* CEO sees poor power and gas demand in 2013
* To review plants with 11,000 MW including new Irsching 5
* E.ON to focus more on coal ad LNG trading
By Vera Eckert
DUESSELDORF, Germany, March 13 German utility
E.ON said it expected demand for electricity and gas
in its core European region to be so weak in 2013 that it might
have to mothball some of its most modern power stations.
Power demand in Germany, Europe's biggest economy and energy
market, fell 1.4 percent in 2012 to 552.3 billion kilowatt hours
(kWh), according to industry data.
As a result, German wholesale electricity prices have
dropped over 30 percent in the past two years, while gas prices,
linked to the oil market, have remained relatively high,
undermining the profitability of gas-fired power stations.
Because of the margin pressure, E.ON has said it will review
selected European power stations with a total capacity of 11,000
megawatts (MW) for their productivity, including its $500
million, highly modern Irsching 5 gas-fuelled plant in southern
Germany, only opened three years ago.
By way of comparison, Germany's daily power demand is
usually around 80,000 MW.
"If the profitability of this plant is not restored, we will
have to close it," E.ON Chief Executive Johannes Teyssen said on
"We will take a decision at the end of this month," he
Teyssen said he expected another overall decline in European
power and gas demand for 2013 as the region's economy slump
curbs industrial activity.
"Power demand in northern Europe could be relatively stable
and gas demand fall slightly. In southern Europe, demand (for
both) should fall significantly."
RENEWABLES UNDERMINE PROFITS
In Germany, furthermore, E.ON said the government's decision
to phase out nuclear energy and accelerate the expansion of
green power had curbed profits.
Renewable power generation, such as wind or solar, receives
priority grid access, and its generators are paid above-market
subsidies, eroding profit margins for thermal power stations.
"It cannot be that year after year more money is spent on
renewables while operators are left with the cost of
system-relevant power stations and are forced to continue
operating under uneconomic conditions," Teyssen said.
E.ON in 2012 sold a stable 181.4 billion kilowatt hours of
power in Germany, its annual report showed, which was a quarter
of its total group power sales. In other EU countries, its sales
declined 7 percent year-on-year to 145.9 billion kWh.
Wholesale gas sales placed in the German market by the E.ON
optimisation and trading subsidiary rose to 438 billion kWh last
year, up 11 percent from 394.4 kWh a year earlier.
E.ON cited weather and new customer acquisitions for its
relative success in Germany.
As a result of its power generation, E.ON said its carbon
emissions in Europe last year totalled 89 million tonnes of CO2,
up slightly from 2011.
Teyssen said that one of the new trade focus areas would be
liquefied natural gas (LNG), where there were international
LNG prices in Asia, Europe and North America vary strongly,
with Asia typically paying around $17 per million British
thermal units (mmBtu), Europe slightly above $10 and North
America only around $3.50 per mmBtu.
E.ON's gas subsidiary, Ruhrgas, is to merge with its trading
division in spring.
E.ON also said that it would exploit its huge global coal
(Editing by Henning Gloystein and Jane Baird)