Czech/Slovak power holding EPH buys another UK plant

By bne IntelliNews January 10, 2016

Energeticky a Prumyslovy Holding (EPH) has agreed to buy UK coal-fired power plant Lynemouth from German utility RWE, the Czech/Slovak energy holding announced on January 8.

The acquisition, the value of which was not disclosed, is EPH’s second in the UK. It bought the aged Eggborough coal-fired plant in November 2014 for €100mn. The energy holding is assumed to be betting on “capacity market” payments from the EU. The scheme would see owners compensated for maintaining generation assets, even if they are not operated, because of energy security concerns in the bloc.

The deal for Lynemouth comes after the European Commission approved in December British plans to subsidize Lynemouth's conversion to burn biomass instead of coal. Following the conversion, the 420MW plant will generate about 2.3TWh of low carbon electricity per year which is sufficient to power around 700,000 homes, EPH said in a statement.

The Czech energy group is buying Lynemouth Power via EP UK Investments. The plant will operate at base-load, thus providing schedulable low-carbon electricity. In September, EPH announced it could shutter the inefficient Eggborough by March 2016.

EPH - controlled by oligarchs connected to closely-held Slovak financial group J&T - has been on a buying spree over the past few years, borrowing heavily to snap up assets to turn itself into a regional heavyweight. The latest acquisitions saw the Czech based group buy Hungarian power producer Budapesti Eromu and Enel’s 66% stake in Slovak power utility Slovenske Elektrarne.

However, last year, EPH began snapping up assets in more mature, western European markets. As well as Eggborough, it bought coal and gas assets in Italy from Germany's E.ON, which is disposing of many fossil fuel plants to concentrate on renewables. EPH says the acquisition is also driven by hopes for "capacity market" regulation.

EPH is also interested in the German assets of Swedish Vattenfall and has said it will join forces with financial group PPF to raise its chances of outbidding other suitors.

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