latter are guaranteed space on the grid whenever it is possible.
The feed-in tariff (FIT) procurement method spikes supply (thus dropping price) with intermittent renewables, and the subsequent output of renewables acts to essentially lower demand for traditional suppliers.

In Germany smaller consumers pay for the FIT contracts, while large industry is exempt.

EON Loses as RWE’s Coal Plants Win Germany’s Green Shift: Energy - Bloomberg
Germany’s largest power generator is emerging as the biggest loser in the country’s shift to renewable energy.
EON SE, the worst-performing stock in Germany’s benchmark DAX index (DAX) for the first year since the company was formed in 2000, has ripped up earnings forecasts as a surfeit of electricity from wind turbines and solar panels makes its fleet of gas-fired plants unprofitable. In contrast, RWE AG (RWE) has gained 16 percent because EON’s closest rival has more cheap-to-run coal stations better able to compete with renewables.
The divergence shows the challenges for traditional power generators posed by German energy policy, designed to cut carbon emissions while phasing out nuclear power. Wholesale power prices have dropped 11 percent this year as wind parks and solar farms join the grid. The difference between fuel prices means generators lose about 13 euros ($16.80) for each megawatt-hour they produce from gas, while making 10 euros from coal.
The entire article can be read at Bloomberg.

It concludes with:
“Germany is currently switching from nuclear to coal, and from gas to coal -- about the worst thing that could be done from a climate change perspective,” Dieter Helm, an energy policyprofessor at the University of Oxford, said by e-mail. “Its current energy policy is not going to reduce its real emissions.”

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