Market Competitive Intensity (MCI): Estonia
Introduction
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.
Scope
Insight into the current levels of competitiveness in the gas and power markets of the EU 27 and 6 related markets. Analysis of the commercial opportunities and threats in the selected markets both currently and in 2010. A benchmarking of the factors driving competition and market entry in the gas and power sectors of the selected markets.
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.
Reasons to Purchase
Assess the competitive environments of gas and power markets both now and in the future. Gain insight into value chain factors driving market competitiveness and how each individual part of the chain will evolve as competition develops. Screen future market entry plans against the MCI scores to highlight key areas of potential risk and opportunity. .
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: Market structure issues mean that meaningful competition remains a distant possibility in Estonia 7
The existence of the derogation and the dominance of Eesti Energia curtail Estonia's score 7
Little development in Estonia's gas score is seen over the forecast period 7
Power MCI: Scope for new entrants to the Estonian power markets is largely non-exsitent 9
The Market Framework metrics are the main constituent of Estonia's overall score 9
Effectiveness of Regulator [2008: 2.5/10 2010: 3/10] 9
Until January 2008 the Estonian power industry was regulated by the Estonian Energy Market Inspectorate (EMI), also known as the Energiaturu Inspektsioon. However, more recently, following the merger of the former Estonian Competition Board, the EMI and the Estonian Communications Board, the market is now regulated by a cross industry regulator known as the Estonian Competition Authority. At best, the Estonian Regulator, both in its current and former incarnations, provided very much a general role rather than proactively seeking to bring about market reform in the way seen in other markets. It remains to be seen if the emergence of the new regulatory body catalyses a more stringent approach. However, with Estonia's Electricity Directive due to run until 2013 (a partial opening of 35% is envisaged by 2009), scope for improvement in this score is minimal. 9
Ease of Third Party Access [2008: 1.5/10 2010: 2/10] 10
The transmission network is owned and operated by Põhivõrk, a subsidiary of Eesti Energia AS, the state owned monopoly. The involvement of the monopoly player in network access and the undeveloped nature of the market mean that gaining TPA is more difficult than in other markets. We expect little, if any, change over the forecast period. 10
Effectiveness of Balancing and Data Transfer [2008: 1.5/10 2010: 2/10] 10
The dominance of Eesti Energia curtails the Supplier Push scores 10
Wholesale Market Fragmentation [2008: 0.5/10 2010: 0.5/10] 10
Retail Market Fragmentation [2008: 0/10 2010: 0/10] 10
Traded Market Maturity [2008: 0/10 2010: 0/10] 10
Customer Pull metrics are irrelevant in the current market structure 10
Access to Market Information and Assistance [2008: 0/10 2010: 0/10] 10
Consumer Representation [2008: 0/10 2010: 0/10] 10
Propensity to Switch [2008: 0/10 2010: 0/10] 10
Gas MCI: Limited viabaility currently exists for new players in the Estonian gas market 11
Effectiveness of Regulator [2008: 2.5/10 2010: 3/10] 11
Until January 2008 the Estonian gas industry was regulated by the Estonian Energy Market Inspectorate (EMI), also known as the Energiaturu Inspektsioon. However, more recently, following the merger of the former Estonian Competition Board, the EMI and the Estonian Communications Board, the market is now regulated by a cross industry regulator known as the Estonian Competition Authority. 11
Ease of Third Party Access [2008: 2/10 2010: 2.5/10] 12
Effectiveness of Balancing and Data Transfer [2008: 4/10 2010: 4.5/10] 12
Supplier Push metrics are all at the bottom end of the scale in the current climate. 12
Wholesale Market Fragmentation [2008: 0/10 2010: 1/10] 12
Retail Market Fragmentation [2008: 0/10 2010: 1.0/10] 12
Traded Market Maturity [2008: 0/10 2010: 0/10] 12
Customer Pull metrics largely remain at the lower range of the scale 12
Access to Market Information and Assistance [2008: 0.5/10 2010: 1/10] 12
As in the electricity sector, market information and assistance remains highly limited. 12
Consumer Representation [2008: 1/10 2010: 1.5/10] 12
Propensity to Switch [2008: 0/10 2010: 0.5/10] 13
MCI Scores 14
APPENDIX 17
Definitions 17
Ask the analyst 22
List of Tables
Table 1: Market Competitive Intensity, Estonia 2008-10 14
Table 2: MCI Additive, Europe 2008-2010 15
Table 3: MCI Multiplicative, Europe 2008-2010 16
List of Figures
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, Estonia 9
Figure 9: Gas Market Competitive Intensity, Estonia 11
Figure 10: Scale for MCI Assessment, Effectiveness of Regulator 17
Figure 11: Scale for MCI Assessment, Ease of Third Party Access 18
Figure 12: Scale for MCI Assessment, Effectiveness of Balancing and Data Transfer 18
Figure 13: Scale for MCI Assessment, Wholesale Market Fragmentation 19
Figure 14: Scale for MCI Assessment, Retail Market Fragmentation 19
Figure 15: Scale for MCI Assessment, Traded Market Maturity 20
Figure 16: Scale for MCI Assessment, Access to Market Information and Assistance 20
Figure 17: Scale for MCI Assessment, Consumer Representation 21
Figure 18: Scale for MCI Assessment, Propensity to Switch 21
