Representing about 28% of primary energy, coal is now the second largest source of energy in the world and the first used to produce electricity. Far from being an energy of the past, it is likely to become the first source of global energy by the 5-10 years to come according to the IEA report published in late 2012 (Medium Term Coal Market Report).
Starting with a handicap and winning the race! This paradox might be suitable for the energy sector of some emerging countries struggling with electricity theft and recurring blackouts. Instead of considering these handicaps as money pits, one can see them as financing levers for Smart Grids in developing countries.
In September 2013, the top selling car in Norway was not the Mazda CX-5, like in August 2013, nor was it the VW Golf similarly to July. It was the Tesla Model S, a 100% electric vehicle (EV) with overall performances in the range of any luxury sedan combustion vehicle, and autonomy of between 350km and 500km depending on the model. Such significant sales are an important milestone in the EV development and can be explained by high fiscal incentives in the country. Though the numbers are smaller, the Californian carmaker is also experiencing booming sales in the US and in Europe. In Belgium, the first shop opened in August and the first European assembly plant was inaugurated in the Netherland in September.
On October 4th, members of the government suggested to cut the VAT on electricity from 21% to 6%. Sia Partners highlights some of the (unexpected) consequences that such a measure could have. From an economic point of view, households would benefit from a EUR 70 decrease in electricity bill in 2014 which would cost about EUR 327 million to the Federal government. From a social point of view, the advantage for the poorest consumers would only reach 60% of what the wealthier households would gain. Lastly, from an environmental point of view, Sia Partners estimates that the measure would lead to 191,000 additional tons of greenhouse gases emissions as well as deterred conditions for investments in energy savings since their payback period would be increased by no less than 14%.
Paris, 25th September 2013 – Sia Partners, the leading independent French management consulting firm, announces today its acquisition of the international Management Consulting activities of Investance Group, a consultancy firm in the finance sector. This acquisition will lead to the integration of 60 consultants and the opening of three new locations: London (20 consultants), Hong Kong and Singapore (20 consultants). In New York, Sia Partners team will double in size and take on 40 consultants. With this acquisition, the United States becomes Sia Partners’ second biggest market, with almost 10% of the Group’s revenue.
For months, debates are taking place at the Walloon government concerning the energy policy to adopt. During the negociations, the Walloon minister of energy proposed to implement progressive pricing for electricity in Wallonia by offering 500 kWh free to each Walloon household as from 2014. The proposition was agreed by the government but no precise details was revealed concerning its costs. Sia Partners proposes to analyse the consequences of such a mechanism on consumers and to deliver clear estimations of the costs.
The Belgian energy market is facing more and more challenging structural changes. The massive integration of renewables, the integration of Europe in the energy strategy, the decline of nuclear production and the investissements of international companies will entail a complete redesign of the energy system. The energy landscape and the current fleet of power plants will become more difficult to manage as the gas fired power plants face profitability issues, the renewables are intermittent and the nuclear baseload is dissappearing. Sia Partners provides an overview of the main forthcoming challenges, quantitatively underbuilts, explores Belgium’s plan to face these challenges and gives some recommendations for the politics to clear the way to a strategic roadmap.
The recent increase in European coal consumption has upended the long-held believe that European coal fired power generation would inexorably decline. Experts and international agencies predict a rising appetite for coal in developing countries, while developed countries will see a strong decrease in coal consumption. In its World energy outlook 2012, the International Energy Agency (IEA) predicted a 45% decrease in coal consumtion in the European Union by 2020. However, recent data suggests a resurgence of coal for power generation in Europe is going on at the moment. The question arises whether coal can pose a real and long-term threat for the already troubeled gas fired power plants in Europe. In this paper, Sia Partners provides an overview of the main drivers behind this phenomen, looking deeper into the role of the EU Emission Trading System (EU ETS) and the boom of shale gas in the US. We calculate how this impacts the profitability of coal fired power plants compared to gas fired power plants and provide an outlook for the future.
On the weekend of 15th and 16th of June, Belgium experienced 14 hours of negative electricity prices, with a three hour peak at -200 €/MWh, when the average spot market is usually around 50€/MWh. This phenomenon has never been observed in Belgium with such duration and magnitude.
Sia Partners is glad to share with you the first summer edition of its Energy Press Review. Enjoy your reading !
For some days Europe and China are negotiating a compromise concerning the imports of Chinese solar panels sold at a very low price in Europe. Indeed, their production costs are said to be 45% lower while the sector is facing a crisis in Europe (see article 1). Besides, Siemens recently announced it would abandon this business line because of fierce Chinese competition (see article 2).
Further on renewables, GDF Suez recently announced a new optimisation strategy that consists in disinvesting from its renewable assets in order to generate cash and pay off its debt (see article 3). Nevertheless, €5,7 billion will still be invested in wind turbine until 2020 as revealed by a study conducted by Sia Partners (see article 4). More wind installed capacities might lead to the recent new phenomenon of negative electricity prices experienced in June on Belgian power stock exchange (see article 5). Later, additional capacities in Belgium will also soon consist in gas power plants given the recent adoption of the so called plan Wathelet by the Council of ministers (see article 6).
Unlike electricity, oil prices reached in June a new peak due mainly to political turmoil in the Middle East and Egypt (see article 7). Contrary to oil, main gas producers are not organised in a cartel (such as OPEC). Despite the inexistence of such organisation, most important gas producers met in Moscow to discuss the recent turmoil in gas market and align their strategy (see article 8).
Sources Sia Partners Press Review 09/07/2013