Large suppliers: Electricity generation profitability by technology type in 2017 (GB)

Chart

Source: Ofgem analysis of companies’ Consolidated Segmental Statements.

Information correct as of: August 2018

This chart shows the Earnings Before Interest and Tax (EBIT) margins for the generation activities of the six large energy suppliers in the GB market. 

A company’s EBIT margin is their revenue minus their costs, before accounting for taxes and interest. These margins have been divided to highlight variations in profitability for different types of power generation technology.

Policy Areas:

  • Electricity - wholesale markets

Data Table

Large suppliers: Electricity generation profitability by technology type in 2017 (GB)

CompanyNuclearConventionalRenewable
Centrica8.9%1.2%0%
E.ON0%*39.4%
EDF5.3%-21.4%37.3%
RWE0%-2.9%41.1%
ScottishPower0%-1.8%46.2%
SSE0%5.79%53.83%

More information

Electricity generation profitability by technology type: At-a-glance summary

Profitability of electricity generation for the six large suppliers active in the electricity wholesale market can be shown through analysis of their Consolidated Segmental Statements (CSS). There has been a marked reduction in conventional generator profitability in recent years. On the flip side there has been an increase in renewable generation profitability.  

Relevance and further information

The Earnings Before Interest and Tax (EBIT) margin is a useful indicator of trends in energy company profits. The level of profit in a market is a good measure of how competitive that market is. Here we have shown profitability by power generation technology type to indicate which forms of technology generation are most profitable for generators. 

Methodology

EBIT is calculated by subtracting the total direct costs, total indirect costs (such as operating costs) and depreciation and amortisation for supplying energy from a supplier’s total revenue.

The EBIT margin is calculated by dividing a supplier’s total revenue by the EBIT value. It is expressed as a percentage, so the figure is multiplied by 100.

We have split margins into conventional generation (eg coal, gas, oil), renewables (eg wind, hydro) and nuclear.

The data in this chart may differ from the data that can be found in the supplier’s externally published Consolidated Segmental Statements. This is because we have made some adjustments to improve comparability. These mostly relate to removing certain impairment and restructuring costs. Detail on these adjustments can be found in Ofgem's review of 2017 CSS.

Note: Following E.ON’s separation of its fossil fuel generation assets to Uniper in 2016, and subsequent sale of Uniper, the activities of Uniper UK Limited are not included in E.ON’s UK CSS for 2017. As a result, E.ON’s revenues from conventional generation have significantly decreased from 2016 and so have not been included in the chart as they are not directly comparable with the margins for the other Big 6.   

Date correct
August 2018
Policy area