Market Competitive Intensity: Denmark

Table of Contents

• CATALYST
• SUMMARY
• ANALYSIS
  • Introduction: MCI Index offers a robust framework for measuring the development of energy Market Competitive Intensity
    • The MCI Index shows how attractive a particular market is to new entrants in terms of the competitive environment
    • The MCI assessment draws on nine underlying metrics grouped into three broad clusters: Market framework; Supplier Push; Customer Pull.
    • The MCI Index measures the development of 20 diverse European gas and power markets
    • The MCI Index assesses markets in December 2006 and on 1st July 2008 in addition to driving a market switching forecast
    • Each of the nine pillars has an assessment scale to allow for the comparison of diverse markets (see appendix for more details)
    • Two differing overall MCI scores are calculated to ensure full clarity of results
      • A simple weighted average (additive) measure shows overall competitive intensity
      • A weighted multiple (multiplicative) measure shows overall competitive intensity
    • The MCI framework has a number of applications for your organization
  • Context: Denmark' s upstream gas and access to the Nord Pool are key to its score at the upper end of both the gas and power scales
    • Although ahead of other markets in terms of current competitive intensity, a considerable gap exists between Denmark in second place and the UK in first place
    • Despite its strong Market Framework factors, Denmark slips one place in the gas rankings over the forecast period
  • Power MCI: Denmark' s power score is only tempered by the relatively low Propensity to Switch metric
    • The maturity of the Danish power market helps create relatively strong Market Framework scores
      • Effectiveness of Regulator [2006: 7/10 2008: 7/10]
      • Ease of Third Party Access [2006: 10/10 2008: 10/10]
      • Effectiveness of Balancing and Data Transfer [2006: 7/10 2008: 7.3/10]
    • All of Denmark' s Supplier Push metrics score at the upper end of the scale
      • Wholesale Market Fragmentation [2006: 7/10 2008: 7.3/10]
      • Retail Market Fragmentation [2006: 8/10 2008: 8/10]
      • Traded Market Maturity [2006: 10/10 2008: 10/10]
    • Despite the developed nature of the market, Customer Pull metrics largely remain at the mid point of the range
      • Access to Market Information and Assistance [2006: 7.5/10 2008: 8/10]
      • Consumer Representation [2006: 6/10 2008: 6.6/10]
      • Propensity to Switch [2006: 3.1/10 2008: 3.7/10]
    • The gap between switching rates in the non-residential and residential sectors will continue to be wide in 2008
  • Gas MCI: Denmark' s gas scores are driven by strong Market Framework factors
    • All of Denmark' s Market Framework metrics score at the upper end of the scale
      • Effectiveness of Regulator [2006: 8/10 2008: 8.3/10]
      • Ease of Third Party Access [2006: 10/10 2008: 10/10]
      • Effectiveness of Balancing and Data Transfer [2006: 9/10 2008: 9/10]
    • Denmark' s Supplier Push metrics are constrained by the lack of fragmentation in both the wholesale and retail arenas
      • Wholesale Market Fragmentation [2006: 2.5/10 2008: 3.5/10]
      • Retail Market Fragmentation [2006: 3.5/10 2008: 5/10]
      • Traded Market Maturity [2006: 3.5/10 2008: 5.3/10]
    • All of Denmark' s Customer Pull metrics remain modest, despite the market opening timetable exceeding EU requirements
      • Access to Market Information and Assistance [2006: 4.5/10 2008: 6.5/10]
      • Consumer Representation [2006: 4.5/10 2008: 5/10]
      • Propensity to Switch [2006: 2/10 2008: 4/10]
    • Switching rates in the residential sector will continue to lag unusually far behind the non-residential sector
  • Outlook: Commercial opportunities exist, though overcoming the threat posed by existing players is a significant challenge
    • Competitive intensity in the Danish gas market will continue to lag behind that seen in the electricity market
      • Power scores
      • Gas scores
    • Denmark achieves the highest power market competitive intensity score of the markets surveyed
      • New Market Entrant Opportunities, Power
      • New Market Entrant Threats, Power
    • Commercial opportunities in the Danish gas sector will continue to trail those in the electricity market
      • New Market Entrant Opportunities, Gas
      • New Market Entrant Threats, Gas
  • MCI Scores
• APPENDIX
  • Definitions
  • Ask the analyst
  • List of Tables
    • Table 1: Market Competitive Intensity, Denmark 2006-08
    • Table 2: MCI Additive, Europe 2006-2008
    • Table 3: MCI Multiplicative, Europe 2006-2008
  • List of Figures
    • Figure 1: MCI Assessment Scale
    • Figure 2: MCI Assessment Framework
    • Figure 3: MCI Market Coverage
    • Figure 4: MCI Scales
    • Figure 5: MCI Applications
    • Figure 6: European Power Market Competitive Intensity, 2006-08
    • Figure 7: European Gas Market Competitive Intensity, 2006-08
    • Figure 8: Power Market Competitive Intensity, Denmark
    • Figure 9: Switching Forecasts, Denmark 2008 [Residential: 15% Non Residential:56%]
    • Figure 10: Gas Market Competitive Intensity, Denmark
    • Figure 11: Switching Forecasts, Denmark 2008 [Residential: 09% Non Residential:52%]
    • Figure 12: Market Competitive Intensity, Denmark
    • Figure 13: Scale for MCI Assessment, Effectiveness of Regulator
    • Figure 14: Scale for MCI Assessment, Ease of Third Party Access
    • Figure 15: Scale for MCI Assessment, Effectiveness of Balancing and Data Transfer
    • Figure 16: Scale for MCI Assessment, Wholesale Market Fragmentation
    • Figure 17: Scale for MCI Assessment, Retail Market Fragmentation
    • Figure 18: Scale for MCI Assessment, Traded Market Maturity
    • Figure 19: Scale for MCI Assessment, Traded Market Maturity
    • Figure 20: Scale for MCI Assessment, Access to Market Information and Assistance
    • Figure 21: Scale for MCI Assessment, Consumer Representation
    • Figure 22: Scale for MCI Assessment, Propensity to Switch