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Germany fears Vattenfall asset sale will leave clean-up costs to taxpayer

March 29th, 2016

A deal to sell lignite coal mining and generation assets in Germany may see the country’s citizens footing the bill.

Swedish state-owned Vattenfall is examining bids for its coal-fired power facilities in the country, and because of the multibillion clean-up costs involved may in effect be paying bidders to take the assets off its hands.

Two Czech suitors, Energeticky a Prumyslovy Holding, orEPH, and Czech Coal Group, said they submitted binding bids to Vattenfall on March 16th. The bids could trump a proposal from a rival German suitor, the municipality-owned utility Steag, according to people close to the matter.

Because of falling energy prices and the switch to renewables in Germany, the acquirers of the assets will also be charged with shutting them and the heavy financial burdens involved have prompted all the bidders to ask Vattenfall to provide the assets with billions of euros in cash for the sale to go through, these people said.
Janschwalde coal-fired power plant
 Because it is unclear whether the unit’s current cash pile of slightly more than €1 billion ($1.18 billion) will suffice, the move could effectively mean Vattenfall would be paying a buyer to take the operations and related liabilities off its hands.

The Wall Street Journal reported that some politicians voiced concern that the bidder with the most attractive conditions might not be the best one for taxpayers, because a low cash injection from Vattenfall means taxpayers could end up footing the bill for shutting down the mines and plants.

“If investors like EPH are buying [Vattenfall’s German lignite operations], I see the risk that they won’t take care of the costs for shutting them down,” said Annalena Baerbock, a member of the Green party in the German parliament.

“Vattenfall mustn’t be able to rake in billions in profits and leave the burden with taxpayers,“ said Klaus-Peter Schulze, member of the German parliament for the ruling CDU party.

I Squared purchases Viridian for $1.1bn

March 29th, 2016

I Squared Capital has purchased the Irish power company Viridian for $1.1bn in a deal which could see the US infrastructure fund eventually entering the UK market.

The fund which owns renewable energy assets in the US and India, and Viridian, an integrated utility spanning the Republic of Ireland and Northern Ireland, will announce the deal on Tuesday.

Viridian provides 20 per cent of domestic energy supply across Ireland, and owns gas-fired power stations and wind farms.

A partner at I Squared, Gautam Bhandari, told the Financial Times the company would actively consider entering the UK market, challenging the existing ‘Big 6.’

“It’s a buyer’s market at the moment. There is a need for new contenders in the UK power market, where customers are looking for solutions other than the Big Six.”

I Squared will also consider buying energy generation assets in the UK and has an additional €1bn to spend on further deals.

Last year Viridian made a pre-tax loss of £13m on sales of £1.5bn. Although the company made an operating profit of £112m, it was pushed into the red by £152m of financing costs.

Mr Bhandari said I Squared will pay down £145m in debt once the deal completes.

EDF Renewables tops wind power table in the US

March 24th, 2016

EDF Renewables, a subsidiary of EDF Energies Nouvelles was the joint top performing wind power developer in the US last year.

The company took top market share for the development of new wind energy capacity additions in 2015, having developed 1,055.4 MW of installed capacity across five states giving them a 12 per cent market share.
EDF Renewables
Tristan Grimbert, CEO and President of EDF Renewable Energy said, “EDF Group, as part of its ambition to be the worldwide champion for low-carbon growth in the electricity sector, expects to double the group’s installed capacity from renewable energy sources by 2030. EDF EN, the entity charged with renewable development globally, will largely contribute to this goal through EDF RE’s North America market position.”

The EDF RE capacity additions include projects in some of the top states for wind power production according to American Wind Energy Association’s fourth quarter 2015 report, (Kansas, Texas and Iowa) and comprised eight projects, ranging from 20 MW to 250 MW in capacity.

EDF RE is also leading the way in the commercial and industrial (C&I) space with five wind deals executed tallying 543 MW with Fortune 500 companies, making the company number one in terms of customer relationships serving the corporate purchaser market.

EDF final investment decision to be announced in May

March 23rd, 2016

EDF’s final investment decision on Hinkley Point will now take place in May according to a French minister.

French economy minister Emmanuel Macron says EDF will now make a final investment decision on the Hinkley Point C nuclear reactor in early May.
A decision on the £18bn nuclear plant had widely been expected on 30 March but has been subject to delays as EDF, which is 85% French state owned, has yet to outline how it will fund the project.

Speaking before the French parliament's Economic Affairs Committee, Mr Macron also said it was unlikely EDF would choose not to take part in the project.

"The principal nuclear project in the developed world is Hinkley Point," Mr Macron said.

"Can we legitimately choose not to take part in the largest nuclear project in the developed world? For my part, I don't think so."

Meanwhile the chief executive of EDF Energy told a parliamentary body in the UK that the project will definitely go ahead.

"Clearly and categorically, Hinkley Point C will go ahead," de Rivaz said speaking in front of parliament's energy and climate change committee.

World Energy Council warns of global power generation water crisis

March 22nd, 2016

The World Energy Council is warning that without “integrated planning” on water consumption in power plants, “we will start to see the effects of water scarcity on energy supplies in the very near future”.

The council’s secretary-general Christoph Frei said that “the energy-water-food nexus poses a systemic risk which could impact the robustness of the energy supply and demand over many years to come.

“Power plants across the world could be affected by changes in precipitation patterns, which are combining with increasing competition between water users to adversely affect the resilience of energy services.”World Energy Council secretary-general Christoph Frei

To back up its warnings, the WEC sites a 2016 research paper in the journal Nature that predicts that 98 per cent of global electric power generation will be affected by a shortfall of available water by 2030.

At last week’s Asia-Pacific Energy Leaders’ Summit in New Zealand, the WEC presented its own report, ‘The road to resilience – managing the risks of the energy-water-food nexus’, in which it calls for immediate action to secure resilient energy infrastructure.

The report makes five recommendations: Improve understanding of the water footprint of energy technologies in order to mitigate the risks of stranded assets; Account for the ‘price’ of water, particularly in areas of water stress; Consider a wider range of financial and insurance instruments to hedge short term risks such as adverse weather incidents and associated electricity price volatility; Give investors the confidence to invest by providing them a full risk assessment that includes different climate and hydrological scenarios in financial analyses; Provide a reliable and transparent regulatory and legal framework that takes into account water issues and competing stakeholders’ interest.

Frei said: “Clear co-ordination and integrated planning needs to take place now, or we will start to see the effects of water scarcity on energy supplies in the very near future. Assuming a water price during project planning is one way to trigger the right signals.

“If we are to counter the problems of water access, then cross-border co-operation is vital. We should be taking full advantage of the 261 international trans-boundary basins that cover 45 per cent of the earth’s land surface. Energy resilience can only be achieved by moving from individual to joint efforts.”

To read the full report click here

Albion develops two £5m hydropower projects in UK

March 21st, 2016

Albion Community Power is developing two new hydropower schemes in Scotland at a cost of almost £5m.

The two run-of-river schemes are in the Scottish Highlands and will generate approximately 2.8 GWh of electricity per year.

Construction of both projects is already underway and they are due to be commissioned by the end of the yeVolker Beckers, Albion Community Powerar.

They are the third and fourth community-scale Scottish hydropower projects that Albion Community Power is developing. Construction of the first two schemes is in advanced stages and both are expected to be fully commissioned by the end of the third quarter of the year.

Albion builds and operates community-scale energy projects across the UK and is financially backed by the UK Green Investment Bank, Strathclyde Pension Fund and Greater Manchester Pension Fund.

It chairman is former RWE npower boss Volker Beckers, who said that hydropower “has a proven track record of generating strong and stable returns for investors”.

“Institutional demand for community-scale renewable energy continues to grow and ACP is well placed to benefit from this trend,” he added. 

Ed Northam, head of investment banking at the Green Investment Bank, said that community-scale projects “improve the efficiency of the network by generating electricity close to where customers need it”.

He added that decentralised schemes “are an important part of the energy mix and have a significant role to play in increasing security of supply, reducing costs and cutting greenhouse gas emissions”.

Toshiba considers writedown of nuclear business

March 18th, 2016

Japan's Toshiba is considering a $1.7bn writedown for its nuclear business creating speculation among investors that the value and goodwill for the unit was overstated.

The Asahi newspaper reported that the company’s Westinghouse unit is potentially set for a writedown given the company’s larger problems as chiefs look to draw a line in the sand following a $1.3bn accounting scandal in 2015.
Toshiba Westinghouse
  The electronics conglomerate also confirmed a report that US authorities are probing accounting at its US units as a result of the book keeping scandal.

  Westinghouse nuclear power subsidiary denied that its finances were under investigation.

  While a stress test on its nuclear business last quarter had shown that there was no need for a writedown, Toshiba said its lower credit ratings and its weaker ability to procure funds had prompted a new test.

Nuclear power providers usually fund new plants through large-scale equity and bond issuance, making their creditworthiness extremely important.

"We cannot gain lost trust and corporate value in just a day. We don't know how long it will take," Chief Executive Masashi Muromachi told a news conference.

French government confirms financial backing for Hinkley Point C

March 18th, 2016

The French government has promised a financial bailout for EDF so that it can proceed with the £18bn plan to build the Hinkley Point C nuclear power plant.

France’s economics minister, Emmanuel Macron said not going ahead with the project would be a mistake and added that the government would do what is required financially to ensure the plant is built.Emmanuel Macron

“If there is a need to recapitalise (EDF), we will,” he said during a visit to a nuclear power station at Civaux in midwestern France. “If there needs to be a further waiver of dividends (from EDF to government), we will.”

Flanked by Jean-Bernard Lévy, the EDF chief executive under fire from French unions and his own former finance director, Macron added: “If you believe in nuclear, you cannot say that you will not participate in the biggest nuclear project in the world. Not doing Hinkley Point would be a mistake.”

Tanzania’s first gas-fired power plant under construction

March 18th, 2016

The 240 MW Kinyerezi natural gas-fired combined cycle power plant in Tanzania, the country’s first such facility.

Japan’s Sumitomo won the engineering, procurement and construction (EPC) contract awarded by the state-run Tanzania Electric Supply (Tanesco).
The $312.6m Kinyerezi facility is being developed about 30km southwest of the CAPITAL Dar es Salaam.

Featuring six Mitsubishi Hitachi Power Systems (MHPS)-built H-25 gas turbines and generators, the power plant is expected to generate electricity required to power nearly 20 per cent of the country's total power needs.

The plant is particularly necessary with the country’s hydroelectric power sector in decline.

Toshiba Plant Systems & Services will be responsible for the supply of heat recovery boilers, steam turbines and other equipment. It will also undertake civil and installation works, as well as coordinate technical matters.

Planned to be commissioned in early 2018, the power plant will be handed over to Tanesco in September 2018 and is being financed by Sumitomo Mitsui Banking (SMBC) and Japan Bank for International.

The project is part of the "Partnership for Quality Infrastructure" initiative, which is being supported by the Japanese government with funding, insurance and technology.

Gore urges Philippines to drop coal power for renewables

March 16th, 2016

Climate change activist and former US Vice President Al Gore says that the Philippines should end its pro-coal-fired power strategy, telling a gathering in Manila, "The age of renewable energy is beginning."

Mr Gore told the gathering of climate action leaders that with the costs of renewable energies consistently going down, the country needed to develop a new energy infrastructure.
Al Gore
"We have the solutions at hand to address climate change. Shift to renewable energy," Gore urged Monday. His message comes despite a recent decision by the Philippines government to approve the construction of 25 new coal-fired power plants.

"Climate change is causing massive disruption, conflict, hunger, infrastructure destruction and is affecting the global economy. It is also threatening political stability in many regions. That's why we need to act and find solutions that work," he said, while adding that the change in direction could only improve the country’s energy security in the long term.

The Philippines’ president Benigno Aquino stated in January that building more coal-fired power plants is necessary to meet the nation’s growing energy needs.

The Philippines needs around 13,000 MW of power generating capacity by 2030, with about 8,500 of those expected to come from coal. Consumption of coal by the Philippines rose 27 per cent between 2012 and 2014.

In 2014, about 74 percent of the Philippines' electricity came from fossil fuels, while geothermal and hydropower accounted for about 13 per cent and 12 per cent of electrical production, respectively, with solar, wind and biomass providing only one percent.

Climate observers say that there is too much bureaucratic obstacles to the expansion of renewable energy at this time, as well as uncertain project financing conditions such as limits to foreign investment and ownership; and infrastructure and grid constraints.

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