'Grow up', RWE tells renewables

RWE CEO Peter Terium

RWE CEO Peter Terium

The cost of Germany’s energy turnaround away from nuclear power threatens to spiral out of control, the CEO of German utility RWE said, demanding an end to a priority access terms for renewables to electricity markets.

“Electricity needs to remain affordable,” CEO Peter Terium told RWE’s annual shareholder meeting in Essen. “It made sense to give a (initial) push to renewable energies with subsidies. But renewables now have to grow up.”

With a market share of 25%, renewables now have to “face the market” and can no longer be shielded from competition, he said, adding that preferential access for renewable energy to Germany’s electricity market needs to be reformed.

Renewable energy currently enters with priority at Germany’s power exchange in Leipzig, and at a production cost of close to zero.

“On sunny days, because of that conventional (fossil) power plants are massively being pushed out of the market, in particular gas-fired power plants,” Terium complained. He added that on some days – most recently on March 24 – power prices at the exchange are even negative, with the effect that German electricity consumers have to pay for the disposal of excess energy.

The producers of renewable energy in Germany receive fixed feed-in tariffs for any electricity they produce, no matter how high or low the wholesale power price at the Leipzig exchange is.

Prices at the exchange for 2014 and 2015 delivery currently hover around €39 per MWh ($51/MWh), €12 less than a year earlier, Terium said.

“The result: significant parts of our conventional (fossil) power plants are displaying red figures,” he said. Terium repeated demands that utilities should be paid for keeping power capacities as reserves, even if production lies idle.

“We won’t manage without conventional (fossil) power plants,” Terium claimed. “They need to step in when the sun doesn’t shine and the wind doesn’t blow.”

Terium reaffirmed that RWE Innogy, the company’s renewables unit, in 2013 will invest €1bn, and €500m in each of the two following years. RWE’s renewables spending is going down amid a diminished financial capacity at the company as a whole, he stressed.

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