EU power market reform to boost energy transition, flexible generators -Citi

VERBUND AG

09/03/2023 10:38

** Citigroup says the planned EU power market reform is
unlikely to bring big changes to power price formation but will
facilitate mechanisms required for long-term energy transition
    ** "We expect wider use of CFD (contract for difference)
contracts for new renewables investments, support for flexible
capacity," the broker says
    ** Citi says the reform is likely to be marginally positive
for renewables developers and should "definitely help" groups
like Engie  ENGIE.PA  and RWE  RWEG.DE  that operate large
flexible capacity portfolios along with big focus on renewables
    ** However, the broker warns of risks from profitability cap
on existing inframarginal technologies such as nuclear and hydro
    ** It says the reform may bring risks for outright power
producers, naming Verbund  VERB.VI  due to its hydro assets and
CEZ  CEZP.PR  on its nuclear feet
    ** Citi adds the risk from power price regulation for Fortum
 FORTUM.HE  is relatively small as it operates in the Nordics
where realized power prices are significantly lower than in
Central Europe

 (Reporting by Matteo Allievi)
 ((Matteo.allievi@thomsonreuters.com))