(Montel) Spanish coal-fired generation profits remain under “pressure” largely due to the “overall cost of commodities”, said Endesa CFO Luca Passa, the country’s main coal burner.
Strong carbon and coal prices have hit the profitability at hard coal-fired plants operated by European utilities in recent months.
Since the end of March, the front year API 2 coal contract has risen by USD 20 to around USD 92/t, while the Dec 18 benchmark EUA price has more than doubled over the past seven months to EUR 17.46/t.
Endesa also warned of the possibility of coal plant closures.
Under current market conditions, the investment needed to retrofit coal-fired plants consuming domestic fuel to comply with the EU’s environmental rules by June 2020 was “uneconomical,” Endesa’s CEO Jose Bogas told an analyst conference during the publication of its H1 results.
In a recent change of policy, the ecological transition ministry (formerly energy ministry) said it would not block the decommissioning of coal-fired plants, which could lead to the closure of up to 4.2 GW of capacity shutting down, as Montel reported.
Endesa has requested permission to close the Compostilla (1 GW) and Teruel (1 GW) domestic coal-fired plants, while Iberdrola has asked to decommission its Guardo (515 MW) and Lada (355 MW) units. The Spanish regulator CNMC has already cleared Naturgy to close the Anllares (365 MW) coal-fired plant.
“Spain has currently 10 GW of coal plants which will be close gradually. The goal, in our opinion, is to avoid investment in other fossil plants, like CCGTs, which will have to be closed before 2050,” said Jose Bogas.
Endesa posted a 17% year-on-year rise in earnings before interest and tax (Ebit) during the first half of the year, to EUR 1.05bn.