HomeCoal FiredNew head of Engie says low power prices the new norm

New head of Engie says low power prices the new norm

Isabelle Kocher, the new chief executive of Engie, believes that low European electricity prices are here to stay, despite hopes expressed by some utility chiefs that the historic lows seen over the last five years would be temporary.

“I do not think that this is cyclical. I think that the price of electricity has no reason to rise. It will never be like it Isabelle Kocherwas before,” Kocher told the Financial Times.

New realities have pressed the company into transforming its business model, with Engie selling €15bn worth of non-renewable energy assets, mostly in exploration and production, coal-fired power plants and US gas plants, over the next three years, replacing all that with €22bn in renewable energy, energy services such as heating and cooling networks, and decentralised energy technology.

Engie has written off nearly €24bn worth of assets over the past two years, as many of its gas power plants become uneconomical. Ms Kocher said Engie will try to find regulated, not market based, energy contracts to protect itself from further price declines.

The price of a megawatt hour in western Europe has virtually divided by two. In Germany it has fallen from €60 per megawatt-hour in 2011 to around €25 this year. The French price has moved from around €56 per MWh to around €30.

The transition to renewables in Europe and across the world is set to keep prices low for the foreseeable future, although some companies, including EDF, have predicted electricity prices in Europe will start to go up again after two or three years.