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Impacts and Lessons from the Fully Liberalized European Electricity Market – Report Now Available

The VaasaETT Global Energy Think Tank in collaboration with the Central Research Institute of Electric Power Industry in Japan (CRIEPI) have now released their third jointly written report entitled “Impacts and Lessons Learned from the Fully Liberalized European Electricity Market”.  The report assesses the effects of full liberalization of retail electricity market for residential customers in Europe with a focus on market activity, pricing, supply reliability, service and satisfaction, and the deployment of smart meters.  The findings were then applied to the Japanese context overhauled by the disasters of Fukushima and the uncertainty surrounding the place of nuclear power in the national energy mix.

The report can be downloaded from the CRIEPI site HERE

Key findings include:

 

  • Post-liberalization electricity rates in Europe are volatile, diverse and appear largely unrestricted by competition between electricity suppliers;
  • Electricity rates rose a staggering 20% between 2009 and 2011;
  • Wide variety of electricity rate plans are available in Europe including special rates for different time slots, wholesale market pegged rates, green electricity, and dual-fuel;
  • Residential switching rates on the rise due to a number of factors including especially the diversification of rate plans, growth in price differences between suppliers, sudden substantial price increases, negative publicity and last but not least the emergence of services or third parties to facilitate customer switching (such as price comparison websites);
  • Shockingly enough, there is no significant relationship between the supplier switching percentage and either price levels per se, or the number of suppliers in the market;
  • Smart energy services are emerging as a key factor of competition in Europe, with the assistance of smart metering infrastructure;
  • In-home displays coupled together with smart meters can reduce electricity consumption by about 8% on average and that users have a high degree of satisfaction with such displays;
  • As Japan contemplates opening its residential market to competition, it will first be important to restore residential customer’s sense of trust in electric power companies; next, it will be necessary to reduce electricity rates and expand renewable energy while, above all, maintaining supply reliability; and further, when introducing smart meters, it will be necessary to comprehensively evaluate issues such as the realization of cost-effective feedback to customers.

 

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