‘Greener’ power plants risk being left in the cold

Date: 08/05/1997

DENMARK is threatening to oppose market-opening moves in the energy sector which would favour more efficient, environment-friendly power producers.

Copenhagen has set its face against the latest Dutch proposals for liberalising Europe's gas supply because the Netherlands has insisted that 'greener' cogeneration plants, which produce power and heat at the same time, should be allowed to shop around for the cheapest supplies.

Denmark argues that it has more of the smaller cogeneration plants than most of its European neighbours and therefore a greater proportion of its power market would be opened up to competition from outside suppliers.

Europe's power and heat generation lobby, COGEN Europe, warns that the Danish threat to sideline them from gas liberalisation represents the worst of all scenarios for the industry.

It would allow larger more wasteful plants to enjoy the benefits of cheaper, more competitively priced gas whilst putting smaller cogeneration at a disadvantage. “It would severely limit the opportunity for cogeneration to increase its competitiveness,” said the Brussels-based lobby.

Although no single country can block a market-opening proposal backed by the rest of the EU, most observers believe that energy liberalisation is such a politically sensitive issue that no country can be steamrollered on key points.

Member states and the European Commission haggled for more than six years over the procedure and pace of electricity liberalisation before coming to agreement on a relatively anaemic proposal last December.

The current Dutch presidency proposal on gas already risks rubbing too many countries up the wrong way by setting relatively ambitious targets for the breadth and speed of market opening.

It has called for all users of more than 25 million cubic metres a year to be allowed to choose their supplier from January 1999. This threshold would fall to 10 million cubic metres after five years and 1 million cubic metres after a decade.

COGEN Europe is already anticipating disappointment when the Commission publishes a forward-looking policy paper on the sector, expected to be issued before the summer break.

It says early drafts of the paper have set a modest target for joint heat and power plants to account for only 20&percent; of EU energy production by 2020, whereas COGEN Europe has been calling for a goal of 30&percent; by 2010.

The Commission's objective would be achievable without any extra effort by energy producers, said a spokesman.

Cogeneration plant operators claim that they are far more efficient than their rivals, with energy wastage of just 10&percent; to 20&percent; compared with 45&percent; to 55&percent; for conventional power-only generators.

COGEN Europe is also concerned that EU assistance to eastern Europe through the Phare programme is seriously slanted in favour of large, less efficient power plants and has not taken enough account of smaller, more decentralised plants which are closer to consumers.

It has started to campaign for changes and says the benefits of these plants are largely unknown to the former centrally planned countries.

“We are looking at what projects have been supported and there is not much for decentralised plants,” said COGEN Europe director Michael Brown.

He added that the European Parliament had also begun to call for changes in the way the Phare programme funds were handed out.

Smaller power plants are generally more efficient because they minimise relatively high energy losses in transmitting power from the generating plant to the end user.