UK starts renewables drive

The UK government has confirmed plans to oblige electricity suppliers to purchase increasing amounts of power from renewable energy generators. The so-called Renewables Obligation was originally announced in October 2000 and aims to secure ten per cent of electricity sales from renewable energy by 2010.

The plan is part of wider goals to reduce greenhouse gas emissions in the UK. The government also launched in August a £215m ($310m, a339m) emissions trading scheme that will start operating in April 2002.

The Renewables Obligation will take effect in January 2002 after a final consultation period. Electricity suppliers will initially be expected to source three per cent of their electricity sales from renewable sources, rising in annual steps to 10.4 per cent by 2010.

Companies failing to meet the targets will have to buy surplus certificates from other firms or pay a penalty of £0.03/kWh. Higher targets could be set for the period after 2010.

  • UK utility ScottishPower is to build a 120 MW wind farm in South Lanarkshire, Scotland. The scheme will comprise a total of 70 wind turbines and could be operational by 2003. Earlier the company announced plans to build the UK’s largest wind farm – a 240 MW facility near Glasgow.

Sweden to investigate power prices

Sweden’s government is to investigate the electricity market due to concerns over high prices and inadequate competition. A revue will be carried out to look into price formation and ways in which competition can be increased.

Government minister Bjorn Rosengren has stated that the investigation could lead to a change in existing market conditions and increased regulation. The Nordic region pioneered electricity market deregulation in the early 1990s but recent price rises have given some power industry players cause for concern.

Liberalization of the market lead to a period of consolidation in the Nordic region, allowing a number of large firms to increase their market share.

In addition, low rainfall levels in Norway have limited the supply of cheap hydropower in the Nordic power system, pushing up wholesale prices.

International Power sells UEF stake

UK group International Power has sold its 25 per cent stake in Spanish utility Union Fenosa Generacion to Union Electrica Fenosa (UEF) for Pta100.5bn ($553.6m, a604m). The disposal is part of International Power’s strategy to free capital and increase flexibility.

The deal makes UEF the sole owner of Union Fenosa Generacion. UEF has also agreed to withdraw from the 8800 MW greenfield power plant construction programme in Italy that International Power recently launched with Ansaldo Energia.

The disposal reduces International Power’s installed generating capacity by 1350 MW to 8850 MW, but will increase the proportion of generating assets over which the company has full or joint control from 77 per cent to 90 per cent.

Innogy, Northern in retail swap

UK retailer Innogy has agreed to swap its Yorkshire electricity distribution business for the retail operations of regional power utility Northern Electric. The deal underlines Innogy’s position as the largest power retailer in the UK and the second largest gas supplier.

Innogy will pay £257m ($371m, a405m) for Northern Electric’s retail business – equivalent to £275 per customer. Northern Electric will pay £262m for Innogy’s Yorkshire distribution business and will also assume £742m in debt. The swap will make Northern Electric one of the UK’s largest distribution companies.

Northern Electric’s supply business will take Innogy’s customer base to 7m. Innogy sells power and gas in the UK under the npower brand, and expects the deal to deliver synergy savings of £25m per annum by 2004.

News digest

Austria: Verbund Austrian Hydro Power has awarded VA Tech Hydro a 212m ($11m) contract for the design, delivery and installation of a steel structure for the penstock lining and manifold of the Kaprun hydropower station in Austria.

Germany: Siemens Westinghouse Power Corp. and RWE have announced that the world’s longest-operating high temperature fuel cell power system has successfully begun a new period of operation at a new site in Essen, Germany. The 100 kW solid oxide fuel cell (SOFC) cogeneration system has been installed at the RWE-owned Fuel Cell Pavilion at the Meteorit Park site in Germany.

Germany: The German government is to pass a law enabling it to give financial support to combined heat and power generation facilities. The law – which is due to enter into force on January 1, 2002 – is aimed at achieving an annual saving of up to 23m t of carbon dioxide.

Germany: HEW and Mirant have signed a shareholders agreement on the joint ownership of the energy company Bewag. Following the conclusion of the agreement both parties will hold 44.76 per cent of Bewag’s capital stock. The agreement brings the creation of ‘Neue Kraft’ one step closer to the German electricity market.

Norway: Statkraft SF has resumed talks with German energy group E.ON AG over the latter’s attempt to pull out of an agreement to construct a 600 MW power cable connecting Norway and Germany. Under the current agreement, E.ON is to lay and operate the cable while Statkraft provides the power.

Norway: The Norwegian government has upheld the permits issued by the Ministry of Environment to allow Naturkraft to establish gas fired power plants at Kollsnes and Karst . The government believes that gas fired plants are important for securing Norway’s energy demand. Naturkraft will make arrangements to install technology to extract and capture carbon dioxide from exhaust gases.

Spain: The European Union has sent out a ‘statement of objections’ outlining its concerns over Electricite de France’s bid to purchase Spanish generator Hidroelectrica del Cantabrico SA. The statement invites both parties to suggest remedies for the EU’s concerns about competition by October 8, 2001.

UK: The UK’s Minister for Energy, Brian Wilson, has given energy policy clearance on three new combined heat and power (CHP) schemes. The plants will supply heat and power to the British Salt works at Middlewich, the Sudbrook Paper Mill at Caldicot and the iXguardian site in Hounslow.