Polenergia : 2017-01-09 Power Trends in CEE and Western Europe

Power Trends in CEE and Western Europe

January 2017

Evolving power market dynamics bring new challenges…

Climate Targets /

Accelerated

Ukraine / Russian

Market

Recent

CO2

Reduction

Renewables

Growth

Crisis

Liberalisation /

Unbundling

Past

Stretched Balance Sheets

Negative Macro Environment

Subdued Power Demand in Europe

Fukushima Accident / Nuclear Phase-out

Current Themes

Electricity Market Reforms / Capacity Markets

Further Reduction in Power Prices and Low / Negative Spark Spreads; Efficient Gas Plants Unprofitable

Security of Supply

/ Affordability

CO2Reform: Backloading and MSR

Focus on Customers and Clean Energy

Market Integration

/ Increased Cooperation

Uncertainty regarding CO2prices

Pressure from Fall in Oil Price

Vision of the Near Future

Decentralisation / Distributed Energy

Connected Home

Energy Efficiency / Smart Grid

Continued Growth in Renewables At Parity

Storage

New Roles and Business Models for Utilities

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…so utilities are making fundamental shifts to respond to the new environment. Customers Merchant Generation Networks & Renewables

"Uniper "

Integrated Utilities

Source: Barclays.

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EU RES subsidies are under transformation as LCOE decreases…

Feed-in tariff suspended

Major retroactive policy change

Risk of change

No progress on approval process for feed-in premium amendment

Retroactive policy change No retroactive change N/A

Policy vacuum

Still no news on next CfD auction

Auction uncertenty GC price collapse Property tax risk

Feed-in tariff suspended

Auction delay

Feed-in premium started on 1 Jan but draft legislation yet to be released

Feed-in tariff/premium suspended

Source: Bloomberg New Energy Finance.

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