The European Energy Market

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The European Energy Market

• Emanuela CESAREO
• Xavier NOEBES
• Léna THONON

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Presentation of Energy situation in Europe

• Europe's citizens and companies need a secure
  supply of energy at affordable prices in order to
  maintain our standards of living.
• At the same time, the negative effects of energy
  use, particularly fossil fuels, on the
  environment must be reduced.
• That is why EU policy focuses on creating a
  competitive internal energy market offering
  quality service at low prices, on developing
  renewable energy sources, on reducing dependence
  on imported fuels, and on doing more with a lower
  consumption of energy.

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1. What do you think are the economic benefits of
liberalizing the EU energy market ?

• Consumers and energy companies should both have
  benefits
• Customers should have more choices of energy
  providers and have more possibilities to pay less
  their energy.
• The energy companies could buy energy from the
  cheapest source.
• The larger companies should realize economy of
  scale which would enable them to be more
  competitive.
• Greater efficiency leads to lower costs and
  prices which is improving competitiveness.

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• Eurelectric, the union for the EU electricity
  industry, says the liberalisation process has
  brought "considerable benefits" to Europe in
  terms of price and cost reductions as well as
  labour productivity gains. However, Eurelectric
  believes that it is vital to maintain the
  momentum and reinforce trust in the
  liberalisation process.
• The Commission has consistently argued that
  liberalisation increases the efficiency of the
  energy sector and the competitiveness of the
  European economy as a whole.

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Who stands to gain the most from liberalization?

• Energy Commissioner Andris Piebalgs said the deal
  benefited both consumers, who would get the
  "lowest possible prices" and better protection,
  and businesses, which would "gain more business
  in a competitive market". "A clear regulatory
  framework for a functioning internal gas and
  electricity market will help the EU to meet the
  challenges of climate change, increased energy
  import dependence and global competitiveness,
• But, we can imagine that the biggest national
  electricity groups like Electricité de France,
  GDF-Suez, EON or Enel will have more
  opportunities to buy their competitors.

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• In April 2005, Greenpeace published
  a report analysing the market shares of Europe's
  ten largest electricity utilities (EdF, E.ON,
  RWE, ENEL, Vattenfall, Electrabel, EnBW, Endesa,
  Iberdrola and British Energy).
• According to the environmental pressure group,
  the liberalisation process has worked in favour
  of these large established utilities as
  demonstrated by the wave of takeovers that ensued
  after the opening of the market.
• The Commission is also keen to see more powerful
  energy regulators to fight anti-competitive
  behaviour, improved cooperation between network
  operators and increased investment.
• Paradoxically, the liberalisation of the energy
  market, which is meant to promote competition,
  has led to a number of giant mergers in recent
  months, which reduces the number of companies.

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2.What are the implications of liberalization for
energy producers in the EU ? How will the
environment they face change after liberalization
? What actions will they have to take ?

• Implications
• will permit to replace the markets of the 27
  members states by a single continentwide market
  for electricity and gas.
• will permit to the biggest energy groups to
  acquire other energy firms in all Europe
  (example Enel and Endessa, the largest spanish
  utility).
• Changes
• many mergers and acquisitions in the energy
  markets.
• fights between governments protecting their firms
  and the biggest groups which want to acquire
  them.
• Actions alliances, lobbying to protect its
  advantages and for being protect as much as
  possible by the government.

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3. Why is the deintegration of large
international company seen as much an important
part of any attempt to liberalize the EU energy
market ?

• Vertical integration of generation and supply
  activityies have reduced incentives to trade on
  wholesale market and thus, a lack of liquidity
  in these markets, in turn an entry barrier.
  Another fact is the insufficient or unavailable
  cross-border transmission capacity as a a barrier
  to integration of national markets together with
  lack of transparency , reliability and timeliness
  of information on network availability.
• The actual biggest energy groups are national.
  They have many advantages and they have monopol
  such as Electricité de France.
• The deintegration of the biggest companies will
  encourage the smallest companies to be more
  actives and permits the market to be more fair
  and the energy firms to be more equal.
• It would permit the introduction of new operators
  on the energy market. In this way competition
  between them would naturally increase the
  affordability and dependability of the service.

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4. Why do you think progress towards the
liberalization of EU energy market has been
fairly slow so far ?

• The countries have tried to protect their small
  energy firms from the biggest groups of the
  others. This protectionism has made this
  liberalization being slowly..
• After 10 years, we cant really say that the
  energy market in UE face with a lot of
  competition. In the majority of the countries,
  the governments and the national companies make
  their best to protect them from  the others .
• Only the minority of big firms like E.ON, EDF,
  GDFSuez, Centrica, Enel or RWE, which represents
  4 countries (UK, France, Germany and Italy) are
  really ready to face with their competitors and
  to increase their presence and power in Europe.

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Sources

• http//www.euractiv.com/en/energy/liberalising-eu-
  energy-sector/article-145320
• http//www.thefinancialexpress-bd.com/

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Any questions ?

• Thanks for
• your attention