A decade ago the big six energy giants enjoyed 98% market share. Now their very existence is in doubt, reports John Collingridge. Utilities, traditionally among the strongest beasts in the corporate world, are under attack from all angles as governments threaten price caps, new rivals undercut their prices, carbon taxes squeeze margins and renewable power technologies plunge in price. Now the very existence of the big power companies is in doubt as they struggle to keep pace with rapid changes in consumer behaviour. Faced with the firepower of deep-pocketed tech giants, they could soon be extinct. That collapse has been mirrored globally, with companies from Germany’s RWE to France’s Engie tumbling heavily. This is a dangerous position. Utilities were privatised with the aim of attracting billions in long-term private cash to invest in coal, gas and nuclear power stations that had been starved of finance during state ownership. Chief executives simply had to erect the chimneys, switch on the turbines and watch investors’ cash multiply. Power giants have not been sitting idly by as the world changes. The big six will soon become five, with the merger of RWE’s Npower and SSE’s retail business – assuming the competition watchdog allows it. That deal will deliver more than £100m of cost savings. RWE and Eon are also carrying out a complex asset swap that will reshape Germany’s power industry. Electric cars will require a huge increase in power generation. Yet while minsters plan to invest in another huge nuclear plant, built by Japan’s Hitachi on Anglesey in north Wales, it is unclear whether they will commit to a string of new nuclear plants. Some experts reckon nuclear will end up supplying a thin but reliable slice of Britain’s power needs, helping provide stability. Meanwhile, distributed power generated from a multitude of small sources is likely to supply an ever-growing proportion of Britain’s power needs. Car giants from Nissan to Honda are working on trials to turn their electric vehicles into miniature power stations. This vehicle-to-grid model captures electricity from solar panels and wind turbines in the cars’ batteries, then pumps it into the grid when demand surges or the car is parked overnight.
Times 8th July 2018 read more »