WORKOUT CONTINUES IN GLOBAL POWER BUSINESS, BUT OPPORTUNITY EXISTS
Financial and political fallout from recent events in the power industry continue to afflict the global power business, slowing or stalling reform efforts across much of the world and causing ongoing distressed asset sales, billions of dollars in asset write-downs and even bankruptcy. Opportunity exists for some companies as buyers of assets being sold at potentially significant discounts in markets around the world. However, as acquisitions of secondary assets continue to outpace new greenfield construction and privatization purchases, electricity demand continues to grow rapidly, resulting in an imbalance of electricity supply and demand in some regions that threatens ongoing business activity and future economic growth. CERA expects these issues to have the following implications for the global power business over the near term:
- Continued asset sales, debt restructuring, and possible bankruptcies are likely.
- The face of the global power industry will continue to change as new entrants and existing players acquire assets and fill the void left by retreating companies.
- Power supply and service problems will grow more acute in some countries, placing greater pressure on governments to take steps necessary to attract a smaller and significantly more risk-averse power investment community.
