European nuclear producers 'discreetly' boost capacity: analysts

European nuclear producers 'discreetly' boost capacity: analysts

London (Platts)--4Jul2005


Many European nuclear generators are discreetly boosting their capacity, which
is technically easy and lucrative at current power prices, UBS Utilities said
in a morning note Monday. 

"Our analysis suggests that Sweden, Belgium and Spain have already boosted
their capacity, thereby limiting the potential remaining upside. Yet as German
utilities were expecting to be forced to close their plants early, they have
not maximised their output," the analysts said, adding that capacity boosts go
a long way to adding nuclear capacity at limited political risk, unlike
building a new plant. UBS Utilities' proprietary model shows that the value of
this is close to EUR500/kWe based on the Net Present Value of the cash flows
over 20 years assuming a realised price of EUR40/MWh. But an additional (and
similar) value comes from the 'saved' capex. As long as wholesale power prices
remain above EUR31/MWh for a period of time, nuclear generators should benefit
from boosting their existing nuclear assets. It estimates the extra value
could be a minimum of EUR0.98ps for Eon and EUR0.90ps for RWE, all else being
equal.

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