EON, RWE May Have to Close Down Unprofitable Gas Power Plants

Natural gas-fired power plants in Germany can no longer operate profitably, according to EON SE, while RWE AG (RWE) hasn’t ruled out mothballing some of them.

“The situation of gas-fired power stations is dramatic,” Johannes Teyssen, chief executive officer of EON, Germany’s largest utility, said today at an energy conference in Berlin. “Politicians have to see clearly what risks for the security of supply arise.” It’s not possible to keep plants running that don’t cover their costs, he said.

German power generators are being challenged by German energy policy, designed to cut carbon emissions while phasing out nuclear power. German year-ahead power prices, a European benchmark, dropped 14 percent last year, according to broker data compiled by Bloomberg. The difference between fuel prices means generators lose about 15 euros ($20) for each megawatt- hour they produce from gas, while making 7.50 euros from coal.

RWE, Germany’s second-largest utility, hasn’t ruled out mothballing gas-fired power plants in Germany. Some of the company’s gas-fired power plants are operating 1,500 hours a year instead of the planned 3,000 to 3,500 hours a year, Matthias Hartung, chief executive officer of RWE Generation SE, said yesterday. No request has yet been submitted to idle power plants, he said.

Germany “needs” flexible gas plants to underpin a greater share of renewable sources if the nation’s nuclear exit is to succeed, Environment Minister Peter Altmaier said today in Berlin.

To contact the reporters on this story: Tino Andresen in Dusseldorf at tandresen1@bloomberg.net; Stefan Nicola in Berlin at snicola2@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

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