Terium confirms plant shutdowns and warns on energy security

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The Chief Executive of RWE, Peter Terium, has confirmed that the company is to mothball 1000 MW of power plants and delivered a strong warning to the German government that the country’s energy security was potentially in jeopardy.

"By 2018 more secured power station capacity will be taken offline than is added. This does not bode well for security of supply, to which wind turbines and solar panels cannot make a large contribution,” Terium said, putting the poor performance down to ‘worsening margins in conventional electricity generation as well as weather-induced declines in gas supply’.

"Now the ball is in the policymakers' court. I am hoping for a rapid political decision on the capacity market that was agreed upon in the coalition agreement", " he added, before mentioning that Germany should follow Britain and France's example (in terms of capacity market).

Speaking at a teleconference board meeting on Thursday, Terium also confirmed that the group operating result was down 40 per cent year on year, to €2.3bn ($3bn).
However there was also room for positivity in the RWE chief’s assessment. He told the board, and the media on the call, that he was very confident the company would reach its savings goal of €1.5bn by the end of 2016.

“Up to 2016, we're investing €1bn per annum in the expansion, modernisation and maintenance of our electricity and gas distribution networks," he added.

"We are also driving the energy sector transformation forward with state-of-the-art products & innovative solutions such as SmartHome, Nest and Ampacity.”

Despite those bright notes, RWE will know that continuing to push for market reform is their biggest challenge in order to avoid the closure of more plants.

Since the start of 2013, the company has closed 12,600 MW of capacity, nearly a quarter of its European portfolio. They will hope a capacity market can be installed to reward producers for their provision of secure gas and electricity when renewables are unable to perform.

As it currently stands, much of the company’s portfolio of plants only run a fraction of the time needed and therefore are not profitable.

The latest planned 1005 MW of shutdowns involve 110 MW at Goldenbergwerk lignite power plant in Hürth, which will be removed from the grid in the third quarter of 2015, and 285 MW at Unit C of the Westfalen hard coal power plant in Hamm at the beginning of 2016.

RWE said that “if market conditions do not change”, the part of Unit K fuelled by hard coal in the Gersteinwerk plant in Werne (610 MW) will cease to operate in the first quarter of 2017, “when an extensive overhaul is scheduled which would no longer be justifiable from an investment perspective under the current economic conditions”.

It stressed that the gas turbines at the combined unit (110 MW) would continue to operate.

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