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MERCHANDISER


Regulatory Risk, Weak Wholesale Prices Greatest Challenges


A PLATTS SURVEY of more than 100 power utility companies and consultancies in Europe has identified regulatory risk and weak wholesale power prices as the greatest challenges facing the industry. Insufficient network development and fuel price risk were also noted as need-to-resolve challenges to the electric utility companies. “The survey reveals a wide spectrum of opinion in a


sector struggling on several fronts,” said Henry Edwardes- Evans, editor, Platts Power in Europe. “Some respondents believe the industry is adequately equipped to meet power needs, while others believe western Europe is heading for a ‘perfect storm’ driven by ageing infrastructure, supply volatility of renewables and accelerated nuclear closures.” Nearly half of those surveyed said that new


conventional power plants are needed in the next three years, particularly in the UK, Germany and Belgium. Respondents also called for new plants to be built in France within the next five years and in Italy, Ireland and Switzerland within the next 10 years. “When we asked how these plants might be


report commissioned by environmental pressure groups says that the EU will save a further €200 billion annually, if it meets a voluntary 2020 target of using 20% less energy than projected in 2005. This is roughly equivalent to the annual gross domestic product of Denmark, but the bloc is on track only for 17% energy savings by 2020, according to data in an EU orientation briefing paper. The report highlights three key benefits of energy


efficiency: cost-reductions for industry and consumers, employment boosts, and breaking fossil fuel dependency. But governments are failing to embrace energy savings


despite the benefits of cheaper bills and new jobs. This can only be achieved by putting energy savings at the top of the EU’s priorities and set binding targets for 2020 and 2030, the report asserts.


Europe’s Energy Supply & Prices


Currently, 80% of the EU’s primary energy consumption is provided by fossil fuels. The EU is highly dependent on external suppliers, importing over 80% of the oil, 60% of the gas and 40% of the coal it uses. Coal imports have doubled since 19904


In a business-as-usual scenario energy consumption will increase by 12% from 2005 to 2020. Overall import dependency may reach 66% in 2020 (compared to 53% in 2010) if energy consumption keeps rising until 2020. At the same time, world prices of oil, gas and coal are expected to rise until 2020 in business-as-usual trends.


financed, most of those surveyed thought some form of central, regulated support would be needed,” says Edwardes-Evans, who will chair the upcoming Platts European Power Generation Conference and supported by Commodities Now. “Hardly anyone thought wholesale markets alone would provide sufficient revenue for the infrastructure build.”


Energy Savings One way to stem this rising tide is, of course, saving


energy itself. In Saving energy: bringing down Europe’s energy prices for 2020 and beyond, we are told that the EU could make net savings of €250 billion per year by 2030 if it reduces energy use 35% below 2005 levels. The new


Clean Energy Falls 11%


Clean energy investment declined 11% in 2012, weighed down by regulatory uncertainty and policy changes in big markets such as the US, India, Spain and Italy. Sharply lower prices of solar and wind technology also exerted downward pressure on investment volumes, though they allow higher installation levels per dollar of funding. These figures from research company Bloomberg New Energy


Finance, based on the world’s leading database of transactions and projects in clean energy, show that overall global investment in 2012 was $268.7bn, down from a revised figure of $302.3bn in 2011. The 2012 investment total was the second highest ever, and five times that of 2004. The highlight of the 2012 total for clean energy investment was a record $67.7bn outlay by China, up 20% on the previous


16 March 2013 Many studies on efficiency conclude that there is a


large potential for cost-effective savings. But these studies generally only consider the cost savings for consumers and businesses resulting from avoided energy use. In this report, produced by the Ecofys energy consultancy and commissioned by Friends of the Earth Europe and the Climate Action Network, attention is drawn to the fact that energy savings do not only result in direct cost savings, but have a multiplier effect due to their downward effect on energy prices (under their assumptions). “The result is that real cost savings from exploiting the EU’s cost-effective energy savings potential are likely to be considerably higher than figures commonly cited,” the report says. •


year thanks to a surge in its solar sector. Its total was more than 50% above that of the second-placed country, the US, with $44.2bn. In 2011, the US pipped China for first position as investors rushed to take advantage of stimulus-related programmes before they expired. Michael Liebreich, Chief Executive of Bloomberg New


Energy Finance, said: “We warned at the start of last year that investment in 2012 was likely to fall below 2011 levels, but rumours of the death of clean energy investment have been greatly exaggerated. Indeed, the most striking aspect of these figures is that the decline was not bigger – given the fierce headwinds the clean energy sector faced in 2012 as a result of policy uncertainty, the ongoing European fiscal crisis, and continuing sharp falls in technology costs. Solar PV module prices, for instance, fell another 24% over the course of last year.


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