ICF Consulting Publishes Issue Paper on Italian Blackout and Need for Investment in Electric Transmission

LONDON, UK, October 6, 2003 – ICF Consulting released an issue paper today titled The European Transmission Conundrum - More Outages Suffered and More Investment Required, which examines the recent and disturbing power outages in three European countries just in the past month. The Italian blackout, like the one in Copenhagen last week, and London last month, as well as near misses in Vienna and Amsterdam, are a wake-up call for Europe's transmission market participants. Although each power outage had a different cause at its root, the blackouts highlight the fact that there is a critical need for significant new investment in the European grid.

European Transmission Conundrum—More Outages Suffered and More Investment Required

"Originally the transmission grid was developed to ensure reliability rather than to support commerce; however, times are changing. Lack of interconnection capacity hampers market integration, limits the scope for consumer benefits from competition, and has serious implications with respect to the security of supply," says Simon Allen, President of ICF Consulting, Ltd., UK.

The European Commission has established a minimum interconnection capacity between member states by 2005. Some have already met the target and others are expected to reach the target minimum by the deadline. Still others have no hopes of meeting the ten percent minimum in time. This challenge is due not only to financing obstacles, but also to siting and zoning constraints.

"The value of the European transmission grid is currently about €40 billion, and we expect to see this value rise by €10-20 billion over the next decade," says Allen. "European utilities have suffered downgrades in credit ratings since the late 1990s," he continues. This raises the question—where will this €10-20 billion come from?