Growth consultancy Frost & Sullivan predicts that there will be little change in the rate of investment in the European power generation sector, at least in the short term.
Large power-based companies such as Siemens and ABB have announced disappointing results in recent weeks and the large, traditional utility model for the bloc appears to be irreversibly broken, according to some analysts.
Consultant Jonathan Robinson told Power Engineering International the stagnation evident in the sector doesn’t look like lifting.
“From a Frost & Sullivan perspective, we are largely seeing a continuation of the status quo of the past five years – limited investment in fossil based power generation, targeted renewable investment, although investment does continue, but at much lower levels than the 2011 peak and more selectively pursued, and sluggish investment in transmission & distribution versus what is needed for the European power system. “
According to Robinson, Frost’s analysis suggests the challenges ahead remain the same as the players in the European power scene continue to adapt their businesses.
“We don’t see much evidence that this will change in the next five years. Many countries will miss their renewable energy targets, but they will get away with this as targets are pushed out to 2030. Electricity consumption growth will remain weak, partially driven by energy efficiency efforts, but also because the economic situation is still weak in many member states.”
Ultimately that amounts to a continually bleak assessment of the prospects for investment in the sector, even if legislation introduced for energy security purposes could provide some modest growth.
“Utilities are facing the major challenge of distributed energy to their business models in Europe and many are still trying to reduce debts – hence a continued climate of some renewable investment (at lower levels), as well as a strategy of diversification with investment prioritised in other regions,” Robinson told PEi, adding, “Capacity mechanisms – where adopted – might help in keeping existing assets online and potentially the re-activation of some mothballed plants, but it is not looking like it will be enough to start a wide scale investment boom.”
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