In the second of our guest blogs examining the factors shaping the policy and investment strategy in the European power market, Dr. Jacob Klimstra, Energy and Engine Consultant and member of the POWER-GEN Europe advisory board, discusses the barriers to growth and what Europe can learn from the US.
ENEL president Fulvio Conti recently described the power sector as being ‘uninvestable’ and on the face of it, this would appear to be true. Certainly, the growth forecasts for Europe’s power industry are disappointing. On average, investment is set to grow by 0-2% per annum according to latest figures from Eurelectric (the Union of the Electricity Industry), and most of this will be focused on renewables, which are intermittent sources of power generation that require back-up. Yet there is little incentive to invest in back-up equipment.
Some people believe that an open, interconnected, and integrated European electricity market is the key to reinvigorating the sector. But while electricity and energy are the engines of the economy and they have to be as cheap as possible, I have yet to see any evidence that an open market leads to a real drop in prices. So I don’t believe that this is the right mechanism. Rather, it would be better to follow the traditional model where national energy companies are controlled by the state and are supported by long-term investment ensuring citizens have access to reliable and cheap electricity.
EU decision-making stymied
However, one of the biggest issues today is that the policy determination for the power industry is dominated by decision makers that believe everything is a matter of opinion, not scientific fact. We need more scientists and engineers involved directly with the decision-making processes.
In the US for example, it is common practice to set up committees that include representatives from users, suppliers, manufacturers, and academics. By finding the right type of experts, they find the right solution. This is what was achieved with gas quality in the US. The current wrangling over deteriorating gas quality in Europe is an example of how EU decision-making is stymied by bureaucracy and lobbying.
At the same time, it is vital that we nurture Europe’s next-generation of scientists and engineers. Globalisation dictates that multi-national firms will locate their sites where the workforce is best educated, and where labour and power costs are most competitive. We therefore need to place more focus on fuelling the engine that generates wealth for Europe – i.e. the power industry – by furnishing the next-generation workforce with the skills and technical expertise necessary for Europe to compete on a global basis.