Fitch Ratings says its outlook for EMEA energy infrastructure in 2014 is largely stable, with the exception of renewable energy projects. These carry the highest downgrade risk within Fitch's portfolio of EMEA energy project finance ratings due to the possibility of negative regulatory intervention. Oil and gas projects, gas infrastructure projects and UK offshore transmission operators (OFTOs) continue to display stable credit profiles.
The outlook on the renewables sector in Europe is negative. The significant growth of power generated from renewable energy in Europe has prompted concerns about its high cost for consumers and the adverse impact on the national power markets, particularly in the context of continuing weak economic conditions. These issues have become more prominent in 2013 and are expected to continue in 2014 and beyond. The negative outlook reflects increased political risk and Fitch's expectation that the industry will need to adapt to less favourable operating requirements and economic incentives. This applies across most jurisdictions in Europe and results from the greater focus on the sustainability of incremental renewable capacity additions, in terms of the effect on the power industry in general and on the cost to consumers, who ultimately foot the bill.
Large Fitch-rated oil & gas projects, such as liquefied natural gas (LNG) producers, benefit from low break-even price levels and, generally, a firm base of long-term take-or-pay contracts. These features support the projects' ability to weather the possible toughening of hydrocarbon market conditions (low prices and/or demand contraction). Competition from new LNG capacity is not expected to materially affect the existing producers.
See full Press Release: https://www.fitchratings.com/creditdesk/press_releases/detail.cfm?pr_id=811171&cm_sp=homepage-_-Featured_Content_Archive-_-Stable%20Outlook%20for%20EMEA%20Energy%20Infrastructure%20in%202014;%20Negative%20for%20Renewable
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