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30/09/2014

Highlights of the developments on the Dutch Energy Market

In this article, Sia Partners has selected the most relevant Dutch energy market news and developments of the Q3 2014 for you.

First of all the support Dutch power plants can provide for the Belgian power shortage. Interesting battle between RWE Essent Claus-centrale and Delta Sloe-centrale. The brand new Sloe-centrale (with the highest return GFPP) in the Netherlands could almost support from a 'plug and play' mode, where Claus-centrale will still have to build some kilometers of cable to enable transport to the Belgian grid.

Secondly the Netherlands are closely following the developments of Gas supply, related to the Russian - Ukraine crisis. What are the alternatives, is there high impact on gas prices, gas supply? And what about the conversion from L-gas to H-gas, with the depletion of Groningen (L-)Gas.

Delta has decided to remain an independent energy supplier and at the same time boost its balance sheet with the sale of Indaver, its waste division. We believe Delta is making the right choice at this moment. It is said that the nuclear power plant (EPZ) would have been an important deal breaker for merging with green image supplier Eneco. It is indeed to be seen how long EPZ will remain part of the Delta group, though being one of the best performing power plants on Dutch soil.

The Dutch gas consumption was lower than normal, mainly due to a mild winter, and supply or extraction by the NAM has been 28% lower over the first 6 months compared to last year. Gasunie also transported less gas than in previous years. The NAM was supposed to produce less gas than in previous years anyway, since minister Henk Kamp forced it to reduce its extractions, so the winter helped reach these objectives.

ACM announced that flow based market coupling will be introduced as from December this year. Though this is yet again a delay in the 'go live', it can be viewed as another very important step in the creation of an efficient European power market.

Lastly on gas. Gas revenues earned by the Dutch state will be placed for some part in an Innovation Fund. The aim of this fund is to preserve the innovative nature of the Netherlands. Specifically: It will be invested in state bonds and the real interests of the bonds will be made available for fundamental and applied-research which will help the innovative nature of the Netherlands.

Sia Partners

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