Power generation

Insight into opportunities in Europe’s power generation market

Power generation across Europe is being transformed by new technologies and energy policy.  Ageing low efficiency plant is progressively being replaced by cleaner higher efficiency gas-fired plant and by renewables. In some countries, nuclear is being progressively phased out, whereas in others, governments are committed to replacing plant closing with a new generation of reactors. At the same time, the change in technology mix is facilitating the expansion of small scale and decentralised power generation, opening up the sector to a wide range of new participants right down to the domestic customer.

The transformation of the power generation sector reflects the evolving market conditions, environmental controls on the levels of emissions, and financial incentives to invest in low carbon generation. The proposed introduction of capacity mechanisms in a number of markets to promote greater security of supply will be another important factor in shaping the future generation capacity mix.

The opportunities in the European power generation sector are large, but the complex interplay between markets and EU and national level energy policy makes the investment environment uncertain.  Baringa works with buyers and sellers of generation assets, as well as investors in new plant, to understand the opportunities and risks. Deploying leading edge market and asset models combined with deep sector expertise, we advise on valuations, contracting and risk management strategies and undertake economic, commercial and regulatory due diligence.

We advise governments on energy policy, analysing the likely impact of different regulations and financial incentives on future investment and plant retirements. For example, we advised the UK Government on its Electricity Market Reform (EMR) programme assessing the likely impact of a carbon tax, feed-in tariffs with contracts for difference and a capacity market on the Great Britain power sector. We also advise system operators, such as National Grid, on the likely implications of the evolving generation mix, particularly the expansion of variable renewable output, on the costs of transporting electricity and balancing the networks.

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