EnBW faces new €1.5bn hit
EnBW, one of Germany's top four utilities, says it has "identified the need to recognise additional impairment of about €1.2bn" ($1.6bn) on its power fleet, mostly due to the fact that its coal-fired plants are making less profits than before amid a boom in renewable energy output.
The company also said it needs to raise its provisions for anticipated losses on no longer cost-covering power purchase agreements by about €0.3bn.
"The reason for the extraordinary charges totalling €1.5bn, which are to be included in the consolidated financial statement of 30 June 2014, lies in considerably worsening expectations regarding long-term electricity price developments," EnBW says.
Futures market prices for electricity have fallen from about €50 per megawatt hour of electricity produced in late 2012 to less than €35/MWh now, the utility lamented.
EnBW added that it doesn't expect any improvement of the price situation over the next few years, "which will significantly lower the potential future earnings from EnBW's generation capacity, specifically from coal-fired power stations."
Utilities have long complained that running gas- or coal-fired power plants has become unviable because they increasingly have to be switched off while renewable power is given priority in entering the grid at a production cost close to zero.
That has the effect of pushing electricity from fossil sources increasingly out of the market.
EnBW in June 2013 and April 2014 had applied to the Federal Network Agency for permission to shut down several of its older fossil block-unit power stations which no longer have any prospects of being profitable.