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Economic Recovery: Financing Utilities Investments

Synopsis

EU member states must finance the deployment of more than 300 gigawatts of new power generation capacity to meet demand growth of 20% by 2030, requiring colossal levels of investment across the entire value chain.

Description

Driven by legislative requirements and strategic diversification opportunities, Europe's leading utilities must finance conventional forms of power generation as well as record levels of low-carbon power generation in a rapidly evolving energy market environment.Analysis of key recent deals and outlookReview of the investment strategies of main European power utilitiesEnergy asset investment projections for 2020The economic downturn has had a dampening effect on power demand, due largely to lower industrial activity. It also took its toll on energy infrastructure investment initiatives, particularly in renewable energy, as risk-averse investors retreated to safe havens.Markets and energy companies acting on their own are unlikely to deliver the necessary technological breakthroughs as a result of delays in obtaining the necessary environmental and construction permits, an issue compounded by difficult access to finance and lack of adequate risk-mitigating instruments.Investors have expressed strong concerns about the scale and diversity of funds needed, the recent and potentially protracted contraction of capital markets, and new legislation that would reduce banks' ability to lend. They have also called for more transparent and stable policy making that addresses limitations on both supply and demand sides.How are European utility capex programs likely to evolve in the next three or four years?Where will energy investments come from? What is the scale and diversity of the funds needed?What does the investment outlook look like for renewable power, clean coal, liquid natural gas, and large-scale energy efficiency?What about conventional forms of power generation and nuclear?

TOC

OVERVIEW

  • Catalyst
  • Summary

THE CURRENT EUROPEAN POWER AND INVESTMENT LANDSCAPE

  • European power market landscape
  • Technological diversity
  • Geographic diversity
  • European power investment landscape
  • State of play in 2010
  • Energy investment in 2011
  • Debt trends
  • Equity trends
  • Regulatory trends

ANALYSIS OF KEY RECENT DEALS AND OUTLOOK

  • Recent deals and drivers
  • Deal outlook for 2011 and beyond

ANALYSIS OF THE INVESTMENT STRATEGIES OF MAIN EUROPEAN POWER UTILITIES

  • Main power utilities in Europe
  • Investment in renewable energy
  • Investment in the upstream oil and gas sector
  • Investment in nuclear power
  • General outlook
  • Current situation across key markets
  • Japan
  • France
  • Germany
  • Overview of short-, medium-, and long-term opportunities

2020 ENERGY ASSET INVESTMENT PROJECTIONS

  • The European power asset landscape in 2020

APPENDIX

  • Ask the analyst
  • Datamonitor consulting
  • Disclaimer

TABLES

  • Table: German nuclear plant lifetime extensions and associated voluntary payments
  • Table: M ajor nuclear steam supply system providers
  • Table: Comparative full-time equivalent employee assessment per GW of installed power generating capacity (estimated)
  • Table: Peak construction craft labor requirements
  • Table: Peak onsite labor requirements
  • Table: Summary of opportunities for suppliers to the generation III+ nuclear industry

FIGURES

  • Figure: European power supply (TWh) 2010-20f
  • Figure: European power demand (TWh), 2010-20f
  • Figure: European power supply and demand (TWh), 2010-20f
  • Figure: European power generation mix, 2010
  • Figure: European power supply from renewable sources excluding hydropower (TWh), 2010-20f
  • Figure: European power generation mix, 2020f
  • Figure: Evolution of wind turbine rotor sizes (m) and capacity over time
  • Figure: US Henry Hub spot prices, 2008-11 (year to date)
  • Figure: Historic and anticipated onshore wind new-build in the US, 2007-14e
  • Figure: Announced power purchase agreements for US wind projects, 2008-12e
  • Figure: Traditional developer and investor risk profile
  • Figure: The declining costs of wind and solar power assets
  • Figure: Spot price of solar-grade silicon, 2000-April 2011
  • Figure: Cost of debt (%), 2005-11
  • Figure: W ind farm proposals currently awaiting permission in the UK
  • Figure: Renewable energy global stimuli funding, 2009-13e
  • Figure: Global subsidies for renewable energy and fossil fuels
  • Figure: NEX vs MSCI vs AMEX vs NYMEX indices, January 2006-January 2011
  • Figure: Selected utility capital expenditure (€m), 2009
  • Figure: Global investment in renewable energy plants by technology type ($bn)
  • Figure: Governments have used capacity caps, moratoriums, and tariff cuts to restrict growth
  • Figure: Utility-scale solar asset finance volumes
  • Figure: Global investment levels across sectors ($m), 2010
  • Figure: Drivers of financial deals in the utilities sector
  • Figure: Horizontal integration trends of utility renewable assets
  • Figure: Barriers to financial deals in the utilities sector
  • Figure: Main European power utilities at a glance, 2009-10
  • Figure: Estimated global capex of major European power utilities (2011-15f)
  • Figure: Key projects by main power utilities in Europe
  • Figure: Estimated global renewables capex of major European power utilities (€bn), 2011-15f
  • Figure: RWE Dea's activities: upstream oil and gas, 2010
  • Figure: E.ON Ruhrgas: E&P position, 2010
  • Figure: E.ON: global drilling activities, 2005-09
  • Figure: The nuclear positions of major European power utilities, 2009
  • Figure: Nuclear projects planned and currently under construction in Europe
  • Figure: Nuclear power output and share of total power supply by country, 2010
  • Figure: German nuclear power phase-out schedule
  • Figure: Forecasted nuclear power output and share of total power supply by country, 2020f
  • Figure: Power generation forecast in France, 2008-30f
  • Figure: Graphic representation of Areva's carbon-free power generation services
  • Figure: Graphic representation of Areva's presence in the world, 2011
  • Figure: German nuclear plant safety records based on the International Nuclear Event Scale
  • Figure: Electricity generation in Germany by fuel type, 1991-2009
  • Figure: Proportion of total power generation projects currently under construction, by European region
  • Figure: Proportion of projects currently under construction in Europe, by type
  • Figure: Largest markets for projects planned and projects currently under construction
  • Figure: Projects currently under construction in Europe, by country and type (MW)
  • Figure: Projects planned in Europe, by country and type (MW), 2011-20f
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