FRANKFURT, Aug 9 (Reuters) – First-half core net profit at RWE plunged 40 percent, hit by Germany’s decision to phase out nuclear power , a nuclear fuel tax and unprofitable gas sales.

Germany shut down eight nuclear power plants after Japan’s Fukushima nuclear disaster and decided to phase out nuclear power completely by 2022, overturning legislation that had originally extended the lifespan of 17 nuclear power plants.

Germany’s largest power producer said on Tuesday it took provisions to dismantle its nuclear power plants and wrote off nuclear fuel rods, just as billions of euros of investments it made in recent years put a strain on its balance sheet.

The financial burden for the nuclear shut-down and the nuclear fuel tax totalled 900 million euros ($1.27 billion) in the first six months of this year, RWE said.

At the same time, RWE’s gas business suffered from a margin squeeze as market prices remained well below what it has to pay its suppliers in long-term oil-indexed contracts, and the company said it expected burdens to increase over the next year.

First-half recurrent net profit fell to 1.67 billion euros from 2.75 billion a year earlier, just falling short of the 1.71 billion euro average estimate in a Reuters poll.

RWE is especially vulnerable to the nuclear exit because it relies heavily on nuclear and coal-fired power generation and the debt-laden company would need to invest a lot of cash to bolster its gas and renewable energy business.

BERLIN, June 30 (Reuters) – Germany’s E.ON (EONGn.DE: Quote, Profile, Research, Stock Buzz) feels no pressure to replace nuclear power plants with alternatives after a national policy shift in energy policy.

“There is no strategy to replace lost nuclear capacity one-to-one. As an entrepreneur I always ask myself is my investment profitable?,” Chief Executive Johannes Teyssen said on Thursday on the sidelines of a conference.

This implies E.ON will have to buy more electricity from European competitors, which will burden earnings. Teyssen declined to comment on how strongly this will weigh on group profit.

Germany’s lower house of parliament on Thursday passed a set of laws to back a strategy shift away from nuclear energy in the wake of Japan’s nuclear crisis and entailing a total withdrawal from nuclear, a quarter of its power supply, up to 2022.

“Naturally, there will be an emphasis on renewable and decentralised energies in Germany, which is also in response to the political will to spur on such projects,” Teyssen said.

E.ON will prioritise wind power, especially offshore and study gas-to-power plants on a case by case basis, depending on their potential profitability, he added.

Germany has just shut well over 8,000 MW of old nuclear capacity at the four big operators after a politically inspired three-month safety moratorium.

BERLIN, June 30 (Reuters) – Germany’s lower house of parliament overwhelmingly approved an exit from nuclear energy by 2022, setting the seal on a policy U-turn by Chancellor Angela Merkel driven by Japan’s Fukushima disaster.

Opposition deputies from the centre-left Social Democrats (SPD) and Green Party joined lawmakers in Merkel’s centre-right coalition in supporting the key measure in an energy reform bill in its third and final reading.

Calling it Merkel’s “Waterloo”, the SPD and Greens said ahead of the vote the nuclear phase-out vindicated three decades of bitter opposition to nuclear power in Germany.

But German industry and the country’s neighbours fear the chancellor’s change of heart on nuclear plants — late last year she called them safe and advocated keeping them open longer – could imperil the power supply in Europe’s biggest economy.

The upper house (Bundesrat) debate on the package on July 8 will be a formality as the chamber representing Germany’s states could only block the package with a two-thirds majority — not likely in a house where Merkel is only marginally outnumbered.

The government, struggling to hit tough mid-term targets for reducing greenhouse gases, faces accusations from the renewable energy lobby that it has missed a chance to promote growth of wind and solar power more aggressively.

European Energy Commissioner Guenther Oettinger, speaking to a conference in Berlin as the Bundestag (lower house) debated the package of power laws nearby, said Germany’s neighbours were worried about its programme of nuclear shutdowns by 2022.

BERLIN, June 30 (Reuters) – Germany’s parliament looked set on Thursday to approve an exit from nuclear energy by 2022, a U-turn by Chancellor Angela Merkel driven by Japan’s Fukushima crisis and described by anti-nuclear opponents as a victory.

Calling it Merkel’s “Waterloo”, the centre-left Social Democrats (SPD) and Greens said the nuclear phase-out vindicated three decades of bitter opposition to nuclear power in Germany.

But German industry and Germany’s neighbours fear the chancellor’s change of heart on nuclear plants — late last year she called them safe and advocated keeping them open longer – could imperil the power supply in Europe’s biggest economy.

European Energy Commissioner Guenther Oettinger, speaking to a conference in Berlin as the Bundestag (lower house) debated a package of power laws nearby, said Germany’s neighbours were worried about its programme of nuclear shutdowns by 2022.

He said closing the oldest eight of Germany’s 17 nuclear plants after a tsunami hit Japan’s Fukushima plant in March had already reduced the total European power supply by 2-3 percent, “which was manageable; the headlines were bigger than the cut”.

But he added: “Europe must do what it can so the process of creeping de-industrialisation does not proceed.” He urged Berlin to coordinate the nuclear exit with its European Union partners to ensure stable power supplies and stop costs from rising.

Merkel, a conservative with one eye on her own coalition’s declining popularity and growing support for the Greens, has dismissed such worries, telling pro-nuclear neighbour France that Germany can get its power via renewable technology.

BERLIN (Reuters) – An uncontrolled renewable power expansion in Germany could threaten the stability of energy grids, the head of energy agency Dena told Reuters on Wednesday.

Failure to connect new capacity near demand centers or near transport grids or storage facilities would waste assets or put at risk the grids’ stability, said Dena’s director, Stephan Kohler, in an interview on the sidelines of a sector conference.

“My demands for the new renewable energy laws would be that additional capacity is to be built only where there is an existing network infrastructure,” he said.

“Another prerequisite would be that it must be possible to absorb the new capacity through demand side management or integrate it in storage systems at a European level,” he added.

Dena assumed in 2007 studies that an additional 45,000 megawatts (MW) of new German wind power would be added by 2020.

But thanks to generous subsidies — to be enhanced by Germany’s shift entirely away from nuclear — there has been runaway growth of both wind and solar power.

Dena has now learned that two northern and the eastern German states alone plan on adding possibly 50,000 MW of onshore wind power and 8,000-10,000 MW of offshore by the year 2020, he said.

BERLIN, June 29 (Reuters) – European power futures prices are too low to justify building the new gas-fired power plants needed after Germany’s exit from nuclear energy, an RWE board member said on Wednesday.

“The market does not warrant investments in gas-to-power stations,” said RWE’s strategy chief Leonard Birnbaum to reporters during the energy industry lobby BDEW’s annual congress in Berlin.

“You would need 75 to 80 euros ($106-113) a megawatt hour (MWh) and given the price (of year ahead delivery) is now below 60 euros, it is evident you cannot build plants,” he added.

Benchmark Calendar Year 2012 German power costs 57 euros in the wholesale market, having risen by 12 percent to over 60 euros in the wake of Germany’s decision to abandon nuclear energy faster in response to Japan’s nuclear crisis.

Prior to these events in mid-March the price of the contract was 53 euros.

BDEW estimates that between 8 and 17 gigawatts (GW) of new German generation capacity — mostly gas and coal-based — will have to be built over the next decade to counter the volatility of green power and to make up for lost nuclear capacity.

The government aims to pass new energy legislation on July 8 and BDEW, which represents 1,800 utility firms in a sector led by RWE and rival E.ON (EONGn.DE: Quote, Profile, Research, Stock Buzz), demands supplies for customers be safeguarded and energy suppliers are given planning security.

FRANKFURT (Reuters) – Friday marked the point of no return for the permanent shutdown of a major slice of Germany’s nuclear energy, leaving a range of unresolved problems caused by the politically-driven reaction to the Fukushima crisis.

Germany’s biggest utility RWE, the last to fall in line, left it until the day before Friday’s deadline to pass on any chance to reopen its Biblis B reactor.

Avoiding a potentially image-damaging clash with government, RWE joined competitors E.ON, EnBW and Vattenfall Europe which already have said their old reactors will stay shut.

The aging nuclear capacity was shut in March following the Japan crisis, for an initial three months, now expired.

In theory, RWE could have tried to restart Biblis B for at least three weeks to cash in on earnings that analysts agree can be up to 500,000 euros ($708,100) a day at written-off plants.

“(By not reconnecting) we are also complying with the requests of politicians, no longer to use the plants which were closed during the moratorium to generate power,” the Essen group said in a statement.

Berlin is preparing a law change, aiming for July 8, to back the immediate closure of 8,800 MW, or 41 percent of Germany’s total nuclear capacity, as of June 17/18, and to shut the remainder by 2022.

LONDON (Reuters) – Germany’s E.ON (EONGn.DE: Quote, Profile, Research, Stock Buzz) on Wednesday said it was making progress with gas contract pricing and sales to European markets, where margin squeezes at its flagship company E.ON Ruhrgas have hit the utility group’s earnings.

Board member Joergen Kildahl, speaking at the Reuters Global Energy and Climate Summit, also said the company would identify in the autumn what overseas markets it was considering to compensate for falling margins in Europe.

On gas demand signals for the year to date he said, “We have seen signs of improvement…underlying growth is moderate but pointing in the right direction.”

He declined to give a second quarter sales projection.

E.ON’s Global Gas division saw sales fall by 3 percent year-on-year to 244.6 billion kilowatt hours in the first three months of 2011 as it lagged behind the previous winter of 2010 which saw high usage due to extremely cold weather.

The unit’s adjusted earnings before interest, tax, depreciation and amortization (EBITDA) fell by 83 percent to 138 million euros ($198.4 million) in Jan through March as a result of margin pressure in the wholesale sector.

Two-year old discussions were progressing with suppliers such as Russia’s Gazprom (GAZP.MM: Quote, Profile, Research, Stock Buzz) and Norway’s Statoil (STL.OL: Quote, Profile, Research, Stock Buzz) over the oil-linking of gas supply contracts to help resolve the profit hits E.ON has had to take, Kildahl said.

PARIS/FRANKFURT (Reuters) – Sun and wind in western Europe will be crucial this summer to ensure enough renewable electricity supplies to Germany and France, where nuclear power may fail to deliver, traders and analysts say.

Demand for power rises in the summer when homes and businesses turn on cooling devices but with a big chunk of Germany’s nuclear capacity out and a possible cut in French nuclear capacity due to a severe drought, things may get tight.

While summer officially starts on June 21, temperatures have been well above seasonal averages since the start of April, dropping water levels in rivers and mountain reservoirs and squeezing hydroelectric supplies in the region.

“There are some question marks over the summer (power supply),” said Konstantin Lenz of Lenz Energy in Berlin.

“If the (German) nuclear plants are missing, solar power can compensate for some of it. But the question is can renewables really cope with all scenarios?,” he said.

Germany has decided its eight suspended reactors, or 40 percent of its capacity, will be idled permanently, removing 8,800 megawatts MW.L and disposing of the remaining 12,700 MW by 2022 in response to Japan’s nuclear disaster at Fukushima.

Anti-nuclear voters have succeeded in demanding an unprecedented and singular approach to drop a low-cost and nil-carbon producing energy source in the heart of Europe.

PARIS/FRANKFURT (Reuters) – Sun and wind in western Europe will be crucial this summer to ensure enough renewable electricity supplies to Germany and France, where nuclear power may fail to deliver, traders and analysts say.

Demand for power rises in the summer when homes and businesses turn on cooling devices but with a big chunk of Germany’s nuclear capacity out and a possible cut in French nuclear capacity due to a severe drought, things may get tight.

While summer officially starts on June 21, temperatures have been well above seasonal averages since the start of April, pushing water levels in rivers and mountain reservoirs and squeezing hydroelectric supplies in the region.

“There are some question marks over the summer (power supply),” said Konstantin Lenz of Lenz Energy in Berlin.

“If the (German) nuclear plants are missing, solar power can compensate for some of it but the question is can renewables really cope with all scenarios,” he said.

Germany has decided its eight suspended reactors, or 40 percent of its capacity, would be idled permanently, totaling 8,800 megawatts (MW), and to get rid of its remaining 12,700 MW by 2022 in response to Japan’s nuclear disaster.

Anti-nuclear voters have succeeded in demanding an unprecedented and singular approach to drop a low-cost and nil-carbon producing energy source at the heart of Europe.