...Pricing momentum remains favorable for KELAG AG, but potential price volatility in the medium term is a key variable to keep an eye on. Although regional power prices stabilized in 2019 after rising overall from 2016-2018, S&P Global Ratings believes the pricing environment remains relatively supportive for the company's business, which benefits from power prices with a lag due to its hedging policy. Because of its low-cost hydro generation activities, the value captured by KELAG due to price increases generally outweighs the cost of procuring electricity in its supply activities. This means that the company benefits more from increasing prices. Nevertheless, we believe that increasing price volatility from more renewables in the European energy mix will represent additional challenges for KELAG and the broader industry. Amid the European ambitions to reach a higher level of renewable share of power generation, the Austrian government has set a target of achieving 100% renewable generation...
