In this edition of Energy Market Analyst we examine the drastic changes that Northern Europe’s power generation fleet will undergo over the next decade. European and domestic policies will lead to significant retirements and decommissioning of coal and nuclear capacity, particularly in Germany and the UK. We look at the different investment options to fill the resulting generation gaps and the way these affect the power markets and prices. We also look at the trends in the second quarter of 2008, which saw all energy commodities break all time records. Global oil prices added a staggering 40% in only three months, driven by a steady and firm demand from developing countries, and a backdrop of increasing geopolitical risk. Gas forward prices also firmed to previously uncharted levels, taking direction from the bullish oil market and recurrent supply issues. European coal also rocketed to virgin territory, rising 65% over the quarter on a combination of firming freight rates and an increasingly tight Pacific market. All time records were also registered in the forward Northern European power markets, which took direction from the very bullish coal and gas markets, whereas spot prices generally firmed on the busy plant maintenance period. EUAs also registered a northbound drift, following the wider energy complex upwards.