European Energy
Markets Observatory - 17th Edition

Energy transitions and the Digital Revolution have created new opportunities for Utilities to change

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The utilities sector is undergoing a profound transformation with energy transition coinciding with the sustained Digital Revolution, calling for new business models. The European Energy Markets Observatory reveals vital trends and action points.

Unsettled Energy Markets

Wholesale market electricity prices are low
Retail prices continue to increase
CO2 price on the Emissions Trading System (ETS) is far too low
Security of supply questions are focused on gas due to Ukraine-Russia crisis
Our Recommendations

To restore European energy market stability,the following measures should be implemented:

  • Accelerate reform of the greenhouse gas (GHG) emissions market; the ETS
  • Implement stronger market management in order to stimulate low-carbon investment
  • Replace feed-in tariffs of renewables (especially solar and wind) with selling prices linked to the market

To improve electricity and gas supply security, the following measures should be implemented:

  • Develop capacity remuneration mechanisms more quickly and consistently throughout Europe
  • Continue to search for domestic gas sources including shale gas
  • Study and finance the implementation of a truly unified and smarter high voltage grid

Climate Change Challenges

COP21 will take place under more favorable auspices than the Copenhagen conference as large greenhouse gas-emitting countries have made commitments to mitigate climate change consequences.

Committed to Reduce
Greenhouse Gas Emissions
  • The United States: Committed to reduce greenhouse gas emissions by 26-28% below 2005 levels by 2025
  • Brazil: Committed to cut greenhouse gas emissions by 37% below 2005 levels by 2025; intends to reduce it by 43% by 2030
  • China: Plans to cut greenhouse gas emissions per unit of gross domestic product by 60-65% below 2005 levels by 2030
  • India: Promised that its greenhouse gas emissions per unit of GDP in 2030 will be at least one third lesser than in 2005
  • Europe: Committed to reduce greenhouse gas emissions by 40% below 1990 levels by 2030
Our Recommendations

Current low oil prices have a negative impact on energy efficiency and on the development speed of renewables. Europe is to some extent the “model student,” but it must urgently reform its ETS system and establish consistency between the different measures to decrease greenhouse gas emissions.

Whatever the success of the COP21 conference, it is unlikely that it will lead to strong enough measures to limit the global temperature increase to 2°C. Therefore, measures must be designed, implemented and financed to adapt public and private infrastructures to the effects of global warming.

Business Models Transformation

Energy transitions are forcing European Utilities to comply with specific objectives:
Low carbon energy mix
Security of Supply
Sustainable Growth

Utilities remain in a difficult financial situation. They must significantly improve competitiveness while adapting to the energy transition plans implemented in their countries.

Click here to find out more about Capgemini's u2es Transformation Program.

Our Recommendations

Technical improvements enabled by the Digital Revolution must be adopted quickly to build a sustained business mode.

In a dual context of energy transition and the need for improved profitability, it is urgent that Utilities fully and rapidly implement Digital Transformation.

The observatory is produced in collaboration with four partners: