Tuesday, October 9, 2012

Power market headed for potential oversupply

The European Energy Review has an article written by Twan Vallebregt, the CEO of Energy Fundamentals, noting the stagnation, and decline, of demand in European jurisdictions.
Interesting to me as the first blog post I wrote, nearly 2 years ago, touched on the same themes for Ontario.

Power market headed for potential oversupply:
Graphic from source article
Putting all of this into perspective is the 'trend' growth, which depending on the type of economy would be expected to range between 1 and 2 per cent per year. Had that growth trajectory been followed since 2007, at 1.5 per cent average annual growth the cumulative European growth would have been at eight percent in 2011, rather than minus two per cent. This gap of 1000 basis points has had huge consequences for investment in the sector, leading to capacity margins that are much larger than anticipated and upsetting investment plans that had assumed ongoing growth. Add to this the large volumes of renewable energy generation that have entered the market - despite strong economic signals to the contrary - and the result is a market that is headed for oversupply.
Read the entire article at the European Energy Review:

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