Bewag to join “Neue Kraft” after Mirant sells stake

Berlin utility Bewag is set to join the “Neue Kraft” German energy group being assembled to rival E.ON and RWE, following the agreement by Mirant to sell its 44.8 per cent interest to Swedish energy group Vattenfall.

Bewag was going to join Vattenfall’s other German interests, Hamburg utility HEW, Veag and East German lignite company, Laubag in forming the “New Force” until Mirant withdrew its cooperation in late September.

Mirant has now agreed to sell its share in the vertically integrated utility to Vattenfall for $1.63bn (€1.81bn which, upon completion, will give Vattenfall a 89.6 per cent stake and 92 per cent voting rights.

Market reaction to Vattenfall’s move has been mixed. Analysts point to the many benefits of integrating the German interests but have concerns about the level of debt, which will rise to $10.3bn or 2.3 times equity.

600 MW wind farm for the UK

A consortium led by British Energy and multinational developer AMEC is considering building the world’s largest wind farm on the Hebridean island of Lewis. The wind farm will be capable of generating 2000 MW of electricity – 40 times larger than Britain’s biggest wind power station at Blyth, Northumberland.

In its first stage some 250 wind turbines would be sited on Lewis with a second even larger stage incorporating both wave and tidal energy following on.

The cost of the project has been put at £500m ($723m, €805m) and the facility would be linked to the national grid by a 563 km undersea cable which itself is the subject of a feasibility study announced within the last month.

The UK’s west coast has enormous potential for renewable energy production but development has always been hampered by the lack of grid connections to areas of demand in the south and east of the country.

A spokesman for British Energy admitted that the project’s biggest obstacle was likely to be regulatory hurdles and environmental concerns.

UK electricity and gas retail price controls to go

UK power regulator Ofgem has announced proposals to scrap price controls for electricity and gas supply in the UK, claiming that sufficient competition now exists within the market for all consumers to obtain power at fair prices.

Ofgem’s chief executive, Callum McCarthy, said, “This decision heralds the future of regulation for these markets. As the markets have become more and more competitive, there has been less justification for price controls.”

The announcement follows market research carried out on behalf of Ofgem, which showed that competition was well established. The MORI research found that 38 per cent of all electricity consumers have switched supplier with 37 per cent of gas users having also moved.

French under pressure to open market

A European Commission report into power market liberalization in Europe accuses France of resisting the Commission’s proposal for full market opening by 2005. It says France still has insufficient regulation, excessive integration of producers and network operators and dominant incumbent power providers.

The report did acknowledge some progress with up to ten per cent of big electricity customers having switched to alternative suppliers from state-controlled Electricité de France (EDF).

The commission has told EDF to sell off some 6000 MW of generation capacity – the equivalent of a third of the French electricity market – to bidders between now and 2003 as a condition of taking control of the south German electricity company EnBW.

France has also opened its first wholesale power trading exchange called Powernext.

Biomass order

Alstom has won an order worth around €7m ($6.28) to supply E.ON with two 20 MW biomass power plants.

The plants will be built on a turnkey basis at Landesbergen in Lower Saxony and Zolling in Bavaria and will mainly use waste wood as fuel. Each plant will have a net power output of 20 MWe and a net plant efficiency of more than 30 per cent in condensing operation mode. The two plants are scheduled for commissioning in late 2003.

Exchanges merge

Germany’s two power exchanges have announced their long expected merger to form the new European Energy Exchange (EEX), which will commence trading at the beginning of 2002.

The Leipzig Power Exchange and the European Energy Exchange in Frankfurt will combine with 60 employees and will be based in Leipzig.

Both the exchanges were established in the year 2000 to buy and sell energy.

News digest

Europe: European utilities must rapidly adapt their CRM strategies if they are to meet the growing demands of major energy users and stabilize their customer base in an increasingly competitive marketplace, says a recent report from market researchers Datamonitor.

France: Boralex Inc. and Seris SA are to build and operate a $12m, 10.4 MW wind farm in southern France. Boralex will have a 60 per cent interest and will be responsible for construction. A consortium of European banks will provide $11m in financing.

Germany: Sydkfaft and ABB have launched their new portfolio management and trading company acton energy. The new firm offers financial services to Germany’s medium sized municipalities and industrial consumers, but will also trade on its own account in the German power market where it is a member of rival power exchanges EEX and LPX.

Germany: RWE AG and Electrabel are to supply process steam to BASF’s petrochemical plant in Antwerp. The two companies will construct a 400 MW gas and steam turbine power station to provide BASF with up to 300 t/h of process steam.

Italy: The European Union has given approval to the creation of E-Utile, a joint venture between Milan’s municipal gas and electricity company AEM Spa and Siemens Informatica SpA of Italy. The new company will provide information technology services for the utility sector in Italy.

Portugal: Wärtsilä has finished converting Tintrofa’s heavy fuel oil operated combined heat and power plant in Portugal to natural gas. The new plant has decreased emissions by some 90 per cent and increased efficiency.

Spain: Harpan AG, the power engineering subsidiary of RWE, has commenced operation at its 16.5 MW wind park in Grisel, Spain. The park comprises 22 wind turbines and will be operated by Harpen’s local subsidiary Parque Eolico Grisel.

Spain: EnBW and EdP will share the bulk of the capital of the Spanish utility Hidrocantabrico and run the company between them. EdP will have the slightly larger percentage at just over 40 per cent while EnBW has slightly less than 40 per cent. Spanish savings bank Caja de Asturias will hold the balance.

UK: E.ON AG has won authorization from the European Commission for the acquisition of the UK’s Powergen. It has offered £12.19 per share for the whole of Powergen’s capital and will take over debts of about £4.4bn ($6.37m, €7m).