Analysts see share price rise for German energy companies after coal exit proposal
The end of coal-fired power production comes with profound implications for German energy companies who have banked on the fossil fuel so far, but analysts say buying shares from RWE, E.ON, Uniper, and other utilities will pay off, Kathrin Witsch writes in Handelsblatt. RWE’s share prices rose since a proposal to exit coal by 2038 had been tabled by a government commission in late January. “This of course is due to the fact that there might be billions in compensation,” analyst Holger Ferchner of state bank NordLB told the newspaper. Other factors contributing to the rise in value of energy companies are rising power prices and a better overall performance by battered German utilities in 2018. The planned merger between RWE and parts of competitor E.ON, which could be completed by the end of the year if resistance in Germany and from other European countries is overcome, could also boost the companies’ share prices, Witsch writes.
The coal exit commission proposed compensating coal plant operators who will see their assets taken off the grid in in “mutual agreements” or applying “regulatory law” for compensations if no agreement is found before mid-2020. Compensation should depend on CO2 emissions, ownership structure, linkages with the mining sector and the respective number of affected employees.