The necessary annual investment volume of €30bn-35bn in new generation capacity throughout Europe will suffer a shortfall of around €10bn in 2009 and 2010, AT Kearney Utility Practice partner and vice-president Florian Haslauer forecasts. Financing costs even for large companies have risen by between 0.5 and 1.2 percentage points as a result of the financial crisis, Haslauer said in Berlin. Haslauer was presenting a study by consultants AT Kearney on the effects of the financial crisis on the power sector.

The credit freeze will make it more attractive for companies to run for longer their older power plants, which are already written off, instead of investing in new generating capacity. This in turn will make power prices rise by at least 50pc, as power consumption picks up, and fuel prices rise, following the current recession. Older, less efficient power plants will need more fuel, and more CO2 certificates to run.

Although the growth in energy consumption will slow down in the next few years, it will still rise by 23% to 3,945TWh a year throughout the EU-27 member states. The decoupling trend between economic growth and growth in energy consumption is less pronounced with regard to power consumption than with regard to total energy consumption, AT Kearney said.

The credit freeze will also stall investments in renewable power projects, as these tend to be more capital intensive than conventional power projects, AT Kearney said. For example, power generating costs for steam coal have risen by 4.3% as a result of the financial crisis, and for gas by 2.1p. But power generating costs for run-of-river power plants have risen by 19%, and for offshore wind, by almost 11%, the consultants said.

Smaller regional companies and utilities without own power generation will come under pressure, as volatile commodities prices make it extremely risky for them to get their price forecasts wrong. Large, vertically integrated companies are less vulnerable. The financial crisis will therefore lead to a consolidation in the European power sector, according to AT Kearney.