The energy sector has undergone significant change during the recent years; prices for oil and gas on energy markets have been continuously growing as have prices in the power sector, but for slightly different reasons. Despite this price development, it can generally be said that most European countries have had no difficulty in producing or importing sufficient volumes of oil and gas or generating enough electricity to meet increasing demand. The indisputable fact, however, is that energy supply security, climate change and the affordability of these precious commodities are now the top priorities of most governments.

During the last decade the increasing reliance on oil and gas power generation thanks to systematic replacement of old, high-emission coal power plants with new, lower emissions gas or oil-fired capacity or desulphurization of old coal power plants has meant that greenhouse gases from power generation have been reduced – but unfortunately not enough.

During the same time, the negative security perception toward nuclear power generation and lack of investments in clean coal power generation resulted in the situation that most nuclear and coal power plants are at the end of their life cycle without sufficient replacement. These trends together with rapidly growing demands in large developing countries ultimately resulted in a growing gap between supply and demand. This growing global challenge make security of supply and energy affordability even harder for most countries and raises real questions about the adequacy of current EU energy policy and global energy policy as well. In addition to what was mentioned above, the steep growth of energy prices is negatively influenced by the following factors:

• Dwindling oil and gas reserves together with conflicts in the Middle East and Africa;
• Growing EU dependence on oil and gas supplied from Russia;
• Rapidly growing power demand mainly in China, India and Russia;
• Limited number of producers of key technological parts for modern coal-fired power plants or nuclear units;
• Planned retirement of our existing nuclear capacities for example in the UK, Germany, Slovakia, Bulgaria and Lithuania;
• Downgrading expectations for the potential contribution of renewables to our generation mix;
• Elevated environmental concerns; and last, but not least;
• Volatility of the global energy markets.

Together these factors point towards an emerging energy gap and urgency around emissions reduction, necessitating a re-think of our requirements for the electricity generation fuel mix over the next fifteen years and beyond.

The major challenge for each government is to set policy and facilitate development of the necessary market forces that will drive investment in the most appropriate infrastructure and technology. The major challenge for every enterprise generating or distributing power or producing oil and gas is to operate in this challenging business environment whilst ensuring security of supply, affordability of energy and, obviously, creating value for their shareholders.