Can converting Tilbury to biomass help RWE with share price woes?

31st May 2011

The report says that engineers are currently converting the station to run on woodchips rather than coal and it should be operational by the winter. As such it should have much lower levels of CO2 emissions, though the fact that it will import the wood from America means there will be some.

On the comment boards, the story provokes a bit of an argument about whether burning wood is carbon neutral or not.

Commenter Niall McG seems to settle that argument but he does point out another drawback.

NiallMcG writes: "These power stations will end up burning crops specially grown for the purpose. Hence, they are the nearest thing we have to carbon neutral. Indeed, if RWE get around to installing carbon capture on the plant, then the power station will 'produce' negative emissions – so called BECCS."

"The trouble with biomass is land use; inevitably, it will put pressure on food production. Nonetheless we don't have many other viable options, and we need to maintain steam plant like this, anyway, to deal with the grid instability caused by increasing amounts of wind power."

The German firm, owner of NPower and Thames Water has had a mixed few months.

Last month, the firm's boss Jürgen Grossmann warned that Germany's plan to mothball its nuclear reactors following the Japanese earthquake, would hit the firm's earnings, from the Financial Times (Paywall).

Now the country is to scrap all its reactors which, unsurprisingly, hit all the country's nuclear generating firms' share prices reported here in Business Week.

Even back in February the firm was planning asset sales in Germany because of a mooted Federal tax on Germany's nuclear sector.

In early 2010, RWE was trading near 70 euros a share but is now just above 40 euros as this share price chart from Yahoo Finance shows.

But with the coal-fired generating industry also facing opposition worldwide, at least the firm may have found a way to deal with public concern about that with its Tilbury plans.

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