WINDS OF CHANGE AND NEW PLAYERS IN THE EUROPEAN POWER MARKET

摘要

Electric power sector liberalisation is a global tide relentlessly moving forward, with the focus of attention shifting from one region to another in response to (and anticipation of) the pace of regulatory change. Some existing industry and market trends have consolidated, while a few winds of change have begun make themselves felt. First, the trends that are firming up: The IPP industry leaders have emerged, and recent developments have tended to redefine the term IPP. The trend in IPP power prices continues to be downward due to competition, advancing technology, and downward fuel price trends. Baseload power at 5 US cents/kWh, considered cheap just two years ago, is now looking rather expensive. Though coal is still a major player, gas is favoured where available, further aided by global climate concerns and low oil prices. Gas market liberalisation provides added impetus to its penetration of the power market. Upstream and downstream integration is becoming more widespread. Few of the top IPPs are pure generators. Pass-through of fuel price risk to end-users is becoming increasingly difficult. Customer choice and competition are shifting the risk back upstream to the gas supplier. Returns on equity are squeezed by continued intense competition and "strategic" investments, mainly by major "national" utilities in markets outside their own countries. Opportunities for a high degree of project financing are diminishing, as allocating risks away from the project becomes more difficult. Banks are wary of merchant plant risk, and even Power Purchase Agreements (PPAs) are coming under a lot more scrutiny (see below).