RWE sees Innogy profits fall
German utility RWE said its renewables division faces a poorer 2014 than expected, as it prepares to take the axe to another 1.5GW of conventional generation capacity amid a plunge in group profits.
Operating profits at the RWE Innogy business fell 26% to €81m ($108.2m) in the January to June period, compared to the first half of 2013.
RWE said this was partly due to the “substantial reduction in subsidies” imposed by the Spanish government.
“The substantial deterioration in conditions for generating renewable energy in Spain is imposing a huge burden on us,” it said.
The German group also suffered from lower utilisation of domestic hydro plants and increased costs on a Scottish biomass project.
Those factors led RWE to darken its forecast for Innogy’s full-year performance, which it had expected to show a slight uplift on 2013.
“Now we expect a significant decline in earnings,” RWE told investors.
The issues at the renewables operation are dwarfed by the huge challenges facing RWE’s conventional fleet, which is being hammered by mild weather, low prices and increased competition from renewables.
RWE’s group recurrent net profit fell by 62.3% to €749m in the first half.
The utility said today it will shut down another 1GW of plants and end supply contracts for a further 470MW. It has now decided to discontinue 9GW in Germany and the Netherlands since 2013.
RWE CEO Peter Terium said such action by RWE and its fellow utilities is ominous for security of supply in Germany “to which wind turbines and solar panels cannot make a large contribution”.
He joined fellow utility giant E.ON in noting the development of a capacity market in the UK, which supports the retention of back-up capacity.