Barriers to a Single European Energy Market.

Table of Contents

• DATAMONITOR VIEW
  • CATALYST
  • SUMMARY
  • METHODOLOGY
• ANALYSIS
  • The size and shape of EU gas markets varies significantly
    • Both the role of gas and levels of absolute demand vary widely across different markets
    • Europe' s three largest gas markets, the UK, Germany and Italy, account for 55% of EU 25 demand
    • Only nine markets have per capita gas demand levels higher than the EU 25 average
    • Mature and established markets have seen much lower five year demand growth than the less developed, smaller markets
  • The nature and characteristics of EU power markets remains diverse
    • More than two thirds of European power demand is accounted for by the five largest consuming nations
    • Finland and Sweden have Per Capita power demand far in excess of the EU average
    • Per capita power demand levels and growth rates vary widely amongst EU members
  • Regulatory frameworks lend varying levels of support to the market opening process
    • The European Commission has been increasing its efforts to ensure compliance with the directives
    • A number of markets have proactively embraced the market opening process by exceeding the terms of the directives
    • Enthusiasm and pro-action towards liberalisation has been lacklustre in some markets
  • The diversity in market structures and frameworks leads to disparate levels of competitive intensity
    • Datamonitor' s MCI Index has been developed as a framework to measure competitive intensity (see appendix for more details)
    • The MCI Index shows how attractive a particular market is to new entrants in terms of the competitive environment
  • The MCI Index is calculated by deriving a weighted average of scores over 9 key metrics divided into three distinct categories
    • Growth in MCI gas scores over the forecast period varies significantly between markets
  • Russia and Ireland show the largest increase in MCI power score over the forecast period
    • Most gas markets see only minor growth in short term scores making them longer rather than shorter term investment options
    • A larger number of more attractive short term investment options exist in the power market than in the gas market
• ACTION POINTS
• APPENDIX
  • Abbreviations
  • Extended methodology
    • ' Effectiveness of regulator' accounts for 10% of the overall score and is one of the three Market Framework pillars
    • ' Ease of Third Party Access' accounts for 15% of the overall score and is one of the three Market Framework pillars
    • ' Effectiveness of Balancing & Data Transfer' accounts for 5% of the overall score and is one of the three Market Framework pillars
    • ' Wholesale Market Fragmentation' accounts for 10% of the overall score and is one of the three Supplier Push pillars
    • ' Retail Market Fragmentation' accounts for 20% of the overall score and is one of the three Supplier Push pillars
    • ' Traded Market Maturity' accounts for 20% of the overall score and is one of the three Supplier Push pillars
    • ' Access to Market Information and Assistance' accounts for 5% of the overall score and is one of the three Customer Pull pillars
    • ' Consumer Representation' accounts for 5% of the overall score and is one of the three Customer Pull pillars
    • ' Propensity to Switch' accounts for 10% of the overall score and is one of the three Customer Pull pillars
  • Further reading
  • Datamonitor Consultancy
  • Ask the analyst
  • List of Figures
    • Figure 1: Only a small number of markets have both a significant volume of gas usage and strong penetrations into the energy mix
    • Figure 2: Absolute levels of gas demand vary enormously between markets
    • Figure 3: Significant per capita gas demand growth potential exists in a number of markets
    • Figure 4: The majority of gas demand in recent years has been in less mature gas markets
    • Figure 5: The majority of absolute power demand in Europe is concentrated into a small number of markets
    • Figure 6: Divergences from average per capita demand levels occur less in the power sector than in the gas sector
    • Figure 7: A considerable gap exists in per capita power demand levels in different parts of the EU
    • Figure 8: Overall MCI scores are made on a sliding scale of 1 to 10
    • Figure 9: Each of the three groups of MCI metrics examines a different element of market competitiveness
    • Figure 10: Whilst the UK is currently, and will remain, the most competitively intense gas market, progress is made elsewhere during the forecast period
    • Figure 11: A much smaller gap exists in power market competitive intensity than in gas market competitive intensity
    • Figure 12: Analysis of forecast scores and growth in these scores over the forecast period highlights the relative attractions of individual markets
    • Figure 13: The attractions of the power sector, in MCI terms, exceeds that of the gas sector
    • Figure 14: Scale for MCI Assessment, Effectiveness of Regulator
    • Figure 15: Scale for MCI Assessment, Ease of Third Party Access
    • Figure 16: Scale for MCI Assessment, Effectiveness of Balancing and Data Transfer
    • Figure 17: Scale for MCI Assessment, Wholesale Market Fragmentation
    • Figure 18: Scale for MCI Assessment, Retail Market Fragmentation
    • 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