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Possibilities for developing pooled generation ressources.

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Presentation on theme: "Possibilities for developing pooled generation ressources."— Presentation transcript:

1 Possibilities for developing pooled generation ressources

2 S.MOREL Ad Hoc Group 3 on « competitiveness of energy intensive industries » 31/03/06 Need for long term visibility for investing generators (securing long-term sales for new capacities) Base-load assets or long term offtake rights on such assets are held by several marketers,in order to have competition on the supply side. Competitive and predictable prices for energy-intensive consumers When regulated tariffs are ruled out, and with no relevant forward market long-term partnership possibilities to develop access to pooled generation resources

3 S.MOREL Ad Hoc Group 3 on « competitiveness of energy intensive industries » 31/03/06 Long term partnership tools Consumers cooperative financing new power plant (TVO) Risk-sharing in generation between industrial consumers and electricity operators(EPR) Partnership between consumers and generators valuing a secondary fuel (DK6) Consumers cooperative purchasing electricity (SOFIBASE) Better access to resources of existant power plants (L.T VPP)

4 S.MOREL Ad Hoc Group 3 on « competitiveness of energy intensive industries » 31/03/06 Consumer co-operative financing new power plant The Finnish electricity company Teollisuuden Voima Oy (TVO) A long-existant cooperative joining large electricity consumers( mainly papermills ) and municipal utility companies TVO owns two nuclear power plants already in operation and EPR to be commissioned in 2012 It sells electricity at cost during the life of the plant (40 years) to its investors in proportion to their contribution to the investment This structure of investment ensures very stable prices as well as exemption from carbon issues leave technical risks,commercial management of outages TVO to reinvest cashflows to finance next investment

5 S.MOREL Ad Hoc Group 3 on « competitiveness of energy intensive industries » 31/03/06 Risk-sharing in generation between industrial players and electric operators In France, the government has been exploring that way to create a favourable institutional environment to finance the construction of a nuclear EPR. RWE and Electrabel of Belgium have formed in 2001 a consortium (Zandvliet)to build a combined heat and power plant 400MW for BASF at its production site in Antwerp. Each of the partners already delivers up to 150 MW of power to BASF. Agreement in 2004 between Electrabel and the steam host, Solvay for a 400 MW combined-cycle unit in Rosignano in Italy. The new Roselectra power station will supply Solvay with electricity and steam. Surplus electricity will be sold on Italy's deregulated market. It is expected to start operating from 2006.

6 S.MOREL Ad Hoc Group 3 on « competitiveness of energy intensive industries » 31/03/06 Partnership between consumers and generators valuing secondary fuel Combined Cycle Plant-Partnership between Gaz de France (DK6) and ARCELOR Electricity generating capacity of 800MW including 225MWe reserved for the transformation of steelworks gas from steel works and coke oven Dunelys company DK6 owner and operator Arcelor Markets Utilities supplies contract Construction lease Conversion of gas into electricity Purshase of natural gas Sale of electricity Capacity provision contract (20 years)

7 S.MOREL Ad Hoc Group 3 on « competitiveness of energy intensive industries » 31/03/06 Purchasing group of electro-intensive users Consortium of industrials willing to purchase electricity in the form of baseload risk free ribbons, for a duration between 15 and 20 years Criteria to define « electro-intensive users » consumption >2,5 kWh(AV), off pick consumption represents at least 55 % of annual consumption ; minimum 8 000 hours a year (except exceptional shut down), CSPE payement Selected suppliers, through a competitive tender with existant base load assets, and investment in co2 free new assets Fixed initial upfront payment and fixed electricity price, High gearing, without State guarantee, deconsolidated and non recourse debt Tax incentive

8 S.MOREL Ad Hoc Group 3 on « competitiveness of energy intensive industries » 31/03/06 Consortium Industrial shareholders Producers Bank Government Financing 90% up-front payement energy fee (take or pay) reimbursment préemption right delivery of electricity Investment 10% electricity price delivery electricity defined criteria tax incentive

9 S.MOREL Ad Hoc Group 3 on « competitiveness of energy intensive industries » 31/03/06 Better access to physical resource of existing power plants Developing medium-long term contracts (4-5 years, 10 years and +) With a logic of bilateral price-setting or call for tenders Leading to more stable and closer to fundamentals prices (anticipations, products costs, adjustment, investments...) To stimulate competition in the medium-long term market segment Put on sale medium-long term drawing rights (at different maturity dates, some of which reaching 15 years) by leading producers like VPP mechanism Creating the level playing field for new entrants to get access to competitive production over the long term, to stimulate competition on long-term offers

10 S.MOREL Ad Hoc Group 3 on « competitiveness of energy intensive industries » 31/03/06 Conclusions for now Consumers position Risksharing technical and commercial Governance issues Cashinvestment Marginover cost Investmentin production assets high Mediumto high Low Consumers cooperative nil Medium M M depending on competition L.T VPP(base load) nil low Medium M depending on competition

11 S.MOREL Ad Hoc Group 3 on « competitiveness of energy intensive industries » 31/03/06 Abaque montrant les relations entre Prix d'Enlèvement Proportionnel, Prix Vu du Producteur et Prix de Revente consortium 0 5 10 15 20 25 30 35 40 050010001500200025003000 Avance en tête en M/GW Prix en /MWh Prix vu du producteur Prix revente consortium Prix d'enlèvement


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