E.ON sticks to split after record loss / Poker over brown coal

Reuters

“E.ON sticks to spin-off plans after record net loss”

E.ON says it is sticking to its plans to spin off its conventional power operations, after posting a record net loss in the first nine months of 2015 on the back of weak wholesale power and commodity prices, reports Christoph Steitz for Reuters. Steitz says this suggests the group sees few alternatives to cope with an industry crisis that has cost it more than 80 percent in market value since 2008. "We remain confident that we can stay on our ambitious timetable," Chief Executive Johannes Teyssen wrote in a letter to shareholders.
E.ON said net losses after nine months stood at 6.1 billion euros, mainly due to impairment charges of 8.3 billion euros.

Read the CLEW dossier on the utilities’ fight for survival here.

Find the CLEW factsheet “Securing utility payments for the nuclear clean-up” here.

Süddeutsche Zeitung

“The revenge of the new strategy”

E.ON’s results show the downfall of Germany’s largest utility continues unabated, writes Karl-Heinz Büschemann in the Süddeutsche Zeitung. “The company finds itself in a similarly precarious situation to rival RWE. Both have been massively hit by the Energiewende: Major conventional power plants and nuclear energy continue to lose importance for energy generation, whereas renewable energies are becoming ever more important,” according to Büschemann. He argues that even though CEO Johannes Teyssen denies it, his plan to split E.ON was motivated mainly by the desire to evade nuclear decommissioning costs – a plan that was thwarted by the government this summer and has now backfired. E.ON can only spin off fossil power plants, which had to be devalued before the split, resulting in massive losses.

Read the article in German here.

Find the CLEW article "E.ON bows to political pressure and keeps nuclear plants" here.

German Council of Economic Experts

 “Economic Policy: Focus on Future Viability”  

The German Council of Economic Experts today presented its annual report on the economic development of Germany, entitled “Economic Policy: Focus on Future Viability”.  In the chapter about “viable climate protection” the council members argue that “Germany will only be able to take a pioneering role in climate protection if the restructuring of the energy sector can be implemented with economic efficiency.” The Renewable Energy Act, which promotes renewable technologies, was “the wrong approach," leading to “an explosion of costs,” it said. Instead, the government should pursue a “consistently European path,” using the European Emissions Trading System (EU-ETS) as a steering mechanism. In a differing opinion, council member Peter Bofinger writes that “The promotion of renewable energy does not contradict a trading system for greenhouse gas emissions in principle.”

Read a report summary in English here and the full report in German here.

Handelsblatt

“Playing poker over East German brown coal”

Utility Steag from North Rhine-Westphalia and investor Macquarie have announced an interest in buying Vattenfall’s lignite operations in eastern Germany, the Handelsblatt writes, citing sources among the potential buyers. Neither the interested parties nor Vattenfall wanted to comment. Steag is a conglomerate of seven municipal utilities and would be a welcome investor in the lignite mining regions of Saxony and Brandenburg, Handelsblatt says. But the company would only pursue the purchase if the government came up with a clear plan for the future of German brown coal, the paper says.

Read a CLEW factsheet on Vattenfall’s brown coal assets here.

Greenpeace/Green Budget Germany (FÖS)

“Lignite costs society at least 15 billion euros per year”

It is a myth that lignite is a cheap energy source, according to a new study by Green Budget Germany (FÖS) financed by Greenpeace. “In 2015 alone, lignite mining and power generation has caused society costs of at least 15 billion euros,” write the authors. Subsidies, the redevelopment of old mining areas, health effects and other hidden expenses mean the market price of lignite electricity does not reflect the real costs of the technology, according to the study. “Relative to power production of about 150 TWh per year, additional costs amount to 9.9 cents/kWh. This is a conservative estimate.” According to Greenpeace, adding these costs to current lignite power generation costs would more than triple lignite power prices.

Find the Greenpeace press release in German, with a link to the study here.

taz – Die Tageszeitung

“The business case is lacking”

While farmers in developed countries profit from comprehensive insurance schemes that are often subsidised by the state, these solutions are largely absent for poor farmers in developing countries, Karsten Löffler, Managing Director of insurance company Allianz Climate Solutions told the taz in an interview. While this was theoretically a giant market for insurers, the lack of data on these farmers’ output was making it hard to develop business models for these countries.

Süddeutsche Zeitung

“Greens denounce Great Britain”

Munich’s municipal utility Stadtwerke München will not take legal action against Britain’s subsidies for planned nuclear plant Hinkley Point C, Dominik Hutter writes in the Süddeutsche Zeitung. Green Party members in the city council had demanded that the Stadtwerke launch a complaint because the subsidies were causing a “distortion of competition” in the European power market. But the majority decided against legal action, since it would be unlikely to succeed, the article says.

Read the article in German here.

Renewable Energies Agency (AEE)

“New meta-analysis on price development of fossil fuels”

The AEE has compared the prices of fossil fuels in 15 current energy scenarios, saying that most studies anticipated increasing prices but some scenarios showed that more renewable energy and higher energy efficiency could see fossil fuel prices decrease due to falling demand. AEE managing director Philipp Vohrer warned that sinking fossil fuel prices must not be used as a justification for postponing the Energiewende.

Read the press release and download the study in German here.