Coal burns 5 big EU utilities
After backing outdated business models that rely on coal, the share values of Europe’s biggest utilities dropped dramatically, reports EurActiv.com.
The Carbon Tracker Initiative has stated that the five largest publicly-listed utilities in the EU lost 100 billion Euros, which is more than a third of their stock market value between 2008 and 2013.
The utilities are Germany’s E.ON, France’s GDF Suez, Electricite de France and Italy’s Enel. These five companies provide almost 60 percent of Europe’s electricity. They have all been downgraded by Moody’s credit rating agency, according to the authors of “Coal: Caught in the EU Utility Death Spiral.”
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The report also states that new coal plants will fail to generate positive cash flows, even in the most best-case scenario, due to changing market conditions for utilities.
These conditions include reliance on coal, renewable policy, technology costs, flat electricity demand and changing customer behavior.
Between 2008 and 2013, the use of coal as a fuel dropped 4.7 percent in total and 4.2 percent in electricity generation. In the same period, the five utilities increased their reliance on coal by 9 percent.
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EU coal-fired generation fell 4.2 percent in the same period of time. Still, the largest utilities maintained significant coal capacity. RWE led this trend by having more than half of its generation capacity based on coal at the end of 2013.
EurActiv.com asked all five utilities for comment on the report, which was published on the day the Norwegian parliament voted to divest its $900 billion sovereign wealth fund from coal. The company’s positions are placed below, provided courtesy of EurActiv.com.
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E.ON said, "E.ON has so far invested almost €10 billion into renewable energies since 2007 and is one of the leading companies in wind-energy world-wide. As a response to fundamental market changes – also triggered by climate change – E.ON announced end of last year a fundamental shift in strategy: The company will split and E.ON will focus on renewables, distribution and customer solutions.
"The spun-off company Uniper will focus on upstream, global commodities and power generation. The future E.ON will be a driver of a low emission environment. The split will be completed next year but already today we are preparing the future set-up in a comprehensive organisational reshuffle. We are confident that investors will recognise our efforts and see their investment in E.ON as a chance to support this fundamental transformation towards renewable energies.
"In 2014 we continued to reduce our total carbon emissions (96 Mio metric tons) – 16 percent less than 2013 - as well as our specific carbon intensity per Megawatt hour (0,43 CO2 in metric tons emitted for each MWh).
"In our view, a carbon ranking based on absolute figures does not help. Specific carbon intensity is a better basis for comparing companies’ efforts in reducing their carbon exposure. Otherwise bigger companies will always rank high in those studies."
Brian Ricketts, secretary general of EuraCoal, the European Association for Coal and Lignite, said, "It is always interesting to read reports from those well-funded organisations who oppose the use of the very fossil fuels upon which our society has been built.
"It is certainly true that coal companies are bleeding. But forgive me for pointing out that the whole energy industry is bleeding. Shares in one of the world’s biggest solar PV companies, Hanergy, have just collapsed by 50 percent. Faced with the sudden fall in oil prices, the oil and gas industry is now slashing its investment programmes. Europe’s largest energy supplier, Russia, is on her knees. The French nuclear industry is now back under the absolute control of the state, after reporting huge losses.
"None of this news should be welcome by anyone; it points to instability, uncertainty and risk. Given this situation, the energy sector now looks to invest only in projects that come with government-backed guarantees: renewables, transmission and distribution, reserve capacity and interconnectors, for example. The dream of a free and liberalised market is fading, to be replaced by a return to central planning.
"EURACOAL itself calls for realism, respect and responsibility during the energy transition. We believe that every energy source plays an important role in society. The messages from too many quarters appear extreme, inciting and unhelpful in a civilised democracy."
Ofwat allows retailers to raise prices from April
Retailers can recover a portion of excess bad debt by temporarily increasing prices from April 2022, according to an Ofwat statement.
The regulator confirmed its view that levels of bad debt costs across the business retail market are exceeding 2% of non-household revenue, thereby allowing "a temporary increase" in the maximum prices. Adjustments to price caps will apply for a minimum of two years to reduce the step changes in price that customers might experience.
Measures introduced since March 2020 to contain the spread of Covid-19 could lead to retailers facing higher levels of customer bad debt. Retailers’ abilities to respond to this are expected to be constrained by Ofwat strengthening protections for non-household customers during Covid-19 and the presence of price caps.
In April last year, Ofwat committed to provide additional regulatory protection if bad debt costs across the market exceeded 2% of non-household revenue.
Georgina Mills, Business Retail Market Director at Ofwat said: “These decisions aim to protect the interests of non-household customers in the short and longer term, including from the risk of systemic Retailer failure as the business retail market continues to feel the impacts of COVID-19. By implementing market-wide adjustments to price caps, we aim to minimise any additional costs for customers in the shorter term by promoting efficiency and supporting competition.”
There are also three areas where Ofwat has not reached definitive conclusions and is seeking further evidence and views from stakeholders:
- Pooling excess bad debt costs – Ofwat proposes that the recovery of excess bad debt costs is pooled across all non-household customers, via a uniform uplift to price caps.
- Keeping open the option of not pursuing a true up – For example if outturn bad debt costs are not materially higher than the 2% threshold.
- Undertaking the true up – If a 'true up' is required, Ofwat has set out how it expects this to work in practice.
Further consultation on the proposed adjustments to REC price caps can be expected by December.
"While it’s great that regulators are helping the industry deal with bad debt in the wake of the pandemic, raising prices only treats the symptoms. Instead, water companies should head upstream, using customer data to identify and rectify the causes of bad debt, stop it at source and help prevent it from occurring in the first place," she said.
"While recouping costs is a must, water companies shouldn’t just rely on the regulator. Data can help companies segment customers, identify and assist customers that are struggling financially, avoiding penalising the entire customer in tackling the cause of the issue."
United Utilities picks up pipeline award
A race-against-time plumbing job to connect four huge water pipes into the large Haweswater Aqueduct in Cumbria saw United Utilities awarded Utility Project of the Year by Pipeline Industries Guild.
The Hallbank project, near Kendal, was completed within a tight eight-day deadline, in a storm and during the second COVID lockdown last November – and with three hours to spare. Principal construction manager John Dawson said the project helped boost the resilience of water supplies across the North West.
“I think what made us stand out was the scale, the use of future technology and the fact that we were really just one team, working collaboratively for a common goal," he said.
Camus Energy secures $16m funding
Camus Energy, which provides advanced grid management technology, has secured $16 million in a Series A round, led by Park West Asset Management and joined by Congruent Ventures, Wave Capital and other investors, including an investor-owned utility. Camus will leverage the operating capital to expand its grid management software platform to meet growing demand from utilities across North America.
As local utilities look to save money and increase their use of clean energy by tapping into low-cost and low-carbon local resources, Camus' grid management platform provides connectivity between the utility's operations team, its grid-connected equipment and customer devices.