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Capacity Market reinstatement lifts RWE forecasts as utility boasts ‘formidable’ renewables prospects

Image: RWE.

Image: RWE.

The reinstatement of the Capacity Market, coupled with better than expected performance, has caused RWE to upgrade its full-year guidance by nearly 30%.

Late last week, the European power giant confirmed that it was now expecting earnings for the full year to come in somewhere between €1.8 and €2.1 billion, an upgrade of around 29% on the €1.4 - €1.7 billion range previously placed on record.

This comes despite a marked decline in the firm’s revenues year-on-year, which have taken a hit as gas-related revenues have almost halved as a result of a reclassification owing to RWE’s sales of innogy E.On.

But the firm was provided a significant lift late last month when the European Commission cleared Britain’s Capacity Market scheme to continue following a shorter-than-anticipated investigation. That clearance means the scheme can now continue, with future auctions and outstanding payments given the go-ahead.

RWE is owed some €230 million - €50 million for 2018 and €180 million in 2019 – in payments that had previously been blocked by the scheme’s suspension. Now that has been lifted, RWE expects those payments to be made in full early next year, lifting its top line.

The upgrade to its forecasts came as RWE also reported adjusted earnings for the nine months ending 30 September 2019 to €1,442 million, while CFO Markus Krebber lauded the company’s future prospects.

“RWE is profitable in operating terms and we have a very solid equity base. Our finances have put us back in a position to achieve growth – above all in the renewable energy business where we have formidable prospects. These are good reasons to tackle the tasks ahead of us with great optimism,” Krebber said.

RWE has undergone a transformational year as it pivots away from being a multi-faceted energy company to being a pureplay renewables developer, enacting a wide-reaching asset swap with fellow German utility E.On that has seen it dispose of interests in business units such as innogy.

In late September RWE established itself a target of becoming carbon neutral by 2040, doubling down on investments in large-scale renewables and energy storage technologies alongside the decommissioning of its existing coal plants.

Last week RWE placed its pan-European renewables pipeline at some 20GW, which it aims to realise by investing up to €1.5 billion each year.

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