Germany’s energy industry a ‘disaster’ – France’s EDF chief
Profits have declined for German energy companies since Angela Merkel decided to shake up the power industry by cutting nuclear energy in favor of renewables. The impact on the energy sector is severe, and may be having a domino effect across Europe.
Henri Prolio, the Chief Executive of France’s state-owned EDF, has openly criticized Germany’s two biggest energy suppliers, RWE and E.ON.
“When it comes to energy they are in a disaster. Their two major companies – E.ON and RWE – are under huge pressure. One is more or less dead, the other one is in a very difficult situation," Henri Prolio claimed, adding that his company was doing “quite well.”
The “dead” comment refers to Germany’s second biggest utility company RWE, which posted a 62 percent drop in profit is in the process of shutting down power stations to save money.
Dusseldorf-based RWE has been struggling to improve financially. Last April the company reported its first net loss since 1949. On top of that, company debt has risen to €30 billion.
E.ON, Germany’s energy leader, which is “in a very difficult situation” according to Henri, announced a drop of 20 percent in profits for the second quarter.
Germany’s top two power companies have been in sharp decline since a ban on nuclear energy. In the wake of Fukushima, Angela Merkel said Germany would phase out nuclear power by 2022 and subsidize renewable energy.
In the next 27 years, Germany will spend €550 billion on renewable technologies like wind and solar, in the hope of attaining 80 percent renewable energy by 2050. This makes technologies like wind and solar more expensive.
Berlin has had a particularly awful week in terms of hard economic data, with no positive news. The country’s GDP outlook has been lowered by economists, exports dived to pre-financial crisis lows over the Ukraine crisis, and other economic indicators such as business confidence and industry tanked.