Market Competitive Intensity (MCI): Finland

Datamonitor's Market Competitive Intensity Index (MCI) is a robust framework for measuring and benchmarking the development of competitiveness and market conditions in a range of gas and electricty markets. The MCI assessment draws on nine underlying metrics grouped into three broad clusters: Market framework; Supplier Push and Customer Pull.

Report Highlights
Datamonitor's MCI Index offers a robust framework for measuring the development of utility Market Competitive Intensity. MCI scores are calculated using two different methods. The first, the simple weighted average (additive) measure shows overall competitive intensity. The second, the multipliative method, is more complex. It prevents markets with an overly wide spread of underlying raw scores from exerting undue influence over, or skewing, the final result.
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DATAMONITOR VIEW 1
CATALYST 1
SUMMARY 1
ANALYSIS 2
Introduction: Datamonitor's MCI Index offers a robust framework for measuring the development of energy Market Competitive Intensity 2
The MCI Index shows how attractive a particular market is to new entrants in terms of the competitive environment 2
The MCI assessment draws on nine underlying metrics grouped into three broad clusters: Market framework; Supplier Push; Customer Pull. 3
The MCI Index measures competitive intensity in EU 27 and 6 related markets 4
The MCI Index assesses markets as they stood in early 2008 and forecasts conditions likely to be prevailing three years after full market opening 4
Each of the nine pillars has an assessment scale to allow for the comparison of diverse markets (see appendix for more details) 5
Two differing overall MCI scores are calculated to ensure full clarity of results 5
A simple weighted average (additive) measure shows overall competitive intensity 5
A weighted multiple (multiplicative) measure shows overall competitive intensity 5
The MCI framework has a number of applications for your organization 6
Context: Finland's power market is more developed compared to many other EU nations 7
Finland's power customer pull metrics show particular weakness throughout the forecast period 7
Finland's weak gas metrics create an MCI score very much at the lower end of the European scale 7
Power MCI: Apart from consumer representation, the power metrics remain at the upper part of the scale 9
All of Finland's market framework factors score highly 9
Effectiveness of Regulator [2008: 8.5/10 2010: 9/10] 9
Ease of Third Party Access [2008: 7/10 2010: 8/10] 10
Effectiveness of Balancing and Data Transfer [2008: 8/10 2010: 8.5/10] 10
Supplier push metrics remain ahead of what is seen in many other EU power markets 10
Wholesale Market Fragmentation [2008: 4.5/10 2010: 5.5/10] 10
Retail Market Fragmentation [2008: 8/10 2010: 8.5/10] 10
Traded Market Maturity [2008: 8.5/10 2010: 9.5/10] 10
Finland's switching rates are amongst the highest in the EU 11
Access to Market Information and Assistance [2008: 7/10 2010: 8/10] 11
Consumer Representation [2008: 3/10 2010: 4/10] 11
Propensity to Switch [2008: 7/10 2010: 8/10] 11
Gas MCI: All of Finland's gas metrics score at the lower end of the scale 12
Finland's gas market framework scores are in stark contrast to those seen in the power sector 12
Effectiveness of Regulator [2008: 2.5/10 2010: 3/10] 12
Ease of Third Party Access [2008: 1/10 2010: 2/10] 12
Effectiveness of Balancing and Data Transfer [2008: 1/10 2010: 2/10] 13
Retail market fragmentation is the only significantly scoring supplier push metric 13
Wholesale Market Fragmentation [2008: 0/10 2010: 1/10] 13
Retail Market Fragmentation [2008:7/10 2010: 7.5/10] 13
Traded Market Maturity [2008: 0/10 2010: 0/10] 13
Lack of switching and access to market information curtails the customer pull metrics 13
Access to Market Information and Assistance [2008: 0/10 2010: 1.5/10] 13
Consumer Representation [2008: 2/10 2010: 2.5/10] 13
Propensity to Switch [2008: 0/10 2010: 0/10] 13
Outlook: Finland's lack of gas competitive intensity restricts new entrants in the short to medium term 14
Competitive intensity in power markets will remain higher than that seen in the gas market 14
Power scores 14
Gas scores 14
Commercial opportunities potentially exist in energy retailing 15
New Market Entrant Opportunities, Power 15
New Market Entrant Threats, Power 15
Commercial opportunities in the Finnish gas sector are limited, but potentially exist if wholesale gas supplies can be secured 15
New Market Entrant Opportunities, Gas 15
New Market Entrant Threats, Gas 15
MCI Scores 16
APPENDIX 19
Definitions 19
Ask the analyst 24
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Table 1: Market Competitive Intensity, Finland 2008-10 16
Table 2: MCI Additive, Europe 2008-2010 17
Table 3: MCI Multiplicative, Europe 2008-2010 18
Figure 1: MCI Assessment Scale 2
Figure 2: MCI Assessment Framework 3
Figure 3: MCI Market Coverage 4
Figure 4: MCI Scales 5
Figure 5: MCI Applications 6
Figure 6: European Power Market Competitive Intensity, 2008-10 7
Figure 7: European Gas Market Competitive Intensity, 2008-10 8
Figure 8: Power Market Competitive Intensity, Finland 9
Figure 9: Gas Market Competitive Intensity, Finland 12
Figure 10: Market Competitive Intensity, Finland 14
Figure 11: Scale for MCI Assessment, Effectiveness of Regulator 19
Figure 12: Scale for MCI Assessment, Ease of Third Party Access 20
Figure 13: Scale for MCI Assessment, Effectiveness of Balancing and Data Transfer 20
Figure 14: Scale for MCI Assessment, Wholesale Market Fragmentation 21
Figure 15: Scale for MCI Assessment, Retail Market Fragmentation 21
Figure 16: Scale for MCI Assessment, Traded Market Maturity 22
Figure 17: Scale for MCI Assessment, Access to Market Information and Assistance 22
Figure 18: Scale for MCI Assessment, Consumer Representation 23
Figure 19: Scale for MCI Assessment, Propensity to Switch 23
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