New research undermines billion-euro claims for coal compensation.
Read the full report from SOMO
Our research finds that the energy companies made poor, short-sighted investment decisions when they opened brand new coal-fired plants in 2015 and 2016. At this time, the market conditions for coal electricity generation were in rapid decline.
Based on RWE’s own financial reporting since 2010, our analysis shows how RWE’s €3 billion investment in its Eemshaven power plant, originally designed to run for 30-40 years, had collapsed to zero value just 5 years after it entered into service. Less than €700 million of that reduction can be explicitly attributed to the Dutch coal phase-out law, compared to the €1.4 billion in damages that RWE is seeking.
Ahead of proposed closures dates, these coal assets are already in decline. The electricity generation at all three power plants has dropped significantly from 2018 levels. RWE’s Eemshaven and Uniper’s Maasvlakte 3 average annual load factors more than halved from 73% in 2018 to 34% in 2020. Profits also tumbled in the same period from +€150 million to -€52 million. Riverstone’s Maasvlakte plant has been offline since a technical failure in January 2020, bleeding money due to fixed costs.
There is an even poorer outlook for profitability going forward. Our findings suggest that total net losses could already amount to at least €470 million by 2030 for all three plants. The ECT enables these energy companies to sue for loss of potential future earnings beyond 2030. The compensation claims overlook the fact that these supposed future profits are infeasible by 2030 and beyond.
The Energy Charter Treaty allows for companies to shift the consequences for short-sighted investment decisions onto taxpayers.
Market forces and a shifting energy landscape are behind the demise of coal assets held by RWE and Uniper in the Netherlands, not Dutch legislation. Despite this, the German utilities are suing the Netherlands under the Energy Charter Treaty, seeking billions in compensation. The ECT opens up the risk of public money being wasted on unprofitable and climate-damaging fossil fuel assets. These funds could instead be invested in the accelerated deployment of clean electricity generation that is required to decarbonise Europe.
Transmission power lines, Netherlands, Flevoland
Credits: blickwinkel / Alamy Stock Photo
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