E.ON is apparently sick of everyone talking about how much money energy companies are making in the UK. So sick, in fact, that it has just recently release a statement saying that the next few years look rather bleak for the company. According to E.ON, there are multiple reasons why the next few years won’t be profitable.
During a shareholders meeting last week, E.ON’s chief executive, Johannes Teyssen, said that it’s predicted the company is going to make less profits in the company years. He believes that this has to do with the struggling European economy, disposable assets and low power prices across all of the country. Not only that, but E.ON has to do its best to bend to the wishes of the UK government.
For those who don’t know, E.ON is facing a lot of pressure from the UK government to change the way it produces energy for consumers. The government is putting this pressure, not just on E.ON, but all of the energy companies in the country. In short, the government wants these energy companies to help it reach its renewable energy goal. In order to reach this goal, the government has to do its best to wing the country off fossil fuels. However, it is hard to get consumers around the UK on board with this when they are the ones dealing with rising energy prices.
Not only that, but E.ON is facing even more pressures in Germany. Here, it has to worry about Germany pulling completely out of the nuclear energy race as of 2022. After that date, E.ON will have to find a new way to produce energy in Germany. This will be a huge obstacle for the company and others to overcome.
Teyssen explained that he believes lower energy prices and less energy demand will hurt earnings. He pointed out that people are doing their best to lower energy usage because of rising prices. Every time energy companies raise the price of energy, people continue to find more ways to lower their energy usage. Although this is helping the government with its carbon footprint goal, it is hurting the profits of energy companies all over Europe.
The chief executive added that wholesale energy prices have halved since they hit their peak in 2009. Thus, the margins seen from power plants all over the European market are close to zero. This even holds true for the most state-of-the-art power plants.