Ongoing economic and political uncertainty are impacting power and utilities investment and planning, and changing market dynamics.
Welcome to the latest online issue of Utilities Unbundled.
The power and utilities sector is currently under pressure to fund a sustainable energy future and vital infrastructure renewal. But — for utilities in the West at least — squeezed balance sheets and higher borrowing costs are stifling investment.
Capital intensive, higher risk and heavily reliant on subsidy, renewables is one of the most affected areas. Financial austerity, Basel III’s stricter capital requirements and cheap shale gas all potentially make traditional sources of funding harder to access. Our lead article looks at how the sector can keep capital flowing for renewables.
On this note, renewables developer Edison Mission Energy provides an example of innovation. We look at how the company developed a new financing structure to attract pension funds to invest in its latest wind farm spinoff.
We also highlight our Renewable energy country attractiveness indices which rate the potential of major renewables markets, and, with two significant US emissions regulations nearing adoption, we look at the new rules of the environmental game and the challenges facing American power producers.
We also report on the Gulf Cooperation Council’s pioneering new project to link the electricity grid across its six states, an initiative that unlocks cost savings and signals possibilities for interconnection projects worldwide.
Elsewhere we look at how volatile markets have caused European utilities’ generation assets and goodwill to lose value; the potential impact of a proposed new revenue recognition model and what to look out for when reporting tangible benefits under US GAAP.
We also examine the major challenges China’s rapid urbanization is creating for its gas and water utilities, from upgrading largely obsolete municipal infrastructure, to the problem of addressing environmental factors.
I hope you enjoy this issue. If you have any questions or comments, our authors would be pleased to hear from you.
Ben van Gils
Global Power & Utilities Leader
Ernst & Young Global Power & Utilities Center
+ 49 211 9352 21557