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Market Is Wrong To Shrug Off High European Power Prices, Engie and RWE Are Still Our Preferred Plays

Tancrede Fulop, CFA Senior Equity Analyst

Analyst Note

| Tancrede Fulop, CFA |

European forward power prices have rallied massively in 2021, reaching all-time highs of EUR 180 per megawatt-hour because of the surge of gas and CO2 prices. As many coal and nuclear plants will be shut down while intermittent renewables growth will accelerate, we expect CCGTs to remain the marginal source of electricity supply. Therefore, power prices will continue to be driven by CO2 and gas prices.

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Company Profile

Business Description

After the deal with E.On, pro forma RWE is refocused on power generation, mostly in Europe. It owns 40.7 gigawatts of power generation capacity: 27% from lignite and hard coal plants, 35% from gas plants, 25% from renewables, 7% from nuclear (which will be shut down by 2022), and 6% from other sources. Besides Germany, RWE’s power plants are chiefly located in the United Kingdom, the Netherlands, Turkey, and the United States for many onshore wind farms.

RWE Platz 1
Essen, NW, 45141, Germany
T +49 20151790
Sector Utilities
Industry Utilities - Diversified
Most Recent Earnings Sep 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type
Employees 19,075