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Platts Power Generation Tracker: West Europe's 20 Gigawatts New Capacity

Power Stations Nearing Completion, But Construction Starts Slow on Uncertainty

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LONDON, May 7, 2013 /PRNewswire/ -- More than 20 gigawatts (GW) of gas- and coal-fired power station capacity is presently under construction in West Europe, despite stagnant demand and below-cost wholesale power prices, the latest Platts power generation analysis shows.

Platts Powervision, a plant lifecycle and market environment tracking tool, shows 8.7 GW of gas-fired capacity and 11.9 GW of coal-fired plant capacity is being built across the region. An additional 15.4-GW capacity is underway in other technologies (onshore wind, biomass, hydro, nuclear) and nearly 4 GW of offshore wind capacity is being built.

"These power stations were planned, approved and financed pre-credit crunch in a world of rising prices and healthy demand," said Platts editor Henry Edwardes-Evans. "They are now reaching completion in the new reality of prices at €40 per megawatt hour (/MWh), a demand slide of 4% since 2008, and a market flooded with subsidized renewables."

Evidence of the changed market conditions is seen in the fact that some €8 billion of impairment charges* were made in 2012 by major generating utilities, largely relating to the declining value of gas-fired power stations. The near-term squeeze on thermal plant economics has caused new construction starts in West Europe to slow to a trickle in recent months. Meanwhile, existing power stations increasingly are being mothballed or ramped down in response to record levels of solar and wind power output.

"Utilities and developers can live with market risk, price volatility, even technology risk," said Edwardes-Evans. "What they find much harder to quantify is regulatory and political risks, which have become dominant forces in the sector. This is causing investment in thermal plant construction to slow down, if not dry up."

From a medium-term perspective, the Platts Powervision data shows Europe's thermal plants are facing a vigorous schedule of closures. It indicates a 120-GW net decrease in installed nuclear, fuel oil and coal capacity across the European markets for the period 2007 through 2019. This is fueling uncertainty longer term.

"Currently, West Europe's power system is underpinned by well-established thermal assets, many of which are fully amortized and running at well below cost in a supporting role to the 'green' renewables revolution," Edwardes-Evans noted. "This may be great for wind farm owners and superb for householders wealthy enough to afford PV panels, but industry observers fear it is not sustainable."

West Europe

Power Plant Construction or Permitted, May 2013



Status

Type

Gigawatts

Number

Approved

CCGT

35.8

59

Construction

CCGT

8.7

18

Approved

Coal

1.5

4

Construction

Coal

11.9

14

Approved

Offshore Wind

16

61

Construction

Offshore Wind

3.7

14

Approved

Other

26.7

356

Construction

Other

15.4

148





Source: Platts Powervision, Platts Power in Europe

CCGT = combined cycle gas turbine (plants using a combination of thermodynamic power sources to reduce costs and improve efficiency)

Platts PowerVision provides web-based access to highly visual data and detailed facility profiles of Europe's power & gas infrastructure, as well as market prices and supply/demand fundamentals. In particular, it identifies an inventory of existing power plants and tracks  new build & conversion projects; plant 'mothball' and shut-down plans; and ownership changes. The data is updated monthly. For more information on Platts PowerVision, visit www.platts.com/products/powervision.

Additional information on power plant lifecycles, market conditions and industry developments is available via Platts Power in Europe publication. It produces a new power plant tracker three times a year. For more information on electric power and natural gas, visit the Platts website www.platts.com.

*Goodwill valuation writeoffs due to changing economic/financial conditions

About Platts: Founded in 1909, Platts is a leading global provider of energy, petrochemicals, metals and agriculture information and a premier source of benchmark prices for the physical and futures markets.  Platts' news, pricing, analytics, commentary and conferences help customers make better-informed trading and business decisions and help the markets operate with greater transparency and efficiency.  Customers in more than 150 countries benefit from Platts' coverage of the biofuels, carbon emissions, coalelectricityoil, natural gasmetalsnuclear powerpetrochemical, shipping and sugar markets.  A division of McGraw Hill Financial (NYSE: MHP), Platts is headquartered in New York with approximately 900 employees in more than 15 offices worldwide. Additional information is available at http://www.platts.com.

About McGraw Hill Financial: McGraw Hill Financial (NYSE: MHP), a financial intelligence company, is a leader in credit ratings, benchmarks and analytics for the global capital and commodity markets. Iconic brands include: Standard & Poor's Ratings Services, S&P Capital IQ, S&P Dow Jones Indices, Platts, CRISIL, J.D. Power & Associates, McGraw Hill Construction and Aviation Week. The Company has approximately 17,000 employees in 27 countries. Additional information is available at www.mhfi.com.

SOURCE Platts



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