ZEW Energy Market Barometer - Increased Willingness to Invest in Power Plants

The willingness to invest in new power plants has increased over the past eighteen months. Investing in new and existing electricity grids, however, seems to be considered less attractive. In Germany, chances for new power retail associations are expected to improve in view of the impending regulation of electricity grid fees.

These are the conclusions drawn from the Energy Market Barometer, a study carried out by the Centre for European Economic Research (ZEW) in Mannheim. The biannual survey was conducted among more than 200 experts from the scientific sphere, energy operators, energy trade companies, and energy service providers. It reflects their expectations concerning the developments on national and international energy markets.

Currently, two thirds of the experts (about 64 per cent) think that the willingness to invest in new power plants is sufficient; the remaining 36 per cent consider it to be deficient.  The experts are thus more optimistic than one and a half years ago. At the end of 2003, only about 54 per cent said the willingness to invest in new power plants was sufficient. Adequate investment confidence is important - particularly in view of the government’s nuclear phase-out plans to replace the power plant capacity of about 40 gigawatts by 2020.

A small majority of 53 per cent assume the willingness to invest in existing electricity grids is sufficient, but only 40 per cent consider this to be the case for new electricity grids. According to the experts, investment confidence in both new and existing power grids is weaker than eighteen months ago. At that time, 61 per cent considered the willingness to invest in existing grids to be sufficient and 50 per cent said this was the case for new electricity networks.

Approximately 49 per cent of the participants forecast better chances for new power retail associations thanks to the impending regulation of electricity grid fees. About 46 per cent of the experts estimate that the new regulator will not bring about any changes and 5 per cent fear conditions for new providers might deteriorate. The participants thus expect regulatory success in at least this one market segment and strengthened competition. It can be assumed, that, in view of falling grid returns, companies will try to increase profits through production and sale.

Contact

Dr. Ulf Moslener, E-mail: moslener@zew.de