RWE Drops Biomass Power, Adds Biomass Thermal, Wind

- by Anna Simet, March 12, 2015, Bio­mass Magazine

While RWE Group report­ed it achieved its earn­ings tar­gets for 2014 and EBITDA was sig­nif­i­cant­ly bet­ter than planned, low elec­tric­i­ty prices and unusu­al­ly mild weath­er neg­a­tive­ly affect­ed busi­ness per­for­mance, which dropped 25 per­cent from 2013 to 2014.

Peter Teri­um, CEO of RWE, said that cur­rent­ly, 35 to 45 per­cent of the utility’s con­ven­tion­al pow­er sta­tions are no longer mak­ing any mon­ey under cur­rent mar­ket con­di­tions. “I am not talk­ing about book values—these pow­er sta­tions are cost­ing us real mon­ey,” he said. “We can­not avoid the sober­ing fact that con­ven­tion­al pow­er gen­er­a­tion is hard­ly viable any longer under cur­rent mar­ket conditions.”

He added that recent mod­ern­iza­tions of RWE’s port­fo­lio of pow­er sta­tions haven’t paid off, and that it is dif­fi­cult to keep a gas or hard coal-fired pow­er sta­tion com­mer­cial­ly fea­si­ble. Pre­vi­ous Invest­ments have made RWE the third-largest gas-fired pow­er sta­tion oper­a­tor in Europe, with capac­i­ty of around 15,000 megawatts across the con­ti­nent. “Con­sid­er­ing how quick­ly the elec­tric­i­ty whole­sale price fell in recent years, it would be impos­si­ble to cut a pow­er station’s costs at the same rate to main­tain mar­gins or even make any prof­it at all,” he said.

Con­struct­ing new bio­mass elec­tric­i­ty plants will no longer be one of the company’s focal points, accord­ing to Teri­um. The com­pa­ny closed its Tilbury pow­er sta­tion in the U.K. in the sum­mer of 2013. The plant had a net installed capac­i­ty of 742 MW and ran on coal before being con­vert­ed to bio­mass in 2011. “Despite the con­ver­sion, it was sub­ject­ed to a life­time lim­i­ta­tion in com­pli­ance with emis­sion laws,” Teri­um said. RWE also sold 80 per­cent of its stake in its 18.7 MW Enna, Sici­ly bio­mass-fired sta­tion at the end of Sep­tem­ber, he reported.

How­ev­er, bio­mass ther­mal is still mak­ing its way into the company’s port­fo­lio. In 2014, RWE opened a 46-MW, bio­mass-fired ther­mal pow­er sta­tion that was com­mis­sioned in March near Mark­inch, Scotland.

Over­all, oper­at­ing results for RWE’s renew­ables divi­sion decreased by 8 per­cent to EUR 186 mil­lion. “A key con­tribut­ing fac­tor was the impair­ment we rec­og­nized on facil­i­ties such as the new 46-MW bio­mass pow­er sta­tion at Mark­inch, in Scot­land,” Teri­um said. “The dras­tic reduc­tion in green ener­gy sub­si­dies in Spain and the trans­fer of Ger­man bio­mass activ­i­ties to sup­ply and dis­tri­b­u­tion net­works Ger­many as of Jan. 1, 2014, con­tributed to this decline in earn­ings. In con­trast, a pos­i­tive effect came from one-off earn­ings from com­pen­sa­tion pay­ments for third-par­ty delays in com­plet­ing the Nord­see Ost wind farm. The expan­sion of wind pow­er capac­i­ty also pos­i­tive­ly influ­enced the result, and the bur­dens from impair­ment loss­es in 2013 did not recur.”

RWE’s cur­rent focus is on onshore and off­shore wind farms, which both Teri­um and RWE’s 2014 annu­al report stat­ed.  In 2014, RWE’s com­mis­sioned new facil­i­ties with a total gen­er­at­ing capac­i­ty of 320 megawatts, the major­i­ty of which was wind power.