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12 March 2008 By Cyrus Sanati

The Continent’s big utilities may have hit a wall in terms of intraEuropean consolidation. But new opportunities lie in the US. The fragmented US power market is in dire need of capital and can give the Europeans more bang for their buck.

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The return on investment for regulated utilities operating is Europe is around 9%. US power generators average an 11% return on investment as regulators allow utilities to make larger profits.

Electricity demand in the US is expected to grow 40% by 2025. The industry will need to invest an estimated $350bn to meet that need.

European utilities have made some investments in the US power market. In 2006 UK utility National Grid bought Keyspan for $12.3bn. Other major investments have centered on the nascent US renewable energy market. In 2007 Energias de Portugal paid $2.3bn for Horizon Wind Energy and German utility E.ON paid $1.4bn to purchase the North American operations of wind generator Airtricity.

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