Power in Europe

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Power in Europe
EU ministers call for 2016 opt-out
Most EU countries back extending the deadline for existing opted-in large combustion plants to meet stricter air pollution limits by at least four years to 2020, the Czech EU presidency said on March 2. The majority of [EU countries] support interim measures from 2016 to 2020 for current installations so there would be room for their alignment [with the new limits] or so that they could be decommissioned if their useful life was over, Czech environment minister Martin Bursik said after a public debate between EU environment ministers in Brussels. The ministers were discussing the European Commissions December 2007 proposals to update and consolidate EU emission rules into a single EU industrial emissions law (see PiE 545/1). These rules include the Integrated Pollution Prevention and Control directive and the Large Combustion Plant Directive, which cover industrial emissions, excluding carbon dioxide, that pollute the air, ground or water. Opted-in plants meet current emission controls set out in the Large Combustion Plant Directive, but many will have to retrofit abatement technologies in order to meet the ECs tougher proposals. Key among the proposals for 500MWth and above coal-fired power stations is a 60% reduction in NOx emissions from the current limit in the LCPD of 500 mg/Nm3 to 200 mg/Nm3 from 2016, a level seen as achievable with Best Available Techniques (BAT in
(continued over page)
Issue 546 / March 9, 2009 Analysis

Vattenfall/Nuon makes the top five German CO2 store draft under attack Drax assesses impact of early closures CCS: into the execution phase Italy needs stimulus of new coal CEZ, J&T buy Germanys Mibrag 3 5 6 8 10 11
The Longer View

Rolling down the mountain 12
News highlights
Nuon re-tenders for Seneffe CCGT EP pushed to vote again on CO2 Areva absorbs 47% O-3 overspend Areva warns Siemens State needs nuclear earnings: RWE Power exports strengthen Intrakat, Suez target EfW Board room blitz at Acea Edison hit by tax, demand slump NWEA calls for subsea cable Statnett ordered to restore Oslo cable Enova projects total 2.15 TWh Endesa moves back to Portugal EDP awards Baixo Sabor contract Ren lines up stimulus package Acciona moves on Gazprom for GN CCGTs? Wind projects focus on Vaud Dong buys Severn CCGT EIB considers Hatfield funding Nuclear justification a shambles RWE acquires Cumbrian options SSE plans Ferrybridge CHP unit 14 14 15 16 17 18 18 19 19 20 20 21 21 21 22 22 23 24 25 25 25 26 26
EDF, Enel in nuclear cooperation

Electricite de France and Enel of Italy have signed a deal to co-develop nuclear power plants in Italy and France, EDF said on February 24. The announcement was made during a Franco-Italian political summit in Rome between French president Nicolas Sarkozy and Italian prime minister Silvio Berlusconi, during which Sarkozy offered unlimited partnership on nuclear power development. Italys plans for nuclear new-builds have yet to be put to law, but EDF said that if Italy did succeed with nuclear legislation, the deal would include the creation of a 50:50 consortium between EDF and Enel charged with coming up with feasibility studies for the development of at least four EPR [European pressurized water reactor] reactors in Italy. A second deal, according to EDF, includes the 12.5% participation of Enel in Frances nuclear EPR program at Penly, Seine Maritime. Enel already has a 12.5% share in EDFs Flamanville EPR nuclear reactor, under construction and expected to begin service in 2017. The agreement also covers research and waste treatment. Italys draft law reintroducing nuclear power generation will go before parliament for approval in March, economic development minister Claudio Scajola said in a February 23 statement. Beyond its stake in Flamanville, Enel said further growth opportunities in the French power market included construction of an 800-MW clean coal power plant, a stake in two CCGT plants of 930 MW, and a stake in the tender for the renewal of 25 hydro power plants concessions. Enels French subsidiary Erelis had 8MW of operational wind capacity at the end of 2008 and a pipeline of around 500 MW. In French power trade, Enel sold over 1,000 GWh in 2008.
News
Belgium 14 / Europe 14 / Finland 15 / France 16 / Germany 17 / Greece 18 / Italy 19 / Netherlands 19 / Norway 20 / Portugal 21 / Spain 22 / Sweden 23 / Switzerland 24 / United Kingdom 25
Data
German power tracks DAX Bilateral Market Assessments Feedstock Comparisons European Exchange and Pool Prices 27 28 29 30
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ANALYSIS
INDUSTRIAL EMISSIONS
EU ministers call for 2016 opt-out

( continued from front page )
fact this radical step down in NOx emissions was already set out in the LCPD final text of November, 2001). Many ministers now argue that the proposals would force older plants to close by 2016 because it would not make commercial sense to upgrade them to the new limits, and that this could hurt the security of energy supply. We do have very serious concerns about the large combustion plant provisions, UK environment secretary Hilary Benn said during the debate. About 25% of our installed capacity would have to close by 2016 if we didnt change what was proposed. If that was replaced by gas, well, it raises questions of security of supply. Council conclusions reflected this sentiment: Some delegations supported the Commissions proposals to bring emissions of existing large combustion plants (including power plants) into line with current BAT by 2016. A number of others underlined the costs of retrofitting existing installations and expressed concern that the associated investments could impact the security of energy supply. Given that many Member States have recently upgraded their combustion plants to comply with current legislation, they asked for a longer phase-in of BAT. A third group of delegations could accept the implementation of BAT by 2016, on the condition that there is a certain transitional flexibility. Benn, along with other ministers, supported the Czech EU presidencys proposals for interim flexibility mechanisms. These include a new opt-out derogation whereby plant with a life span of less than about 10,000 to 15,000 operational hours between 2016 and 2020 would continue to meet the emissions standards required under the current EU large combustion plant directive. Most ministers also rejected the ECs proposal to lower the threshold for large combustion plants covered
by EU rules to 20 MW from 50 MW, Bursik said. He said that the Czech EU presidency wants to reach an informal political agreement between the 27 EU governments on the proposals at the EU environment council meeting June 25. The European Parliament is set to vote on the proposals on March 12, after its environment committee adopted recommendations in a vote January 22. EU governments, the EP and the EC all have to agree a common text before the proposals can become law. The EUs integrated pollution prevention and control directive currently covers around 52,000 installations across the EU, encouraging them to fit best available techniques and requiring them to use the most costeffective means to achieve a high level of environmental protection. The LCPD covers power stations larger than 50 MW, oil refineries, coke ovens and coal gasification and liquefaction plants.
All 3,870-MW of UK coal-fired power station Drax is opted in to the LCPD. The plant meets current NOx emission values comfortably, spokeswoman Melanie Wedgbury told Platts, but would have to invest to meet the tougher limits proposed. The problem facing all optedin plant is the threat of further legislation in 2020 making redundant any investments made to meet 2016 emission limit values, Wedgbury said. See Drax feature, page 6. Meanwhile another attempt is being made, this time by a cross-party group of 44 European Parliament members, to get CO2 emission performance standards into the industrial emissions legislation. The group is proposing that all power plant with more than 500 MW thermal input permitted after the law takes effect comply with an emissions limit of 350g CO2/kWh from 2020, and that all existing similar-sized power plant comply with the same limit from 2025. See European news, page 14.
Power in Europe
Power in Europe is published twice monthly by Platts, a division of The McGraw-Hill Companies, registered office: 20 Canada Square, Canary Wharf, London, UK, E14 5LH. Officers of the Corporation: Harold McGraw III, Chairman, President and Chief Executive Officer; Kenneth Vittor, Executive Vice President and General Counsel; Robert J. Bahash, Executive Vice President and Chief Financial Officer; John Weisenseel, Senior Vice President, Treasurer. Prices, indexes, assessments and other price information published herein are based on material collected from actual market participants. Platts makes no warranties, express or implied, as to the accuracy, adequacy or completeness of the data and other information set forth in this publication (data) or as to the merchantability or fitness for a particular use of the data. Platts assumes no liability in connection with any partys use of the data. Corporate policy prohibits editorial personnel from holding any financial interest in companies they cover and from disclosing information prior to the publication date of an issue. Copyright 2009 by Platts, The McGraw-Hill Companies, Inc. Permission is granted for those registered with the Copyright Clearance Center (CCC) to photocopy material herein for internal reference or personal use only, provided that appropriate payment is made to the CCC, 222 Rosewood Drive, Danvers, MA 01923, phone +1-978-750-8400. Reproduction in any other form, or for any other purpose, is forbidden without express permission of The McGraw-Hill Companies, Inc. Text-only archives available on Dialog, Factiva, and LexisNexis. Platts is a trademark of The McGraw-Hill Companies, Inc.
Issue 546 / March 9, 2009

(ISSN: 0955-6079) To reach Platts E-mail: support@platts.com
Editor Henry Edwardes-Evans henry_edwardes-evans@platts.com +44 (0)207 176 6207 Editorial Director, European Power Vera Blei Production editor Dominic Pilgrim Production assistant Chris Isles Editorial Director, Global Power Larry Foster Vice President, Editorial Dan Tanz
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POWER IN EUROPE / ISSUE 546 / MARCH 9, 2009
ANALYSIS
VATTENFALLS BID FOR NUON
Vattenfall/Nuon makes the top five

Swedish utility Vattenfalls 8.5 billion all-cash offer for Dutch utility Nuon pushes the new group into the top five power generators in Europe, but Platts data shows Vattenfall/Nuons relatively benign carbon intensity makes it the envy of its immediate peers. The deal, announced on February 23, promotes Vattenfall up the European league table to fifth in terms of electricity production (185 TWh/yr), putting it just ahead of GDF Suez and behind EDF/British Energy, E.ON, Enel/Endesa and RWE/Essent. But in terms of carbon emissions, Vattenfall/Nuon is down in eighth place, emitting some 20 million tons CO2 less than near rival GDF Suez in 2007 (see Powervision data). At todays 11/t carbon price, Vattenfall/Nuon would be saving 220 million on carbon credit purchasing over GDF Suez in a 100%auctioned ETS Phase 3. At first glance this conclusion is puzzling, as Vattenfall/Nuon has over 12 GW of coal plant to GDF Suezs 5 GW. The key, however, is hydro. V/Ns 11-GW of zero-emission Nordic hydro is balanced in the rivalry by GDF Suezs 15-GW of gas-fired plant. Vattenfalls relatively small gas-fired portfolio and heavy coal portfolio explains its commitment to developing carbon capture technology. In this and several other areas, the Vattenfall/Nuon merger appears to be a meeting of minds, in contrast some suspect to the recent RWE-Essent fusion. Both Nuon and Vattenfall are known for their innovations in renewable and clean energy, the two said. The companies will join forces, to continue to develop projects, such as the CCS installations at Schwarze Pumpe (Vattenfall, Germany) and Buggenum (Nuon, the Netherlands). Both companies are global front runners in the development of CCS. Investing in offshore wind will be a key priority, adding to current large wind farms such as at Egmond aan Zee (Nuon), Lillgrund and Kentish Flats (Vattenfall). This will support the combined groups ambition to generate 15 TWh of wind power by 2015 (compared to 2.5 TWh in 2009). Other alternative energy sources, such as solar foil development and ocean power, are part of the R&D investments of the combined companies.
Learning from Dutch strengths

With reference to the Netherlands, Vattenfall noted that an ageing asset portfolio and capacity shortages in the Dutch market provided the opportunity for a shift towards renewables and clean energy. The Dutch markets proximity to and good connectivity with Vattenfalls core markets would serve to consolidate its Northwest European footprint, and provide a strong platform for further growth in Belgium, France and the UK. Finally, the Dutch market was emerging as a gas and biomass hub, in tune with Nuons biomass and CCGT strengths. Indeed one of Vattenfalls priorities is to support Nuons strategy of securing 10-20% of its own gas demand through upstream gas assets in addition to long and short term gas contracting. In supply meanwhile Vattenfall said it would seek to build on Nuons highly successful customer service model and dual-fuel offering expertise to accelerate customer growth and profitability in Germany. And it would explore growth opportunities in de-centralized heat generation technologies.
2007 verified CO2 emissions by company (million mt)

E.ON AG RWE / Essent Enel / Acciona GDF SUEZ EDF / British Energy CEZ Iberdrola, SA Vattenfall /Nuon Drax Group Ltd. Scottish & Southern Energy Plc 0 10 20 30 40 50 60 70 80
Source: Platts Powervision
Installed Capacity (MW)

Existing Existing Planned Vattenfall GDF Vattenfal -Nuon Suez -Nuon 3,424 6,525 1,779 5,094 0 15,117 530 126 9 155 1,722 0 6,257 0 2,437 0 35 3,109 Planned GDF Suez 8 0 0 2,335 0 8,057 436 19 379
Plant type
Hydro 11,313 Nuclear 5,117 Fuel Oil 2,059 Coal 12,210 Coal Gasification 284 Natural Gas 4,305 Other Gas 518 Biomass & Waste 408 Offshore wind 350
Note: excludes onshore wind Source: Platts Powervision
The deal
In an initial acquisition, Vattenfall is paying 5.052 billion for a 49% stake in Nuons unbundled commercial activities. Subsequent acquisition of the remaining 51% will take place in the form of deferred share purchases in 2011, 2013, and 2015. The equity value for 100% of Nuon is fixed at 10.31 billion. In a conference call, Vattenfall management said substantial divestments would be made to help fund the deal. The sale of Vattenfall Europe Transmissions German network is progressing and is expected to be
ANALYSIS
VATTENFALLS BID FOR NUON
completed in 2009, with the proceeds potentially being used to reduce leverage. In addition, Vattenfall said it would reduce its 2009-2013 capital expenditure programme from SEK 202 billion to SEK 191 billion (16.7 billion). The utility has arranged a 5 billion bridge credit facility with nine banks, with a 12-month maturity and an option to extend by 50% for a further 12 months. The margin on the credit is Euribor + 150 basis points for the first six months, stepping up 75bp for the second six months and then 50bp step ups every six months thereafter. Vattenfall said it expected to refinance the 5 billion bridge in the bond markets during 2009.
The acquisition is conditional on 80% approval of shareholders, unbundling of the networks occurring and approval of the competition authorities. Vattenfall is to take operational control with effect from completion and will consolidate with effect from January 1, 2009. Synergies from the deal would be significant, Vattenfall said, but no figures were given. Trading operations are to be combined and extended, pushing the new group into the top three European energy traders. Savings would flow from reduced IT costs, improved purchasing power and substantial skill transfer opportunities in trading, customer product offering and plant operations. There are no redundancies planned, with Nuon retaining its head office and regional office.
Vattenfall-Nuon: plants by MW and operational/development status
Early Development Operational Under construction
420-3,090 MW 40-420 MW 0-40 MW
FINLAND NORWAY Oslo Stockholm Tallinn ESTONIA RU SSI A SWEDEN Helsinki
Dublin IRELAND UNITED KINGDOM London Amsterdam
DENMARK Copenhagen
Riga
LATVIA
LITHUANIA RUSSIA Vilnius Minsk NETH. Berlin POLAND Warsaw Brussels BELGIUM LUX. Paris Luxembourg GERMANY FRANCE Prague UKR AI N E CZECH REP. SLOVAKIA BELAR U S
Source: Platts Powervision. Contact: nathaniel_julien@platts.com, tel +44 207 176 6277
ANALYSIS
TRANSPOSITION OF EU CCS DIRECTIVE
German CO2 store draft under attack

Sara Knight
A draft law on CO2 capture and storage agreed between Germanys federal environment and economy ministries is to be put before cabinet later this month. It has already met with sharp criticism from environmentalists. The draft is a first step towards transposing the European CCS directive, passed last December, into German law and contains arrangements on CO2 transport through pipelines, investigations into suitability of geological formations for CO2 storage and planning rules on construction and operation of CO2 stores. Greenpeace takes issue with the draft for three main reasons. Firstly, it says there are no effective measures against CO2 leakage from end stores. Secondly, no thorough investigation of the CO2 stores is planned because these are expected to be formations from which natural gas has been extracted yet how much gas has migrated out of natural gas reserves is not known. When the reserve is opened, only that amount of gas is found that is present in the reserve at that time, Greenpeace notes. And thirdly, the draft proposes that CO2 end store operators take full responsibility for storage for only 20 years, after which the taxpayer is likely to have to foot any bills. A study by consultancy Intac for Greenpeace analyzing the draft law recommends the setting up of a fund into which all CO2 operators would contribute to cover future CO2 storage costs and so prevent these being passed through to the public. The study recommends beginning with a few pilot storage projects from which standards can be developed. It warns that use of best available technologies did not guarantee success, pointing to problems at the Asse nuclear waste end store, a former salt mine, where unexpected substantial influx of salt water into the store has presented state authorities with major problems. Meanwhile nature protection association NABU (Naturschutzbund Deutschland) has said that permitting procedures should not favour CO2 stores over other competing issues of public interest such as geothermal energy or ground water protection. It fears that if all evaluations, permitting and controls become the responsibility of the mining authorities, environmental and nature protection issues will be neglected. Further, NABU said there should be clear limits on the amount of polluting substances allowed in the CO2 stream. If all coal and lignite power stations under construction or planned are completed and retrofitted with CCS technology, nearly 190 million metric tons/yr of CO2 would need storage, according to environment group Deutsche Umwelthilfe (DUH). Some 9.6 GW under construction is set to emit about 59 million mt/yr CO2. Another 22 planned projects totalling 22.8 GW would emit 131 million mt/yr CO2. Two pilot projects including carbon capture planned by RWE (450 MW) and Vattenfall (up to 500 MW) would add to the total said DUH. A study by Prognos, meanwhile, commissioned by Europes second largest carbon-emitting generator, RWE (behind E.ON), concludes that carbon capture and storage should result in lower electricity prices and increase security of supply. Depending on whether we expect scenarios of constant or falling electricity demand, the wholesale price for electricity could be 17% or 22% lower when using CCS by 2030 compared with no CCS. The main reason lies in the lower CO2 prices that result through use of CCS. Savings to 2030 would add up to 52 billion (lower electricity consumption) or 66 billion (unchanged electricity consumption) depending on the scenario, predicts the study. The study looks at the effects of CCS on Germanys future power station fleet. If electricity demand is reduced by 15% over the period 2005-2030, some 14.5 GW of new capacity would be built in the decade 20202030, compared with 21 GW if electricity demand remained constant. Assuming CCS technology is widely used, the new plant would comprise more coal and lignite plant and less gas capacity, the opposite being the case if CCS was not employed. The scenario with constant electricity demand and use of CCS sees, for instance, 12 GW of new coal capacity being built over the period 2020-2030, along with 6 GW of new lignite, but no new gas plant at all.
CCS scenarios and CO2 certificate prices

Scenario: reduction in electricity consumption Without CCS Electricity consumption 2005-2030 Share of renewables 2030 Share of cogeneration Nuclear CO2 emissions 2005-2030 CO2 certificate price
Source: Prognos
Scenario: no change in electricity consumption Without CS No change 40% 25% Phased out -50% 75/tonne With CCS No change 40% 25% Phased out -50% 55/tonne
With CS -15% 40% 25% Phased out -50% 55/tonne
-15% 40% 25% Phased out -50% 70/tonne
ANALYSIS
DRAX AND UK CAPACITY MARGINS
Drax assesses impact of early closures

Around 6,000-MW of opted-out UK coal-fired power capacity may have less than three years left to run if current rates of production are maintained, Drax Group chief executive Dorothy Thompson said in a 2008 results conference call on March 3. The story of 2008 was undoubtedly the Large Combustion Plant Directive, which created opted-out plants with 20,000 hours of operating life that must close by 2016, Thompson said. Some of that opted-out plant has been running very hard in January this year it produced 14% of total UK output. If they continue to run at these rates, quite a lot will close early. We calculate that 6-GW could come offline by end-2011. The timing was probably not coincidental, because that is when the cost of Phase Three carbon [under the EUs Emissions Trading Scheme] starts kicking in, Thompson said. We will no longer have national allocation plans for UK plants and there will be less incentive to remain in the market. The recession and resulting fall in electricity demand would delay effects flowing from a generating capacity squeeze for two to three years, Thompson said. When you adjust for weather, we estimate that this winter demand is down about 5-6%. That translated into 2-3 GW. This is partly recession and partly to do with prices. Wholesale prices have halved since the time of the highest commodity prices, so in time some of the response may be dampened as commodity price falls come through. Previous forecasts for capacity tightness around 201112 have eased back a bit, but 11.5 GW of coal and oil plant have to close by 2016, and from 2016 all the opted-in plant will be subject to new NOx regulations [under proposed EU legislation], Thompson said. Some of that plant will not retrofit to meet the new regulations and will either be forced to close or accept reduced running hours. Thompson warned that the 6-GW of coal plant likely to close by 2012 would be replaced by new gas-fired capacity and that by 2015, over 50% of our electricity is going to be fuelled by gas, and if anything the gas import story is getting more complex. As of January 2009, 36% of UK supply was gas-fired. Some 9 GW of new gas plant is expected by 2015. All of this underlined the importance of Drax in ensuring security of supply and reinforces the need for investment in the sector, Thompson said.
Opted-Out Hours Used

(Drax Assessment @ 23rd February) 40% 30% 20% 10% 0% 36% 2000 MW 36% 2000 MW 36% 1000 MW 35% 1000 MW 37% 1300 MW 37% 1400 MW 36% 1000 MW 33% 600 MW 34% 700 MW 33% 600 MW 34% 350 MW (Efficiency and Capacity) Coal Fired Oil Fi red
Industrial emissions focus on opted-in plant

Thompson was not aware of any pressure in Brussels to relieve the conditions for opted-out plant under the current LCPD, but there is real pressure to ease the proposed conditions for opted-in plant in the period 2016-2020. Quite substantial investment is needed if opted-in plants are to meet tougher NOx emission standards as proposed by the European Commission in the Industrial Emissions Directive (IPPC see PiE 545/1), Thompson said. There was pressure from east European member states (and the UK) to allow non-compliant plant to continue operating under some form of derogation to 2020, she said. All 3,870-MW of Drax is opted in to the LCPD. The plant meets current NOx emission values comfortably, spokeswoman Melanie Wedgbury told Platts, but would have to invest to meet the tougher limits proposed. LCPD is 500 mg/Nm3, we are at the 400-450 mg/Nm3 and the 2016 proposal is for a 60% cut to 200 mg/Nm3, so wed have to invest to meet that. The problem facing all opted-in plant is the threat of yet further legislation in 2020 making redundant any investments made to meet 2016 emission limit values, Wedgbury said. You need to look at the whole suite of environmental laws when making an investment
Source: Elexon, Drax estimates
Opted-Out Plant Capacity Closure

7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 2011 2012 2013 2014 2015 Source: Elexon, Drax estimates (Drax Assessment @ 23rd February MW)
ANALYSIS
DRAX AND UK CAPACITY MARGINS
Committed Large CCGT / CHP Power Plant Build Announcements

Announced March 2008 January 2008 August 2007 June 2007 May 2007 August 2006 July 2006 June 2006 Owner Severn Power EDF RWE E.ON RWE ConocoPhillips SSE/ESBI Centrica Contractor Siemens GE Alstom Alstom Alstom GE Siemens Alstom Plat type CCGT CCGT CCGT CHP CCGT CHP CCGT CCGT Location Capacity (MW) 800 1,300 2,000 1,275 1,650 480 850 885 Estimated commercial operation Winter 2010 2011 H1 2012 2010/11 First unit 2010 Summer 2009 Winter 2009/10 H2 2009
Uskmouth, Wales West Burton, Notts Pembroke, Wales Isle of Grain, Kent Staythorpe, Newark Immingham Marchwood, Southampton Langage, Devon
Note: Commitment deemed to be at the letting of the turbine supply and maintenance contract. Plans for other plant have been announced but are believed to be at earlier stages in the process. Source: Market Announcements, Drax Estimates as at February 20, 2009
decision. For instance the National Emissions Ceiling Directive could increase the stringency of pollutant controls in 2020. If there was a risk of assets being stranded in 2020, that would dissuade generators from investing to meet 2016 controls, Wedgbury said. Typically you need a 1015 payback period for major investments of this sort. One option is that everything runs to 2020, allowing better visibility of regulatory changes ahead and avoiding premature retirement of plant, she said.
This was the highest output at Drax for 12 years, CEO Dorothy Thompson said, and despite unbelievable volatility in commodity prices, winter dark green spreads (the price of power less coal and carbon) generally remained within a band of 18-30/MWh, and our profitability remained robust. Looking ahead, Drax said it had sold 20.7 TWh for 2009, of which 16.2 TWh at an average achieved price of 51/MWh; 17.3 TWh for 2010, of which 11.2 TWh at 56.6/MWh; and 10.3 TWh for 2011, of which 4.6 TWh at 62.6/MWh. Thompson said dark green spreads in the forward market were 5-10% above those it had been taking this time last year so while spreads have come down from the real highs of last year, they are still positive for us. Fuel costs in 2008 were 858 million, compared to 471 million in 2007. The increase was due to higher generation, an increase in the price of coal and other fuels, and the impact of higher prices for and increased buying of CO2 emissions allowances. Drax buys power in the market when this is below its own marginal cost of production. The cost of power bought in 2008 increased to 212 million compared to 76 million in 2007, it said. The generator said that the last quarter of 2008 saw a narrowing of dark green spreads, as plant was returned to service and fears of a capacity shortfall were allayed, together with reduced peak electricity demand, reflecting the economic climate. Revenue benefited from the sale of by-products (ash and gypsum), Renewable Obligation Certificates, Levy Exemption Certificates and SO2 emissions allowances, the generator said. Significantly higher ROC sales in 2008 were driven by our growing biomass burn, Drax said. The groups carbon abatement projects have led to a 3% reduction in CO2 emissions in 2008 compared to 2006, due to biomass co-firing and investments in thermal efficiency improvements, it said. The generator said it led UK coal-fired generation performance with availability of 86% and a load factor of 76%.
Carbon outlook
Todays weak CO2 price was due to lower emissions and heavy selling of allowances by industrials seeking to raise short term cash, Thompson said. There has been debate as to whether Phase 2 will mirror Phase 1, when prices went to zero. We dont think it will because there is real value for Phase 2 certificates in Phase 3 [Phase 2 EUAs can be banked into Phase 3] and all our analysis shows that the allocation plans are not sufficient to cover emissions. So ultimately the carbon price is based on Kyoto credits and on banking [into a much tighter Phase 3 carbon market]. Kyoto credits appear to be floored by the Chinese position of somewhere between 8-12/ton CO2. Use of Kyoto credits in Phase 3 was much more limited than envisaged a few years back, Thompson said. In Phase 2 were allowed to use 4.4 million tons of Kyoto instruments. In Phase 3 the increment is only 0.8 million tons [giving a 2008-2020 total of 5.2 million tons].
12-year output high

Drax Groups 2008 profit after tax fell 6% to 333 million despite revenue growth of 41% to 1,753 million, the generator reported on March 3. Profits were squeezed by higher fuel costs, increased purchase of power in the market and reduced margins in the fourth quarter 2008. Power sales reached 1,692 million in 2008 compared to 1,204 million in 2007, boosted by a 29% hike in average achieved electricity price to 58.3/MWh and an increase in net power sold to 25.4 TWh, compared to 24.9 TWh in 2007.
REVIEW
PLATTS THIRD ANNUAL EUROPEAN CCS CONFERENCE
CCS: into the execution phase

A successful policy year for carbon capture and storage has left the technology facing its make-or-break challenge financing demonstration projects to de-risk CCS in the eyes of society, delegates at Platts third annual European Carbon Capture and Storage conference in Brussels heard February. Industry speakers expressed satisfaction at the swift achievement of a CCS Directive in December 2008, and the emergence of not one but two sources of institutional subsidy for demonstration projects (the 300-million EU Allowance special reserve for CCS and innovative renewables; and the 1.15-billion proposed stimulus package from EU budget under-spend). But this was no time for complacency, Shells Graeme Sweeney told the conference (he is also chairman of zero emission fossil fuel plant platform ZEP). We need to move fast if the current competitive opportunity is to be realized. The US has proved many times how it can catch up quickly, and the Canadians have moved from a 10-page expression of interest to plans for two CCS schemes in six months. Ive not seen Europe move that fast in a generation, he said. Four issues needed urgent resolution, Sweeney said. First, we need criteria for the division of the 300 million EU Allowances [recently granted by the EU] between CCS and innovative renewables. Then we need the criteria for CCS demonstration project selection, with clear tender rules. Third, we need guidance on how funds are to be disbursed. Finally, we need progress on how project knowledge is to be shared project coordination gets you a ten-year start. Sweeney said that to meet current timelines for 10-12 demonstration projects up and running by 2015, project selection needed to be made at the very latest by 2010. That is tomorrow in political terms. Then we need allocation of funding by mid-2011. We are into the execution phase for CCS and must get the show up and running. The European Commissions climate change committee was about to meet for the first time to discuss criteria for division of the 300 million EUAs, Sweeney told Platts. We need the demonstrations urgently to validate technologies across all variants, he said. We have to learn enough from the demos to de-risk the technology in the eyes of the public, and begin to get costs down. Our job is to reassure the public, because it is going to be extremely difficult to get support, especially for onshore storage. Some 34 CCS projects in all have been proposed across Europe. In the demonstration phase (4 GW built), CCS costs are estimated at 60-90/tonne CO2 abated, Sweeney said. For the early commercial phase (20 GW), he put the cost at 40-70/t CO2 and for a final, mature phase at 30-50/t CO2. There was general recognition of the steep mountain CCS has to climb with regard to funding during a recession. There are no customers for CCS it reduces revenue and increases costs, so it needs public/private partnership, Sweeney said. As difficult as the recession is, however, once its over climate change will still be there.
Emission Performance Standards

The conference heard differing views on whether the Emissions Trading Scheme was an adequate mechanism for driving CCS forward. One of the main architects of the CCS Directive, Scott Brockett of DG Environment, said the European Commission had absolute confidence in the scheme. The cap would be tightened over time, carbon prices would recover and there was no need to consider further regulation as yet. Less sure was MEP and rapporteur Chris Davies, another key actor in CCS promotion to the top energy/environment policy table last year. He told delegates that member states would have to reconsider introducing CO2 emission performance standards for power stations if the EUs ambitious climate change targets were to be met. The Council of Ministers comprehensively dismissed the idea in December, with only the Netherlands in support of my proposal for a 500 gram CO2 per kWh limit, but it is back on the agenda, Davies said. Standards for CO2 would be discussed by the European Parliament as revisions to the Integrated Pollution Prevention and Control directive worked their way through the Brussels legislative process, he said. Im not convinced that the Emissions Trading Scheme is enough to drive CCS development. Regulation however has a great track record of success. When industry is presented with new technical requirements, it meets them on time; there is no room for member states to play the system. Davies acknowledged that any CO2 regulation would have to include all fossil fuel-fired generation. We would have to reduce the standard to 350 g CO2/kWh to include gas, so the rule is not limited to coal alone. Im going to have discussions with UK representatives soon, to explore the potential to relax some of the [NOx, SO2 and dust] requirements under the Large Combustion Plant Directive in order to get a deal going from 2020 on CO2 emission performance standards, he said.
REVIEW
PLATTS THIRD ANNUAL EUROPEAN CCS CONFERENCE
Capture race is on
A number of detailed presentations given by generators (RWE, E.ON, Enel, GDF Suez, ConocoPhillips) indicated that the capture element of CCS is receiving significant amounts of seed money, is close to scale demonstration and has definable risks. Carbon capture and storage can be done at 20/tonne CO2 but not before 2020, Vattenfall vice president, R&D, Lars Stromberg told delegates. The major challenges facing CCS were the permitting of CO2 transport pipe lines, a critical variable in terms of project timing, and getting through the high-cost demonstration phase, Stromberg said. In the demo phase CCS would cost around 90/tonne CO2, by 2020 that cost would be down to 40, falling to 2025 by 2030, he said. Our 30-MW oxyfuel boiler at Schwarze Pumpe is working beautifully, even if it is probably the most expensive boiler ever built, he said. Vattenfalls next planned to replace two 250-MW boilers at its Janschwalde plant with oxyfuel boilers, removing around 90% of CO2 emissions from one 500-MW block. Meanwhile E.ONs Bernhard Fischer said the German utility was focusing its efforts on post-combustion capture technologies because its more advanced compared to IGCC and oxyfuel, is suitable for the retrofit market and is the only option for capture-ready projects.
liabilities indefinitely, he said; at some point after closure of a store, it must be handed over to the nation. Risk of leakage peaks during the injection phase, with leaks from wells the most likely path, Wright said. We can add up all the risks but what we dont know yet is what constitutes the overall level of unacceptable risk. Wright said that every CO2 store would have its own most suitable monitoring techniques. If this is to be regulated, I want the regulator to help me define the most cost-effective monitoring techniques. He listed wellhead monitoring, wellbore sampling, soil gas, dynamic modelling, water chemistry, 4D seismic, geomechanics and geochemistry as among key monitoring techniques. Seismic surveying was not a panacea for all monitoring ills, Wright noted, and other techniques were cheaper. Satellite imagery for instance had good potential for public acceptance, with In Salah tests showing that a combination of satellite imagery and geomechanical techniques tracked surface and subsurface behaviour of CO2 in a low-cost, non-invasive way that could be made publicly available.
Investment case weak: JP Morgan

Pouring liberal amounts of cold water on what had been a generally positive conference, Marc Levinson, Economist, JP Morgan Chase gave a final day presentation on financing. The economic drivers for CCS were too uncertain to interest investors under current conditions, he said. CCS does not produce anything you can sell, and revenue from enhanced oil recovery is extremely unlikely if CO2 streams are plentiful. The only reason for CCS is if it costs less to pump into the ground than emitting it. At the current cost of CO2, why would anyone want to invest in CCS? Levinson asked. Only in the long term, and only in the European Union, did integrated gasification combined cycle plant with CCS appear to be cost-competitive compared to conventional coal plant without CCS, Levinson said, assuming extension of the EU Emissions Trading Scheme and a declining cap on emissions. Nowhere else in the world did IGCC with CCS approach cost competitiveness with traditional coal over a 20-year horizon, Levinson said. Neither was IGCC with CCS competitive over that period with renewable baseload power options such as biomass. And if new nuclear was subsidized, as proposed in the US, that would push IGCC with CCS further out of the investment frame. It is far from certain that developers in the US can prove to regulators that coal and CCS constitutes a reasonable and prudent investment, allowing them to pass-through costs to customers, Levinson said. US investors are certainly not going to get excited by CCS while those decisions remain cloudy.
Monitoring of storage
While utilities jostle for position on capture, some of the most pressing questions and anxieties were raised on CO2 transportation and storage. Two major issues facing CCS are potentially disruptive lead-times for pipeline permitting; and the absolutely critical need to avoid leakage. As ex-Shell Transport chairman Lord Ron Oxburgh noted, with diligence the risk of leakage should be small, but geology always has surprises. Presentations by StatoilHydro and BP on CO2 storage at Sleipner and In Salah prompted in-depth debate of risk assessment and monitoring options. StatoilHydros Trude Sundset openly discussed lessons learnt from a rupture in the Utsira geological formation in the North Sea, caused by high pressure injection of water from the Tordis field, leading to a leak of oily water (this was nowhere near the Sleipner CO2 store, Sundset noted). With more extensive seismic surveying, leakage could have been avoided, she said. This was a valuable lesson for CCS, Sundset concluded: thorough geological surveys of sites will be crucial for CO2 stores. We must never rest on this issue if we are to gain public acceptance. BPs Iain Wright said the overarching principles ensuring safe geological storage had been set out in the CCS Directive, but now we need much more detail. Commercial entities could not shoulder CO2 storage
ANALYSIS
PLATTS EUROPEAN CCS / NEW COAL PLANS IN ITALY
Levinson said he would be more bullish on private investment if governments showed long-term commitment to consistently higher CO2 prices. As things stood, we think governments will be funding this for the next five years.
because China and India will point to what they perceive as a failure of the scheme, Lewis said. If push comes to shove, the EU has to be prepared to take action to defend this market, he said. It would be too difficult to tighten the overall CO2 cap to 2020, as this would require all 27 EU Member States to agree on the change. But one measure that could strengthen the ETS, without compromising the essential free market design of the scheme, would be for the EC to introduce a reserve price for auctions in Phase III, which would see a much greater use of auctioning and a reduction in free allocation, he said. They must be prepared to put a minimum price on the auctions from 2013, as that would send a clear signal not to sell allowances in Phase II, Lewis said.
Reserve auction price

Responding to this, Deutsche Banks Mark Lewis said the European Commission must be ready to intervene to support the EU Emissions Trading Scheme if the carbon price failed to recover. If the European economy continues to deteriorate this year, we could be in a very difficult position. If the carbon price is very depressed in the run-up to Copenhagen [COP15 UN Kyoto meeting], it will be very difficult to get agreement
Italy needs stimulus of new coal: Assocarboni

Italy must press ahead with new coal projects to create jobs, stimulate the economy and prevent investment capital going abroad, chairman of Italian coal association Assocarboni Andrea Clavarino told Platts on March 4. Last year was positive, with Tirreno Power receiving towards the end of 2008 the environmental authorization to build a new 460-MW coal-fired unit at Vado Ligure [in the northwest coastal province of Savona]. The unit will have a very high efficiency of 47%, Clavarino said. Tirrenos plan includes 180-MW of renewables, so the total investment will be 800 million, out of which 200 million will be for renewables, Clavarino said. Globally, although capacity will rise, emissions including CO2 will be reduced. At present the Vado Ligure site has two 330-MW coal units and a new CCGT of 760-MW. With the new coal unit total site capacity will rise to around 1,800-MW. Now some local resistance must be addressed, and Tirreno is negotiating terms with local municipalities. We look forward to starting work soon because construction would involve 1,000 workers over four years and provide 250 jobs thereafter, Clavarino said. The existing infrastructure does not allow for future carbon capture equipment, but Clavarino noted that the new unit would have a beneficial impact on emissions by displacing less efficient plant. Meanwhile at Porto Tolle, Enels 2,000-MW oil-to-coal conversion project in Veneto, we are talking about the potential for 4,000 construction jobs over four years, Clavarino said. After two years development, however, the project still awaits environmental approval, there are national park restrictions that need to be overcome, and Clavarino is fearful the investment opportunity could be lost. Italy is 60%-dependent on gas-fired electricity; coal supplies 12% of Italian power compared to Europes 33% average. However there is an alternative project Enel is pursuing in Albania, with the aim to have 1,500-MW [of coal-fired capacity] in Albania and an interconnector to Italy. I think we run the risk that, if we dont have environmental authorization for Porto Tolle, our country will be deprived of an important facility and another country will benefit from the investment. Local trade unions are of the same opinion. Some 3,000 workers protested recently in favour of the project, with a delegation received by the environment ministry. The government supports Porto Tolle but, under regional law, only gas plant can be built in the Po Delta national park, where the oil-to-coal conversion is proposed. This is a restrictive interpretation of the law that the court has given, and Enel is disputing it, Clavarino said. Opposition to new coal across Europe is well organized and highly motivated. In December environmental group Greenpeace staged a demonstration at Porto Tolle, painting No Carbone on the stack, as part of its panEuropean campaign against construction of coal plant. The action, and rallying of local opposition, has certainly added to development delays if not actual cancellations in Italy, Germany and the UK. In the short term this has led to gas plant continuing to displace coal in several west European markets. Longer term, nuclear is an option, although Clavarino was cautious on a nuclear power renaissance in Italy. Lets wait and see how things are going at the end of 2009, he concluded. New nuclear is a very long way out, Im not worried that the focus is shifting because economic considerations will dictate choices and we should concentrate for now on less costly oil-to-coal conversion. Once approved, Porto Tolle would take 42 months to complete and could be online during 2013. New nuclear would only become available in 2020.
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ANALYSIS
MIBRAG SOLD TO CZECH DUO
CEZ, J&T buy Germanys Mibrag

Czech power group CEZ has made its first foray into the German market with the acquisition, in consortium with the Czech-Slovak investment company J&T Group, of Mibrag, the German integrated coal mining and power generating business. CEZ announced February 25 that it and J&T Group had signed a share purchase agreement to acquire 100% of Mibrag from the German companys joint US-based shareholders URS Corporation and NRG Energy for 404 million. CEZ said the transaction, which is subject to customary closing conditions including European Commission approval, is expected to be concluded during the second quarter of 2009. Mibrag will be owned by a joint venture company, equally owned by CEZs brown coal mining subsidiary Severoceske Doly Chomutov and J&T Group. The local daily Leipziger Volkszeitung reported February 25 that CEZ and J&T had outbid ENBW, Germanys third-largest utility, in the tender. Mibrag owns and operates two opencast lignite mines, Profen and United Schleenhain near Leipzig, with a combined annual production of around 19 million tons. The company has proven reserves of around 530 million tons of lignite, with significant options for expansion, CEZ said. Coal from the two pits is primarily supplied to the 2,900MW Lippendorf and 2,450-MW Schkopau power plants as well as three combined heat and power plants (Mumsdorf, Deuben and Whlitz) with a total installed capacity of 208 MWe, owned and operated by Mibrag. In 2008, Mibrags power plants produced 1.4 TWh of power and over 2,000 TJ of heat. Mibrag also runs a coal dust processing factory. In its most recent financial results for 2007, Mibrag posted a net profit of 43.2 million and EBITDA of 128.5 million on revenues of 372.5 million. Neither CEZ nor J&T would elaborate on the reasons for the acquisition of Mibrag or their plans for the future development of the company, beyond saying that it was of strategic importance. The acquisition of Mibrag . . . means further development in our business in Germany where we are now active in the wholesale [power] trading business, said Daniel Benes, chairman of the supervisory board of Severoceske Doly Chomutov and vice board chairman of CEZ. NRG said that it had decided to sell its 50% stake in Mibrag as part of a wider exit from international holdings, in order to redeploy capital in the US. NRG said it would maintain its 41.9% interest in Schkopau, a coal-fuelled power station near Halle, Germany, which obtains its fuel under a long-term contract from Mibrags Profen mine. Prague-based J&T has emerged in recent years as a growing force in the Czech power market. Its ambitions were underlined last April with the announcement of plans to invest CZK 20-25 billion (790-900 million) over the next five years in the development of some 1,000 MW of new generation capacity to secure control of at least 10% of the Czech power sector. The company currently owns and operates 330-MWe and 1,430 MWth of coal-fired generating capacity in its home market as well as a 41% stake in the Prague regional distributor, PRE. In December J&T announced the signing of a preliminary agreement with the government of Moldova for the construction and operation by 2015 of a 350-MW hard coal-fired thermal power near the city of Ungheni in western Moldova, on the border with Romania. The agreement provides for the possible development of two further 350-MW units at the same site. The company also plans to develop a 350-MWe hard coal-fired plant at a site in Strazske in eastern Slovakia. Severoceske Doly Chomutov is the largest producer of brown coal in the Czech Republic, with a domestic market share of just under 50%. The company produces annually approximately 20 million tonnes of coal, from two mines in the North Bohemian brown-coal basin. Doly Bilina produces low-sulphur graded and boiler coal. Doly Nastup Tusimice mainly produces boiler coal. Its largest customer is CEZ.
CEZ Groups fourth quarter 2008 net income fell CZK 7 billion to CZK 13 billion (466 million) on revenues that were down CZK 1.25 billion to CZK 49.8 billion, the Czech generator said on March 3. A swift decline in demand and a two-month outage at unit 1 of nuclear power plant Temelin were key drivers of the poor performance, CEZ said. Fourth-quarter EBITDA was down CZK 1.8 billion at CZK 18.4 billion. Electricity demand for the quarter was down 4% because of the recession, and had a material impact on the years overall figures, CEZ said. Czech electricity prices fell in the final quarter of 2008, CEZ said, with calendar 2009 baseload power down 28% during the quarter from 78/MWh to 56/MWh. For the full-year 2008, net income grew 10.7% in 2008 to CZK 47 billion on revenues that were up 104% to CZK 182 billion. Some 64 TWh was generated in CEZ Group power plants in 2008, down 6.1 TWh year-onyear. Trading activity was up some 64% for 2008, with CEZ expanding its trading to include coal, gas and Certified Emission Reductions. Electricity purchased outside of own generation in 2008 reached 59.5 TWh, up from 36.1 TWh in 2007.
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ANALYSIS
THE LONGER VIEW
The Longer View
Rolling down the mountain

PiEs latest longer view charts, laid out below, amply illustrate what utilities have been saying through the 2008 results season; last year was the most volatile commodity price period witnessed in most working lifetimes. For the European power sector the rollercoaster highlights are as follows: year ahead baseload power in Germany/France down from 85-90/MWh in September 2008 to 46-47/MWh March 4, 2009; coal down in the six months to January 2009 from $190 to $80 per metric ton, and down another $20 to $62/mt by early March; Q2 2009 UK NBP gas down from 85 pence/th September 4 to 38.5 pence/th February 19; and December 2009 carbon down from 30 in June 2008 to under 10 in early February. Through all the turmoil, utilities have struggled to maintain a semblance of stability in their margins. Even ignoring the Everest-like ascent/descent of UK day ahead spark spreads in late 2008, continental gas plant spreads have been volatile, yo-yoing between 10-20-30/MWh depending on the market through November and December, before falling heavily in January and staggering up and down since. According to Platts data, on March 4 the month ahead clean spark spread in the UK stood at just under 8/MWh, in Germany at 5.30/MWh and in the Dutch market at 6.16/MWh. Little wonder that the newsflow on CCGT project development has almost entirely dried up. Month ahead dark green spreads for coal plant meanwhile have plummeted from over 30/MWh in Germany and 40/MWh in the UK last October to below 7/MWh and 10/MWh respectively March 4. It is worth noting, however, that through February 2009, clean dark spreads were little changed (UK) or indeed stronger (Germany) than in February 2008. A coal trader on March 4 noted that despite the recent drop in the dark spread, European coal-burn was still strong. Power prices may have fallen, but coal is still in the money and many coal-fired plants are running flat out, he said. While running coal plant flat out in Germany has no implications for capacity margins in future, in the UK it does (see Drax feature on potential early closure of 6GW of opted-out capacity as old plants burn through allotted hours). This has clearly unnerved the UK
Platts Year Ahead Base Power Assessment (/MWh)

120 100 80 60 40 United Kingdom 20 Feb-07 Source: Platts May-07 Netherlands Nov-07 France Feb-08 Germany May-08 Spain Aug-08 Nov-08 Feb-09
80 70 60 50 40 30 Nov-08 Dec-08 Jan-09 Feb-09
Aug-07
CIF ARA 90-day forward coal price ($/mt)

250 210 170 130 90 50 Feb-07 Source: Platts Aug-07 Feb-08 Aug-08 Feb-09
Coal-power green dark spreads (front month)

35% efficient coal plant March 4, 2009 UK Germany October 28, 2008 UK Germany July 25, 2008 UK Germany
Source: Platts Coal Trader International
(MWh) 9.96 6.86
43.85 33.20
24.30 -7.76
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ANALYSIS
THE LONGER VIEW
government, which, in the absence of any forward momentum in new coal plant development, has been leading the charge in Brussels for a second wave of optouts from industrial emissions legislation starting in 2016 (see page one). The high level of coal burn has no doubt been encouraged by recent low CO2 prices, and more broadly by the fact that the power sector is now into the last four years of free carbon allowances under the ETS, during which time excess coal-fired generation has manageable carbon cost implications at least at prices of 10-12/t CO2. A price today of 12/t CO2 will be welcome in European Commission circles considering the 8-9/t lows of midFebruary, which prompted speculation that Phase 2 could run the same way as Phase 1, prices could fall to zero in a recession-hit market, damaging the ETS credibility. In fact the low carbon price (caused by large, distressed industrials selling allowances to raise short-term cash) has drawn a wave of speculative money into the market. The rush of industrials to sell quota opened up arbitrage possibilities for speculators to buy low and sell to those who still need carbon allowances, a trader said. Looking ahead, the spread between German yearahead (2010) and calendar year 2011 baseload
power prices has been widening, suggesting that the market thinks any economic recovery will be delayed until 2011, traders said. The German Cal 10/11 baseload spread has grown from 2.20/MWh on February 12 to 3.35/MWh on March 2, when Cal 10 baseload closed at 42.65/MWh and Cal 11 baseload around 46/MWh. With Cal 12 baseload around 49.80/MWh, the German far power curve was in full contango that day. Cal 11 isnt quite as bearish as its front-year relative, and this is certainly because fewer and fewer players believe in an economic recovery in 2010 but rather expect it to be delayed until 2011. This is reflected in power demand projections for those years, one trader said. Another source said the more bearish sentiment for Cal 10 was because of the current correlation between German forward power and oil and equity prices, which react fastest to macroeconomic developments, he said. In the long-term, however, coal will remain the biggest price driver for German forward power and while we have no serious information about oil and equity prices for 2011, the coal forward curve is in contango, with CIF ARA 2010 at $72/metric ton and Cal 11 coal at $78/metric ton, putting the spread around $6/mt, he said. In the second week of February, this spread was around $4.50/metric ton.
Platts Day Ahead Base Spark Spread (/MWh for 7,000btu/kWh)

100 80 60 40 20 0 -20 Feb-07
Source: Platts
Netherlands
Germany
United Kingdom
Belgium
40 30 20 10 0 Nov-08 Dec-08 Jan-09 Feb-09
May-07
Aug-07
Nov-07
Feb-08
May-08
Aug-08
Nov-08
Feb-09
Oil and Gas comparisons

160 Dated Brent ($/bbl) UK NBP day-ahead (p/th) Dutch TTF day-ahead (p/th)
December 2009 Carbon (/mt)

40
120
30
80
20
40
10
0 Feb-07 Source: Platts
0 Aug-07 Feb-08 Aug-08 Feb-09 Jun-07 Source: Platts Oct-07 Feb-08 Jun-08 Oct-08 Feb-09
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NEWS
BELGIUM / EUROPE
NEWS
Belgium
Nuon re-tenders for Seneffe CCGT

Dutch utility Nuon has tendered for a 400-500-MW combined cycle gas turbine power station at Seneffe, Walloon, Belgium. In a note in the EU Official Journal March 3, Nuon said an engineering, procurement and construction contract for the gas-fired power plant was due to start February 1, 2010. No completion date was given. Bids or requests to participate in the competition are due by April 7, Nuon said. A previous EPC tender for the project was cancelled in October 2008. Nuon has said it hopes to gain final consents to proceed with Seneffe during 2009. On February 23 Swedish utility Vattenfall made a 8.5 billion all-cash offer for 100% of Nuon. The Dutch utilitys management and supervisory boards have unanimously recommended the deal to shareholders. Contact: Jacques van den Dool, NL-1009 DC Amsterdam. Tel. +31 610569437. E-mail: jacques.van.den.dool@nuon.com.
Belgium in brief . . .
SPE has obtained its construction permit for its proposed CCGT at Navagne. The plant will cost 550 million. Construction will begin at the end of this year, with the 860 MW plant due to be generating by early 2012. SPE is a Centrica affiliate, in which the UK company holds 49%. Belgian bank, Dexia, and Econcern of the Netherlands, have confirmed that they hope to complete by Spring this year the finance package for the Belwind offshore wind farm project. This would enable the first phase of the project to be completed by end-2010. Belwind N.V. is a project company of Evelop (an Econcern company) set up to develop the wind farm on Bligh Bank, 46-km offshore. Once both phases are complete, capacity will be 330 MW. Belwind has agreements with Elia on a grid connection and sale of green certificates.
comply with an emissions limit of 350g CO2/kWh from 2020, and that all existing similar-sized power plant comply with the same limit from 2025. The 500-MW thermal rating would translate into about 210 MW power capacity for coal plant and about 260 MW power capacity for combined cycle gas turbine plant, said Johnston. The group has also proposed that the European Commission review these provisions by June 30, 2014, and consider lowering the emissions limit to 150g CO2/kWh, bringing forward the 2025 deadline and widening the scope beyond the power sector. A 350g CO2/kWh limit rules out new coal unless fitted with carbon capture and storage, Johnston told a meeting in the EP March 3. The tighter limit of 150g CO2/kWh would mean only gas and coal plant with 90% CCS would be allowed. The 500-MW thermal threshold would mean that the emission limits would apply to about 500 power stations in the EU today, said Johnston. A similar proposal was thrown out of the report adopted on the new emissions law by the EPs environment committee on January 22 by the committees chairman on a procedural technicality without a vote, said Johnston. The same procedural issue, centered on whether including CO2 extends the scope of the original laws, could see the latest proposals thrown out again before the EP votes on the committees report, he said. The new Industrial Emissions Directive (IPPC) is to replace the EUs integrated pollution prevention and control directive, which sets limits on pollutants (excluding CO2) and the EUs large combustion plant directive. Coal lobby group Eurocoals secretary general Thorsten Diercks told the EP meeting that the EP had twice rejected power plant emission limits in the last year once as part of the EUs third energy market opening package and again as part of the EUs climate protection package. Diercks argued that mandatory emission limits should only be considered once CCS had been proven commercially. Meanwhile it must be possible to build capture-ready plant that will knock out half or twothirds of the new coal plant planned in the EU, he said. We wont be locked in because [CCS] will be retrofitted. If in 2016 or 2017 we see that CCS is possible, then we could have an obligation for it after that.
ETS needs floor price: Turner

The European Union should consider introducing a floor price in the EU Emissions Trading Scheme to protect the system from price collapses, the chairman of the UKs committee on climate change, Lord Turner, said March 4. Speaking in a public evidence session in London, Turner said a minimum price for EU Allowances could be introduced to provide a more robust price signal for clean investment. When asked whether his committee believes the carbon price under the EU ETS is capable of achieving its emissions reduction goals, Turner said: If the carbon price continues at current levels, it would not send the signals which are required. We will look again at the
Europe
EP pushed to vote again on CO2

A cross-party group of 44 European Parliament members is pushing for proposals for emission limits for large combustion plant to be included in the report on a new EU industrial emissions law that the EP is due to vote on March 12, environment group E3Gs Mark Johnston told Platts on March 5. The group is proposing that all power plant with more than 500-MWth permitted after the law takes effect
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NEWS
EUROPE / FINLAND
whole issue of the carbon price in our September report. There is a part of the report that looks at the implications of the current economic recession. The carbon price has come down a lot this year because emissions are coming down. But an interesting issue is whether the price has come down more than market economists would predict. What they would say is that there is a fungibility of supply and demand for carbon permits across the whole of Phase II and Phase III, he said. Since the overall carbon cap in Phase III, from 2013-2020, is expected to be more stringent than the current cap, this should be driving up the carbon price now, he said. So the price today ought to be reflecting not just how many emissions there are today but also a foresightful markets view of the balance between supply and demand in 2019 and 2020. I think its highly likely that the fall in the market price has been significantly larger than you might think is logical if you believe that efficient market theory, he said. EUAs for delivery in December 2009 fell from 30.45/metric ton CO2 in July 2008 to a low of 8.33/mt February 12 before staging a rebound to almost 12.00/mt March 4. Turner said the committee on climate change had suggested a range of tools to improve market direction, one of which would be to combine the EU ETS with a floor price for carbon. There has been a debate among economists as to whether the best approach is a fluctuating price for carbon in a trading system or a straight tax on carbon, but it is completely possible to combine that using a hybrid system which has a fluctuating price [and] also a floor price within it, so that participants know that at that point it becomes a tax and will not be allowed to fall below that level, he said. The committee was established as an independent body under the climate change act to advise the government on setting carbon budgets and report to parliament on progress in cutting GHG emissions. In line with the EU framework, the committee has produced an intended target of a 42% cut in GHG emissions from 1990 levels by 2020, which should apply following a global deal on climate change, and an interim target to cut emissions by 34% from 1990 levels by 2020 to apply before a global deal is reached.
Danube with the signing in December of an agreement with state utility NEK. RWE Power, which was selected last October as NEKs preferred partner over a rival bid from Electrabel, invited GDF Suez to join the project under its leadership, and had expected to split its stake. RWE Power said it remained committed to the project.
Greeks target Bulgarian wind

Two affiliates of Greeces Copelouzos Group are planning to build a series of wind parks with a combined capacity of just over 300 MW south of the Bulgarian town of Krumovgrad, near the border with Greece. Bulgarias sector regulator, the State Energy and Water Regulation Commission, announced February 2 that power production licences should be given, after financial closure, to NECO for three wind parks with a combined capacity of 72 MW, and to Elika Bulgaria, for five parks with 236 MW installed capacity. The firms applied for and received 15-year licenses, but indicated clearly that extensions would be requested at the end of this period. The investment budget for the NECO parks is 79.2 million while that of the Elika projects is put at 259.6 million. Non-binding letters of intent from the National Bank of Greece indicate a willingness to supply credits worth 70% of budgeted investment in each wind park. The calculations involved in the two business plans assume, inter alia, that relevant feed-in tariffs will rise from Lev 185.95/MWh now to Lev 208.93 in 2010 and Lev 297.73 in 2024.
Finland
Areva absorbs 47% O-3 overspend

French nuclear firm Areva is to absorb a 47% cost overrun of 1.7 billion on its turnkey contract for the Olkiluoto-3 nuclear power plant it sold to Finnish utility Teollisuuden Voima Oy, Areva officials said February 25. The EPR project is three years behind schedule and now targeted for completion in 2012. The running total loss includes a 749 million provision taken for 2008, Areva officials said during a webcast on 2008 results. The 1.7 billion total does not include additional amounts that are the subject of pending arbitration between Areva and TVO. The 47% cost overrun is based against the full 3.3 billion contract, which included fuel supply, as well as the reactor construction. The project should meet its 2012 completion deadline if TVO can pass on documents faster, Areva CEO Anne Lauvergeon said during the webcast. Lauvergeon said it takes an average of more than 12 months for TVO to validate the technical documentation before passing it on to Finnish regulator STUK. The contract for Olkiluoto-3, which Areva and Siemens are building for TVO, calls for the work to be done in two months. If TVO can speed up the processing of documents, theres quite a likelihood well make that 2012 date, she said.
GDF Suez pulls out of Belene

Frances GDF Suez said February 18 that it had decided not to pursue its interest in participating in the 2-GW Belene nuclear power project in Bulgaria and would instead focus on other nuclear projects. GDF Suez had been in talks with RWE to take part of the German utilitys 49% stake in Bulgarias second nuclear power plant but a company spokesman said it had decided to focus on new reactors in France, the UK, Romania and Abu Dhabi. RWE Power acquired a 49% stake in a joint venture called Belene Power Company to plan, build and operate Bulgarias second nuclear power plant at Belene on the
15
NEWS
FRANCE
France
CCGT tariffs reviewed

Energy regulator CRE has launched a consultation on how to handle a request from GRTgaz (the gas network operator) for a change of tariff structures, and operational terms and conditions, for supplying combined cycle plants. GRTgaz informed CRE at the end of January that in the current framework, it cannot meet the significant need for intra-day flexibility which will be generated by peak and semi-baseload demand from new gas-fired power units coming on stream. TIGF, the TSO in southwest France, has told the CRE it has similar problems. As part of the consultation GRTgaz has submitted a note of its intentions, setting out the principles it proposes to use to deal with the situation. The context is a sharp increase in potential gas-fired capacity. CRE says some forty projects have applied for access to the gas transmission network since 2006. Twelve contracts have been signed four from 2009, four from 2010 and four from 2011 a total generating capacity for these twelve alone of 6,000 MW. The core issue is flexibility services, and who should offer them. GRTgaz does not believe it should. CRE says there are precedents in Europe for models in which the TSO offers them and for third parties to offer them, and it has not formed a judgment for the time being. A key issue for CRE is non-discrimination. It is asking key players what criteria should be used for deciding priorities the location of the plants in relation to the network, or the status of the project (operational, with an access contract, or still in the planning stage). In addition, it wants to know whether, if hourly balancing obligations were introduced, these should only apply to power plants (as GRTgaz envisages) or should be extended to other large consumers, or even all gas consumers.
terminate the shareholders agreement for the FrancoGerman joint venture Areva NP ...specified effective latest January 30, 2012, and sell its entire stake to the majority shareholder Areva SA under the terms of a put agreement, Siemens said. Under the shareholders agreement, Siemens is not allowed to compete in activities it brought to Areva NP for a period of eight years. That includes nuclear reactor design and engineering, turnkey nuclear power plant construction, fuel design and manufacture, services, and safety-related instrumentation and control systems. Siemens said it can, however, market turbines, generators and electrical systems for nuclear power plants since those items are not produced by Areva NP . Meanwhile on February 25, Areva CFO AlainPierre Raynaud said Areva must compensate Siemens 2.05 billion for giving up its share in Areva NP . The figure is based on values assigned for the Siemens share in 2007.
Mixed bag for new entrants

New entrants are nibbling away at the incumbents share of the French residential power market, but losing ground in the business market according to the latest Quarterly Observatory from the French regulator, the CRE. Alternative suppliers had 19% of the residential market by number of sites as of end 2008, up from 18.1%. They had 10.6% of the non-residential sites, down from 12.7%. In terms of consumption, the picture is the same: alternative suppliers had 2.3% of the residential market, i.e. 3.3 TWh, and this was up from 1.7% three months earlier. In the case of the non-residential market, the figures were 11.6% and 34 TWh at the end of the fourth quarter, whereas alternative suppliers had 12.4% of non-residential consumption at the end of the third quarter of 2008.
Areva warns Siemens

French nuclear power technology group Areva has warned Siemens, the German engineering giant, that Siemens plan to create a nuclear joint venture with Rosatom of Russia is a breach of Siemens contract with Areva. Siemens has a 34% share in Areva NP and under a shareholder agreement from January 2001 entered into obligations including a non-compete clause, Areva said in a statement on March 4. Areva has informed Siemens that by announcing this joint venture it is in breach of contract, with all the ensuing consequences by virtue of the shareholders agreement, said Areva. On March 3 Siemens announced a nuclear joint venture with Russian nuclear company Rosatom. Siemens said the joint venture would work to develop Russian pressurized water reactor (VVER) technology. It would handle marketing, sales and the construction of new plants, Siemens said, as well as upgrades of existing plants. Siemens had said in January that it wanted to pull out of the agreement with Areva NP . Siemens AG will
GDF Suez targets third EPR

GDF Suez is in discussions with EDF over its involvement in Frances second European pressurized reactor, planned by EDF at the Penly site, GDF Suez CEO Gerard Mestrallet said March 5. And the government supports GDF Suez role as prime contractor and operator of a third EPR, Mestrallet said. The government has yet to commit to a third EPR. GDF Suez posted a net profit of 6.5 billion for 2008, 13% up on 2007. This included 1.9 billion in disposals, mainly stakes in Belgian companies Distrigas and Fluxys, the company said. Regulatory factors hampering group profits included the inability to pass on to customers the full increase of natural gas supply costs, it said, as well as a 250 million levy charged by the Belgian government on nuclear producers in Belgium, of which GDF Suez subsidiary Electrabel bore the brunt. The company is to take the Belgian government to the Constitutional Court to appeal against the tax.
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France in brief . . .
French grid operator RTE recorded a 36.7% decrease in 2008 net profit to 295 million as operating costs increased 13% to 1.062 billion mainly because of more expensive wholesale power purchasing, the network operator said March 4. A 2.6% drop in industrial consumption in 2008, which accelerated in the last three months of the year, had not had a significant effect on results, RTE said. At the end of December 2008, RTEs net debt had risen by 108 million to 6.064 billion.
Germany
ENBW inches into onshore wind

ENBW has bought three small onshore wind projects with together 52-MW from wind developer Plambeck Neue Energie for a high eight-digit figure, raising its onshore wind capacity to 80 MW. The 10 MW Schwienau 2 project was commissioned in January 2009. The Buchholz plant with 36 MW was being commissioned in February. The 6 MW Alt Zeschdorf is under construction. The additions take ENBW a small step towards its target of a 20% renewables share of electricity generation by 2020. The onshore activities follow an offshore initiative started in May 2008 when ENBW acquired Eos Offshore and Offshore Ostsee Wind. These companies own the rights to Hochseewindpark Nordsee and He dreiht(both of 400-MW and both in the North Sea), and Kriegers Flak 1 with 400 MW and Baltic 1 with 52.5 MW in the Baltic Sea, totalling over 1 GW. Installation of Baltic 1 may begin this year.
State needs nuclear earnings: RWE

The global financial crisis could help persuade Germanys next government, after elections in September, to reverse the nuclear phase out law, according to RWE chairman Jrgen Grossmann, speaking at a press conference on February 26.
If the nuclear phase-out continues, the first plant to close will be Biblis A in summer 2010, he said. But he believed nuclear lifetimes should be extended, describing the benefit to energy companies of longer operation of written-off reactors as an advantage to the economy rather than windfall profits. The state must decide what to do with this advantage, he said. I dont want to speculate he continued, but in view of the massive public support being poured into banks and industry, the state needs new sources of income and here is one readily available. Longer running times for nuclear would put downward pressure on the wholesale price of power, observed RWE CEO Ulrich Jobs. Ironically, this would run counter to RWEs intention of increasing its operating result by an annual average of 5-10%, instead of the previous target of 5%, to 2012 (not including the planned acquisition of Essent) since this aim assumes an average realised German electricity price of at least 60/MWh during the period. Sales of RWEs 2008 generation in Germany fetched an average price of 58/MWh, compared with 47/MWh in 2007, according to the company. Outside Germany, RWE is already pursuing new nuclear projects. It has the option of a 49% stake in a joint venture with Bulgarian NEK to build two 1-GW nuclear units at Belene. RWE is also one of six partners in plans at Romanias state-owned SNN to build two Cernavoda 720-MW units. If the project stays on schedule the units could go online in 2015/2016. And the company has set up a joint venture with E.ON to build up to 6-GW of nuclear capacity in the UK. On the question of disposal of radioactive waste from the new projects, Grossmann said it was EU policy for each member state to deal with its own waste. He believed problems associated with end storage were more of political and social-acceptance character than technical. Nuclear is growing world wide, its not just a theme for Germany, he said. RWEs electricity generation was up 4% in 2008 to 224.1 TWh, of which 180.3 TWh was contributed by RWE Power in Germany. At the start of 2009, RWE had already sold 90% of 2009 generation, 70% of 2010 generation and 30% of 2011 generation.
RWE generation 2007-2008 (TWh)

RWE Power In-house generation Lignite Coal Nuclear Gas Renewables Pumped storage, oil, other purchased from third parties Total 2008 180.3 73.9 43.1 49.3 11.5 0.6 1.9 180.3 2007 178.9 76.1 55.3 32.1 10.1 3.2 2.1 178.9 RWE Npower 2008 36.7 18.0 18.2 0.5 18.1 54.8 2007 33.8 15.1 17.7 0.8 0.2 23.7 57.5 RWE Group 2008 224.1 73.9 62.0 49.3 31.2 5.3 2.4 110.1 334.2 2007 216.1 76.1 71.0 32.1 29.3 5.2 2.4 108.2 324.3
RWE Power figures include electricity procured for plants not owned by RWE but deployed at its discretion according to long term agreements in 2008, this amounted to 30.6 TWh, of which 28.6 TWh was coal generated, largely by coal plant owned by Evonik Industries. RWE Group figures include generation and purchase of RWE Energys regional companies and the renewables business transferred to RWE Innogy in 2008. RWE Npower largely purchases electric via RWE Supply and Trading Source: RWE, Platts
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GERMANY / GREECE
German imports/exports 2008 (provisional)

Import Country TWh % change -35.7 +2.1 +176.0 +24.3 -12.8 +17.2 -15.7 +36.4 +100 -9.1 France 10.6 Luxembourg 0.8 Netherlands 0.8 Austria 5.6 Switzerland 2.7 Denmark 9.2 Czech Republic 7.9 Sweden 2.5 Poland 0.1 Total 40.2
Source: BDEW
Export TWh % change 0.9 5.3 18.9 15.0 13.9 1.4 1.3 0.5 5.6 62.7 +19.1 +1.7 +4.4 -7.0 -7.8 -7.3 +49.7 -44.1 +14.0 -1.1
Balance TWh +9.7 -4.5 -18.0 -9.4 -11.1 +7.8 +6.6 +2.0 -5.5 -22.5
Meanwhile, despite government and energy regulator pressure for a single high voltage network company in Germany (instead of the current four), RWE has no intention of shedding its network, but rather is creating an independent transition operator to meet the stipulations of the European Commissions upcoming third internal energy market package. Grossmann said the regulated business worked well in RWEs portfolio and would remain a core business, not least because it brought a steady income flow.
Power exports strengthen

Germany recorded an even larger electricity export overhang in 2008 than in the previous two years, at 22.5 TWh compared with 19.1 TWh in 2007 and 19.8 TWh in 2006. Exports flowed mainly to the Netherlands, Austria and Switzerland, while imports flowed predominantly from France, Denmark and the Czech Republic, according to figures from electricity, gas and water federation BDEW. Nuclear power was back in form last year with output of 149 TWh, after 140.5TWh in 2007, displacing in particular coal generation which clocked up just 129 TWh in 2008 compared with 142 TWh in 2007. The higher nuclear share contributed to a reduction in specific CO2 emissions, to an estimated 0.57 kg CO2/kWh compared with 0.6 kg/kWh in 2007. A 5-TWh increase in renewables output to 93 TWh in 2008 also played a role, although the year on year rise to 2008 was just a third of the 15 TWh increase in renewables generation between 2006 and 2007. Most of the wind, solar and other (also largely renewables) generation was accounted for by independent operators, the corporate energy companies playing only a minor role in renewables.
German renewable energy generation (TWh)

2006 Hydro Wind Biomass Waste (only renewables share of 50%) Photovoltaic Total
Source: BDEW
2007 21.2 39.7 19.4 4.5 3.1 87.9
2008 20.8 40.2 23.0 5.0 4.0 93.0
20.0 30.7 15.5 3.7 2.2 72.1
German net power station capacity (MW)

2007 Fuel Including Without IPPs IPPs 2008 Including IPPs Without IPPs
Hydro 5,166 4,300 Pumped storage 5,710 5,710 Lignite 20,516 19,860 Coal 27,596 25,305 Nuclear 20,470 20,470 Oil 6,258 5,700 Gas 23,394 19,300 Wind/solar 26,159 235 Other 9,000 3,508 Total 144,269 104,388
2008 figures provisional Source: BDEW
5,205 4,310 5,710 5,710 20,516 19,860 27,405 25,305 20,470 20,470 6,190 5,650 23,394 19,300 28,728 255 9,471 3,607 147,089 104,467
Greece
Intrakat, Suez target EfW

Greek construction company Intrakat and Suez Environnement of France are to co-develop Energy from Waste projects in Greece, the companies said in a joint statement February 23. At present there are no waste-to-energy plants in Greece, where most municipal solid waste is landfilled without treatment, in contradiction with EU environmental objectives, the companies said. Several large Greek municipalities are expected to launch public-private waste management partnerships in the coming months, the companies said, where wasteto-energy systems could play a crucial role. Suez Environnement, a 35%-owned affiliate of French energy group GDF Suez, operates 50 large waste-to-energy facilities in Europe, processing seven million metric tons of municipal waste a year. The largest facilities in Europe burn around 600,000 metric tons of waste and produce 500 GWh of electricity a year. Heat offtake is used in district heating systems or industrial applications.
German generation by fuel (TWh, 2007/08 provisional)

2006 Lignite Nuclear Coal Gas Oil Hydro Wind Other Gross generation Electricity imports Electricity exports Import/export balance Electricity consumption including network losses
Source: BDEW
2007 155.1 140.5 142.0 75.9 9.7 28.1 39.7 46.4 637.6 44.3 63.4 -19.1 618.4
2008 150.0 148.8 128.5 83.0 10.5 27.0 40.2 51.1 639.1 40.2 62.7 -22.5 616.6
151.1 167.4 137.9 73.4 10.5 26.8 30.7 39.1 636.8 46.1 65.9 -19.8 617.0
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ITALY / NETHERLANDS
Italy
Board room blitz at Acea

Acea, Romes power and water utility, has been thrown into uncertainty by top management upheaval. At a board meeting on March 3, Andrea Mangoni, the firms managing director, tendered his resignation on the grounds that he no longer enjoyed the confidence of the main shareholder. Mangonis resignation was accepted by the board. The board, whose chairman is Giancarlo Cremonesi, also received the resignations of Roberta Neri, Aceas head of planning and finance, and of Massimiliano Salvi, head of energy networks. With responsibilities that include company financial records, Neri holds an important governance role. The board is expected to meet on 27 March to approve Aceas 2008 financial statements. Behind the boards troubles are disagreements on strategy, in particular alliances with GDF Suez on which Mangoni had been working for more than a year. Holding almost 10% of Aceas share capital, the French group is Aceas second largest shareholder after the city authorities, which own 51%. Francesco Gaetano Caltagirone, a Rome constructor and newspaper-owner, owns just over 5% through three of his companies. The situation at Acea provides another example of the role of politics in Italys local utilities. Elections last year took Gianni Alemanno, a politician who made his career in the post-fascist Alleanza Nazionale party, to the mayors office, where his predecessor was Walter Veltroni, a leading centre-left politician. Mangoni had been appointed during Veltronis term.
somewhat greater in terms of sales. Of last years total Italian demand of 337.6 TWh, Edison provided 67.2 TWh, equal to 19.9%. Taking 28.4 TWh, clients in the free market provided the main demand for Edisons sales, followed by the power exchange, through which the company sold 21.1 TWh. Edisons CIP6/92 sales amounted to 13.1 TWh in 2008. The company noted that sales to markets, both to clients supplied in the free market and through the exchange, advanced by 20.3% last year on the 41.2 TWh sold in 2007. Most of the 50.2 TWh net production came from thermal plant which accounted for 34.0 TWh, down 10.5% on 2007. Net hydro output was 30.1% higher at 3.9 TWh, while Edipowers contribution was 1.4% lower at 11.8 TWh. Edisons imports were significantly lower at 0.4 TWh, against 1.2 TWh in 2007, while supplies obtained within Italy increased by 83.5% to 16.9 TWh. Contributing to the fall in thermal output was the sale of six small CIP6/92 plants in April last year and the consequent loss of about 370 MW of capacity. During the year, the company also disposed of its 70% interest in the 170 MW Celano thermal plant. A key development for the future is the construction of 4.4-km of 150-kV line between Campocologno in Switzerland and Tirano in the Valtellina northeast of Milan. Work on this first non-state cross-border interconnector, which began in April last year, is expected to be completed by the end of this year. Looking ahead, Edison said financial events and the high volatility of oil prices will not fail to make their effects also felt in 2009. The company foresees contraction in power demand, a reduction in wholesale spreads and strong competition arising from an increase in supply, all factors that will affect the years operations.
Edison hit by tax, demand slump

Edison has reported 2008 sales of 11,066 million, up by 33.7% on 2007, while the groups gross operating margin improved by 2.4% to 1,643 million and the pretax profit by 6.3% to 730 million. Introduction of what is generally called the Robin Hood Tax and of an anti-crisis decree, coupled to a non-recurring positive tax item that had helped the results in 2007, left Edisons post-tax profit down 30.4% at 346 million. Edison pointed out that demand for energy fell in Italy in the fourth quarter 2008, the first time demand has fallen since the 1981 crisis. Between October and December, electricity demand fell 5%, helping the full-years figure to slip by 1%. Due to a fourth-quarter drop of 15%, industrial power demand fell by 9% in the year overall. Power continued to be Edisons principal business last year, sales of electricity advancing by 28.1% to 8,689 million, compared with 5,093 million from hydrocarbons. Gross operating margin from Edisons power business rose by 7.1% from 6,783 million in 2007 to 1,326 million last year, equivalent to 15.3% of sales against 18.3% in 2007. From its capacity of 12,100 MW, which includes its 50% interest in Edipower, Edison produced 50.2 TWh in 2008, equivalent to 16.4% of total Italian production of 305.5 TWh. The groups market share was, however,
Italy in brief . . .
A2A, the Milan/Brescia power and gas utility, has won the Bicsi Energia 2008 award from Customer Asset Improvement (CAI), a research organization controlled by the Bank of Italy. Publishing the results of its Osservatorio Energia 2008, CAI said that A2A was evaluated particularly positively by its users especially in the sales of electricity.
Netherlands
Grid at heart of stimulus proposals

The Dutch government should sell minority stakes in transmission networks to fund investment in energy infrastructure and energy saving according to the Energieraad, an advisory council on energy. This was part of its response to a request from the government on how it should approach the financial crisis. Another was to suggest bringing forward replacement of ageing parts of the grid to provide an economic stimulus. Money from the suggested sale to institutional investors of for example, one third of the governments stakes in power TSO, TenneT, and gas TSO,
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GasTransportServices should, it says, go into a new Energy and Climate Fund. Other sources of funding could be money from the sale by local and provincial authorities of their stakes in energy companies, and a small, temporary levy on energy products for consumers (vehicle fuel, power and gas) for as long as the oil price remains below $70 a barrel and in any event no more than two years. Many parts of the network are 40-50 years old replacement should be brought forward, the Council says. There would be no licensing issues as this is existing plant. Replacing it with an investment program costing 300 million annually from 2010 would give a significant stimulus to the economy. The Council recognizes that the regulator would have to adapt tariffs accordingly and that this might need the government to change the regulatory framework. The Council is currently working on a report on energy infrastructure and the renewal wave ahead which it expects to publish in May.
ECN/KEMA report on which the government based the subsidy levels does not take the current high cost of wind turbines into account, it says. It also says maintenance and operational costs have been underestimated.
Akzo cleared to buy out Salinco

The competition authority has approved Akzo Nobel Energys buyout of the 50% in Salinco which it did not already own from Essent. Salinco supplies power (80 MW) and steam (250 t/h) to an Akzo chemical plant at Hengelo. Akzo Nobel Energys other power generation facility is another joint venture with Essent, the Deleso cogeneration plant the largest in the Netherlands with a rated capacity of 530 MW and supplying 700 tonnes steam an hour to the chemical industry cluster at Delfzijl and to the grid. Akzo Nobel is planning an industrial-scale CO2 capture facility at Delesto and, according to the Carbon Capture and Storage Roadmap published by the Northern Netherlands authorities in February this year, is looking for a partner to fund a project to capture between 100,000 and 200,000 tons CO2. Akzo Nobel Energy also has a pilot algae production plant at Delfzijl, where it is experimenting with the potential use of algae for fuel.
E.ON, RCI work on CCS

E.ON Benelux and the Rotterdam Climate Initiative are to work jointly on planning a carbon capture and storage network for the city and its port area. E.ON will work on the business case for CCS and supply expertise; the RCI will look for funding from the public sector and the European Investment Bank. E.ON Benelux is already involved in a carbon capture pilot at its existing plant on the Maasvlakte area of the city, and plans industrial-scale carbon capture for the new plant it is building there. It plans to have this operational by 2015. The city of Rotterdam for its part plans to cut the citys CO2 emissions by 50% by 2025. A feasibility study has already validated the concept of a grid to carry the CO2 from industrial plants to storage locations, which are likely to be depleted oil and gas fields on and offshore.
Norway
Statnett ordered to restore Oslo cable

Regulator NVE has ordered Statnett to restore, by July 1, operation of the cables beneath the Oslo fjord which have not been functioning since the spring of 2008 (PiE 543/20). According to Norwegian news agency NTB, NVEs patience is now exhausted and it has ruled that if the July 1 deadline is not met, Statnett must pay a penalty of NKr800,000 per day until the cables are working again. NVE attributes the cables faults to inadequate maintenance and inspection: If [they] had been out of operation during a period when there was little water in Norwegian reservoirs, power customers would have suffered. Instead, the scope for exporting surplus electricity has been significantly reduced, thereby causing large losses to the generating companies in the form of reduced sales income. NVEs statement criticizes Statnett for violating regulations, inadequate reporting, poor routines and delays in correcting faults. It claims that Statnett did not properly follow up measures to remove the mines and ammunition that were found beside the cables in 2007. Nor has the gridco concluded precautionary contracts with competent service suppliers in those areas where Statnett itself lacks special skills. Statnett reported group after-tax profit of NKr1,517 million in 2008, against NKr651m in 2007 (PiE 520/19), reflecting the sale of its NordPool business and higher income from larger amounts of power transmitted. This years results are expected to be significantly weaker, because the high 2008 profit will lead to a cut in grid tariffs this year.
NWEA calls for subsea cable

Tennet should be considering a subsea cable to improve transmission along the Amsterdam-Rotterdam axis, known as the Randstad, according to the Dutch Wind Energy Association, NWEA. The NWEA has written an open letter to the Dutch government to put the case. There is discussion in the Netherlands as to whether a new 380-kV connection to serve the Amsterdam-Rotterdam axis and their industrial hinterlands should run above ground or below. A third option of an undersea cable would be cheaper than putting the cable below ground, according to NWEA, and have the advantage of providing connections for onshore wind farms. We urge once again, the NWEA says, that this alternative be seriously considered. In a separate development, the NWEA says that around half the onshore wind projects looked at by the Ecorys consultancy at NWEAs request will not go ahead if the new rules on renewables subsidies due to take effect on April 1 are not modified to take a more differentiated approach. If there are no changes, the ambition of doubling the amount of onshore wind energy will not be achieved. The NWEA says investment costs are on average 10% higher than assumed by the subsidy rules. The
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NORWAY / PORTUGAL
Statkraft reports record year

High power prices, increased output and favorable results from hedging activities gave Statkraft its best ever year in 2008, the genco announced on February 26. Preliminary figures put after-tax profit for the year at NKr33,262 million (NKr6,632 million in 2007), and the underlying after tax profit at NKr8,097 (906) million (NKr7,030 million). The average system price in the Nordic market rose from 27.9/MWh in 2007 to 44.7/MWh in 2008 a 60% rise and the groups total production last year reached 53.4 TWh (44.9 TWh), an increase of 19%. High reservoir levels at the start of 2009 and more than normal precipitation means that the resource situation in the Nordic area is robust, Statkraft said. Forward prices indicate a somewhat lower price level in the coming period. Combined with the increased production capacity [resulting] from the swap agreement with E.ON this provides the basis for relatively high production in 2009 and increased income from current electricity sales. There is however great uncertainty about the future development of electricity prices and the hydrological resource situation. Statkraft said it had proposed that the state increase the generators equity capital by NKr8 billion, as well as adjusting dividend policy, so that it could implement Statkrafts strategy of continued profitable growth in the area of environment-friendly and flexible electricity production.
features of the plan, according to power industry magazine Energi, are the scrapping of all the countrys oil-fired heating installations, the electrification of one-third of its motor vehicle fleet and a quarter of its oil platforms, and a drive to make buildings more energy-efficient.
Portugal
Endesa moves back to Portugal

Spains Endesa is moving back into Portugal, aiming for a 10% market share by 2010 amid signs of increasing liberalization. Javier Uriarte, the groups general manager for power marketing, told the Lisbon media that Endesa had a pipeline of Portuguese generation projects worth 2 billion that were due to begin coming on line in late 2010. Endesa had left Portugals liberalized market in mid2007 because of price caps on power sales and what it saw as the slow pace of deregulation. It has now opted to move back after the Lisbon government decided in December to increase tariffs to ensure better compensation for distributors. Before it pulled back, Endesa accounted for 8% of electricity sales in Portugal. We are back, and we think that this time there will be true liberalization, said Uriarte. Nuno Ribeiro da Silva, head of Endesa Portugal, said the company had already agreed sales contracts for 1,000 GWh with industrial customers. Analysts say the single Iberian energy market, known as Mibel, has so far failed to prove effective because only a small amount of electricity is traded freely in Portugal and the level of interconnection between the two countries is not yet sufficient to support full liberalization.
Enova projects total 2.15 TWh

Enova, the Norwegian state company that supports energy-saving and alternative energy projects, claims that its efforts in 2008 resulted in 2.15 TWh of energy saved or renewable energy produced. During the year it provided support for a total of 284 projects. Energy minister Terje Riis-Johansen said the companys achievements last year made a significant contribution towards achieving our goal of 18 TWh energy saved or produced from renewables by the end of 2011. In a recent package of anti-recession measures, the government allocated an extra NKr1.2 billion (134 million) to Enova in 2009 (PiE 544/18). Among allocations planned for 2009 are NKr400 million for a program covering public sector buildings, and an extra NKr790 million for the established programs in the areas of renewable heating solutions, energy saving and wind power. As such a record total of NKr3.5 billion would be available in 2009 for increasing energy-saving and producing renewable energy.
EDP awards Baixo Sabor contract

Energias de Portugal has awarded a contract worth around 111 million to a consortium led by Austrias Andritz Hydro for supply and installation of the 170-MW Baixo Sabor pumped storage hydropower project in the Douro river basin in northern Portugal. Andritz Hydro, formerly known as VA Tech Hydro, said March 5 that its share of the contract is worth around 90 million. Its consortium partner is Ensulmeci, the engineering arm of Portuguese investment company, Esphera Capital. The consortium is to supply for each of the two hydropower plants, two reversible pump turbines, motor generators, governors, hydraulic steel structures, automation, and an extensive balance of plant package. Baixo Sabor is scheduled to enter commercial service in September 2013. It is projected to produce 444 GWh/yr. Last July, EDP awarded a 257 million contract to Bento Pedroso Construes and LENA Engenharia e Construes for the civil works for the Baixo Sabor dam and powerhouses. EDP is in the process of building four large-scale hydropower plants Alqueva, Baixo Sabor, Bemposta and Picote at a total investment of 773 million. The four projects will result in an additional 860 MW of capacity and an increase of 17% in its total hydro capacity.
Norway in brief . . .
EBL the Norwegian electricity industry association has been working with Trondheim-based SINTEF (Norwegian University of Science and Technology) and BI (the Norwegian school of management, in Oslo) to prepare a new climate policy plan which they believe could enable Norway to meet its climate goals by 2020. The key
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PORTUGAL / SPAIN
EDP profits up 20%

Energias de Portugal lifted net profits by 20% in 2008 to 1.09 billion, while Ebitda rose 20% to 3.15 billion. Profit was partly lifted by gains of 405 million from last years initial public offering of the groups renewable energy unit, EDP Renovveis. Capex came to 3.6 billion in 2008, 78% of which was spent on expansion projects. On top of an 18% increase in installed capacity over the year, EDP had 3,330 MW of new capacity under construction at the end of 2008, mostly in hydro and wind (51%). Electricity demand increased by 1.2% compared with 2007, but was affected by weakening demand in the fourth quarter (-2.7%). Demand in Portugal (up 1% in the last quarter) was more resilient than in Spain (-3.4%), where the group is also a leading operator. Wind output rose 18% in 2008, reflecting higher installed capacity (up 18%) and better weather conditions in Portugal in the fourth quarter. Hydro output dropped 22%, representing only 57% of historical average hydro output. The electricity inflow into EDPs distribution unit in Portugal increased 1.2% year-on-year 0.9% when adjusted for temperature and working days. This was 3.6% below the forecast made by regulator Erse in its calculations for 2008 tariffs and was mainly due to decelerating economic growth. Lower consumption, coupled with a consumption mix that also differed from Erses assumptions, led to a 105 million tariff deficit in the distribution business. EDP said it had reached an agreement to raise 1.2 billion in cash from the sale of rights to its accumulated tariff deficit for 2007 and 2008 to Tagus, a securisation company that will finance the purchase by issuing debt. The tariff deficit is the difference between EDPs power generation costs and the regulated price of electricity. It can be recovered over 15 years. EDP also announced that it had raised nearly 1.6 billion from a three-year credit line agreed with 19 banks. Chief financial officer Nuno Alves said this gave the company 5 billion in available cash and credit. EDP plans to invest 3 billion a year between 2009 and 2012. Meanwhile EDP Renovveis recorded a net profit of 104.4 million in 2008.
Penedos says Ren plans to increase capital expenditure partly as an economic stimulus measure of the kind being encouraged by the European Union. Ren expects Erse, Portugals independent energy regulator, to provide incentives for new investment in 2009, increasing Rens regulated asset base to more than 8%, up from a current level of 7%.
Portugal in brief . . .
Japans Mitsubishi is to take a 34% stake in the 45.8-MW Amareleja solar photovoltaic installation that Acciona Energia recently completed at Moura in southern Portugal. The two companies plan to seek further undisclosed joint opportunities in the renewable energy sector, according to Acciona. The Amareleja installation cost 261 million to complete and went on line in December. The installation was developed by Acciona subsidiary Amper Central Solar.
Spain
Acciona moves on
The parting of Endesa owners Enel and Acciona was confirmed to the CNMV securities commission on February 21. Acciona sold its 25% stake in Endesa for 11.1 billion to Enel (8.2 billion in cash, 2.9 billion in Endesa assets), increasing the Italian groups controlling stake to 92%. The CNMV ruled March 3 that Enel was obliged to bid for all 100% in Endesa, after the Spanish association of small shareholders in floated companies (Aemec) asked the CNMV for clarification. While Acciona moved quickly to announce post-Endesa plans, it was not immediately clear what Endesas leadership will look like under Enel control. Endesa MD Rafael Miranda said February 26 that an Endesa strategic plan was being drawn up at full speed. The split paves the way for the creation of a new renewables group based on the assets of Acciona and Endesa, planned originally for mid-2008. Endesa said the new group would be formed within six months of regulatory clearance. Acciona is to buy 2,104 MW of Endesa renewable capacity in Spain and Portugal for 2.89 billion. The assets are 1,248 MW in wind and 856 MW in hydro capacity. With the addition of Enel wind capacity to be bought by Acciona totalling 400 MW as part of the deal, Acciona Energia is set to become the worlds second biggest renewable energy generator, with 6,516 MW, behind Iberdrola Renovables (8,487 MW). Acciona plans to invest in the equivalent of 600 MW this year. The sale of its Endesa stake has slashed its debt from 17.5 billion to 5.9 billion. Acciona expects the new Endesa assets to boost 2009 Ebitda by 250 million to 1.4 billion, 45% higher than in 2008. Endesas Miranda meanwhile presented 2008 results a 7.17 billion net profit, 168% up on 2007 thanks to 4.56 billion in capital gains from the sale of some
Ren lines up stimulus package

State grid company Ren saw net profits fall 12% to 127.4 million in 2008. Operating revenues were down 6.7% to 607.4 million, while Ebitda rose 1.3% to 322.3 million. Excluding extraordinary items, recurrent profit rose 8% to 94.8 million. Chief executive Jos Penedos said Ren aimed to increase investment by about 60% in 2009 to 500 million as part of an ongoing revision of its 2009-2014 investment plan for electricity transmission and natural gas transportation, storage and re-gasification. The company had previously planned to invest 1.76 billion to 2014, including 313 million invested in 2008.An overall figure for the new plan has not yet been announced.
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10,000 MW to E.ON. Without the capital gains, net profits would have been 2.37 billion, an increase of 5.8% over 2007. End-2008 debt stood at 14 billion, down 32.8% on the previous year. Miranda said despite the sale of some Endesa assets, the utility preserves a grand dimension, and he did not rule out new investments this year. He told analysts that Endesa is going to form part of a great world energy leader.
Gridco Red Electrica de Espaa (REE) will invest 4 billion to improve supply security over the next four years, according to its 2009-2013 strategic plan presented on February 27. Investments in 2008 totalled 635 million, up 1% on 2007. Net profit in 2008 was up 17.7% at 286 million. REE announced a 9.8% fall in mainland Spanish demand in February, at 20,627 GWh, the biggest monthly drop since REE records began in 1991.
Gazprom for GN CCGTs?

Spain and Russia on March 3 signed a memorandum of understanding on energy collaboration covering oil, electricity, renewable energies, natural gas, and LNG, during a first official visit to Spain by president Dmitri Medvedev. Two separate accords were signed between Iberdrola and Inter Rao, and Gas Natural and Gazprom. The two countries are to set up a bilateral group to study energy proposals. Iberdrola and Russian electricity company Inter Rao agreed to analyze jointly business opportunities that could arise in the Russian Federation, the Community of Independent States, the European Union, and Latin America. Gazprom is to look at the possibility of acquiring Spanish combined cycle gas turbine (CCGT) plants from Gas Natural. Gas Natural on March 3 presented its documents to the CNMV securities commission for the 17 billion takeover of Union Fenosa, and on March 4, GN entered the board of Spains third biggest utility. As a result, GN will have to divest some of its 3,600 MW in CCGT plant. GN has a further 2,000 MW of CCGT plant under construction. The GN-Gazprom accord also covers CO2 emission rights trading, power generation in general, natural gas trading, and future LNG production, transport and distribution accords. GN chairman Salvador Gabarr on March 4 was appointed chairman of Union Fenosa, to replace UF chairman Pedro Lpez Jimnez. GN managing director Rafael Villaseca also entered UFs board March 4, and is in line to be appointed UF managing director when the takeover is completed.
Health and consumption minister Bernat Soria told the Senate upper house March 4 that the government would revert to electricity bills every two months if customer complaints continue and utility irregularities are proved. Since the beginning of the year, bills are sent monthly, but meters are read every two months, so utilities estimate the bill every other month. This has led to utter chaos, angry consumer complaints, and utility promises to repay exorbitant bills.
A new wind generation record was set in Spain at 11:10am on March 5 when 11,180 MW of capacity was in operation, the AEE wind business association said. At that moment, wind energy accounted for 29% of consumption in Spain, but AEE said earlier in the day this coverage reached more than 40% on several occasions. Spain was being lashed by gale-force winds on March 5.
Sweden
Sweco lands wind deals

Engineering consultant Sweco has been commissioned by Blekinge Offshore to prepare a permit application and an environmental impact assessment for an offshore wind farm venture that is expected to produce an electrical output comparable to a nuclear power plant, Sweco said February 25. Blekinge Offshore has ambitious plans for a 2,500MW, 500-turbine wind farm north of Bornholm. Proposed construction start is 2014 with completion in 2019. Annual production would be around 5 TWh. Sweco said it had also been selected by Vattenfall to study the potential for a wind farm in Hornsberg, outside Valdemarsvik. Sweco has been given responsibility for optimising the wind farm layout, calculating the production volume, studying the electrical systems and other infrastructure and handling the permitting process, it said. The two contracts are worth around 450,000, Sweco said. Sweco has many years of experience in driving major projects in the energy area. Our wind power specialists support developers throughout the entire process by addressing issues related to energy, environment and infrastructure all to create solutions that result in profitable wind energy projects, said Eva Nygren, president of Sweco Sweden. Sweco is working on wind energy assignments for SCA, Statkraft, Bergvik Skog and Wallenstam.
Spain in brief . . .
Iberdrola Renovables has put into operation three new wind farms in Malaga province, with a total installed capacity of 121.3 MW. Cerro La Higuera (44 MW), Altamira (49.3 MW) and Cortijo La Linera (28 MW) are to be fully operational in July. They bring IRs installed renewable capacity in the southern Andalucia region to 548 MW, out of its Spain total of 4,868 MW at the end of 2008. Iberdrola and Endesa registered the biggest increases in gas supply market shares in 2008, according to the CNE national energy commission, rising 1.3% and 0.8% respectively. Gas Natural remains market leader with a 45.5% share (down 5.1%), followed by Iberdrola (12.8%), Union Fenosa (12.4%), Endesa (9.2%), and Naturgas Energia (5.4%).
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Nuclear talks break down

The Swedish government and opposition broke off talks on a new energy strategy February 26, saying they could not agree on building new nuclear reactors. The Conservative-led government wants to replace Swedens 10 reactors when they become too old to operate, but the opposition wants to phase out nuclear. In particular, the Green opposition party will not accept new reactors. Lack of an agreement is likely to make nuclear power an issue in the September 2010 elections. Meanwhile Greenpeace co-founder Patrick Moore told participants at an energy seminar in Stockholm February 26 that Sweden should reprocess its spent nuclear fuel. If you dont do it here and now, I guarantee you, three or four generations from now, they will be very happy to, he said. Moore runs a consulting company and favors nuclear power. By law, Swedish nuclear power plant operators must directly dispose of spent fuel. Moore said reprocessing was a more efficient use of the uranium in nuclear fuel and helped develop fuel technology. Karl Bergman, head of Vattenfalls new nuclear division, disagreed. Bergman said that, even if there were no legal prohibition against reprocessing, direct disposal is less expensive for a country with a small commercial program such as Sweden.
Nuclear opposition grows in Vaud

Opposition is growing in canton Vaud to new nuclear power. The cantonal parliament has voted by 64 to 58 to invite the government to ensure that utilities in which the canton has direct or indirect ownership respect Article 56 of the Cantonal Constitution, which stipulates that no use must be made of nuclear power. The motion calls on the cantons representatives on the boards of these utilities to demand that the request for authorization to build a new reactor by Alpiq be withdrawn. Jacqueline de Quattro of the centre-right Radical Party noted that the canton produces only a quarter of its electricity needs, with a quarter coming from French nuclear power stations. She added that the cantons representatives in the EOS Group (Alpiq) have been clearly instructed to promote renewables, in which Romande Energie (EOS Group) has plans to invest CHF 570 million.
Green projects blocked

Renewables campaigners have petitioned the government, with more than 28,000 signatures, to boost the annual credit to support projects for hydro and geothermal power, photovoltaic panels, and wind and biomass energy. The No More Nuclear Power Stations group behind the petition is made up of a dozen non-governmental organisations including Greenpeace and Swissolar and has the backing of the centre-left Social Democrats and the Green Party. The group says more than 4,000 projects are blocked because government funding is limited to SFr250 million. The parliament of canton Fribourg has voted 77 to 9 to require the cantonal government to submit an initiative to the parliament in Bern calling for removal of the cap of CHF 16 million/yr for the promotion of photovoltaic technology. Swissgrid has received 5,426 applications for photovoltaic projects, of which 255 are from canton Fribourg. The motion calls for the cap to be doubled. A similar Green Party motion has been approved by the parliament of canton Solothurn. The Solothurn parliament has also voted to abrogate planning restrictions on the siting of solar panels. Since the CHF 250 million from the full-cost feed-in tariffs for renewables system (KEV) for 2009 has already been allocated, the Swiss Federal Office of Energy (SFOE) has placed 3,000 photovoltaic projects on a waiting list. The federal government has promised to improve KEV when it amends the Electricity Supply Act and its ordinance, and has asked the SFOE to submit concrete proposals by the middle of the year. On 11 February the government approved an additional sum of CHF 10 million for small photovoltaic projects.
Switzerland
Wind projects focus on Vaud

Following reports of wind power plans by BKW and Groupe E (PiE 545/23), two more Swiss companies have announced wind projects. The Zurich municipal EWZ has formed Energie Naturelle Mollendruz to build a 24-MW, 12-turbine wind park in the Jura mountains of canton Vaud, budgeted to cost CHF 72 (49) million. Once completed in around 2012 the park will have an annual production of 50 GWh. The communes of La Praz, Vaulion, Mont-la-Ville and Juriens as well as the city of Yverdon-les-Bains have joined EWZ to found the company. EWZ will have 95% of the share capital, the communes will have equal voting rights. Mollendruz is the first of many wind projects EWZ plans to develop, with a credit from the City of Zurich amounting to CHF 200 million, to be approved by the electorate in a referendum due in May. Meanwhile the Reninvest company of Ticino is going ahead with plans for a 38-MW wind park at Grandsonnaz in the Jura mountains, at a cost of CHF 120 million. The area has favourable wind conditions, which vary between 4.3 and 5.8 metres per second. According to company director Claudio Zanini, the 19 turbines would produce 80,000 MWh, part of which will be purchased by the Swiss Confederation at the price of 20 Swiss centimes per kWh. The plan will be submitted to the canton by the end of the year, and if all goes well the park could become operational by 2011. The three sites chosen are at Bullet, Fontaines and Fiez.
Switzerland in brief . . .
Aziena Elettrica Ticinese (AET) has warned that if its participation in the Lnen coal-fired power station in Germany is rejected, it will have to seek supplies of uncertifiable origin on the market, inevitably consisting of a European mix, typically from coal and gas-fired sources,
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at less favourable conditions. The cost of this would eventually amount to 50 million, AET said. Authorization is required from the cantonal parliament as AETs legal supervisory body. The commission decided to freeze the decision until the cantonal government, which favours the project, submits a detailed cantonal energy plan.
The BKW Group recorded a 7% increase in total electricity sales to reach 25.9 TWh in the 2008 business year. Distribution increased by 3% to 7.9 TWh, in its own catchment area or to partners. Sales in Italy rose by 8% to 5.2 TWh. International trading rose from 10.8 TWh to 11.8 TWh. Production increased by 611 GWh over the previous year to 10.3 TWh, thanks in part to commissioning of the 800 MW CCGT plant in Livorno Ferraris, from which BKW is entitled to a quarter of total production. Production from renewables doubled to 28 GWh, with the Otelfingen biomass power station and the Bockelwitz wind park coming on stream for the first time.
Combined Cycle plant. The project involves construction of a 9.5 km 400-kV single circuit overhead line connecting the plant to the grid, and an 11-km gas pipeline. The prospective conversion to gasification would be accompanied by implementation of CCS. The project has been granted Section 36 Consent under Electricity Act 1989 for operations as a CCGT and as an IGCC with CCS. A full Environmental Impact Assessment has been finalized and an environmental permit is pending, the EIB said. The project will comply with the Large Combustion Plant Directive and will require an IPPC permit. The status of the IPPC application, details of the EIA, results of public consultation and proposed mitigation measures will be reviewed during appraisal, the EIB said.
Retail margins up
Energy suppliers are making about 100 (111) a year on every one of their domestic gas and electricity customers, energy regulator Ofgem said March 2. Ofgem said suppliers gross margin is around 95 for every electricity customer per year and 103 for every gas customer. In June, just prior to a wave of retail price hikes, suppliers were making about 90 a year for every electricity customer and roughly 50 for every gas customer, Ofgem figures show. The data was released as part of Ofgems first quarterly report into wholesale and retail energy prices. Gross margin is calculated as the difference between the retail prices, less network and environmental costs, and the wholesale energy costs. It includes suppliers own internal operating costs such as customer service, staffing, IT, marketing and billing. The margins have increased since the summer because of retail price increases and a leveling off of the wholesale cost increases due to lower wholesale energy prices, Ofgem said. Ofgems analysis, which assumes an 18-month hedging strategy, suggests suppliers wholesale energy costs should start declining during 2009, with gas costs leveling off at the end of the year. However, the margin figures did not include the recent price cuts from five of the UKs big six suppliers, which will be included in Ofgems next quarterly report, the regulator said.
United Kingdom
Dong buys Severn CCGT

Dong Energy of Denmark has bought the 850-MW Severn combined cycle gas-fired power station project and the engineering business Carron Engineering & Construction from Welsh Power Group, Dong said March 6. The power station in South Wales is being built and is expected to be commissioned at the end of 2010. The budget for construction is nearly DKK 5 billion (671 million) including Dong Energys purchase price, the Danish company said. Carron Engineering & Construction (CEC), based in North Yorkshire, provides consultancy services relating to the construction, operation and maintenance of power plants. The gas plant and CEC would complement Dongs existing UK wind and gas activities, Dong CEO said Anders Eldrup. Rothschild acted as financial adviser to DONG Energy on the acquisition. Separately, Drax Power said it had reached agreement with Welsh Power to buy Haven Power, an electricity supply business serving around 22,000 small and medium sized business customers, equating to some 0.7 TWh per year. Drax is paying 10.75 million, including a power trading book position worth 3.5 million, Drax said.
Nuclear justification a shambles

The process of deciding whether the UK should build new nuclear capacity is being rushed through in a chaotic manner, a 22-strong group of academics and consultants said March 5. In an open letter to the energy and climate change minister Ed Miliband, the Nuclear Consultation Group said the formal Justification process, a high level assessment concerning whether the benefits of new nuclear build outweigh the potential detriments, was being mishandled. Since Justification is a key regulatory process and part of the international system for attempting to ensure the safety of nuclear power, it must be carried out in a way which is thorough, transparent, neutral and independent, the group said. However, the crowded
EIB considers Hatfield funding

The European Investment Bank is considering providing up to 166 million in financing to Powerfuel to help its carbon capture and storage demonstration project at Hatfield, Humberside. The EIB, the European Unions financing arm, said February 27 that the loan was under appraisal. The project, which according to the EIB will cost an estimated 660 million, involves development of a 900MW combined cycle gas turbine facility, to be built CCS ready following conversion to an Integrated Gasification
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schedule for all the processes for new nuclear build, as given in government documents, shows that codependent processes are either stacking up or taking place out of sync and this, in turn, results in an inordinately hurried decision-making timeline. For instance, information on how waste and spent fuel from new stations would be managed would not be assessed until at least a year after the decision on Justification, the group said. The group also complained of clear conflict of interest. We do not believe it is appropriate for the Secretary of State for Energy and Climate Change to be the Justifying Authority as he, and DECC, have already expressed their clear support for new nuclear reactors. Given that Justification, once finalised, may foreclose on any future discussion on issues crucial to nuclear power, it is vital that this process is opened up in order to allow for meaningful and realistic examination of evidence a public forum. The Justification consultation forms part of the regulatory and legal process following the governments announcement at the start of 2008 that new nuclear was in the public interest. The consultation runs until later this month, to be followed by a further consultation between September and December 2009 on the secretary of states draft decision as Justifying Authority.
National Grid said that due to uncertainty over the interconnector, a monthly auction to sell space on the cable for April had been postponed. A new date has not yet been set. The total month volume may be auctioned in a single auction on Tuesday March 17, said National Grid. No other long-term auctions are affected at this time, it said. The interconnector is 50:50 owned by National Grid and French grid operator RTE.
SSE plans Ferrybridge CHP unit

Scottish and Southern Energy is proposing to build a 90-MW multi-fuel combined heat and power facility at its Ferrybridge power station in Yorkshire, the company said March 5. The facility would use a range of fuel sources such as biomass, waste wood and waste-derived fuel and would seek to provide heat to other industrial processes at the site, SSE said. Although a decision on the future of Ferrybridge coalfired power station is not set to be made until at least 2010, half of the facilitys capacity is scheduled to close by 2015 as it does not comply with the LCPD.
Dong, Olsen, E.ON bid for wind

Danish energy companies DONG Energy and Fred Olsen Renewables and German energy giant E.ON have formed a consortium to bid in the UK Crown Estates Round 3 Offshore Wind Farm program, the companies said March 3, without giving specific power capacity targets. According to the statement, the bid is over a capacity of thousands of megawatts of UK offshore power and E.ONs Regional Director for Renewables, Dave Rogers, said the consortium was started to allow the companies to jointly profit from each others experience in this sector. In Round 3 well see wind farms being built further offshore and in much more challenging environments than ever before [and] thats why we have brought together companies with the financial ability and the experience of working on major offshore wind projects, Rogers said. Meanwhile Statkraft and StatoilHydro of Norway have joined forces with Airtricity and npower renewables to form a consortium Forewind to seek licenses under Round 3.
RWE acquires Cumbrian options

RWE npower has acquired options on private property at two sites for possible new nuclear power stations in Cumbria, the company said February 25. Both sites have coastal access. One is located in mid-Copeland near Sellafield and RWE npower has already obtained an offer for 3,600 MW of grid access from the National Grid for that site. The other site is further south in the Millom area, RWE npower said. The company said it expects the sites to be nominated to the governments Strategic Siting Assessment program by the March 31 deadline. RWE npower has a joint venture with E.ON UK to bid for and develop sites being auctioned off by the Nuclear Decommissioning Authority for new reactors as well. Those sites are near existing reactors at Oldbury in Gloucestershire, Bradwell in Essex and Wylfa in Wales. RWE npower already owns 135 acres of privately acquired land at Wylfa. It is to discuss the joint development of its Cumbrian sites with E.ON once the NDA auction is completed, it said. The auction is scheduled for the end of March.
UK in brief . . .
Link fault finding continues

Investigations are continuing into a fault on the 2,000MW UK-France power link, part-owner National Grid said March 3. Since February 9, capacity on the link has been cut to 1,500 MW. Every day while tests are carried out between 1100 and 1500 GMT capacity is cut to 1,000 MW from France to England and 500 MW from England to France.
Energy regulator Ofgem has approved a proposal requiring generators to submit monthly updates on emissions and running hours of units affected by Large Combustion Plant Directive. Under the proposal, submitted to Ofgem by E.ON, generators will have to provide data on requests to operate extra hours, emissions limits, a summary of national emissions reduction plan (NERP) and emissions limit values (ELV) allowances bought and sold, as well as cumulative and remaining operating hours for units opted-out of the LCPD. The data will be published on National Grids Balancing Mechanism Reporting Service web site beginning June 25.
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MARKET COMMENTARY
German power tracks DAX

German year-ahead base power prices were heavily influenced by equity and oil levels during the two weeks to March 6 as power traders tracked markets that react immediately to macro-economic news. Despite a short power rally early March as a result of short covering activity in power and carbon and utilities hedging forward power, the electricity market, mirroring industrial power demand, has remained fundamentally weak. A break in the correlation between German forward power prices and 2009 carbon allowances was due to carbon being used as a short-term financial tool and to the German power markets recent tracking of the countrys DAX stock market index, market sources said. Between March 5-6, Platts Power Index for the German forward market shed 65 euro cent to 42.27/MWh, or by 10.40 points to 676.30. The PPI is a weighted forward power index, based on German front-month, front-quarter and front-year base load wholesale prices to indicate curve movements in continental Europes benchmark power market. Frontmonth is weighted singularly, front-quarter three-fold and front-year 12-fold. The day-on-day drop resulted from bearish prompt prices feeding through to the curve and came despite flat coal and upward movement in crude futures on the back of equity market stability. The front month and front year traded midday March 6 at 35.50/MWh and 44.95/MWh. ticked up 20 p to 41.50/MWh. After an extended bear run, carbon found support above 11.85/mt, helping to make coal-fed power plants more expensive to run. Likewise, gas for winter 2009 also found buyers at close to 55 p/th during the period. Between carbon and gas, it was a bit of a two-pronged attack on the power curve, one trader said. Increasingly, market players cited the growing influence of coal prices on the power curve, with coal-fired units close to forming the marginal fuel and CCGT plants providing much of the countrys baseload generation.
Netherlands
Dutch year-ahead prices continued the recent bearish trend in the two weeks to March 6, hitting a four year low on February 24 while month-ahead power prices plunged to levels not seen for 18 months. Traders are anticipating further falls as Cal 10 base fell to 44.80/MWh, according to Platts data, the lowest point since the contract was assessed at 44.20/MWh on April 1, 2005. The negative sentiment had the same impact on power for delivery in March, down to 37.75/MWh, a level not seen since late August 2007. The economic downturn and lower industrial demand have hit prices hard while temperatures above seasonal average and a healthy supply system added downward sentiment to the prompt. Power for delivery next year lifted towards the end of the period, ending the fortnight around 47.90/MWh.
France
The French-German year-ahead baseload power spread has been trading at a premium of above 2/MWh since February 26, after falling to a 25 euro cent discount January 20, according to Platts data and OTC market sources. The 2 mark was passed the day after Frances virtual power plant auctions (VPP), which resulted in prices coming off straight after the auctions as volumes flooded the market but then being boosted in the next session by market participants choosing to maintain buy positions rather than sell, according to traders. The upward movement following the auctions was boosted by a generally bullish session in other Continental European power markets on the back of climbing oil prices. Traders said low liquidity made the French market more difficult to gauge than its German equivalent, and contributed to the risk premium built into the French year-ahead contract. One trader said that the April 1 merger of futures trading on French and German power exchange Powernext and EEX should facilitate more trading between the two markets. Arbitrage will be easier, he said, but added that this would not necessarily bring the value of the two contracts closer.
Spain
Spanish power prices plunged to 18-month lows in the past fortnight, with traders and analysts anticipating further falls on the prompt and curve in the near future. By March 3 day ahead power had fallen to 34.25/MWh according to Platts data, the lowest point since the contract was assessed at 34.20/MWh on September 27, 2007. Prices corrected slightly thereafter, but the contract was heard trading only 25 euro cent higher at 34.50/MWh on March 4. Prices have wilted in the face of a healthy supply system, lots of wind output, good hydro and eroding demand. On March 3 Spanish year-ahead OTC power prices were down 14.55/MWh to 38.45/MWh since January 2 and some 21.55/MWh below the 60/MWh of a year ago. Traders said temperatures above the seasonal average and heavy precipitation have helped lower Spanish power prices this year. In the week ending February 22, data from Spains environment ministry indicated hydroelectric reserves hit the highest level recorded since the end of July 2008, up 1.3% to 11,188 GWh. The latest data shows reserves down a touch, to a still-healthy 49.5% for the week ended March 1, at 11,148 GWh. Platts European Power Team, Tel: +44 (0)207 176 6207, Email: power@platts.com
United Kingdom
UK electricity prices for forward delivery ticked higher in the two weeks since February 23, with increased costs for gas and carbon emissions making generation more expensive for some. Winter 09 baseload power gained 85 pence to 46.25/MWh while Summer 09 base
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BILATERAL MARKET ASSESSMENTS
Platts Base Power Assessments (/MWh)

2009 United Kingdom Day ahead Week ahead Month ahead Quarter ahead 2nd Q ahead Germany Day ahead Week ahead Month ahead Quarter ahead 2nd Q ahead 3rd Q ahead France Day ahead Week ahead Month ahead Quarter ahead 2nd Q ahead Netherlands Day ahead Week ahead Month ahead Quarter ahead 2nd Q ahead 3rd Q ahead Spain Week ahead Month ahead Quarter ahead 2nd Q ahead 2008 United Kingdom Day ahead Week ahead Month ahead Quarter ahead 2nd Q ahead Germany Day ahead Week ahead Month ahead Quarter ahead 2nd Q ahead 3rd Q ahead France Day ahead Week ahead Month ahead Quarter ahead 2nd Q ahead Netherlands Day ahead Week ahead Month ahead Quarter ahead 2nd Q ahead 3rd Q ahead Spain Week ahead Month ahead Quarter ahead 2nd Q ahead 10/16-jan 64.74 64.20 62.75 51.88 51.09 54.74 57.69 47.50 49.75 57.70 51.88 51.09 70.60 63.45 63.90 46.51 66.95 57.55 60.00 50.00 52.23 61.68 50.30 47.78 41.91 45.61 12/18-jan 84.37 82.10 83.30 71.56 68.35 66.00 68.53 57.00 60.57 66.87 71.56 68.35 64.85 71.60 78.24 57.66 65.91 70.65 74.30 60.90 64.13 71.12 68.99 68.89 55.16 58.07 17/23-jan 57.16 56.50 56.46 48.13 46.77 53.75 55.35 44.29 46.92 54.60 48.13 46.77 53.85 54.30 59.25 42.99 55.10 55.05 56.95 46.45 49.25 57.82 49.00 47.36 39.37 42.75 19/25-jan 70.81 74.32 77.01 69.87 67.12 56.90 62.55 54.12 58.27 64.70 69.87 67.12 59.90 63.10 68.30 54.97 61.40 63.60 67.97 58.45 61.45 68.65 68.59 67.41 54.55 56.92 24/30-jan 62.96 61.57 57.21 48.92 47.85 59.85 57.43 44.65 47.03 54.60 48.92 47.85 60.85 64.05 61.25 43.70 61.05 62.40 58.85 46.47 48.88 57.72 47.32 47.70 39.00 42.26 26/1-feb 72.75 73.43 72.78 70.42 67.87 56.25 60.08 55.16 59.37 65.33 70.42 67.87 67.25 63.35 66.30 56.53 68.05 63.55 65.86 58.91 63.02 69.40 70.87 68.25 56.67 59.13 1/6-feb 62.43 58.74 57.13 48.53 47.69 53.93 49.52 42.69 44.82 52.50 48.53 47.69 57.00 57.35 53.15 41.97 59.00 55.83 52.75 44.40 46.52 55.01 39.85 41.05 36.87 40.48 2/8-feb 68.46 70.93 69.34 67.93 66.41 60.81 56.56 54.74 59.25 65.20 67.93 66.41 61.50 67.81 62.06 56.13 61.81 68.25 61.91 58.26 62.74 68.91 70.73 63.11 57.33 59.38 7/13-feb 56.40 54.66 53.08 46.56 45.54 54.26 48.23 41.81 44.44 52.49 46.56 45.54 54.45 60.30 52.30 41.70 53.15 57.90 50.50 43.75 45.62 54.80 42.05 40.97 37.99 40.95 9/15-feb 68.46 70.93 69.34 67.93 66.41 60.81 56.56 54.74 59.25 65.20 67.93 66.41 61.50 67.81 62.06 56.13 61.81 68.25 61.91 58.26 62.74 68.91 70.73 63.11 57.33 59.38 8/20-feb 44.37 44.03 43.38 43.16 42.54 43.60 41.48 37.82 39.99 48.36 43.16 42.54 48.65 45.55 43.69 37.02 49.30 45.10 43.10 39.03 41.48 49.91 40.26 40.36 36.20 37.99 16/22-feb 71.21 69.37 70.51 71.06 70.34 57.85 57.13 57.87 62.63 68.30 71.06 70.34 66.05 59.75 60.50 59.47 66.35 60.03 60.90 61.39 66.18 72.53 69.80 63.65 58.82 61.37 20/27-feb 41.93 41.12 40.61 40.84 41.17 37.80 38.33 33.99 35.95 45.30 40.84 41.17 40.30 38.00 38.98 33.65 40.30 37.85 38.75 34.68 36.57 46.66 39.12 38.61 34.79 36.09 23/29-feb 70.69 71.54 74.18 72.82 72.77 62.13 57.71 60.11 65.14 69.81 72.82 72.77 58.06 65.95 61.50 61.69 61.35 64.80 61.94 63.83 68.96 74.04 65.13 63.21 59.94 62.22 28/5-mar 41.06 39.61 40.31 40.69 41.92 38.89 36.24 34.40 35.70 45.69 40.69 41.92 42.19 39.44 37.09 33.98 42.63 39.25 37.13 35.25 37.10 47.50 38.99 34.75 34.39 35.83 1/7-mar 71.10 70.32 73.57 72.15 72.08 55.35 59.37 58.83 64.27 69.35 72.15 72.08 64.95 61.50 61.05 61.71 66.80 60.45 63.58 62.71 67.87 73.89 63.38 60.42 60.20 62.07
PiEs base power assessment table shows the last two months prices for various products, and compares these with the corresponding two months prices from the previous year. Each price is an average of Platts daily assessed prices between the dates shown. For more information, please contact the editor: henry_edwardes-evans@platts.com Tel: +44 20 7176 6207
28
DATA
FEEDSTOCK COMPARISONS
Gas
The UK NBP prompt gas prices slipped below a shortlived early March spike after Gazprom acknowledged payment from Naftogaz Ukrayiny for its February gas bill, traders said March 5. A raid on the Naftogaz HQ by soldiers had raised doubts about Naftogaz ability to meet Gazproms March 7 payment deadline, which kicked off a bullish period across Europes largest gas hubs. By March 5, however, gains made in the previous session ebbed away as the prompt closed at 33 p/therm, well below March 4s 36 p/th level. Aprils risk premium was sold off and that drove down the Summer 09 contract, which ended March 5 at 33.4 p/th. April, settled at 33.3 p/th. On the Dutch TTF gas market, April closed March 5 at 12.85/MWh, 80 euro cent lower day-on-day. May was assessed at 12.60/MWh, down 65 euro cent day-on-day. Contracts on the far curve were pulled down by a weaker crude oil market as working week 10 drew to a close. Cal 10 closes March 5 at Eur19.15/MWh. Month ahead clean spark spreads continued to rally in the UK, up 56 pence to GBP9.07/MWh through the week to March 5, but the bears prevailed in Germany and the Netherlands, down by 1.82 and 1.37 on the week to 6.14/MWh and 6.89/MWh respectively.
UK NBP Gas for March 5 (pence/th)

Bal Month Mar April May June July Q2 2009 Q3 2009 Q4 2009 Q1 2010 Oct 2009 1 yr
Source: Platts European Gas Daily
33.05 33.45 33.20 33.20 33.40 33.20 33.30 33.20 48.35 56.50 48.80 33.40 33.40 33.60 33.40 33.70 33.60 48.75 56.90 49.00
Fuel Oil for March 5 ($/mt)

Northwest Europe (1% cargoes, 3.5% barges) Spot (1%) April (1%) May (1%) Q2 09 (1%) Spot (3.5%) April (3.5%) May (3.5%) Q2 09 (3.5%) 233.25 237.50 242.75 242.50 353.75 220.75 222.75 223.00 233.75 238.00 243.25 243.00 354.75 221.25 223.25 223.50
Source: Platts Global Alert; spot= 5-15 days ahead of publication
Coal
The Atlantic physical coal market lurched downward $2/metric ton on March 5, with traders predicting European delivered steam coal prices could plummet to the mid-$40s in the coming weeks. The first reported fixed price trade of the session was that of a prompt Aprilloading panamax of South African Richards Bay coal at $57/mt FOB on the globalCOAL platform, with a utilitytrader heard selling to a producer-trader. A DES Amsterdam 50,000 mt cargo of Colombian coal then traded lower at $56.50/mt although traders described it as a case of the two trades going through at different times in a falling market rather than indicative of CIF ARA rates falling below FOB levels. Two weeks ago I thought the Pacific strength was going to rescue the physical market but now Im of the opinion that were going to trade $45/mt DES ARA in two weeks, said one Swiss-based trader. Following reports earlier in week 10 that coal producers were selling on an FOB basis and filling short positions with coal purchased from ARA stockpiles to save freight costs, one European trader said he believed producers prime motive for buying European coal was to support prices. Producers dont usually have contracts which allow them to sell different specs or origins, usually they have to supply branded coal, he said. On March 5 Platts assessed the prompt month April CIF ARA price at $56.50/mt, Richards Bay FOB at $56.50/mt and FOB Newcastle at $61/mt. Forward month dark green spreads on March 5 stood at 9.61/MWh in the UK market and 6.93/MWh in the German market, according to Platts data.
Gas Oil for March 5 ($/mt)

(0.1% cargoes) Spot March April May Q2 09 233.25 233.75 366.00 374.25 384.75 406.50
Source: Platts Global Alert; spot= 5-15 days ahead of publication
Steam Coal Prices for February 27 ($/mt)

Nation/Area CIF ARA FOB Richards Bay FOB Bolivar FOB Newcastle FOB Qinhuangdao FOB Kalimantan Russia Pacific CIF Japan CIF Korea West Price 62.00 59.25 59.25 65.00 92.00 61.00 77.00 80.00 73.00
Notes: Price bases: CIF ARA 6,000 kcal/kg NAR; Richards Bay, 6,000 kcal/kg NAR; Bolivar, 6,300 kcal/kg GAR; Newcastle, 6,300 kcal/kg GAR; Qinhuangdao, 6,200 kcal/kg GAR; Kalimantan, 6,300 kcal/kg, GAR; CIF Japan, 6,300 kcal/kg GAR; CIF Korea West, 6,080 kcal/kg NAR. All 1% Sulfur max. 90-day forward delivery. Source: Platts International Coal Report
29
DATA
EUROPEAN EXCHANGE AND POOL PRICES
EEX Phelix peak and base spot market February 4 March 6, 2009
(MWh) 500,000 Volume Base price Peak price (/MWh) 100
Spanish final pool February 4 March 6, 2009

(MWh) 700,000 Volume Average daily price Price (/kWh) 5.0
400,000
75
600,000
4.5
300,000
50
500,000
4.0
200,000
25
400,000
3.5
100,000 04-Feb
10-Feb
16-Feb
22-Feb
28-Feb
0 06-Mar
300,000 04-Feb
10-Feb
16-Feb
22-Feb
28-Feb
3.0 06-Mar
Source: EEX
Source: Omel
Nord Pool Elspot daily system price February 4 March 6, 2009

(MWh) 1,100,000 Total volume Average price 1,000,000 45 (/MWh) 50
Amsterdam Power Exchange weighted average prices February 4 March 6, 2009

(MWh) 120,000 Peak volume Off-peak volume 90,000 Peak price Off-peak price Average price 75 (/MWh) 100
900,000
40
60,000
50
800,000
35
30,000
25
700,000 03-Feb
09-Feb
15-Feb
21-Feb
27-Feb
30 06-Mar
0 04-Feb
10-Feb
16-Feb
22-Feb
28-Feb
0 06-Mar
Source: Nord Pool
Source: APX
Italian Power Exchange Day-Ahead February 4 March 6, 2009

(MWh) 700,000 Total volume Average price (/MWh) 100
EPEX Spot Auction prices and volumes February 4 March 6, 2009

(MWh) 220,000 Volume Weighted average price Peak price (/MWh) 100
600,000
85
180,000
80
500,000
70
140,000
60
400,000
55
100,000
40
300,000 04-Feb
10-Feb
16-Feb
22-Feb
28-Feb
40 06-Mar
60,000 04-Feb
10-Feb
16-Feb
22-Feb
28-Feb
20 06-Mar
Source: GME
Source: EPEX
30
Register by 13 February, 2009 and save 200
European Renewable Energy

2-3 April, 2009
I
Hilton Berlin
Berlin, Germany
Building on the overwhelming success of its energy events in Europe, Platts inaugural European Renewable Energy conference will provide attendees with not only an overview of each area involved in the renewable energy sector from finance, governments, construction, operation and technology providers, it will also take an in depth look into a number of case study examples of the implementation of new projects in renewable power generation across Europe.
Key topics include:

I I I I I
Regulatory and legislative developments Developing successful renewables portfolio Regional focus on CEE and SEE Grid connectivity and capacity allocation Financing and investment in renewables
Hear from the following organisations:

Abengoa Solar S.A., Centrica, Department of Energy and Climate Change, Dexia, Ecofys International, EnBW Transportnetze AG, EUROSOLAR The European Association for Renewable Energy, GDF Suez Energy Central & Eastern Europe, German Wind Energy Association (BWE), HgCapital, LB Capital, Marine Current Turbines Ltd, RWE Innogy, Solaria Germany GmbH, World Council for Renewable Energy (WCRE)
For more information quote PLTSNEW and contact: Stacey Knox stacey_knox@platts.com +44(0)-20-7176-6226 www.events.platts.com

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