One of the largest electricity utility companies in Germany, RWE, has posted its first loss in 60 years. RWE CEO Peter Terium said that the company had got its strategy wrong by not having invested more heavily in renewables, and that it was time to change course.
The company, along with Germany’s other utilities, has long fought against the country’s EEG legislation—the incredibly successful policy program that has encouraged the uptake of renewable energy sources like wind and solar, allowing the country to begin to phase out its nuclear and coal generators. The steady vision and consistent implementation of the EEG has allowed Germany to become one of the world’s renewable energy leaders.
Mourning that RWE had entered the renewable energy market ‘possibly too late’, Mr Terium noted that the company would be closing down 7GW of new, excess coal and gas generation capacity in the next few years as such plants become less and less profitable to run. “This trend will continue in the next few years and is irreversible,” he said in a prepared statement.
Germany’s huge amount of solar PV capacity has played a big role in reducing market electricity prices, mainly by reducing the capacity that needs to be brought online to meet peak electricity demand. As in Australia, power generation plants designed to run to meet peak demand can potentially be some of the most lucrative, as the power they produce can be sold at a premium.
But solar PV—especially distributed solar PV—reduces the need for peaking plants to be fired up by allowing many homes and businesses access to ‘free’, on-site solar power during periods of peak demand.
Germany recently announced that it would begin phasing out incentives for renewable energy generation given that such technologies are now ‘mainstream’. RWE seems to be working around this new reality, with Mr Terium saying that the company will embrace a new strategy to remain viable.
The company will aim to assume the role of ‘integrated energy manager’. In contrast to the traditional role of a utility, which has to date has been to build large, centralised power plants for generating and delivering electricity across a network, the role of an integrated energy manager would be to tie together all the smaller components to ensure that the system as a whole runs as efficiently as possible.
“In other words, someone to coordinate the many activities of the individual market players: someone to look after networking the various individual initiatives involved in the transformation of the energy system at a technical and economic level – to bring them all together as a single, integrated unit.”
© 2014 Solar Choice Pty Ltd