Market Competitive Intensity (MCI): Luxembourg

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 the 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: Luxembourg has been slow to embrace liberalisation and competition in its gas and electricity sectors 7
Luxembourg remains a limited market for energy investment due to market size, regulatory and incumbent barriers 7
The gas market is dominated by two key suppliers with the regulatory framework making market entry difficult to achieve 7
Power MCI: Scope for new entrants to Luxembourg's power market remains inherently limited 9
The Market Framework metrics remain an inherent flaw in Luxembourg's overall score 9
Effectiveness of Regulator [2008: 2/10 2010: 2.5/10] 9
Ease of Third Party Access [2008: 3/10 2010: 3.5/10] 10
Effectiveness of Balancing and Data Transfer [2008: 1.5/10 2010: 2/10] 10
Balancing is largely predicated on neighboring countries and their networks. With respect to electricity, the network of Cegedel-Net is connected to the network of RWE in Germany, and Sotel's network is connected to Elia in Belgium, and the imbalance is integrated in these respective networks. 10
The dominance a number of key utilities curtails the supplier push scores 10
Wholesale Market Fragmentation [2008: 2/10 2010: 3/10] 10
Retail Market Fragmentation [2008: 0.5/10 2010: 1/10] 10
Traded Market Maturity [2008: 2.5/10 2010: 3/10] 10
Customer Pull metrics only play a minor role in the current market structure 10
Access to Market Information and Assistance [2008: 1/10 2010: 1.5/10] 10
Consumer Representation [2008: 1/10 2010: 2/10] 10
Propensity to Switch [2008: 0/10 2010: 0/10] 11
Switching has not been a prominent aspect of the Luxembourg market; a limited amount of industrial switching has taken place, but this has not been experienced in the household sector to any great degree. 11
Gas MCI: Very limited viabaility currently exists for new players in the Luxembourg gas market 11
Effectiveness of Regulator [2008: 1.5/10 2010: 2/10] 11
Ease of Third Party Access [2008: 2/10 2010: 2.5/10] 12
Effectiveness of Balancing and Data Transfer [2008: 3/10 2010: 4/10] 12
Supplier Push metrics are all at the bottom end of the scale in the current climate. 12
Wholesale Market Fragmentation [2008: 1/10 2010: 1.5/10] 12
Retail Market Fragmentation [2008: 0/10 2010: 1.0/10] 12
The retail gas market in Luxembourg remains very concentrated amongst a small number of players. 12
Traded Market Maturity [2008: 1/10 2010: 1.5/10] 12
Customer Pull metrics largely remain at the lower range of the scale 12
Access to Market Information and Assistance [2008: 1/10 2010: 2/10] 12
As in the electricity sector, market information and assistance in the gas sector remains limited in Luxembourg. 12
Consumer Representation [2008: 1/10 2010: 2/10] 12
Propensity to Switch [2008: 1/10 2010: 2/10] 12
Switching rates will remain low in Luxembourg over the forecast period. This is due to a lack of awareness on behalf of business and consumers on the one hand, but more fundamentally, the overarching problem of a lack of market choice given the dominance of key suppliers. 12
MCI Scores 13
APPENDIX 16
Definitions 16
Ask the analyst 21
[Inhaltsverzeichnis ausblenden]

Table 1: Market Competitive Intensity, Luxembourg 2008-10 13
Table 2: MCI Additive, Europe 2008-2010 14
Table 3: MCI Multiplicative, Europe 2008-2010 15
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, Luxembourg 9
Figure 9: Gas Market Competitive Intensity, Luxembourg 11
Figure 10: Scale for MCI Assessment, Effectiveness of Regulator 16
Figure 11: Scale for MCI Assessment, Ease of Third Party Access 17
Figure 12: Scale for MCI Assessment, Effectiveness of Balancing and Data Transfer 17
Figure 13: Scale for MCI Assessment, Wholesale Market Fragmentation 18
Figure 14: Scale for MCI Assessment, Retail Market Fragmentation 18
Figure 15: Scale for MCI Assessment, Traded Market Maturity 19
Figure 16: Scale for MCI Assessment, Access to Market Information and Assistance 19
Figure 17: Scale for MCI Assessment, Consumer Representation 20
Figure 18: Scale for MCI Assessment, Propensity to Switch 20
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