Commodity market report
| |
43 Pages

Europe power markets long-term outlook H2 2014

Europe power markets long-term outlook H2 2014

Report summary

The continuing pursuit of environmental targets presents a mounting challenge to Europe’s power markets and the companies operating in them.  With power demand suffering from the prolonged after-effects of economic recession and strong growth in incentive-driven renewable supplies, wholesale power prices are experiencing a period of significant weakness and are well below the level required to incentivise investments in conventional plant.  

What's included?

This report includes 2 file(s)

  • Europe power markets long-term outlook H2 2014 PDF - 668.84 KB 43 Pages, 6 Tables, 27 Figures
  • Europe Power H2 2014.xls XLS - 4.44 MB


The power sector is rapidly transitioning to a cleaner generation mix supported by technological and regulatory changes. Regional markets and structures are adjusting to these new realities with implications on fuel demand, commodity pricing and asset values.

This Power Markets Long Term Outlook report provides a detailed analysis of supply, demand and price fundamentals, as well as the regulatory and market issues affecting regional power markets.

Use this report to examine key issues driving regulatory and economic trends and identify future growth opportunities in regional power markets.

Wood Mackenzie's detailed analysis and reliable market forecasts give you a strong foundation for your investment decisions and corporate planning. Our experienced power research analysts use high-quality proprietary gas, coal and oil markets research to help you unlock power market fundamentals and identify future growth opportunities.

  • Executive summary
    • The energy policy background to 2030
      • Net change in capacity - Europe 2013 to 2030
    • ETS reserve arrangements will raise the cost of emissions from 2021
      • ETS allowance balance - with and without market reserve adjustment
    • A new emphasis for renewable energy targets
    • New rules for incentive regimes
    • Valuing the capability of flexible suppliers
    • Coal versus gas for conventional supply share
      • Power supply by source
  • Demand
    • Slow recovery and continued weak demand in mature markets
    • Industrial transition provides contrasting growth prospects
    • Residential and commercial demand offset by efficiency improvements
  • Supply
    • Generation capacity
      • Low carbon growth at the expense of conventional sources
      • The affordability of renewables is a significant concern
      • The emergence of post-2020 milestones
      • Margins weaken as the capability of conventional supply is eroded
      • Gas capacity edges up while coal, oil and nuclear decline
  • Supply-demand balances
    • Generation output
      • A substantial decarbonisation of European power supply
      • Supply competition continues to pressure gas before some upside emerges in the long term
        • Power supply - change between forecasts
  • Risks and uncertainties
    • Long term policy backs emissions trading - ETS strengthening outcome uncertain
      • Long-run economics of gas and coal generators – fuel and emissions cost parity
    • Security risks have the potential to reshape energy policy
  • Economic outlook
    • Q3 2014 Economic indicators (2005 - 2035)
    • Q3 2014 GDP growth
    • Gas price forecast
  • Coal prices
    • Market background – seaborne thermal coal
      • Seaborne demand is tied to Asian economic growth
      • Oversupply will persist for several years
      • Prices recover slowly through the mid-term then rise to incentivise new production
        • Coal price forecast – delivered (CFR) ARA prices (6,000 kcal/kg NAR)
      • Demand and supply in China is a key risk to our coal price forecast
      • Changes from the previous coal price outlook
  • Policy and regulation
    • Competition
      • Third Package implementation
        • Third package adoptions by member states
      • Anti-trust enforcement
      • Emissions targets and pollutant controls
    • Security
    • State aid for environment and energy projects
      • Capacity Reward Mechanisms
    • EU emissions trading and price forecast
      • Carbon price background
        • Historical carbon (EUA) prices in ETS trading phases
      • Emissions trading scheme and energy policy development
        • 2030 targets confirmed
        • A central role for emissions trading
      • Market balance and the influence of supply-side adjustments
        • ETS emissions, cap and allowance supply (prior to market reserve)
        • ETS allowance supply - post-market reserve
        • Cumulative allowance balance - before and after the market reserve
      • Emissions price forecast
        • Carbon (EUA) price forecast
        • Carbon price and cost of fuel switching in the power sector
        • Power sector carbon emissions with and without emissions pricing
      • Uncertainties

In this report there are 33 tables or charts, including:

  • Executive summary
    • Executive summary: Image 1
    • Executive summary: Image 2
    • Executive summary: Image 3
  • Demand
    • Electricity demand
  • Supply
    • Growth in renewable generation capacity and share of total supply
    • Break-even costs of new-build technologies (LRMC)
    • Annual cost of new entry with wind cost reduction scenarios
    • Net capacity change (EU 28)
  • Supply-demand balances
    • Supply-demand balances: Image 1
    • Carbon intensity of power supply (ETS markets only)
    • Supply-demand balances: Image 3
  • Risks and uncertainties
    • Risks and uncertainties: Image 1
  • Economic outlook
    • Economic outlook: Table 1
    • Economic outlook: Image 1
    • Crude oil price outlook (Brent)
    • Oil product price outlook (NW Europe FOB)
    • Economic outlook: Image 4
  • Coal prices
    • Economic outlook: Image 5
    • Economic outlook: Image 6
  • Policy and regulation
    • Policy and regulation: Table 1
    • Policy and regulation: Table 2
    • Policy and regulation: Table 3
    • Policy and regulation: Image 1
    • Policy and regulation: Image 2
    • Policy and regulation: Table 4
    • Policy and regulation: Table 5
    • Policy and regulation: Image 3
    • Policy and regulation: Image 4
    • Policy and regulation: Image 5
    • Policy and regulation: Image 6
    • Policy and regulation: Image 7
    • Policy and regulation: Image 8
    • Policy and regulation: Image 9
Requester's name : .............
Department : .............
Authoriser's Name : .............
Authoriser's signature : .............
Date : .............
Cost Centre : .............

Questions about this report?

Frequently Asked Questions
  • Europe: +44 131 243 4699
  • Americas: +1 713 470 1900
  • Asia Pacific: +61 2 8224 8898
contact us

Why Wood Mackenzie?

As the trusted source of commercial intelligence for the world's natural resources sector for more than 40 years, we empower clients to make better strategic decisions with objective analysis and advice. Find out more...