2011 European Power Leadership Forum – The Results Book

Executive Summary

The European power industry is faced with a daunting set of challenges as it works to meet the sometimes conflicting policy objectives of decarbonisation, market integration and security of supply while keeping prices reasonable for the consumer. The industry is committed to delivering on these objectives and believes that it can do so given a well designed, consistent and stable policy framework across Europe.

This special publication documents the findings of the 2011 European Power Leadership Forum, hosted by Bloomberg New Energy Finance on 17-18 November in Evian-les-Bains, France. The Forum convened more than 50 thought-leading experts from across the European power industry, from utilities, technology and service companies, government bodies, finance providers and non-governmental organisations.

Participants in the forum discussed the major challenges and opportunities facing the industry through the unique lens of an interactive business simulation and focussed panel discussions.

They prioritised and addressed the challenges and battled the policy and other uncertainties and finally emerged with successful, and sometimes not so successful, businesses. The plethora of regulatory changes that have battered the industry over recent years, and the spectre of the European debt crisis, weighed on discussions and, although the industry is optimistic that the sector will meet the investment challenges put before it, they are pessimistic that it will be achieved in the most efficient way.

Below we list the main lessons from the Forum:

•Critical issues facing the industry: Participants felt that the major exogenous issue facing the industry at present was the parlous state of the European economy, the major policy issues were renewable and carbon policy and the major endogenous issue was the capability of the transmission network to meet the demands being placed on it.

•A return to growth is uncertain: There was a surprisingly strong belief from the panel that the hiatus in demand growth in Western Europe, caused primarily by the global financial crisis, is temporary. The view that strong growth will return, driven to a large extent by the energy efficiency measures needed to decarbonise European energy usage, was however challenged by our other participants who saw flat to declining demand as more likely.

•Investment will flow: Despite the huge investment requirements needed in the European power industry across generation, transmission and distribution, the feeling in the industry is that these are achievable and that the money can be found. Incentives need to be updated and policy structures changed to draw in both the equity and debt capital needed but this can and will be achieved.

•Certainty of policies: From unbundling regulations to carbon price floors, from feed-in-tariffs to the Emissions Trading Scheme, from forced nuclear shutdowns to Robin Hood taxes the industry is dealing with a plethora of policy changes . This is the challenge to European policy makers – to put in place a minimal set of clear and robust policy targets for the sector, to allow the EU ETS to do its job, and to then let the industry deliver .

•Strength in Diversity: Participants felt strongly that diverse technologies are of critical importance in building successful large scale European generation businesses. Those players who have ignored the emerging renewable energy sources will need to enter this field aggressively. This will be supported by the move from small scale to utility scale projects in the renewable sector. Diversity of geography is valuable and there is potential to see more pan-European M&A activity in coming years but companies were warned that there was little value in attempting to move beyond European borders.

Please download the full report for more detailed analysis.

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