RWE warns on profit as Texas freeze halts wind farms
4:21 am Friday, February 19th, 2021
By Christoph Steitz and Tom Käckenhoff
FRANKFURT (Reuters) – Freezing temperatures hitting Texas have put onshore wind farms out of service and forced operator RWE to buy electricity at sky-rocketing prices, it said on Friday, warning of a knock on earnings this year.
Germany’s largest power producer said the crisis would mean a low- to mid-triple-digit million euro hit to core earnings from onshore wind/solar this year.
Analysts at brokerage Jefferies estimate the hit to adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) at 100 million and 500 million euros ($121-$605 million).
“Given the situation, we see this as a one-off impact and RWE may try to recoup losses from insurance,” the analysts wrote in a note.
RWE said part of its onshore wind fleet in Texas had been partly out of service from Feb. 9 because of icing and grid issues that have dealt a major blow to the second-largest U.S. state.
“Priority number one is to safely resume operations at our production sites,” said Silvia Ortín Rios, chief operating officer, wind onshore and solar photovoltaics Americas, at RWE’s renewables division.
Hundreds of thousands of homes in Texas are coping without heat for a fourth day on Thursday after utilities made some progress restoring power while freezing temperatures are expected to last through Saturday.
The crisis has led power prices to spike as high demand from residential heating clashed with lower availability of plants, RWE said, forcing the company to buy volumes for as much as $9,000 per megawatt hour to meet its supply obligations.
The United States is RWE’s top renewables market, accounting for 38% of its roughly 9 gigawatts of installed renewables capacity.
Shares in Europe’s third-largest renewables player were down 2.1% to 31.76 euros at 0858 GMT.
($1 = 0.8258 euros)
(Reporting by Christoph Steitz and Tom Kaeckenhoff; editing by Diane Craft and Jason Neely)
