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Europe's big utilities shunned green energy at their peril - Greenpeace

Source: Reuters - Wed, 26 Feb 2014 23:01 GMT
Author: Reuters
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Green activists hold a banner while in a formation resembling a wind turbine as they call for more renewable energy, during a protest outside the European Parliament in Brussels, Nov. 7, 2013. REUTERS/Francois Lenoir
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* Utilities will have to mothball more fossil fuel plants

* Iberdrola, E.ON, Enel made profits from green power

* Divisions over EU policy goals

BRUSSELS/PARIS, Feb 27 (Reuters) - Europe's 10 biggest utilities, produce more than half of Europe's power, but only a tiny percentage is from the new green energy sources that could revive their profits, a report from campaign group Greenpeace said on Thursday.

Traditionally profitable utility companies have been hurt by an EU-wide shift towards renewable power that has created pro-sumers - or consumers with their own sources, such as solar panels, which enable them to sell back power to the grid.

While the uptake in renewables has been spurred by EU policy and subsidies, the top 10 utilities largely stuck to old business models for which they are now paying the price, Greenpeace's report said.

It calculates the big 10 generated 58 percent of power within Europe, but only 4 percent of this was from non-hydro renewable sources, such as solar and wind, in 2012.

Meanwhile, European investments in coal and natural gas accelerated, even though demand faltered, and energy firms in Europe added 85 gigawatts (GW) of fossil fuel capacity over the last decade.

Analysts estimate the utilities need to shut down about 50 GW of fossil fuel capacity by 2017 if they want to maintain even their diminished 2012 profit levels.

"Utilities have invested large amounts," the report said. "But instead of using these resources to fund a genuine change of business model, they have done the opposite."

Since 2008, the European Union's 20 biggest utilities have lost more than half a trillion euros in share value, but their small investments in green energy performed relatively well.

Iberdrola, E.ON and Enel made a total of 4-to-5 billion euros in annual earnings from their renewables businesses, the report said.

The utilities say generation from natural gas or coal is needed to provide reliable baseload to complement intermittent renewables and they have called for state help to maintain it.

A group of them, known as the Magritte Group, also lobbied loudly for EU policy-makers to move away from an existing framework of multiple policy goals, including 2020 targets for renewable power and energy saving, and to focus on a single aim to cut carbon emissions.

So far the Commission, the EU executive, has responded to them and a policy outline for 2030 published in January includes just one fully-binding target to cut greenhouse gas emissions by 40 percent compared with 1990.

Heavy industry and some EU member states, notably Britain, share the view one target is best.

But Greenpeace, together with other environmental campaigners and renewable firms, wants a fully binding renewable target in the 2030 policy package.

There are utilities that agree. In addition to the so-called Magritte group, green energy companies, including Acciona Energia, which describes itself as the only utility 100 percent reliant on renewables, has set up a rival group to call for a binding renewable goal. (Reporting by Barbara Lewis in Brussels and Geert de Clercq in Paris; editing by Keiron Henderson)

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