Czech-based Energeticky a prumyslovy holding (EPH) has agreed to buy the plant from Eggborough Power for an undisclosed sum, following warnings from the current operator that shrinking profit margins from coal-fired generation would force a shutdown by the end of 2015.
The government rejected Eggborough’s application for biomass conversion support earlier this year, and Eggborough chief executive Neil O’Hara warned that the UK’s escalating carbon tax coupled with the need for investment to meet European Union emissions standards meant the “rational economic conclusion” was a 2015 closure.
EPH chairman Daniel Kretinsky said in a statement that the acquisition reflected the company’s “genuine interest in the UK market”. A spokesman for the company declined to comment on the group’s plans for the plant.
Eggborough Power is an independent, single asset generator, meaning that tight generating margins from the plant could take a devastating toll on the company, but a vertically integrated market participant could diversify its risk through a portfolio of assets and activities.
Utility Week understands that a company the size of EPH would be able to shoulder difficult economic conditions in the short term with a view to securing payment through the UK government’s capacity market which will take effect from the winter of 2017/18.
The EPH group operates mainly in the Czech Republic, Slovakia and Germany, through a complete value chain in the energy sector, including coal extraction. The acquisition of the Eggborough, which provides around 4 per cent of the UK’s power, more than doubles the company’s current installed capacity portfolio of 1.75GW.
The Eggborough plant successfully pre-qualified for the first capacity market auction to be held at the end of this year on the basis of a three-year refurbishment to improve efficiency and ensure compliance with EU emissions standards.
Both Eggborough Power and EPH declined to comment on the future of the plant or the terms of the sale, which is still subject to approval by the European Commission.