European power good to 2007

Europe’s Union for the Co-ordination of Transmission of Electricity (UCTE) has issued a new system adequacy forecast which predicts that security of supply across Europe will be sufficient in the period 2005 to 2007. UTCE foresees security margins declining beyond 2007 and says an additional 30 GW of power will be required in the years 2010 to 2015.

UTCE says that planned power plant developments will help to cover load increases and that security of supply will remain at acceptable levels until 2010. The development of international interconnections is expected to improve the reliability of deficit areas.

Hoiwever, UTCE pointed out that local objections are limiting the number of new transmission projects. The reports points to transmission system bottlenecks limiting the full potential of the interconnected grid system and said the addition of substantial amounts of wind power capacity presents a growing challenge to the network. Spain and Germany will need significant transmission expansion to cope with the quantity of wind power. Power exchange will be vital and has increased with the reconnection of the UCTE zones.

Dong increases share

Within days of outmanoeuvring Sweden’s Vattenfall Group over ownership of Danish power group Elsam, the Danish state-owned oil and gas group Dong has secured control of Energi E2, Denmark’s second-largest power generator.

Through a series of deals valued at DKr17bn ($2.9bn) Dong has positioned itself as a fully integrated national power giant, with the lion’s share of Danish electricity and gas supply contracts. Dong is to pay the Copenhagen municipality DKr10.5bn for a 34 per cent stake in E2, one third of which will be in cash, with five other minority stakes added for an additional DKr1.5bn.

The two deals are threatening to weaken Dong’s net debt position and have resulted in the imposition of a CreditWatch status from rating agency Standard and Poor’s.

East-West operators get closer

Rating agency Standard and Poor’s has published a report in which it compared six electricity transmission system operators (TSOs) and predicts a narrowing of credit quality between Western and Eastern Europe TSOs.

The report, entitled Peer Comparison: West and East European Electricity Transmission Companies, points out the capital-intensive nature of these companies and their need for significant investment in the medium to long term across Europe in general and Eastern Europe in particular.

Standard and Poor’s said that transmission companies were characterized as having the lowest operational risk profiles among utilities but that their robust business strength was generally offset by their high financial leverage.

Germany costs connections

A study into wind energy in Germany from the German Energy Agency (DENA) has concluded that, with appropriate expansion of the grid network, 20 per cent of the country’s power could come from renewable sources.

It estimates that in the period to 2000 the cost of connections from the currently planned North Sea and Baltic shore-based wind plants to the main industrial centres will be €280m ($372m). It predicts this will rise to €490m in the period to 2010 before falling to about €350m in the period to 2015. The costs would add between €0.39 and €0.49 per kWh to domestic electricity bills

DENA calculates that the cost of connecting planned offshore wind projects would be at least €5bn ($6.6bn) and warns that banks may be unwilling to provide finance.

UK renewables lobby

-A group of 11 UK renewable energy trade associations, representing over 600 companies, has published an action plan aimed at expanding the use of renewables to meet 25 per cent of UK energy needs by 2025. Central to the plan is a call to develop renewables across all energy sectors, so that the progress being made in renewable electricity, especially wind power, is mirrored for all renewable technologies.

The plan calls on the government to set targets and introduce support measures to create new markets for renewables in heat and transport. It demands a strategy for expanding and reinforcing the national grid to accommodate increased renewable capacity.

Kyoto will cost

The annual cost to Europe’s electricity users of complying with the Kyoto Protocol could be around €5bn ($6.6bn), says new research by Datamonitor.

The climate change agreement, which came into force in February, will mean major investment in carbon-efficient generation capacity between 2005 and 2010, with consumers ultimately footing the bill.

Datamonitor believes that Kyoto and the EU Emissions Trading Scheme will affect how power is produced and traded in Europe’s markets and that in the short term renewables will not be the answer.

News digest

Austria: The Energy Alliance, the proposed grouping of six energy suppliers in eastern Austria, is facing a legal challenge from the economic chamber in the state of Carinthia, which argues that competition in electricity supply is being undermined. Merger talks continue pending a verdict from competition authorities.

Europe: Only three EU member states have met the deadline to complete the allocation of emission allowances under the EU Emissions Trading Scheme.

Finland-Estonia: ABB has won the contract to design, build and install the underground power link between Estonia and Finland. The Estlink project is worth €110m ($145m) to ABB and will use HVDC Light technology.

Finland: Plans for a new nuclear reactor in Finland advanced when the government issued a construction licence to operator TVO. Start-up is scheduled for 2009.

France: Electricité de France is to undertake its largest hydro power project for 20 years at Gavat (Isàƒ¨re) on the Romanche, scheduled for commissioning in 2013. The underground power station will have two turbines with total output of 46 MW.

France: The French government has confirmed it will privatize Electricité de France (EDF), Areva and Gaz de France (GDF) this year. GDF will go to market in early summer followed by Areva in late summer and EDF by the year end.

Germany: Wärtsilä Biopower Oy has been contracted by BioTherm Baden & Cop KG to supply a biomass-fuelled combined heat and power plant to the town of Baden-Baden in Germany.

Greece: The government of Greece has invited proposals from parties for a €40m ($52.5m) project to prepare the national electricity grid to link up to alternative energy sources.

Norway-Netherlands: Statnett, the Norwegian national transmission system operator, has entered an agreement with Nexans to provide 156 km of cabling for the deep water section of NorNed, an HVDC interconnector between Norway and the Netherlands.

Spain: Spanish utility Endesa has reported a 5.1 per cent rise in net profits for last year to €1.38bn ($1.82bn) on sales up 8.7 per cent at €17.6bn. Sustained demand in Italy and Latin America has offset lower profits in Spain and Portugal.

Spain: Electricity network operator REE has exercised an option to acquire the remaining 75 per cent of Iberdrola’s high voltage network that it does not own from Grid Industries, owned by CVC Capital Partners.

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