energy sector

The Barcelona-based energy company Gas Natural Fenosa, through its subsidiary Global Power Generation (GPG), has signed an agreement to acquire a majority stake of 85% in two solar plants in Brazil from Gransolar Group. The operation will involve an investment of €85 million to implement their first power generation project in the Brazilian market. The production of these two facilities will be about 154 GWh a year. With this agreement, and the construction of a 91 MW plant in Australia announced last August, the holding company GPG Gas Natural Fenosa has already exceeded the target of energy production set for 2018 in its strategic plan.

The Catalan Government was one of 14 regional executives to sign the 'Under 2 Memorandum of Understanding' in May 2015 as part of a pact to reduce CO₂ emissions by 80-95% by 2050 among the signing territories. This goal is an effort to mitigate the worst effects of climate change coming from greenhouse gas emissions. In recent years, the Catalan Government has been working toward improving energy efficiency and developing a greater supply of renewable energy through various initiatives and action plans. However, the biggest changes necessary for Catalonia to adopt the renewable, low-emissions energy model it desires cannot be implemented by the Catalan Government, but would have to come from the Spanish Government instead. Overall, the biggest challenge facing the adoption of renewable energy is being able to produce it at prices competitive with conventional sources of power.

There has been discussion among the Nuclear Safety Council (CSN) to approve construction of Spain's Temporary Centralised Storage Facility, more commonly referred to as the ATC (Almacén Temporal Centralizado), and a decision is expected in the coming days. The Spanish Government designated Villar de Cañas in Castilla-La Mancha's Cuenca Province as the location for the ATC at the end of 2011 to temporarily store 6,700 tU of radioactive waste accumulated in the country, including high-activity radioactive materials that could not previously be stored in any facility within Spain's borders. At present, nuclear reactors – including three active in Catalonia – must manage high-level waste on-site, either in light water pools or in dry storage casks until it can be shipped to a completed ATC. While Catalonia's nuclear power plants are licensed far into the 2020s, environmental concerns over the safety of radioactive waste hang over nuclear energy's future.

On Tuesday, ahead of the United Nations conference on Climate Change to be held in Paris this autumn, Catalonia signed a 'Memorandum of Understanding' in Sacramento (California), together with 11 other US states, Mexican states, Canadian provinces and regional governments. By taking this step, the Catalan Government and the other signatories commit to cut total greenhouse emissions to 80%-95% below 1990 levels by 2050 or to cut per capita emissions to below 2 metric tons during the same timeframe. The 12 founding signatories to the agreement span seven countries and three continents, with a total population of 100 million people and about $4.5 trillion in combined GDP. Apart from Catalonia, the signatories include: California, Vermont, Oregon and Washington (USA); Acre (Brazil); Baden-Württemberg (Germany); Baja California and Jalisco (Mexico); Ontario and British Columbia (Canada); and Wales (UK). More states, nations and cities are expected to join the agreement in the coming months.

A strategic gas pipeline is to be built through the Catalan Pyrenees, linking the Iberian Peninsula with France and Central Europe. The Midcat project aims to reduce Europe's dependency on Russian gas by 40%, diversifying the sources of supply. The pipeline should be operational by 2020, announced on Thursday the Spanish Minister for Industry, José Manuel Soria. The day before, French President, François Hollande, Spanish PM, Mariano Rajoy, Portuguese PM, Pedro Passos Coelho, and European Commission President, Jean-Claude Juncker, re-launched the project's construction. Midcat started to be planned in 2007 but it was halted for several years, mainly due to a lack of interest from French companies and institutions, which were not guaranteeing to build their part. Now, the crisis with Russia has reignited the urge to find alternative gas suppliers for Central Europe.

On Friday, the Spanish Government approved the €1,350 million compensation to Escal UGS, the company behind the controversial Castor Project, a submarine facility built to store 1.3 billion tonnes worth of gas reserves off the Ebro Delta coast. This project failed after it was found to have caused almost 1,000 small earthquakes. This amount will be financed through increased tariffs to gas consumers over the next 30 years, resulting in public compensation for a private investment. The Spanish Government is obliged to pay the developer Escal UGS, because of a clause in the 2008 Royal Decree whereby the State would agree to compensate the company should the project be unable to be completed. An appeal of this law was rejected by the Spanish Supreme Court last October. The Spanish Government has argued that this solution is cheaper than operating the project. The Catalan Government however, which had opposed the project from the start, has appealed this decision to the Constitutional Court.

The Constitutional Court has accepted the Spanish Government's appeal against the Catalan Executive' decree from December 2013 with which families in need are protected from their household electricity and gas being cut off by energy supply companies during winter months. The Catalan Government's measure aimed to fight the so-called 'energy poverty': people who cannot afford to pay for their energy bills because they do not get minimum income. The decree was not a cancellation of the bills but to allow those families to postpone the payment during the winter months. However, the Spanish Executive considered that the Catalan measure represented a "discrimination" against the citizens from other Autonomous Communities, who have to pay their energy bills on time. The appeal goes against Catalonia's political autonomy and is arbitrary. The Catalan Government stated it was "upset" by the ban and added that it will find an alternative way to help those families.

The energy company Gas Natural Fenosa announced they have launched a tender offer for 100% of the share capital of the Chilean Compañía General de Electricidad (CGE), which represents a €2.6 billion purchase. The transaction is to be the biggest international  acquisition by the Barcelona-based company. The total size of the operation, including the consolidated debt of CGE and its subsidiaries, is approximately €6 billion. It expected to generate over €600 million gross profit next year. Purchase of CGE, which distributes electricity to 43% of the Chilean market, and has 2.5 million customers, will increase the Catalan company's presence in Latin America. Furthermore, this deal will allow Gas Natural Fenosa to meet its 2015 growth targets and strengthen its presence in Latin America.

The Spanish Government plans to compensate €1.35 billion to the companies behind the failed Castor project, the off-shore gas storage facility built off the coast of Vinaròs, a Valencian town near the Catalan border. The company Escal UGS, controlled with a 66.7% stake by ACS, filed a claim in July last year for the €1.6 billion cost. The project which funded with €1.4 billion worth of bonds issued by the European Investment Bank in a controversial new funding scheme, was forced to temporarily stop a few weeks after it began in September last year, after it was found to be responsible for almost 1,000 earthquakes in Catalonia's Ebro Delta.  However, due to a clause from 2008 in the agreement, Escal was legally entitled to compensation. The Spanish Government tried to free itself of this obligation, but last October the Supreme Court allowed it. This decision has been highly controversial and will cause further political, financial and ecological earthquakes.

Barcelona-based Gas Natural Fenosa earned €1.445 billion in 2013, 0.3% more than in 2012. The strong international customer base of the energy company has neutralized the “decline in business” in Spain. This fall at Spanish level was due to the fiscal pressure increase and to the impact of the latest Spanish Government’s reform of the electricity market, which led to a shortfall of €455 million in 2013 for the Catalan multinational. The aggregate EBITDA (Earnings before interest, tax, depreciation and amortization) stood at €5.085 billion, 0.1% more than in 2012. International business accounted for 44.1% of the EBITDA, while it had represented 43.2% in 2012. In addition, the Spanish market contributed to 55.9% of Gas Natural Fenosa’s EBITDA, a 1.6% drop on last year figures.

The Catalan Government has finally approved a decree protecting families in need from having their household electricity and gas cut off by energy supply companies during the winter months. The measure aims to fight the so-called ‘energy povert’: people who cannot afford to pay for their energy bills because they do not get minimum income. This way, the Catalan Government ensures they can continue having heating and using their cooking devices during the coldest period of the year. Energy companies will not be able to cut off supplies to these families between November and March. Besides, the Catalan Government has also approved a temporary budget extension for the coming weeks, since the People’s  Party (PP) – which runs the Spanish Executive – has blocked the approval of the 2014 budget.

The Catalan Government wants energy companies not to cut off the domestic power supply to people in financial difficulties who are temporarily unable to pay their bills. The Catalan Ministry of Business and Employment aims to fight so-called ‘energy poverty’: people who are obliged to do without electricity or gas because they simply cannot afford the bills. In the current economic crisis, thousands of Catalan households (around 20%) are facing this problem, which means they cannot use the heating during winter or they have problems cooking meals. In order to achieve this objective, the Catalan Executive is looking at modifying Catalonia’s Consumption Code to include this initiative fighting ‘energy poverty’.

A series of earthquakes measuring between 2 and 4.2 on the Richter scale have been affecting the coast of southernmost Catalonia and northernmost Valencia in the last few weeks but particularly since last weekend. All the evidence suggests that the Castor offshore gas reservoir is behind the earthquakes. In 2009, the Spanish Government approved the building of an underground gas reservoir located under the sea bed, some 20 kilometres offshore from the Ebro Delta and Vinarós, using the cavity in the rock from a former oil field. Madrid approved the project without an earthquake risk report, despite a formal petition from the Catalan Government. Now, geologists, the Spanish Industry Ministry and the company admit that the injection of gas into the rock could be triggering the earthquakes. Activities have been stopped and the Public Prosecutor’s Office is investigating the case.