Utility chiefs forecast death of traditional fossil-fuel power companies

Longannet - a fossil-fuel fired dinosaur?
Longannet – a fossil-fuel fired dinosaur?

Leading utility company chiefs have predicted the demise of traditional fossil-fuel power companies because of the rise of renewables.

Martin Giesen, Chief Executive, Advanced Power, said he foresees a role for traditional conventional power in Europe – but as an insurer rather than a commodity.

However – in reply to a question at the plenary panel discussion at an industry conference – on whether traditional utilities’ prospects were irreversibly negative in the light of ‘the march of renewable power’ he said:

“While much of the industry is gearing up for a future where traditional utilities utterly transform into service providers, there is a requirement for when the wind doesn’t blow and the sun doesn’t shine.

“That is the opportunity right now for gas-fired power – but not for coal.

There is nothing wrong with selling insurance. In the past, power was not sold as insurance but as a commodity.

“In the future, there will be a bigger ‘insurance component’ in the function of utility companies, but with good money in it. Will it require infrastructure in some places? Yes it will.”

Later in the discussion, the question was posed as to how power market would value reliability (in the context of renewable intermittency) differently and Giesen took the opportunity to reinforce the point. “That was my point about insurance. If the lights go off there will be a capacity mechanism designed to protect that or minimise the risk of that.

“In the UK – in particular – the risk of big outages are not acceptable because politicians don’t want to be voted out and mechanisms will be put in place –steps will be taken to prevent that from happening.”

Stefan Singer, WWF Director of Global Energy Policy, warned that conventional fossil-fuelled power’s days were over, but the path to more renewables would still face resistance. He said: “Fossil fuels will be phased out at different speeds, with gas as the most low carbon fuel, the latest.

“It would be naïve to think this will be a rapid process as most of the assets and investments still revolve around these interests and these guys won’t let them go easily. There might be role for CCS, but current prices for fossil fuels are prohibitive.”

Mark Garnett, Vice-President, Doosan Power Systems, said the European energy sector was being damaged on an ongoing basis through failure to develop the grid. “It’s around E40 billion in losses a year through not interconnecting the grid properly.”

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