European Infrastructure: Billions Needed in Investment

Deck: 
Electricity demand in parts of Europe is on the rise.
Fortnightly Magazine - February 2004
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Electricity demand in parts of Europe is on the rise.

The European Union (EU), unlike the United States, enters 2004 with neither a constitution nor a European regulatory agency to oversee the EU's "single market" goals in energy. The EU, however, faces many cross-border issues affecting trade in electricity and natural gas, just as the United States does. While the member countries of the EU have become more energy efficient, new investment in all segments of electric infrastructure still is needed. To fund this investment in the most efficient manner, a legal and institutional regulatory framework for the entire region must be established.

The EU has taken the position that the "liberalization" (or introduction of competition to monopoly) will be limited to certain segments of the energy process. Thus, competition is the selected method for the generation of electricity, the exploration and marketing of natural gas, and the marketing of both to the end consumer, whether residential, commercial, or industrial.

Energy statistics show significant investment opportunities as a result of the EU's push for competition. The most recently available figures from the Paris-based International Energy Agency, indicate that Western Europe consumes about 2.5 billion kWh, or 18.2 percent, of global electricity demand. In comparison, North America consumes about 30 percent, and Eastern Europe and the former Soviet Union consume 10 percent of global electricity.

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