Europe’s utilities aren’t spending money on conventional fossil fuel power plants, dissuaded by an uncertain regulatory atmosphere and the green mania that has gripped Germany. But the trend away from the construction of new fossil fuel power plants or investment into existing facilities could prove in the very near future. As the FT reports, the renewable sources that are edging out their browner competition are still hampered by problems of intermittency—that is, keeping the lights on when the sun isn’t shining or the wind isn’t blowing. Lacking cost-effective commercial-grade energy storage options, Europe will still need fossil fuels for consistency’s sake, which makes low investment by utilities a big problem for future grid stability.
And this has an effect on the European economy, too. As a Barclays analysit told the FT, low spending by utilities is “putting considerable pressure on suppliers. Siemens is significantly reducing manufacturing capacity in Europe, and I would expect other vendors to follow suit.”
Germany’s energiewende lies at the heart of all of this. The country’s “green” energy transition has not only threatened the stability of its own grid, but of its neighbors‘ as well. Given its track record it shouldn’t be surprising at this point that the systematic propping up of solar and wind energy production at extravagant cost has also produced another problem for the health of the continent’s utilities.