Abstract
To unveil the challenges the European energy industry faces, this paper looks at the financial performance of energy companies that are different in terms of the energy generation mix in the period 2011–2013. Furthermore, the paper aims to draw general conclusions on how the share of conventional power plants in the companies’ generation mix has affected their operation as a whole. Finally, the paper discusses the trends in the energy industry, in particular regarding gas-fired power plants, as well the opportunities and threats facing them in the context of achieving the EU strategic energy goals. The results show that companies with a higher share of conventional thermal power plants in their energy mix operate with a significant decrease in profit, and generally face a decrease in their asset value. This is opposite to companies with large diversified portfolios and shares of hydropower and new renewables. Since conventional power plants, especially high-performing and flexible gas-fired cogeneration ones, may play a key role in producing the peak load and even the base load power, as well as in maintaining high quality in the electricity grid, this situation might jeopardize the achievement of the EU strategic energy goals. Hence, it calls for new energy reforms.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
References
Abolhosseini, S., & Heshmati, A. (2014). The main support mechanisms to finance renewable energy development. Bonn: The Institute for the Study of Labor (IZA).
Auverlot, D., Beeker, E., Hossie, G., Oriol, L., Rigard-Cerison, A., Bettzuege, M. O., Helm, D., & Roques, F. (2014). The crisis of the European electricity system: Diagnosis and possible ways forward. Paris: Commissariat general a la strategie et a la prospective.
Battle, C., & Rodilla, P. (2010). A critical assessment of the different approaches aimed to secure electricity generation supply. Energy Policy, 38(11), 7169–7179.
Caldecott, B., & McDaniels, J. (2014). Stranded generation assets: Implications for European capacity mechanisms, energy markets and climate policy. Working Paper. Oxford: Smith School of Enterprise and the Environment.
Capgemini. (2013). European energy market observatory report [pdf]. Capgemini. Accessed October 15, 2014, from http://www.capgemini.com/resource-file-access/resource/pdf/1310_capgemini_eemo15_editorial.pdf
CEZ. (2013). 10 CEOs push for EU energy policy to change direction. CEZ Press Release brochure [pdf]. CEZ GROUP. Accessed October 18, 2014, from http://www.cez.cz/edee/content/file/pro-media-2013/10-rijen/leaflet_ceos_08-10-2013.pdf
CMS. (2013). Renewables support mechanisms across Europe: A comparative study [pdf]. CMS. Accessed October 15, 2014, from http://www.cms-dsb.com/Hubbard.FileSystem/files/Publication/66d448bf-8611-4409-bb4f-4ccee4bbbcf9/Presentation/PublicationAttachment/d2078c0b-4df4-45f2-9e72-359f37f345fb/CMS_Renewable_Energy_Guide_April_2013_b.pdf
de Clercq, G., & Lewis, B. (2013). European utilities urge policy reform to avert blackouts. Reuters [online] 11 October. Accessed October 15, 2015, from http://uk.reuters.com/article/2013/10/11/utilities-renewables-ceos-idUKL6N0I11UF20131011
De Vries, L. J., & Heijnen, P. (2008). The impact of electricity market design upon investment under uncertainty: The effectiveness of capacity mechanisms. Utilities Policy, 16(3), 215–227.
EC. (2009). Parliament and Council Directive 2009/28/EC of 23 April 2009 on the promotion of the use of energy from renewable sources and amending and subsequently repealing Directives 2001/77/EC and 2003/30/EC.
EC. (2010). Commission Communication to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions COM/2010/0639 final of 10 November 2010—Energy 2020 A strategy for competitive, sustainable and secure energy.
EC. (2011). Commission Communication to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions COM/2011/0885 final of 15 December 2011—Energy Roadmap 2050.
EC. (2014a). Commission Communication to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions COM/2014/015 final of 22 January 2014—A policy framework for climate and energy in the period from 2020 to 2030.
EC. (2014b). Commission Communication to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions COM/2014/21 final of 22 January 2014—Energy prices and costs in Europe.
EC. (2014c). Commission Communication to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions COM/2014/0634 of 13 October 2014—Progress towards completing the Internal Energy Market.
EEA (European Environment Agency). (2013). Efficiency of conventional thermal electricity generation, Key policy question: Is the European energy production system becoming more efficient? [online]. Accessed October 14, 2014, from http://www.eea.europa.eu/data-and-maps/indicators/efficiency-of-conventional-thermal-electricity-generation-1/assessment
HEP d.d. (2013). Izvjesce o poslovanju HEP grupe u 2012. Godini. Zagreb: HEP d.d.
HEP d.d. (2014). Izvjesce o poslovanju HEP grupe u 2013. godini. Zagreb: HEP d.d.
Herzeg, M. (2012). Renewable energy support schemes in Europe [pdf]. CORPUS. Accessed October 17, 2014, from http://www.scp-knowledge.eu/sites/default/files/Herczeg%202012%20Renewable%20energy%20support%20schemes%20in%20Europe.pdf
Honore, A. (2014). The outlook for natural gas demand in Europe [pdf]. The Oxford Institute for Energy Studies. Accessed October 13, 2014, from http://www.oxfordenergy.org/wpcms/wp-content/uploads/2014/06/NG-87.pdf
IHS CERA. (2013). Keeping the lights on: Design and impact of capacity mechanisms [online]. IHS CERA. Accessed October 10, 2014, from http://www.ihs.com/products/cera/multi-client-studies/europe-capacity-mechanisms.aspx
Joskow, P. L. (2006). Competitive electricity markets and investment in new generating capacity. Center for Energy and Environmental Policy Research, 06-009 WP.
Nicolosi, M., & Fursch, M. (2009). The impact of increasing the share of RES-E on the conventional power market: The example of Germany. Zeitschrift fĂĽr Energiewirtschaft [online] Accessed October 10, 2014, from http://www.ewi.uni-koeln.de/fileadmin/user_upload/Publikationen/Zeitschriften/2009/09_03_01_Nicolosi_Fuersch_Zfe.pdf
N.V. Nuon Energy. (2012). Annual report 2012. Amsterdam: Nuon Energy.
N.V. Nuon Energy. (2013). Annual report 2013. Amsterdam: Nuon Energy.
Schaps, K. (2013). Europe’s gas plants attract opportunistic investors. Reuters [online] 7 August. Accessed October 10, 2014, from http://uk.reuters.com/article/2013/08/07/uk-europe-power-plants-idUKBRE9760V720130807
Sensfuss, F., Ragwitz, M., & Genoese, M. (2008). The merit-order effect: A detailed analysis of the price effect of renewable electricity generation on spot market prices in Germany. Energy Policy, 36(8), 3086–3094.
The Economist. (2013a). How to lose half a trillion Euros: Europe’s electricity providers face an existential threat. The Economist [online] 12 October. Accessed October 10, 2014, from http://www.economist.com/news/briefing/21587782-europes-electricityproviders-face-existential-threat-how-lose-half-trillion-euros
The Economist. (2013b). The unwelcome renaissance: Europe’s energy policy delivers worst of all possible worlds. The Economist [online] 5 January. Accessed October 10, 2014, from http://www.economist.com/news/briefing/21569039-europes-energy-policy-delivers-worst-all-possibleworlds-unwelcome-renaissance
Tveten, A. G., Bolkesjo, T. F., Martinsen, T., & Hvarnes, H. (2013). Solar FIT and merit order effect: A study of the German electricity market. Energy Policy, 61(1), 761–770.
Vattenfall AB. (2012). Life cycle assessment: Vattenfall’s electricity generation in the Nordic countries [pdf]. Vattenfall AB. Accessed October 10, 2014, from http://corporate.vattenfall.com/globalassets/corporate/sustainability/reports/life_cycle_assessment.pdf
Verbund AG. (2012). Annual report 2012. Vienna: Verbund AG.
Verbund AG. (2013). Annual Report 2013. Vienna: Verbund AG.
Verbund AG. (2014). Verbund press kit—Key company facts. Vienna: Verbund AG.
Acknowledgement
This work was fully supported by the Croatian Science Foundation under grant number IP-2013-11-2203.
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2016 Springer International Publishing Switzerland
About this paper
Cite this paper
Borozan, D., Starcevic, D.P. (2016). In Search of the New EU Energy Reforms: Assessing the Financial Performance of the EU Energy Companies. In: Bilgin, M., Danis, H. (eds) Entrepreneurship, Business and Economics - Vol. 2. Eurasian Studies in Business and Economics, vol 3/2. Springer, Cham. https://doi.org/10.1007/978-3-319-27573-4_15
Download citation
DOI: https://doi.org/10.1007/978-3-319-27573-4_15
Published:
Publisher Name: Springer, Cham
Print ISBN: 978-3-319-27572-7
Online ISBN: 978-3-319-27573-4
eBook Packages: Business and ManagementBusiness and Management (R0)