Risks for Power Sector

The risks refer to the current and future supplies of natural gas, electricity, oil and coal.  The term Current refers to a 1 or 2 year horizon; the term Future refers to a 5 to 10 year horizon.

Values mean as follows:  1 for no perceptible risk; 2 for low risk; 3 for medium risk; 4 for high risk; 5 for not applicable. Risk Factors Electricity Current Future Geopolitical exploitation of supplies 3 2 Global competition for resources 3 4 Inadequate international transport capacity 2 2 Insufficient or inadequate interconnector capacity 3 2 Insufficient or unreliable transmission networks 2 1 Insufficient or unreliable distribution networks 4 3 Inadequate or insufficient reserve capacity 4 3 Insufficient or inadequate conversion capacity 3 2 Inadequate peaking capacity 4 3 High domestic energy prices 3 4 Low domestic energy prices 3 2 Declining demand and/or low prices for oil and gas exports 2 2 Natural disasters, terrorism and warfare 2 2 Poor national energy policies 2 2 Poor or inadequate internal regulation 3 2

Geopolitical exploitation of supplies refers to both supplier and transit countries.

Global competition for resources refers to both energy resources that are physically scarce and to resources whose availability is limited by international cartels.

Inadequate international transport capacity refers to transport of energy crossing over  two or more borders. This is different from risks deriving from  Geopolitical exploitation of supplies by transit countries which are generally independent of limited transport capacity.

Insufficient or inadequate interconnector capacity refers to transmission between states and includes such aspects as, for example, lack of reverse flow in the case of natural gas  transport.

Insufficient or unreliable transmission networks refer to internal high voltage or high pressure gas transport infrastructures.

Insufficient or unreliable distribution networks refer to internal generally medium and  low voltage or medium and low pressure gas transport infrastructures.

Inadequate or insufficient reserve capacity refers to natural gas storage, oil products  depots as well as hydropower reservoirs, etc.

Insufficient or inadequate conversion capacity refers to any kind of energy conversion  and includes: power generation; refining; heat production; etc. Include under this item  risks coming from outdated and worn out equipment with frequent outages.

Inadequate peaking capacity refers specifically to withdrawal of natural gas from storage,  production fields and linepack and to flexible generating capacity able to meet peaks  in power demand.

High domestic energy prices refers to the impacts on supplies especially to lower income households caused by supply demand imbalances or imposed by international cartels or by monopoly/oligopoly suppliers.

Low domestic energy prices refers specifically to the risks of deterring energy companies from entering the market or from making adequate investments in energy infrastructures to satisfy future demand.

Declining demand and/or low international prices for energy exports regards essentially the impact on global supplies of insufficient investments in the longer term: for example, resulting from  strong and overly ambitious targets for biofuels production.

Natural disasters, terrorism and warfare include risks coming from political instability within supplier countries.

Poor national energy policies refers specifically to supply deficits in particular fuels, regions of a state or over different periods of time (daily, seasonal) attributable to weak or inadequate government energy policies.

Poor or inadequate internal regulation regards unbundling between monopoly and  competitive segments of energy companies and the regulation of tariffs and quality of service.