In the media: Loss in profits at E.ON; biogas farmers revolt
Conventional power business causes E.ON loss in profits / debt reduced
Half way into its “transformative year,” Germany’s largest utility E.ON has reported a reduced operating profit and underlying net income compared to 2014. The half-year EBITDA fell by 13 percent from 4.9 billion to 4.3 billion euros and underlying net income decreased by 21 percent from 1.5 to 1.2 billion euros. The reasons were a further decline in wholesale electricity prices, said the new E.ON CFO Michael Sen, adding that in Sweden and Germany, shorter operating times of E.ON’s nuclear power stations also had an effect. Other reasons for the reduction in operating profits were the lower oil prices and the weak ruble. While profits from renewables also fell by 17 percent (primarily due to divestments), Sen said earnings from new offshore wind parks in the North Sea would have a positive effect in the quarters ahead.
CEO Johannes Teyssen said that E.ON’s difficult position was also due to a distorted power market in Germany, where for example highly efficient gas-fired power plants couldn’t be operated profitably. The government was lagging behind in shaping a new power market design that would “establish a reliable regulatory environment for the future of the energy supply and the implementation of the energy transition.” Other European countries like the UK were acting more realistically by implementing capacity reserves.
E.ON reduced its economic net debt by 4.1 billion euros and has reduced the carbon intensity of its power generation in Europe by 35 percent since 1990, the management said. Preparations for E.ON’s split into two companies by 2016 were on schedule.
Find the press release and interim report in English here.
“Power privileges for industry come under fire”
The German association for small traders (Handelsverband Deutschland, HDE) and the Federation of German Consumer Organisations (VZBV) demand that the government reduce privileges for energy intensive industries, the Handelsblatt reports. These companies are currently fully or partially exempt from paying the renewable surcharge that all power consumer are paying on power bills. If these privileges were reduced, households and small traders would have to pay 380 million euros less for power per year. The two associations even allege that the government is keeping the renewables surcharge artificially high to enable a continuous decrease of the levy in the following years in order to portrait the 2014 Renewable Energy Law reform as a success, the article says.
“Vattenfall reclaims millions in taxes”
Power station and coal mine operator Vattenfall demands a payback of several million euros in trade income taxes from local communities in Lusatia, rbb Radio reports. The Swedish utility announced that falling wholesale prices for power had led to value adjustments in its lignite operations, which would result in taxes paid to the state and towns to be cut in half in 2015 and tax refund claims for the years 2014 to 2016. The department of Peitz, where Vattenfall operates lignite power station Jänschwalde, will have to relinquish eight million euros, the rbb article says. The town of Spremberg will lose 15 million euros, making up one-third of its annual tax income. Vattenfall’s move was obviously designed to improve conditions for a planned sale of its lignite operations in eastern Germany in 2016, the article says.
Read the article in German here.
“The fight of the nuclear industry”
Utilities operating nuclear power stations in Germany for a long time have enjoyed high profits, but now they all belong to the losers of the Energiewende, writes Fritz Vorholz in an opinion piece for Die Zeit. This gives them a “near irresistible urge” to abscond from paying for the nuclear clean-up and defying the “polluter pays” principle by reorganising and splitting their companies. These moves, as recently seen at E.ON can result in their clean-up responsibilities being limited to five years. The Minister for Economic Affairs and Energy wants to prevent this with a new law. But the risks for the taxpayer, that the companies will not have enough money to pay for nuclear decommissioning and waste storage, remains.
Read the op-ed in German here.
“Villages on the edge”
The small village of Holzweiler has become a beacon of the energy transition, writes Kristian Frigelj in Die Welt. Unlike several neighbouring villages that have been removed to make room for the lignite mines of RWE, Holzweiler could be one of the first communities to survive as the red-green government of North-Rhine Westphalia has decided in 2014 that RWE could mine all the lignite it needs without touching the village. Now its inhabitants are hoping that they won’t end up as an island in the middle of an open-cast mine. RWE wants to fully use its mining licence up till 2045 but environmental activists say this won’t be necessary, thanks to the Energiewende that reduced the need for fossil power from lignite, Frigelj writes.
“The rebellion of the biogas farmers”
Until 2014, running a biogas plant in Germany was a profitable and secure business, writes Jost Maurin in a feature for the taz. Power from biogas was paid for by feed-in tariffs, set for 20 years in the Renewable Energy Act (EEG). Crops like maize for biogas production covered 11 percent of Germany’s arable land in 2014. But since the rules in the EEG changed in August 2014, many biogas farmers are “feeling pushed into a corner,” one of them told Maurin. The reform has reduced feed-in tariffs so much, that hardly any new plants have been built. The existing operations have seen their guaranteed income cut – with retroactive effect – the farmers say and have launched a complaint with the German Constitutional Court. Meanwhile environmental activists fight the monocultures of biogas farmers and say that the land should instead be used for ecologic farming.