The European Energy
Market
Emanuela CESAREO
Xavier NOEBES
Léna THONON
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.
1. What do you think are the economic
benefits of liberalizing the EU energy market ?
Consumers
benefits:
and
energy
companies
should
both
have
-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.
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.
Who stands
liberalization?
to
gain
the
most
from
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.
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.
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.
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.
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 can’t 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.
Sources
 http://www.euractiv.com/en/energy/liberali
sing-eu-energy-sector/article-145320
 http://www.thefinancialexpress-bd.com/
Any questions ?
Thanks for
your attention