New Energy market report from Business Monitor International: "Czech Republic Power Report Q3 2013"

Boston, MA -- (SBWire) -- 08/05/2013 --The future of the country's power sector is largely dependent on nuclear and renewables, although gas has a key role to play over the medium term, as it will help reduce reliance on coal in electricity generation. Solar power use has soared thanks to an over-generous subsidy scheme, which has now been revised in order to deliver more modest but sustainable growth. However, an increasing level of uncertainty within the country's renewable regulatory framework, with the Government threatening further cuts in subsidies for the sector, risks deterring potential investors. As such, we anticipate sluggish growth across the majority of segments within the renewables industry in 2013.

Investment plans suggest that generation will remain more than adequate, comfortably meeting forecasts for steady growth in domestic demand and providing the basis for continued net power exports to neighbouring countries. Longer term, the country aspires to significantly increase its nuclear power generation.

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Key trends and developments in the Czech electricity market:

- Allowing for transmission and distribution losses (estimated at 5.89% in 2012, and expected to decrease to 5.81% by 2022, owing to new investment in the grid), power supply should continue to outweigh demand, allowing for continued net exports to neighbouring states. Czech power generation is estimated to have reached 83.66 terrawatt hours (TWh) in 2012, with an average 0.31% annual increase anticipated to 2022, when we forecast it will reach 86.30TWh.
- At the end of March, CEZ completed the first evaluation of bids for the construction of two new units at the Temelin nuclear power plant. However, it did not release the ranking of the two bidders, US-Japanese company Westinghouse and Czech-Russian Consortium MIR.1200. CEZ is now reportedly leading talks with both companies about increasing their bids. The final decision is expected to be announced in autumn.
- Following mass protests over high energy prices in Bulgaria which led to the resignation of the government in February, the Bulgarian energy regulator is now deciding whether there are grounds to cancel the power-distribution license of CEZ. The Czech energy company, together with EVN AG (EVN) and Czech utility Energy-Pro have been investigated by the country's public prosecutor for allegedly breaching outsourcing contracts.
- Germany's heavily indebted RWE has successfully wrapped up another asset divestment, with the sale of Czech gas transmission operator Net4Gas for EUR1.2bn. This sale brings the total raised since the beginning of 2012 to EUR3.3bn. The asset was purchased by a partnership comprising Allianz Capital Partners and Borealis - the investment arm of Canadian pension fund OMERS. In addition to the EUR1.2bn purchase price, the partners are assuming debt of EUR400mn. The deal is due to close in H213.

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