Abstract
Overview
Introduction
In the US, energy companies have responded to government support for coal and
nuclear power with new project proposals. In Europe, market forces continue to
push investment in gas- and coal-fired power plants, while governments offer
tacit support to secure gas supplies. In both jurisdictions, utilities take
advantage of the trading and lobbying opportunities security of supply
presents.
Scope
- Security of supply is focused on the source of primary fuels for power
generation.
- In the long-term nuclear power will join coal as America' s answer to
security of supply.
- Europe' s key security of supply issue is reliance on foreign gas, and coal
expansion is a major response to this concern.
- Security of supply concerns present a range of new opportunities for
utilities in the US and Europe.
Report Highlights
Signing gas purchase agreements is a long-standing risk mitigation strategy of
utilities, eliminating wholesale market risk by avoiding the wholesale market
altogether. For example, in August 2006 E.ON signed a GPA with Gazprom
guaranteeing 24 bcm per year of gas supplies until 2036.
With gas demand in Europe set to increase 28% in the next 15 years,
establishing security of supply for gas is largely left to individual
companies. EU-level support for security of supply is largely relegated to
trying (unsuccessfully) to induce Russia to sign the Energy Charter.
The US fiscal response to security of supply concerns is almost entirely
contained within the Energy Policy Act of 2005. For example, the Department of
Energy is authorized to offer federal risk insurance to new nuclear plant
investors for financial losses stemming from events such as litigation or
licensing delays.
Reasons to Purchase
- Understand the factors driving security of supply threats for US and EU
markets.
- Review the government responses to security of supply challenges in the US
and EU.
- Understand how energy companies are planning to cope with and respond to
security of supply threats.
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