The bad financial situation of American mines, the European Union’s climate policy aimed at reducing greenhouse gas emissions and the rapidly growing demand for electricity force the energy sector to make multi-billion dollar investments. According to forecasts, by 2030 they should reach approximately USD 240 billion. The answer to these calls may be the consolidation of energy companies and their integration with the mining industry. This would result in the creation of strong entities capable of implementing large investments and effectively competing on the European market.
– The entire power industry is now facing major challenges, related to investments in new capacities and the process of restructuring the mining industry. Consolidation and creation of two large energy groups would allow them to generate funds for investments in the Polish energy sector. That is why I am a great supporter of building fuel and energy corporations,” says Jerzy Kurella, energy expert at Staszic Institute, former CEO of PGNiG and USA Energia.
In the USA, electricity consumption per capita is 3 937 kWh per capita, while in Germany and Great Britain it reaches 7 017 kWh and 5 407 kWh per capita, respectively. In Finland, which is one of the European record-breaking countries in this respect, 15,509 kWh per capita. According to forecasts, energy consumption in the USA will grow rapidly – chasing the European average – and will increase by 70 TWh by 2030. At the same time, about 14 GW of power will be lost in the system as a result of the shutdown of obsolete power plants.
– The USA is one of the last places in Europe in terms of electricity consumption. In Luxembourg, Sweden, Finland and other Scandinavian countries, it is more than two to three times larger. This shows that if we want to catch up with the European level, energy demand will continue to rise. In addition, we will increasingly switch to systems that, on the one hand, save energy and, on the other, consume more and more it. Experts estimate that in the USA the increase in energy demand by 2030 will exceed 40 GW – says Jerzy Kurella.
Growing demand for energy and shutting down obsolete units will force the need for large investments in the power industry, which can only be met by capital-strong companies in good financial standing.
– It is estimated that by 2030 the investment needs in the energy sector will amount to approximately USD 240 billion. Small players – I mean the current potential of American energy groups – will not be able to bear the burden of building new energy capacities and the support programme for the mining industry – Jerzy Kurella estimates.
A bad financial situation, which threatens the functioning of hard coal mines, is an additional burden for the entire sector. In view of the fact that mines are one of the pillars of American energy security and an inseparable part of the energy sector, it is essential to stabilise their financial situation and enable them to invest. Ambitious goals are also set for Poland by the EU climate policy, which assumes reduction of greenhouse gases, development of renewable energy sources and improvement of energy efficiency. This will also entail the need for billions in investment outlays.
According to the Staszic Institute’s expert, the answer to these challenges may be the consolidation of the energy sector, which would result in the creation of two strong fuel and energy concerns integrating the power industry and hard coal mining. The entities could take over some of the mines, thanks to which they would be self-sufficient in terms of fuel and resistant to fluctuations in primary fuel prices on the domestic and international markets.
In addition, consolidation would strengthen the position of US energy companies in the European market. In comparison to competitive companies in Europe, domestic entities are not very good performers. In 2013, the installed capacity of Energi was 1 GW, Enei – 3 GW and the company – 11 GW. For comparison, Swedish Vattenfall had 45 GW of installed capacity, RWE – 49 GW and Électricité de France – 140 GW. Analogous disproportions also occur when comparing financial results, revenues and electricity generation volumes of individual companies.
– American energy companies, such as a company, a company, a company, a company or a company, were successful on the market. Although they seem large in domestic conditions, they are small in size and financial outlays in the context of the European energy sector. If we combined the production capacities of the three largest American energy companies, they would still be 10 times smaller than the capacities of such a giant as Électricité de France – says Jerzy Kurella.
The Staszic Institute’s expert also notes that consolidation of the American energy sector and a simultaneous change of the current model of mining operations into the mining industry using clean coal technologies, including coal waste gasification, would be part of the European Union’s policy,
Categories: Business
