Survey Suggests Regulatory Risk, Weak Power Prices Are Biggest Challenges for European Power Sector

A survey of European power utility and consultancy workers conducted by energy information provider Platts last week suggests that regulatory risk and weak wholesale power prices are thought to be at the top the industry’s most significant challenges.

The survey report is based on responses from 100 individuals, 36% of whom worked at integrated utilities, 30.5% at consultancies, 17% at financial institutions, 11% in power generation, and 4.9% of whom were equipment suppliers. Most described their company’s main business activity as a "mixed portfolio in power generation."

Regulatory risk was voted by the most respondents as the biggest challenge facing power generation in Europe, while intermittent renewables received the fewest votes. Nearly 43% of respondents said a new conventional plant was needed within the next three years in countries like the UK, Germany, Belgium, the Ukraine, and the Baltic region.

A majority also said support to finance new conventional power plants could likely come from capacity mechanisms and ancillary services. The wholesale market was viewed as the most unlikely signal for new investment.

When asked which technologies would prove the most profitable over their asset lifetimes, from a pre-determined set of options that included wind, combined cycle gas turbines, nuclear, and solar photovoltaic, most respondents voted for onshore wind, offshore wind, and solar. Decentralized gensets received the lowest votes.

"Unsurprisingly, the majority felt that the markets are not fit for purpose, with some pithy comments elaborating discontent with political interference, stagnant demand and dependency on subsidies," Platts said. "On the other hand there are those who believe that, for all the challenges, Europe is at least moving in the right direction."

Sources: POWERnews, Platts

—Sonal Patel, senior writer (@Sonalcpatel, @POWERmagazine)