Weak electricity prices continue to erode ČEZ profits
Half year profit at ČEZ lower as electricity prices continue to slide but forward sales see some firming. The Czech power company says it is looking intently at Vattenfall’s power assets in Germany and preparing for new nuclear plants in the Czech Republic.
The basic story is that electricity prices are still weak and ČEZ suffered some hitches in production at the Temelín nuclear plant in the second quarter and the new Ledvice coal fired power plant is taking longer than expected to come online.
More damage to ČEZ’s bottom line was only avoided because prices for emissions have climbed over recent months and that has helped cushion some of the damage from weakening electricity prices on wholesale markets.
Looking further afield, there are some signs of a slight firming in electricity prices but nothing to shout from the roofs about. The average prices of ČEZ’s pre-sold electricity for 2017 and 2018 is quite a lot stronger than the prices announced just three months ago. For example, the average price of 2017 power is now 34 euros/MWh as opposed to 24 euros/MWh given at the end of April.
On the strategic front, ČEZ boss Daniel Beneš said the company is closely following the progress of Swedish power company Vattenfall’s electricity plants in Germany with the process likely to start in October.
There is more certainty about prospects on the German market now, he said, thanks to the fact that it’s now clear how the government sees the power mix for the near future. Around 2.7 GW of capacity at old coal plants will be taken out of normal production and put on reserve by 2020 so that the country can continue to meet its commitments to cut its targets to cut carbon dioxide and curb climate change.
On the sale of Slovakia’s biggest electricity company, Slovenské Elektrárne, which majority owner ENEL now expects to take place in two stages – before and after the completion of the Mochovce 3 and 4 nuclear reactors – Beneš said there had been no fundamental change from ČEZ’s point of view.
ČEZ did not make a bid for ENEL’s stake, unlike local Czech power group EPH and a rival consortium made up of Hungarian electricity company MVV and MOL-dominant Slovak refiner MOL. ČEZ’s Beneš did,however, say that there was still a possibility that it could come back to the table over Slovenské Elektrárne some time in the future.
The Czech state controlled power company said that it is actively working on the state’s long term nuclear plans which see one new nuclear reactor being built at the Dukovany site and a further one being added either at Dukovany or Temelín.