As always, you will find only the most interesting news from the energy world in Ukrenergo Review.
Briefly about the important.
Polish power companies will have to sell all electricity, with the exception of “green” energy, exclusively on energy exchanges to prevent a sharp increase in prices. This was reported by the Ministry of Energy of Poland. Today, Polish power companies (mostly state-owned utilities) are obliged to sell only 30 percent of their products on energy exchanges. Such a relatively small volume of electricity supply often creates unforeseen and significant fluctuations in prices.
“I hope that increasing this obligation will stabilise wholesale electricity prices and will prevent their unjustified growth in 2019,” Energy Minister Krzysztof Tchorzewski was quoted as saying in a statement. The Minister also noted that the state power companies would start selling their electricity on exchanges since 1 August this year.
It is worth noting that electricity prices in Poland have grown over the past few months due to the increased cost of coal and the cost of carbon emissions. The country’s energy market regulator is currently investigating this issue. As of today, Poland still uses coal to generate the major part of its electricity. However, the reduction in permitted emissions urges the government to look for cleaner sources of energy.
Germany refused the proposals of two Chinese buyers intending to buy its energy assets. For this, the State Development Investment Bank KfW will temporarily acquire a 20 percent holding in 50Hertz Transmission GmbH. This will prevent the Chinese from purchasing a stake in the company.
Germany also intends to block the acquisition of an engineering company by investors from China, which, according to the government, will be the first direct prohibition of the recently re-elected Angela Merkel’s Cabinet. Thus, Germany will join the U.S. and Canada, resorting to a tougher line of its foreign economic policy with respect to China.
Merkel’s government is on the vergse of implementing a pan-European foreign investment criterion after a series of Chinese acquisitions on the European continent in recent years. Politicians are concerned that China is seeking access to strategically important technologies and wants to increase its global influence through the acquisition of key infrastructure, including ports and power grids. This week, the Ministry of Economy said it would consider the rules aimed at strengthening requirements for foreign investment. Therefore, it seems that the German energy market will undergo significant changes.
3. Japanese Tepco to compensate for the loss of Fukushima at the expense of wind energy. Tokyo Electric Power Co Holdings (Tepco), the largest producer of electricity and the owner of nuclear power plants in Japan, stated that it intended to turn away from nuclear power and move towards renewable energy sources (RES) worth tens of billions of dollars. Tepco aims to develop renewable energy projects in Japan and abroad with a capacity of 6 to 7 GW.
In the previous fiscal year, the share of RES in the structure of electricity produced by Tepco amounted to only about 15 percent. This figure is lower than in other Japanese power companies. “We must gain competitive advantage in renewable energy,” said President Tomoaki Kobayakawa.
Tepco plans to focus mainly on offshore wind energy projects. This nuclear power generating company was able to produce electricity at a relatively low price. However, the disaster at Fukushima nuclear power plant in 2011 led to a halt: the plant is not operating up to this day. Therefore, such a change in the company’s global development is a pragmatic step with benefits not only for Tepco but also for the climate.
In June, Italian Enel SpA, one of the largest power companies in Europe, announced its intention to buy almost USD 1.5 billion controlling stake in the Brazilian power company Eletropaulo. This became one of the record bargains on the energy market this year. However, the company then suspended further purchase of assets in Brazil since it was busy with the asset sales of up to EUR 1.5 billion in the second half of the year. “I don’t see appetite for further acquisitions in Brazil at this stage,” Enel CEO Francesco Starace told analysts on a conference call on Tuesday after the company released first-half results.
The company reported that net debt at the end of June increased by 11.2 percent from December 2017 and reached the level of EUR 41.6 million mainly due to acquisitions, dividend payments and investments. It is worth noting that last year, Enel SpA also bought a Brazilian company CELG for approximately USD 640 million. In general, Enel, a manager of Spanish Endesa SA, is one of the largest power players in South America, which has been actively reorganising its portfolio in the region in recent years. However, it seems that the active expansion in the South American region will be suspended.
On 27 July, France, Spain and Portugal agreed to build an undersea power line in the Bay of Biscay to help the Iberian Peninsula to get out of energy isolation. Speaking after the meeting in Lisbon, the leaders of the three countries welcomed the agreement signed during the meeting on the financing of construction of a 370-kilometer transmission line linking France and Spain.
“This is a very important step,” said the Prime Minister of Portugal Antonio Costa. The European Commission will finance 30 percent of the project by bringing EUR 578 million. This is an unprecedented example of financing energy projects within the European Union. It is expected that the line will be commissioned in 2025, almost doubling the capacity of the electricity exchange between France and Spain.
Spain and Portugal have been asking for a long time to bring them out of isolation from the European distribution networks for electricity and gas. For example, Portugal has an excess electricity production and can export it not only to Spain. At the same time, Spain is also striving to increase the number of interconnectors with the rest of Europe. Madrid and Lisbon would also like to connect their systems to the European gas market by building a pipeline in Catalonia in the northeast of Spain. Both countries are currently importing gas from Algeria through a pipeline commissioned in 2011. The future of this project is still in question. However, electricity integration processes will definitely continue their movement in the Pyrenees.