Major energy companies have written down the value of coal and oil power station assets by £600m, with RWE npower poised to cut around 440 jobs linked to closing plants.
By Rowena Mason, Energy Correspondent
Mon,22Aug,2011
The falling profitability of coal stations in the medium-term is linked to costly restrictions from Europe on carbon dioxide emissions and lower wholesale electricity prices last year.
EDF Energy has booked a £340m write-down on its Cottam and West Burton coal-fired power stations, which last changed hands for £398m and £366m respectively.
The company said they both remain "an integral part of the generating portfolio" but "expectation of future revenues" is lower.
Meanwhile, RWE npower has recorded an "exceptional impairment loss against the value of two coal and two oil fired power stations" amounting to £249m.
It said: "This has been caused by a sharp decline in the margins forecast to be earned on coal and oil generation over the next three to four years reflecting fundamental changes in the UK generation market over this period."
E.ON has also recognised a £40m impairment related to its decision not to develop its Kingsnorth coal power station any further. It decided to put off turning the plant into a "clean" coal generator because of insufficient electricity demand.
Coal is facing its demise in Britain as new stations have to meet onerous environmental standards and margins remain low.
Furthermore, nine of the UK's coal stations must close before 2015 because of European regulations on pollution.
All coal power stations were given the choice between spending millions on becoming less pollutive or running 20,000 more hours in their current form before closing.
This has caused RWE npower to take a £22m hit through expected severance and termination costs for 441 lost jobs related to the closure of coal plants over the next four years.
However, for some of this year, rising gas prices means coal has been the preferred means of generation. In July, Liberum Capital said: "We ascribe little value to coal power stations due to their short life but this 'oxygen blast' of profitability should help short-term earnings."
(By Telegraph)
By Rowena Mason, Energy Correspondent
Mon,22Aug,2011
The falling profitability of coal stations in the medium-term is linked to costly restrictions from Europe on carbon dioxide emissions and lower wholesale electricity prices last year.
EDF Energy has booked a £340m write-down on its Cottam and West Burton coal-fired power stations, which last changed hands for £398m and £366m respectively.
The company said they both remain "an integral part of the generating portfolio" but "expectation of future revenues" is lower.
Meanwhile, RWE npower has recorded an "exceptional impairment loss against the value of two coal and two oil fired power stations" amounting to £249m.
It said: "This has been caused by a sharp decline in the margins forecast to be earned on coal and oil generation over the next three to four years reflecting fundamental changes in the UK generation market over this period."
E.ON has also recognised a £40m impairment related to its decision not to develop its Kingsnorth coal power station any further. It decided to put off turning the plant into a "clean" coal generator because of insufficient electricity demand.
Coal is facing its demise in Britain as new stations have to meet onerous environmental standards and margins remain low.
Furthermore, nine of the UK's coal stations must close before 2015 because of European regulations on pollution.
All coal power stations were given the choice between spending millions on becoming less pollutive or running 20,000 more hours in their current form before closing.
This has caused RWE npower to take a £22m hit through expected severance and termination costs for 441 lost jobs related to the closure of coal plants over the next four years.
However, for some of this year, rising gas prices means coal has been the preferred means of generation. In July, Liberum Capital said: "We ascribe little value to coal power stations due to their short life but this 'oxygen blast' of profitability should help short-term earnings."
(By Telegraph)
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