E.ON hedging rates steady, CO2 dives 25% in 2015

Published 11:07 on March 9, 2016  /  Last updated at 11:38 on March 9, 2016  /  EMEA, EU ETS  /  No Comments

Utility E.ON, Europe’s third biggest emitter, reported a steady rate of power generation and forward hedging rates in 2015 as the company’s ETS-regulated CO2 output plunged 25%.

Utility E.ON, Europe’s third biggest emitter, reported a steady rate of power generation and forward hedging rates in 2015 as the company’s ETS-regulated CO2 output plunged 25%.

For its expected outright central European generation, E.ON said it had hedged 100% of its Y+1 and Y+2 output and 40% of its Y+3.

This matches the level of a year earlier and represents no advance on Y+1 and Y+2 hedging rates as of the end of Q3-2015.

The figures showed E.ON had slowed its hedging rates over the second half of 2015, after advancing slightly on its historical levels over the first half.

Its power sales were virtually flat year-on-year at 780.9 TWh versus 780.2 TWh in 2014.

E.ON said its EU ETS-regulated CO2 emissions from power and heat fell 25.4% to 46.7 million tonnes.

“It results from the fact that in 2015 we produced less power and had a lower-carbon generation mix , thanks to a slightly higher proportion of renewables and natural gas and a decline in coal-fired generation,” the results said.

E.ON reported its biggest ever annual loss due to multi-billion write-downs of its fossil fuel burning plants as wholesale power prices slumped and renewables get priority grid access. Its net loss more than doubled to €7 billion.

The annual results are the unified company’s last after it opted to spin off its conventional generation and trading business into Uniper, which is due to list in the second half of 2016.

HEDGING SEASON

EU utility hedging figures may have been affected by an adjustment of expected forward power sales, which may have been downgraded due to lower anticipated demand from smarting industrials, warmer winter temperatures, or Europe’s economic malaise.

As the main buyers of EUAs, the purchase patterns of major utilities can have a major bearing on carbon prices.

Many utilities in western Europe sell most of their electricity one-to-three years in advance, simultaneously buying the required carbon and fuel to lock in profits.

Of the other major utilities to have reported 2015 results, RWE’s hedging rates were mixed while Vattenfall’s were slightly down year-on-year after slowing in Q4.

CEZ is due to report on Mar. 15 and ENBW Mar. 21.

By Ben Garside – ben@carbon-pulse.com

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