News digest

Germany: Vattenfall Europe is currently examining the need for investments in new power plants in Germany and has presented ideas to its supervisory board. Providing that general market conditions are favourable, the company will construct a lignite fired power plant in Saxony and a hard coal fired plant in the Greater Hamburg area.

Ireland: The Electricity Supply Board (ESB) of Ireland is upgrading the country’s electricity network with an enterprise energy management system from Canada-based Power Measurement. The project is part of a g2bn ($2.4bn) refurbishment programme and will use a network of intelligent energy meters and software to help ESB to automatically track and profile electricity transactions.

Italy: Italy has submitted a revised National Allocation Plan (NAP) under the EU Emissions Trading Scheme in which it has reduced allowances by over 30m t per year for every year of the first phase of the scheme. The new NAP allocates 239.96m t in 2005 (down from 278.5m t), 240.57m t in 2006 (down from 279.7m t) and 241.64 in 2007 (down from 279.2m t).

Italy: Enel has signed an agreement to purchase 71 1.5 MW wind turbines from GE Energy in 2004 and 2005. Thirty-eight of the turbines will be installed at the Littigheddu project in Sardinia, while five will be used to repower the existing Collarmele project in Abruzzo.

Spain: Endesa has started up the second of three turbines at its combined cycle gas turbine (CCGT) plant in Tenerife, and is also close to completing the Gran Canaria CCGT plant. The two plants pave the way for natural gas to be brought to the islands.

Switzerland: VA Tech Hydro has won a contract to modernize the electro-mechanical equipment at the Küblis power plant in Switzerland. The g9m ($10.8m) contract involves the delivery, installation and commissioning of two horizontal twin Pelton turbines, two synchronous generators, four spherical valves and a distribution penstock.

UK: The 363 MW Fifoots power station in South Wales has been purchased by a private equity fund for an unconfirmed £40m ($73m). The buyer, the Rutland Fund, believes that the plant has “great recovery potential” in the UK market where wholesale prices are rising.

UK: An investigation by regulator Ofgem into the blackouts in Birmingham and London last year has found that National Grid Company was not in breach of its legal obligations. The utility has not escaped criticism, however, with Ofgem raising concerns about the adequacy of installation procedures.

EU states miss July deadline

The European Commission has stated that only two European member states had transposed the European Union (EU) gas and electricity directives before the 1 July 2004 deadline. Slovenia and the Netherlands have transposed the legislation, while Denmark, Hungary and Lithuania have adopted most measures.

The Commission says it is studying the situation and will consider launching infringement procedures against those countries that have not implemented the legislation.

The directives stipulate that network operators have to be separated effectively from the parts of the gas and electricity activities where competition is possible, mainly production and supply. In addition, all member states have to appoint an independent regulator to prevent any discrimination arising in the market. The directives also foresee the possibility for member states imposing public service obligations including security of supply, regularity, quality and price of supplies and environmental protection.

The gas and electricity directives were adopted in 2003 and gave a July 1, 2004 deadline for EU energy markets to be opened to commercial customers representing 70 per cent of consumers. All consumers should be able to choose their energy supplier from July 2007.

Horns Reef turbines dismantled

Wind turbine supplier Vestas has announced that it will dismantle all 81 nacelle units at the Horns Reef offshore wind farm following operational problems at the site. The units will be transported to Vestas’ facility in Ringkøbing, Denmark, for testing and upgrading.

The announcement is a blow for the offshore wind industry and for Vestas, but the company says the experience at Horns Reef has been important. “Experience is expensive, but also precious,” said Svend Sigaard, Vestas president and CEO. “Being the first large offshore project, Horns Reef must be a success. The project is important for Vestas’ continued leadership in the offshore segment.”

Vestas erected 80 of its V80-2.0MW units at Horns Reef in the North Sea, 15 km off the Danish coast, in 2002. It also installed an onshore test turbine at Tjaereborg near Esbjerg. All 81 units will be dismantled and tested, and Vestas aims to complete the work by late 2004.

The operational problems at Horns Reef have been caused by the harsh offshore environment, according to Vestas. The difficult conditions have also made problem solving difficult.

IP buys Turbogas

International Power of the UK has agreed to purchase a 75 per cent stake in the Turbogas power station in Portugal from RWE Power AG for a total of g205m ($247m). The 990 MW combined cycle plant, located near the northern city of Porto, is co-owned with EDP (20 per cent) and Koch Transporttechnik (five per cent).

International Power has operated in Portugal for a number of years through its 600 MW coal fired Pego plant. The acquisition will consolidate its position in the country, create fuel diversity in its portfolio and contribute to earnings.

Turbogas is currently selling its entire output under a 25 year power purchase agreement. The Portuguese government is planning to amend such long-term contracts to enable the liberalization of the market, but International Power says that it is confident that the value of the contracts will be preserved.

Make the most of LCPD flexibility

Analysis by ICF Consulting has shown that owners of large coal fired power stations in the European Union (EU) should weigh up their options before investing to comply with the forthcoming Large Combustion Plant Directive. This legislation, together with emissions trading, will drive critical new decisions in the region’s power markets, says ICF.

To meet the requirements of upcoming legislation on carbon dioxide (CO2), sulphur dioxide (SO2) and nitrous oxide (NOx), coal fired plants are looking to install pollution control technology. ICF’s analysis shows that in many cases, this is not required and plant owners should fully weigh up their options to avoid unnecessary investments.

EDF privatization in the balance

In the wake of a number of strikes by utility workers, the French government has put immediate plans to privatize its two main national utilities, Electricité de France (EDF) and Gaz de France (GDF), on ice. It will instead set up a commission to look into the opening up of the two utilities’ capital.

The decision by the government will delay any decision on energy market privatization by up to 12 months, and will also provide an opportunity for EDF’s liabilities to be closely scrutinized.

In response to pressure from the European Commission, the government has already agreed to change the status of EDF to end its unlimited state guarantee. This leaves the utility with a potential lack of funding, a problem which the government hoped could be solved by turning it into a corporation and cutting the state’s stake to 70 per cent.