World Power Markets


Table 1: Total Sector Deal Activity, 2008 and 2009 2008


2009


10 deal list. Seven out of the largest 10 transactions had European companies on both sides of the deal, accounting for 60% of the value of all deals. European bidders featured in three out of every ten (29%) of non- renewable electricity and gas deals. The fallout from a wave of European mega deals, continuing


Power (excluding renewables)


of which: Electricity Gas


Renewables Total


541 119 856


Number Value US$ Number Value US$ % Number % Value 660


194.3 bn


180.2 bn 14.1 bn 38.9 bn


596


497 99


550 1,516 233.2 bn 1,146 Source: PricewaterhouseCoopers, Power Deals 2009 Annual Review


power market consolidation and network unbundling in mainland Europe, positioning for the expansion of nuclear power in the UK, and ownership transfers in China formed the backdrop behind the biggest deals of 2009. The deal outlook for 2010 remains mixed. Continuing


uncertainty and reduced demand will continue to cloud the short-term deal outlook. “Set against this, there are many positive deal drivers. Consolidation and network divestment will remain a key factor in central and eastern Europe,” say PwC. Chinese investor interest will also be maintained. PwC see


the possibility of a renewal of wider international ambitions by key players; “The challenges of the major capital programmes required to deliver future clean generation are likely to spur greater partnerships across industry boundaries and we would not rule out cross-industry stake-building.”


Reducing Emissions It is clear that the entire electricity industry has


a common goal of creating a low-carbon future. Electricity industry leaders recently shared this vision, underlining the crucial role of electricity for the three areas of sustainability – economic, social and environmental. But these ambitions will require a massive deployment of advanced technologies, subsidy, and carbon emissions legislation. Based on the joint Roadmap for a Low-Carbon


Power Sector by 2050 (presented in December 2009 in Copenhagen) the industry goal of developing national or regional emission reduction trajectories towards a low-carbon future has been set. These trajectories will rely on a common measure of carbon emission intensity (see page 96). In this respect, supportive, transparent and stable governmental policies are necessary for long-term planning by the industry and to encourage the significant investments needed. The Power Choices study for Europe showed that an objective


worldPower 2010 Source: IEA


But how is this financing to materialise given the current economic problems of the Eurozone and elsewhere plus the growing antipathy towards climate change? Step up BP with what has become a colossal environmental and economic catastrophe. No better a wake-up call – and perhaps in the right country – for public opinion to begin to re-guide political leaders towards real long-term power solutions?


5


of carbon neutrality by 2050 could be achieved and that, with the right regulatory and policy framework, the European electricity industry can reduce its CO2 emissions by 90% from today’s levels by 2050. This reduction would be achieved by significant deployment of renewable energies (about 50% of installed capacity by 2050), CCS for both coal and gas-fired generating plant and new nuclear capacity. However, while rapid progress is being made on the initial deployment of new renewables, as of now these technologies (and the necessary transmission and distribution investments) will not be deployed on a significant scale before 2025 at the earliest. Consequently, deep cuts in electricity industry emissions will not occur before then.


Figure 2: World Primary Energy Demand, MTOE (IEA Reference Scenario)


97.6 bn


88.9 bn 8.6 bn


33.5 bn -10% -8%


-17% -36%


131.1 bn -24% -50%


-51% -38% -14% -44%


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