Demand in six major European electricity markets is expected to remain weak through 2024, while a pick up in renewable supplies and nuclear availability should keep both ahead of carbon-heavy sources, agency Moody's said in a report on Tuesday.
Consumption is not expected to return to levels seen before last year's energy crisis until 2026, Moody's said, with only a 1.5% rise forecast for next year due to low industrial output, growth in energy efficiency and more normal weather patterns.
Industry across Europe cut power demand in 2022 as prices soared when Russia reduced gas supplies following its invasion of Ukraine and France's nuclear plants were hit by outages.
Low carbon power generation including nuclear is expected to account for 80% of total output in the six major markets by 2028, with renewable power sources such as wind, solar and hydro accounting for most of the growth, Moody's said.
That compares with around 75% forecast in 2024 as more French nuclear becomes available.
However, decarbonisation plans are at risk due to ongoing permitting issues, cost inflation and supply chain bottlenecks, as the energy transition will require policy and regulatory support to attract massive investments, Moody's said.
French nuclear output is expected to remain below historical levels in 2024 despite year-on-year improvements, while the build-out of renewables will partly offset the gradual closure of coal-fired power plants across Europe, Moody's said.
Gas is expected to remain the marginal fuel for power generation in most European countries, keeping power prices high but declining over the long term. The rising share of renewables should put pressure on prices and keep them volatile, Moody's said.
Moody's analyst Benjamin Leyre said French forward prices were expected to remain at a premium to their German equivalent until 2026, with the size of the premium reflecting market expectations on French nuclear availability.
(Reporting by Forrest Crellin Editing by Mark Potter)