European Energy Markets Observatory (EEMO)

4 factors putting European Utilities under pressure
The 2008/2009 economic crisis led to major drop in energy consumption levels and energy consumption forecasts are more pessimistic than one year ago.
Fukushima accident triggered governments to revisit their energy mix and to envisage reducing the share of nuclear energy.
Aging plants and the development of renewables require at least €1 trillion investments in infrastructure in the next decade, yet Utilities are slowing down their capital expenditure.
Energy efficiency measures and other regulations by the European Commission represent a financial burden on Utilities.

Economic Instability

Electricity Consumption** (TWh)
Gas Consumption** (TWh)

The 2008/2009 economic crisis led to major drop in energy consumption levels

As a poor economic future situation looms in the horizon for the euro zone, projections on GDP evolution and related energy consumption are more pessimistic than one year ago which impacting on Utilities’ sales and thus revenues.

Energy Transition

Fukushima accident in March 2011 lead to questions around nuclear energy sustainability. Countries like Germany and France review the nuclear share of the energy mix.

Nuclear phase-out by 2022

Decrease the nuclear share from 75% today to 50% in 2025

Investments needed from now to 2020 are forecasted
between €350 and 415 billion* out of which grid investments
amount to about half these estimations Investments needed from now to 2020 are forecasted
between €350 and 415 billion* out of which grid investments
amount to about half these estimations Investments needed from now to 2020 are forecasted
between €350 and 415 billion* out of which grid investments
amount to about half these estimations Investments needed from now to 2020 are forecasted
between €350 and 415 billion* out of which grid investments
amount to about half these estimations Investments needed from now to 2020 are forecasted
between €350 and 415 billion* out of which grid investments
amount to about half these estimations Investments needed from now to 2020 are forecasted
between €350 and 415 billion* out of which grid investments
amount to about half these estimations

The UFE "50% nuclear" scenario leads to €382 billion
investments and at least a 16% increase in electricity
generation The UFE "50% nuclear" scenario leads to €382 billion
investments and at least a 16% increase in electricity
generation The UFE "50% nuclear" scenario leads to €382 billion
investments and at least a 16% increase in electricity
generation The UFE "50% nuclear" scenario leads to €382 billion
investments and at least a 16% increase in electricity
generation The UFE "50% nuclear" scenario leads to €382 billion
investments and at least a 16% increase in electricity
generation The UFE "50% nuclear" scenario leads to €382 billion
investments and at least a 16% increase in electricity
generation

Increasing Regulation

2012
A new Energy Efficiency compromise set a target of 17% decrease of EU’s primary energy consumption by 2020 instead of 20%

Utilities are required to make energy savings equivalent to 1.5% of their annual sales each year from 2014 to 2020, if not, they will incur penalties.

In this way, mandatory reduction of sales decreased revenues.Energy efficiency measures and other regulations by the European Commission represent a financial burden on Utilities

Infrastructure Investments

3 areas that require investments in infrastructure - (1)Generation plants' construction to replace old plants. (2)Nuclear reactors potential phase-out and safety improvement after Fukushima accident. and (3)Electricity and gas grids reinforcement.

Total investment needs estimated for the electricity and gas sector between 2010-20: over 1 trillion €*

€1 trillion investments needed

Due to current economic instability and a lack of reliable projections for the eurozone's future, Utilities have difficulties to make the necessary investments

Major Impacts on the Utilities

Sales and Revenue

Stagnation in energy consumption levels

Additional legislation as Utilities still seen as easy sources of revenues

Future Higher Costs

Increased investments in generation capacities and grids infrastructures

Risk of penalties from legislation