Germany

Germany

RWE renewables production up 29% in H1

Increase in 'green' energy profit outstrips group-wide result

Profitability and electricity generation achieved by RWE's renewables business grew more quickly in the first half of 2012, than that of the group as a whole. The German energy firm told investors yesterday that "renewables remain our most important area of growth" and that it was "investing heavily...all over Europe".

Releasing its H1 results, RWE offered no detailed figures for the performance of its offshore wind assets, but reported making "considerable progress" in the UK North Sea. It expects to complete construction on the Greater Gabbard offshore wind farm this year.

It also sees "good opportunities" for a political solution to the offshore cable liability issues that have dogged its German North Sea project, Nordsee Ost.

Renewables generation

RWE's total electricity production grew 7.9% during H1, reaching 112.5bn kWh. Renewables account for just 5.2% of the group's total electricity output, but the 29% growth in renewables generation far outstripped that from the group as a whole.

Profit from the renewables business also grew more quickly than the group's bottom line. The renewables division's operating profit rose 10.1%, to €98m; slightly more than one percentage point above the group rate. Growth in renewables profit stemmed from both greater production and higher electricity prices.

Nevertheless, renewables' H1 earnings accounted for just 2.7% of group operating profit. A renewables workforce of 1,475 full-time staff represents 2.1% of RWE's total headcount.

Further profit growth

Looking ahead, RWE forecasts that its renewables business will achieve a result this year, "above last year's level", provided weather conditions remain normal.

The only factor cited by RWE as an ongoing drag on renewables performance was "significant" project development costs. RWE offshore wind assets currently under construction include Gwynt y Mör, Nordsee Ost and Greater Gabbard. It will also submit a consent application for the Atlantic Array project later this year. Its UK development pipeline also includes the Galloper project, planned as an extension to Greater Gabbard. This is currently the subject of an "examination" by the UK Planning Inspectorate. RWE's German offshore wind pipeline includes Nordsee Innogy 1, 2 and 3.

New fossil-fuel power stations being built by RWE in Europe will be "ideal partners" for wind and solar photovoltaics generation, says the company. These will boast "rapid reaction capabilities", allowing them to "decrease or increase capacity by more than 500MW within 15 minutes".

Also of note are RWE's comments on nuclear power generation. It is "exiting from nuclear power with conviction", adding that "the cluster risk this technology represents is not an option in the long run".

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