“Energiewende” Shattering German Power Sector: Europe’s Largest Power Company, E.on, Loses Whopping 10.2 Billion Euros!

E.on, Europe’s largest power company, lost almost 7 billion euros last year (2015). A year earlier it lost 3.2 billion euros.

The German power giant was hit not only by low prices on the electricity exchanges, but the losses were also due to significant “impairment charges” as the company writes down the value of its conventional coal and gas power plant assets.

E.on chairman

“Difficult times” says E.on Chairman of the Board and CEO Johannes Teyssen   Source : E.ON SE 

That sort of thing happens when a power company is forced by law to buy haphazard, money-losing solar and wind energy at exorbitant prices and sell it at a loss on the power exchanges. There’s no turnaround in sight.

What we are witnessing is the collapse of Germany’s power industry – thanks to the Energiewende (transition to green energies).

E.on CEO Johannes Teyssen spoke of “difficult times” at a press conference on Wednesday morning. Over the past two years the Essen-Germany-based company has lost over 10 billion euros!

Bloomberg reports here:

 ‘The general economic environment and the situation in our industry have deteriorated significantly,’ Chief Executive Officer Johannes Teyssen told reporters on Wednesday in Essen.”

Unsurprisingly the massive losses stemmed in large part from the area of power generation, where sales fell 34%. The operation of gas-fired power plants is no longer profitable due to the low prices on the energy exchanges.

Worse, the low prices from excessive production are not even making their way to the consumers. Although generated power is sold at low prices on the exchange markets due to surplus production from wind and sun, consumers are getting no benefit. German consumers are now paying near record prices for electricity (approx. €0.29/kw-h). Often coal-fired power plants run idle as well. experts have warned that the Energiewende may cost German consumers a trillion euros.

Share prices of Eon have also taken a terrible beating. In early 2008 the price for a share stood near 50 euros. Today a share stands at a measly 8 euros.

Spiegel here calls the losses at Eon “dramatic”.

Already in 2013 The Economist warned of an impending disaster for Germany’s energy sector.

 

31 responses to ““Energiewende” Shattering German Power Sector: Europe’s Largest Power Company, E.on, Loses Whopping 10.2 Billion Euros!”

  1. DirkH
    1. Colorado Wellington

      True, but you’d have to be very quick and nimble. Nowadays, even utilities providing critical services are held hostage to the fancy of the electorate. The crooks may be back before long.

      I don’t think it will ever get more predictable and we will certainly never see again the relative stability of, oh, let’s say, the 19th century.

      Betting on the consequences of the Franco-Prussian War gave an investor much longer timeframes.

      1. DirkH

        You don’t want long timeframes. You want what I call high vertical mileage.

        1. DirkH

          I am currently profiting from the death of debt money – the repricing of Gold; which might go up to DJI == USD price for a troy ounce. So I look out for what to do after that. In the short term, the Keynesian Green governments will continue their labor of destruction and keep Zombies alive. When debt currency dies – and do not hold it in any large amounts when it does, especially not in bank accounts – the loot will be all around; the smashed remains of the collapsing zombies, for a penny on the Dollar. That will also be when the Keynesian Greens are replaced.

          BTW Keynes’ idea of replacing individual consumption with state consumption MADE SENSE AS LONG AS THE STATE BOUGHT MEANINGFUL STUFF – highways, railroads, hydro power. Today’s Keynesians have replaced that with welfare. They try to emulate their master but all they manage is buy votes and lose money.

        2. Colorado Wellington

          I agree. Just because green cronies are making a killing on the swindle doesn’t mean their critics should abstain. It’s not like they created the bad situation. A man-made disaster is still a disaster and the markets must reflect it. I am watching it.

  2. Mikky

    European utilities should build proper power stations in developing countries, which can’t afford, and have more sense than to follow the pointless “green” wank of the decadent West.

    1. Jeff Todd

      That sounds like a good business opportunity; and a way of attracting business and industry to your country. China showed the way, although things are a bit dodgy for them at the moment.

  3. yonason
  4. The Indomitable Snowman, Ph.D.

    “Everything ‘green’ is stupid, and doesn’t work.”

    — Tim Blair

    That’s probably all you need to know.

  5. boyfromtottenham

    Hi from Oz. “That sort of thing happens when a power company is forced by law to buy haphazard, money-losing solar and wind energy at exorbitant prices and sell it at a loss on the power exchanges.” So what role do these Energy Exchanges have in this energy eco-system, if the generators have to sell to them at prices that ensure that the generators lose money? And who is ultimately responsible for the creation of a national system that seems to guarantee its own failure? I thought that ‘Alice in Wonderland’ was a work of fiction. Is Germany sleepwalking to its own destruction because it has swallowed Alice’s ‘make me smaller’ potion?

    1. DirkH

      The exchanges come from the pre-Green era of the CDU; and worked great to turn the former state-run local monopolies into an electricity market. Places like California still have local monopolies, we advanced greatly from that, and prices dropped.

      Now, the exchange will pay current spot prices for renewable energy coming in, and that, let’s say 4 cents at a given moment, will then be topped up by subsidies to the tariff promised to that wind or solar operator. The topping up will be taken from the renewables levy that end consumers pay, a fixed sum per kWh.

      So, the excchanges are not the problem, the levy is, and the mandate that all kWh’s from solar/wind MUST be bought first, pushing down the spot price due to oversupply, leaving nothing for honest operators.

      Quite clearly, a Venezuelan situation; the operators should shut down like the toilet paper manufacturers in Venezuela.

  6. Bernd Felsche

    They should split their company in a manner similar to RWE’s where the subsidised parts operate “profitably” and the traditional, reliable parts are forced to operate at a loss.

    The reliable generating sector continues to make losses and can’t pay their bills; they become insolvent. Not even the Bundesnetzagentur (Federal Network Agency responsible for electrical power supply and communications networks) can force companies to continue to operate when they are unable to pay their bills. When they can’t pay for the maintenance and fuelling of power stations, it won’t be long before they shut down.

    Remove about 10GW of despatchable generating capacity and even the imports would not cope when electricity is needed most. Brownouts and blackouts would ensue; propagating into neighbouring countries.

    Merkel could of course declare an emergency to keep the plants running, but the government (i.e. taxpayers) will have to fairly compensate suppliers of materials and labour. They cannot confiscate e.g. coal and give it to the power plant operators. That too would be a subsidy.

    And EU regulations prohibit the government from bailing out the (previously) reliable generators to keep them running because that would be a disallowed subsidy. (Heavy energy users in Germany were previously excused from paying a levy to support the Energiewende but the EU got uppity and declared it to be an illegal subsidy to German industry.)

    And anyway, the German Finance Mnister has declared that the billions of Euros collected in excess taxes will be spent on the flood of immigrants. Even the bottom of the barrel is gone. They won’t get loans for fossil-fuelled power from the IMF; they fund only useless projects.

    I suspect though that neither REW nor E.On will terminate the Energiewende by demonstrating its folly so dramatically. They have become addicted to the easy money of subsidies, where one is rewarded for seeming; not producing.

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  8. Posa

    I’m astonished how otherwise erudite German friends have bought into Green mythology.

    So blackouts, brownouts, bankruptcies, and energy poverty are unfortunately necessary as a learning tool. It is predictable that at some point the Pain Threshold will become too high and force a severe backlash.

    It’s a painful learning experience (as was Wiemar Hyperinflation) but the lessons were lasting ones. Didactics and science are easily swamped by irrational propaganda and mass delusions… getting smacked upside the head by reality is the next best thing.

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  10. oeman50

    After a while, you start talking about real money……

    This situation is not unlike what happended in California when they “deregulated” their electricity market. The utilites were required to supply power on demand to all, but they had to pay more for the power supply than they could get from capped rates. Talk about being unsustainable…

    1. Colorado Wellington

      “My whole life is unsustainable. In fact, I’m quite certain it will end badly.” -Layne Blanchard

    2. sod

      “This situation is not unlike what happended in California when they „deregulated“ their electricity market”

      Sorry, but that is about as false as things get. In the real world, huge power companies had full control of supply and prices and were making tons of money from customers who had no choice.

      In California, Enron was simply manipulating prices to make cash.

      https://en.wikipedia.org/wiki/California_electricity_crisis

      The cost of the crisis was about $50 billion. That could have bought a lot of renewables!

      And thanks to renewables, the same will not happen again. Thjese are putting pressure on the price of fossil fuel power companies. They simply missed the development and npow suffer for their own imcompetence

      1. AndyG55

        “That could have bought a lot of renewables!”

        And the crisis would be far, far worse.

        Renewables DO NOT and CAN NOT provide the consistency of supply that the civilised world NEEDS to continue to progress.

        Anyone suggesting anything but a tiny niche market in renewables is very obviously trying to HALT the progress of humankind, to the detriment of all.

        Still using that oil produced computer and relying on coal fired electricity, I see, sob. !!

        Without coal, gas.. you would NOT have a computer.. remember that before you continue yapping like a demented Chihuahua. !

        1. sod

          “RAnyone suggesting anything but a tiny niche market in renewables is very obviously trying to HALT the progress of humankind, to the detriment of all.”

          That is false. Renewables can easily cover abouzt 30% of demand, without any problem.

          That is not a tiny niche market.

          The niche market will sonn be filled by coal.

          Look at the graph on this bloomberg site:

          http://www.bloomberg.com/news/articles/2016-03-09/coal-is-losing-the-battle-for-the-u-s-market-badly

          This winter, coal was badly beaten by gas. But several times it even dipped below nuclear. And twice it even was below renewables. About 5% of US coal was retired last year. About 50% of coal plants are either retired or a planning retirement.

          They are replaced by gas and renewables. Watch coal becoming a niche product.

          1. yonason

            “Watch coal becoming a niche product.” – sod

            Watch civilization become a shrinking ecological niche, which is the Greenie goal, after all.
            http://www.green-agenda.com/neweconomy.html

          2. yonason

            How does it feel to be a Green tool? …a “useful idiot” in the war to destroy humanity?
            http://www.green-agenda.com/index.html

          3. Analitik

            The reduction in coal generation in the US is almost entirely due to cheap gas and has almost nothing to do with renewables, except that the distortion of energy prices in support of renewables drives up the cost of all thermal generation and the poor load following characteristics of coal plants makes this worse than for gas.

          4. sod

            “How does it feel to be a Green tool? …a „useful idiot“ in the war to destroy humanity?”

            Yes the horror. just imagine other countries get as much renewables as Germany does and a grid that is as unstable as the German grid (basucallly the mmost stable in the world).

            https://www.cleanenergywire.org/factsheets/germanys-electricity-grid-stable-amid-energy-transition

            A horrible thought surely the end of mankind.

          5. yonason

            @sod

            “‘Isn’t the only hope for the planet that the industrialized civilizations collapse? Isn’t it our responsiblity to bring that about’?
            – Maurice Strong, founder of the UN Environment Programme”
            http://www.green-agenda.com/neweconomy.html

            That’s the side you are on, the one that is the self-declared enemies of civilization.

            Grid stable? Maybe for now, but becoming rapidly unaffordable.
            https://arizonadailyindependent.com/wp-content/uploads/2015/08/ElectCostvsrenewable.png

            Why not have grid stability, low prices, and real hope for everyone in the world, not just a few scam artists and politicians?
            http://www.iloveco2.com/2009/01/green-agenda.html

      2. Analitik

        Yes, they have utterly failed to come up with a business model that copes with having to buy something that is forced on them and then having to pay others to take it off their hands.

        Guaranteed buy prices for renewable energy, guaranteed sales even if the renewable power isn’t wanted, subsidies for construction of renewable “farms”? Yes, no manipulation at all.

      3. yonason

        “And thanks to renewables, the same will not happen again….” – sod

        ENRON was all about renewables! That’s why that happened in the first place.
        https://www.masterresource.org/enron-legacy/enron-saved-us-wind-revisited/
        It’s because “renewables” require lots of cash, and the only way for ENRON to get it was to steal it.

        Now the governments are funding “renewables” with money legally pilfered from citizens, i.e., the governments are doing the creative book keeping for the “renewables.” It IS happening, only on a MUCH larger scale!

  11. John F. Hultquist

    Was all this not in the Plan?
    Thus, success now looms on the horizon.
    Folks in the USA are trying to follow along, so don’t make it any more complex.

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