RWE Climbs Most in 2 Years on Renewables Study: Frankfurt Mover

RWE AG, Germany’s largest power producer, led gains in the nation’s utilities in Frankfurt as a government adviser raised the possibility of limits on subsidies for renewable energy, leading to higher electricity prices.

The Essen, Germany-based company advanced 6.4 percent, the most since October 2011, to close at 23.275 euros in Frankfurt trading while rival EON SE gained 4.9 percent to 12.705 euros.

Germany should adopt Sweden’s subsidy system to boost competition and curb the cost of expanding solar and wind power, the Monopolkommission said in a study. Germany must stop subsidizing clean-power generators when prices on electricity exchanges turn negative, it said.

“The recommendation of the Monopolkommission awakes the hope that the EEG subsidy system will be radically changed after the federal elections and that the expansion of renewables will be controlled more strongly in the future,” Sven Diermeier, an analyst at Independent Research GmbH, said by phone from Frankfurt. He also cited the possibility that the Green party won’t join the government after the Sept. 22 election.

Chancellor Angela Merkel has vowed to change clean-power subsidy laws after the election. A proliferation of renewable-energy ventures has exceeded government forecasts, driving up costs for consumers. The tariff that Germans have to pay to finance such projects jumped to a record this year.

Today’s jump to a three-month high in German power for delivery next year suggests “the floor has been reached,” Guido Hoymann, a B. Metzler Seel Sohn & Co. KGaA analyst, said from Frankfurt. That makes power generation more profitable.

Sweden has a quota model requiring utilities to supply fixed levels of renewable power or buy tradable credits to make up the difference. Germany, which is phasing out nuclear reactors, hands uncapped subsidy payments to renewable projects, with the level varying depending on the energy source.

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