Many power stations have become “unprofitable” to run in Europe according to the parent company of UK energy supplier npower.
The boss of German power firm RWE says it is closing thousands of megawatts worth of capacity in Germany and the Netherlands because of low electricity prices and the rise of solar power.
In a letter to investors yesterday, chief executive Peter Terium said: “The crisis facing conventional electricity generation is forcing us to take about 3,100 megawatts of capacity offline. Further stations are being evaluated.”
Describing what he called a “conventional electricity generation crisis”, Mr Terium went on to state: “In view of the latest price developments on power exchanges and the continuing, subsidy-driven solar boom, the situation is far from being remedied. On the contrary, many power stations have become unprofitable to operate.”
The energy boss predicted problems with the price of the power it sells in two or three years’ time: “We are still benefiting from the fact that we sell forward most of our electricity generation up to three years in advance. Therefore, we sold this year’s production and some of that of the next two years when prices still exceeded the market’s current level. However, this advantage will decrease from year to year. Sooner or later, the crisis will hit us with full force.”
The firm expects to end the 2013 financial year with net income of about €2.4 billion (£2.05bn).