News item | 2011-08-22 | 16:30 PM

Energy News Europe - week 33, 2011

Czech Republic

Country to give away some emission credits free
Ceske Noviny, 2011-08-18
The Czech Republic will try to secure an exemption from the EU rules and distribute some emission permits free even after 2013, according to Reuters. Initially, the government intended to sell all the permits but Environment, Industry and Finance Ministries changed their mind and have informally agreed that they will request the exemption. Another source says that if the plan is approved, Czech electricity generating firms will get 108mn free permits in 2013-2020, gradually falling from 27mn in 2013 to zero in 2020.
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Denmark

Denmark: Major investments are putting Dong Energy under financial pressure
Berlingske Tidende, 2011-08-19
Danish power company Dong Energy has made major investments in the 2006-2010 period resulting in investments exceeding profits by DKK 13bn (EUR 1.74bn USD 2.49bn). It has invested another DKK 4bn in the first half of 2011 alone. Competitors like Swedish Vattenfall and Finnish Fortum have been better at balancing investments and operating profits, with Vattenfall balancing the two and Fortum seeing profits exceed investments by DKK 17bn.

To finance investments Dong has taken major loans, resulting in a doubling of interest charges from DKK 1.3bn in 2006 to DKK 2.7bn in 2010. In January Dong raised DKK 5.2bn in hybrid capital by issuing bonds at an interest of 7.75%. This capital was used to cover previous hybrid loans and has lead to a DKK 200mn increase in annual interest costs.
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Europe

Smart grid market forecast to reach EUR 6.8bn by 2016
Enerzine, 2011-08-17
According to the report from consulting firm GTM Research entitled 'The Smart Grid in Europe 2012', the total market for smart grid technology in Europe is forecast to reach EUR 3.10bn (USD 4.47bn) in 2012. This is expected to grow by 120% to reach EUR 6.80bn (USD 9.81bn) in 2016.

Report author Geert-Jan van der Zanden said that smart grid development is currently driven by advances in technology, progressive policies and electricity needs. He added that integrated deployment is expected in Europe to 2016, which will lead to the development of the smart grid market segments of automated distribution, integration of renewable energy, meters, electric vehicles and IT systems specific to the field of electricity. Consumer engagement is the key variable in the commercial success of smart grids in Europe, highlighted van der Zanden.
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Germany

RWE Effizienz to extend range of smart home products
Frankfurter Allgemeine Zeitung, 2011-08-12
The German RWE Group's RWE Effizienz, which offers energy-saving solutions, launched its energy management system Smarthome in March 2011, added motion and smoke detectors as well as dimmable adapters and window contacts to its Smarthome product programme in June 2011, and will extend the latter product programme by launching in the fall of 2011 products such as flush-mounted light switches, in-wall dimmers and flush-mounted transmitters that interact via radio technology.

RWE estimates the domestic customer potential at about 2mn households, and intends to equip several hundred thousand households in the medium term, according to Ingo Alpheus, who heads RWE Effizienz. The Experton Group expects the share of households with home automation systems to rise from 0.1% to 4% by 2015 due to increasing energy prices and people's desire for comfort and safety.

Within the scope of its Smarthome project, RWE is collaborating with Microsoft, and offering electricity tariffs with prices depending on the time of day. A Smarthome package retails from EUR 400 (USD 571.20) to EUR 800. A four-person household with annual energy cost of about EUR 1,900 can save 10% to up to 30%, mainly thanks to intelligent control of heating systems that is radiators.
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Brandenburg warning on Carbon Capture
Frankfurter Allgemeine Zeitung, 2011-08-16
Brandenburg's premier Matthias Platzeck said that the eastern German state will not pursue tests of carbon capture and storage (CCS), if Schleswig-Holstein and Lower Saxony forbid underground storage of carbon dioxide in their territories. Such a refusal is possible according to the government's draft for a CCS law.
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Germany asks eight energy firms to help fight power shortage in winter
Press Release, 2011-08-16
Germany's network agency Bundesnetzagentur has contacted eight Austrian energy companies, including Verbund and Wien Energie, asking them whether they would be able to make deliveries during the winter of 2011/ 2012. It said that the southern parts of the country could face electricity shortages if conditions are extreme. This is because of Germany's decision to decommission nuclear power plants.

The agency wants the electricity firms to answer quickly. If the Austrian providers cannot help Germany will be forced to keep the nuclear power facilities operating for longer. Germany's request has had an impact as energy firms in Austria do not tend to have surplus capacities in winter. In fact, Austria also imports power from November to spring. One solution could be for Austrian energy firms to start using gas power stations more and export the energy to Germany. Due to high gas prices these are currently not used much.
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Italy

Increase in taxes for energy sector should raise EUR 3.6bn
Il Sole 24 Ore, 2011-08-17
It has been estimated that the increase of the so-called Robin Hood tax on the energy sector in Italy from 6.5% to 10.5% in 2012-2014 will raise EUR 3.6bn (USD 5.18bn) for the Italian Treasury. The tax has also been extended to include energy transmission and distribution companies.

The government has predicted that the tax will cost approximately EUR 90mn per year for Terna, the operator of Italy's national electricity grid, and around EUR 220mn per year for Italian gas grid operator Snam Rete Gas. Snam Rete Gas, however, estimates an impact of around EUR 150mn per year on its accounts for 2011, 2012 and 2013.

Terna forecasts that its net profits will be hit by around EUR 70mn annually for the the three years. Analysts also predicts a drop in profits of around EUR 15mn-EUR 20mn for Italian utilities Edison and A2A, and a fall of approximately EUR 15mn for Acea. The move will have the effect of pushing down dividends by as much as an estimated 14%-16% for Terna and 12%-13% for Snam Rete Gas. Alternatively, companies may choose to cut their investment programmes. In response to the government's announcement of the tax increase, shares in Terna, Snam Rete Gas and Enel fell by 13.6%, 9.9% and 4.2% respectively on 16 August 2011.
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Netherlands

Increased electricity production capacity by 2018
De Volkskrant, 2011-08-12
In the supply monitoring report of Dutch electricity grid operator TenneT for 2010 to 2026, TenneT says that the Netherlands will increase its electricity production capacity by 50% by 2018, despite the country having sufficient electricity to meet domestic demand. This comes as the Netherlands is increasingly exporting its electricity to countries such as Germany, the UK, France and Norway.

Until recently, the Netherlands relied on imports of electricity for 20% of its supply, however, the country is now self-sufficient and a production increase will mean Dutch power producers take a more dominant role in the European energy market. Dutch industry is especially profiting as the electricity network in north-western Europe becomes more interconnected.
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Poland

New CO2 law to significantly increase costs of producers
Rzeczpospolita, 2011-08-14
Once Poland introduces the new CO2 emission law in 2013, Polish energy companies will have to spend more than they had expected on CO2 rights. For example, it is estimated that PGE, which counted on being able not to pay for 70% of its CO2 emissions and with the new law will have to pay for some 55-57% of them, will see its costs increase by PLN 1bn (EUR 240.59mn USD 343.56mn) to PLN about 1.8bn, while Tauron will have to increase its spending on CO2 emissions to PLN 700mn, and Enea will have to pay PLN 200mn more.

Extra costs could be compensated by an increase of energy prices by over 20% which would very likely have a negative effect on the market demand.
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Romania

China Nuclear PowerEngineering to invest in Cernavoda project?
Wall Street, 2011-08-15
China Nuclear PowerEngineering is said to be interested in investing in the project for the construction of a third and fourth reactors at Cernavoda nuclear power station in Romania, according to the Romanian Economy Minister Ion Ariton. The company is part of China Guangdong Nuclear Power Holding.
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Spain

More thermal solar energy generation capacity planned to 2014
Energias Renovables, 2011-08-17
Spain could have the capacity to meet all its electricity demand from thermal solar energy, according to Protermosolar, the industry association. Currently, there are 21 thermal solar power facilities operational in Spain, occupying just 3,002 hectares of space (0.006% of the country).

A total of 61 thermal solar power stations have construction licences, so in addition to the 21 which are operational with a capacity of 852.4 MW, there are 27 which are under construction with a capacity of 1,302.5 MW and 13 which are pre-assigned and still require construction to start, with a capacity of 370.4 MW. Once all these are grid-connected in 2014, there will be 2,525.30 MW of thermal solar generation capacity in the country using six different types of technology. They will occupy 112 km2 of space (0.02% of the country) and will generate 7,298.25 GWh/year of energy. In total, they will avoid CO2 emissions of 3.4mn tonnes
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Sweden

Energy consumption to rise by 2013
Svenska Dagbladet, 2011-08-17
Swedish energy consumption is set to rise in the next couple of years, as the industry and transport sectors increase their use, the Swedish Energy Authority (Energimyndigheten) has forecast. Energy consumption is expected to rise by 5% in the industry between 2010 and 2013. The transport sector's consumption is expected to rise by 2 TWh to 97 TWh during the same period. Consumption is expected to remain unchanged in the housing and service sectors.
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United Kingdom

National grid cannot cope with forecast wind energy capacity
Telegraph (UK), 2011-08-13
The national grid is not capable of handling the amount of wind power the government estimates it will carry in the future, the Oxford Institute for Energy Studies has reported. Researches claim the grid can handle no more than a third of its capacity from wind energy, some 28 gigawatts.

A recent government study found about 58 gigawatts of wind capacity could be added to the grid by 2030, with the overall grid capacity put at 80 gigawatts. Researches said an over capacity of wind power will result in an increase of turbine owners being paid to keep power off the system. Researchers said the intermittency of wind - sometimes there will be too little or too much wind - has not been fully factored into government calculations.
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Disclaimer: The newsletter "Energy News Europe" contains an overview of energy-related news published in European media. It does not represent the views of Vattenfall or its management.