Energy and Utility Management Consultants

First Reactions to Greek Bailout Positive plus, New Generators Planned

February 2012


The Greek bailout announced on the 21st February, the country's second bailout since May 2010, will cost the EU €130bn in loans for the struggling economy, but Stock markets reacted well to the news, with only modest changes in the price of the Euro. There have been fears of Eurozone-wide implications with a domino effect seeing further economies falling into debt - or worse, a full recession - but the initial response has been positive, increasing sentiment that a European recession is not imminent, although one can never say never, of course.Of more positive news to Europe, and specifically the UK is the recent agreement between the UK and France which has seen French energy giant EDF pledge to build four new nuclear power plants in the UK by 2025, bolstering the UK's fleet and creating some 1,500 new jobs in the sector.  Owing to the limited useful lifespan of a nuclear power generator, the UK is facing losing almost a fifth of its electricity generation capacity within the next ten years as many existing nuclear power stations face being decommissioned, so the new generators will be invaluable as the country strives to produce enough low carbon energy to guarantee long-term supply. Not only has the nuclear deal been signed, but further recent UK-France ventures signed include a deal to develop an interconnector between France, Alderney and Britain which will transport energy generated by tidal power off of the coast of Alderney and will create further links between the UK and Europe through which imports and exports can flow, and will give the UK better access to favourable European energy prices. With regard to current storage news, Rough (one of the UK's largest natural gas storage sites) will be taken offline between the 22nd and 23rd February for scheduled maintenance. Fortunately though, following an unexpected recent outage, the South Morecambe field is now back online (despite a problematic restart) and is more than capable of off-setting the loss of injections from Rough.  The amount of gas readily extractable from storage can be expected to lower gas costs as the Spring approaches, so getting a good level of capacity back is certain to lend some confidence to the markets.





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