![]() ![]() Transport power demand will grow by 14 percent CAGR as a result of the rollout of the electrification infrastructure and national regulations on emissions (for example, if cities ban internal-combustion engines and impose fiscal measures to discourage the use of nonelectric vehicles). The main factors behind the surge will be the electrification of transport and a ramp-up in the production of green hydrogen through electrolysis, requiring renewable power (Exhibit 1). Sustained growth in power demand, supported by climate-related targetsĮlectricity demand is expected to increase steadily in Europe, at a CAGR of about 2 percent until 2035. The European power market is undergoing major changes. What’s ahead for the European power sector? In this article, we explore five trends that will shape the European power sector in the decade to come and offer some perspectives on how utilities and large consumers might respond. Navigating this next normal will be a key challenge for utilities, traders, and large power consumers, and that highlights the importance of developing resilient power-asset portfolios and managing risk. This development has affected the cost of power produced by natural-gas power plants, which broadly set prices in European markets.Īt the same time, price volatility is reaching new heights as a result of the uncertain output of renewable assets and a tight supply-and-demand balance in the European power system. ![]() That increase has been prompted largely by a surge in natural-gas and carbon prices, which currently exceed €100 per MWh 2 TTF (Title Transfer Facility). in a number of European countries-about four times the average historical level. Power prices have touched new highs: baseload week-ahead prices have risen above €200 per megawatt-hour (MWh) 1 Platts European Power Daily, S&P Global,. European power markets have entered a period of unprecedented change. ![]()
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