Statkraft looks beyond low power price with German gas plants

Wed Feb 12, 2014 7:32am EST

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ESSEN, Germany, Feb 12 (Reuters) - Norway's Statkraft said on Wednesday it will persevere with its three remaining German gas-fuelled power plants despite weak electricity prices and grid priority for green energy.

The state-owned power firm said it was paying some 20 million euros ($27.35 million) a year to keep them open.

"We're not earning our full operating costs, we're having to pay this out of our pocket unless the situation changes," Juergen Tzschoppe, managing director of German Statkraft Markets GmbH, told reporters at a trade fair.

"We hope to produce profitably again in the medium term."

Operating results for Germany, where its turnover fell 8.2 percent in 2013 year-on-year to 19.1 billion euros, will be reported on Thursday as part of the Norwegian group's results.

Tzschoppe said it did not make sense to mothball the plants when he could foresee that the current distortions - which have hit Statkraft's rivals such as E.ON and RWE just as badly - would be over in five years.

"At that stage, when power demand recovers, new capacity will be desperately needed," he said.

Statkraft has already closed the 430 megawatts Emden and the 510 MW Robert Frank gas-fired plants in the last two years because German subsidies bolstered low-carbon wind and solar energy generation, boosting supply and lowering prices.

It is now left with the 800 MW Knapsack I, the 400 MW Knapsack II, which it only opened last year, and a 200 MW plant at Herdecke.

Six years ago, when the investment decision for Knapsack II was made, power prices were twice as high as now, when they are near 8-year lows.

Power production from Statkraft's gas fired plants in Germany halved in 2013 to one terawatt hour compared with 2012.

In the meantime, waiting was not the only option. It was possible to pack up the plants and sell them overseas. But Statkraft was happier to lobby for change inside Germany and focus on more profitable areas, Tzschoppe said.

Utilities are lobbying for renewables output to be curbed, and existing plants to be forced more into the traded market.

They also want to receive payments to keep open coal- and gas-fired plants, as they are needed to produce power during times of unfavourable weather when there is no renewable supply.

Statkraft makes money from its wholesale market activities as a power trader, bundling some 8,500 MW of capacity from small hydro, biomass and solar producers and marketing it on their behalf. It also steers some British wind plants from Germany.

($1 = 0.7312 euros) (Reporting by Vera Eckert, editing by William Hardy)

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