Caption: E.On's Wilhelmshaven
German utilities RWE and E.On released their 2014 Annual Earnings Statements, finding that the companies’ are not making a profit on its fossil-fueled power plants.
Germany has substantially increased power generated from renewable sources, accounting for more than a quarter of power produced. As a result, wholesale electricity prices have lowered, reducing profitability of utilities.
RWE’s overall earnings fell nearly 10 percent year-over-year to €7.1 billion ($7.6 billion USD); that number is expected to fall an additional 10-14 percent in 2015. To date, RWE has suffered a 30 percent loss in profit from coal, gas and nuclear plants, and lignite mines.
“Framework conditions in conventional electricity generation are deteriorating faster than we can take countermeasures” RWE Chief Executive Peter Terium said in the annual report.
RWE and E.On joined the “Magritte group” comprised of several European utilities — including GDF Suez and Enel— who are seeking bailouts from EU leaders, according to Bellona Europa. Recently, the two companies’ requested additional financial support in the form of capacity payments for the coal power plants.
RWE’s renewables business increased 9 percent, however, renewables make up only five percent of the company portfolio.
E.On experienced a net loss of €3.2 billion ($3.4 billion USD) in 2014, the largest to date in the company’s history; and earnings fell by 9 percent to €8.3 billion ($8.9 billion USD). E.On’s wind and solar business saw a 20 percent increase.
Recently, E.On announced plans to split into two separate companies in 2016, with one focusing on renewable energy and the other on coal-fired and gas-fired power.
Following the announcement, RWE said it plans to invest about €1 billion a year from 2015 in renewables, with an emphasis on wind farms.
To read E.On’s annual report, click here.
To read RWE’s annual report, click here.