Several regional European competitive arenas are emerging, through which cross-border competition is likely to be channelled in coming years, according to a recent Datamonitor analysis.
Despite the claims of some energy companies, until recently competition occurred on a country-by-country basis with only the likes of EdF, RWE and E.On significantly venturing outside their national borders. However, the last few years have seen companies such as Spain’s Endesa, Italy’s Enel and Belgium’s Electrabel all pursuing vigorous international strategies.
Nonetheless, Datamonitor suggests that the emergence of a true pan-European energy marketplace and, correspondingly, genuine pan-European players is still some way off with companies realising that Europe as a whole is too big and diverse for a truly single energy market to emerge anytime soon. Instead, a number of regional competitive arenas are emerging, such as the Nordic region, northwest continental Europe, western Mediterranean, and central and eastern Europe.
The key feature of a regional grouping of markets, says Datamonitor, is the availability of a full-service hub which combines a physical infrastructure for cross-border trade in power and gas, with a traded market that services those energy flows, allowing forward planning and risk management. Consequently, regional groupings can be defined by thier hubs such as the Nord Pool, APX and EEX. However, other regional groupings cannot yet be clearly defined in this way as both physical and financial infrastructure in southern and central Europe remains limited, says the report.
In Datamonitor’s analysis, the western Mediterranean is emerging as the next big battleground for Europe’s largest power utilities with the beginning of a three-way fight involving the three national champions of EdF, Endesa and Enel.