Utility RWE sold roughly the same amount of power but hedged a considerably larger proportion of it over H1, it said in financial results on Thursday, a move that could mean its EUA demand will tail off over the rest of the year.

Europe’s biggest emitter had hedged >90% and >70% of its expected Y+1 and Y+2 baseload (nuclear and lignite) generation respectively by the end of Q2.

This is higher than the >80% and >40% levels hedged a year earlier.

RWE’s hedging of ‘spread’ output (hard coal and gas) was largely unchanged.

It had hedged >60% and <10% of its expected Y+1 and Y+2 ‘spread’ output, marginally down on the >60% and >10% levels of a year earlier.

“We hedge not based on our views on the market but on reducing the risks we are exposed to,” RWE’s CEO Peter Ternium told journalists during a webcast results briefing.

RWE’s electricity sales were stable at 128.6 TWh, compared to 128.4 TWh a year earlier, but the company’s EBITDA fell 7% y/y to €3.2bn as profit margins for thermal generation were squeezed, with coal generation margins in Germany down by a fifth y/y.

RWE’s hedging rates are closely watched by market participants as the company’s CO2 output accounts for almost 10% of all emissions covered in the EU ETS.

As the main buyers of EUAs, the purchase patterns of major utilities can have a major bearing on price levels. They sell most of their electricty one to three years in advance, simultaneously buying the required carbon and fuel to lock in profit.

RWE’s increased hedging is in contrast to hedging rates at other major utilities, Enel, EON and Vattenfall, which have fallen back this year.

Benchmark EU carbon prices rose just 1.6% or 12 cents over the first six months of 2015, ICE data shows.

By Ben Garside – ben@carbon-pulse.com