The French multinational energy company Engie would be better off closing its three coal-fired plants in Germany rather than selling them, according to a report published this week by the Institute for Energy Economics and Financial Analysis (IEEFA).
Engie is actively trying to sell its three plants - Farge, Wilhelmshaven and Zolling. The report identifies two of the likeliest buyers as Czech distressed asset specialists EPH and the Seven Energy Group.
The authors of the report see Engie best protecting its position in the German electricity generation market by closing the plants and replacing them with other forms of generation to include renewables.
"Such a move would also be in line with the company’s commitment to a low-carbon energy transition," according to IEEFA.
"Closure of the plants would serve as a signal that Engie is 'part of the solution' to a coal power phaseout being pursued as a matter of public policy in Germany, rather than creating problems by selling to distressed asset buyers determined to keep them open," the report said.
“We find that benefits from closing the power plants - living up to the company’s promises to build a low-carbon energy system, preventing rivals from gaining market share, and embracing the Coal Exit Commission - outweigh the benefits of selling,” Gerard Wynn, an IEEFA energy finance consultant, was quoted.
Wynn said that to date Engie does not appear to be considering the main alternative strategic option for the three plants: For Engie itself to retain them, wind them down and close them, or sell them to a decommissioning specialist.
“This strategy would minimize the plants’ impact on the environment by ensuring a responsible site decontamination and clean-up as well as limiting emissions of carbon dioxide and air pollutants by assuring a firm end-date for their operation,” Wynn said.
The report states that while selling could help Engie fulfill its 2016-2018 plan for merchant asset disposals and reinvestment, that plan is already all but fully achieved.
“Engie may also achieve some short-term, accounting presentation benefits from selling versus closing. But prioritizing such an outcome may not be fitting for a company committed transparently to clean up its energy portfolio,” Paolo Coghe, co-author of the report, concluded.
By Nuran Erkul Kaya