German utility RWE said Wednesday it would take 3,100 MW of generation capacity offline in Germany and the Netherlands, owing to a two-thirds drop in its Conventional Power Generation Division's operating result.
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The company said the boom in solar energy meant that, "many power stations throughout the sector and across Europe are no longer profitable to operate."
Although the company announced 3,100 MW of capacity to come off-line as a headline figure, 4,265 MW is listed for summer, long-term mothballing, contract termination or decommissioning.
A further 897 MW of coal and lignite is under "intense review", while the prospects for an additional 1,450 MW of contracted hard coal plants are being considered.
The company expects to mothball long term 1,765 MW of gas capacity, including 1,250 MW in Germany and 515 MW in the Netherlands.
The Gersteinwerk F and G plants in Germany will be mothballed from third-quarter 2013 and second-quarter 2014 respectively. A combined 540 MW of topping gas turbine capacity will be mothballed at the Weisweiler lignite plant from third-quarter 2013.
Two gas turbines, each of 360 MW capacity, will be mothballed for the summer at Emsland from the second-quarter of next year. The company also announced, without giving details due to confidentiality, the termination of 1,170 MW of hard coal contracts in the German market between fourth quarter 2013 and fourth quarter 2014.
In the Netherlands, the Amer 8 hard coal plant is to be decommissioned from first-quarter 2016, pending a final decision from the Dutch authorities. The 430 MW Moerdijk gas plant is slated for long-term mothballing from fourth-quarter 2013, in addition to 85 MW of gas capacity mothballed earlier this year.
Other plants remain under "intense review". These include the 250 MW Westfalen C hard coal plant, the 287 MW/285 MW Frimmersdorf P&Q lignite units and the 70 MW Goldenbergwerk J lignite unit.
RWE earlier reported an operating result of Eur4.09 billion in first-half 2013, up from Eur3.64 billion in the same period of 2012, and first-half EBITDA of Eur5.5 billion, compared with Eur5.04 billion in January-June 2012.
But the company's first-half results were strongly boosted by a one-off payment arising from arbitration proceedings with Russia's Gazprom over gas prices.
Net income for the period dropped 38% to Eur979 million from Eur1.6 billion in first-half- 2012, due mainly to a market-induced impairment loss of about Eur800 million for RWE's Dutch generation portfolio.
Net of capital expenditure on property, plant and equipment and intangible assets, RWE said free cash flow was negative Eur418 million, adding that though still negative, this was an improvement on the negative Eur740 million for the same period last year. RWE still has two hard coal power plants under construction at Hamm and Eemshaven.
Although the payment from Gazprom was a one-off, RWE confirmed its forecast for the whole of 2013 made in March this year, which expects an operating result of about Eur5.9 billion and recurrent net income of around Eur2.4 billion for the year.