European Utility Shareholders Lost Half A Trillion Euro In Five Years

Says this article (without byline) at the Economist. I found it because if this Retweet by Danny Kennedy.

As the article explains, the 20 biggest power companies in Europe had a collective value of $1 trillion at their peak in 2008, and they are worth “only” $500 billion now. And Germany’s biggest utility E-On has managed to beat that trend by declining a full three quarters in value.

The article blames this development partly on renewable energy. They are right, of course. With much more renewable energy in the mix, the days of guaranteed profit from fossil fuel and nuclear are gone.

E-On could have saved themselves a lot of this trouble if they had invested aggressively in renewable energy in Germany themselves. That investment came (and still comes) with a guaranteed profit for twenty years. That would have accelerated their problems with their existing fossil fuel and nuclear capacity. But the transition to renewable will happen anyway. Delaying it will always be a negative strategy helping only for a short-time period (which is a couple of decades, when discussing energy).

The most interesting part of this article was:

Some utilities have got into the renewables business themselves. Drax, which used to be Britain’s largest coal-fired power station, is being converted to run on wood pellets. Other utilities are big investors in offshore wind power.

That’s interesting because it shows the way ahead with existing fossil fuel plants. There is nothing wrong with running a coal plant, if you run it either on wood pellets (the first time I heard someone doing that), or on synthetic coal made from modern biomass, as Suncoal wants to do. There’s nothing wrong with running a gas plant if you fire hydrogen that has been produced from excessive solar or wind energy.

Under the present German Law on the Priority for Renewable Energy, it is not possible to run most of the coal power plants because under Article 27 of the law, feed-in tariffs are paid only for very small capacity plants. That should change. These existing coal plants need to move to biomass eventually anyway. Why not have it happen faster?

Image Credit: European Union Parliament building image via Shutterstock