RWE renewables profit triples, issues UK warning

GERMANY: RWE reported a 187.7% increase in operating profit in the first half of 2015, following the completion of the Gwynt y Mor and Nordsee Ost offshore projects, but said policies in the UK could cause developments to be cancelled.

RWE's 576MW Gwynt y Mor was fully commissioned this year
RWE's 576MW Gwynt y Mor was fully commissioned this year

Profit for the company's renewables division increased to €233 million in the first six months of the year, compared with €81 million for the same period in 2014. Earnings also increased 76.9% to €382 million.

The German utility said the increase was due to the completion of the 576MW Gwynt y Mor project, in the Irish Sea off the North Wales coast, and the 295MW Nordsee Ost development in the German North Sea.

RWE said its profits were also helped by greater production levels across its wind portfolio and the sale of the Gwynt y Mor grid connection to Balfour Beatty. The asset was sold in January as part of energy regulator Ofgem's offshore transmission owner licence regime.

Warning to UK government

However, RWE issued a warning to the UK government, threatening to cancel projects if current policies progress.

"The UK government intends to cut green energy subsidies and has already abolished the exemption from the national climate protection levy. This may result in planned renewables projects no longer being profitable, which would cause them to be abandoned," RWE's financial report said.

In the government's summer budget announcement in July, the chancellor, George Osborne, said the climate change levy exemption for renewable electriciy would close. The official budget document said the removal "will correct an imbalance in the tax system by preventing taxpayers' money benefitting renewable electricity generated overseas, and by helping ensure support for low carbon generation provides better value for money for UK taxpayers".

The climate change levy is a tax on businesses' power usage, designed to encourage energy efficiency and reduce carbon emissions.

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