Eon calls for clear policy as generation earnings plummet

German energy giant Eon has called on the government to support conventional power plants as earnings for its generation arm plummet below market expectations.

The supplier posted financial results for the first half of this year showing earnings from generation fell 29 per cent from the previous results to €839 million, which is “significantly below” expectations, according to RBC Capital.

Eon’s beleaguered E&P business also performed worse than expected, falling 19 per cent to €543 million.

In a letter to shareholders alongside the results Eon chief executive Johannes Teyssen said: “Germany continues to lack a clear regulatory mechanism that defines and rewards the role conventional power plants play in ensuring security of supply…Without such a mechanism, Germany’s energy transition will remain incomplete.”

Eon has consistently called for a capacity market mechanism, similar to what is offered by Government to UK generators.

The heavy losses in its generation business areas come as a result of a continued weakness in the German wholesale power price following the strong deployment of renewable energy into the market as part of Germany’s energy transition.

The losses also underline Eon’s decision to spin-off its centralised energy assets into a new company, Uniper, in order to focus on its more profitable customer-facing business.

Eon said around a third of the “4,000 milestones” for separation have been achieved.

Utilities across Europe are tapping the same trend, most recently with Centrica announcing a billion pound strategy shift towards its British Gas retail arm.

Eon’s overall earnings loss was 13 per cent compared to the previous half-year results at €4.27 billion, with full year EBITDA at €7.0-7.6 billion.

Germany energy rival RWE will report its financial results for H1 tomorrow.