The low water has caused problems for the coal companies in recent weeks.
(Photo: Bloomberg/Getty Images)
Dusseldorf While some energy companies are struggling to survive as a result of the price crisis, others are reaping hefty surpluses – for example the ailing coal group Steag.
In the first six months of this year, the Essen-based company achieved earnings before interest, taxes, depreciation and amortization (Ebitda) of 450 million euros with sales of 2.4 billion euros. This means that the surplus is already higher than in 2021 as a whole. “Our result this year is largely due to the electricity generation business,” says Steag boss Andreas Reichel in an interview with the Handelsblatt.
Electricity prices have risen massively in recent months. One megawatt hour currently costs over 600 euros in daily trading. For comparison: a year ago the rate was just under 60 euros.
Steag’s overall result is likely to be even better at the end of 2022, when the Essen power plant operator generates even more electricity: In order to reduce gas consumption, the federal government has made it possible by law to bring old coal-fired power plants back on line.
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Steag wants to leave the Bergkamen power plants in the Ruhr area and Völklingen-Fenne in Saarland, which were supposed to be shut down at the end of the year, longer connected to the grid. The Quierschied and Bexbach plants in Saarland should also be running at full capacity again at the beginning of November.
Steag does not see a coal shortage – but “astronomically high prices”
The additional hard coal for the power plants comes from North and South America, South Africa and Australia and is shipped to the overseas ports in Amsterdam, Rotterdam and Antwerp. From there, coal is transported to the power plants by rail.
>> Read also: Heat wave makes delivery of coal and fuel more difficult: These are the consequences for Germany’s economy
Due to the limited transport capacities on the rails, the transport situation is very challenging, especially in Saarland, according to Reichel. By November you will be able to build up enough coal reserves. “The prices are astronomically high at the moment, but the coal is available.” There is no bottleneck.
Import prices for hard coal have risen rapidly in recent months: from less than EUR 100 a ton to almost EUR 400. But the increase in electricity prices offsets the additional costs of procurement of coal for Steag many times over.
This is reflected in the good half-year figures. In these, Steag boss Reichel sees a chance to get the troubled supplier back on track.
“The year 2020 was marked by a deep crisis: We had to cope with high depreciation as a result of the law ending coal-fired power generation, social plans for 1000 jobs in Germany on the balance sheet.” Reichel believes that the transformation of the company can now really be advanced.
Most importantly, it’s a chance to find a buyer for the fossil company. “Due to the revaluation of our domestic power plants, we now have the opportunity to sell Steag as a whole,” the manager is convinced.
After ever-increasing losses, the hard coal group agreed on a restructuring plan with its owners, the municipalities of the Ruhr area, at the end of 2021. By then, net debt had totaled 485 million euros – also due to the energy transition and the politically enforced move away from fossil fuels, Steag’s main business.
Steag: More than half of the profits come from hard coal
Slightly more than half of the profits come from the hard coal business in this half-year as well. Around 45 percent from the second business area: Renewables, storage and geothermal systems.
While buyers are queuing for the “green” part of the company, the “black” part, i.e. the coal-fired power plants, is considered difficult to sell. Many investors and the financing banks reject coal commitments from a sustainability point of view.
According to the Steag boss, that is exactly what has now changed. “It surprised me myself, but the interest of investors, investment bankers and strategists in Steag as a whole is great,” asserts the manager. The sales process will officially start at the end of the year and should be completed a year later.
Before that, however, Steag will be split into two subgroups. On the one hand the old fossil business, on the other hand that with renewable and sustainable energy production. Although the current plan is officially a total sale of both divisions, a possible takeover of the coal operations by a federally owned foundation is still an option.
Advantage of such a solution: the state would have a power plant reserve, could thus contribute to energy security and would also have the freedom to shut down the blocks once the energy market has freed itself from dependence on Russian gas and has reorganized itself.
Because good results or not: In the medium term, Steag faces the challenge that Germany wants to phase out coal by 2038 at the latest. While corporations like RWE are investing massively in wind power and solar systems, the heavily indebted group has missed the leap into future business.
More: Over 2000 percent: Electricity prices jump to a record high
