Market Competitive Intensity: Italy

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: Italy' s standing in the gas and power rankings remains static over the forecast period
    • Italy' s power market positioning remains static between the more developed Western markets and the emergent Eastern markets
    • Like its power market position, the Italian gas market remains positioned between two distinct clusters of market
  • Power MCI: Italy' s Customer Pull metrics lag slightly behind both the Market Framework and Supplier Push factors
    • Italy' s Market Framework score is driven by the Regulator' s proactive reforms and strong stance on promoting liberalisation
      • Effectiveness of Regulator [2006: 7.3/10 2008: 8/10]
      • Ease of Third Party Access [2006: 6/10 2008: 7/10]
      • Effectiveness of Balancing and Data Transfer [2006: 4/10 2008: 5.3/10]
    • Growth in the wholesale power market will increase the Supplier Push metric by July 2008
      • Wholesale Market Fragmentation [2006: 5.2/10 2008: 7/10]
      • Retail Market Fragmentation [2006: 6.7/10 2008: 7.2/10]
      • Traded Market Maturity [2006: 5.5/10 2008: 7.4/10]
    • Customer Pull factors are likely to remain relatively low in July 2008
      • Access to Market Information and Assistance [2006: 3.5/10 2008: 5.5/10]
      • Consumer Representation [2006: 4/10 2008: 5/10]
      • Propensity to Switch [2006: 3.8/10 2008: 5.4/10]
    • An MCI score at the higher end of the scale will help drive further growth in switching rates
  • Gas MCI: Italy' s overall gas score is held back by weakness in the Customer Pull metrics
    • The assertion shown by the Italian regulator has a major impact on the Market Framework metrics
      • Effectiveness of Regulator [2006: 7/10 2008: 7.4/10]
      • Ease of Third Party Access [2006: 5.5/10 2008: 6/10]
      • Effectiveness of Balancing and Data Transfer [2006: 4.8/10 2008: 5.8/10]
    • Reductions in both wholesale and retail market fragmentation are the key driver of the Supplier Push metrics
      • Wholesale Market Fragmentation [2006: 3/10 2008: 3.5/10]
      • Retail Market Fragmentation [2006: 5.9/10 2008: 6.8/10]
      • Traded Market Maturity [2006: 3/10 2008: 4.5/10]
    • Customer Pull metrics are mainly driven by propensity to switch
      • Access to Market Information and Assistance [2006: 2.5/10 2008: 3.5/10]
      • Consumer Representation [2006: 2.5/10 2008: 3.5/10]
      • Propensity to Switch [2006: 3.6/10 2008: 5.1/10]
    • The gap between residential and non-residential switching rates will grow by the end of the forecast period
  • Outlook: Increased competitive intensity will continue to create commercial opportunities in the Italian gas and power market
    • Competitiveness in both the Italian gas and power markets is in the mid range of the other markets analysed
      • Power scores
      • Gas scores
    • The opportunities in the Italian power market are stronger than in many other markets, though grid issues need careful attention
      • New Market Entrant Opportunities, Power
      • New Market Entrant Threats, Power
    • Gas market switching rates are currently twice those in seen the power 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, Italy 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, Italy
    • Figure 9: Switching Forecasts, Italy 2008 [Residential: 22% Non Residential:38%]
    • Figure 10: Gas Market Competitive Intensity, Italy
    • Figure 11: Switching Forecasts, Italy 2008 [Residential: 11% Non Residential:3%]
    • Figure 12: Market Competitive Intensity, Italy
    • 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