Germany’s second largest power producer, RWE, reported staggering losses of 5.7 billion euros over the fiscal 2016 year, after the company had posted a net loss of near 200 million euros for 2015.
RWE profits up in smoke as renewables crush wholesale prices. Image: RWE.
The latest results continue the growing string of woes occurring since 2013 when RWE posted a net loss of 2.76 billion euros – its first full-year loss since the power giant was founded in 1949.
Marketwatch here also reported that the Essen, Germany-based power company recommends scrapping the pay out of any dividends to shareholders. The scrapping of dividend payments would especially be a blow to stock owners such as municipal shareholders because they often depend on them each year to fund public facilities like schools and hospitals.
RWE scrapped dividend payments in 2015 as well.
The company booked impairment charges of 4.3 billion euros for electricity generation in 2016 “amid weak wholesale power prices“, Marketwatch reported.
Earnings were curtailed significantly through impairments of €4.3 billion. CEO of RWE AG Dr. Rolf Martin Schmitz: “The difficult market environment made impairments necessary. In addition, the nuclear energy fund imposed a substantial one-off burden on us.”
German wholesale power prices have massively eroded over the past years as a flood of highly subsidized wind and solar power has been given the right away into the power grid over fossil fuels. At times so much power is fed into the grid, especially on sunny and windy days, that the wholesale price even dips into negative territory, meaning power producers such as RWE have to pay to unload the surplus power.
Meanwhile many conventional plants must be always kept on standby for the many times wind and solar do not produce. The sub-capacity operation of the conventional power plants make them inefficient and non-profitable. On the consumer side, electricity prices have reached record levels at near 30 euro-cents per kilowatt-hour.