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Industry Highlights

For politics and energy to mix successfully, the onus is on governments to send out clear policy directions and stick to them.

The result of this failing to happen is being seen again and again across Europe, and this month brought the latest examples.

RWE posted a net loss of $3.85bn – its first annual loss in its history – and the company became the latest to set a large chunk of blame at the door of Angela Merkel and her ‘Energiewende’.

“Political intervention is making our business challenging,” said RWE in its annual report, adding that “should market conditions continue to deteriorate, we will be at risk of having to perform further writedowns”.

The bad news from RWE’s headquarters in Essen continued a week later when the company announced that it would be mothballing its Lingen combined cycle gas turbine plant in Germany’s Emsland region during the summer – a state-of-the-art plant which has so far cost €500 million and has only been operating since 2010.

The reason for the mothballing? It simply cannot compete with Germany’s solar photovoltaic (PV) plants. Good news if you’re in the PV industry; bad news if you want to see a balanced make-up of power generation that keeps all technologies in play.

The Energiewende’s list of unintended consequences continues: less nuclear and more renewables has in fact resulted in more coal-fired power, while new high-tech plants like Lingen find themselves idle because they are no longer able to operate econonimcally in an energy mix that they simply didn’t see coming.

With elections out of the way in Germany, it might just be that we see some U-turns on the Energiewende.

Everyone knows that more forms of renewable power generation will be – indeed must be – integrated into Europe’s energy make-up, yet the joined-up policy thinking that will allow this to gradually happen seems to have eluded most governments.

Instead we have fluctuating policies driven by knee-jerk decisions designed to win votes.

In the UK this month, independent renewable energy developer RES pulled the plug on a $502 million biomass plant in England because of “the government’s inconsistent support for dedicated biomass energy”.

This follows similar decisions on dedicated biomass plants and offshore wind farms.

Meanwhile, in the so-called emerging economies, policymakers are setting out strong blueprints to boost power generation, which is drawing support not just from domestic power players but crucially, attracting the interest of international investors.

In this month’s issue we have a focus on two economies that have strong ambitions for their energy sectors.

Mexico has radically reformed its legislation to open its long-locked doors to foreign investors (see p.4).

This move could be worth a total of up to $60 billion to outside companies: Poland has already signalled an interest and don’t be surprised when more European players follow suit.

In India, a strong political will is driving through an ambitious nuclear programme which is drawing-in the major manufacturers in the sector (Areva, Westinghouse, GE and Rostatom), who realise the potential of the Indian market (see p.28).

The Indian government has consistently pushed for a move to utilise more nuclear energy and in the wake of the Fukushima accident, it took steps to placate its publicࢀ¦ and kept pushing.

Indeed, as the third anniversary of Fukushima passed on 11 March, India is one of the nuclear sector’s success stories.

While the European nuclear market continues to be dogged by delays and inactivity and the US sector reels from the effects of the shale gas boom, India and many other regions of Asia are definitive about what they are going to do, and where, and when, and how.

The difference between the governmental approaches of Asia and Europe is straightforward: Asia doesn’t have the time to indulge in the dithering and tinkering of Western policymakers. There’s an imperative to provide electricity to growing populations and manufacturing sectors, which in turn will further boost economies and the growth of home-grown technology.

Dr. Heather Johnstone à‚  Dr. Heather Johnstone
Chief Editor
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