RWE Reports Loss, Spots Belgian Opportunity
German power utility, RWE, reported a loss in its nine-month results November 14, and expects legal challenges over its use of lignite (brown coal) in power generation to continue to impact its business. However, it has spotted an opportunity for one of its mothballed gas-fired plants to capture commercial advantage from a shortfall in Belgian generation capacity.
RWE also said that its multi-billion-euro deal, announced March 2018, to sell its majority-owned Innogy to E.ON is still expected to secure EU and other approvals by summer 2019 with the entire deal due to be completed "rapidly thereafter". Innogy’s renewables and gas storage businesses, plus its 37.9% stake in Austrian utility Kelag will be returned to their original owner RWE.
Net income in 9M 2018 attributable to shareholders was €65mn ($73mn), contrasting with a €2.22bn profit for 9M 2017.
RWE’s adjusted 9M 2018 earnings before interest tax depreciation and amortisation (Ebitda) fell by 27% year-on-year to €1.139bn – with contributions from Supply & Trading down 9% at €183mn, European Power Generation was down 28% to €234mn, and Lignite & Nuclear down 56% to €240mn. Its bitterly-contested felling of the Hambach ancient woodland for opencast lignite mining is currently on hold owing to legal proceedings: "It remains to be seen when a final ruling will be handed down. It is possible that this will not happen until the end of 2020." This will most likely lead to a massive curtailment of lignite production from Hambach, it added.
In Belgium, Engie has been obliged to keep two Belgian nuclear reactors offline for seven months longer than expected to remedy structural flaws. The resultant loss of 2 GW of Belgian generation capacity led its energy minster to appeal for extra capacity to be brought online.
The resultant "improved market conditions and rising demand for flexible generation capacity" prompted RWE to decide last month to bring its Claus C 1,304 MW gas-fired power plant near Maasbracht in the Netherlands back online, noting that: "Claus C could be connected to the Belgian grid thanks to its proximity to the border." Its CCGT can achieve 58% electrical efficiency but it could take two years before full capacity is available, as maintenance work is needed.