Capital Ideas Podcast Power shifts: The future of European utilities
7 snips
May 27, 2025 Barbora Matouskova, a fixed income investment analyst at Capital Group, dives into the transformative energy transition impacting European utilities. She highlights the ambitious decarbonization goals and how geopolitical tensions are reshaping the landscape. Barbora discusses strategic investments in renewable energy while also addressing the risks investors face in this volatile market. She offers insights on navigating capital expenditures amid global disruptions and the complexities following the energy shock from the Ukraine crisis.
AI Snips
Chapters
Transcript
Episode notes
Sector Challenges and Shocks
- The utility sector faced multiple shocks: ambitious decarbonization targets, COVID-19 disruptions, and the energy shock from Ukraine.
- These events led to regulatory, operational, and political challenges impacting utilities' financial and strategic outlook.
Utilities Retain Defensive Status
- Utilities remain defensive with high proportions of regulated or contracted activities, providing cash flow stability.
- Government ownership in some cases adds downside protection, maintaining credit investor confidence.
Massive and Risky Capex Increase
- European utilities' capital expenditure (capex) is set to nearly triple to meet net zero targets, especially on power grids.
- Delivering this capex on time and budget poses risks, especially in renewables like offshore wind.