RWE Says German Power Prices Need to Rise to Build New Plants
RWE AG (RWE), Germany’s second-largest utility, said power prices must rise to justify the construction of generators needed to plug a supply shortfall left by the government’s plan to exit nuclear energy.
“The market doesn’t support new investments at the moment,” Leonhard Birnbaum, the company’s chief commercial officer, told reporters in Berlin today. “We’d need power to be somewhere around 75 euros to 80 euros a megawatt-hour.”
German Chancellor Angela Merkel wants to exit atomic energy by 2022 after shutting eight nuclear plants in March after explosions at reactors in Japan stoked safety concerns in Europe’s biggest power market. The country’s utilities must build 10 gigawatts of fossil fuel-fired power plants from 2013 to 2020 to plug the gap, Economy Minister Philipp Roesler said in a speech today.
“If the German market won’t pay for the needed capacity then we should make supply as European as possible,” Birbaum said.
Baseload power for 2012 rose for a third day, gaining 20 cents, or 0.4 percent, to 57.10 euros ($82.22) a megawatt-hour as of 9:51 a.m. Berlin time, according to broker data compiled by Bloomberg. Baseload power is delivered around the clock.
Roesler said he wants to implement a law that will speed the approval process for the construction of power plants. He made the comments in a speech to energy industry executives in Berlin today.
Available Engineers
RWE “won’t build more offshore wind parks as our ability is limited by the number of available engineers and ships,” the management board member said. “We’re building four in parallel, we couldn’t do five.”
A planned model whereby wind park operators get more aid upfront will make offshore facilities in Germany “more attractive,” he said.
Separately, RWE may miss a target of reducing its carbon- dioxide output to about 0.45 metric tons per megawatt-hour of power in 2020 as the nuclear exit cuts the amount of CO2-free plants in the company’s portfolio, according to Birnbaum.
The company is sticking to a plan to slash CO2 output to the average amongst its European competitors by then, allowing RWE’s power plants to profit should prices for European Union emission permits rise, he said.
To contact the reporters on this story: Stefan Nicola in Berlin at snicola2@bloomberg.net Nicholas Comfort in Frankfurt at ncomfort1@bloomberg.net
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