Market Competitive Intensity (MCI): Portugal

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: Portugal has been slow to embrace energy market liberalisation 7
Portugal remains a limited market for investment due to a number of structural barriers 7
The gas market is dominated by one key supplier with little in the way of market opening at this stage 7
Power MCI: Scope for new entrants to Portugal's power market remains limited 9
The Market Framework metrics form a key constituent of Portugal's overall score 9
Effectiveness of Regulator [2008: 5.5/10 2010: 6.5/10] 9
Ease of Third Party Access [2008: 3/10 2010: 4/10] 10
Effectiveness of Balancing and Data Transfer [2008: 2.5/10 2010: 5/10] 10
Balancing in Portugal is largely driven through MIBEL, a system that will become increasingly important in eroding long term purchasing power agreements to provide for a more competitive market. As access to power supplies through MIBEL become easier, we expect an increase in the score for this metric. 10
The dominance a number of key utilities curtails the Supplier Push scores 10
Wholesale Market Fragmentation [2008: 3/10 2010: 4/10] 10
Retail Market Fragmentation [2008: 3/10 2010: 5/10] 10
Traded Market Maturity [2008: 3/10 2010: 4.5/10] 11
Customer Pull metrics only play a minor role in the current market structure 11
Access to Market Information and Assistance [2008: 2/10 2010: 3.5/10] 11
Consumer Representation [2008: 2/10 2010: 3/10] 11
Propensity to Switch [2008: 3/10 2010: 5/10] 11
Gas MCI: The Portuguese gas market remains largely closed to competition due to a derogation from EU directives 12
Effectiveness of Regulator [2008: 1/10 2010: 3/10] 12
Ease of Third Party Access [2008: 0.5/10 2010: 2.5/10] 13
Effectiveness of Balancing and Data Transfer [2008: 0.5/10 2010: 2.5/10] 13
Supplier Push metrics are all at the bottom end of the scale in the current climate. 13
Wholesale Market Fragmentation [2008: 0.5/10 2010: 2.5/10] 13
Retail Market Fragmentation [2008: 0/10 2010: 1.0/10] 13
The gas retail market in Portugal remains a monopoly under GALP, and is unlikely to show decreased concentration until long after the end of our forecast period. 13
Traded Market Maturity [2008: 1/10 2010: 3/10)] 13
Customer Pull metrics largely remain at the lower range of the scale 13
Access to Market Information and Assistance [2008: 1.5/10 2010: 2/10] 13
Market information and assistance in the gas sector remains limited in Portugal due to GALP's monopoly status. This will improve as the market slowly opens, albeit at a lethargic rate. 13
Consumer Representation [2008: 1.5/10 2010: 2/10] 14
Propensity to Switch [2008: 0/10 2010: 1.5/10] 14
MCI Scores 15
APPENDIX 18
Definitions 18
Ask the analyst 23
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Table 1: Market Competitive Intensity, Portugal 2008-10 15
Table 2: MCI Additive, Europe 2008-2010 16
Table 3: MCI Multiplicative, Europe 2008-2010 17
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, Portugal 9
Figure 9: Gas Market Competitive Intensity, Portugal 12
Figure 10: Scale for MCI Assessment, Effectiveness of Regulator 18
Figure 11: Scale for MCI Assessment, Ease of Third Party Access 19
Figure 12: Scale for MCI Assessment, Effectiveness of Balancing and Data Transfer 19
Figure 13: Scale for MCI Assessment, Wholesale Market Fragmentation 20
Figure 14: Scale for MCI Assessment, Retail Market Fragmentation 20
Figure 15: Scale for MCI Assessment, Traded Market Maturity 21
Figure 16: Scale for MCI Assessment, Access to Market Information and Assistance 21
Figure 17: Scale for MCI Assessment, Consumer Representation 22
Figure 18: Scale for MCI Assessment, Propensity to Switch 22
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