Utilities

The upcoming privatisation of a Dutch utility highlights the changing landscape of Europe’s power sector. Owned by more than 50 cities, analysts expect Eneco to fetch more than €3bn. However, the potential sale has sparked the interest of much larger rivals as Eneco has things many of them covet – a range of home energy services, from a smart thermostat to an electric car charging device that enables the utility to remotely decide when is the cheapest time to charge your vehicle. Europe’s power sector is under pressure as never before – from changes in government policy to technological advances and the explosive growth and falling costs of renewables — all of which are undermining the economics of traditional power plants. The model of sending electrons from a big gas or coal-powered plant through a central transmission grid to passive consumers is being left behind. In the new world order, energy services will play a big role and snapping up Eneco could give a traditional utility or even an oil and gas major a lucrative foothold. It would be just the latest deal in an industry that is having to reinvent itself or face extinction. Mark Lewis, head of research at not-for-profit group Carbon Tracker and previously head of European utilities research at Barclays, described what is driving the transformation in terms of “the three Ds”: decarbonisation, digitalisation and decentralisation. All three, he said, “are disrupting the entire sector, there is no respite at all”. No one is predicting exactly how these forces will play out. But falling costs of renewable power are accelerating deal activity. A recent forecast by the International Renewable Energy Agency predicted that o n current trends, by 2020, “all mainstream renewable power generation technologies can be expected to provide average costs at the lower end of the fossil-fuel cost range”.

FT 12th June 2018 read more »

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Published: 13 June 2018