Bloomberg News

European Utility Profits Dropping as Demand Falls, Fitch Says

June 28, 2012

European power producers will find it more difficult to generate electricity profitably as the economic crisis cuts demand, Fitch Ratings said in a report.

The power industry faces “an uncertain investment framework for the non-renewables business,” Fitch said today. The rating agency pointed to falling margins in thermal generation because of weak consumption and the full auctioning of carbondioxide emissions allowances from 2013.

“Pure generators are the most vulnerable, while the rating impact will be more limited for integrated utilities,” Fitch said.

German Economy Minister Philipp Roesler Roesler said declining profits for power producers is cutting investment.

“We don’t find anyone who invests in gas power stations because it doesn’t pay off,” Roesler said today in Berlin at a conference organized by the BDEW, a lobby group for German utilities. “We will not only need renewable energies but also conventional power stations, gas and coal power stations.”

Credit pressure could most probably result from unfavorable changes to energy policies related to a political preference for renewable energy, according to Fitch.

To contact the reporter on this story: Tino Andresen in Dusseldorf at tandresen1@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net


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