Interest mounts for AES Drax stake

Competition is intensifying for control of Drax, the UK’s largest power station, located near Selby in North Yorkshire. This follows the decision by US owners, AES Corporation, to withdraw its debt restructuring plan for Drax, after banks and bondholders, owed £1.3bn ($2.04bn), declined to meet an AES imposed deadline.

International Power have offered to buy a stake in Drax and take on some of the debt, in return for management control of the coal fired plant. Its offer was raised by £20m to £100m for 15 per cent of Drax’s debt and 36 per cent of its equity in order to trump an offer by investment bank Goldman Sachs.

New York-based energy group Miller, McConville, Christen, Hutchison & Waffell, which specializes in buying distressed power stations in the US and UK, said it would be making a bid and Drax confirmed that an offer had been received from BHP Billiton, the diversified Anglo-Australian mining group.

AES had been trying to restructure Drax’s finances since it fell into a cash crisis last year.

News digest

France: Italy’s Enel is reported to be in talks with Electricité de France (EdF) about entering the French power market through the acquisition of generating capacity in exchange for a relaxation of rules restricting EdF’s role in the Italian electricity market.

Germany: Alstom has been awarded a contract by N-Ergie AG, Nuremberg’s electrical utility, to supply a cogeneration power plant to the Sandreuth combined heat and power plant as part of a modernisation project costing K90m ($97.7m).

Italy: Italy’s Chamber of Deputies has approved an energy sector reorganization law intended to complete Italy’s gas and power market liberalization process including the requirement for Eni and Enel to cut their stakes to 20 per cent in their respective gas and power networks by July 2007.

The Netherlands: Research from Datamonitor suggests that up to 60 per cent of Dutch major power users have switched electricity supplier since market opening eighteen months ago in a search for cost savings and improved service.

Portugal: VA Tech Hydro has been awarded a K2.7m ($2.9m) contract by Electricidad de Portugal Energia for the turbine modernization of the Belver IV hydroelectric unit on the river Tajo.

Portugal: The Portuguese government has approved a resolution setting out the objectives of a reorganisation of its energy sector and the measures to be adopted, including improving security of supply, increasing competition and promoting sustainable development.

Spain: Royal Dutch/Shell has bought a 40 per cent share in the 99 MW LaMuela wind park in Spain from TXU Europe Energy Trading. It owns four wind parks in the USA where it plans to build a 160 MW wind park.

Spain: GE Oil & Gas has delivered a 56 MW steam turbine generator for a combined cycle waste-to-energy project at Bilbao’s municipal waste incineration plant which will supply 100 MW to the national grid when commissioned in 2004.

Spain: Spanish utility Endesa has entered into a long-term deal with Nigeria LNG Limited to buy one billion cubic metres of LNG per year from 2006 and also secured a similar 20-year deal with a Qatar-based company in order to supply its growing fleet of CCGT plants.

UK: Britain’s National Grid and Dutch network operator TenneT have completed a seabed survey as part of a project to build a power link between the two countries with a capacity of between 1000 MW and 1300 MW.

German utility E.ON has acquired a 36.3 per cent stake in Graninge, taking its total interest in Swe

E.ON is also reported to be negotiating to buy a 17 per cent stake in Graninge held by two Swedish families and if successful, would follow this with a tender for the ten per cent listed on the Stockholm bourse.

E.ON will be looking to fully consolidate Graninge into the E.ON Group as part of its strategy to enlarge it competitive position in the Northern European energy market. Graninge is expected to work closely with Sydkraft on generating, grid and marketing operations to achieve cost savings. Graninge supplies 285 000 customers in central Sweden and generates 4 TWh annually.

Mitsui Babcock to decommission Gleep

Mitsui Babcock has been appointed by the UK Atomic Agency Authority to decommission Europe’s first nuclear reactor, the Graphite Low Energy Experimental Pile (Gleep), which operated from 1947 to 1990. Gleep was initially used to prove the physics for the UK’s nuclear power programme and subsequently used to produce radio-isotopes for use as fuel in the country’s first generation of nuclear power plants.

Mitsui Babcock will dismantle and remove the reactor to allow for the site’s redevelopment as a technology park. The cost of the decommissioning and other demolition work is around £10m ($15.7m). The fuel rods and control rods were removed in 1994/1995.

Centrica goes for green look

British utility Centrica plc plans to spend £500m ($781m) over the next five years on generating its own green energy, mostly from offshore wind farms. It is planning a number of joint ventures and aims to have stakes in a least 1000 MW of wind generation by 2010.

Centrica’s chief executive, Roy Gardner said: “We think our entry into renewables generation is timely given the rapid changes in the economics and technology of the industry, which will deliver better economies of scale.”

Separately, Centrica announced the acquisition of the 240 MW Barry power station in South Wales from AES Barry Limited, a subsidiary of AES.

UK clean coal plant approved

The UK has passed plans for a new 430 MW clean coal power plant to be built by Coalpower Limited at the Hatfield Colliery at Doncaster in Yorkshire. The plant is one of two planned by the company formed by Richard Budge, former chief executive of Britain’s biggest coal producer.

The plant will convert SOx and NOx pollutants into useable byproducts while CO2 will be removed prior to combustion.

EU begins probe into British Energy rescue package

The European Commission has launched an investigation into the package of measures aimed at rescuing troubled nuclear group British Energy on the grounds that it may constitute illegal state aid. The UK government and British Energy are confident the £5bn ($7.8bn) package will be approved. The Commission said that while it would use the EU’s state aid rules to assess the restructuring, it would also try to reflect issues covered by the Euratom Treaty on nuclear safety.