Germany’s green energy boom is slaughtering coal companies

Germany is headed for its biggest electricity glut since 2011 as new coal-fired plants start and generation of wind and solar energy increases, weighing on power prices that have already dropped for three years. Utilities from RWE AG to EON SE are poised to bring units online from December that can supply 8.2 million homes, 20 percent of the nation’s total, according to data compiled by Bloomberg. That will increase spare capacity in Europe’s biggest power market to 17 percent of peak demand, say the four companies that operate the nation’s high-voltage grids. The benchmark German electricity contract has slumped 36 percent since the end of 2010. The new coal plants are starting as Germany aims to almost double renewable-power generation over the next decade. Wind and solar output has priority grid access by law and floods the market on sunny and breezy days, curbing running hours for nuclear, coal and gas plants, and pushing power prices lower. The profit margin for eight utilities in Germany narrowed to 5.4 percent last year from 15 percent a decade ago. “The new plants will run at current prices, but they won’t cover their costs,” Ricardo Klimaschka, a power trader at Energieunion GmbH who has bought and sold electricity for 14 years, said June 25 by e-mail from Schwerin, Germany. “The utilities will make much less money than originally thought with their new units because they counted on higher power prices.”