UKRENERGO REVIEW 16-23 MARCH 2018
The spring is well under way, and therefore the coming weekend promises to be sunny and enjoyable, especially, if you start with the new publication of Ukrenergo Review. World energy news are full of interesting stories and breakthrough ideas, so keep abreast together with us.
M&As. Oslo, the capital of Norway, consolidates its ownership of Norway’s Hafslund transmission system operator and E-CO Energi electricity generator. The city will unite companies under a single corporate umbrella, and this will be the first step in the preparation for further mergers and acquisitions in the entire Norwegian electricity sector. Such operations are allowed under the laws of Norway regarding unbundling in the energy sector, adopted in 2016. In particular, the law stipulates that such TSOs as Hafslund should have production and distribution of energy separated.
However, the law allows a shareholder (in this case, the municipality of Oslo) to own a different pool of both generating and transporting energy companies, as the business and financial operations of such companies (Hafslund and E-CO) will remain separate according to the norms. Earlier this month the Norwegian Parliament decided to forbid electricity producers, serving more than 30,000 consumers, to own electricity generation and distribution (previously the rate reached 100,000 consumers). That is why the new owner will control the country’s second-largest electricity producer generating 13 HFC, as well as the country’s largest electricity grid, serving 710,000 consumers, and this will be in line with current Norwegian legislation. In general, E-CO fully owns and partly operates over 70 HPPs, and is the third largest electricity generator in Norway. The joint group will focus on a key position in further industry consolidation to become a good place for expected future changes in the Norwegian energy sector according to an E-CO Energi report. This step should mean the next round of restructuring for Hafslund, which began selling assets to Finnish Fortum in 2017, while Oslo, in turn, gained control over its share in Finland. It is expected that the merger will be completed in the second quarter of 2018, subject to approval by the city council of Oslo. Business activity of European energy everyday life is abound in vitality.
2. Fight for electricity supply. The EU antitrust authorities are investigating several complaints from Danish producers seeking to supply electricity to their neighbors, but are not able to access the markets where TenneT operates. The European Commission said it had a “constructive dialogue” with TenneT, a Netherlands-German transmission system operator, a subsidiary of TenneT Holding. A corresponding statement was made by Margrethe Vestager, EU competition commissioner, at a briefing in Copenhagen on Monday. We suspect that access was restricted due to a high level of electricity production. TenneT controls 40% of cross-border networks with a capacity of 1800 MW. TenneT argues that the German-Danish border suffers from a low number of interconnectors, adding that transmission capacity has been stretched to the brink because of the market liberalization and transfer to renewable energy sources. The company said that the EU investigation would include calculations on whether the transmission capacity, approved in accordance with European legislation, puts foreign suppliers at a disadvantage. Moreover, such expertise could serve as a precedent for all border crossings in Europe. It should be reminded, that electricity producers in Denmark, Sweden and Norway have been complaining about limited access to electricity supplies between West Denmark and North Germany for a long time. According to Deputy Director General of Danish Energy, Anders Stouge, in 2016, when access was limited to 200 MW, revenue losses for electricity producers in the northern countries amounted to about $ 82,44 million. At the moment, companies are at the stage of seeking a compromise solution to the problem, and the European Commission acts as an independent arbiter of the dispute.
3. Smart solutions for electricity saving.
New Delhi (India) began using smart meters for rational energy consumption. Using special software Indian consumers can remotely control their home appliances simply by installing a “smart” electricity meter at home. It allows to check which device consumes more electricity at home and synchronizes the use of energy-saving equipment with «off-peak» hours, when the price is lower. This solution was first introduced in India thanks to the efforts of Tata Power Delhi Distribution Ltd (TPDDL), a joint venture between the Government of Delhi and Tata Power, which is to install smart meters and launch the Android mobile app. The technology is spreading rapidly, and thanks to intelligent meters and the backward infrastructure of smart-net networks, even local distribution companies have begun to introduce such “smart” solutions. In the future, at peak demand hours, consumers will receive messages on their mobile phones that will offer them incentives to reduce energy consumption. Today domestic consumers mostly have a single tariff throughout the day, without distinguishing between peak and non-raised prices. The new TPDDL automation program will help the licensee to track customer complaints, carry out remote diagnosis and find the best solution, thereby constantly informing customers via SMS or an app. In addition, the sensor detects damage, stores information on the counter and transfers it to the central server. This also allows to deenergize remotely. Wireless power sensors detect connections and other similar interventions into distribution lines that prevents stealing of electricity widespread in India. A great example of optimization and energy efficiency.
4. Energy reforms in Indonesia.
Did you know that Indonesia was the the center of one of the largest subsidies for energy use? By 2015 in 260-million country electricity prices had been set at an irrationally low level and the government had been making transfers to Perusahaan Listrik Negara (PLN), an energy company in Indonesia, to cover its losses. In 2012, subsidies for electricity cost the government $ 10 billion. Within the reform program, starting from 2013, Indonesia has achieved success to cut such subsidies. Reforms included raising electricity prices to levels that reflect costs, with the exception of consumers with low electricity consumption, including those in need. Using data on electricity consumption and prices for all consumer groups and regions over the period from 1992 to 2015, The Conversation made an assessment of the impact of changes on electricity prices and electricity consumption in Indonesia. The analysis showed that the reduction of subsidies since 2015 has reduced annual electricity consumption by about 7%. In the end, the policy of subsidies reduction in Indonesia has led to significant efficiency in the use of electricity. Unfortunately, it has recently been announced that prices for fuel and electricity in Indonesia were subject to freezing until the end of 2019 – the year of presidential elections. Indonesia has demonstrated that it is possible to carry out reforms that simultaneously contribute to the environment, reduce inequalities and are effective for the country’s budget.
5. New records. According to the system transmission operator National Grid, in Britain the energy produced by wind power stations reached a record-high 14,2 GW on March 17. Thus, wind generation produced 35,7% of electricity in the country’s total energy balance. 2017 has already become a record for green energy, and 2018 is expected to exceed it, stated Fintan Slye, director of the National Grid. Forecasting wind power production may be a challenge, since it depends on wind speed and current electricity consumption, however, its level is expected to increase as far as the more wind power stations are being opened. About 2 GW of wind generating capacity are predicted to be added in 2018. The share of wind energy in the country has increased by about a fifth since last year, thanks to the recently opened Orsted’s Burbo Bank and Vattenfall Pen-y-Cymoedd stations. The cost of subsidies for new offshore wind power stations has halved since the last auction in 2015 for renewable energy projects. At such auctions the lowest bidder wins the subsidy. In 2018, prices will continue to decline. It bears reminding that Germany has the largest capacity of wind power stations in Europe – about 56 GW. It is followed by Spain with 23 GW, and the top three is joined by Britain.