E.ON Plans $19 Billion on Power and Transmission Projects in Competitive German Market

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Researched by Industrial Info Resources (Sugar Land, Texas). State-of-the-art coal-fired power stations will be a particular focus of E.ON Energie’s (NYSE:EON ) (Dusseldorf, Germany) planned generation project investment of $16 billion. Other key investments include highly efficient natural gas-fired power stations and renewable energy. The company also plans to commission Germany’s first large-scale offshore windfarm near the island of Borkum in the North Sea during 2008.

E.ON will be pushing the further development of a number of key emerging energy technologies. Among them will be the construction of a new generation of coal-fired power stations, capable of operating at efficiency levels of over 50%. The company will also partner external organizations in working on a range of research and development (R&D) programs centered on CO2 sequestration and storage. Joint implementation projects that investigate global approaches to reducing CO2 emissions will also be supported by E.ON.

Klaus-Dieter Maubach, E.ON’s board of management chairman, said that $3.35 billion had been budgeted for investments in upgrading power grid infrastructure. He said that a significant part of this investment will be put into the installation of additional transmission capacity to cater for future feed-ins from planned renewable generation plants, with an emphasis on Northern Germany.

The further expansion of cross-border transfer points to aid the ongoing process of European market integration is another key investment area. By the end of 2008, transmission capacities across Germany’s borders to Denmark, the Czech Republic and the Netherlands will have increased by a total of 1,000 MW. From 2009, the transmission network operators in Germany, France and the Benelux states will be able to fully coordinate their operations across their respective national borders. Maubach said that this would be a major development. ”This represents a big step towards achieving an integrated, harmonized Northern European electricity market and is therefore an important milestone on the road to pan-European market liberalization,” he said.

The pending end of state supervised electricity pricing in Germany will mean that local energy companies will focus more on the competitive market environment when determining prices as opposed to generation supply and sales costs. In this new power scenario, E.ON is not planning to make any further changes to its tariff structure before the end of Q3 of 2007, but it will be closely monitoring market development in the meantime. “At this stage, it is impossible to predict what will happen on October 12 or thereafter,” said Maubach.

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