Cold
European Winter Could Create Energy Crisis, Cap Gemini Says
A
cold winter may plunge Europe into an energy crisis because of the
over-reliance on renewable energy and the shutting of natural
gas-fired generators, Cap Gemini SA (CAP) said in a report.
10
October 2013
Gas-fired
generators are running at utilization rates that are too low to meet
their fixed costs as grids favor subsidized renewable power, the
Paris-based management consultancy said today. About 60 percent or
130,000 megawatts of Europe’s gas-generation capacity is at risk of
closing by 2016, it said, citing IHS Inc. (IHS) estimates.
“These
plants -- that are indispensable to ensure security of supply during
peak hours -- are being replaced by volatile and non-schedulable
renewable energy installations that are heavily subsidized,”
according to the report, produced with Exane BNP Paribas, law firm
CMS Bureau Francis Lefebvre Lyon SELAS and think tank VaasaETT.
Generators
are switching to cheaper coal for baseload power as the U.S. exports
the fuel amid a shale-drilling boom that has driven up domestic gas
demand, Cap Gemini said. The collapse of the cost of carbon credits
has strengthened the appeal of the polluting fuel.
The
consultancy urged reform of the emissions-trading system to boost the
price of emitting carbon. It also called for a coordinated European
capacity market to pay plants to ensure there’s enough capacity in
reserve at periods of high demand.
“Without
longer-term economic incentives to invest in new and vital energy
infrastructure and in the face of a declining utility margins and
revenue, longer term security of energy supply could be in jeopardy,”
Colette Lewiner, energy adviser to Cap Gemini’s chairman, said in
the report.
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