Europe's energy supply in transition: electricity producers focus on renewable energies
The ninth edition of Colombus Consulting's study on the financial health of European power producers shows that the energy sector in Europe is undergoing a transformation. Despite a continuing decline in energy consumption and increasing price volatility due to geopolitical tensions, electricity producers are sticking to their strategy of using renewable energies. In Switzerland, despite significant progress, long-term supply remains a fundamental challenge.
The volatility of electricity prices increased in 2023, posing a major challenge for European electricity producers. Measures such as price caps and price shields are being implemented to reduce the existing uncertainty, which is partly caused by growing geopolitical tensions and fluctuations on the natural gas market. Despite everything, the return to normality remains an uncertain goal.
"The increased price volatility has a negative impact on the competitiveness of energy providers and leads to profitability problems, especially for companies that are heavily dependent on fossil fuels," says Baptiste Leflaive, Senior Consultant at Colombus Consulting.
Energy suppliers that obtain a significant proportion of their energy from fossil sources suffer more from price fluctuations, which has had a negative impact on their EBITDA. European electricity producers recorded significant revenue growth between 2021 and 2023, but the results showed considerable differences.
Alpiq improves thanks to strategic realignment
Alpiq's financial situation has improved significantly thanks to its focus on its core business and a successful diversification strategy in the area of renewable energies. The realignment, combined with effective risk management, has enabled the Swiss energy company to better withstand market fluctuations. The company continues to invest in solar and wind power plants in order to actively contribute to achieving its decarbonization goals.
Europe reduces its electricity consumption
In 2023, energy consumption in Europe fell by 6% compared to 2021, due to the switch to renewable energy and energy-saving policies in various countries. This trend is complemented by a 24% decrease in gas consumption. While electricity generation is progressing to meet the challenges of decarbonization, the recovery in demand remains uncertain. This is partly due to policy measures to save energy.
Renewable energies take pole position
European energy providers have continued to drive the switch to renewables, increasing installed capacity by 15% by 2023. Renewables have surpassed fossil fuel capacity in power generation for the first time due to their strong growth. Large capital inflows into photovoltaics and offshore wind are reinforcing this trend, making renewables the clear winner of the year.
Switzerland and the challenge of long-term energy supply
The long-term energy supply in Switzerland remains a challenge, although renewable energies are making significant progress in terms of capacity. The law on the promotion of renewable energies aims to double the production of renewable energies by 2050. "Swiss electricity producers are expanding their renewable energy capacities. This step, in combination with an agreement with the European Union, puts the energy supply on a promising course," says Baptiste Leflaive, Senior Consultant at Colombus Consulting.
Source: www.colombus-consulting.com
