Table of Contents
Rationale behind RWE’s Losses and Revival Strategy
For the first time in its 60 years of operation, the Germany-based European power giant Rheinisch-Westfälisches Elektrizitätswerk (RWE) has posted a net loss, amounting to €2.8 billion ($3.8 billion) for the fiscal year ended 2013. This can be attributed to impairment losses of €4.8 billion ($6.6 billion) following a drop in the value of its power plants. Increasing subsidies for renewable energy have posed a serious threat to coal and gas-fired power plants, leading to losses in profitability and applicability. The company’s operating result declined by 8% in 2013 to €5.9 billion ($8.1 billion) compared to 2012, in which conventional electricity generation alone accounted to €1.4 billion ($1.9 billion). This has forced RWE to plan to shut down 7 Gigawatt (GW) of conventional power generation based on hard coal and gas across Europe. Similar situations have arisen for other major players such as Électricité de France (EDF), E.ON and Gaz de France Suez (GDF Suez). This may lead to capacity and supply restraints and further to a deteriorating power scenario across the continent.
- Reasons for RWE's losses.
- Strategic steps taken to revive financial conditions.
- The impact of RWE's losses in the European Power Industry.
Reasons to buy
- Gain insight into the reasons behind the loss of thermal power stations in Europe.
- Comprehend the strategic moves for financial revival.
- Identify the impact of RWE's losses on Europe.
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