Abstract
Overview
Introduction
Datamonitor forecasts that rising wholesale gas and power prices continue to
pressurise Europe's leading energy suppliers into further retail price hikes.
The wholesale price of energy continues to test record highs across the EU as
soaring fuel inputs costs, mounting environmental obligations, strong demand
and widespread concerns over security of supply sustain a bullish energy
complex.
Scope
- An overview of the key factors driving the strong underlying upward price
trend across Europe's key wholesale gas and power markets.
- Understanding of the European utilities that are most exposed to the
wholesale market and the structural hedges that their equity positions provide.
- An assessment of the potential winners and losers in the continuing high
price climate.
- An analysis of the market impediments that will serve to distort the true
impact of rising wholesale prices on retail tariffs.
Highlights
Growing import dependence and oil price-indexation will continue to drive
wholesale gas price rises. Fossil fuel prices are rising on the back of tight
supply/demand fundamentals. Global oil prices will break the $80 per barrel
mark on the back of ongoing tensions in the Middle East, strong Chinese demand
and robust global economic growth.
A utility's equity gas position is a key factor affecting its ability to
absorb wholesale market strength. Gaz de France (GDF) and E.ON Ruhrgas have
the largest overall net trade exposures in Europe's volatile wholesale gas
market. GDF has, however, been more successful than E.ON in structurally
hedging its position upstream.
Generation prowess will determine Europe's winners and losers in the power
market. The fundamental difference between the gas and power sectors is that
utilities largely control the means of electricity production. Utilities with
the largest power structural hedge will be the ultimate winners in a high
wholesale price climate.
Reasons to Purchase
- Understand the increasingly pivotal relationship between wholesale gas and
power prices and end user retail tariffs.
- Benchmark the structural hedges and wholesale market exposures of Europe's
leading utilities.
- Assess which utilities are best placed to shield their customers from
further tariff price hikes in the current high wholesale price climate.
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