A cold winter may plunge Europe into an energy crisis because of the over-reliance on renewable energy and the shutting of natural gas-fired generators, Cap Gemini SA (CAP) said in a report.
Gas-fired generators are running at utilization rates that are too low to meet their fixed costs as grids favor subsidized renewable power, the Paris-based management consultancy said today. About 60 percent or 130,000 megawatts of Europe’s gas-generation capacity is at risk of closing by 2016, it said, citing IHS Inc. (IHS) estimates.
“These plants — that are indispensable to ensure security of supply during peak hours — are being replaced by volatile and non-schedulable renewable energy installations that are heavily subsidized,” according to the report, produced with Exane BNP Paribas, law firm CMS Bureau Francis Lefebvre Lyon SELAS and think tank VaasaETT.
Generators are switching to cheaper coal for baseload power as the U.S. exports the fuel amid a shale-drilling boom that has driven up domestic gas demand, Cap Gemini said. The collapse of the cost of carbon credits has strengthened the appeal of the polluting fuel.