There’s only one big story in the power industry at the moment and they don’t come much bigger – GE’s planned acquisition of Alstom.

GE has officially made an offer of $17bn for Alstom’s thermal and renewable power businesses, as well as its grid arms.

A committee of independent directors will now review the offer before the end of May, which is also the time that Siemens has to come in with a rival offer, should it be interested.

Meanwhile, there’s been a lot of talk in the French government about the deal, and most of it has been negative.

President François Hollande has said it is neither “sufficient” nor “acceptable” and warns that the deal would put Alsom jobs at risk.

This is curious, as Alstom chairman Patrick Kron believes the transaction would allow Alstom’s employees to “join a well-known, major global player, with the means to invest in people”.

So there’s a disconnect between politics and business – nothing new there then. As players from the power industry in Europe and further afield prepare to descend on Cologne for POWER-GEN Europe in the first week of June, the European power industry is in a state of flux, and it is a state that is aided and compounded in equal measure by policy decisions.

No one would disagree that a move away from fossil fuels to more renewables is a good thing. How you get there and in what time frame is the point of conflict.

The power sector is not an island industry: its well-being has a direct effect on the health of whole countries. As Eurelectric argues in this issue (p6): “If Europe does not get its energy policy right, the economy as a whole suffers.

“The value of our companies is deteriorating, political and regulatory uncertainty is high and security of supply is at stake. Action is needed and it is needed now.”

When did energy become the policy plaything of governments? When it became clear that it was a potential vote-winner. Plans for the Energiewende were in place before Fukushima, but the disaster in Japan sent the policy hurtling out of the starting blocks long before it was ready to run the race. Now, with transmission issues writ large and an unintended rise of coal in place, the Energiewende runner is wheezing round the track, proving the adage of the ‘five Ps’: proper planning prevents poor performance.

The thinking behind the well-known ‘energy trilemma’ of security of supply, affordability and sustainability is that all three must be catered for in (pretty much) equal measure, but the problem is that governments have tended to pick one and pursue it at the expense of the others. And this can result in back-to-front actions, such as peppering land and sea with wind farms when the grid is not yet ready to handle the electricity they generate.

In this issue of PEi, Dr Tamer Turner, chief executive of Yildirim Energy Holding, calls for an “evolution instead of a revolution”. Ahead of POWER-GEN Europe, he writes (p38): “Policymakers have to be more realistic with regard to the technical, economic and social capacity of their market to absorb change.”

So where does Europe go from here? All the pieces of the 21st century power system jigsaw are on the table – they’re just not fitting together. Dennis Volk, electricity analyst at the International Energy Agency, says Europe is “is at the crossroads to successfully develop the power sector in accordance to its needs and options”.

Writing in our Talking Point feature on p12, he says: “The future will show if either national governments are to retain their current roles in shaping the future of multiple European power systems or if one truly European power system emerges. At the same time, governments’ choices will define how much competition will be left for delivering reliable, affordable and sustainable electricity services.”

Whatever national governments and the EU do about energy, it must be done hand-in-hand with the power industry. Debate delivers decisions that work. Knee-jerk actions presented as faits accomplis result in disorder and uncertainty.

Oh, and will the Stars and Stripes be flying alongside the Tricolore outside Alstom’s headquarters in coming months? If I were a betting man I’d wager a fistful of euros on it going GE’s way.

Where does Europe go from here? All the pieces of the 21st century power system jigsaw are on the table – they’re just not fitting together.

Kelvin Ross,

Follow PEi Magazine on Twitter: @PEimagzine
Follow me: @kelvinross68

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