Six key themes from the London Power & Renewables Briefing

It’s been a roller coaster ride for power markets. The events of recent years, from the global pandemic to the energy crisis, will shape the market for years to come.

Energy policy is evolving in response to ever-shifting market dynamics. Change is underway in a range of areas, including short-term emergency responses, fundamental power market reform, support for renewable supply chains and broader policy support to drive progress towards net zero targets.

At our recent Power & Renewables Briefing in London our experts gathered to explore the impact of change and the opportunities and challenges ahead. Key themes included:

• The European power markets through crisis and reform
• Potential implications of the introduction of nodal pricing in Europe/UK
• Power purchase agreement (PPA) market dynamics
• EU response to the US Inflation Reduction Act (IRA)
• Offshore wind supply chain trends
• Hydrogen in Europe: from here, there and everywhere?

Fill in the form to download an extract from the slide deck presented and register your interest in receiving the on-demand recap. And read on for six quick highlights.

1. Flexible resources will become indispensable in Europe

For European power markets, while Europe’s objectives are challenging, they are not entirely out of reach. However, as markets decarbonise and the role of variable supply climbs, flexible resources will become indispensable.

Market pressures are already taking shape as renewable growth outpaces transmission upgrades. Curtailment risk and its impact on eroding returns is growing.

Further out, permitting bottlenecks threaten to derail capacity targets as rising costs test project viability. Targeted policy actions will address these areas, but advancing the flexibility needed to complement renewables on the system will be critical to support a net zero power system.

2. Many lessons learnt from the US on nodal power markets

The reality of the shift to nodal is that generators are not always going in places that reduce congestion. The most difficult challenge is allocating basis risk and financing of new projects.

3. PPAs will remain a critical enabler of new wind and solar investment, but last year presented significant barriers

After a few years of significant successive growth for PPA’s, we saw a large contraction in 2022 due to procurement.

Despite this, PPA volumes will continue to grow in the coming years, as ESG requirements and structurally higher retail energy rates will incentivise corporate take-up.

4. China remains a key link in the renewables supply chain

China dominates global supply of renewables equipment although substantial wind power manufacturing already exists in the EU. European manufacturing of PV and storage need considerable scaling to reach targets and dampen dependence on Asian imports and will come at a cost premium.

5. Offshore wind is growing fast – but is it fast enough?

We expect the offshore wind sector to grow five-fold out to 2030, although this is not enough to meet government targets.

The supply chain remains a key constraint, but growth is critical for displacing fossil fuels and meeting new power demand.

6. Hydrogen capacity announcements have continued to grow in scale and diversity of location – despite a minor year-on-year slow-down

Low-carbon hydrogen is key to decarbonisation efforts, but additional intervention is required in many sectors and policy is becoming increasingly important.

Our experts explored these topics – and more – in depth at the London Power & Renewables Briefing. Fill in the form at the top of the page to download an extract from the slide deck presented and register your interest to receive the on-demand replay.