ČEZ looks on bright side as electricity prices firm, first quarter income climbs
State-controlled electricity producer ČEZ has some reasons to be cheerful. It’s kicked off 2016 with net profits up by around a third at 10 billion crowns compared with the same period in 2015. And that’s in the face of still weak electricity prices compared with levels 12 months ago.
So with some signs of a firming market the woes of the almost 70 percent state controlled power group look mostly self-inflicted of late, or perhaps a bit of blame can be put on ČEZ’s suppliers.
Electricity production in the first three months of the year shrunk by 5.0 percent compared with the first quarter of 2015, largely due to continued outages at the Dukovany nuclear power plant due to checks on piping welds. The original checks by sub-contractors were flawed with some ČEZ employees being punished as well.
And that’s had a knock-on impact on ČEZ’s 2016 predictions for electricity generation. Instead of the predicted 11 percent rise this year, the forecast output increase for 2016 has been pared back to 9.0 percent with coal-fired power plants expected to make up most of the increase.
The company cautions though that even this latest prediction for 2016 could have to be revised. There are still some teething problems with the Počerady coal fired power plant, which could be ironed out in the next weeks, and more serious problems with the new fourth block of the Ledvice power plant and ongoing negotiations with supplier Alstom who will foot the bill for repairs a faulty turbine and boiler. And, another cautionary warning, there still might be some problems with the availability of the nuclear power plants Temelín and Dukovany going forward.
Away from conventional power production, ČEZ is pushing ahead with its bid to widen the scope of services offered to households and industrial customers, loans are now on offer as well for customers looking at installing a solar panel or two and the roof. Energy services for companies is a market which ČEZ sees expanding around fivefold to 9 billion crowns by 2020.
And foreign markets? Well ČEZ is still looking at renewables expansion opportunities in Germany and is also perusing the heat and power plants being sold by France’s EDF in Poland. It has plants accounting for around 10 percent of Polish electricity generation capacity and 15 percent of heat supply.