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Saturday, February 20, 2010

Energy in Europe, 02, 2010 - China to out-smart us

  1. EU reaches antitrust settlement with GDF Suez
  2. Court rules against Russia in Yukos case
  3. Power firms want funding model for smart grids
  4. Power firms want flexibility on EU air pollution law
  5. China flies past EU, US on new wind turbines
  6. Eni offers to sell pipelines to settle EU probe
Quote of the day: I think that Europe should be very careful about climate deals, because while China stalls, it invest heavily into renewable and sooner or later, they will say "We are the top producers of the world and we are green. Now it's your turn.". And because we're so big in words and so modest in actions, we'll have to pay to China, because we never did what we promised.

EU reaches antitrust settlement with GDF Suez

4 December 2009
European Union regulators accepted on Thursday (3 December) proposals by French utility GDF Suez to settle antitrust charges and give rivals easier access to the French gas market.

GDF Suez is the third energy firm, after Germany's E.ON and RWE, to settle with the European Commission after the EU executive charged them with abusing a dominant position and restricting rivals' access to networks. European regulators have battled hard to open the energy market. EU countries reached a deal in March that will beef up regulatory power over giant utilities and protect consumers' rights.

"The remedies offered by GDF Suez provide a real opportunity for competitors to enter the French gas market and so offer energy consumers greater choice of gas supplier and more competitive prices," EU Competition Commissioner Neelie Kroes said in a statement.

As part of the legally binding commitments, the company agreed to release rapidly a large share of its long-term reservations of gas import capacity into France, equal to about 10 percent of the total long-term import capacity.

It will continue to cut its share of those reservations to below 50% by 1 October 2014. GDF Suez was not ordered to sell off any assets, unlike E.ON and RWE, because doing so would not have resolved the competition problem, the Commission said.

The Commission had in July fined GDF Suez and E.ON a total 1.1 billion euros ($1.7 billion) for agreeing not to compete against each other in their respective gas markets, the first antitrust penalty for a utility in the 27-country EU.

The companies have denied any wrongdoing and said they would appeal. source

My comment: Nice! And good. Though I'm not sure what "release rapidly" means if not "sell". But I like this, because I have already posted here about the problems and monopoly issues in France's energy market. This I guess is a good start.

Court rules against Russia in Yukos case

1 December 2009

A special international commercial tribunal ruled on 30 November 2009 that the Energy Charter Treaty (ECT) is binding on Russia, paving the way for shareholders of the former Yukos company to win the first phase of a compensation claim of up to US$ 100 billion, the claimants said.

The ad-hoc Arbitral Tribunal, sitting in The Hague under the auspices of the Permanent Court of Arbitration, ruled that the Energy Charter Treaty (ECT) is binding on Russia despite the fact that it has not been ratified by the Duma, the winners of the case said in Brussels today (1 December).

Former Yukos subsidiary GML director Tim Osborne and lead counsel Emmanuel Gaillard, head of Shearman & Sterling LLP's international arbitration group, said the majority shareholders of the former the Yukos Oil Company - Hulley Enterprises Ltd. and Yukos Universal Ltd. - two subsidiaries of GML Ltd. and Veteran Petroleum Ltd., the pension fund for the benefit of former Yukos employees, have won the first phase of their compensation claim against the Russian Federation.

As the speakers explained, the proceedings are the largest in international arbitration history, and were initiated by the claimants following what they said was the illegal expropriation by the Russian Federation of their investment in Yukos Oil Company.

No court rulings were made available at the press conference as the legal process was still ongoing, Gaillard explained.

However, he stressed that the decisions have "a huge precedent value" as they go "far beyond the Yukos case," meaning that all EU investments made in Russia up to 19 October 2009 - when Russia's notification of its decision to leave the ECT entered into force, will benefit from ECT protection for 20 more years, until 19 October 2029.

Asked by EurActiv what the estimated timeframe for the future court proceedings is, the speakers explained that similar cases are "not particularly speedy". A "merit phase" during which time Russia can challenge the ruling could take up to three years. A judgement would then be pronounced and an award determined. If Russia does not honour this compensation payment, it will be enforced according to international practice.

However, the speakers said "experience shows that states comply with awards"

The Russian Mission to the EU was unavailable for comment at short notice. source

My comment: Hm. I'm not sure how Russia will agree with this, because these are a hell lot of money. And since I'm not entirely familiar with the whole thing, I won't comment more, but I find it somewhat interesting if an "expropriation" can and will be compensated. Especially when we speak of something so big.

Power firms want funding model for smart grids

30 November 2009

Developing smart grids will require changing the financing model of electricity distribution as current practice is mainly focused on cutting costs, representatives of the industry said last week (26 November).

Demands to cut power costs while investing in smart grids to reduce CO2 make for a difficult business model for electricity distribution system operators (DSOs), a conference organised by electricity industry association Eurelectric heard in Brussels.

Incentives from regulators to DSOs will have to move from rewarding efficiency improvements to sustainability, the speakers agreed.

Smart grids use digital technology, allowing real-time management of networks and bi-directional flows and facilitating the integration of intermittent renewable sources. The first step is smart meters, which give consumers up-to-the-minute information on their energy use.

Europe's electricity networks will require significant upgrades in coming years to adapt to growing demand. Missing the opportunity to digitalise the grids at the same time would be a lost opportunity as the same networks will still be used 50 years from now, the speakers said.

But the electricity industry is worried that it will end up paying for all the investment without receiving reasonable returns (EurActiv 20/05/09).

While the move to intelligent grids will represent nothing short of a revolution in electricity distribution, it is not the immediate priority for the industry. Several managers of DSOs in different EU countries reported that the old logic of investing in efficiency will rule in the next five years, but indicated that their companies would start to invest in the integration of renewables and smart meters in five years after that.

In Spain, the government has set an obligation to roll out smart meters by 2018. Distribution system operators say the estimated €1bn that will have to be invested in the next ten years presents a good opportunity to go all the way, as doubling that would allow the move to smart grids, said Antonio Espinosa de los Monteros of Spanish electricity firm Iberdrola.

But he pointed out that the meters will not come for free to the consumer, who will have to pay around 70% of the rental price. The rest will go to a new way of managing the system, a cost that regulators should bear, he said.

Nevertheless, smart meters will also allow households to play a more active role in the energy sector. This is not only because they will be able to control their own energy consumption, but also because making the electricity grid bi-directional will enable them to sell the energy they produce from renewables on-site back to the grid.

The experts stressed that the next step towards commercialising smart meters will be standardisation, because the technology is already available. source
My comment:I have often said how much I like smart meters, so I like how they discuss them more and more. What I don't like, however, is the immense numbers they put next to them. A smart meter is a consumption monitoring system. It's unfair to combine it with the efficiency requirement of electricity production by building, which is something else. It would be good if this all happens at the same time, but it's not necessary. And it's hard to say who should pay for the new infrastructure. Because home-owners will have to invest into solar panels and probably new electricity wiring, because of them, and ok, the smart-meters themselves. But there is more to that system than the little gadgets in your homes and this is the system outside that will route the electricity in both directions, calculate the price, set priorities and so on. And this should be paid by operators. Otherwise, what happens - people pay for everyone, the operators profit from the investment of other people, because (of course) the whole service of selling and buying won't come free. I don't think this is fair. And of course, there should be another regulation, and it is about the price of electricity. Because currently in Bulgaria, the electricity goes more and more expensive, because people consume less and less. If this continues after the buildings start producing electricity, then the price will sky-rocket and there would absolutely no economical reason for home-owner to invest into such expensive upgrades. More read here.

Power firms want flexibility on EU air pollution law

4 December 2009

The EU's upcoming industrial pollution law on air soil and water must be made flexible enough if the power sector is to deliver genuine results, a group of electricity companies said this week (2 December).

The power firms rallied for support at the European Parliament for a transition period to comply with the forthcoming recast of the Directive on Integrated Pollution Prevention and Control (IPPC), due to be agreed next year.

The European Commission's original proposal, combining seven existing EU air pollution laws, including the IPPC Directive and the Large Combustion Plants Directive, foresaw that all industrial installations would have to apply tighter air pollution limits by 2016.

But EU member states adopted a common position in June that would allow transitional national plans between 2016 and 2020 for combustion plants that fulfil certain criteria.

Representatives of power companies with seats in Eastern Europe and the UK called on the Parliament to support the flexible approach in its second reading of the proposed legislation. However, they would like to extend the derogation until 2023.

If the power industry had to implement the technologies required by the new directive by 2016, then efficiency would suffer, said Vladimir Hlavinka, chief production officer at Czech power utility CEZ.

"We will not be able to do both greening of plants and improving efficiency," he said.

The industry chiefs were also concerned about securing the limited time derogation inserted by member states to avoid early closure of plants. This would allow plants to opt out of compliance with emission limit values between 2016 and 2023 if they operate for less than 20,000 hours during the period.

In Poland, where around 90% of electricity comes from coal-powered stations, the proposal would lead to an "economically ungrounded shutdown of more than 50% of installed capacity," claimed Kazimierz Szynol, director of Jaworzno III power plant owned by PKE SA, one of Poland's largest power companies. He said that the resulting costs would be impossible to pass on to customers as "socially-accepted prices".

But many critical voices have been raised against exemptions from air pollution legislation, which is expected to bring important health and environmental benefits.

Christian Schaible, industry policy officer at the European Environmental Bureau (EEB), dismissed the industrialists' argument as a quest for short-sighted profit gains.

"These operators have long neglected to implement Best Available Techniques (BATs) properly. When they ask for a further time extension or run their plants for more than 20, 000 hours under a lax regime, the negative external costs to health, which are 3-10 times higher than the long overdue investment costs to the operators, are left to citizens," he said.

An ardent proponent of strong pollution legislation, German MEP Holger Krahmer (ALDE), who is steering the dossier through the Parliament, advocated the use of binding minimum emission limit values for all sectors as a "European safety net" to avoid a widespread recourse to exemptions (EurActiv 11/03/09). But national capitals rejected the idea (EurActiv 02/03/09). source
My comment: I also agree with the strict limits. It's high time those companies understand time has changed. It's not longer the 90s, they have to act in a responsible manner. Most of those power plants are poisoning the people living near-by. We have such cases in Bulgaria. There is a good technology that can turn them into clean and efficient power plants, but they don't want to invest, because all they care are the short-termed profits. And eventually, in the 2020, they will sell their plants to someone else, who will invest then. Sorry, guys, but that's a no-go. It's clear that it's hard to get those money, that's why the EU should offer green-credits, but only if there are clear (and double-checked) evidences that those plants are upgrading. Otherwise, I don't want my taxpayers money to pay the energy mafia to get even richer. I don't mind rich people, just try to earn by actually doing something for me.

China flies past EU, US on new wind turbines

04 February 2010

The global wind energy market continued to grow last year, driven by a strong push from China, which installed more new turbines than Europe and the US, according to new statistics from the Global Wind Energy Council (GWEC).

The global wind energy market grew 31% last year and withstood the economic downturn, GWEC said yesterday (3 February).

A third of new turbines were installed in China, whose 13 gigawatts (GW) of new capacity outstripped Europe (10.5GW) and the US (9.9GW).

China doubled its wind energy capacity in 2009 for the fifth year running, climbing up the top-ten list of the world's biggest wind energy markets. Last year, it overtook Spain on total installed capacity and was outdone only by the US and Germany.

Despite accusations by many Western countries that China hindered an agreement on a new international climate treaty in Copenhagen, the Asian giant continues to develop clean energy to fuel its growing economy.

Spain installed the most new capacity in the EU in 2009, 2.5GW, followed by Germany's 1.9GW. The two traditional wind leaders accounted for 43% of growth, followed by Italy, France and the UK. source

My comment: Not precisely a surprise and I think that Europe should be very careful about climate deals, because while China stalls, it invest heavily into renewable and sooner or later, they will say "We are the top producers of the world and we are green. Now it's your turn.". And because we're so big in words and so modest in actions, we'll have to pay to China, because we never did what we promised. I think this situation will clearly suck!

Eni offers to sell pipelines to settle EU probe

05 February 2010

Italy's Eni has offered to sell its international gas pipelines, worth some 1.5 billion euros, in a move that should help the oil and gas major avoid a hefty antitrust fine and ease regulatory pressure.

Eni is ready to sell its Transitgas and TENP pipelines on the market and sell its TAG pipeline to a public entity, Eni Chief Executive Paolo Scaroni said on Thursday (4 February), adding however it will hang on to transport rights in all three assets.

Eni, the world's seventh-biggest listed oil company, has been the object of an EU antitrust probe since 2007 over allegations it restricted rivals' access to the pipelines.

If found to be in violation, the EU could fine Eni a maximum of up to 10% of its previous year's sales. Press reports have spoken of more than 500 million euros.

The European Commission said in a statement on Thursday it would market-test Eni's proposal and may then accept it as a legally-binding commitment without fining the company.

Eni's proposal, if accepted, would make it the fourth energy company, after Germany's E.ON and RWE and French utility GDF Suez, to settle with the regulator on charges of abusing a dominant position.


My comment: The same as before - it's just nice to see things change in a better direction. Hope that it will work as they claim and not in ... another way.


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