Czech electricity giant highlights positives from disappointing first quarter results
Czech electricity producer and distributor ČEZ has announced a 17 percent drop in first quarter profits to 7.3 billion crowns. Turnover dropped by 14 percent to 45.4 billion crowns.
The power company typically sells much of its earmarked power production three or more years ahead. The plus is that this gives it some certainty about what demand will be and can line up its capacity accordingly. The downside can come when the sold ahead electricity is at lower prices than current ones after an upturn in the market.
ČEZ lowered its overall power production estimate for the whole of 2018 due to the drop in electricity output from its coal-fired plants, down around 1 TWh in the first quarter of the year, but it is sticking to its net profit forecast for 2018 of between 12 billion and 14 billion crowns.
There were some bright spots for the almost 70 percent state owned utility. Distribution of electricity in its core Czech market rose to 14.8 TWh from 14.6 TWh in the first quarter of 2017. Sales of electricity to final customers also climbed to 10.7 TWh from 10.4 TWh. One drawback from the last factor was the higher purchase prices for electricity faced by ČEZ to meet its need since it cannot cover all demand and contracts from its own power plants.
ČEZ put the emphasis, from results which most analysts regarded as disappointing, on its ongoing development of do called new power, or renewables, assets, and on energy services to corporate customers. In the first case, permits have been for four wind farms in western and central France. ČEZ, is focusing on renewables expansion in France, German, and other countries regarded as ‘stable’ after being stung by the volatile regulator environment in the Balkans. Turnover in energy services reached 3.0 billion crowns with around half of that now outside the Czech Republic, regarded as a fairly small market for such usually large price tag contracts.
Separately, ČEZ says it had completed a study which highlighted no fundamental obstacle for its single biggest power source, the Temelín nuclear power plant operating for 60 years. The technical and economic investigation found no fundamental safety or technical reason why the first reactor could not operate until 2060 and the second unit until 2062. The plant in South Bohemia, around 45 kilometres from the Austrian border, is the biggest single electricity producer in the Czech Republic.
Other non- technical factors such as a stiffening of the regulatory regime for nuclear power plants, might put a 60 year lifespan for the plants in danger, ČEZ cautioned.
