Market Competitive Intensity: Germany

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: The size of the market and high levels of corporate activity are key factors driving gas and power competitive intensity in Germany
    • Germany' s power scores are relatively strong over all metrics other than Propensity to Switch
    • Germany' s gas metrics are currently driven by the impact of the new regulator and the lack of concentration in the retail market
  • Power MCI: With the exception of Propensity to Switch, all of Germany' s power scores are in the upper half of the scale
    • The creation of a regulatory body has revived Germany' s Market Framework scores
      • Effectiveness of Regulator [2006: 7.7/10 2008: 7.5/10]
      • Ease of Third Party Access [2006: 7.4/10 2008: 7.9/10]
      • Effectiveness of Balancing and Data Transfer [2006: 5.5/10 2008: 6.7/10]
    • Supplier Push factors all score relatively highly given the well developed nature of the German power market
      • Wholesale Market Fragmentation [2006: 6/10 2008: 6.2/10]
      • Retail Market Fragmentation [2006: 5/10 2008: 6.5/10]
      • Traded Market Maturity [2006: 8/10 2008: 9/10]
    • Customer Pull metrics are likely to remain low for the foreseeable future
      • Access to Market Information and Assistance [2006: 7.7/10 2008: 8.5/10]
      • Consumer Representation [2006: 7.6/10 2008: 8.3/10]
      • Propensity to Switch [2006: 1.5/10 2008: 2.6/10]
    • Switching growth rates in both sectors will be curtailed by the fact that market opening theoretically occurred back in 1998
  • Gas MCI: A strong upward movement in Germany' s gas metrics is expected over the forecast period
    • Germany' s gas Market Framework score is no longer curtailed by the lack of a regulator
      • Effectiveness of Regulator [2006: 7.8/10 2008: 9/10]
      • Ease of Third Party Access [2006: 5.7/10 2008: 7.3/10]
      • Effectiveness of Balancing and Data Transfer [2006: 2/10 2008: 5/10]
    • The large number of municipal energy retailers drives the Supplier Push metrics
      • Wholesale Market Fragmentation [2006: 3.3/10 2008: 5.3/10]
      • Retail Market Fragmentation [2006: 8.5/10 2008: 9/10]
      • Traded Market Maturity [2006: 2/10 2008: 6/10]
    • Germany' s Customer Pull metrics show improvement emerging by 2008
      • Access to Market Information and Assistance [2006: 3/10 2008: 7.3/10]
      • Consumer Representation [2006: 8/10 2008: 8/10]
      • Propensity to Switch [2006: 1.8/10 2008: 3.5/10]
    • Forecast switching rates for 2008 are at the lower end of the European scale
  • Outlook: The established and competitive nature of the market means exploiting commercial opportunities in Germany will remain challenging
    • Significant progress is likely to be made in the competitive intensity of the German gas market in the coming two years
      • Power scores
      • Gas scores
    • Mitigating regulatory uncertainty and ensuring cost effective TPA are the key challenges facing entrants to the German power market
      • New Market Entrant Opportunities, Power
      • New Market Entrant Threats, Power
    • Germany' s gas market competitive intensity shows a strong improvement over the forecast period
      • 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, Germany 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, Germany
    • Figure 9: Switching Forecasts, Germany 2008 [Residential: 07% Non Residential:17%]
    • Figure 10: Gas Market Competitive Intensity, Germany
    • Figure 11: Switching Forecasts, Germany 2008 [Residential: 04% Non Residential:18%]
    • Figure 12: Market Competitive Intensity, Germany
    • 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