RWE details hedge sales for coal, nuclear power

RWE, one of Europe’s biggest power generators, has locked in forward sales and prices for output from it conventional generation plants for coming years after improving earnings prospects for 2020 due to higher wholesale prices.

RWE on Thursday reported an 18 per cent rise in first-half adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) while notably doubling EBITDA in coal and nuclear generation to 310 million euros.

RWE secured its generation position and accompanying carbon emissions certificates for 2020 at a hedge margin of 27 megawatt hours (MWh) and is reaping ongoing profits on higher realised prices, slides it presented on an analysts call showed.

Calendar Year 2020 supply in the wholesale market at the end of 2019 sold at around 40 euros/MWh, according to Refinitiv Eikon data. The contract for 2021 delivery has gained 15 per cent from its 2020 low in May.

Wholesale power traders and analysts use hedge rates to track company earnings and to assess future volumes tied up with counterparties and the value of forward production.

RWE has locked in more than 90 per cent of its output in 2021, 2022 and 2023 at 32 euros, 32 euros and 26 euros, respectively, after accounting for cost of carbon emissions certificates, the slides showed.

The German utility has hard coal and brown coal plants as well as gas, nuclear and renewable energy generation capacity.

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