EDF continues its UK push
France-based power outfit Electricité de France (EDF) is making bigger ripples in the British pond by securing a larger share of the UK generation market with the £1.5bn ($2.1bn) acquisition of some of TXU Europe’s power generation and distribution assets in the UK.
Through its London Electricity subsidiary, EDF has bought TXU’s distribution business, Eastern Electricity, and its West Burton power station. It will also buy out TXU’s 50 per cent share in 24Seven, a network management company set up by TXU and London Electricity.
The 2000 MW West Burton coal-fired plant cost EDF £366m, and TXU will also receive a £60m reimbursement for environmental expenditure. EDF will pay £1.45bn for the distribution and network management businesses.
Ratings agency Standard & Poor’s says that the state-owned power giant has overpaid for the assets. But EDF will not be too concerned as it continues to corner the European market with a set target of acquiring 20 per cent of the region’s generation business. The acquisition will bump up its UK portfolio to 7.5 per cent of generation and 18 per cent of distribution.
The deal means that TXU has reached its £1bn debt reduction target, which now allows it to focus on its UK retail business, which includes 5.5m customers, while concentrating on the European scene. The acquisition puts EDF ahead of TXU in terms of generation; its nearest rivals are now Innogy with 8000 MW and Powergen with 10 000 MW.
German exchange eyes merger for 2002
Germany’s two power exchange bourses are in talks to get their planned merger ready by early 2002. Frankfurt’s EEX and Leipzig’s LPX are confident of wrapping up the process to compete in Europe’s biggest power market.
Each bourse has its advantages, and each has been displaying very different strengths. LPX, modelled on the Scandinavian Nord Pool exchange, has been particularly successful in the spot power market. Its midday auction price has fast developed into a reliable benchmark, with traders praising its overall simplicity.
EEX is 48 per cent owned by the Deutsche Boerse and Swiss exchange SWX, with the remaining 52 per cent spread between 48 shareholders. Its strength lies in its futures market.
The two ventures, both launched in 2000, have each captured six per cent of the German power market. Traders feel that a merger would give them the best of both worlds as LPX’s sound spot market working alongside EEX’s positive future trades would make good business sense.
The new exchange would be based in Leipzig and would trade under the new name of European Energy Exchange. Both parties have talked about the potential deal in the past but it is this month when they will know if it will be approved.
Hans Schweickhardt, EEX executive manager and Carlhaus Uhle, LPX chairman, will jointly run the merged bourse.
Britain’s green energy makes impact
All types of renewable energy will play a larger role in the electricity market under a new set of proposals from the UK government.
Part of the initiative, recently announced by energy minister Brian Wilson, is to make plans for a 645 km undersea cable linking wind farms and other renewable energy schemes along the UK’s west coast to the national grid.
Scottish Power is also stepping up its efforts for green energy by investing £500m ($706m, €804m) on developing wind farms in Scotland. The renewable contribution is part of an EU initiative that requires the UK to meet a target of at least ten per cent of its overall energy output to be green by 2010.
Spain and Portugal agree to join forces for new Iberian energy projects
The Spanish and Portuguese governments have joined forces in setting up an Iberian electricity market within the European Union to be implemented by 2003.
The plan dictates that both parties use their experience in introducing competition and increase energy interconnections. The agreement will see the current 700 MW network links increase to 1700 MW within five years at a cost of £42m ($60m). The network companies, Red Electrica de Espana and Portugal’s REN will undertake the project.
The deal was struck to balance out foreign investors who are looking to take large stakes of domestic companies. The reorganization is expected to allow the Portuguese national utility Electricidad de Portugal to increase its stake in Hidrocantabrico by up to 40 per cent.
Alstom wins Italian job
France-based engineering and supply contractor Alstom has been awarded a €50m ($44m) contract by Enel to complete what will be one of the largest circulating fluid bed (CFB) boilers in Italy by 2004.
Enel’s Sulcis plant project in Sardinia will have an output of 220 MW and will supply power to Sardinia’s grid and a local aluminium smelting company. The contract gives Enel the option to build a second unit at the site.
Europe: Most of Europe’s leading energy utilities are failing to meet their customers expectations across a wide range of criteria, claims a new report from Datamonitor. The report also claims that smaller utilities often outperform their larger competitors when it comes to customer satisfaction.
Germany: The German Federal Cartel Office (BKA) has launched actions for regulatory breaches against four leading electricity companies – Veag, HEW, Bewag and EnBW’s distribution division. The four are accused of hindering Third Party Access (TPA) to competitors by charging them excessively high tariff rates.
Germany: From 2003, Germany will start construction on its first offshore wind energy park in the North Sea. The wind park, which will be sited 45 km northwest of Borkum, will be the first in the world to be installed outside of the 19.3 km coastal protection zone in 30 m depth of water.
Germany: Four German companies are combining their resources in an effort to develop a fuel cell generating unit which is suitable for the residential and small industrial markets by 2005. The group, comprised of EWE, MVV, Ruhgas and VNG AG, believes that there will be a market for the environmentally friendly and efficient generating units.
Holland: The Dutch state has finalized the purchase of the high voltage electricity grid owned by E.ON, Electrabel, Essent and Reliant for NLG2.55bn ($1bn), although it was trimmed to NLG1.84bn to offset long-term debt and interest rate charges. The grid will now be controlled by state-run TenneT.
Sweden: Tranås Energi AB has awarded Sermet Oy, which was recently acquired by Wärtsilä, a contract for a 10 MW biofuel combined heat and power plant which will provide district heat to the city of Tranås. There are also plans to use the steam cycle for electricity generation in the future. The plant will use the sawdust and bark from nearby sawmills as biofuel.
UK: The UK government has begun consultation on measures to help small generators function under the New Electricity Trading Arrangements (NETA). The proposed plans would allow small power generators to consolidate their output for sale and ensure that imbalance prices accurately reflect costs of balancing the power system.
UK: The UK’s first district heating scheme using a microturbine-powered combined heat and power system has been installed in an 18-storey tower block. The system provides heating and electricity to the building and was installed as part of a refurbishment plan.