BY CONTINUING TO USE THIS SITE, YOU ARE AGREEING TO OUR USE OF COOKIES. REVIEW OUR
COOKIE NOTICE

Register with us today

and in less than 60 seconds continue your access to:Latest news headlinesAnalytical topics and featuresCommodities videos, podcast & blogsSample market prices & dataSpecial reportsSubscriber notes & daily commodity email alerts

Already have an account?

Log in to register

Forgot Password

Please Note: Platts Market Center subscribers can only reset passwords via the Platts Market Center

Enter your Email ID below and we will send you an email with your password.


  • Email Address* Please enter email address.

If you are a premium subscriber, we are unable to send you your password for security reasons. Please contact the Client Services team.

IF you are a Platts Market Center subscriber, to reset your password go to the�Platts Market Center to reset your password.

In this list
Electric Power

Dutch energy industry at odds over power capacity market

Energy | Electric Power | LNG | Natural Gas (European)

European gas prices could play a big role in where Platts JKM prices head this winter

Electric Power

Platts M2MS-Power

Commodities | Energy | Electric Power | Natural Gas | LNG | Natural Gas (North American) | Financial Services | Banking | Infrastructure | Utilities | Structured Finance

Gas Storage Outlook Conference

Electric Power

UK power Summer 2019 baseload contract leapfrogs Winter 2020 on extra supply

Dutch energy industry at odds over power capacity market

Dutch energy industry players are at odds as to whether the introductionof a capacity market would be the correct response to the poor power planteconomics that have led to the mothballing of a raft of gas-fired stations inrecent years, according to interviews conducted by Platts this week.

Not registered?

Receive daily email alerts, subscriber notes & personalize your experience.

Register Now

Whilst Germany's RWE, which owns Essent, is in favor of capacity markets,Dutch utility Delta is still considering the matter, while Vattenfall-ownedNuon is firmly against.

RWE and Delta took the unusual step in July of entering Dutch gas-firedplants into the capacity market tender of a neighboring country -- in thiscase Belgium. The Belgian authorities were seeking to contract around 800 MWof gas-fired capacity for a six-year period from 2016-17 to ensure systemintegrity as it shuts down its nuclear fleet.


RWE entered its 1.3 GW Claus C plant located in Maasbracht, while Deltaentered one of the two units at its 870 MW Sloecentrale facility inVlissingen-Oost.

Claus C is currently mothballed after RWE's decision at the start of Julyto suspend operations due to current adverse business conditions for gas-firedpower plants. The 2015 clean spark spread --- a measure of the profitabilityof gas-fired plants taking into account fuel and carbon costs -- is currentlyfirmly negative by around Eur7/MWh.

VULNERABILITY

Utilities have mothballed nearly 4.5 GW of Dutch gas-fired capacity insince 2012, however, supply margins remain robust, with a number of new Dutchcoal-fired stations either having just come online or due to do so in thecoming months and strong importation capacity from Germany.

That said, increasing imports of German renewable energy, in particular,make the Dutch system vulnerable to the loss of gas-fired capacity, accordingto Delta.

"If there isn't enough supply from Germany and we close our own plants,there will be a problem for industry as we will not have enough baseloadpower," company spokeswoman Mirjam van Zuilen said.

Delta, however, is still formally undecided on whether capacity marketsare the solution.

"Delta's view is that we try to make money for our plants, so we'll onlymake money if there is a market that will allow us to keep capacity open," vanZuilen said.

RWE, for its part, has mothballed over 2.5 GW of Dutch gas-fired capacitysince 2012 and is firmly in favor of capacity markets.

"We think it necessary to rethink the market design by introducing amechanism which values the supply of capacity and not only the production ofelectricity. This mechanism should be open for every technology from thesupplier side as well as from the consumer side, be market-based and orientedtowards European solutions," RWE spokesman Lothar Lambertz said.

CONSULTATION

The Dutch government is currently in consultation with industry on thequestion of capacity markets and is due to make a decision early next year,according to Delta's van Zuilen.

The government told Platts earlier in July that gas plant mothballing hadnot affected generation adequacy in the Netherlands. Dutch grid operatorTenneT held a similar view, adding it was against capacity mechanisms at itbelieves in an 'energy-only' market.

Nuon's opposition to capacity markets is particularly stark, given itsdecision at the turn of this year to mothball 860 MW of capacity at its Magnumplant in Eemshaven.

"Mothballing of capacity is a normal reaction to low prices by themarket," Nuon spokeswoman Melanie Poort said.

"The current installed capacity including imports are sufficient to servethe demand for electricity. Before considering to introduce a capacity market,policy makers should rather focus on strengthening the existing market designby fostering demand side response, better integrating renewables into themarket or strengthening cross-border connections," she added.

But despite its opposition to a Dutch capacity mechanism, Nuon was opento the idea of Dutch plants being tendered for neighboring countries' capacitymechanisms.

"Nuon supports any initiative or measure that supports cross-borderparticipation in existing and future capacity mechanisms in neighboringcountries (for example, in the UK)," Poort said.

However, the company has no "concrete plan" to follow RWE and Delta andseek connection to a neighboring countries grid, she added.

--Reginald Ajuonuma, reginald.ajuonuma@platts.com
--Edited by James Leech, james.leech@platts.com

Similar stories appear in European Power Daily See more information at http://www.platts.com/Products/europeanpowerdaily