CEZ switches focus from the Balkans to the West
The largest power producer in Eastern Europe is scaling back its troubled Balkan operations to expand in the west, Bloomberg reported.
After spending hundreds of millions of dollars in Southeastern Europe last decade, CEZ AS is changing tack following too many fights with local lawmakers and regulators. The Prague-based utility is in talks to sell coal plants and a distribution business in Bulgaria. In Western Europe, the company is snapping up wind farms, heating facilities and other assets to compete with giants like EON to Engie.
“We are shifting our focus,” Chief Financial Officer Martin Novak said this month in an interview. “In terms of new assets, the company is now aiming at renewables, and definitely in Central and Western Europe, rather than in Southeastern Europe.”
The impending sale of assets in Bulgaria, which the company hopes to complete in the next few months, marks the end of rapid expansion under the previous management in emerging markets from Albania to Romania and Turkey. The Czech utility, which still generates most of its power from coal and nuclear, plans to double profit from new sources by 2020 to catch up with western peers.
CEZ’s Balkan strategy began to crumble at the turn of the decade as wholesale prices slid and nationalist governments turned on foreign utilities. The company soon ran afoul of local regulators as Albania nationalized its assets, Romania temporarily withheld state compensation for wind power and Bulgaria repeatedly threatened to revoke the utility’s license after accusing CEZ of charging consumers too much.
The utility is still negotiating with potential buyers, including Czech company Energo-Pro AS, which sweetened its bid in September. CEZ may also sell its 50 percent stake in Akcez Enerji Yatirimlari AS, a power supplier to 3.4 million people in northwest Turkey. Though the management isn’t officially negotiating, it’s open to offers, Novak said.
At the same time, the utility has added 35 megawatts of onshore wind capacity in Germany this year. It bought nine wind farms in France, where it plans to develop as much as 100 megawatts in the next five years.
CEZ’s strategy shift coincides with a push by the European Union to increase the region’s renewable energy target to 30 percent of total consumption in the bloc by 2030 from the current goal of at least 27 percent by 2030, European Commission Vice President Maros Sefcovic said last week, Bloomberg reminded.
CEZ is contemplating separating renewable assets from conventional energy in a similar vein to when RWE AG spun off its green power, grid and retail units into Innogy SE, Novak said.