RWE details hedge sales for coal, nuclear power

FRANKFURT (Reuters) - RWE RWEG.DE, 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% 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 TRDEBYZ1 has gained 15% 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% 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. CFI2Zc1

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

RWE’s data factored in the impact of an agreed phasing out of coal plants under deals between the government and power producers to end the use of coal by 2038.

While coal still accounts for 30% of its generation capacity, that will fall below 10% within a decade as RWE expands its renewable energy capacity.

Reporting by Vera Eckert; editing by Jason Neely