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Spain's Endesa sees coal, nuclear plants operating beyond 2030

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Spain's Endesa sees coal, nuclear plants operating beyond 2030


CEO sees backup role for coal plants post 2030

Endesa to double renewable spending, additions through 2021

Barcelona — Spain's Endesa's plans to continue to operate its remaining coal and nuclear plants beyond 2030 and plans to finish one more retrofit and to install new battery units, while closing two units in 2020, executives said Wednesday.

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Additionally, CEO Jose Bogas also said he expected nuclear plants in Spain to continue operating as far as 2030 or beyond despite comments from the country's government last week regarding the possible full closure of the nuclear fleet in the 2020s.

"Keeping thermal plants past 2020 is essential," Bogas told analysts in a call. "The remaining coal plants will operate beyond 2030 but with operational hours of less than 1,000 hours per year. They will be used to provide backup and capacity mechanisms need to be introduced to keep them in the system."

In the short term, the two coal plants Endesa intends to close in 2020 are the 1.1-GW Compostilla and the 1.0-GW Teruel, where the upgrades to comply with the EU's Best available techniques reference document (BREF) were deemed as not cost effective.Both these plants use domestic coal in their generation.

By contrast, the company confirmed its commitment to the 1.4-GW As Pontes plant, which is being retrofitted and which will also receive a battery system, such as that installed at the 1.1-GW Litoral (Carboneras) plant.

It also confirmed it would invest in upgrades for its power plants in the Balearic Islands, where it operates three conventional plants with combined 1.1 GW including the 585-MW Es Murterar coal/gas plant and the Canary Islands, where it has a total 3.6 GW installed capacity across 11 plants which largely run on fuel oil, diesel and natural gas.

Endesa said it would install battery systems in some of the Canary Island plants, without adding which plants.

In terms of nuclear, Bogas pointed to Spain's draft climate change law published earlier this month, but which contained no specific targets for the nuclear fleet.

While the target remains decarbonization, nuclear will have a continuing role to play in security of supply and competitive pricing while also keeping CO2 emissions down.

Additionally, the extra time will be required for auxiliary companies to prepare properly for the dismantling cycle while funds are secured to cover the eventual costs.

"I think we will see in the new law how the government will expect to reach 2030 and I am sure we will need nuclear power plants." Bogas said.

Secretary of State Jose Dominguez told Spanish press last week that the current government would target closing nuclear plants once they hit 40 years, which would mean a full closure of the 7.9-GW fleet by 2028.

Indeed, while the talk is of closure for thermal plants, Endesa said it actually expects Spanish demand for electricity to increase as much as 28% between 2017 and 2030, from 253 TWh to 325 TWh due to the ongoing substitution of fossil fuels in gross energy demand.

In particular, it sees electricity occupying 33% of the gros energy demnad in 2030, compared to 24% in 2016 as it effectively ousts refined petroleum products from the mix.

This could lead to a rise in peak demand to 49 GW in 2030 from 41 GW in 2017, while the reserve margin is seen slipping to 1.10 MW from 1.35 MW over the same period, the company estimates.

Effectively, all of the new capacity will come from new renewable installations, with as much as 60 GW believed to be required in Spain through to 2030.

With this in mind, Endesa announced Wednesday it would double renewable spending and boost capacity additions in the next three years, with1 GW of additional merchant farms to be built in the period. The amount to be invested between 2019 and 2021 will be Eur2 billion, double what the previous plan envisaged.

Endesa's parent company, Enel of Italy, said Tuesday that it sees clarity in the Spanish regulatory framework and this has given it impetus to expand in Spain before Italy, where there is still regulatory uncertainty regarding new renewable awards.

The additional 1 GW in Spain will comprise approximately 300 MW of wind and 700 MW of solar, and the company said it would be happy with the capacity to enter the markets as merchant plants.

However, the door is certainly open to power purchase agreements with its large portfolio of industrial clients, a number of whom have already shown interest in such deals, Bogas said.

Endesa also said it would be open to any bolt-on acquisitions of new renewable capacity, and that it expects this pace of installations to persist or, more likely, increase after the three year period, with the 2030 targets in mind.

To this effect, Endesa expects to have a pipeline of 2 GW of additional projects ready to go in 2021 as well as a further 10 GW of possible projects beyond that, according to CFO Luca Passa.

The company currently has 879 MW under construction from the 2017 capacity awards that should come online by the end of next year.

--Gianluca Baratti,

--Edited by Richard Rubin,