PwC: Utilities struggling to cope with 80% rise in energy demand

by Will Nichols

More from this author

24 Apr 2012

  • Comments

DOUBTS OVER whether Europe's future electricity supply can cope with spiralling demand will leave the continent's energy sector "on a knife edge", until concerns over the policy and financing environment governing new capacity are addressed.

That is the conclusion of a new PwC survey that predicts an 84% rise in electricity consumption by 2035 driven by population growth, urbanisation, and technological changes such as the anticipated shift to electric vehicles, Accountancy Age sister publication reports.

PwC surveyed senior executives from 72 power and utility companies across the globe and found that while a majority believed increased demand would boost investment in new renewable energy capacity, many were also extremely concerned by a range of barriers to investment that could result in blackouts if they are not overcome.

These include a shortage of capital for new generation projects, planning bottlenecks, and "potentially disruptive market reform".

Two thirds of respondents expressed concern that rising fuel poverty, particularly in Europe and South America, would make it difficult for them to recover their costs from consumers – a scenario that could undermine infrastructure investments and increase the prospect of power outages.

In Europe, 53% of executives predicted an increased risk of blackouts to 2030, while 40 per cent of North American respondents voiced similar concerns.

Steven Jennings, UK power and utilities leader at PwC, said concerns about the affordability and pace of infrastructure investment are "translating into unease about security of energy supply".

"The outcome of current moves – and policy deadlock – on energy security, affordability and efficiency are far from certain, and there is a considerable degree of concern about whether there will be enough done to resolve these issues in the next 20 years," he added.

"Power systems will be on a knife edge in terms of whether they will cope with the huge scale of demand growth ahead until effective policy frameworks and investment issues are resolved."

However, the survey highlights how increased demand for energy is likely to inspire a major ramping up of investment in non-hydro renewables, which could see utilities' fuel mix shift from 66% fossil fuels and 34% non fossil fuels today to 57% and 43% respectively in 20 years' time – although the report notes that this is unlikely to be sufficient to limit global warming to an average 2°C increase.

More positively, over 80% think onshore wind, biomass and all forms of solar energy will not need subsidies to compete with traditional forms of generation by 2030.

Similarly, just under 70% of respondents think offshore wind and marine energy technologies will also prove cost competitive within the next 20 years, backed by a full rollout of smart grid systems.

Meanwhile, three fifths of executives said there was a good chance electric cars will comprise a significant proportion of the world vehicle fleet by 2030, although two thirds remain concerned standards for electric vehicle infrastructure is evolving too slowly.

Visitor comments

blog comments powered by Disqus

Add your comment

We won't publish your address

By submitting a comment you agree to abide by our Terms & Conditions

Your comment will be moderated before publication




Conservatoire for Dance and Drama, London, Permanent, Part Time, £60,000 pro rata




Get the latest financial news sent directly to your inbox

  • Best Practice
  • Business
  • Daily Newsletter
  • Essentials


Search for jobs
Click to search our database of all the latest accountancy roles

Create a profile
Click to set up your profile and let the best recruiters find you

Jobs by email
Sign up to receive regular updates with the latest roles suitable for you



Why budgeting fails: One management system is not enough

If budgeting is to have any value at all, it needs a radical overhaul. In today's dynamic marketplace, budgeting can no longer serve as a company's only management system; it must integrate with and support dedicated strategy management systems, process improvement systems, and the like. In this paper, Professor Peter Horvath and Dr Ralf Sauter present what's wrong with the current approach to budgeting and how to fix it.


iXBRL: Taking stock. Looking forward

In this white paper CCH provide checklists to help accountants and finance professionals both in practice and in business examine these issues and make plans. Also includes a case study of a large commercial organisation working through the first year of mandatory iXBRL filing.