4C is now TGS

We are excited to announce a significant milestone in 4C Offshore's journey. Our integration into the TGS family marks the beginning of a new era in offshore wind market intelligence.

Learn what this means for you!

RWE stretched to limit with Germany's coal phase-out plans

By: Tom Russell 16/01/2020 RWE

Corporate General

German electric utility company RWE has announced that is had agreed to conform to the German government's plans to phase out coal power production however, it claims that the compensation it will be paid by the government falls nearly €1bn shy of the financial damage it will suffer as a result.

The German government has unveiled the “Federal/State Agreement on Coal Exit”. Among other points, it contains a €40 billion decommissioning path to end lignite-based power generation by 2038. By 2030 Germany aims to source 65% of its electricity through renewable energy generation.

The announcement follows news earlier this week that the European Union has committed to becoming the first climate-neutral bloc in the world by 2050. Through the European Green Deal's Investment Plan, it seeks to mobilise public investment and help to unlock private funds through EU financial instruments, notably InvestEU, which it claims would lead to at least €1 trillion of investments.

Whilst many hail this as a big stride towards tackling the climate challenge. RWE stated it will be considerably burdened by the coal and lignite phase out plans. The German government has assured a compensation of €2.6 billion for the company to be paid over the next 15 years, however, RWE claims this is significantly lower than the actual financial damage of about €3.5 billion that it will suffer. The company also anticipates that more than 3,000 jobs will be cut in the short term with numbers rising to the total will be about 6,000 by 2030.

RWE claims that its financial worries stem from the German governments accelerated plans to the halting lignite power production. The company outlined that profits lost as a result of the premature shutdowns are not included in the total amount and that the preservation of the Hambach forest and the associated, more complex new open-cast mine planning will have an impact on its financial damage.

Markus Krebber, CFO of RWE AG, said: “RWE is suffering considerable financial losses. In the end, however, we will have to weigh up the hard conditions imposed by the German government and the great uncertainty that will arise for us and our employees without an agreement”.

Dr. Rolf Martin Schmitz, CEO of RWE AG commented: “The long discussion was an enormous emotional burden, especially for our staff. They rightly expect that reliability has now been achieved. After all, reliability is essential if they are to be able to do their responsible work for a secure electricity supply with all their might. It is an imperative of fairness and respect that all those involved - politics, society and the company - work together to ensure that the solution that has now been achieved will last in the long term.”

The phase out of coal and lignite following push for carbon neutrality and renewable energy production in both Germany and wider Europe is a double edged sword for RWE. Whilst the company is subject to the closure of its coal and lignite power plants, it is also one of the largest renewable energy generators in the world following a complex asset swap deal with E.ON last year with plans to be carbon-neutral by 2040. RWE Renewables, a subsidiary of RWE, now has more than 9 GW of installed capacity and 2.6 GW under construction. It has committed to a net €1.5 billion investment annually for continued expansion.

For more information on offshore wind farms worldwide, click here.

Premium

4C Offshore Premium, our most popular subscription, gives you full access to use the 4C Offshore WebApp which includes exclusive offshore wind, transmission and vessel reports, news and downloads.

Request a 30 minute Demo

RWE stretched to limit with Germany's coal phase-out plans

Back to News

Trending News!