European energy competition still patchy, says Cap Gemini
The report, which covers the period from April to October 2002, shows large regional variations between the market share of major players. In the UK and Germany, for example, no generating firm accounts for more than 25% of market share, but in France and Belgium former monopolies EDF and Electrabel respectively still retain market shares of more than 90%.
Germany and the UK are singled out as the two countries with the greatest volume of electricity subject to competition in both the industrial/commercial and residential markets.
The European Union has recently said all industrial and commercial markets must be open to full competition by 2004, with retail markets to follow by 2007, a move the report says will pose significant challenges for countries such as France and Italy, where market opening is still limited.
The report says cross-border trading is not yet sufficient to create a single European market, as continuing differences in wholesale prices between neighbouring countries are holding back the efficient transfer of power across most national borders. It is only when there are no limitations to cross-border trade, such as between Germany and Austria, that wholesale prices are aligned.
In addition, the report says interconnections between countries were designed for reliability and security rather than trading.
Some progress has been made in developing cross-border capacity auctions that allow greater trading access to the interconnectors. However, standardisation is lacking, as four different types of auctions are currently in use, all of which tend to favour pre-existing long-term contracts rather than short-term, price-responsive deals.
“The report is based on data for the traditionally quiet summer period, but in fact emphasises how much is going on,” said Colette Lewiner, Paris-based senior vice-president and global leader of the energy, utilities and chemicals practice at Cap Gemini in a statement to mark the release of the report on March 25.
“The sheer volume of activity is evidence that the European utility industry is facing a number of significant challenges that will only get more pressing as time goes on,” she said. “Companies have already made major changes in response to deregulation, but the report emphasises that they have a significant amount still to do.”
* European energy markets deregulation observatory, www.cgey.com/energy
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe
You are currently unable to print this content. Please contact info@risk.net to find out more.
You are currently unable to copy this content. Please contact info@risk.net to find out more.
Copyright Infopro Digital Limited. All rights reserved.
As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (point 2.4), printing is limited to a single copy.
If you would like to purchase additional rights please email info@risk.net
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (clause 2.4), an Authorised User may only make one copy of the materials for their own personal use. You must also comply with the restrictions in clause 2.5.
If you would like to purchase additional rights please email info@risk.net
More on Risk management
To liquidity and beyond: new funding strategies for UK pensions and insurance
Prompted by policy shifts and macro events, pension funds and insurance firms are seeking alternative solutions around funding and liquidity
More cleared repo sponsors join Eurex ahead of cross-margining
End of TLTROs for banks and pension fund search for liquidity management tools drives uptake
Reimagining model risk management: new tools and approaches for a new era
A collaborative report by Chartis and Evalueserve on how the use of automation can combat the growing complexity of managing model risk due to regulation and market volatility
What Goldman’s appeal victory means for Fed stress tests
Decision could embolden more banks to appeal, analysts say. But others believe result is one-off
Clearing members rattled as CME approved to launch its own FCM
National Futures Association registration sharpens concerns about conflict of interest with CCP
CME files application for US Treasury and repo clearing
New entrant believes direct user access model will avoid accounting problem that hampers rival FICC
UST repo clearing: considerations for ‘done-away’ implementation
Citi’s Mariam Rafi sets out the drivers for sponsored and agent clearing of Treasury repo and reverse repo
Gensler to stick to Treasury clearing timetable
SEC chief promises to keep up the pressure for done-away trades
