RWE Deepens Clean-Power Spending Cuts as Renewables Unit Shrinks

Jan 15, 2014 8:39 am ET

Jan. 15 (Bloomberg) -- RWE AG, the German utility expecting a slump in profit this year, plans to reduce renewable-power investments as it changes the focus of its clean-energy unit.

The company’s Innogy unit will spend less than the planned 500 million euros ($681 million) in 2014, its Chief Executive Officer Hans Buenting said today in Essen, where RWE is based. Innogy will focus on project development rather than investment.

The decision to scale back spending deepens a cut announced last year, when RWE reduced its 2014 clean-energy investment budget by half from the 1 billion euros planned for 2013. German utilities are lowering costs and selling assets after power prices tumbled, making many electricity plants unprofitable.

RWE will give a new investment target at its annual press briefing on March 4, Buenting said today. The utility’s cost cuts mean “fewer possibilities” for Innogy, which will lose about 200 jobs by the end of 2015, he said. The losses, on top of transfers to other departments, will leave the unit with 700 to 800 staff by then, from about 1,500 at the end of last year.

Innogy is reining in investment even as Germany expands in renewable power. The growth of wind and solar output, which now accounts for more than 20 percent of generation and takes preference on the grid, has forced prices down. RWE said in November that profit will drop by almost half in 2014.

Innogy plans to make a final investment decision on the Nordsee 1 wind farm in the North Sea in 2014, having previously intended to decide at the turn of the year, Buenting said. It’s seeking to sell a majority stake in the 332-megawatt facility -- 40 kilometers (25 miles) north of Juist -- and keep 25 percent.

Larger German competitor EON SE said today it started construction of its Amrumbank West wind farm in the North Sea.

--Editors: Amanda Jordan, Alastair Reed