European Power
Major investments required, with gas and renewables expected to dominate.
By Bruno Brunetti
T
he unfolding of the severe economic recession is taking There is some evidence that new build costs may have
a silent, but significant toll on European electricity peaked, but falling costs of raw materials are yet to
markets through plummeting loads from industrial materialise. Plants manufacturers are announcing drops in
shut-downs. However, a greater issue is to what extent the ordersasclientsdelayinvestments,bettingthatpriceswillfall,
more difficult access to the credit markets and the sharp drop but delays cannot continue indefinitely since the European
in fossil fuel needs will affect companies’ capabilities to power markets will soon be required to modernise and/or
modernise or build new units – especially since costs of new replace a significant portion of their existing ageing capacity.
plants or components have remained particularly strong. Inspiteofweakercarbonbalancesandprices,newcoal-fired
capacity appears more at risk, especially since the new build
process for coal units is finding obstacles in the form of local
opposition. Gas-fired generation remains the most attractive
... 2009 European demand option, although the linkage with volatile oil markets and
[electricity] is likely to move
increasingdependencyongassuppliesconcentratedona(few)
lower by about 3.5%,
foreign suppliers may also slowdown gas-fired penetration in
the generation mix.
equivalent to around 110 TWh
The share of renewable sources within the overall fuel mix
could increase by some 5% up to 2020, while higher
penetration would be more likely under stronger supporting
policies or higher oil or EU Emissions Trading Scheme (ETS)
carbonprices.Meanwhile,thenuclearoptionhasbeengaining
momentum, but projects currently in the pipeline will take a
long time to bring online and remain overall below the units
likelytoberetired.Thisistosaythatthecontributionofnuclear
within the energy mix is likely to move lower going forward.
Collapsing Industrial Demand
Plummeting demand is becoming well documented in data
released by the Transmission System Operators across Europe.
In spite of resilient demand from heating needs in residential
and commercial sectors, collapsing manufacturing activity is
severely undermining overall loads, which means that 2009
European demand is likely to move lower by about 3.5%,
equivalent to around 110 TWh.
The textiles and non-metallic mineral sectors (bricks,
refractory, ceramic and glass products) have suffered a more
pronounced downturn than other industrial sectors. The losses
innon-metallicmanufacturingactivityarecorrelatedwiththe
slowdown in housing markets, with a more direct impact on
electricity demand in Italy, Spain and Germany. These three
marketsaccountforabout66%ofoveralldemandforpowerin
thenon-metallicmineralsectorintheEuroarea.Italianpower
demand in this sector totals some 15 TWh/year, or about 24%
of the entire demand in the Euro area, against some 13
TWh/year in Germany and Spain. The weakness in the textile
industry means that the Italian system again is particularly
exposed, as this sector uses about 8 TWh of power per annum
(or about 40% of the Euro area power use in this sector).
18 worldPower2009
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