European Energy Market Essays

European Energy Market Essays European Energy Market Essay European Energy Market Essay 1. What do you think are the economic benefits of liberalizing the EU energy market? Who stands to gain the most from liberalization? -Economic benefits: The consumers would have freedom to choose their energy providers and probably could lower the costs. They will have improved service quality as they will have variety of producers. Energy providers can improve efficiency through innovation to be competitive which in turn will also reduce prices. Larger utilities should be able to realize economies of scale which will able them to compete more effectively. The consumers and businesses would gain the most from liberalization: Consumers could get the best lowest prices possible from producers; better production with the use of innovative technology. Business would have more business in the competitive market and could gain more profit. 2. What are the implications of liberalization for energy producers in the EU? How will the environment they face change after liberalization? What act ions will they have to take? -Implications: Replace the markets of its 27 member states with a single continent wide market for electricity and gas. The majority market shares would be acquired and dominated by a large single enterprise eg: Electric de France. -Changes in environment after liberalization: There are a lot of acquisitions and mergers in the energy markets. Politicians and governments try to protect their firms from other competitions with regulations. Bigger firms will try to acquire firms in local country. -Actions: Government would impose conditions to stop foreign companies from acquiring local companies. The local authorities would try to protect the local company advantages. 3. Why is the deintegration of large energy companies seen as such an important part of any attempt to liberalize the EU energy market? -There are vertically integrated producers consists of utilities that are producing, transmitting and selling power which made the markets lack of liquidity. The deintegration of biggest companies will encourage smaller companies to be active in the market. There will be fair competition and energy firms could compete with each other. -To reduce the barrier in doing cross-border transmission in national markets. Barrier to do cross-border transmission is the oppositions from various parties in the country which hinders the foreign companies to enter the national market in order to protect their integrated companies. If deintegration is done by the country, there would be more operators in the energy market that will encourage competition; increase affordability and dependability of the services. . Why do you think progress towards the liberalization of the EU energy market has been fairly slow so far? -The countries have been trying to protect their local small energy companies from the large foreign companies. -The governments and national companies try to protect their own industry from the foreign companies to maintain their market share in the industry. -Only the big firms are ready to face their competitors and increase their marke t share and power in Europe.