11/06/2013
The financial situation of the Electricity Industry – Economic and financial update
Finance & Economics
With the EU witnessing an enduring economic
slowdown, European energy companies are currently facing an
investment climate that is far from favourable. Weak electricity
demand, the need to refinance debt under strained capital market
conditions and more stringent analysis from financial analysts and
credit agencies have obliged companies to reinforce their balance
sheets by cutting costs, selling assets, increasing return on
capital and reducing capital expenditure.
Despite this difficult economic context, the electricity sector urgently needs sizeable investment to adapt to the climate and renewables challenge, ensure innovation and replace ageing infrastructure. Carrying out these investments is essential for our industry to deliver on our commitment to reach carbon-neutrality by 2050.
In a context of volatile fuel prices and strong competition for capital resources, a stable investment climate and a predictable and attractive regulatory framework are paramount. To facilitate access to limited capital resources, regulation must provide adequate incentives and guarantees to capital providers.
We provide data that can help to inform such regulation and avoid market distortions. Our reports regularly assess the financial performance and investment capacity of our industry and its exposure to mainly political/regulatory but also market, credit and liquidity risks. They also address the diverse taxes and levies imposed on the sector.
