August 14, 2018 / 7:30 AM / a year ago

UPDATE 1-RWE hedged forward power sales below market prices

(Adds details from wholesale markets for power, CO2)

FRANKFURT, Aug 14 (Reuters) - RWE sold the bulk of its power generated from nuclear and brown coal-fired plants from 2018 and the following three years at prices well below current levels, company data showed on Tuesday.

The German utility sold more than 90 percent of production in both 2018 and 2019 at 28 euros ($31.98) per megawatt hour (MWh), according to slides prepared for an analyst call on the company’s first-half results.

More than 90 percent of 2020 output was sold at 29 euros and more than 40 percent of 2021 was also sold at 29 euros.

By comparison, wholesale market prices for German 2019 baseload power currently stand at a record 46.35 euros, according to Thomson Reuters data.

The 2020 and 2021 contracts stand at 43.30 and 42.15 euros respectively.

Energy traders track hedge rates to assess the size of future volumes tied up with counterparties and the value of forward production.

Electricity output from RWE last year fetched 31 euros/MWh.

The volume of the 2018 position amounts to 85-90 terawatt hours (TWh).

RWE, which is exposed to mandatory European carbon emissions rights prices due to its coal-heavy portfolio with high CO2 emissions, also said its CO2 position was financially hedged until the end of 2022.

The implied price at which it covered its output with emissions allowances was good news, ranging between 5 to 6 euros a tonne CO2 for 2018 through 2021, when the present price of CO2 for expiry Dec. 2018 has shot up to 18.09 euros.

RWE also produces electricity in hard coal and gas-fired power stations across EU countries and stands to become a big player in renewables in an asset swap deal with rival E.ON .

RWE also sells ahead power generated from hard coal and gas but closer to delivery dates, and said it benefitted there a little from the recovery in prices, although it also had to pay higher fuel costs.

European wholesale power forwards have risen by over a third since February, due to strong long-term prices of related fuels and carbon, which has firmed on EU market reforms aimed at incentivising emissions cuts to protect the climate. ($1 = 0.8757 euros) (Reporting by Vera Eckert Editing by David Goodman and Adrian Croft)

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