Bucking a trend set by its European peers to divest from coal, the Czech energy group Energeticky a Prumyslovy Holding (EPH) is buying coal-fired power plants across the continent to the dismay of environmentalists lobbying for a phase-out of fossil fuels.
Its annual production of more than 100 million megawatt-hours in its plants in Britain, the Czech Republic, Germany, Hungary, Italy and Slovakia — enough to power about 30 million homes — makes EPH the seventh-largest power producer in Europe.
Set up in 2009, EPH relies on coal for more than half of its production capacity. Its owner, Czech billionaire Daniel Kretinsky, is undeterred by global efforts under the 2015 Paris Agreement to curb global warming by switching from carbon-intensive fossil fuels like coal and oil to “clean” energy, especially solar and wind.
“From the practical and moral point of view, we believe it’s wrong to reject using resources that are necessary to meet the fundamental needs of European citizens,” EPH spokesman Daniel Castvaj said.
The EPH controls about 50 companies with 25,000 employees. Dirty-burning brown coal, also known as lignite, accounts for 30.5 percent of EPH’s capacity, while cleaner-burning black coal makes up 21.7 percent.
The sixth-wealthiest Czech according to Forbes magazine, Kretinsky controls 94 percent of EPH, which earned 1.64 billion euros (US$1.73 billion) in gross profit in 2015 after taking in 4.57 billion euros in consolidated revenue.
Kretinsky also owns the Czech branch of German-Swiss publishing group Ringier Axel Springer Media AG and the top-flight football club Sparta Prague.
EPH has been on a shopping spree, snapping up coal-fired electricity plants from European energy giants like E.ON, Enel and RWE, which they are happy to sell.
Given the global push to decarbonize, “there’s a great deal of uncertainty about the future of coal, gas and nuclear power,” said Marek Hatlapatka, an analyst with the Prague-based brokerage and investment firm Cyrrus.
“The energy sector is currently divided into two completely different streams with capital-intensive ‘old energy’ on the one hand and ‘new energy’ on the other, that is more modern, less capital intensive and with a lot of room for renewables,” he said.
“This division is putting huge pressure on companies and regulators,” he said, adding that it is forcing giants like E.ON and RWE to sell their fossil fuel-based assets at “relatively low prices, reflecting the risk.”
There are investors — like EPH — who see opportunities afforded by the low prices of these assets and have been snapping them up, regardless of the uncertainty.
Last year, the firm acquired German lignite assets from Sweden’s Vattenfall. It also bought three coal-fired plants and five mines in eastern Germany, and a 50-percent stake in the Lippendorf power station near the German city of Leipzig, accounting for 8,000MW of power in total.
Castvaj insisted that EPH only buys coal-fired plants in markets where they are “indispensable to cover the needs of the population and industry.”
“Germany’s withdrawal from nuclear energy necessarily implies a temporary use of coal,” he added, but declined to confirm how much money the firm has put into its recent acquisitions.
Petr Kalas, head of the Czech government committee for renewable energy, said that EPH has “an alternative strategy which is not exactly in line with the Paris Agreement on climate, but is still an option for the market.”