BP Says German Energy Switch to Raise Prices, Hurting InvestmentStefan Nicola
BP Plc, the operator of Germany’s Gelsenkirchen refinery, said it’s concerned the country’s plans to shut nuclear plants and expand renewable energy will drive up power prices, blocking investments in Europe’s biggest economy.
“This development makes it increasingly difficult for the industry to remain internationally competitive,” said Michael Schmidt, chief executive officer of BP Europa. “This doesn’t encourage investments in German locations. Production know-how moves away, eventually drying out the local value chain.”
German Chancellor Angela Merkel is seeking to more than triple the share of renewables in Germany’s power mix by 2050. The costs and scope of the industry overhaul, the country’s biggest since World War II, have moved energy to the center of the political and economic agenda before elections this fall.
Companies are shifting away from Germany in favor of the U.S., where industrial power prices have dropped to 2 to 3 euro cents (3 to 4 U.S. cents) a kilowatt-hour, about half the price on German exchanges, according to Schmidt. While U.S. prices will fall further, German costs will be pushed higher by the energy switch, he said today in Berlin.
The development of shale gas in North America sent U.S. gas prices to their lowest in a decade. That’s attracted investments from large industrial energy users such as steel producers. Austrian steelmaker Voestalpine AG, which has German plants in Butzbach, Brandenburg and Gotha, said Dec. 19 it may build a 500 million-euro factory in the U.S.
BP operates the Gelsenkirchen refinery near Dusseldorf and the Lingen refinery in Lower Saxony. Its crude-processing, petrochemical and chemical plants in Germany consume about 1 percent of the country’s total power needs, according to the London-based company.