Direct Energie confident of EU blessing of gas plant project

French utility Direct Energie is determined to begin construction of a 400MW gas-fired power plant at Landivisau by the end of the year.

“We are confident that we’ll get an answer from the European Commission before the end of the year, and we’ll be ready to start construction soon thereafter,” a spokesman said late on Thursday.

The project has been on hold since the commission began an investigation last November due to implications of state aid (see EDEM 16 November 2015).

“The plant is to be built in Brittany, which is poorly served by the power and natural gas grids and would be unprofitable without an annual capacity fee, which will last for 20 years under the terms of tender we won in 2012,” the spokesman said.

The public tender was launched to address scarcity of supply in Brittany, a region which relies heavily on nuclear production from neighbouring Normandy. But it attracted the attention of the commission for excluding alternative technologies.

“The problem is that the government failed to notify the commission of state aid but we are ready to move ahead as soon as the investigation is concluded,” the spokesman said. The project is expected to be complete in 2018-2019.

Direct Energie also recently acquired a 400MW gas-fired power plant at Bayet from Swiss utility Alpiq. “It’s true that power prices are too low for this investment to become profitable in the short-term but we believe that we are in a cycle and this is a way for us to hedge against a new price orientation in the future,” the spokesman said.

The French clean peak spread peaked at €8.19/MWh at the start of the year but has since dropped to €3.48/MWh, according to ICIS calculations, on the basis of a €49.13% plant efficiency for delivery in 2017.

The spokesman also indicated there was an ongoing discussion regarding a carbon floor, and whether a measure of this kind should be implemented on a European or national level. joachim.moxon@icis.com