IntroductionCapgemini's European Energy Markets Observatory is an annual report that was initiated in 2002. It tracks the progress of two subjects: the establishment of an open and competitive electricity and gas market in EU-27 (plus Norway and Switzerland) and the reaching of the EU's 3x20 climate change objectives. The report looks at all segments of the value chain and analyzes leading-edge energy themes — digital revolution, customer experience, smart grids and demand response management — to identify key trends in the electricity and gas industries.
The observatory is produced in collaboration with three partners: Exane BNP Paribas, CMS Bureau Francis Lefebvre and VaasaETT Global Energy Think Tank.
The 15th edition of the European Energy Markets Observatory covers the whole year 2012 and winter 2012/13.
The study shows that the electricity and gas markets in Europe are in a unstable situation, due to the following root causes:
- A slow economy and decreasing consumption of electricity and gas
- The EU Climate and Energy Package requiring the EU countries to reach 20% of renewable energies in the energy mix by 2020. Giving priority to renewable energy on the markets this is pushing other forms of energy, such as gas plants, to low utilization rates
- The unconventional gas boom and low gas spot prices in the US, resulting in oversupply of coal in Europe and lowering coal prices
- Low CO2 prices which are not favoring decarbonized installations
The consequences of this situation have triggered a series of different issues such as gas plants closures, renewable subsidies reaching unsustainable levels and falling CO2 rights emission prices. This situation poses a clear threat to security of supply in the short and the long term.
ConclusionThe energy markets have to be rethought by:
- Reforming the ETS market (for example, allocation levels have to be adapted to the economic situation)
- Creating quickly capacity markets coordinated at the European level
- Designing and implementing a new retail market design enabling the smart grids financing and deployment
- Establishing a more reasonable renewable energies capacity growth pace in order to limiting the related increase in subsidies
- Implementing an aggressive and efficient energy savings policy
If the right reforms are not implemented in a timely fashion, the physical electricity and gas systems will deteriorate and when the economy and the consumption grow again, energy security of supply will be under pressure.
- Energy Regulation
- Electricity Markets
- Gas Markets
- Customer Transformation
- Renewable Energy Sources & Local Energy Transitions
- Companies’ Overview
Discover more about the EEMO report: