April 18 (Bloomberg) -- Power blackouts similar to those in the U.S. East Coast, Italy and the U.K. two years ago are likely to be repeated around the world because of insufficient investment and aging power plants, PriceWaterhouseCoopers said.

About $12.7 trillion of investment, greater than the U.S. annual economic output, is needed through 2030 to meet an expected doubling in electricity consumption, a report by consultants at PriceWaterhouseCoopers said. That total is higher than the estimated $10 trillion spending on electricity called for by the International Energy Agency during the same period.

``Blackouts are expected to become more frequent,'' according to the report, which was based on a survey of 119 investors and executives at utilities in 36 countries. ``Two-thirds of utility respondents believe the likelihood of blackouts will increase or remain the same. Only a quarter think it will reduce.''

Failures at power cables in upstate New York, London and northern Italy left millions of people, offices and subway systems without power in 2003. In Europe, power plant developments have failed to keep pace with demand, leaving nations such Italy and the Netherlands dependant on imports to keep the lights on.

Security of supply is a ``major concern'' for 72 percent of the utility industry executives surveyed, up from 65 percent last year, the report said.

North America will need about $3.4 trillion of investment through 2030, more than any other region, because it's also the biggest energy consumer, the report said. China will need about $2.4 trillion of investment in power and gas assets, the report said.

Europe's Needs

Europe will need about $1.9 trillion of the total worldwide investment through 2030 because some of the continent's wires, including those in the U.K., are at the end of their 40-year life.

Funds will also be needed to build new gas import terminals in the U.K. as the country's reserves in the North Sea dwindle. Britain will import about 70 percent of the gas it needs by 2010, said Mark Hughes, director of European utilities at PriceWaterhouseCoopers in London, during an interview.

In Spain, the government and companies are building gas-fired power stations and gas import terminals as power demand is forecast to grow 5.6 percent this year, above the European average. The country suffers supply cuts regularly.

More than half of the respondents to the report's survey said they expect new nuclear power stations, despite popular and political opposition, because countries need to replace aging coal- fed plants and older nuclear reactors, the report said.

Wind, Solar

Rising investment in renewable sources, such as solar power and wind parks, isn't expected to deliver enough power to replace thermal or nuclear stations.

The survey participants ``expect the share of renewables to remain virtually the same in the next 10 years,'' the report said.

In the U.K., renewable sources are expected to generate about 10 percent of the country's electricity by 2010, up from about 5 percent now. Nuclear plants such as Sizewell supply about one- fifth of the Britain's electricity, and almost all power in France.

Nuclear power stations will also be backed by governments after countries around the world, including those in the European Union, committed to cut carbon emissions from coal and gas-fired power plants under the Kyoto Protocol, the report said. Nuclear stations don't emit carbon dioxide.

Mergers

European power and gas mergers and acquisitions are expected to stay at the same level as last year, where they represented about 40 percent of a worldwide total of $123 billion, Hughes said.

More takeovers are likely in Eastern Europe, where companies such as Germany's E.ON AG and RWE AG or Belgium's Electrabel SA are expanding.

``An Eastern focus beckons with European companies becoming further engaged with Southeastern Europe, Russia and former Soviet Union countries both in their hunt for gas and to build their presence in reforming markets,'' the report said.

Eastern European countries such as Poland and Bulgaria are selling stakes in some of their state-owned power plants.

Duesseldorf-based E.ON plans to increase its stake in Slovak power company Zapadoslovenska energetika a.s., a director said last week.

``Companies are continuing to move out of their home territories in their pursuit of scale, but the main focus is on their wider regions rather than pursuing a globally stretched footprint,'' the report said. ``Regionalization is replacing globalization as the dominant paradigm guiding utility company strategic moves.''

Regional Targets

About 83 percent of European utility respondents said they planned to stay focused on their ``home regions,'' the report said. Electricite de France, the world's largest power company, has sold some of its assets in Asia as it plans to focus in Europe.

Selling assets to focus on a company's main operations will be the primary reason for power and gas transactions, the report said. Spain's Endesa SA, Iberdrola SA and Union Fenosa SA are expected to sell their stakes in Auna, owner of Spain's third- largest wireless company.

Mergers between bigger Western European companies are unlikely because of regulatory hurdles, Hughes said.

The European Commission blocked a proposal by Portugal's EDP- Energias de Portugal SA to buy Gas de Portugal SA, the country's biggest natural gas company, last year. Spanish regulators also blocked Gas Natural SDG SA's attempt to purchase Iberdrola SA two years ago.

Mergers are expected among the smaller power companies in the Netherlands, Hughes said. Centrica Plc, the U.K.'s largest energy supplier, has been made preferred bidder, along with Gaz De France SA, to buy SPE NV, Belgium's second-largest power producer.

To contact the reporter on this story: Elena Moya in London at moya@bloomberg.net

Last Updated: April 17, 2005 19:16 EDT