Oil prices spiked on Wednesday…
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The idea that falling prices for renewable energy will begin to create a shake-up in the energy market, may have merit as RWE has just announced that it will close 3.1GW of fossil fuelled power stations around Europe due to the booming renewable energy market, which has made those power stations unprofitable to run.
On Wednesday it released its half year results, claiming that the growing boom in the solar sector means that many conventional power stations are no longer profitable to operate.
A statement released by the company read that “due to the continuing boom in solar energy, many power stations throughout the sector and across Europe are no longer profitable to operate. During the first half of 2013, the Conventional Power Generation Division's operating result fell by almost two-thirds. The massive reduction in power station margins is a major factor in this development.”
RWE managed to survive, insulated from the events due to its decision to sell most of its electricity production facilities two or three years ago.
Related article: E.ON Sees First-Half Profit Slump in Europe
To further secure their portfolio, and reduce costs they stated that, “after a detailed analysis, the Group has decided to take a total of 3,100 MW of generation capacity offline in Germany and the Netherlands. Further power stations are being assessed and all options to improve the company's economic efficiency are being explored.”
RWE made the statement just a week after closing the 750MW Tilbury B power plant in Essex, UK, which had fallen foul of the EU’s Large Combustion Plant Directive (LCPD). They also blamed the British government’s energy efficiency schemes and high network charges, for their reduced operating profit, and subsequent decision to reduce its 26 existing energy sites in the country, to just 10 over the next five years.
Paul Massara, the CEO of RWE npower, said that they were determined to reduce costs in order to keep prices low for customers. “To do this we need to make some major changes and, although some of these will be difficult, I believe it's the right thing for both our customers and our business. Changing our structure will help us to serve customers better - and reducing our costs will help them at a time when external factors are pushing prices upwards.”
By. Joao Peixe of Oilprice.com
Joao is a writer for Oilprice.com