Solar surge hurts coal, deepens Merkel's puzzle (Germany) [View all]

[jpak]

Last edited Fri Jan 20, 2012, 08:19 PM - Edit history (1)

http://www.delawareonline.com/article/20120120/BUSINESS09/120119057/Solar-surge-hurts-coal-deepens-Merkel-s-puzzle

Germany is installing so many solar panels that profits at coal-fired power stations run by EON AG and RWE AG may slide more than 40 percent by the middle of 2012.

The country, Europe’s biggest electricity market, installed a record 3,000 megawatts of new panels in December, the Bonn- based Bundesnetzagentur, the network regulator, said this month. The prospect of a glut of power may drive the margin from burning coal to generate electricity, the so-called clean-dark spread, as low as 5 euros ($6.43) a megawatt hour by July, according to UBS AG. It was at 8.70 euros at 8:15 p.m. in Berlin Wednesday, data compiled by Bloomberg show.

"There is not much overcapacity yet, but it will get worse as there is a lot of new supply coming," Patrick Hummel, an analyst at UBS in Zurich who has covered German energy for more than 10 years, said by e-mail on Jan. 16. Germany may be oversupplied for at least five years, according to the bank.

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Operators of coal and gas plants including EON and RWE lose a combined 300 million euros in pretax earnings per year, based on current installed solar capacity cutting operating hours at fossil-burning plants, according to Hummel.

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