nuclear-news

Nuclear Cuts Vindicate Merkel as RWE Profit Dips, Bloomberg By Julia Mengewein – Jul 5, 2013 Germany’s $710 billion green-energy drive is cutting production at nuclear reactors, the nation’s most profitable large-scale plants, as power prices slump to a six-year low. The proportion of hours during which electricity traded at less than 30 euros ($39) a megawatt-hour, the level at which UBS AG says reactors start losing money, rose to 50 percent last month, the most since 2007 and 92 percent more than a year ago, data from the Epex Spot SE exchange show. RWE AG (RWE) cut output at its Gundremmingen plant near Munich 31 times in the first half as solar and wind output jumped, compared with 18 times in 2012, according to data compiled by Bloomberg.

The reductions, which typically last for hours at a time, underscore how Chancellor Angela Merkel’s plan to replace atomic power with renewable energy within a decade is gaining ground at the expense of profit at utilities from RWE to EON SE. The boom in green power, coupled with the lowest demand in 10 years, sent the average operating margin at 15 European utilities to the lowest since 2002, company data compiled by Bloomberg show.

“We will see more of those situations where renewable output is so high, that spot prices collapse below the level of the cash costs for nuclear plants,” Patrick Hummel, an analyst at UBS in Zurich, said July 2 by e-mail. “This really is a double-whammy for power producers. Fewer running hours means less power is sold and that happens at a lower price.”…..

On June 16, a Sunday, wind and solar plants met more than 60 percent of Germany’s demand, a record, according to the International Economic Forum for Renewable Energies, a Muenster, Germany-based research institute, forcing RWE, EON and EnBW Energie Baden-Wuerttemberg AG (EBK), the nation’s nuclear operators, to cut output as prices slumped below zero. That’s the level at which utilities must pay consumers to take power off the grid.

“The currently low prices on exchanges have dramatic consequences for the operators of conventional power plants,” said Hildegard Mueller, head of the managing board of BDEW, the Berlin-based utility lobby group. “They wonder how to make money with their plants. The companies now face the question how to develop their business model in the future.”……

“Our nuclear plants are not the cash cows that some think they still are,” Bernhard Guenther, RWE’s chief financial officer, said on a May 15 call with reporters.

Renewable power is so prominent in Germany’s grid that natural gas-fired plants haven’t been profitable for 17 months, according to a Bloomberg calculator that takes power prices, fuel and emissions costs into account. Reactors are cheaper to operate than lignite-, coal- and gas-fired stations on a marginal cost basis, according to Chris Rogers, an analyst at Bloomberg Industries in London.

Solar output peaked at 23,203 megawatts on June 16, almost 13 times the average over the past 12 months, according to EEX data. Same-day prices fell to as low as minus 225 euros from 5 a.m. through 8 a.m. Berlin time, and changed hands at minus 100 euros from 2 p.m. through 4 p.m., Epex data show……. http://www.bloomberg.com/news/2013-07-05/nuclear-cuts-vindicate-merkel-as-rwe-profit-dips-energy-markets.html