A partnership aimed at acquiring large-scale thermal power generation assets has been announced.
Denham Capital, a leading global energy-focused private equity firm, and Thesis Energy, a London-based independent power management company, confirmed the partnership, called Thesis Energy, on Wednesday.
Christopher Picotte, Thesis Energy Chairman and Co-Founder, stated: “The current complexity and rapid pace of change in the power markets in Europe create challenges for all market participants but also a significant opportunity for new entrants. We believe that a combination of competitive, regulatory and political factors will drive the market to a very different configuration – both physically and with respect to asset ownership – over the next decade.”
Luis Pais Correia, President and Co-Founder, added: “We do not subscribe to the view that a viable future European market model will be devoid of all large-scale conventional generation. And, looking at the current market simply as an opportune time to deploy capital because utilities are selling assets is not sufficient. Denham contributes substantial capital resources and also a sophisticated understanding of the markets and experience in asset ownership.”
German utility RWE is hoping to cement a foothold in the solar industry after buying a minority stake in solar power group Conergy.
The size of the stake has not been disclosed but Hamburg-headquartered Conergy said RWE had made the single biggest investment in a $45m funding round.
Andree Stracke, board member of RWE Supply & Trading, said: “Having worked with Conergy successfully in Europe, we are pleased to be supporting the group’s worldwide expansion.”
The investment follows the partnering between RWE and Conergy on commercial PV solar rentals which targets business customers of RWE, initially in Germany, and the finance, construction and sale Kencot Hill solar farm in the UK.
Conergy chief executive Andrew de Pass said: “We are pleased to have RWE’s financial backing and endorsement of Conergy. We look forward to using this capital to develop more projects with new and existing partners in the solar industry. With this important stamp of approval, it is clear that the turnaround of Conergy is complete and our growth trajectory is certain.”
Solar power developer Abengoa has secured $660m project financing for a new solar thermal power plant in South Africa.
The financing agreements involve loans from several institutions including the African Development Bank, the International Finance Corporation and the Development Bank of Southern Africa.
The 100 MW Xina Solar One facility is being developed close to Pofadder, in the Northern Cape Province, next to Abengoa’s existing 100 MW plant Kaxu Solar One, the first solar thermal plant in commercial operation in South Africa.
With a total investment of around $880m, construction of Xina Solar One started last year. It will be owned by a consortium in which Abengoa controls 40 per cent. The other consortium members are IDC, PIC, and KaXu Community Trust.
Xina Solar One has a parabolic-trough design and a five-hour thermal energy storage system using molten salts. It will supply electricity to South African utility Eskom under a 20-year power purchase agreement.
The Xina and Kaxu projects were awarded by the Department of Energy of South Africa under its independent power producer programme.
The International Finance Corporation is providing a $37m loan to finance Xina Solar One.
IFC country manager Saleem Karimjee said: “Solving the power issue is an urgent priority in South Africa, and establishing the country as a leader in renewable energy production is an important long-term goal. This project draws on South Africa’s abundant sunshine to address both these issues.”
The European Commission has extended the deadline on its investigation to assess whether GE's acquisition of Alstom is in line with EU merger regulations.
The Commission is examining the prospect of remedies being introduced, which would free up the deal to go ahead. While a GE-Alstom merger affects the wider European energy industry, the investigation has focused on the massive turbines used to produce electricity at gas-fired power stations.
The decision has now been postponed from July 8th to August 6th.
According to FT, GE is asserting that the European gas power sector is in such a poor state, with few turbines sold, that the deal would not skew the market.
Speaking to France’s parliament last week, Patrick Kron, chief executive of Alstom, said: “Alstom has sold three gas turbines in Europe over the last five years . . . I do not think that this merger with General Electric will result in a distortion of the European market, which, besides, is totally dead.”
People familiar with the discussions say that GE is also arguing that only about four gas turbines are sold in Europe each year, out of global sales of 200.
EU officials counter that the European gas turbine market’s smallness does not make any price rise or reduction in choice insignificant — particularly in a sector as sensitive as power, and where turbines cost hundreds of millions of euros
Germany's third-biggest utility will cut costs further in response to low wholesale prices and writedowns on plants, expecting the crisis in the energy sector to reduce profits by up to 5 percent this year.
EnBW is seeking to cut a further $424m from annual costs by 2020 as the increase in renewables, politically driven by the country’s Energiewende policy continues to impact on the company’s conventional power plant facilities.
Despite being an early adopter to the energy transition ahead of rivals, the company
reported a bottom-line loss of 450 million euros ($476 million) for 2014, compared with a profit of 51 million a year earlier.
Chief Executive Frank Mastiaux said the company would not stray from its objective to boost its renewables business, but even in that future-oriented segment the company's operating profit sank by 13 per cent last year.
Bosses have pointed to a favourable comparison in terms of full-year losses.Analysts pointed out that EnBW’s losses were far lower than the $3.4bn loss incurred by Eon and the $1.38bn in losses logged at RWE in 2014.
“The announcements from the European Commission on the Energy Union Package are welcome and provide further confirmation of our views that interconnectors are the key enabler to; increase security of supply , allow further internal market development, improve competition and increase decarbonisation across the region. Furthermore it is clear that interconnectors can deliver these objectives in a timely and cost-efficient manner.”
He told a press conference, “Energy islands still exist in Europe which threaten our security and make us vulnerable. This is the first concrete union showing country by country how we can get to a 10 per cent interconnection target by 2030 and it marks our independence from external suppliers and our interdependence as Europeans.”
Meanwhile TenneT is planning to invest about €20bn over the next ten years in the grids of both Germany and the Netherlands.
The electricity transmission system operator (TSO) invested €2.3bn in both the countries' grids in 2014.
By 2023, TenneT plans to grid-connect 3.45 GW of Dutch offshore wind energy under an agreement reached with that country's government in 2014.
By 2019, TenneT intends to build 7.1GW of connections for German wind farms, which it says will will easily meet the government's offshore wind target of 6.5GW by 2020.
The TSO is involved in the COBRAcable and NordLink European interconnector projects. The investment decisions have already taken for both the interconnectors and TenneT is expanding the cross-border capacity between the Netherlands and Germany at two locations.
TenneT CFO Otto Jager said: "TenneT is financially well-equipped to tackle the next ten years. However, a point of attention remains. The rapid changes in the energy sector, as well as the energy transition and the associated extensive investment programme, require a robust regulatory regime for TenneT.
"Such a regime should strike the right balance between security of supply and an acceptable cost level. In order to maintain the high reliability level of our grid, investments must be supported by appropriate tariff structures, as is currently the case in Germany."
Areva will no longer be concerned with working across the entire nuclear power sector and will focus on supplying nuclear reactor components.
New chief executive Philippe Knoche told the FT that the company willno longer lead high profile new build projects and is most likely from hereon in to be focusing on the company’s expertise in developing core nuclear steam supply systems.
Philippe Knoche also said part of the new strategy involved “clearly to work with EDF” or other groups to focus on supplying reactor components.
Areva reported a €4.8bn loss for 2014 last month, prompting the Socialist government of President FranÃ§ois Hollande to call for it to forge closer ties with EDF, its main customer which operates France’s 56 nuclear reactors and which is also state-controlled.
Knoche said recent results will have no impact on commitment to its key projects, saying that there were “positive signs” that the Finnish project was getting back on track. He added that he had no intention of pulling out of the Hinkley Point reactor project in the UK of which Areva has a 10 per cent stake.
The company is delivering nuclear steam supply systems and control systems for the reactor, which is much more in line with the kind of programmes they want to do in the future.
“Our commitment to Hinkley cannot be questioned in any manner,” he said.
Overall though, Mr Knoche’s comments represent a lowering of ambitions for a group that since the early 2000s attempted to become a participant across all areas of the nuclear industry, from uranium mining to building big new power plants.
The big loss last year reflected severe cost overruns at its long-delayed Finnish reactor, where it has played a leading role.
Mr Knoche said new-build projects represented “most of our debt and losses” over the past decade, but only 8 per cent of revenue. He said he wanted the company to “focus more on its core business” in the nuclear supply chain as a result.
Part of the new strategy will be to work more closely with EDF, letting the big utility take the lead on large new-build projects.
Mr Knoche said that Areva was also caught out by the downturn in nuclear demand following the Fukushima disaster in Japan in 2011, saying, “Internally we should have reacted faster.”
The company has now promised annual cost savings of €1bn over the next three years as well as lower capital spending. He acknowledged that some kind of a capital raising was also on the table. Analysts estimate that the company has a hole of about €2bn.
Mr Knoche insisted that the company had a solid future despite its troubles. Areva expects to win a significant part of EDF’s €55bn budget to extend the lifespan of the utility’s French reactors. It also has a large installed base, servicing more than 350 of the 440 operating reactors worldwide.
Fortum has followed up the sale of its Finnish grid business two years ago by offloading it Swedish grid business to a group of Swedish pension funds and Canada’s Borealis.
The $6.9bn (€6.6bn) deal follows a similar 2013 sale of its Finnish utility for €2.55bn as it completes it move out of power distribution, and looks to focus on its core business.
In common with other European utilities, Fortum is attempting to reduce debt.
“After the divestment of its distribution businesses Fortum will concentrate on the growth and development of our core businesses, based on our competences: CO2-free hydro and nuclear power generation and efficient combined heat and power production,” said Timo Karttinen, interim chief executive.
FT reports that Fortum is looking to eastern Europe and Russia in particular for future growth. It is one of the European companies most exposed to Russia and in December signed deals on nuclear and hydroelectric power with state-backed companies.
Canada’s Borealis holds a 50 per cent stake in the buyer consortium alongside the Swedish national pension funds AP1 and AP3 as well as Folksam, a local mutual insurance business.
The Brazilian Electricity Regulatory Agency (Aneel), the entity that regulates the Brazilian energy market, is expected to reject requests from the firm Gerdau about two hydropower projects.
Online news provider Estadao explained that Gerdau had required Aneel to modify the financial balance and extend the contracts.
Gerdau bought to Enterpa Energia the stations of Sao Joao (with a potential of 60 MW) and Cachoeirinha (45 MW) in 2008. However, work on the projects has not advanced because of troubles with the environmental licenses.
The board of Eskom suspended its chief executive, Tshediso Matona and three other senior officials on Thursday as it launched an independent inquiry into ongoing poor performance.
South Africa’s struggling state power utility has been unable to manage a crumbling infrastructure. The move comes as frequent power outages hit businesses and households across the country, severely affecting an already ailing economy and causing the government to slash its growth forecasts for the year. The power crisis, which has deepened this year, is also blamed for hitting investment in industry and damaging the reputation of the country.
Mr Matona who was only appointed to the post in August as the utility’s woes worsened. Zethembe Khoza, a non-executive member of Eskom’s board, takes over as interim chief executive. The group’s finance director is among the other executives suspended.
Zola Tsotsi, Eskom’s chairman, said the suspensions were to ensure that the inquiry — expected to last three months — was as “transparent and “uninhibited as possible”.
“We have asked the executives to step down in the interests of achieving results,” he said. “We hope to come out of this with a better grasp of all the challenges facing the business, and most importantly, with solutions.”
Eskom has been forced to implement almost daily scheduled outages as its ageing, insufficiently maintained infrastructure breaks down with increasing frequency. It is building two big coal-fired power stations — Medupi and Kusile — that will add 9,600 MW to the grid.