Czech-based energy holding EPH announced on June 21 that it has agreed to buy two combined cycle gas turbine (CCGT) power stations in the UK for £318mn. 

The Slovak-founded company has in recent years bought coal-based assets in Germany and Italy, as well as the UK, while continuing to increase its presence in Central European energy markets via acquisitions in Slovakia and other states in the neighbourhood.

While Western European energy groups are in the midst of a retreat from conventional power as they seek to concentrate on renewables development, EPH is eyeing a loophole. The company is betting heavily that capacity market mechanisms – via which older power assets would be paid to idle as a back up to renewables – would soon be implemented around the EU.

Meanwhile, the heavily indebted holding has redivided its assets into a series of subsidiaries alongside the departure from EPH of Patrick Tkac - an alumni of Slovak financial group J&T, like remaining owner Daniel Kretinsky. The spin off of EP Infrastructure (EPIF), which controls the Slovak section of the mainline gas route running Russian supplies into Europe as well as heat and power distribution, enabled Australian giant Macquarie to buy into the unit.

However, Kretinsky’s EPH has retained full ownership of the largely coal-based generation and mining assets across Central and Western Europe, which are perhaps even riskier than the geopolitically challenged EPIF. Those assets are concentrated in EP Power Europe (EPPE).

In a statement, EPH announced that EPPE has agreed to spend £318mn (€360mn) in cash - “subject to customary working capital and other completion adjustments” - to buy the Langage and South Humber Bank CCGT power stations from UK utility Centrica. The pair has a combined capacity of 2.3GW. The assets will be held by EPPE unit EP UK Investments Ltd (EP UK).

EPH bought the 2GW Eggborough and Lynemouth coal-fired power stations in November 2014. Eggborough Power Limited is currently proposing to develop a new gas-fired power station with output of up to 2,500MW. The Lynemouth plant is being converted into a biomass-fuelled power plant. The transaction is subject to EU merger clearance and is expected to close during the second half of 2017, the EPH statement said.

“We are proud to have the opportunity to continue Centrica´s tradition in the conventional power generation market in the UK,” said Kretinsky. “This is a significant acquisition in our strategy of increasing our generation capacity in the UK market.  The two CCGTs will complement our existing UK portfolio of Eggborough and Lynemouth power stations and our Eggborough CCGT development project.”