Since its conception, the EU has been aware of the importance of energy issues. The European Coal and Steel Community (ECSC), formally established in 1951 by the Treaty of Paris, served as the European Atomic Energy Community (EURATOM) as the foundation for the modern-day European Union. EU aims to be a zone which provides free movement of goods, freedom to provide services and freedom of establishment. This can only be achieved with an open market where EU citizens can choose their energy suppliers freely and energy suppliers freely deliver to their customers. Achieving such a system means the creation of an internal Energy market, EU has adopted many directives. These rules has been establish to ensure efficiency gains, price reductions, higher standards of service and increased competitiveness. This study, which will be more analytical than descriptive, aims to show how the EU regulations, policies and institutions has affected and may affect the French energy market.
First we will examine the impact of the EU (1) and then dissect the competitive environment for new entrant.
[...] Attacking these new markets seems to be the best way for new French energy providers' to acquire vital market shares. Finally, one can conclude that volatility of primary commodity costs is a result of the decrease of the reserves, the increasing consumption of fast growing countries such as China and India, the importance of the speculation and omnipresent geopolitical risks create a very uncertain environment. References CRE, LISTE DES FOURNISSEURS [Online] Available at : http://www.energie-info.fr/fichier/ListeFournisseurs.pdf [accessed 7 April 2008] CRE, MISSIONS, [Online] Available at: http://www.cre.fr/fr/presentation/missions [accessed 3 April 2008] EUROPEAN COMMISSION, MARKET LIBERALIZATION [Online] Available at: http://ec.europa.eu/energy/electricity/index_en.htm [accessed 7 April 2008] EUROSTAT Panorama of Energy ETUDES, LH L'OUVERTURE DES MARCHES DE L'ELECTRICITE ET DU GAZ NATUREL POUR LES CLIENTS RESIDENTIELS, BAROMETRE ANNUEL VAGUE 1 [Online] Available at: http://www.cre.fr/fr/marches/etudes[accessed 26 April 2008] TOUTE L'EUROPE., [Online], Available at: http://www.touteleurope.fr/fr/union-europeenne-en-action/les- politiques-europeennes/energie.html [accessed 3 April 2008] TOWARD A COMMON CO-ORDINATED REGIONAL CONGESTION MANAGEMENT METHOD IN EUROPE, [Online] Available at: http://ec.europa.eu/energy/electricity/publications/doc/regional_congestion_ management.pdf [accessed 20 April 2008] TRANS-EUROPEAN ENERGY NETWORKS, [Online] Available at: http://ec.europa.eu/ten/energy/index_en.htm [accessed 15 April 2008] POWEO, POSITIVE ENERGY SERVING OUR CUSTOMERS,[Online]. [...]
[...] Besides, the French government allows consumers who switched from the public supplier (EDF) to a new comer (POWEO, DIRECT ENERGY ) the right to come back; Consumers are not concentrated enough. As the customers are price sensitive and their bargaining power and their power is relatively high. Suppliers' Bargaining Power One can say that firms as POWEO, EDF are price sensitive because: Cost of supplied products as oil, gas, uranium is high when compared to the Industry's total costs. And this part is increasing because of the increase in commodities' prices (oil, gas ) The supplier's products are not easy to differentiate; The suppliers bargaining power is high because: The demand for commodities (oil, gas ) is increasing while the production of these resources is limited. [...]
[...] Table The notoriety of the new entrants on French energy market (in Source: LH This graph shows us that new entrants are not well-known by French households. In addition to this, the low percentage of litigations does not motivate customers to change their energy provider. According to LH2, only of the customers have decided to change their energy provider. The analysis we made with Porter's 5 forces and the customer's knowledge about the new competitive framework shows a complex environment Key success factors in the industry To fit in with the customer's demand and sustain the competition in this industry, a firm needs to: Lead an offensive(??) communication and marketing strategy based on: o Prices, because consumers are price sensitive. [...]
[...] Hence since 2003 EU encourage (by a directive) member states to adopt legislations that give incentive to produce more renewable energy The positive role of the European central bank The energy market is very sensitive to the price of the commodities such as oil and gas. Nowadays, the oil and gas prices are rising sharply, this detrimental to the energy producer because it increases the cost of their main raw material. However the fact that the price of these commodities are in dollars reduces the bill (due to the exchange rate between euro and dollars). [...]
[...] And among those who do know that they can change their energy provider, one third still thinks that they will have to pay if they decide to do so. The same study states that of the French households don't really know how to manage an energy provider switch. However, one of the main problems for a new entrant is the weakness of their marketing and communication strategy. According to LH2's survey of the French households have never been contacted by a new energy provider. As a result, they are insufficiently informed and don't really know the new providers. [...]
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