Czech power company CEZ AS (BAACEZ.PR) is going to halve its planned capital expenditure on refurbishing its fleet of coal-fired power plants, and redirect that capital mostly into the construction of natural gas-fired power plants, a senior CEZ executive said Wednesday.
CEZ also expects no negative impact on its electricity sales from slowing economic growth in Western Europe, said Alan Svoboda, head of sales at CEZ.
"We are going to slow down our refurbishment of coal-fired plants; before we planned to totally refurbish the entire fleet," but now CEZ plans to refurbish only 50% of the coal-generation fleet "and to direct that capex to (building) gas-fired plants," Svoboda said.
Up to 50 billion koruna ($3.07 billion) is now likely to be redirected to construction of new, mostly natural gas-fired power plants. Last year the company said it would invest CZK100 billion to renovate its coal generation fleet.
Svoboda also said selling some CEZ coal-fired power plants was a possibility that fits into the company's strategy of changing the generation mix to include cleaner electricity generation, and a potential expansion of CEZ's nuclear capacity.
Local media have reported that CEZ is in talks to sell its Pocerady coal-fired power plant. Svoboda said talks are at a very early stage. CEZ and closely-held coal supplier Mostecka Uhelna AS are in a deadlock over terms of long-term lignite deliveries to Pocerady while CEZ is also seeking to lower its overall carbon emissions.
"We have to evaluate the overall impact on our portfolio, we're not under pressure to sell power plants," he said.
The move into natural gas is part of CEZ adjusting its portfolio mix, he said. "We changed our view of the optimal mix going ahead," referring to new European carbon emissions regulations.
As of 2013, CEZ and other companies that are obliged to limit greenhouse gas emissions as part of the European Emissions Trading Scheme will have to pay for carbon credits.
Currently the credits are allocated without charge from the European Union to national governments.