EUROPEAN POWER & ENERGY
Costs of Energy Transition Looms Large The Fukushima accident in March 2011 led to the
serious questioning of nuclear energy sustainability, with countries examining how to reduce the nuclear share of the energy mix. As a result, the European energy mix will start to evolve towards less nuclear and more renewables, gas, and in some countries, coal. These scenarios which should generate more CO2 emissions require significant additional investment from utilities which will impact generation and grid costs and thus retail prices. In Germany, following the May 2011 nuclear phase
out decision, electricity prices will significantly increase for domestic customers. Equally, German industrial customers could see prices go up by 70% by 2025, EEMO reports. The energy transition investments needed from now to 2020 are forecasted between €350 and €415 billion, out of which grid investments amount to about half these estimations.
Power Shift to Emerging Economies Change in power generation, 2010-2035
objective of 20% renewables in the energy mix by 2020 will be difficult to meet. “This is a result of the sovereign debt crisis prompting
governments to reduce the feed-in tariffs and fiscal incentives that have fuelled renewable progress. The solar power industry has been hit particularly hard,” according to the Report. These reduced subsidies have created oversupply for
equipment manufacturing companies globally, and have also prompted China to significantly increase their exports of equipment – particularly solar photovoltaic panels – to the US and Europe. As a result, it is forecasted that in the short-term at least half of the world’s existing solar photovoltaic manufacturers could be taken over or be bankrupted.
Emission Targets Should be Met Although the market and regulatory signals are currently insufficient to encourage the industry to move towards low carbon technology, the EU 2020 CO2 objectives should be met owing to the economic crisis and industrial plant relocations to Asia resulting in lower energy consumption and hence lower emissions. To be efficient the EU ETS is in radical
The need for electricity in emerging economies drives a 70% increase in worldwide demand, with renewables accounting for half of new global capacity
Source: WEO 2012, IEA However, Professor Alfred Voss from Stuttgart University,
has estimated the energy transition cost for Germans at more than €2,000 billion, an amount comparable to that spent on German re-unification. This will lead to significant electricity price increases for German customers who have already one of the most expensive electricity in Europe. “The German case shows that energy transitions are complex and can only be envisaged with long run plans,” say EEMO In France, if nuclear is lowered
to 50% of total energy generation, then electricity prices are forecast to rise by 16%, translating into a 12% retail price increase.
Decreased Subsidies Threaten Renewables With more than 70% additional capacity in 2011,
renewable energies have continued to expand in Europe. However, despite large offshore wind projects launched in Member States like the UK and France, the EU 2020
32 December 2012
need of reform. Carbon emission prices have decreased from €14/t in early 2011 to €6-7/t earlier this year, reflecting an excess of permits. Specifically, in the short-term, extra allowances must be back-loaded to re-establish the scarcity required to push prices up – which the Commission is currently organising. However, the EU’s internal procedures mean this much-needed amendment will not be solved until April 2013 at the earliest.
Energy Efficiency Objectives The EU 2020 energy efficiency objective will be difficult
The EU 2020 energy efficiency objective will be difficult to meet
to meet. Thus, in June 2012, an EU compromise text for the energy efficiency directive was adopted. It requires utilities companies to ensure their own clients achieve energy savings from 2014 on. It is mandated that these aggregated savings should reach, year-on-year, 1.5% of the utilities’ annual sales. If a utility fails to deliver these aggregated savings, it will incur a penalty.
Capital Expenditure Slowing Huge infrastructure investments are required, but
utilities are slowing down their capital expenditure, confirm Capgemini. In Europe a minimum of €1 trillion investments in infrastructure – including generation, grids, LNG re-gasification facilities and pipelines – are required by 2020. In the electricity industry, these investments are needed to replace ageing plants in Europe
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84 |
Page 85 |
Page 86 |
Page 87 |
Page 88 |
Page 89 |
Page 90 |
Page 91 |
Page 92 |
Page 93 |
Page 94 |
Page 95 |
Page 96