• Combustion Industry News

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      Patrick Lavery

      Combustion Industry News Editor

Magritte Group release recommendations on Europe’s energy future for European Council’s consideration

The CEOs of 11 of Europe’s largest utilities (forming the ‘Magritte Group’) issued a joint statement last week ahead of the European Council’s meeting to discuss the European Commission’s 2030 energy and climate package. The companies – CEZ Group, Enel, Eni, E.ON, Fortum, GasNatural Fenosa, GasTerra, GDF Suez, Iberdrola, OMV and RWE – provided recommendations to combat the problems facing the energy sector and consumers in Europe, including security of supply, increasing CO2 emissions, a lack of incentives for capital investment, declining competitiveness and high power bills for industrial and residential consumers.

The recommendations include the large and difficult undertaking of reaching a global climate partnership agreement with Europe’s competitors, as well as pragmatic measures such as restoring the Emissions Trading System as a flagship climate and energy policy, and adjusting public financial support for renewable energy generation.  Also recommended is the elimination from domestic and industrial electricity bills all charges not related to production, transport and distribution of electricity (for instance national taxes and surcharges for social and environmental policies). 

Despite public relations sensitivities, the document also expresses a clear desire for easier importation of unconventional gas supplies from North America and the expansion of fracking operations within Europe to replace coal-firing and reduce carbon emissions. Regarding public financial support for renewable energies, the Magritte Group urges no retroactive decisions on the part of national governments (as is being planned in Spain for one), as well as linking subsidies for renewable energies to market prices to factor in falling costs of its production. It also urges support for R&D of less mature technologies such as tidal and wave power rather than subsidies. Amongst the broader R&D recommendations are focuses on carbon capture and storage, shale gas, distribution grid modernisation and energy storage technologies. The group calls additionally for one carbon reduction goal for 2030, rather than a carbon reduction goal and a renewable energy quota goal.

Alternative group of companies urges European Council to push towards more renewables

The Magritte Group’s recommendations have been countered somewhat by a separate statement from another group of European utilities and companies in the power generation sector, including Alstom, Andritz, Acciona, DONG Energy and Vestas, amongst numerous others (some not in the power generation sector). The group calls for an ambitious renewable energy production target with binding national targets, arguing they will aid the transition to a sustainable economy and provide a boost to economic growth. A 2030 target for renewable energy will, the statement says, reduce costs of uncertainty to businesses and help secure funding for investment, at the same time creating jobs and putting the EU at the forefront of renewable technologies. Its thrust is supported by a recent Greenpeace report which claims that major European utilities would be much better off financially if they had invested more in renewable energies over the past decade, pointing to the profitability of the renewable energy investments that were made, and the financial difficulties faced with conventional baseload plants. A little ironically, the Greenpeace report uses the examples of renewable energy profits made by E.ON, Enel and Iberdrola, who are part of the Magritte Group.

US energy regulator asks electricity transmission businesses for action against sniper attacks; commentators doubt risk priority

Following the mysterious and still unresolved sniper attack on the Metcalf substation in California last year, recent coverage by the Wall Street Journal, and subsequent intervention by some US senators, the US Federal Energy Regulatory Commission (FERC) has requested transmission companies identify critical facilities and implement security plans against such attacks. At the same time, FERC has asked the National American Electric Reliability Corporation to develop new security standard, to be drafted within 90 days. However, a Reuters opinion piece has suggested that rather than a coordinated series of sniper attacks, more likely sources of widespread grid interruption would be a geomagnetic storm, the detonation of a nuclear weapon, or a large cyber-attack, and that the best protection against sniper attacks would be increased training of grid controllers and substation operators, such that there was a smooth handling of a small number of sub-stations being brought down. Hopefully time will not tell.

UK budget includes £60 million for carbon capture and storage innovation

The UK budget was announced last week, and included an allocation of £60 million (€72 million/$US 99 million) to fund innovation in the field of carbon capture and storage. More detail is expected in the coming weeks. Along with the funding announcement, the UK Treasurer stated the government’s intention to halt carbon tax rises after 2016.

Vattenfall sells Vattenfall Europe PowerConsult to Palero Capital

Swedish state-owned utility Vattenfall has sold its subsidiary Vattenfall Europe PowerConsult (VPC) to private equity firm Palero Capital for an undisclosed figure, as its strategy of consolidation amid difficult market conditions continues. VPC is an engineering and laboratory services company with offices in Germany and Serbia, employing 535 people across it and its subsidiaries. Palero Capital specialises in buying subsidiaries of large companies, and aims to continue and grow VPC.

Fortum Power and Heat to replace Naantali power plant in Finland

February saw an announcement by Fortum Power and Heat that it will replace a 50-year old coal-fired power plant in Naantali, in the south-west of Finland, with a €260 million ($US 358 million) multi-fuel combined heat and power plant. It is to have capacities to produce 142 MW of electricity and 244 MW of heat, and will be capable of firing coal, wood and recycled waste, and the plan is for it to be able to fire biomass exclusively if desired. Furthermore, it is hoped that most biomass will be able to be sourced in a 150 km radius from the plant. Construction will begin in 2014 and is expected to be complete by 2017.

Hitachi-led consortium wins PGE contract for south-eastern Poland plant

A Hitachi-led consortium including MHPS Europe, Tecnicas Reunidas and Budimex (the Polish arm of Ferrovial) has won a 3.25 billion Zloty (€774 million/$US 1.07 billion) contract to build a 450 MW unit at PGE’s Turow coal-fired power plant in the south-east of Poland. The unit will replace aging current capacity, and is due to be in construction for 4 years and 8 months.

Kenyan government seeking investors for 1 GW coal-fired plant

The Kenyan government is seeking investors for a planned 900-1,000 MW coal-fired power plant, according to Xinhua. The plan is for investors to build and operate the plant and enter into a contractual engagement to sell electricity to the Kenyan government, similar to two other projects the Kenyan government opened for investment in October last year. Chinese company Fenxi has concessions for two major coal deposits that it intends to mine; Kenya wishes to exploit its own coal reserves and reduce coal imports.

Panasonic declares it will offer air pollution compensation to workers moving to China

As the Financial Times has reported, Japanese company Panasonic has recently become the first multinational company to explicitly offer to employees moving to China special compensation in recognition of the health effects resulting from the extreme levels of air pollution found in many Chinese cities. Until now, it has been common for multinational companies to offer ‘hardship’ payments for workers moving to China, but air pollution-related health impacts were not referred to explicitly. But awareness of the problem seems to have prompted Panasonic to make the compensation explicit. Only three in 74 Chinese cities comply with ‘safe’ national air pollution guideline levels.