RWE joins other European utilities in advancing Q1 hedging

Published 11:39 on May 12, 2016  /  Last updated at 12:03 on May 12, 2016  /  EMEA, EU ETS  /  No Comments

Utility RWE, the EU’s biggest emitter, joined other generators in ramping up its carbon hedging over the first quarter, while also selling more electricity than a year earlier.

Utility RWE, the EU’s biggest emitter, joined other generators in ramping up its carbon hedging over the first quarter, while also selling more electricity than a year earlier.

RWE had hedged more of its expected generation than a year earlier, its quarterly results showed Thursday.

This could prove bearish for carbon prices as it could lower RWE’s future demand for EUAs. The company’s demand outlook is particularly influential for the EU ETS as a whole because its carbon footprint is around 8% of the entire scheme.

RWE had hedged more than 90% of both its outright power generation – lignite and nuclear – and its spread-based output – hard coal and gas – for the current year, up from >90% and >70% respectively for the corresponding period a year earlier.

For Y+1 electricity sales, RWE said its hedged percentages for outright and spread-based output were >90% and <10% respectively, up from >60% and >20% a year earlier.

And for Y+2, RWE said its hedged percentages for outright and spread-based output were >70% and <10%, compared to >30% and <10% the year before.

Over the first quarter, RWE had increased its reported hedging over those three years by a total of at least 40 percentage points, in line with its Q1 hedging a year earlier but up on the 10 percentage points recorded during the previous quarter.

RWE’s electricity sales climbed 4.8% year-on-year over the period to 70.1 TWh. The utility’s total power generation rose 1.6% to 57.4 TWh.

RWE’s shares rose 6.6% after the results were released, which showed a better-than-expected 2.3% drop in adjusted net income to €857 million as “unusually high earnings” from energy trading offset slumping power prices.

FACTFILE

  • Utility hedging rates are closely monitored by participants in the EU ETS because the data can provide a window into existing and future EUA demand from the bloc’s biggest allowance buyers.
  • Vattenfall, CEZ, E.ON and Enel have already reported slight advances in Q1 hedging, while ENBW is due to on Friday.

By Ben Garside – ben@carbon-pulse.com

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