Eon, Germany’s biggest utility by revenues, is considering the closure of one of Europe’s most modern gas-fired power stations as ructions on the European electricity market forced it to slash its profit forecast for the current year by almost one-third. Eon is planning to shut down of its Irsching plant in Bavaria in March and other plants could follow.
The rapid growth of renewable energy sources had made coal and, especially, gas-fired power stations “largely uneconomic to operate”, the company said. It forecast underlying net profit would sink to €2.2bn-€2.6bn in 2013, down from an initial estimate, published last year, of €3.2bn-€3.6bn, and from a profit of €4.3bn in 2012.
“We can’t just continue operating conventional plants in the hope something will change,” said Johannes Teyssen, chief executive. Eon would decide on the shuttering of its Irsching plant in Bavaria in March and other plants could follow, he said, adding rivals in France and the UK had already announced similar moves.
The German government’s ambition to replace nuclear power with renewable energy sources by 2022 has added to the boom in “green” energy investments, which has been fed by price guarantees going back a decade. A plunge in wholesale electricity prices has eroded the profits of conventional plants.
Eon said the “unmanaged growth” of renewable energy sources and their privileged access to the market was forcing fossil-fuel plants to spend more time idle, with gas plants suffering more than coal-fired ones because of higher raw material costs.