EU energy markets in 2014.
Date: 2014-12-17
Institutions: Directorate-General for Energy
Subjects: EU Member State, energy consumption, energy policy, energy supply, price fluctuation

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EU Energy 
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in 2014

Energy 

 
EU Energy 
Markets
in 2014

This publication presents an adapted version of the Commission Staff Working Documents SWD (2014) 310 final and SWD (2014) 
311 final  accompanying the  Communication «Progress towards completing the Internal Energy Market» COM (2014) 634 final of 
13 October 2014.

Legal notice: The European Commission does not guarantee the accuracy of the data included  
in this publication, nor does it accept responsibility for any use made thereof.

Some data included in this report are subject to database rights and/or third party copyright.

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Luxembourg: Publications Office of the European Union, 2014

ISBN 978-92-79-37962-8 
doi:10.2833/2400

© European Union, 2014 
Reproduction is authorised provided the source is acknowledged.

Printed in Belgium

Printed on white chlorine-free paper

 
 
Table of contents

1. Trends and Developments in European Energy Markets 2014   .

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1.  Energy position of the EU  .

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1.1.  EU energy consumption  

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1.1.1.  Gross Inland Consumption   .

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1.1.2. Uses of energy sources by sector   .

1.1.3.  Energy intensity  .

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1.2.  EU energy supply   .

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1.2.1.  EU primary energy production  .

1.2.2.  EU electricity generation  .

1.2.3.  EU energy imports  

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1.2.4.  EU import dependency  .

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Electricity from RES    .

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2.   Recent developments in the European wholesale markets of natural gas   .

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3.   Recent developments in the European wholesale markets of electricity   .

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Traded volume and liquidity in the European wholesale markets   .

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Integration of the European electricity markets   .

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2. Country reports   .

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Introduction   .

  BELGIUM   .

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  BULGARIA   .

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  CZECH REPUBLIC  .

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  DENMARK   .

  GERMANY   .

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  ESTONIA  

IRELAND  

  GREECE   .

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  SPAIN    .

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  FRANCE   .

  CROATIA  .

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ITALY 

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  CYPRUS   .

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  LATVIA   .

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  LITHUANIA   .

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  LUXEMBOURG  .

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  HUNGARY   .

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  MALTA   .

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  THE NETHERLANDS  

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  AUSTRIA  .

  POLAND  .

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  PORTUGAL   .

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  SLOVAKIA   .

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  FINLAND   .

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  THE UNITED KINGDOM   .

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  95

  100

  105

  109

  114

  118

  123

  129

  135

  141

  145

  150

  155

  159

  164

4

1

0

2

N

I

N

O

I

N

U

N

A

E

P

O

R

U

E

E

H

T

N

I

S

T

E

K

R

A
M

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N

E

/

5

 
 
 
 
 
 
 
 
 
1.  Trends and Developments 
Energy Markets 2014

in European

F I G U R E  1   –    E U - 2 8  G R O S S   I N L A N D   C O N S U M P T I O N 

(as % of total Mtoe)   ( 2 0 1 2 )

1.  Energy position of the EU

1.1.  EU energy consumption

1.1.1.  Gross Inland Consumption

Gross inland consumption decreased by 4% between 2010 
and 2012. Crude oil and petroleum products continued to 
dominate the energy mix, although their share decreased 
from 35.1% to 33.8%.

Natural gas
23.4%

Nuclear
13.5%

Waste, non-ren.
0.8% 

Renewables
11.0%

Solid fuels
17.5% 

Crude oil and 
petroleum products
33.8%

Total = 1 682.9 Mtoe

Gas consumption decreased both in absolute and relative 
terms against feeble economic performance, weak electricity 
demand and growing role of solid fuels and renewables in 
the power sector. The quantity of gas consumed went down 
by 11%, reaching 393 Mtoe in 2012 and the share of gas 
declined from 25.1% in 2010 to 23.4%. 

Nuclear  energy  retained  its  share,  with  the  quantity 
consumed declining from 236.6 Mtoe in 2010 to 227.7 Mtoe 
in 2012. 

Two energy sources saw an increase in consumption and 
share:  solid  fuels  and  renewables.  Solid  fuel  consumption 
increased from 280  Mtoe in 2010 to 293  Mtoe in 2012, 
its  share  growing  from  15.9%  to  17.5%.  Renewables 
consumption  went  up  from  172.1  Mtoe  in  2010  to 
184.4 Mtoe in 2012, its share growing from 9.8% in 2010 to 
11% of gross inland consumption in 2012.

4

1

0

2

N

I

N

O

I

N

U

N

A

E

P

O

R

U

E

E

H

T

N

I

S

T

E

K

R

A
M

Y

G

R

E

N

E

/

6

Source: Eurostat (preliminary data for 2012)

1.1.2. Uses of energy sources by sector 

2012 final energy consumption was 5% below its 2010 
levels  with  transport  remaining  the  largest  consumer  of 
energy, followed by industry and households. Compared to 
2010, the shares of different end use sectors remained fairly 
stable  with  transport  at  32%  (+0.5  p.p.),  industry  at  26% 
(+0.5 p.p.) and households at 26% (-0.7 p.p.).

Looking  by  fuel,  between  2010  and  2012  against  weak 
economic performance industrial gas consumption levels 
decreased even though the share of industry in in natural gas 
consumption  went  up  slightly.  Household  gas  consumption 
level and share went down between 2010 and 2012. 

In the area of petroleum products, shares remained unchanged 
between 2010 and 2012, with transport accounting for about 
two thirds and industry for 22%. Solid fuels are predominantly 
used in industry, with a share of 75%.

 
 
 
 
 
 
 
 
 
F I G U R E  2   –    E U - 2 8  T O TA L   F I N A L   E N E R G Y   C O N S U M P T I O N   B Y   E N D - U S E   S E C T O R   (in Mtoe)   ( 1 9 9 5 - 2 0 1 2 )

1 400 

1 200 

1 000 

800 

600 

400 

200 

0 

2% 

14% 

26% 

26% 

32% 

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Agriculture

Services, etc.

Households

Industry

Transport

Source: Eurostat (preliminary data for 2012)

F I G U R E  3   –   E U - 2 8  U S E   O F   N AT U R A L   G A S   B Y   S E C T O R   (final consumption)   ( 2 0 1 2 )

Transport
1.1% 

Industry
37.0% 

Other sectors 
61.9% 

Services 
17.5%

Households 
41.8%

Agriculture
1.4%

Other 
1.2%

Source: Eurostat (preliminary data for 2012)

Energy available for ﬁnal consumption = 259 Mtoe

F I G U R E  4   –     E U - 2 8  U S E   O F   P E T R O L E U M   P R O D U C T S   B Y   S E C T O R   (final consumption)   ( 2 0 1 2 )

Other sectors
13.9%

Transport
64.1%

Industry
22.0%  

Energy available for ﬁnal consumption = 515 Mtoe

Source: Eurostat (preliminary data for 2012)

4

1

0

2

N

I

N

O

I

N

U

N

A

E

P

O

R

U

E

E

H

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N

I

S

T

E

K

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A
M

Y

G

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E

/

7

 
 
 
 
 
 
 
 
 
F I G U R E  5   –    E U - 2 8  U S E   O F   S O L I D   F U E L S   B Y   S E C T O R   (final consumption)   ( 2 0 1 2 )

Transport
0.1% 

Industry
75.1% 

Other sectors 
24.8% 

Services
2.4%

Households
19.3%

Agriculture
2.5%

Other
0.6%

Source: Eurostat (preliminary data for 2012)

Energy available for ﬁnal consumption = 48 Mtoe

1.1.3.  Energy intensity

Turning to electricity, total consumption went down by 2% 
between 2010 and 2012. In 2012 industry continues to be 
the  largest  consumer  of  electricity  and  in  2012  accounted 
for 86.6  Mtoe (down from 88.5  Mtoe in 2010), with the 
share of industrial electricity consumption in total electricity 
consumption slightly down, reaching 36% of the total. 

Energy intensity is an indicator of the amount of energy 
used to produce a unit of economic output. Final energy 
intensity measures the energy efficiency of the economy 
against  final  energy  consumption  that  is  the  amount  of 
energy finally available to different sectors after conversion 
of energy sources. 

Households and services each account for 30% of electricity 
consumption and together accounted for 143.9  Mtoe of 
electricity consumption in 2012 (households down by 2.5% 
and services by 0.6% relative to 2010).

At the level of the entire economy final intensity has been 
decreasing since the year 2000, although with a very minor 
increase between 2002 and 2003. This trend holds also for 
industry  and  transport:  final  intensity  in  the  transport  and 
industrial sectors has been on a downward trend apart from 
a slight increase between 2008 and 2009 for transport and 
between 2002 and 2003 for industry. 

FI GUR E 6  –     USE  OF ELECTRICI TY BY SECTOR   

(as % of total Mtoe) (2012)

Households
30%

Services
30%

Transport
2% 

Other
2% 

Industry
36% 

Final energy consumption = 240.6 Mtoe (2 798 TWh)

Source: Eurostat (preliminary data for 2012)

4

1

0

2

N

I

N

O

I

N

U

N

A

E

P

O

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I

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M

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E

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E

/

8

 
 
 
 
 
 
 
 
 
F I G U R E  7   –    E U - 2 8   F I N A L   E N E R G Y   I N T E N S I T Y   (in toe/million EUR)   ( 2 0 0 0 - 2 0 1 2 )

900 

800 

700 

600 

500 

400 

300 

200 

100 

0 

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Transport

Industry

All sectors

Services

Source: Eurostat (preliminary data for 2012)

1.2.  EU energy supply

1.2.1.  EU primary energy production

EU energy production decreased by more than 4.5% between 
2010 and 2012, after a slight increase in 2010. Crude oil and 
petroleum products registered a 21% decrease in this period 
and  gas  production  a  17%  drop.  Production  of  solid  fuels 
showed a modest increase of 1.3%. Renewables production 
registered  a  9%  increase  reaching  22%  share  of  primary 
energy production – second only to nuclear at 29%. 

and 26% of gas production in the EU; the third and fourth 
producers – Germany and Romania – has a 7% and 6.5% 
share of natural gas production in the EU. The UK is the 
largest producer of crude oil and petroleum products in the 
EU with a 60% share in 2012; Denmark is the second largest 
producer with a 13% share. 

Netherlands and the UK are the largest producers of natural 
gas in the EU and in 2012 respectively accounted for 43% 

Between  1995  and  2012  the  decrease  in  natural  gas 
production reached 30%. Production crude oil and petroleum 
went down by 56% since 1995 and of solid fuels by 40%.

F I G U R E  8   –    E U - 2 8  P R I M A R Y   E N E R G Y   P R O D U C T I O N   (in Mtoe)   ( 1 9 9 5 - 2 0 1 2 )

1 200 

1 000 

800 

600 

400 

200 

0 

2% 

22% 

29% 

17% 

10% 

21% 

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Other

Renewables

Nuclear

Natural gas

Crude oil and petroleum products

Solid fuels

Source: Eurostat (preliminary data for 2012)

4

1

0

2

N

I

N

O

I

N

U

N

A

E

P

O

R

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E

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/

9

 
 
 
 
 
 
 
 
 
1.2.2.  EU electricity generation

1.2.3.  EU energy imports

Total electricity generation in 2012 was 3295 TWh1, stable 
year-on-year. Solid fuels and nuclear each accounted for 
27% of electricity generation: up by 2 p.p. in the case of 
solid fuels and stable in the case of nuclear in comparison to 
2010. The share of natural gas in EU electricity generation 
continuously  decreased  –  from  24%  in  2010,  to  22%  in 
2011 and 19% in 2012. The share of oil remained stable at 
around 2%. Cyprus and Malta are the two Member States 
that rely almost entirely on oil for electricity generation.

In  2012  CO 2-neutral  sources,  namely  renewables  and 
nuclear, accounted for 51% of EU electricity generation – up 
from less than 45% in the 90s. 

Renewables accounted for 24% of electricity generation: 
3 p.p. above the 2010 share. Hydro power remained the 
most  important  renewable  source,  representing  46%  of 
renewable  power  generation,  followed  by  wind  (26%  of 
renewable  generation,  up  by  14%  between  2011  and 
2012) and biomass and waste (19% of renewable power 
generation,  up  by  12%  between  2011  and  2012).  In  2012 
solar accounted for 9% of renewable electricity generation, 
up by impressive 50% between 2011 and 2012, following 
a doubling of production between 2010 and 2011.

FI GUR E 9  –    EU- 28  GROSS ELECTRICITY GENERATION 

(as % of total TWh)   ( 2 0 1 2 )

Nuclear
27%

Natural gas
19%

Crude oil and 
petroleum products
2%

Renewables
24%

Other 
1% 

Solid fuels
27% 

Total Gross Electricity Generation = 3 295 TWh

Source: Eurostat (preliminary data for 2012)

In  line  with  lower  energy  consumption  and  electricity 
generation, in 2012 EU energy imports were 9% below the 
2008 peak levels and indeed fell in the third consecutive 
year, reaching 922 Mtoe. After a significant drop over the 
period  2006-2010,  imports  of  solid  fuels  and  in  particular 
of hard coal increased in 2011 and 2012. Solid fuel imports 
accounted for 13% of energy imports. 

In  2012  imports  of  crude  oil  and  petroleum  products 
registered  a  slight  fall  (-4.6%  compared  to  2010)  and 
accounted for 58% of energy imports. Natural gas imports 
reached  a  new  peak  in  2010,  but  dropped  by  2%  to 
259  Mtoe  since  then  and  as  of  2012  account  for  28%  of 
energy imports. 

Partner  countries  differ  from  fuel  to  fuel,  although  some 
of  them  are  key  partners  in  a  number  of  fuel  categories. 
In 2012 Russia was the main exporter of crude oil and hard 
coal  to  the  EU  and  on  par  with  Norway  in  the  natural  gas 
exports.

The  list  of  the  top  six  exporters  of  crude  oil  to  the  EU 
changed between 2010 and 2012 with Saudi Arabia, Libya 
and Nigeria exporting more to the EU than Norway that was 
previously second to Russia in crude oil exports. 

When  it  comes  to  hard  coal  exporters  to  the  EU,  Colombia 
and the US remained the second and third largest exporters. 
The increase in US exports of coal is related to increasing 
consumption of gas domestically.

Against the background of weaker demand in the course of 
2012 exports of natural gas from Norway to the EU rose 
to  levels  comparable  with  Russian  natural  gas  exports. 
Norwegian  companies  have  been  actively  changing  their 
pricing policy with new Statoil contracts negotiated purely on 
a spot indexation basis. At the same time, Gazprom maintains 
that the oil price link is indispensable for long-term business 
planning, but has been offering a number of discounts in 
its long-term prices between 2011 and 2013 to a number 
of companies. By changing the price setting mechanism to 
gas-on-gas basis, Norway was able to retain consumers and 
in 2012 increase market share to the detriment of other 
exporters such as the Russian Federation and Algeria. 

1   Note that we would advise against presenting historical 
data 1995-2012 and comparing in detail (by fuel) 2011 

to 2012 data in absolute terms due to a break in the series 

(methodological change) between 2011 and 2012.

4

1

0

2

N

I

N

O

I

N

U

N

A

E

P

O

R

U

E

E

H

T

N

I

S

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E

K

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M

Y

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E

/

0

1

 
 
 
 
 
 
 
 
 
 
F I G U R E  1 0  –   E U - 2 8  N E T   I M P O R T S   O F   E N E R G Y   (in Mtoe)   ( 1 9 9 5 - 2 0 1 2 )

1 200 

1 000 

800 

600 

400 

200 

0 

1% 

28% 

58% 

13% 

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Other

Natural gas

Crude oil and petroleum products

Solid fuels

Source: Eurostat (preliminary data for 2012)

F I G U R E  1 1  –   E U - 2 8  I M P O R T S   O F   F O S S I L   F U E L S   B Y   C O U N T R Y   O F   O R I G I N   (in %)   ( 2 0 1 2 )

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

Others 

 Kazakhstan 
 Norway 

 Nigeria 

 Libya 

 Saudi Arabia 

 Russia 

Crude oil

Source: Eurostat (preliminary data for 2012)

1.2.4.  EU import dependency

Others 
 Libya 
 Nigeria 
 Qatar 

 Algeria 

 Russia 

 Norway 

Natural gas

Others 
 Indonesia 
 South Africa 

 Australia 

 USA 

 Colombia 

 Russia 

Hard coal

The EU is the world’s largest energy importer. The majority of 
Member States (MS) are highly dependent on imports of oil 
and  gas.  A  few  MS  have  significant  production  that  makes  a 
considerable contribution to the EU energy balance. The UK and 
Romania satisfy a sizeable share of their needs with domestic 
production, while the Netherlands is an important net exporter 
of gas and Denmark of crude oil and petroleum products. 

downturn  in  the  primary  production  of  hard  coal,  lignite, 
crude oil and natural gas has led to a situation where the EU 
is increasingly reliant on primary energy imports in order to 
satisfy  demand.  Yet,  at  42.2%  import  dependency  of  solid 
fuels is more than 2 p.p. below its peak in 2008. At the same 
time  in  2012  crude  oil  and  petroleum  product  dependency 
reached a historic high of 86.4%. 

The overall energy import dependency of the EU peaked in 
2008, before falling in 2009 and 2010. At 53.3% in 2012, 
overall  energy  dependency  in  2012  it  was  slightly  higher 
than in 2010 driven by an increase in the import dependency 
for solid fuels and for crude oil and petroleum products. The 

The import dependency for gas peaked in 2011 before falling 
by 1.3 p.p. in 2012 to 65.8%. This dynamics was underpinned 
by a fast decrease in gross inland consumption of gas (-12% 
between 2010 and 2012) and a somewhat more moderate 
drop in import volumes (-5% between 2010 and 2012). 

4

1

0

2

N

I

N

O

I

N

U

N

A

E

P

O

R

U

E

E

H

T

N

I

S

T

E

K

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M

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E

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E

/

1

1

 
 
 
 
 
 
 
 
 
 
 
F I G U R E  1 2  –    E U   I M P O R T   D E P E N D E N C Y   (in %)   ( 1 9 9 5 - 2 0 1 2 )

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Crude oil and petroleum products 

Natural gas 

All fuels 

Solid fuels 

Source: Eurostat (preliminary data for 2012)

Electricity from Renewable Energy Sources (RES)

In 2012 the production of renewable electricity reached 799 TWh, 
an increase of more than 13% compared to 2011. Hydro power 
is the most important renewable electricity source and accounts 
for 46% of renewable electricity generation in the EU. 

The importance of RES other than hydro has been growing. 
Between 2011 and 2012 electricity from solar energy saw 
an impressive growth of more than 50%, with its share 
in renewable electricity generation reaching 9%. Electricity 
from wind registered a growth of about 14% and electricity 
from biomass and waste of about 12%. 

F I G U R E  1 3  –    E U - 2 8  G R O S S   E L E C T R I C I T Y 

G E N E R AT I O N   B Y   R E N E W A B L E 

E N E R G Y   S O U R C E   (in %)   ( 2 0 1 2 )

Geothermal energy
1%

Biomass and waste
18%

Solar energy
9%

Wind energy
26%

Hydro power 
46% 

2.   Recent developments in the European 
wholesale markets of natural gas 

The gross domestic product of the EU Member States registered 
a year-on-year increase of 0.5% during the third quarter of 2013. 
This ended a sequence of 5 consecutive quarters with negative or 
zero growth rates. The prolonged economic slowdown, still not over 
for some Member States, and the prospects of gradual recovery 
affected the economic decisions and actions of market participants 
in the EU energy markets throughout 2012 and 2013.

Further  to  the  difficult  macroeconomic  context,  the  actors 
in  the  EU  markets  of  natural  gas  had  to  take  into  account 
the long-term prospects of the industry in terms of the 
replacement  of  decreasing  indigenous  production  with 
imports from extra-EU trading partners and in terms of a 
general decoupling of energy consumption and economic 
growth, as illustrated in Figure 14.

The consumption of natural gas in 2012 stood at 4 500 TWh, 
representing  a  2.7%  decrease  on  a  yearly  basis.  No  lower 
level was recorded since 1999. Based on a preliminary 2013 
data from Eurostat, 18 Member States registered further 
declines of gross inland consumption. 

Among  the  factors  affecting  these  developments  were  the 
low levels of industrial demand and relatively mild weather 
conditions  which  affected  demand  for  heating.  The  reduced 
consumption from power plants turned into an important factor: 
in 2012 and 2013 gas power plants were outcompeted by coal 
(as demonstrated by clean spark and dark spreads2) and RES.

Source: Eurostat (preliminary data for 2012)

Total = 799 Mtoe

2   Dark spreads are reported as indicative prices giving the average difference between the cost of coal delivered ex-ship and the power price. As such, 
they do not include operation, maintenance or transport costs. Spreads are defined for a coal-fired plant with 35% efficiency. Clean dark spreads are 
defined as the average difference between the price of coal and carbon emission, and the equivalent price of electricity. Spark spreads are indicative 
prices showing the average difference between the cost of gas delivered on the gas transmission system and the power price. As such, they do not 

include operation, maintenance or transport costs. The spark spreads are calculated for gas-fired plants with standard efficiencies of 50% and 60%. 
Clean spark spreads are defined as the average difference between the cost of gas and emissions, and the equivalent price of electricity.

4

1

0

2

N

I

N

O

I

N

U

N

A

E

P

O

R

U

E

E

H

T

N

I

S

T

E

K

R

A
M

Y

G

R

E

N

E

/

2

1

 
 
 
 
 
 
 
 
 
T A B L E   1  –    A N N U A L   G A S   I N TA K E   F R O M   P O W E R   P L A N T S   (bcm)

2008

2009

33.4

24.8

16.0

n.a.

n.a.

28.7

23.1

13.7

n.a.

n.a.

2010

29.8

25.3

11.6

n.a.

2.2

2011

27.5

19.5

9.4

7.1

2.5

2012

24.2

13.2

7.2

8.4

1.5

2013

20.1

13.1

4.8

7.4

1.2

ITALY

UK

SPAIN

BELGIUM

FRANCE

Source: Platts-Bentek

F I G U R E  1 4  –    B A L A N C E   O F   N AT U R A L   G A S   I N   T H E   E U   (TWh)   ( 1 9 9 6 - 2 0 1 2 )

6 000 

5 000 

4 000 

3 000 

2 000 

1 000 

0 

1996 

1997 

1998 

1999 

2000 

2001 

2002 

2003 

2004 

2005 

2006 

2007 

2008 

2009 

2010 

2011 

2012 

Gross inland consumption 

Total imports

Primary production

Total exports 

Source: Eurostat (preliminary data for 2012)

Table 1 illustrates the reduced intake from power plants. Based 
on data from Platts – Bentek, it appears that in 6 years, the gas 
consumption of power plants was reduced more than 3 times 
in Spain almost 2 times in the UK whereas Italian power plants 
reduced the in-take by more than 13 bcm per year.

being Norway and the Russian Federation (31% each), and 
Algeria (13%) and Qatar (8%). The combined part of Nigeria, 
Libya,  Egypt,  Trinidad  &  Tobago  and  others  was  less  than 
8%4. An additional 40 bcm was imported by MS from intra-
EU sources.

As shown in Figure 14, the gradual decline in EU domestic 
production of natural gas continued throughout 2012, with 
the  average  decrease  since  the  year  of  peak  production 
(2001) amounting to 4%.

In  2011  and  2012  falling  imports  of  natural  gas  could 
also  be  observed  along  with  falling  consumption.  This 
development is in contrast to observed trends in the three 
previous years. According to preliminary Eurostat data for 
2012, the extra-EU gas imports totalled 3 592 TWh (about 
341 bcm3) in 2012, with the most important trading partners 

The  EU-28  import  dependency5  of  natural  gas  increased 
from 0.43 in 1995 to 0.49 in 2000, to 0.57 in 2005, to 0.62 
in 2010 and reached 0.66 in 2012 (preliminary figures). 
The majority of Member States tend to rely on imports as 
the major source for the gross inland consumption.

3   Conversion rate used: 1 bcm = 10.533 TWh (normal cubic meter, 

4   The “non-specified” trading partner category of Eurostat may 
contain gas coming from the above-mentioned countries.
5   Import dependency is defined as the ratio of net imports  
over the sum of gross inland consumption and bunkers. 

measured at 0 degree Celsius and 760 mm Hg), as defined 

The EU import dependency is net of intra EU trade; calculated  

by IEA Natural gas information.

at national level however, it includes the intra EU trade.

4

1

0

2

N

I

N

O

I

N

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A

E

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1

 
 
 
 
 
 
 
 
 
F I G U R E  1 5  –    I M P O R T S   O F   N A T U R A L   G A S   I N   T H E   E U - 2 8   ( 1 9 9 0 - 2 0 1 2 )

450 

400 

350 

300 

m
c
b

250 

200 

150 

100 

50 

0 

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

(le(cid:28) axis) Total (LNG + pipe)  

(right axis) share LNG  

Sources: Eurostat, BP Gas statistics, Commission calculations

F I G U R E  1 6  –    L N G   P R I C E S ,   S E L E C T E D   C O U N T R I E S   ($/MMBtu)   ( 2 0 1 0 - 2 0 1 4 )

25%

20%

15%

25%

10%

5%

0%

25

20

15

10

5

0

1  2  3  4  5  6  7  8  9  10  11  12  1  2  3  4  5  6  7  8  9  10  11  12  1  2  3  4  5  6  7  8  9  10  11  12  1  2  3  4  5  6  7  8  9  10  11  12  1  2  3 

2010 

2011 

Japan 

Spain

2012 

UK 

2013 

US

2014 

Sources: Thomson Reuters, Waterborne

Between  2011  and  2012  the  EU-28  total  imports  of 
natural gas decreased by 108 TWh, which is equivalent 
to  slightly  more  than  10  bcm.  The  import  evolution  by 
transport delivery mode was quite different. As illustrated in 
Figure 15, an increase of imports of natural gas delivered 
by pipelines (12 bcm / year) was more than matched by a 
strong decrease of LNG deliveries (more than 22 bcm / year). 
As a result, the relative share of LNG in total gas supplied 
dropped from 20% in 2011 to 15% in 2012.

The diversion of LNG cargoes to the Pacific basin in the 
aftermath of Fukushima is well documented6 and Figure 16 
provides  further  evidence  for  the  more  attractive  pricing 
conditions in Japan (similar price levels were also observed 

in South Korea and China). The relative inflexibility of some 
market participants who are bound to long term contracts 
with take or pay obligations may be another reason of the 
decreasing relative share of LNG in total imports.

Based on the latest report from Prospex Research7, the total 
traded  volumes  (including  exchange  spot  and  forward  and 
OTC cleared and non-cleared) of the EU markets of natural 
gas stood at 32 200  TWh in 2011, a fifth consecutive year 
of strong growth. This number compares to a gross inland 
consumption in the EU of 4 600 TWh. The gas traded volumes 
are also approximately 4 times bigger than those recorded 
for electricity.

6   Check for example the regular publications of the Market 
observatory for energy here: http://ec.europa.eu/energy/

observatory/gas/gas_en.htm

7   “European Gas Trading 2012”, Prospex Research, www.prospex.co.uk

4

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2

N

I

N

O

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U

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1

 
 
 
 
 
 
 
 
 
 
F I G U R E  1 7  –    T R A D E D   V O L U M E S   O F   N A T U R A L   G A S   I N   S E L E C T E D   H U B S   (TWh)   ( 2 0 1 1 - 2 0 1 3 )

9 000

8 000

7 000

6 000

5 000

4 000

3 000

2 000

1 000

0

Q1 

Q2 

Q3 

Q4 

Q1 

Q2 

Q3 

Q4 

Q1 

Q2 

Q3 

Q4 

2011 

2012

2013

Austria 

France 

Belgium 

Italy 

Germany 

Netherlands 

UK 

Sources:  National Grid (UK), GTS and LEBA (Netherlands), Huberator (Belgium), Gaspool (Germany), NCG (Germany), GRTGaz (France), Snamrete (Italy), CEGH (Austria)

F I G U R E  1 8  –    B R E A K - D O W N   O F   N AT U R A L   G A S   C O N T R A C T S   B Y   P R I C I N G   M E C H A N I S M   I N   E U R O P E   

( i n   s h a r e   o f   c o n s u m p t i o n )   (in %)   ( 2 0 0 5 - 2 0 1 2 )

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

Oil indexed 

Gas-to-gas competition 

Regulated 

Other 

2005

2007

2009

2010

2012

Source: International Gas Union

The  UK  market  is  by  far  the  most  liquid,  recording  trading 
volumes above 20 000 TWh. Market operators on the Dutch 
and German markets exchanged respectively 6 500 TWh 
and  2 100  TWh.  The  highest  churn  factors8  were  in  the 
UK (23.6) and the Netherlands (16.3), followed by Austria 
(4.4),  Belgium  (4.2)  and  Germany  (2.5)9.  Over-The-Counter 
(OTC)  accounts  for  more  than  80%  of  the  traded  volumes. 
Similar  to  electricity  markets,  the  cleared  OTC  has  a  much 
smaller share than the non-cleared OTC under which the gas 
volumes from the long term contracts are recorded.

8   The churn factor is defined as the ratio of traded volume  
to physical consumption. It informs about the liquidity  

of the market place and the quality of the pricing signal  

that is discovered on that market.

9   The low churn factor for Germany on the gross market  
is due to the important share of long-term contracts. 

As illustrated in Figure  17, in the period after 2011 hub 
traded  volumes  stabilized,  registering  varying  fortunes 
across hubs (the Dutch10 and German hubs were among the 
most  notable  increases  while  hub  volumes  in  the  UK  and 
Austria went down). 

The evolution of the overall traded volumes is not yet clear. 
Judging  by  data  from  the  International  Gas  Union  (see 
Figure 18), the relative share of natural gas delivered in 
the EU under hub based gas-on-gas competition continued 
to  increase  and  reached  almost  50%  of  the  overall  EU 
consumption. For the Member States that have developed 
mature hub trading, this share is well above 80%.

10   GTS reports hub and OTC trades for the Netherlands.

4

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I

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1

 
 
 
 
 
 
 
 
 
Another  indication  of  the  difficult  situation  facing  the  gas 
fired power generators is provided by Figure 19 which traces 
the evolution of prices of competitive fuels against selected 
benchmark prices for gas in the EU. A persistent surplus 
of steam coal on the US market resulted from the gradual 
crowding out of coal by shale gas. These extra volumes of 
coal from the US but also Colombia and other countries were 
made available in the EU at competitive prices. In addition, a 
structural oversupply of EU Emissions Trading Scheme (ETS) 
allowances kept a downward pressure on carbon prices.

It is also interesting to observe the dynamics of gas prices by 
comparing the pure hub benchmark (such as the NBP price) 
against a hybrid price containing hub and oil indexation 
elements  (such  as  the  German  border  price).  Whereas  the 
hub benchmark was traded at a discount since 2010 and 
earlier, the spread was reduced by 2012 and in some cases 
hub prices were above the German border price. 

One factor that could explain the decrease of the spread is 
the more pronounced part of hub prices in the German border 
price as more and more suppliers are turning to this pricing 
mechanism; this can also be witnessed by the divergence of 
the German border price from a pure oil indexed benchmark 
with delivery in North Western Europe, such as the Platts Gas 
Contract indicator.

Another factor may be linked to the relative stability of the 
major oil benchmarks providing a support for the long term 
gas prices indexed on oil. As illustrated by the map on next 
page, the divergence of the wholesale gas prices across the 
EU decreased somewhat; yet Member States with few supply 
choices were facing a tougher bargain and higher prices. 

F I G U R E  1 9  –    E VO L U T I O N   O F   P R I C E S   FO R   C O M P E T I T I V E   F U E L S   V E R S U S   E U R O P E A N   G A S   P R I C E 

B E N C H M A R K S   ( 2 0 1 0 - 2 0 1 4 )

Prices of competitive fuels (left axis) in Euro vs Prices of gas (right axis) in Euro/MWh

105

)
€
(

s
l
e
u
f

e
v
i
t
i
t
e
p
m
o
c

f
o

s
e
c
i
r
P

95

85

75

65

55

45

1  2  3  4  5  6  7  8  9  10  11  12  1  2  3  4  5  6  7  8  9  10  11  12  1  2  3  4  5  6  7  8  9  10  11  12  1  2  3  4  5  6  7  8  9  10  11  12  1  2 

)
h
W
M
€
(

/

s
a
g

f
o

s
e
c
i
r
p

32

27

22

17

12

7 

2010 

2011 

2012

2013

2014 

(le(cid:28) axis) Brent Spot (€/bbl)
(le(cid:28) axis) Coal CIF ARA Spot (€/t) 

(right axis) NBP average price (€/MWh) 
(right axis) DE border (€/MWh) 

Sources: Platts, BAFA (DE border)

4

1

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2

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I

N

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1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
F I G U R E  2 0  –    C O M PA R I S O N   O F   E U - 2 8  AV E R AG E   W H O L E S A L E   G A S   P R I C E S   D U R I N G   F I R S T   H A L F   O F   2 0 1 4

Price  in €/MWh 

no data

< 25.00

25.00 - 27.50

27.51 - 30.00

> 30.00

The colour code for each MS 
 is defined according to a 
 simple average of all 
 available types of prices 
 (hub, LTC, LNG) in the 
respective MS.

* Reported by the Bulgarian Regulator

**Germany: BAFA data on border price for Germany reported as
'other' and refers to the first four months of 2014.

*** POLPX data (hub). Regulated prices for natural gas in Poland,
net of transmission charges, as of 16.03.2012; 
Recipients of high natural gas (consumer group E) (other

).

SE
-------
EB5: 31.42

FI
-------
HUB: 28,80

EE
-------
EBP2: 31.32

LV
-------
EBP2: 28.86

LT
-------
EBP2: 35.20

Malta

Cyprus

UK
-------
HUB: 21.80
EBP1: 17.83
EBP4: 25.30
LNG: 21.55

DK
-------
HUB: 21.99

NL
-------
HUB: 21.58

BE
-------
HUB: 21.57
EBP1: 23.92
EBP4: 25.08
LNG: 21.65

DE**
-------
HUB: 21.81
Other: 25.83

FR
-------
HUB: 24.12
LNG: 31.79

PL***
-------
HUB: 22.22
Other: 28.80

SK
-------
EBP2: 28.40

HU
-------
EBP2: 27.47

CZ
-------
EBP2: 27.81

AT
-------
HUB: 22.55

SI
-------
EBP2: 29.19

RO
-------
EBP2: 26.30

BG*
-------
Other: 29.96

GR
-------
EBP2: 29.81
LNG: 31.00

ES
-------
EBP1: 25.21
EBP3: 25.79
LNG: 31.72

IT
-------
HUB: 23.15
EBP1: 32.36
EBP2: 28.74
EBP3: 31.25
EBP4: 25.12

EBP: EBP prices are estimated border prices (domestic prices not taken into account).
EBP1 prices are estimations of border prices for gas from Norway; first four months of 2014.
EBP2 prices are estimations of border prices for gas from Russia; first four months of 2014.
EBP3 prices are estimations of border prices for gas from Algeria; first four months of 2014.
EBP4 prices are estimations of border prices for gas from the Netherlands; first three months of 2014.
EBP5 prices are estimations of border prices for gas from Denmark; first three months of 2014. 
LNG prices for Belgium, France, Spain and the UK are landed prices as reported by 
Thomson-Reuters (simple averages of monthly data). LNG prices for Greece and Italy are estimations
based on customs data reported to ESTAT COMEXT for first four months of 2014.
Portugal not reported due to missing data in ESTAT COMEXT since October 2013.

Sources: EBP and LNG: ESTAT COMEXT, Thomson-Reuters; HUB: Platts, Finnish Gas Exchange,
Gaspoint Nordic for Denmark; BAFA for border prices for Germany; Bulgarian regulator for border prices to Bulgaria
For the administrative boundaries : © Eurogeographic;            ©  DG ENER - July 2014

0

250

500 Km

4

1

0

2

N

I

N

O

I

N

U

N

A

E

P

O

R

U

E

E

H

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I

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/

7

1

 
 
 
 
 
 
 
 
 
F I G U R E  2 1  –    E V O L U T I O N   O F   T H E   M A I N   G A S   H U B   B E N C H M A R K S   (€/MWh)   ( 2 0 1 0 - 2 0 1 4 )

40

35

30

25

20

15

10

1  2  3  4  5  6  7  8  9  10  11  12  1  2  3  4  5  6  7  8  9  10  11  12  1  2  3  4  5  6  7  8  9  10  11  12  1  2  3  4  5  6  7  8  9  10  11  12  1  2  3 

2010 

BE 

Source: Platts

2011 

2012 

2013 

2014 

AT 

DE GSP 

DE NCG 

FR PEG N 

FR PEG S 

IT 

NL 

UK 

T A B L E   2  –    F A P D   E V E N T S   B Y   S E L E C T E D   A D J A C E N T   A R E A S

# observations / year

BE-NL

BE-UK

NL-UK

FR PEG Nord – FR PEG Sud

AT-IT

AT-DE

Average FAPD events selected

2011

251

25

4

83

2

0

133

41

2012

248

6

17

28

1

0

112

27

2013

251

13

7

28

0

0

6

9

Sources: (1) Price data: Platts; (2) Flow nomination data: Fluxys, BBL, ENTSO-G TP

Figure  21 illustrates the strong correlation across the EU 
hub prices. By the second half of 2012 the Italian benchmark 
gradually aligned with the Austrian and then continental hub 
prices.  The  French  PEG  South  price  followed  an  opposite 
evolution,  slowly  diverging  from  the  more  traded  PEG 
North price and then from the other hub prices as well. This 
evolution is most likely linked to the persistently low levels 
and capacities of gas storage, and the need of a strong 
pricing signal to ship gas flows from North to South.

As a rule, the hub prices gave a fair representation of the 
supply  and  demand  conditions  in  different  trading  areas 
and  market  participants  were  using  the  available  trading 
opportunities to make sure prices were aligned. As shown 
in  Table  2,  the  operation  of  the  gas  markets  improved 
significantly in the last couple of years, as shown by the 
decrease of FAPD events11 that measure irrational adverse 
flows.

11   Flow against price differentials (FAPDs): By combining daily price and flow data, Flow Against Price Differentials (FAPDs) are designed to give 

a measure of the consistency of economic decisions of market participants in the context of close to real time operation of natural gas systems. 

With the closure of the day-ahead markets (D-1), the price for delivering gas in a given hub on day D is known by market participants. Based 

on price information for adjacent areas, market participants can establish price differentials. Later in D-1, market participants also nominate 
commercial schedules for day D. 

An event labelled as an FAPD occurs when commercial nominations for cross border capacities are such that gas is set to flow from a higher price 

area to a lower price area. The FAPD event is defined by the minimum threshold of price difference under which no FAPD is recorded. The minimum 

threshold for gas is set at 0.5 €/MWh. 

After the day ahead market closes, market participants still have the opportunity to level off their positions on the balancing market. 

That is why a high level of FAPD does not necessarily equate to irrational behaviour. In addition, it should be noted that close-to real time 

transactions represent only a fractional amount of the total trade on gas contracts.

4

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1

 
 
 
 
 
 
 
 
 
 
 
 
In  those  countries,  where  the  contribution  of  hydro  energy 
is significant in power generation (e.g.: Spain, Portugal, 
Sweden, Austria, Norway or Switzerland) the amount of 
precipitation significantly impacts the generation costs and 
the wholesale power price level. In most of these countries 
the  2013  average  power  prices  were  among  the  lowest  in 
Europe.  In  countries  like  Germany,  where  the  influence  of 
solar and wind power generation rapidly increased during 
the last couple of years, abundant renewable supply assured 
one of the lowest average price in 2013 in the EU. German 
power  generation  trends  have  significantly  impacted  the 
price level in Central and Eastern Europe. Prices in this region 
also depend on the availability of electricity interconnections 
to neighbouring countries and regions, such as the Balkans.

Prices  in  Italy,  Ireland  the  United  Kingdom  and  the 
Netherlands  were  among  the  highest  in  the  EU  in  2013, 
either because of the lack of sufficient interconnection 
capacities to neighbouring power markets (Italy and Ireland) 
or because of the dominance of expensive generation fuels 
in setting the marginal price in the wholesale market (natural 
gas  in  the  case  of  the  Netherlands  and  the  UK).  In  the  UK 
changes in the energy mix, i.e. related to significant coal-
fired  generation  capacities  taken  offline  in  2013  according 
to long standing plans, have created an upward pressure on 
domestic wholesale power prices in the short term, pending 
new capacity coming on-stream.

The successive cold spell events that hit the Northern part 
of Europe at the end of the heating season were another 
period of significant price swings. The majority of countries 
in  North  and  North-Western  Europe  experienced  harsher 
than  usual  meteorological  conditions  throughout  the  2012 
– 2013 winter season. Based on heating degree days data 
(HDD)12  from  the  Joint  Research  Centre  of  the  European 
Commission,  the  March  temperatures  were  the  furthest 
apart from the long term average, with some MS recording 
more than 100 HDDs in addition to the long term average. 
In two separate events during the second and third week of 
the month, the temperatures across the UK were 60 C – 80 C 
cooler than the long term average for several days.

Prior  to  March  2013,  market  operators  were  withdrawing 
gas from storages at a faster-than normal rate. The March 
cold spell events accelerated further the withdrawal and as 
the  winter  season  was  coming  to  an  end,  a  new  minimum 
level of 2.71% was reached on 13.04.2013 in the NBP area. 
French storage levels were also extremely low and the 
minimum was reached on 10.04.2013 (6.23%).

3.   Recent developments in the European 

wholesale markets of electricity 

The map on the next page (Figure 22) illustrates the annual 
averages  of  day-ahead  wholesale  baseload  electricity 
prices in 2013 in the member states of the European Union, 
Norway and Switzerland:

Power generation costs and wholesale prices are primarily 
influenced on one hand by supply side drivers, such as 
the structure of the power generation mix, the amount 
of generated power compared to domestic needs or the 
availability of power imports and exports and other factors, 
for example carbon emission allowance prices. On the other 
hand, the demand side is affected by the electricity need of 
households (lighting and heating needs), and the industrial 
demand for electricity, primarily depending on the general 
performance  of  the  economy.  On  the  longer  term  both 
household and industrial electricity demand is also impacted 
by energy efficiency policies.

12   Heating degree days (HDDs) express the severity of a meteorological 

condition for a given area and in a specific time period. 

HDDs are defined relative to the outdoor temperature and 

to what is considered as comfortable room temperature.  

The colder is the weather, the higher is the number of HDDs. 

These quantitative indices are designed to reflect the demand 

for energy needed for heating purposes.

4

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I

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O

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1

 
 
 
 
 
 
 
 
 
F I G U R E  2 2  –    C O M P A R I S O N   O F   A V E R A G E   W H O L E S A L E   B A S E L O A D   E L E C T R I C I T Y   P R I C E S , 

F I R S T  S E M E S T E R   O F   2 0 1 4

Price  in €/MWh 

no data

< 35.01

35.01 - 45.00

45.01 - 55.00

> 55.00

FI: 34.9

SE: 30.7

MT: No Dat

a

Malta

EE: 35.3

CY: No Data

Cyprus

LV: 46.3

DK: 30.1

LT: 46.3

IE: 60.6

UK: 51.8

NL: 40.9

PL: 44.6

BE: 38.9

DE: 32.5

FR: 34.7

PT: 32.2

ES: 33.3

CZ: 32.7

SK: 33.4

AT: 32.6

HU: 38.3

SI: 38.0

HR: No Data

IT: 49.5

RO: 32.2

BG: No Data

EL: 55.4

Sources: Platts, National power exchanges
For the administrative boundaries : © Eurogeographic;©  DG ENER - April 2014

0

250

500 Kilometers

4

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I

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U

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A

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F I G U R E  2 3  –    E V O L U T I O N   O F   M O N T H LY   A V E R A G E   W H O L E S A L E   E L E C T R I C I T Y   P R I C E S   I N   D I F F E R E N T 

E U R O P E A N   R E G I O N S   (€/MWh)   ( 2 0 1 0 - 2 0 1 4 )

100

90

80

70

60

50

40

30

20

10

0

1  2  3  4  5  6  7  8  9  10  11  12  1  2  3  4  5  6  7  8  9  10  11  12  1  2  3  4  5  6  7  8  9  10  11  12  1  2  3  4  5  6  7  8  9  10  11  12  1  2 
2014 

2010 

2011 

2012 

2013 

CWE baseload

CEE - baseload

Nordpool -system basload

UK baseload

Spain baseload

Italy baseload

Greece baseload

Sources: Platts, power exchange platforms

Taking a look at the longer term trends on Figure 23, the findings of 
the analysis above on the 2013 average prices can be reinforced. 
The  important  role  of  hydro  generation  can  be  tracked  in  the 
volatility of Spanish and Nordic power markets; with sudden shoot-
ups and falls in power prices, depending on hydro availability. Italy 
had a significant price premium to other European peers during the 
last four years, and the UK has had a price premium since 2012 
as gas-fired generation has become less competitive than coal.

Central Western and Central Eastern European wholesale electricity 
prices showed a high degree of convergence in the last four years, 
as German power prices served as a peer to many markets in both 
regions.  In  the  Southern  European  countries  (e.g.:  Spain,  Italy  or 
Greece) high summer temperatures can significantly increase power 
demand  (mainly  for  cooling  needs  in  households)  and  wholesale 
prices in the market. On the other hand, severe cold snaps affecting 
the whole European continent, like in February 2012, can result in 
sudden increases in heating needs, driving up both feeding stock 
costs for generation (natural gas) and electricity prices13.

In 2010 and 2011 a slight recovery from the lows in 2009 could 
be observed for most of the regional power prices in Europe, 
however, in 2012 and 2013 prices were on a decreasing trajectory 
in most of the regions. On the demand side the sluggish economic 
recovery has put a lid on price increases, which could easily be 
tracked in limited industrial demand for power. After the 2008 
crisis many industries did not cease to respond to high energy 
costs by further decreasing their electricity intensity, which might 
have also contributed to the lower power demand.

On the supply side several factors have simultaneously 
contributed  to  lower  generation  costs  and  have  kept  a  lid  on 
wholesale power prices, as Figure 24 shows. Import coal prices in 

North Western Europe fell by 40% since the beginning of 2011, 
primarily owing to abundant import supply from Colombia and 
the United States. At the same time natural gas prices stabilised 
since the beginning of 2012 after a significant growth in 2010 
and 2011. As oil-index gas contracts still have an important role 
in many EU countries and LNG shipments from third countries 
have  substantially  decreased  since  the  first  months  of  2011 
(LNG quantities have been sold on Asian markets, offering more 
competitive prices), natural gas prices have been stuck on a 
relatively high level in Europe, despite the fact that industrial 
demand for gas remained limited during this period.

Decreasing  coal  prices,  in  contrast  to  relatively  high  gas 
prices,  increased  the  profitability  of  coal-fired  power 
generation  to  the  detriment  of  natural  gas.  EU  Emission 
Trading Scheme (ETS) emission allowance prices, reaching 
15  €/tonnes  of  CO2  equivalent  in  June  2011,  fell  below 
5 €/tonnes in 2013 on average. The low carbon prices did 
not improve the situation of gas-fired generation either, 
as  they  could  not  incentivise  gas-fired  generation  being 
proportionally less carbon-emission-intensive than coal.

These achievements have led to a gradual squeeze-out of natural 
gas; the share of this fuel fell by almost five per cent in the EU-
28 power generation mix between 2010 and 2012, according to 
preliminary data from Eurostat14. At the same time renewable 
energy sources (solar and wind combined with significant hydro 
contribution in rainy periods) managed to gain ground, similarly 
to  coal.  The  share  of  nuclear  energy  also  diminished  as  a 
consequence of decisions in some member states to gradually 
abandon nuclear power generation in the forthcoming decade. 
As renewable power generation, due to its intermittent nature, 
needs backup capacities, the shift from less emission-intensive 
generation sources to coal raises a new challenge for national 
and European greenhouse gas emission reduction policies.

13   See more detailed analysis in the Quarterly Report on European Electricity 
Markets: http://ec.europa.eu/energy/observatory/electricity/doc/20130814_

q2_quarterly_report_on_european_electricity_markets.pdf

14   See Chapter 1.2.2 on page 10

4

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F I G U R E  2 4  –    E V O L U T I O N   O F   T H E   P L AT T S ’   PA N   E U R O P E A N   P O W E R   I N D E X ,   T H E   I M P O R T   P R I C E   O F   T H E 

S T E A M   C O A L ,   G E R M A N   I M P O R T   B O R D E R   P R I C E   F O R   N AT U R A L   G A S ,   E M I S S I O N   A L LO WA N C E 

P R I C E   A N D   T H E   S H A R E   O F   R E N E WA B L E S   I N   T H E   E U   P O W E R   G E N E R AT I O N   M I X   ( 2 0 1 0 - 2 0 1 4 )

100 € 

90 € 

80 € 

70 € 

60 € 

50 € 

40 € 

30 € 

20 € 

10 € 

0 € 

31%

29%

27%

25%

23%

21%

19%

17%

15%

1  2  3  4  5  6  7  8  9  10  11  12  1  2  3  4  5  6  7  8  9  10  11  12  1  2  3  4  5  6  7  8  9  10  11  12  1  2  3  4  5  6  7  8  9  10  11  12  1  2 
2014 

2010 

2011 

2012

2013

Platts PEP (€/MWh) 

Coal CIF ARA (€/t) 

DE border imp. (€/MWh) 

Carbon price (€/t) 

RES share (%- right axis)

Sources: Platts, BAFA 

Platts PEP: Pan European Power Index (in €/MWh) 

Coal CIF ARA: Principal coal import price benchmark in North Western Europe (in €/Mt) 

DE border imp. stands for long term contract based import natural gas price on the German border (in €/MWh) 

RES includes hydro, wind, solar and biomass; RES share in the total power generation estimation is based on monthly ENTSO-E data for the EU-28 as a whole

F I G U R E  2 5  –    E V O L U T I O N   O F   Q U A R T E R LY   T R A D E D   V O L U M E   O F   P O W E R   I N   T H E   M A J O R   E U R O P E A N 

R E G I O N S   A N D   T H E   A V E R A G E   E U R O P E A N   P O W E R   M A R K E T   L I Q U I D I T Y   ( 2 0 1 0 - 2 0 1 3 )

400 TWh

350 TWh

)
h
W
T
(

e
m
u
o
v

l

d
e
d
a
r
t

y
l
r
e
t
r
a
u
Q

300 TWh

250 TWh

200 TWh

150 TWh

100 TWh

50 TWh

45 TWh

55%

50%

45%

40%

35%

)

%

(

)
y
l
r
e
t
r
a
u
q
(

n
o
i
t
p
m
u
s
n
o
c

y
t
i
c
i
r
t
c
e
e

l

d
n
a
n

l

i

s
s
o
r
g

/

e
m
u
o
v

l

r
e
w
o
p

d
e
d
a
r
T

Q1 

Q2 

Q3 

Q4 

Q1 

Q2 

Q3 

Q4 

Q1 

Q2 

Q3 

Q4 

Q1 

Q2 

Q3 

Q4 

2010 

2011 

2012

2013

CWE 

NP 

Apennine 

Iberia 

CEE 

Greece 

(right axis) Liquidity ratio

Sources: Platts, electricity trading platforms and ENTSO-E

Traded volume and liquidity in the European 
wholesale markets

Besides the evolution of the price level it is important to 
analyse  the  traded  volumes  of  power  and  the  liquidity  in 
the European wholesale electricity markets. Traded volume 
of  power  measures  the  amount  of  day-ahead  baseload 
power contracts in a given period (e.g.: a quarter). Liquidity is 
defined as the ratio of traded volume of power and the gross 
inland electricity consumption in a given country or a region.

Figure 25 shows the quarterly evolution of traded volume of 
power and the European average liquidity between 2010 and 
2013 for most of the European power trading markets. The 
highest traded volume of power could have been observed in 
this period in the Central Western European15 (CWE) markets 
and  in  the  Nordic  markets16  (Nordpoolspot).  Nordpoolspot 
has also been the most liquid market, with a liquidity ratio 

15   Germany, France, Belgium, Netherlands Austria and Luxembourg
16   Sweden, Denmark, Finland, Estonia, Latvia, Lithuania and Norway

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F I G U R E  2 6  –     M O N T H LY   R A T I O S   O F   H O U R LY   P R I C E   C O N S I D E R E D   A S   B E I N G   C O N V E R G E N T   A N D 

M O N T H LY   A D V E R S E   P O W E R   F L O W   R A T I O S   B E T W E E N   G E R M A N Y   A N D   T H E   N E T H E R L A N D S 

A N D   B E T W E E N   H U N G A R Y   A N D   S L O V A K I A   (in %)   ( 2 0 1 0 - 2 0 1 3 )

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

1  2  3  4  5  6  7  8  9  10  11  12  1  2  3  4  5  6  7  8  9  10  11  12  1  2  3  4  5  6  7  8  9  10  11  12  1  2  3  4  5  6  7  8  9  10  11  12 

2010 

DE-NL diﬀ.

2011 

HU-SK diﬀ.

2012 

2013 

DE-NL adv. ﬂow

HU-SK adv. ﬂow

Sources: HUPX, OTE-SK power exchanges

of 96% in the fourth quarter of 2013, being above 80% 
during most of 2012 and 2013. The CWE region could also 
be found among the liquid ones, with a ratio of 34% in the 
fourth quarter of 2013. Power regions, such as the Iberian-
peninsula,17 Apennine-peninsula (Italy) and Greece had high 
traded volumes and liquidity ratios as measured against 
the gross inland electricity consumption. However, these 
markets  are  so-called  mandatory  pools,  meaning  that  all 
bilateral  power  trade  must  compulsorily  be  carried  out  on 
these trading platforms, resulting in traded volumes being 
higher than in other (non-mandatory) markets.

The Central and Eastern European18 (CEE) region has been 
the most dynamically evolving region in the observed period, 
as  traded  volumes  have  nearly  quadrupled  and  market 
liquidity has risen from 6.4% to 21.4%.

The overall European market liquidity, incorporating both 
mandatory  and  non-mandatory  markets,  rose  from  39% 
to  51%  between  the  first  quarter  of  2010  and  the  fourth 
quarter of 2013. Besides increasing traded volume in 
power this increase in the market liquidity was also due to 
decreasing gross inland electricity consumption in this four 
year long time period.

Integration of the European electricity markets

During the last decade several market couplings have taken 
place among neighbouring European markets, enabling an 
implicit cross border trade of electricity. The coupling of the 
Nordic markets already started at the beginning of the last 

17   Spain and Portugal
18   Poland, Czech Republic, Slovakia, Hungary, Slovenia, Romania

decade and in June 2013, as the last country, Latvia became 
the  part  of  the  coupled  region.  In  the  Central  Western 
European (CWE) region a trilateral coupling between France, 
Belgium and the Netherlands was introduced in 2006, which 
was extended to Germany in November 2010. In Central and 
Eastern Europe (CEE) a market coupling exists between the 
Czech Republic and Slovakia since 2009, which was extended 
to Hungary in September 2012. Poland is also coupled with 
Sweden and Slovenia with Italy as from the end of 2010.

Finally, at the beginning of February 2014 the CWE and 
the  Nordic  region  was  coupled  with  the  UK  and  Ireland, 
forming  the  North  Western  Europe  (NWE)  market,  with 
the  participation  of  fifteen  European  countries.  Since  May 
2014, also the South-West European Market, i.e. Spain and 
Portugal, are coupled with North-Western Europe.

These  market  couplings  have  also  contributed  to  the 
convergence in wholesale prices between neighbouring 
markets.  However,  the  existence  of  market  couplings  does 
not  necessarily  eliminate  price  differentials.  For  example, 
the Dutch wholesale power prices had an average premium 
of 14  €/MWh to Germany in 2013, primarily owing to the 
significant  impact  of  costly  gas-fired  generation  in  the 
Netherlands  and  to  the  lack  of  sufficient  import  capacities 
from Germany during the time of abundant solar and wind 
generation  in  that  country.  Belgian  prices  also  decoupled 
from  the  other  markets  of  the  CWE  region  in  2012  and 
in  the  first  half  of  2013,  as  two  nuclear  reactors  were 
permanently  taken  offline.  Latvia  and  Lithuania  still  had  a 
significant premium to other countries of the Nordic region, 
in the consequence of insufficient interconnections to other 
Nordpool  markets  and  heavy  dependence  on  electricity 
imports from Russia. Hungarian power prices, being coupled 
with the Czech and the Slovak markets, also showed signs of 
temporary decoupling many times in 2013, especially in the 
case of suddenly increasing domestic electricity consumption 
or significant amount of exports to the Balkans.

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Nevertheless, market couplings contributed to the reduction 
of the number of occurrences of adverse power flows (when 
power is flowing from a more expensive market to a cheaper 
one,  providing  an  example  for  non-economical  behaviour), 
thus minimising welfare losses of cross-border power trade. 
In  most  of  the  cases  the  ratios  of  adverse  power  flows 
compared to the total number of trading hours fell close 
to zero shortly after the implementation of the market 
coupling and remained almost negligible even if significant 
price differentials could be observed between neighbouring 
markets.

Figure  26  shows  a  good  example  for  the  co-existence 
of price divergences and low adverse power flow ratios 
between neighbouring markets. In 2011 the ratio of trading 
hours, when the hourly price difference was less than 10% 
between  Germany  and  the  Netherlands  was  above  90%, 
while in 2013 this ratio dropped below 40% during most 
of the time. However, adverse power flows hardly occurred 
between the two markets in spite of the existence of obvious 
price divergences. 

On the other hand, adverse power flows between Hungary and 
Slovakia became almost negligible after the implementation 
of the market coupling in the autumn of 2012. However, price 
divergence still exists between the two markets, though it is 
less significant than it was beforehand.

To  put  it  in  another  way,  market  coupling  can  be  a  useful 
tool for promoting the integration of the European wholesale 
electricity markets within the course of the creation of a single 
internal electricity market, eliminating welfare losses from 
cross-border power trade. However, coupled markets do not 
necessarily lead to permanent price convergence in electricity 
prices across the coupled area. In order to improve convergence 
in prices, the development of physical power transmission and 
interconnector infrastructure is indispensable in addition to the 
existence of cross border trading allocation mechanisms.

Besides price convergence and adverse power flows between 
neighbouring power areas the integration of the European 
electricity markets can also be captured in increasing cross 
border electricity flows, as Figure 27 shows.

F I G U R E  2 7  –    M ONTHLY CROSS BORDER ELECTRICITY  FLOWS  IN  THE EU  AND THE RATIO OF C ROSS BORDER 

F L O W S   C O M P A R E D   T O   T H E   G R O S S   I N L A N D   E L E C T R I C I T Y   C O N S U M P T I O N   ( 2 0 1 0 - 2 0 1 3 )

30 TWh 

25 TWh 

20 TWh 

15 TWh 

10 TWh 

5 TWh 

0 TWh 

10%

9%

8%

7%

6%

5%

1  2  3  4  5  6  7  8  9  10  11  12  1  2  3  4  5  6  7  8  9  10  11  12  1  2  3  4  5  6  7  8  9  10  11  12  1  2  3  4  5  6  7  8  9  10  11  12 

2010 

2011 

2012

2013

(le(cid:28) axis) Cross border trade volume  

(right axis) Cross border trade/consumption ratio

Source: ENTSO-E

In 2010 the monthly average cross border electricity trade 
was  17.8  TWh  in  the  EU,  while  in  2013  it  amounted  to 
21.7 TWh, showing a growth of 23% in this period. Although 
monthly cross border trade volumes showed a high degree of 
seasonality between 2010 and 2013 (being higher in winter 
months, as electricity need increases, and lower during the 
summer periods), an upward trend in monthly trade volumes 
could clerarly be observed.

At the same time gross inland electricity consumption in the 
EU showed only a modest increase (being less than 2%). 
Dynamic growth in cross border trade as opposed to modest 
increase in electricity consumption resulted in an increase in 

the ratio of electricity cross border trade volumes compared 
to consumption, up from 6% measured in January 2010 to 
9.8% in December 2013.

The increasing trend of cross border trade volumes compared 
to national electricity consumption clearly shows good signs 
of integration of European wholesale electricity markets, 
as the increasing availability of electricity sources from 
other markets helps in promoting competition and boosting 
consumer welfare.

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 2. Country  
reports

Introduction

The purpose of the Country Reports in this Staff Working 
Document  is  to  take  stock  of  the  state  of  play,  both  in 
quantitative and qualitative terms, of the implementation 
and  functioning  of  the  energy  market  in  the  28  Member 
States of the European Union. 

These  country  reports  are  based  on  the  most  recent 
information available to the Commission during the first 
half  of  2014.  In  order  to  allow  for  comparability  a  similar 
structure and set-up of these reports has been chosen as 
the  structure  used  in  the  previous  reports  as  published 
together with the Internal Energy Market Communication of 
November 2012. There is one significant difference: for each 
country a new Chapter on the electricity and gas security of 
supply situation has been added.

As to the data used, the primary source of information is 
Eurostat. The data used to produce the figures included in 
the  country  reports  on  gross  inland  energy  consumption, 
gross  electricity  generation  and  electricity  and  gas  price 
changes are sourced from Eurostat. Also a significant part 
of the information included in the table with key indicators 
is sourced from Eurostat. This holds for information on the 
number  of  companies,  market  shares,  market  values,  and 
(partly) installed generation capacity. Alternatively, installed 
generation capacity is taken from ENTSO-E’s Yearly Statistics 
& Adequacy Retrospect 2012.

Information included in the table with key indicators on 
switching rates, regulated prices and HHIs is mostly provided 
by  the  NRAs.  Typically  this  information  is  taken  from  the 
NRAs’  national  reports  for  2012.  National  Regulatory 
Authorities  (NRAs)  have  been  given  the  opportunity  to 
comment  on  draft  versions  of  the  reports  related  to  their 
country and all 28 NRAs have done so.

In  these  reports  we  have  also  strived  to  give  a  country-
individual breakdown of gas and electricity retail prices, 
showing  the  composition  of  these  prices  in  an  energy, 
a  network  and  a  tax  component  and  demonstrating  the 
development between 2009 and 2012. This work is a follow-
up of the data gathering exercise carried out in the context 
of the Energy Prices and Costs Communication earlier in 
2014. On the basis of the data gathered we have not been 
able to provide meaningful graphs related to gas prices for 
Austria, Finland, Greece and Ireland.

The  chapter  in  each  country  report  on  consumers  contains 
information on consumer satisfaction from the Commission’s 
DG SANCO’s market monitoring surveys. The number of 
smart  meters  is  taken  from  varying  national  sources. 
The  remaining information on consumer affairs included in 
this chapter is typically provided by NRAs.

The  chapters  on  the  regulatory  framework,  wholesale 
markets,  infrastructure  and  security  of  supply  contain 
information from a variety of (mostly national) sources. 
Frequently  used  sources  are  publications  by  Ministries, 
NRAs, TSOs, ACER, CEER and DG Energy. References to these 
sources are included in the reports.

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M
U

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L
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B

Key issues 

 → The level of market concentration remains high, despite a high switching rate of consumers 

that tend to reduce the market share of incumbent suppliers on the retail markets. 

 → Due to changes in the generation mix and retirement of generation capacity, risks for security 
of supply will increase in the upcoming years. Increased cooperation with neighbouring  
countries and demand side response are required to tackle such risks. Efforts to further  
integrate the physical grid and electricity markets with neighbouring countries should be 
pursued. Enhanced interconnection could help to accommodate peaks in demand.

 → Belgium should take measures to further stimulate consumer empowerment leading to 
enhanced retail competition. This is necessary to ensure that when decrease in wholesale 
gas and electricity prices is observed, it is also passed on to the final consumers. 

 → Belgium should also ensure that distribution charges reflect efficient costs of distribution, 
network operations and development. Proper regulatory oversight at federal as well 
as regional level is essential to ensure that all network tariffs reflect efficient 
costs and are incentive based.

1.  General overview

F I G U R E S  1   A N D   2

Gross energy consumption in 2012 (56.3 Mtoe) was based 
largely on crude oil and petroleum products (39.0%), natural 
gas (27.0%), and nuclear energy (18.5%). Solid fuels and 
renewable energy sources (RES) were less important in the 
energy mix (with shares of 5.3% and 5.9%, respectively)19.

The power generation mix in 2012 (82.9 TWh) was dominated 
by nuclear power (with a share of 48.6%) and by gas-fired 
plants  (30.9%).  RES  and  solid  fuels  accounted  for  14.2% 
and  0.12%  respectively20.  Electricity  demand  in  Belgium 
decreased by 2.8% in 2012 compared to the 2011 level.21

Belgium’s renewable energy target  is 13%  by 2020 22. 
In 2012, the share of renewables in gross final energy 
consumption reached 6.8%23 and the country is on track to 
achieve its 2020 national RES target. Belgium also has plans 
to reduce its greenhouse gas emissions by 15%, but these 
have yet to be aligned with regional initiatives.

Gross inland consumption mix 2008-2012

45% 

40% 

35% 

30% 

25% 

20% 

15% 

10% 

5% 

0% 

2008 

2009 

2010 

2011 

2012 

Solid fuels
Nuclear

Natural gas
Renewables

Crude oil and petroleum products
Other

Source: Eurostat

Gross electricity generation mix 2008-2012

60% 

50% 

40% 

30% 

20% 

10% 

0% 

2008 

2009 

2010 

2011 

2012 

Solid fuels
Nuclear

Natural gas
Renewables

Crude oil and petroleum products
Other

Sources:  EU energy in figures - “Statistical Pocketbooks 2012 and 2013”, 

European Commission

19   Eurostat.
20   http://ec.europa.eu/energy/publications/doc/2014_pocketbook.pdf
21   ACER/CEER Annual Report on the Results of Monitoring the Internal 
Electricity and Natural Gas Markets in 2012, November 2013.

22   National Reform Programme 2013, April 2013.
23   Eurostat.

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Major  shareholders  of  S.A.  Fluxys  Belgium  are  Euronext 
Brussels (10.03%), Belgium State (1%) and Fluxys Holding 
(89.97%). Fluxys Holding, parent company of S.A. Fluxys 
Belgium, is owned by a municipal holding Publigas (77.7%) 
and Caisse de dépôt et placement du Québec (20%). 

The regional governments of Flanders, Wallonia and Brussels-
Capital have also transposed the DSO unbundling provisions 
of the Third Energy Package in their respective legislations 
for  the  24  electricity  and  18  gas  DSOs.26  Articles  28  of 
Directives  2009/72/EC  and  2009/73/EC,  relating  to  Closed 
Distribution  Systems  (CDS),  have  been  transposed  into 
law in the Flemish and Walloon region. In the Walloon and 
Brussels-Capital  regions,  the  new  concept  of  CDSs  has 
not  (yet)  been  introduced,  but  its  legislation  provides  for  a 
concept of private distribution networks. 

3.  Wholesale markets

Electricity

The  Belgian  electricity  generation  market  is  still  highly 
concentrated (Herfindahl Hirschmann Index – HHI- in: 2013 
of 4 700 and 7 390 in 2008) but it has been improving as the 
generation market share of Electrabel (2013: 67%) dropped 
significantly  in  the  last  5  years27.  The  three  largest  firms, 
Electrabel,  EDF  Luminus  and  E.ON  had  a  market  share  of 
89%  in  2013.  The  average  price  on  day-ahead  wholesale 
market in 2013 (EUR 47.45/MWh) at the Belgian exchange 
market Belpex was slightly higher than in 2012 and about 
two  euros  lower  than  in  2011.  At  the  same  time  the  total 
trading volume increased from 12.3 TWh (2011) to 17.0 TWh 
(2013). The sharp increase in traded volume correlates with 
a reduced availability of two nuclear power plants at the end 
of 2012. The number of market participants on the Belpex 
Day-Ahead Market has increased significantly in recent years 
and totaled 42 at the end of 2013. 

Gas

Eighteen supply companies operated in 2012 on the Belgian 
gas wholesale market. The largest supplier was Eni Gas & 
Power with a market share of 36.9% in 2012 (2011: 45.7%). 
GDF Suez is the second largest supplier on the market with 
31.9% market share (+4.5% in 2012). EDF Luminus also 
strengthened its third place (10.2% in 2012, up 1.6%). The 
remaining  fifteen  supply  companies  hold  market  shares  of 
less than 5% each and nine of these do not even reach 1%. 

2.  Regulatory framework

General

The Third Energy Package was transposed into national 
law by a law issued on 8  January 2012. This resulted in 
an increase in the powers of the national regulator, while 
at the same time strengthening consumer protection and 
increasing the competence of regional authorities.24

The indexation of the energy component of electricity and 
gas prices was capped provisionally from 1 April 2012 to 
31 December 2012. The aim of the Belgian authorities was 
to increase transparency and price comparability in variable 
contracts, protecting the consumer against price increases 
based on opaque indices and information asymmetries. These 
measures  and  the  subsequent  public  debate  encouraged 
Belgian  consumers  to  become  more  price-conscious  and 
ignited their interest in changing providers. 

To further increase competition and liquidity in the Belgium 
gas  market  a  new  entry-exit  transmission  model  was 
implemented as of 1 October 2012.

National Regulatory Authority

In January 2014, the Belgian federal energy regulator, 
the CREG (“Commission de Régulation de l’Électricité et du 
Gaz”) employed 64  employees (including 1 president and 
3 directors) and had an annual budget of EUR 14 952 254.25 
Its  independence  from  the  Ministry  was  increased  by  the 
provisions of the law of January 2012 and the decision of 
the Constitutional Court of 7 August 2013, which confirmed 
that the regulator had exclusive jurisdiction with respect to 
application, determination and exemption of tariffs. Since 
1 July 2014, the competence for setting distribution tariffs 
has been transferred to the regions. Regional regulators 
(CWaPE in Wallonia, VREG in Flanders, BRUGEL in Brussels) 
are now responsible for the control of tariffs regarding public 
distribution of gas and electricity (low-voltage (≤ 70kV) or 
low-pressure networks). 

Unbundling

The CREG certified S.A. Elia System Operator (Elia) as the 
Belgian TSO for electricity as fully ownership unbundled on 
6 January 2012, along with S.A. Fluxys Belgium as TSO for 
natural gas on 12 October 2012 and Interconnector (UK) on 
11 July 2013. 

Elia has been listed on the stock exchange since 2005. Its 
core shareholder is the municipal holding company Publi-T 
(45.22%), founded in 2001 when Elia was established. 

24   CREG, Annual Report 2012, 2013.
25   http://www.creg.be/fr/index.html

26   CEER, Status Review on the Transposition of Unbundling 

Requirements for DSOs and Closed Distribution System Operators, 

http://www.energy-regulators.eu/portal/page/portal/EER_HOME/EER_

PUBLICATIONS/CEER_PAPERS/Cross-Sectoral/Tab/C12-UR-47-03_

DSO-Unbundling_Status%20Review_Public.pdf

27   HHI and market share based on generation capacity.

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F I G U R E S  3   A N D   4

Electricity price change by component 2008-2013 (in € cent/kWh)

Natural gas price change by component 2008-2012 (in € cent/kWh)

H O U S E H O L D S

I N D U S T R Y

H O U S E H O L D S

I N D U S T R Y

25 

20 

15 

10 

5 

0 

8

7

6

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2008

2013

2008

2013

2008

2012

2008

2012

Taxes+Levies 

Networks

Energy+Supply

Taxes+Levies 

Networks

Energy+Supply

Source: Eurostat

Sources: EC, EPCR metadata

The level of market concentration, although still high, has 
improved  (HHI  2013:  2 332)28,  as  pressure  is  exerted  by 
emerging companies.

The total natural gas consumption was constant at 185.6 TWh 
(+1.2%)  even  though  end-consumers  connected  to  the 
distribution networks increased their consumption (+11.5%). 
However, at the same time consumption for electricity generation 
(possibly combined with the production of heat) dropped by 
10.7%  and  consumption  by  industrial  customers  dropped 
by 3.3%. Most gas supply is provided via direct long term 
contracts (duration > 5  years) with natural gas producers 
(61.9% in 2012). However, the share of short-term contracts 
(< 1  year) grew from 22.3% in 2011 to 33.9% in 2012.29 
This  effect  was  supported  by  the  recently  set  up  virtual 
trading point ZTP(L) (Zeebrugge Trading Point) as part of the 
new entry-exit regime. 

4.  Retail markets

Electricity

The electricity prices for household consumers declined from 
EUR  0.1590/kWh  in  2012  to  EUR  0.1583/kWh  in  201330 
and  for  industrial  consumers  from  EUR  0.0950/kWh  to  
0.0914/kWh.30 In 2013 the share of energy and supply costs 
was 38.75% of household prices, while the share of network 
costs was 37.25%. Taxes and other levies made up for the 
remaining 24%.30

On  1  April  2014,  a  VAT  reduction  from  21%  to  6%  on 
electricity entered into force.

Gas

On  the  gas  market,  concentration  is  still  high.  In  2012, 
especially in the Flanders region, the market share of the 
largest  three  retailing  companies  fell  from  91.26%  to 
76.01%. The HHI also fell in the Brussels region from 7 402 
to  6 476.  As  in  the  electricity  market,  ECS  was  the  largest 
supplier. 

Smart meters

Despite reduction of the largest three players’ market shares, 
concentration  was  still  high  in  2012.  The  largest  supplier 
was Electrabel Customer Service (ECS) with a market share 
of 45% (2011). 

Belgium formally decided, under current conditions, not to 
proceed  until  2020  with  the  wide-scale  roll-out  of  smart 
meters in the electricity and gas markets as the outcome 
of  the  cost-benefit  analysis  conducted  by  the  regional 
regulators were negative.31

28   CREG National Report 2014 to the European Commission  

and ACER, July 2014.

29   CREG, Annual Report 2012, 2013.

30   Eurostat.
31   Ref: C13-RMF-54-05 Status Review of Regulatory aspects  

of Smart Metering.

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Each of the three Belgian regions (Flanders, Wallonia and 
Brussels-Capital) has been in charge of their region-specific 
cost-benefit analysis (CBA) for the smart metering roll-out.32

5.  Consumers

Consumers’  assessment  of  the  retail  gas  and  electricity 
markets is above EU average (75.7  points vs. 74.133 and 
75.6 vs. 72.0, respectively), which in both cases corresponds 
to  the  11th  position  in  the  EU  ranking.  The  gas  market  has 
improved by 6.7 points since 2012 and the electricity market by 
7.4 (highest and 2nd highest in the EU). Both markets have the 
highest proportion of consumers switching tariff plan or service 
provider in the EU (about 3 times higher than the EU average), 
and choice of providers and the ease of switching are within 
the 5 best ratings in the EU (the latter component is assessed 
3rd highest in the EU for the gas market). While the incidence of 
problems in both markets is below the EU average, the number 
of consumers complaining is higher than average (2nd highest 
in the case of gas services). Especially the share of complaints 
to third parties is 3rd highest in the EU.34

The improvement of market performance from 2012 could be 
linked to several measures taken by the Belgian government: 
a modification of the energy law making it easier to switch 
provider; a campaign organised together with local communes 
informing  and  assisting  consumers  in  using  comparison 
tools for comparing energy prices; and promotion of joint 
energy purchases. The information campaigns that took 
place in 2012 were continued in 2013; at least one collective 
switching was organised by a consumer organisation. New 
regulatory guidance specified that contract termination can 
take place at any moment without cancelation fees (as long 
as the one month notification period is respected).

32   Two different CBAs were realised on behalf of VREG:  

the first in 2008 and a second one in 2011.  

Among the three scenarios considered in the 2011 CBA, only 

the reference scenario results in a positive net present value. 

However the result under the reference scenario is considered 

to be inconclusive as it does not yield a strong positive result. 

Nevertheless, in the Flemish region, Eandis and Infrax (DSOs) 

started installing new smart gas and electricity meters as  

of 1 October 2012. 50 000 meters will be installed in different 

B E L G I U M

Customers  became  more  price-conscious  and  suppliers 
kept  their  prices  constant  in  2013  after  the  end  of  the 
provisional capping. Since 2013, suppliers’ prices are more 
transparent and through the introduction of the safety net 
regulation these prices are constantly monitored by the 
CREG. As a result, the average price of the electricity and 
gas component is now moving closer to the average prices 
seen in neighbouring countries. 

However, there is still divergence among the various regions 
in Belgium. A positive outlook is seen for Flanders, but not 
for Wallonia, as reported by regional regulators. 

The number of customers benefiting from social tariffs 
remained stable compared to 2011 (400 000 for electricity 
and 230 000 for gas). The Federal Mediation Service for 
Energy received 8 331 complaints during 2012 (compared 
to 8 736  complaints in 2011). Of these complaints, 50% 
were considered admissible. 

6.  Infrastructure

The Belgian authorities have established a one-stop-shop for  
the permitting of Projects of Common Interest (PCIs) pursuant 
the TEN-E Regulation and a cooperation agreement between 
the Federal State and the Regions on the establishment of 
the Coordination Committee has been signed.

Electricity

The Belgian network forms an integral part of the European 
transmission  network  and  has  connections  with  the 
Netherlands,  France  and  Luxembourg.  The  infrastructure 
at the interconnection point also includes phase shifters, 
which limit the impact of loop flows which originate most 
frequently from Germany and help to stabilize the grid in 
Belgium and in the region.

Several projects have been identified as PCIs in accordance 
with  the  guidelines  on  Trans-European  energy  network  as 
they are cross border connections and improve security of 
supply. The “NEMO” project will create the first interconnection 
to the United Kingdom via the North Sea. The “ALEGro” 
project will also create the first direct interconnection to 
Germany. Finally there is another interconnection project 
with Luxembourg.

areas of Flanders during ten months. The CBA for the region  

Gas

of Brussels capital by BRUGEL results in negative net present 

value for all four considered scenarios. A CBA for smart metering 

roll-out in Wallonia has been realised in 2012 by CWAPE.  

The results reported are the following: the ‘Full roll-out’ is 

negative, while the ‘Smart Meter friendly’ scenario is positive. 

The Walloon region has decided, under current conditions,  

not to go ahead with a wide-scale roll-out until 2020.
33   However the difference is not statistically significant.
34   10th Consumer Markets Scoreboard, http://ec.europa.eu/

consumers/consumer_evidence/consumer_scoreboards/10_

edition/index_en.htm

Belgium occupies a key position in the European gas grids 
and serves as an important transit country. In particular, 
the development of the Zeebrugge hub is attracting 
International trade as a collection of connection points of 
several pipelines and as an important LNG terminal, which 
contributes significantly to the security of supply in North-
West Europe. In addition, Belgium is also well interconnected 
with its neighbours – Germany, France, The Netherlands, and 
Luxembourg.

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Based  on  market  consultation  Fluxys  Belgium  will  build 
additional  interconnection  lines  to  the  LNG  terminal  in 
Dunkirk  and  Fluxys  LNG  will  build  a  second  landing  stage 
for  loading  and  unloading  at  Zeebrugge  terminal  which 
also qualified as PCI. In addition, there is another project to 
improve the interconnection of the Belgium gas market to 
Italy (reverse-flow on TENP).

In total, ten projects involving Belgium have been identified 
as PCIs.

Elia, as TSO, and the Government have taken measures to 
address the situation which include an increased strategic 
reserve and industrial load reduction. An updated plan for 
controlled regional power cuts has been presented to avoid 
black-outs in a worst-case scenario. 

In the medium term, in order to encourage investments, the 
Belgian government has launched a call for tender for the 
construction of new CCGT plants. 

7.  Security of Supply

Electricity 

A  combination  of  factors  has  led  to  concerns  about 
generation adequacy in Belgium: the nuclear phase-out, 
delays in several new plants for fossil-based generation and 
in the construction of high-voltage lines. These factors have 
been exacerbated by unforeseen outages in major nuclear 
units which have reduced the generation capacity by 3 GW.

B E L G I U M   –  K E Y   I N D I C A T O R S

Gas 

Following the transition to an entry-exit market model, 
the network was enforced with a new compressor station 
on the rTr/VTN pipeline in Winksele, which increases entry 
and exit capacities both in the East and the West. Moreover, 
Fluxys Belgium reactivated the former liquid nitrogen (LIN) 
storage tank in Dudzele with a new LIN blending facility in 
order to stabilize the flows to the UK and to fulfil gas quality 
conditions. Finally, the gas network towards Luxembourg 
will be enhanced in order to be able to comply with the 
anticipated growing demand for natural gas in Luxembourg.

E L E C T R I C I T Y

G A S

Number of companies representing at least 95% 
of net power generation

Number of main power-generation companies

46

2

Number of entities bringing natural gas  
into country

Number of main gas entities

N/A

N/A

Market share of the largest power-generation company 65.8%

Market share of the largest entity bringing natural gas N/A

Number of electricity retailers

Number of main electricity retailers

Switching rates (entire electricity retail market)

Regulated prices for households – electricity 

Regulated prices for non-households – electricity

HHI in power-generation market

HHI in electricity retail market

Electricity market value (1) (bn€)

Installed generation capacity (MW, 2012)

Peak demand (MW)

Number of smart meters installed

33

4

10%

No

No

4 010

3 000

9.677

20 800

14 234

N/A

Number of retailers selling natural gas to final customers

Number of main natural gas retailers

Switching rates for gas (entire retail market)

Regulated prices for households – gas

Regulated prices for non-households – gas

HHI in gas supply market

HHI in gas retail market

Gas market value (1) (bn€)

22

4

11.2%

No

No

4 000

3 900

4.505

Sources: Eurostat, CEER, National Regulatory Authority, EC calculations.

(1)   Market value is an estimation of the size of the retail electricity and gas markets. It is calculated using data on electricity  

and gas consumption in the household and non-household sectors (average bands) and annual average retail prices.

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Key issues

 → With regards to electricity, the domestic market is dominated by the Bulgarian 
Energy Holding and its daughter, the national electricity supply company Natsionalna 
Elektricheska Kompania EAD (NEK) and characterized by an overcapacity in electricity 
generation. To attract independent producers and traders, efforts on establishing a well-
functioning  balancing  market  including  putting  into  place  an  organised  independent 
power exchange and day-ahead market should be increased. The existing quota system 
for power plants in the regulated segment of the market should be phased out gradually 
and the current single-buyer model should also be removed. Bulgaria needs to gradually 
phase out regulated electricity prices also for households and small and medium-sized 
businesses connected at low voltage and take necessary steps towards a competitive 
retail market. Furthermore, an effort should be made to accelerate the implementation 
of electricity interconnection points and enhance the capacity to cope with disruptions.

 → With regards to the gas market, connection of the domestic gas transmission system 
and the transit system via adequate capacity level remains an outstanding issue 
and the delays observed in developing interconnections with neighbouring countries 
should be resolved and promoted. The certification process of the independent gas 
transmission operator should be completed.

 → The  progressive  dismantling  of  the  Bulgarian  Energy  Holding  conglomerate  and  an 
ownership  unbundling  of  the  transmission  system  operators  would  essentially  help 
reducing the dominance of the incumbent company and introduce more competition 
on the Bulgarian electricity and gas markets.

 → Bulgaria should also strengthen the independence of the national regulatory 

authority and its administrative capacity in the energy sector. 

1.  General overview

Gross  national  energy  consumption  in  2012  reached 
18.2  Mtoe,  a  decrease  of  4.5%  compared  to  2011.  The 
country’s  energy  mix  was  largely  based  on  solid  fuels 
(36.3%),  followed  by  nuclear  (21.4%)  and  oil  (20.1%). 
Compared to 2011, solid fuels decreased significantly.

F I G U R E S  1   A N D   2

Gross electricity generation in 2011 reached 50.8 TWh, with 
the largest contributor being solid fuels (54.2%), followed by 
nuclear power (32.1%). Renewables (9.3%) and natural gas 
(4.1%) also had a visible presence in the electricity mix, while 
the contribution by oil is negligible (0.3%). Gross electricity 
generation  in  2012  reached  47.3  TWh,  with  the  largest 
contributor being solid fuels, followed by nuclear power.

Gross inland consumption mix 2008-2012

Gross electricity generation mix 2008-2012

45% 

40% 

35% 

30% 

25% 

20% 

15% 

10% 

5% 

0% 

60% 

50% 

40% 

30% 

20% 

10% 

0% 

2008 

2009 

2010 

2011 

2012 

2008 

2009 

2010 

2011 

2012 

Solid fuels
Nuclear

Natural gas
Renewables

Crude oil and petroleum products

Solid fuels
Nuclear

Natural gas
Renewables

Crude oil and petroleum products

Source: Eurostat

Sources:  EU energy in figures - “Statistical Pocketbooks 2012 and 2013”, 

European Commission

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Cogeneration35 (with 6.7% in 2011) has been in decline 
since  2008,  when  it  represented  10%  of  gross  electricity 
generation36. The country’s overall renewables target share 
for 2020 is 16%. In 2012, the renewable share in gross final 
energy  consumption  was  16.3%36  and  Bulgaria  has  thus 
already achieved its national 2020 RES target.

2.  Regulatory framework

General

Unbundling

In February 2014, the public provider NEK completed the last 
phase of its split from the Electricity System Operator (ESO). ESO is 
now able to start the process of its certification as an independent 
transmission operator, although no draft certification decision 
was  submitted  to  the  European  Commission  until  September 
2014.41 In April 2013, the gas TSO Bulgartransgaz EAD submitted 
an application to SEWRC for certification as an independent 
gas  transmission  operator42.  SEWRC’s  initial  draft  decision  was 
withdrawn and is to be resubmitted in the autumn of 201443. 

The Energy Act was amended in July 2012 to implement 
the Directives 2009/72/EC and 2009/73/EC37 and the Energy 
Efficiency Act was amended in February 2013 to implement 
Directive 2010/31/EC38. 

The electricity distribution network is privatized and owned 
by CEZ, EVN and Energo-Pro. The distribution and supply 
companies  are  legally  unbundled.  None  of  the  30  gas 
distribution companies are legally unbundled since they 
have less than 100 000 customers.44

The  Renewable  Energy  Act,  adopted  in  July  2012  was 
amended  in  2013  to  abolish  the  “green  surcharge  for 
transit“39 and introduce a fee (or tax) for solar PV and wind 
production.40 Also the limitation on the volume of electricity 
purchased at the feed-in tariff price was amended. Production 
above the cap will be purchased at the regulated retail price. 

National Energy Regulator

The Bulgarian Energy Regulator is the State Energy and 
Water Regulatory Commission (SEWRC), established in 1999. 
SEWRC is an autonomous regulatory agency responsible for 
electricity, heat, natural gas, water and sewerage. In 2012, 
SEWRC  employed  128  staff,  with  an  operating  budget  of 
approximately  EUR  1.86  million.  Although  SEWRC’s  budget 
increased by EUR 70 000 in 2013, this did not translate into 
a significant increase of resources and number of employees. 
The  current  budget  does  not  allow  SEWRC  to  build  up  the 
stable and high quality staff that is demanded to carry out 
its legal tasks. The fact that SEWRC’s Chairpersons changed 
four times in the course of 2013, raises concerns about 
the  independence,  professional  stability  and  continuity  of 
the  management  of  the  Regulator.  The  selection  of  the 
Chairperson of SEWRC should take place in a more transparent 
manner based on transparently defined professional criteria 
and respecting general principles of conflict of interest. 

3.  Wholesale Markets

Electricity

The state owned Bulgarian Energy Holding EAD (BEH) and 
its subsidiary NEK, hold generation assets representing 45% 
of the installed capacity. NEK acts as a single buyer from 
the power generators on the high voltage grid and remains 
the  sole  electricity  supplier  at  regulated  prices  for  end 
suppliers. Moreover, NEK has the legal obligation to purchase 
electricity produced by CHP plants, renewables and industrial 
producers at regulated prices.

Dispatching of power plants takes place based on regulated 
quota and priority rules. As a result, NEK purchases electricity 
at a wide range of prices, from EUR  21/MWh up to more 
than EUR 350/MWh. Overall, the Bulgarian electricity market 
operates mainly at regulated prices, covering roughly half 
of the electricity transactions. The Rules on Electricity Trade 
were  amended  in  May  201445;  a  company  within  the  BEH 
group, Independent Bulgarian Energy Exchange (IBEX), has 
been licensed for operating an organized power exchange 
and day-ahead market in electricity46.

About  a  third  of  the  electricity  market  was  first  opened 
in 2012, including consumers using their right to choose 
a  supplier  and  commercial  exports.  The  open  electricity 
market in 2012 included mainly consumers connected to 
high voltage network and some medium voltage consumers.

35   The share of electricity produced in combined heat  

and power plants (CHP).

36   Eurostat.
37   SEWRC, Annual report 2012, July 2013.
38   Ecologic, “Assessment of climate change policies in the context 

41   http://powermarket.seenews.com/news/bulgarias-beh-says-nek-

of the European Semester, Country Report: Bulgaria”,  

eso-split-up-completed-403143

Report for DG Climate Action, 2013.

39   Ecologic, “Assessment of climate change policies in the context 

42   http://www.bulgartransgaz.bg/
43   http://ec.europa.eu/energy/gas_electricity/interpretative_notes/

of the EU Semester”, Issue 03/2013, June 2013.

certification_en.htm

40   http://www.kpmg.com/BG/en/IssuesAndInsights/ArticlesPublications/

Newsletters/Legal/Documents/2014-01-Important-amendments-to-

the-Renewable-Energy-Act-effective-from-1-January-2014.htm

44   SEWRC, Annual report 2012, July 2013.
45   State Gazette of Bulgaria, issue 39 of 9 May 2014.
46   SEWRC’s decision of 31 March 2014.

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B U L G A R I A

F I G U R E S  3   A N D   4

Electricity price change by component 2008-2013 (in € cent/kWh)

Natural gas price change by component 2008-2012 (in € cent/kWh)

H O U S E H O L D S

I N D U S T R Y

H O U S E H O L D S

I N D U S T R Y

10 

9 

8 

7 

6 

5 

4 

3 

2 

1 

0 

6 

5 

4 

3 

2 

1 

0 

2008

2013

2008

2013

2008

2012

2008

2012

Taxes+Levies 

Networks

Energy+Supply

Taxes+Levies 

Networks

Energy+Supply

Source: Eurostat

Sources: EC, EPCR metadata

Traditionally Bulgaria is a net electricity exporter. In 2012, the 
share of net country exports was 20.4% of the net electricity 
country  output.47  This  was  lower  than  2011  because  of 
decreasing  demand  from  the  Greek  market  and  other 
neighbouring markets having sufficient hydro resources. 
In January and February 2012, the export of domestically 
produced electricity was curtailed twice from Bulgaria to the 
neighbouring markets. Following the removal of surcharges 
imposed on power generators electricity exports increased in 
2014 compared to previous years.

Gas

Bulgaria largely depends on gas imports from Gazprom. 
Bulgargaz EAD, which is part of BEH, is the largest natural 
gas  importer.  In  2013,  a  second  trader,  affiliated  with 
Gazprom, entered the gas market, which imported gas from 
Russia and sold gas to its distribution companies as well as 
end users. 

The tariff model for transmission is “postage stamp” (flat 
fee).  At  present,  transit  flows  through  Bulgaria  to  inter 
alia Turkey and Greece are excluded from the regulatory 
oversight  by  SEWRC  and  based  on  historic  long  term 
transport contracts with preferential access to cross-border 
capacities. Bulgartransgaz EAD is expected to implement 
an entry-exit model, to meet the requirements of the Third 
Energy  Package,  however  this  system  is  not  envisaged  to 
include the transit.47

4.  Retail Markets

Electricity

The retail electricity market remained highly concentrated. In 
2012, 8 out of total 24 power retailers took 92% of the market.
From the beginning of 2013, the market was only regulated at 
the low voltage level. The renewables charge makes up for 15% 
of the total electricity price for household consumers in Bulgaria. 

Although electricity consumers are allowed to switch, no actual 
switching is observed. Due to the regulated prices for household 
consumers, there is no benefit in switching and there is no 
incentive for traders to enter this segment.48

Gas

Overall gas demand in Bulgaria increased in 2013 by 7% 
compared to 201248. The traded volumes were 2 854.8 mcm 
for non-households and 70.2 mcm for households.

In 2012, Bulgaria registered an annual price decrease for 
natural gas close to 4%, for both household and industrial 
customers. Taking purchasing power into account, retail 
gas prices for the average consumer in Bulgaria are the 
highest in Europe. Natural gas prices (including taxes and 
levies) increased by 42.2% for residential consumers and by 
49.2% for industrial users from 2008 to 2012. The main 
drivers behind these price rises were energy and supply 
costs, although VAT rises and higher distribution costs (for 
industrial users) were also significant factors49.

47   SEWRC, Annual report 2012, July 2013.

49   The EC, Energy Prices and Costs report, 2014.

48   ACER/CEER Annual Report on the Results of Monitoring the Internal 
Electricity and Natural Gas Markets in 2012, November 2013.

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B U L G A R I A

Although consumers have the right to select their natural gas 
supplier, no actual switching is observed as DSOs operate 
exclusively in their licensed areas of operation. 

infrastructure  to  be  developed  within  the  interconnecting 
lines with Greece and Romania that increase the cross-
border  capacity  and  open  North-South  priority  corridor. 
Another important PCI is hydro-pumped storage in Yadenitsa.

5.  Consumers

The retail electricity market in Bulgaria is by far the lowest scoring 
in the EU (48.9 points compared to 72.0) and has seen a highest 
decrease in score (6.9 points) since 2012. The market is also at 
the very bottom of the domestic ranking of 31 services markets. 
In fact, it has the lowest score of all surveyed services markets 
in the 28 EU Member States. The market scores the lowest or 
second lowest on all components surveyed (comparability, trust 
in providers, overall consumer satisfaction, choice of providers, 
problems,  switching  and  ease  of  switching),  except  for  the 
proportion of complaints (which are just below the EU average). 
The gas market in Bulgaria is scoring better, although also 
below the EU average (72.0 points vs. 74.150, corresponding to 
18th position in the EU and has seen an increase of 2.150 points 
since 2012. This market scores particularly low on trust (lowest 
place among the EU countries).51

Technical  measures  and  rehabilitation  of  the  electricity 
transmission system were approved by the Regulator in 
2012. A number of reconstructions and an enlargement of 
the transmission network was realised and new substations 
and lines were constructed to satisfy the requirements from 
new renewable capacities in certain regions of the country.54 

Gas

In 2013, approximately  EUR 15.7 million has  been  invested in 
the improvement of the gas distribution infrastructure, through 
the construction of 194 km of pipelines54. Currently there is 
no physical congestion in the system, either national or cross-
border. However, cross-border connection points suffer from 
heavy contractual congestion and there is minor entry capacity 
from neighbouring Member States into Bulgaria. Annual gas 
consumption is below half of the projected transmission capacity.

In July 2013, SEWRC concluded that the implementation of 
smart metering was not economically viable. The powers of 
the SEWRC include the review of complaints of consumers 
against licensees. In 2013, 2 332 complaints against electricity 
licensees  were  filed  at  SEWRC,  and  45  complaints  against 
gas  licensees.  The  majority  of  the  gas  related  complaints 
were concerned with delays in getting connected to the gas 
transmission network and gas disruptions.52 From July 2012, 
vulnerable customers are defined in the Energy Act.

Progress  on  the  interconnections,  PCIs,  with  Romania, 
Serbia, Greece, and Turkey is ongoing. The interconnection 
with  Romania  –  originally  expected  to  be  commissioned  in 
June 2014 – is facing delays. Firm reverse flow capacity 
from Greece has been installed at the level of 1  mcm/d. 
However, the interconnection between Bulgaria and Turkey is 
delayed. The reverse flow project with Romania, entailing the 
connection  of  the  domestic  Romanian  system  to  the  trunk 
line, has been suspended. 

6.  Infrastructure

7.  Security of supply

The  Bulgarian  authorities  should  ensure  a  proper  and 
timely adoption of the measures stemming from the TEN-E 
Regulation, including the establishment of the one-stop-shop 
for Projects of Common Interest (PCIs) (due by 16 November 
2013),  and  other  measures  foreseen  for  2014  and  2015, 
including  the  publication  of  the  manual  on  the  permit 
granting process for project promoters, and the adoption of 
legislative  and  non-legislative  measures  streamlining  the 
environmental assessment procedures.

Electricity

Total installed capacity in 2012 was 13.8 GW, with the peak 
load  of  7.8  GW  observed  in  February  2012.53  There  are 
several PCIs under the guidelines for trans-European energy 

Electricity

Bulgaria  is  one  of  the  largest  electricity  exporters  in  South 
Eastern Europe, and thus faces no particular security of supply 
issues.  The  electricity  transmission  network  of  the  country 
has not faced any significant problems related to security of 
supply and congestions in the electricity system, including the 
cross-border capacities. Short-term congestions were rare in 
the  interconnectors  with  neighbouring  countries.  Scheduled 
and non-scheduled interruptions were lower than forecasted.54 
To  increase  the  security  of  supply  in  the  Burgas  region,  the 
construction of two new 400kV substations and three 400kV 
lines  in  the  North-Eastern  part  of  Bulgaria  is  envisaged, 
accommodating  the  high  penetration  of  renewables  in  the 
region and allowing the North-South connection55.

50   However the difference is not statistically significant.
51   10th Consumer Markets Scoreboard, http://ec.europa.eu/consumers/

consumer_evidence/consumer_scoreboards/10_edition/index_en.htm

52   SEWRC, Annual report 2012, July 2013.
53   ENTSO-E, YS AR Report 2012.

54   SEWRC, Annual report 2012, July 2013.
55   ENTSO-E, Regional Investment Plan Continental South East, July 2012.

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B U L G A R I A

Gas

In  2014  Bulgaria  remains  fully  dependent  on  a  single 
source of gas on a single route by a single supplier. It has 
only  limited  domestic  underground  storage  capacities  that 
could help in balancing disruptions in high demand periods. 
Interconnections  with  the  neighbouring  countries  are  very 
poor and still under development. To ensure security of supply, 
there are possibilities for reverse physical flow of natural gas 

from  Greece  and,  after  eventually  reaching  an  agreement, 
from  Turkey.  The  Kula-Sidirokastro  interconnector  exhibits 
an existing capacity of 4.3  bcm annually, with the planned 
reverse flow capacity of 0.36 bcm56. There is an underground 
gas  storage  facility,  Chiren,  with  a  capacity  of  550  mcm, 
of  which  250  mcm  is  reserved  for  emergency  situations. 
Expansion of the Chiren capacity is envisaged57.

B U L G A R I A   –  K E Y   I N D I C A T O R S

E L E C T R I C I T Y

G A S

Number of companies representing at least 95%  
of net power generation

Number of main power-generation companies

20 

5

Number of entities bringing natural gas  
into country

Number of main gas entities

2

3

Market share of the largest power-generation company N/A

Market share of the largest entity bringing 
natural gas

N/A for 2012, 
99.8 for 2011

Number of electricity retailers

Number of main electricity retailers

Switching rates (entire electricity retail market)

Regulated prices for households – electricity 

Regulated prices for non-households – electricity

HHI in power-generation market

HHI in electricity retail market

Electricity market value (2) (bn€) 

Installed generation capacity (MW)

Peak demand (MW)

Number of smart meters installed

24

8

0%

Yes (1)

Yes (1)

N/A

N/A

1.706

10 236

7967

N/A

Number of retailers selling natural gas  
to final customers

Number of main natural gas retailers

Switching rates for gas (entire retail market)

Regulated prices for households – gas

Regulated prices for non-households – gas

30

3

0%

Yes

Yes

HHI in gas supply market

HHI in gas retail market

Gas market value (2) (bn€)

7 753

Approx. 1 000

0.434

Sources: Eurostat, CEER, National Regulatory Authority, EC calculations.

(1)   ACER/CEER Annual Report on the Results of Monitoring the Internal Electricity and Natural Gas Markets in 2012, November 2013.

(2)   Market value is an estimation of the size of the retail electricity and gas markets. It is calculated using data on electricity  

and gas consumption in the household and non-household sectors (average bands) and annual average retail prices.

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56   Francese, Opening the Southern Gas Corridor,  

Trans Adriatic Pipeline, December 2012.

57   Bulgartransgaz, 10 year development plan, 2013-2022.

 
 
 
 
 
 
 
 
 
Key issues

 → Coupling of the day-ahead markets between the Czech Republic, Slovakia and Hungary 
improved price stability in the region. Market coupling with the rest of European regions 
remains a priority. 

 → Further investment in cross-border interconnectors will increase market competition 
and energy security. Unscheduled power flows from Germany remain a big concern for 
the Czech Republic as they risk the safe operation of its transmission networks.

 → The Czech Republic should reinforce its power distribution and transmission network in 

order to integrate power generating facilities, including dispersed renewables. 

 → The major concerns regarding security of supply relate to depleting lignite reserves, 
an ageing electricity infrastructure (including the generation portfolio) and high 
networks costs, which influence the electricity prices for end-users. 

C

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1.  General overview

F I G U R E S  1   A N D   2

Energy  consumption  in  2012  (42.78  Mtoe)  was  based 
largely on fossil fuels, notably coal (with a share of 40% in 
the  energy  consumption  mix).  The  renewable  energy  share 
is increasing and has reached 11.2%58 in 2012, mainly due 
to solar and hydro contributions (8%58). The Czech Republic 
was above its 2011/2012 interim trajectory and is on track 
to achieve its national 2020 RES target of 13% by 2020. The 
power generation mix in 2011 (87.5 TWh) was dominated by 
solid  fuels.  Cogeneration59  provided  for  12.8%  of  the  total 
electricity generation in 2011, falling slightly comparing to 
2010.

Gross inland consumption mix 2008-2012

50% 

45% 

40% 

35% 

30% 

25% 

20% 

15% 

10% 

5% 

0% 

2008 

2009 

2010 

2011 

2012 

Solid fuels
Nuclear

Natural gas
Renewables

Crude oil and petroleum products
Other

Source: Eurostat

Gross electricity generation mix 2008-2012

60% 

50% 

40% 

30% 

20% 

10% 

0% 

58   Eurostat.
59   The share of electricity produced in combined heat  

and power plants (CHP).

2008 

2009 

2010 

2011 

2012 

Solid fuels
Nuclear

Natural gas
Renewables

Crude oil and petroleum products
Other

Sources:  EU energy in figures - “Statistical Pocketbooks 2012 and 2013”, 

European Commission

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2.  Regulatory framework

General

The  Czech  Republic  has  introduced  amendments  to  their 
incentive scheme for renewables60 and the support for all 
new installations except small hydro ceased at the end of 
2013. This has slowed down the development of the sector 
which had increased rapidly in the previous period. 

National Energy Regulator

The Energy Regulatory Office (“Energetický regulační úřad”, 
ERO)  is  responsible  for  energy  regulation  in  the  Czech 
Republic.  In  2012/13,  ERO  employed  178  staff.  The  2012 
budget of EUR 8 million doubled compared to 201161, due to 
the amendment to the Energy Act which markedly reinforced 
the ERO’s powers, in particular those of supervision, oversight 
penalisation and remedial measures in cases of violations of 
legal regulations and in the enforcement of sanctions. 

Unbundling

In  2012,  ERO  certified  the  ownership  unbundling  of  the 
electricity TSO, ČEPS. In the gas sector, at the beginning of 
2013 ERO issued a certification decision concerning NET4GAS, 
which opted for the status of Independent Operator (ITO). 
Gas distribution companies are legally unbundled from the 
TSO, gas trading companies and gas storage operators. 

3.  Wholesale Markets

Electricity

The concentration of wholesale power generation remains 
very  high.  ČEZ  is  the  dominant  electricity  generator  with  a 
market share close to 80%62.

In the Czech Republic, electricity is traded at Prague-based 
Power Exchange Central Europe (PXE), and in spot markets 
(day-ahead  and  intraday)  organised  by  OTE,  a.s.  (a  joint 
stock company established in 2001 which acts as the Czech 
electricity  and  gas  market  operator).  In  2012,  a  total  of 
112 TWh was traded under bilateral contracts registered in 
the  OTE  system  with  an  additional  11  TWh  traded  in  the 
organised  spot  markets.  A  total  of  19.8  TWh  was  traded 
at  the  PXE  in  future  energy  exchange  products  (a  market 
volume of EUR 944 million). 

C Z E C H   R E P U B L I C

The  market  coupling  of  the  Czech,  Slovak  and  Hungarian 
day-ahead  markets  started  in  September  2012  and  has 
been successful so far. The price convergence between the 
countries  reached  76%63  after  the  launch  of  the  market 
coupling.  Cross-border  capacity  allocation  for  power 
transmission for German, Polish and Austrian borders takes 
place  through  Central  Allocation  Office,  GmbH.  Capacity 
allocation  with  Slovakia  is  based  on  long-term  nominations. 
The average Czech day ahead wholesale price in 2012 was 
approximately EUR 43/MWh for base load power (a decrease 
compared to 2011). 

Gas

In 2012, 25 entities imported gas into the Czech Republic. 
The  largest  entities  importing  gas  were  RWE  Transgas, 
WINGAS  GmbH  &  Co.  KG,  and  VNG  Energie.  The  volume 
of  natural  gas  imports  reached  6.9  Mtoe64  in  2012.  It  was 
bought mostly from Russia and Norway under long-term 
contracts, but also at European energy exchanges, or from 
domestic resellers. The average price for gas imported from 
Russia was EUR 37.4/MWh in the third quarter of 201265.

Trading activity on the Czech virtual trading point increased 
significantly  in  2012  and  reached  107  TWh  in  bilateral 
contracts  (compared  to  0.258  TWh  in  2011).  The  increase 
was  due  to  new  brokering  activities  of  three  companies: 
42  Financial Services (42FS), Tradition Financial Services 
(TFS)  and  ICAP.66  In  2012,  a  bi-directional  transmission 
between  the  Czech  virtual  trading  point  and  Slovakia  was 
enabled. 

4.  Retail Markets

Electricity

Market  concentration  remains  very  high,  but  the  dominant 
position of three main power suppliers, ČEZ, E.ON and PRE is 
gradually decreasing. The three companies covered close to 
70% of the market in 2012 down from 85% in 2011.67

Czech power prices are fully liberalized. The supplier switching 
ratio in 2012 was relatively high (7.96%68). 

63   OTE’s own estimations.
64   Eurostat.
65   http://ec.europa.eu/energy/observatory/gas/doc/qregam_2012_

quarter2_quarter3.pdf

66   http://www.icis.com/resources/news/2012/12/28/9627306/year-

in-review-czech-natural-gas-market/

60   Act no. 165/2012 on promoted energy sources  

67   Overall, in 2011 there were 356 power retailers  

and amendments to certain laws.

in the Czech Republic.

61   http://www.eru.cz/dias-read_article.php?articleId=51
62   Eurostat.

68   ACER/CEER, Annual Report on the Results of Monitoring the Internal 

Electricity and Natural Gas Markets in 2012, November 2013.

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C Z E C H   R E P U B L I C

F I G U R E S  3   A N D   4

Electricity price change by component 2008-2013 (in € cent/kWh)

Natural gas price change by component 2008-2012 (in € cent/kWh)

H O U S E H O L D S

I N D U S T R Y

H O U S E H O L D S

I N D U S T R Y

16 

14 

12 

10 

8 

6 

4 

2 

0 

7 

6 

5 

4 

3 

2 

1 

0 

2008

2013

2008

2013

2008

2012

2008

2012

Taxes+Levies 

Networks

Energy+Supply

Taxes+Levies 

Networks

Energy+Supply

Source: Eurostat

Sources: EC, EPCR metadata

Between 2008 and 2012, power prices decreased for industrial 
consumers and increased for household consumers69.

In  the  gas  sector,  switching  rates  have  remained  stable  in 
the past few years, at around 12% for both the whole retail 
market and households73.

The  network  component  of  electric  energy  prices  for 
households has increased since 2010 (Figure 3). The levies 
related to the share of renewables in electricity consumption 
grew from less than 2% of the total energy bill for households 
in 2009 to more than 9% in 2012. 

Gas

Competition in the retail supply market is increasing. In 
2012, there were 59 active gas suppliers in the retail market, 
10 more than in 201170. Nevertheless concentration remains 
high. ERO reports that the retail market may saturate if the 
number  of  traders  continues  to  grow71.  In  2012,  gas  was 
distributed by six regional companies.

Gas  prices  are  generally  determined  by  long-term  contracts 
but a growing number of suppliers offer prices reflecting spot 
market prices. Gas prices for industrial consumers decreased 
between  2008  and  2012  as  network  and  tax  related 
components  of  natural  gas  prices  for  industry  decreased 
(Figure 4). In the first part of 2013, gas prices for household 
consumers reached EUR 0.064/kWh. In the same period, gas 
prices for industrial consumers reached EUR 0.034 EUR/kWh.72

Smart meters

The  outcome  of  the  cost  benefit  analysis  of  smart  meter 
deployment,  undertaken  by  the  Czech  government,  was 
negative.  Consequently,  a  formal  decision  was  made  not 
to  proceed  with  the  roll-out  of  smart  metering  in  both  the 
electricity and gas sectors74. In 2014 the European Commission 
formally  requested  the  Czech  Republic  to  ensure  that  final 
energy consumers are provided with individual meters75.

5.  Consumers

Retail  gas  market  is  assessed  below  the  EU  average 
(72.0 points compared to 74.176) and ranks 19th EU-wide. The 
market  is  also  assessed  below  the  average  of  31  domestic 
services markets (24th position). In particular, trust in providers 
is 4th lowest in the EU. However, switching rates are the second 
highest  in  the  EU  while  the  ease  of  switching  receives  the 
fourth highest score. Overall, this market has remained stable 
compared  to  2012.  Consumer  assessment  of  the  electricity 
retail market is above the EU average (72.9 points compared 

69   Eurostat.
70   Some of the suppliers offered their services only during a part  
of the year, whereas others offered their services to certain 

customer categories. Source: Eurostat, gas market indicators, 

number of retailers selling natural gas to final customers,  

73   CEER database.
74   http://www.ceer.eu/portal/page/portal/EER_HOME/EER_PUBLICATIONS/

2003-2012.

71   Due to the high level of competition,  

motivation for newcomers may be limited.

72   Eurostat.

CEER_PAPERS/Customers/2013/7-1_C13-RMF-54-05-Status_Review_

of_Regulatory_Aspects_of_Smart_Metering_FOR_PUBLICATION.pdf
75   http://ec.europa.eu/energy/newsletter/20140205-newsletter.htm
76   However the difference is not statistically significant.

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C Z E C H   R E P U B L I C

to 72.077), corresponding to 15th place. It increased by 3 points 
between 2012 and 2013, in particular with regard to overall 
consumer satisfaction, choice of providers, actual switching 
and  ease  of  switching.  The  two  last  components  have  the 
5th highest score in the EU.78

Czech  consumers  no  longer  only  switch  from  vertically 
integrated  incumbents  to  new  suppliers,  but  also  between 
suppliers  to  obtain  the  lowest  price.  The  total  number  of 
switches  in  the  electricity  sector  was  472 000  in  2012 
(from that 382 000 households) and in the gas sector it was 
348 000 (from that 316 000 households).

Consumers  can  access  a  tool  providing  information  on 
electricity  suppliers  on  ERO’s  website79.  Consumers  may 
address  their  complaints,  questions,  and  suggestions  to 
the Consumer Protection Unit operating with ERO. The most 
frequent  subject  of  complaints  concern  unfair  commercial 
practises, switching and billing. Czech law does not define a 
“vulnerable customer”80. The amendment of the Energy Act 
is  currently  under  preparation  and  non-economic  support 
should be foreseen in it.

6.  Infrastructure

The Czech authorities should ensure a proper and timely 
adoption  of  the  measures  stemming  from  the  TEN-E 
Regulation, including the establishment of the one-stop-shop 
for Projects of Common Interest (PCIs) (due by 16 November 
2013),  and  other  measures  foreseen  for  2014  and  2015, 
including  the  publication  of  the  manual  on  the  permit 
granting process for project promoters, and the adoption of 
legislative  and  non-legislative  measures  streamlining  the 
environmental assessment procedures. 

Electricity

The increasing share of renewables in the energy mix of the 
Czech  Republic  and  other  countries  in  the  region,  as  well 
as  the  foreseen  increasing  demand  (up  of  about  200  MW 
per  year  depending  on  scenarios),  call  for  an  ambitious 
investment in the Czech energy infrastructure. 

Several Projects of Common Interest (five in total) being 
developed in the Czech Republic aim to increase capacity at 
the country’s North-Western and Southern borders. Pending 
investments also include the upgrade of the transmission 

network to connect the new and modernised power plants. 
Improvement  of  distribution  infrastructure  is  needed  to 
enable the expansion of dispersed renewables. There is an 
on-going replacement and expansion project for the 400 kV 
grid. It is planned to be completed by 2030, but investment 
is slow and lead times are long.

Gas

In 2012, the GAZELLE gas pipeline was completed to connect 
to  the  OPAL  and  MEGAL  gas  pipelines  that  expand  to  the 
transmission system supplying Germany and France. Also, in 
2012, the interconnector between the Czech and Polish gas 
transmission  systems  (the  STORK  project)  was  completed 
(partly  financed  with  funds  from  the  European  Energy 
Programme  for  Recovery).  The  Czech-Polish  interconnector 
plays an important role in the integration and liberalisation 
of the gas market in the region. Following the implementation 
of reverse flow projects (also co-financed by the EEPR), 
security  of  supply  has  substantially  improved  in  the  Czech 
Republic and Slovakia. A second pipeline between the Czech 
Republic and Poland is already planned to start operation 
end  2018,  with  two  other  projects  with  Austria  planned  to 
come online after 2020 (all these three are PCIs under the 
guidelines for Trans-European energy networks)81.

7.  Security of supply

Electricity

The Czech Republic’s degree of electricity dependence is one 
of  the  lowest  in  the  EU  (25.2%  in  2012)82.  The  generation 
mix is well diversified as the national strategy does not allow 
any single source of energy to provide for more than 65% 
of the total. Abundant domestic coal resources are gradually 
declining. They can be exploited until 2050. The country 
is  a  net  electricity  exporter.  Major  concerns  relate  to  the 
depleting lignite reserves, ageing electricity infrastructure 
and high networks costs which influence the electricity prices 
for end-users.

The  Czech  Republic  is  interconnected  with  the  Austrian, 
German,  Polish  and  Slovak  markets.  The  relatively  high 
interconnection rate is generally positive for Czech security 
of  supply,  but  has  a  downside.  The  Czech  network  suffers 
from  unscheduled  flows  of  power  originating  in  Germany 
(loop flows). 

81   Technical information on Projects of Common Interest 

accompanying the Commission Delegated Regulation (EU)  

77   However the difference is not statistically significant.
78   10th Consumer Markets Scoreboard, http://ec.europa.eu/consumers/

No 1391/2013 of 14 October 2013 amending Regulation (EU) 

347/2013 of the European Parliament and of the Council on 

consumer_evidence/consumer_scoreboards/10_edition/index_en.htm

guidelines for trans-European energy infrastructure as regards 

79   http://kalkulator.eru.cz/
80   ERO, Annual report 2012, July 2013.

the Union list of projects of common interest.

82   Eurostat.

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C Z E C H   R E P U B L I C

Gas

Almost all gas consumed in the Czech Republic is imported 
from Russia (90%) and Norway (9%)83. Security of supply 
is  relatively  robust  and  has  benefited  from  the  new 
interconnectors and reverse flow capabilities on existing 
pipelines being put in place. The contractual gas prices are 
mostly linked to oil products and hard coal. This maintains 
stable prices, but carries financial penalties in case of early 
termination. In this regard, an important precedent was set 
in October 2012 when RWE’s Czech subsidiary succeeded in 
its dispute with Gazprom over gas contracts. The court ruled 
for the first time that a company did not have to pay fines 
under a “take-or-pay” clause84.

C Z E C H   R E P U B L I C   –  K E Y   I N D I C A T O R S

E L E C T R I C I T Y

G A S

Number of companies representing at least 95% 
of net power generation

Number of main power-generation companies

73

1

Number of entities bringing natural gas  
into country

Number of main gas entities

25

1

Market share of the largest power-generation company 78%

Market share of the largest entity bringing natural gas 82.3%

Number of electricity retailers

Number of main electricity retailers

360

3

Number of retailers selling natural gas to final customers

Number of main natural gas retailers

59

11

Switching rates

7.96 (1)

Switching rates for gas (entire retail market)

12.03

Regulated prices for households – electricity 

Regulated prices for non-households – electricity

HHI in power-generation market

HHI in electricity retail market (domestic)

Electricity market value (2) (bn€)

Installed generation capacity (MW)

Peak demand (2012, MW)

Number of smart meters installed

No

No

N/A

N/A

5.001

20 520

11 324

50 000

Regulated prices for households – gas

Regulated prices for non-households – gas

HHI in gas supply market (domestic)

HHI in gas retail market (domestic)

Gas market value (2) (bn€)

No

No

3 358

1 632

2.505

Sources: Eurostat, CEER, National Regulatory Authority, EC calculations.

(1)   ACER/CEER, Annual Report on the Results of Monitoring the Internal Electricity and Natural Gas Markets in 2012, November 2013. 

(2)   Market value is an estimation of the size of the retail electricity and gas markets. It is calculated using data on electricity  

and gas consumption in the household and non-household sectors (average bands) and annual average retail prices.

83   Eurostat.
84   http://ec.europa.eu/energy/observatory/gas/doc/qregam_2012_

quarter2_quarter3.pdf

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Key Issues

 → The energy mix will change significantly due to ambitious policy targets for renewable 
energy (wind power set to account for up to 50% of electricity generation by 2020). 
To  address  this  interconnection  capacities  with  neighbouring  countries  are  being 
developed to maintain a high level of security of supply. 

 → Danish household customers pay one of the highest electricity prices in EU, mainly due to 
a very high level of energy taxes. Compared to electricity prices for industrial consumers 
the price for household customers is three times higher. However, the electricity price 
without taxes for industrial consumers is below the EU-27 average (5% in 2012).

 → Annual domestic gas production was reduced by approximately 10% in 2012. Denmark 
now partly relies on imports through Germany to balance its gas supply and demand. 
Denmark’s security of supply is closely linked to that of Sweden due to the fact that 
the latter is entirely dependent on Denmark. 

 → Regulated  end-user  prices  will  be  phased  out  by  October  2015  (electricity)  and,  based  on 
legislation yet to be proposed, by October 2016 (gas). A bill on a supplier centric model for the 
electricity retail market was adopted in June 2012 and will come into force by October 2015.

1.  General overview 

Gross  energy  consumption  has  decreased  from  20.2  Mtoe 
(2008) to 18.1 Mtoe (2012). In 2012, Denmark relied on crude 
oil and petroleum products (39.0%), renewable energy sources 
(23.3%), natural gas (21.8%) and solid fuels (13.6%)85.

Total  gross  electricity  generation  in  2012  dropped  to 
30.7 TWh85. In 2011, renewable energy sources provided the 
largest share for the first time (40.34%), whereas solid fuels 
were  the  second  most  important  source  (39.77%).  Natural 
gas had a share of 16.48% and crude oil of 1.42%.

F I G U R E S  1   A N D   2

The RES share in gross final energy consumption in Denmark 
reached 26% in 2012 and is expected to rise to more than 
35%  by  2020.  In  spring  2011,  the  Danish  government 
decided to raise the share of renewable power to 50% by 
2020, thus exceeding the European targets. Cogeneration86 
provided  between  40.7%  and  49.2%  of  the  total  energy 
generation between 2008 and 2011.87

Gross inland consumption mix 2008-2012

Gross electricity generation mix 2008-2012

45% 

40% 

35% 

30% 

25% 

20% 

15% 

10% 

5% 

0% 

60% 

50% 

40% 

30% 

20% 

10% 

0% 

2008 

2009 

2010 

2011 

2012 

2008 

2009 

2010 

2011 

2012 

Solid fuels
Renewables

Natural gas
Waste (non-renewable) 

Crude oil and petroleum products

Solid fuels
Renewables

Natural gas
Other

Crude oil and petroleum products

Source: Eurostat

Sources:  EU energy in figures - “Statistical Pocketbooks 2012 and 2013”, 

European Commission

85   Eurostat.

86   The share of electricity produced in combined heat and power plants (CHP).
87   Eurostat.

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2.  Regulatory framework 

General

The Third Energy Package was implemented in national law 
with the adoption of Act no. 466 on 18 May 2011.88

National Energy Regulator

The Danish Energy Regulatory Authority (DERA) was founded 
in 2000 and employs about 50 employees with a budget of 
about EUR 5.56 million in 2012. Compared with 2011 this is 
an increase by more than 10% in staff and budget.89

Unbundling

The TSO for both gas and electricity is Energinet.dk. DERA 
adopted  final  certification  decisions  in  February  2012  in 
accordance  with  the  rules  of  the  ownership  unbundling 
model and making use of the provisions related to separation 
within the state. 

3.  Wholesale Markets 

Electricity

The  largest  electricity  generators  in  Denmark  are  Dong 
Energy and Vattenfall who together account for about 56.7% 
of the total generation capacities. Denmark is part of the 
Nord Pool Spot, a joint energy exchange for the Scandinavian 
countries.  More  than  70%  of the  energy  generated  in  the 
area is traded at Nord Pool Spot. 

an amount of 2 830 mcm was exported. Only a very small 
amount  was  imported  from  Germany.  The  three  important 
export  countries  were  Sweden  (37.84%),  the  Netherlands 
(35.19%) and Germany (26.96%).91

The  Danish  wholesale  market  is  mostly  based  on  bilateral 
trading (OTC trading), but volumes traded at the Danish gas 
exchange (Gas Point Nordic) have by 2014 reached 25%. It 
has  been  possible  to  trade  gas  on  the  gas  exchange  since 
2008. The gas exchange was established in 2007. The 
average prices were EUR 27.98/MWh in 2013, EUR 25.16/MWh  
in 2012 and EUR 23.25/MWh in 2011.

4.  Retail Markets 

Electricity

The electricity market was liberalised in 2003. There are 
currently  33  active  suppliers  in  the  retail  market.  DERA 
recognises that the level of competition needs to improve. In 
2012, 6.7% of the end consumers switched supplier, which 
is an increase on 2011 levels (3.18%), but still low. Since 
2003, all Danish electricity consumers are free to choose 
whether to join the regulated market with regulated prices 
or the liberalised market where prices are not regulated. 
Consumers  above  100 000  kWh,  covering  about  50%  of 
the  retail  market  (in  terms  of  consumption),  are  active  in 
the market, whilst at least until the end of 2012, between 
90 and 95% of electricity consumers had not exercised their 
right to change supplier and remained on default contracts 
with  regulated  prices.  However,  for  most  consumers,  the 
regulated prices will cease by October 2015. 

Denmark is divided into two market areas (Western Denmark 
DK1 and Eastern Denmark DK2). The energy is either traded 
day-ahead or intraday. The total volume traded day-ahead 
was 20.3 TWh in DK1 and 15.3 TWh in DK2 (2012), while the 
volume traded intraday was 0.2 TWh in DK1 and 0.2 TWh in 
DK2 (2012)90. The average price (arithmetic mean) in 2012 
was EUR 36.33/MWh in DK1 and EUR 37.56/MWh in DK2. 

The electricity prices for consumers are frequently updated 
by  DERA  and  published  on  www.elpristavlen.dk  where  both 
fixed and variable prices are shown. The prices did not rise 
between  the  first  half  of  2012  and  the  first  half  of  2013, 
remaining  constant  at  EUR  0.3/kWh,  which  is  the  highest 
electricity  price  within  the  EU  and  primarily  caused  by  the 
highest level of taxes and levies including VAT (56.7%).92

The Danish electricity wholesale market is part of the day-
ahead  market  coupling  project  which  began  operation  in 
February 2014.

Gas

The  annual  gas  production  for  2012  in  Denmark  was 
5 455 mcm, production decreased by about 10% compared 
with  2011.  The  gas  consumption  was  at  3 696  mcm  while 

In 2013, the Danish Energy Agency issued a new regulation 
securing  the  full  roll-out  of  smart  meters  in  Denmark  by 
2020.  Large  scale  replacement  of  existing  meters  began 
in 2010/2011  and  currently more than 50%  of consumers 
have smart meters. There are already 1.63 million metering 
points where a smart meter is installed following a voluntary 
roll-out led by the distribution system operators (DSOs), and 
the remaining 1.38 million will be also equipped following a 
positive cost-benefit analysis.

88   DERA – Results and Challenges, http://energitilsynet.dk/fileadmin/
Filer/Information/Resultater_og_udfordringer/Aarsrapport2011_

eng/helepubl.htm#kap07

91   www.ens.dk/en/info/facts-figures/energy-statistics-indicators-

89   http://energitilsynet.dk/tool-menu/english/secretariat/
90   All values based on the bought quantities.

energy-efficiency/annual-energy-statistics

92   Eurostat.

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D E N M A R K

F I G U R E S  3   A N D   4

Electricity price change by component 2008-2013 (in € cent/kWh)

Natural gas price change by component 2008-2012 (in € cent/kWh)

H O U S E H O L D S

I N D U S T R Y

H O U S E H O L D S

I N D U S T R Y

35 

30 

25 

20 

15 

10 

5 

0 

12 

10 

8 

6 

4 

2 

0 

2008

2013

2008

2013

2008

2012

2008

2012

Taxes+Levies 

Networks

Energy+Supply

Taxes+Levies 

Networks

Energy+Supply

Source: Eurostat

Sources: EC, EPCR metadata

On 1 October 2015, the electricity retail market will change 
to  a  supplier  centric  system,  where  electricity  suppliers 
buy  grid  services  on  a  wholesale  basis,  and  sell  “delivered 
electricity”  to  consumers.  By  the  same  date,  regulated 
prices will cease for almost all consumers. The suppliers of 
electricity will become the primary contact for consumers. 
This  should  make  bills  easier  to  read  as  there  will  only  be 
one  price  for  electricity  covering  both  energy  consumption 
and transmission costs. Due to this simplification consumers 
may be encouraged to become more active. One important 
initiative to boost the competitiveness of the retail market 
is  the  so-called  ‘datahub’,  a  data  platform  developed 
and  managed  by  the  ownership-unbundled  Danish  TSO, 
Energinet.dk,  which  simplifies  the  extensive  data  traffic 
between  the  players  in  the  Danish  electricity  market  and 
makes it easier for electricity consumers to change supplier 
and to access their own consumption data. The datahub has 
been operational since March 2013. 

Gas

The  gas  market  was  liberalised  in  2004.  In  2012,  a  total 
number of 14 retail suppliers were active in the market. On 
average the Danish customer is able to choose between at 
least 12 different suppliers. In 2012, 7.7% of end-consumers 
switched supplier. The retail market concentration is relatively 
high with a Herfindahl-Hirschman Index (HHI) of 3 648 in 
201393.  Customers  are  able  to  choose  between  regulated 
and  unregulated  prices.  However,  at  least  until  the  end  of 
2012, the vast majority of smaller gas consumers had not 
exercised their right to change supplier and remained on 

default contracts with regulated prices. For most consumers, 
regulated prices will cease by October 2016. The majority 
of small scale customers are not active in the unregulated 
market  segment,  whilst  large  scale  consumers  are.  The 
prices for consumers are monitored by DERA and published 
on  www.gasprisguiden.dk.  The  average  natural  gas  price 
for  households  was  EUR  13.82/GJ  in  2013,  decreasing 
constantly in the last two years (2011: EUR 16.47/GJ). The 
average price for industrial consumers was at EUR 10.74/GJ  
in  2013  which  is  an  increase  of  4.51%  compared  to  the 
previous year.94

At the moment there are no plans to implement smart gas 
meters on a large scale.

5.  Consumers 

Danish  consumers  rate  the  performance  of  their  retail 
e l e c t r i c i t y   a n d   g a s   m a r k e t   a b ov e   t h e   E U   a v e r a g e 
(75.4 points compared to 72.0 and 77.0 compared to 74.195), 
corresponding  to  12th  and  9th  place  EU-wide,  respectively. 
The gas market also ranks above the average of all domestic 
services markets (12th place out of 31), while the electricity 
market scores just below the average (17th place). The 
incidence  of  problems  is  the  second  lowest  for  electricity 
and lowest for gas in the EU. Both markets score high on 
trust in providers and overall satisfaction (2nd and 3rd highest 
in the EU in the case of gas market). On the other hand, 
comparability is amongst the lowest rated in the EU, (lowest 
for the gas market and 5th lowest for electricity)96.

93   DERA, figures for 2013 (based on volumes).

edition/index_en.htm 

94   Eurostat.
95   However the difference is not statistically significant.
96   10th Consumer Markets Scoreboard, http://ec.europa.eu/

consumers/consumer_evidence/consumer_scoreboards/10_

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D E N M A R K

There  are  no  specific  provisions  regarding  vulnerable 
consumers in energy law; instead this issue is dealt with in 
social legislation.

Denmark  is  one  of  very  few  countries  to  protect  energy 
consumers in remote areas.97

6.  Infrastructure 

The  Danish  authorities  should  ensure  a  proper  and  timely 
adoption  of  the  measures  stemming  from  Regulation 
347/2013  on  the  trans-European  energy  infrastructure, 
including the establishment of the one-stop-shop for Projects 
of Common Interest, PCIs (due by 16 November 2013), and 
other measures foreseen for 2014 and 2015, including the 
publication  of  the  manual  on  the  permit  granting  process 
for project promoters, and the adoption of legislative and 
non-legislative measures streamlining the environmental 
assessment procedures.

Electricity

The  highly  ambitious  goals  for  the  Danish  energy  policy 
to  meet  all  energy  demand  by  renewables  by  2050  are  a 
challenge to the electricity transmission system. Hence, 
Denmark  is  enhancing  its  electricity  interconnections  with 
neighbouring countries i.e. Germany and the Netherlands 
and strengthening or expanding existing interconnectors. 
Some  of  these  projects  are  long-term  with  commissioning 
dates foreseen for years 2018 – 2022.

phase of expansion of the transport capacity in the Northern 
part  of  Germany  is  completed  and  the  next  phase  of  the 
expansion  is  planned  to  come  into  operation  in  October 
2015.  The  expansion  of  the  cross-border  connection  will 
allow  Denmark  (and  Sweden)  to  increase  imports  of  gas 
from  Germany  in  order  to  compensate  for  the  decreasing 
Danish North Sea production. The bi-directional flow on this 
interconnection  allows  Denmark  to  export  gas  to  Germany 
during  the  summer  time  and  import  gas  from  Germany 
during winter time, where gas consumption in Denmark (and 
Sweden)  is  high  due  to  need  for  gas  for  heating  purposes. 
The German part of the expansion of the gas system is part 
of the list of PCIs.

7.  Security of supply

Electricity

ENTSO-E  predicts  power  imbalances  from  winter  2016, 
mainly  caused  by  the  ambitious  targets  for  renewable 
energy.  However  ENTSO-E’s  calculations  do  not  take  into 
account  that  Germany  is  phasing  out  its  nuclear  power 
plants. Nevertheless, the Danish grid has been very reliable 
in  the  past.  To  maintain  this  high  level,  Energinet.dk  is 
extending its electricity infrastructure with the surrounding 
countries  to  avoid  becoming  dependent  on  the  capacity  of 
a  single  country.  In  2013,  Energinet.dk  and  National  Grid 
signed a cooperation agreement to consider the feasibility of 
an electricity interconnector between Denmark and the UK.

Gas

Gas

As  a  result  of  the  gradual  depletion  of  the  Danish  gas 
production in the North Sea, Denmark (and Sweden) require 
access to new gas resources. 

The expansion of the gas infrastructure in the Southern part 
of Jutland was completed in October 2013. The expansion 
includes  establishment  of  a  new  compressor  station  at 
Egtved  and  looping  of  the  existing  transmission  pipeline 
from  the  German  border  to  Egtved.  Furthermore,  the  first 

Denmark implemented the requirements of the Regulation 
(EU) No 994/2010 in October 2012, including an Emergency 
Plan for the Danish gas transmission system. The expansion 
of  the  gas  transmission  system  towards  Germany  will 
ensure  increase  in  import  capacity  from  Germany  in  order 
to  supplement  gas  supplies  from  the  Danish  North  Sea  as 
the production is foreseen to decrease in forthcoming years. 
However,  the  new  Hejre  gas  field  is  expected  to  come  on 
stream in 2016/2017 and will increase the production in the 
North Sea.

97   The European Commission Vulnerable Consumer Working Group 
Guidance Document on Vulnerable Consumers, November 2013.

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D E N M A R K   –  K E Y   I N D I C A T O R S

E L E C T R I C I T Y

G A S

Number of companies representing at least 95%  
of net power generation

~1300

Number of entities bringing natural gas  
into country

Number of main power-generation companies

2

Number of main gas entities

N/A

N/A

Market share of the largest power-generation company 37%

Market share of the largest entity bringing natural gas N/A

Number of electricity retailers

Number of main electricity retailers

Switching rates (entire electricity retail market)

Regulated prices for households – electricity 

Regulated prices for non-households – electricity

HHI in power-generation market

HHI in electricity retail market

Electricity market value (2) (bn€)

Installed generation capacity (MW, 2011)

National instantaneous peak load (MW) 

Number of smart meters installed

55

N/A

6.7%

partly

partly

N/A

N/A

5.053

13 580 

6 169

N/A

Number of retailers selling natural gas to final customers

Number of main natural gas retailers

Switching rates for gas (entire retail market)

Regulated prices for households – gas

Regulated prices for non-households – gas

HHI in gas supply market

HHI in gas retail market

Gas market value (2) (bn€)

14

N/A

0.9%

partly

partly

N/A

3 648 (1)

1.514

Sources: Eurostat, CEER, National Regulatory Authority, EC calculations.

(1)   DERA, figures for 2013 (based on volumes).

(2)   Market value is an estimation of the size of the retail electricity and gas markets. It is calculated using data on electricity  

and gas consumption in the household and non-household sectors (average bands) and annual average retail prices.

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Key issues

 → High volumes of renewables have changed the way the electricity market in Germany 
operates. In 2012 direct marketing increased, in particular in onshore wind, due to a 
change of the Renewable Energy Sources Act (EEG). A major review of the EEG is now 
underway and a revised law entered into force on 1 August 2014. It is expected to have 
strong impact on the future costs, expansion and market integration of renewables in 
Germany. It is of central importance that the revised law ensures that as of certain 
thresholds  all  new  beneficiaries  of  the  RES  support  scheme  will  have  to  sell  their 
electricity directly in the market and will be subject to balancing obligations. 

 → In general, the coordination of the energy policy with neighbouring countries should 
further  improve,  also  in  order  to  keep  the  overall  costs  of  transforming  the  energy 
system  to  a  minimum,  in  particular  by  reviewing  the  cost-effectiveness  of  energy 
policy instruments designed to achieve the renewable energy targets and by continuing 
efforts to accelerate the expansion of the national and cross-border electricity and gas 
networks.  Recent  efforts  of  the  German  administration  to  coordinate  reflections  on 
future policy developments with neighbouring countries are very welcome.

 → Network development is slower than planned. Further efforts on both intra-German 
infrastructure and cross-border interconnections are needed to better synchronise 
intermittent renewables expansion with grid development and avoid congestion 
and unscheduled flows towards the networks of neighbouring countries.

1.  General overview

Gross  energy  consumption  in  2012  (319.5  Mtoe)  was 
based largely on crude oil and petroleum products (33.9%), 
solid fuels (25.2%), and natural gas (21.3%). The share 
of  renewable  energy  sources  (RES)  in  overall  energy 
consumption (10.3%) has constantly increased over the last 
years  and  surpassed  the  share  of  nuclear  energy  in  2011 
which decreased over the same period to 8.0%.98

F I G U R E S  1   A N D   2

The gross electricity generation in 2011 was 608.9 TWh. The 
biggest share in the generation mix came from solid fuels 
(43.1%). RES became the second most important production 
technology (21.2%) followed by nuclear (17.7%) and natural 
gas (15.3%).99 In 2011 the German Parliament decided to 
phase-out  nuclear  power  generation  by  2022.  Eight  of  the 
17  nuclear power generation units have already been shut 
down, while the remaining power stations will close by 2022 
in a defined order from 2015 onwards.

Gross inland consumption mix 2008-2012

Gross electricity generation mix 2008-2012

40% 

35% 

30% 

25% 

20% 

15% 

10% 

5% 

0% 

50% 

45% 

40% 

35% 

30% 

25% 

20% 

15% 

10% 

5% 

0% 

2008 

2009 

2010 

2011 

2012 

2008 

2009 

2010 

2011 

2012 

Solid fuels
Nuclear

Natural gas
Renewables

Crude oil and petroleum products
Other

Solid fuels
Nuclear

Natural gas
Renewables

Crude oil and petroleum products
Other

Source: Eurostat

Sources:  EU energy in figures - “Statistical Pocketbooks 2012 and 2013”, 

European Commission

98   Eurostat.

99   Eurostat.

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The  German  RES  target  under  the  Renewable  Energy 
Directive 2009/28/EC, defined as the percentage of energy 
from renewable sources in total gross final consumption 
of energy, stands at 18% by 2020 which is 5.7 percentage 
points  above  the  level  of  2012.  The  National  Renewable 
Energy Action Plan expects a share of 19.6% by 2020.

2.  Regulatory framework

General

The German energy law was amended following the nuclear 
moratorium in 2011 and the associated substantial changes 
of location of generation. Power plants must now announce 
their shutdown one year in advance and electricity TSOs 
can intervene to this shutdown in case there is a technical 
necessity  of  the  particular  plant  in  terms  of  network 
stability. TSOs are now obliged to analyse reliable available 
generation capacity, its development with a view to the next 
winter  period  as  well  as  the  five  following  years,  and  the 
potentially necessary reserve capacity. 

The support schemes for renewable energies (notably 
solar  PV,  onshore  and  offshore  wind)  have  been  reviewed 
by  recent  legislation.  One  major  element  of  the  amended 
EEG is the gradual introduction of an obligation for all new 
RES producers covered by the support scheme to sell their 
electricity directly on the market. From 1 August 2014, this 
applies  as  of  500  kW  generation  capacity,  which  will  be 
lowered  to  100  kW  on  1  January  2016.  Further,  the  new 
legislation foresees planning corridors for the development 
of different technologies for renewable generation capacities. 
A further important element is the gradual introduction until 
2017 of competitive tenders for renewable support, a part 
of which will also be open for operators established in other 
EU Member States. 

On 18 December 2013 the Commission adopted an opening 
decision on the EEG to examine whether the German RES 
support  scheme  and  in  particular  the  surcharge  reduction 
granted to energy-intensive industries is compatible with EU 
state aid rules. On 23  July 2014 the Commission declared 
the  aid  to  be  compatible,  taking  into  account  the  recent 
amendments. 

National Energy Regulator

The German Federal Network Agency for Electricity, Gas 
Telecommunications, Posts and Railways (Bundesnetzagentur) 
was set up in 1998. Bundesnetzagentur is a separate higher 
federal authority within the Federal Ministry of Economics and 
Energy.  In  2012  BNetzA  employed  2 324  employees  (FTEs) 
and had a budget of EUR 181.2 million (ca. EUR 24 million 
thereof for energy regulation). Since 2011, the BNetzA has 
taken on additional duties relating to network development 
so as to accelerate the expansion of the extra-high voltage 
electricity  networks,  via  efficient  planning  and  approval 
procedures. 

G E R M A N Y

Unbundling

There are four onshore electricity transmission system 
operators  (TSO)  and  15  gas  TSOs  which  have  filed 
certification requests. Three of the four onshore electricity 
TSOs  have  received  the  certification  while  one  application 
was rejected for the time being, due to insufficient financial 
resources,  against  the  opinion  of  the  Commission.  For  an 
offshore electricity TSO (the Baltic Cable), BNetzA opened ex 
officio  certification  procedures  and,  in  accordance  with  the 
Commission Opinion, refused certification as no information 
had been provided by the TSO. 

Local networks are largely still integrated on the basis of 
an  exemption  from  the  statutory  provisions  on  legal  and 
operational separation of network and retail businesses that 
applies to distribution system operators (DSO) with less than 
100 000 connected customers. About 90% of the electricity 
and 95% of the gas DSOs fall under this “de minimis rule”. 

3.  Wholesale Markets

Electricity

In the generation market (electricity not eligible for payments 
under the Renewable Energy Sources Act) the four main power 
generation companies (E.ON, RWE, EnBW and Vattenfall) had a 
market share of 76% of installed capacity (81.4 GW) in 2012. 
The  aggregated  net  generation  volume  of  the  four  biggest 
companies  (332.8  TWh)  in  relation  to  the  net  generation 
volume (426.2  TWh)  that was fed  into the  grids of  public 
supply resulted in a market share of 78%. In this calculation 
only  generation  capacities  were  taken  into  account  that  fed 
into the grids of public supply and that were not remunerated 
according to the Renewable Energy Sources Act.100

There are two power exchanges in Germany: EPEX SPOT for 
day-ahead  and  intraday  markets  and  EEX  for  any  forward 
products. The volume traded (245.3  TWh) at day ahead 
market increased by 10% in 2012. Prices decreased for peak 
load  by  15%  (EUR  48.51/MWh)  and  for  base  load  by  17% 
(EUR 42.6/MWh) at spot markets. 

Energy  directly  sold  from  renewable  sources,  particularly 
onshore  wind,  increased  by  more  than  400%  (51 163  GWh) 
in  2012  following  an  amendment  of  the  EEG  allowing  RES 
operators to choose among three forms of direct marketing: 
Direct  marketing  for  the  purpose  of  claiming  a  market 
premium,  direct  marketing  for  the  purpose  of  an  electricity 
supplier reducing the EEG surcharge, or other direct marketing. 

The number of traders active on the different markets further 
increased to a total of 363 (EPEX Spot 194, and EEX 169).

100   BNetzA, Monitoring Report, 2013.

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G E R M A N Y

As of February 2014 Germany coupled its day-ahead market 
with  other  North  West  European  markets.  Germany  is  also 
part  of  the  market  coupling  project  for  intraday  market  of 
these markets plus Austria and Switzerland. In the market-
coupled area, prices started to realign in the second quarter 
of  2013,  after  significant  price  divergences  observed  in 
earlier periods.  

Gas

Gas production in Germany further declined in 2012 by 9.7% 
to 10.7 bcm and imports increased by 8.78% to 1 535 TWh 
in 2012. The imported volumes primarily came from Russia 
(about 45%), the Netherlands (26.5%), and Norway (25.9%). 
Exports (667.3 TWh) increased by 29.12% and were mainly 
directed  to  Czech  Republic,  France,  the  Netherlands  and 
Switzerland. 

While the German gas market was initially fragmented into 
more than 20  market areas, there now remain only two 
market  areas:  Net  Connect  Germany  (NCG)  and  GasPool. 
There  is  one  German  gas  exchange  EGEX  (European  Gas 
Exchange GmbH). Trading activities strengthened on both 
OTC and exchange markets, with OTC (trading volume 2012 
was 2 460  TWh) remaining the preferred market. The daily 
average reference price over both market areas rose by almost 
10% (NCG: EUR 25.19/MWh and GasPool EUR  25.11/MWh).  
This  increase  was  caused  partly  by  temporary  bottlenecks 
in the gas supply in February 2012, when prices increased 
up  to  EUR  40/MWh.  The  daily  average  cross  border  price 
was EUR 29/MWh (+12.6%) and the gas forward price was 
EUR 24.66/MWh (+4.8%) at the EEX in 2012. 

While  the  three  largest  importers  increased  their  market 
share by 11.4 percentage points (to 67.2%), the total share 
of the five largest companies fell by 11.1 percentage points 
(to 80.3% in 2012). 

Germany  has  suffered  from  contractual  congestion  in  the 
past, but booking levels have recently decreased due to the 
cancellation of contracts. According to ACER’s Annual Report 
on Congestion101 contractual congestion remains high, mainly 
at Germany’s border connections with the Netherlands. It 
therefore remains important that Germany cooperates with 
neighbouring  countries  to  ensure  effective  implementation 
of  congestion  management  regimes  on  its  interconnection 
points in accordance with EU law102.

4.  Retail Markets

Electricity

With an HHI of 2 021 the German electricity market is 
reasonably competitive even though the four largest supply 
companies increased their market share by 3.3 percentage 
points to about 45.5% (228.1 TWh). 

Despite  a  clear  downward  drift  of  wholesale  prices  on  the 
spot and forward markets, the retail prices for households 
significantly increased on average (+12.3%) in 2013. Electricity 
retail prices in Germany rank among the highest in Europe. 
On the one hand, this can be attributed to the fact that the 
cost of expanding the share of renewable energy is borne 
by final consumers. On the other hand, the legislator put in 
place taxes and fees on energy consumption to incentivise 
rational  use  of  energy  and  internalise  externalities.  Taxes 
(electricity  and  VAT)  have  been  stable  for  a  long  time  and 
add up to a share of 22.9% and total levies to around 26.1%. 

Despite  some  measures  taken  to  limit  the  increase  of  the 
EEG-surcharge,  the  financing  costs  amounted  in  total  to 
EUR 19.4 billion in 2013. 

In 2012, electricity customers were able to choose among a 
large number of suppliers. Household customers were able 
to  choose  between  72  suppliers  on  average  (2011:  65).  In 
2012, 7.8% of household customers and 11.3% of industrial 
customers  switched  supplier  in  terms  of  consumption 
volumes.  In  the  entire  retail  market  over  2.8  million 
customers switched their supplier, leading to a switching 
rate of 10.4% of the total volume.

In  response  to  the  Commission’s  procedure  challenging 
the  exemption  by  law  of  industrial  users  from  network 
charges103,  Germany  has  adopted  legislative  changes  to 
reduce the number of beneficiaries. A revised law on feed-in 
tariffs intends to help keeping energy prices for consumers 
stable in the next years. 

Gas

The emitted gas volume to final consumers (including gas-
fired  power  plants)  increased  by  5%  in  2012  (815.4  TWh) 
driven  by  an  increase  in  household  consumption  (+10%) 
during the very long and cold winter 2012/13. The three 

101   http://www.acer.europa.eu/Official_documents/Acts_of_

the_Agency/Publication/ACER%20Gas%20Contractual%20

Congestion%20Report%202014.pdf

102   Commission Decision 2012/490/EU of 24 August 2012 

103   A formal investigation procedure under state aid provisions  

regarding congestion management guidelines on amending 

was initiated on 6 March 2013. In parallel, contacts  

Annex I to Regulation (EC) No 715/2009 of the European 

with national authorities have been established to analyse  

Parliament and of the Council on conditions for access to  

the compliance of the exemption provisions with internal 

the natural gas transmission networks, OJ (2012) L 231.

energy market legislation.

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G E R M A N Y

F I G U R E S  3   A N D   4

Electricity price change by component 2008-2013 (in € cent/kWh)

Natural gas price change by component 2008-2012 (in € cent/kWh)

H O U S E H O L D S

I N D U S T R Y

H O U S E H O L D S

I N D U S T R Y

35 

30 

25 

20 

15 

10 

5 

0 

8 

7 

6 

5 

4 

3 

2 

1 

0 

2008

2013

2008

2013

2008

2012

2008

2012

Taxes+Levies 

Networks

Energy+Supply

Taxes+Levies 

Networks

Energy+Supply

Source: Eurostat

Sources: EC, EPCR metadata

largest  companies  have  a  market  share  of  only  28.5%. 
Diversification improved further such that in almost 86% of 
the  network  areas  consumers  can  choose  among  at  least 
31 different gas suppliers. 

However,  the  number  of  customers  who  switched  their 
supplier  declined,  especially  for  small  consumers.  In  2012, 
7.92% of household customers and 13.38% of industrial 
customers  switched  supplier  in  terms  of  consumption 
volumes.  In  terms  of  all  final  consumers,  the  consumption 
volumes-based supplier change rate was 10.68%. This is a 
decrease of 18% compared to 2011104.

5.  Consumers

German  consumers  consider  their  electricity  and  gas  retail 
markets  as  above  the  EU  average  (81.4  and  77.4  points 
compared  to  72.0  and  74.1,  respectively),  ranking  1st  and 
8th among EU countries. However, while the electricity market  
has seen a consistent increase in score since 2010, the gas 
market  has  slightly  decreased  its  performance  between 
2012 and 2013, reversing the positive trend observed since 
2010105. Both markets score better than the EU average on 
all  the  components  with  the  exception  of  actual  switching. 
Electricity  market  scores  highest  among  EU  countries  on 
trust  in  providers  and  and  ease  of  switching,  2nd  highest 
on  comparability  and  4th  highest  on  choice  while  the 
incidence of complaints is second lowest in the EU. For gas 
services,  Germany  scores  among  the  best  EU  countries  for 
comparability and choice (5th place). At the same time, only 
around 6% of electricity and gas consumers have switched 
their provider or tariff with the existing provider in the past 

12  months,  which  is  in  both  cases  around  half  of  the  EU 
average.106

In  line  with  the  provisions  of  the  Third  Energy  Package, 
consumer  protection  rights  have  been  strengthened  by 
the  shortening  of  the  supplier  exchange  process  and  by 
establishing  new  standards  for  contracts,  information  and 
financial  reporting  by  suppliers.  BNetzA  has  been  assigned 
the role of central information centre for energy consumers. 
Energy  consumers  now  have  the  right  to  file  complaints 
against  their  supplier.  In  2012  the  consumer  service  of  the 
BNetzA  recorded  a  total  of  22 112  incidents  (electricity 
19 771 and gas 2 341) of which a significant portion focused 
on  inconsistencies  in  the  energy  bill.  Furthermore  a  new 
arbitration body, the “Schlichtungsstelle Energie e.V.”, was 
founded  to  provide  consumers  with  additional  cost-free 
extrajudicial resolution with regard to their electricity and 
natural gas suppliers as well as distribution system operators.

6.  Infrastructure

BNetzA was designated as the “one stop shop” for permitting 
procedures for electricity Projects of Common Interest (PCI), 
while for gas the designation has not yet been communicated.

Electricity

In  2012  the  four  TSOs  spent  EUR  1.15  billion  on  network 
infrastructure which is an increase of investment volume of 
36% mostly due to the energy transition. The expansion of the 
electricity transmission network has been advancing slower 
than planned. By July 2014, about 416 of 1 877 kilometres 

104   BNetzA, Monitoring Report, 2013.
105   The electricity market increased its performance by 2.2 points 
while gas has seen a 1.6 decrease between 2012 and 2013.

106   10th Consumer Markets Scoreboard, http://ec.europa.eu/

consumers/consumer_evidence/consumer_scoreboards/10_

edition/index_en.htm

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G E R M A N Y

(22%) of the projects listed since 2009 in the Electricity Grid 
Expansion  Act  (EnLAG)  were  realised.  TSOs  now  expect  to 
finish 40% of the projects by 2016, 10% less than what had 
been expected still in early 2014.107 Network development is 
clearly behind schedule and subject to increasing resistance, 
including  on  the  level  of  regional  governments.  In  2012, 
BNetzA approved about 2 800 km new lines and 2 900 km of 
network enhancements beyond the EnLAG. 

With  the  adoption  of  the  Federal  Requirements  Plan  Act 
(Bundesbedarfsplangesetz)  in  2013,  further  efforts  have 
been  made  to  commonly  agree  upon  and  realise  the  most 
crucial  and  urgently  needed  transmission  infrastructure 
projects.  It  however  remains  to  be  seen,  and  becomes 
increasingly doubtful in view of delays, whether the actual 
speed  of  network  infrastructure  construction  is  sufficient. 
Some  projects  included  in  the  Bundesbedarfsplan  are 
also  labelled  as  projects  of  common  interest  as  they  are 
particularly  important  from  the  European  perspective. 
In  total  20  electricity  PCIs  are  located  in  Germany.  Most 
urgently, lines from the North to the South of Germany are 
needed  to  eliminate  internal  bottlenecks  and  help  avoid 
unscheduled “loop flows” which are currently congesting the 
borders with Germany’s neighbours. Also, cross-border lines 
with  neighbouring  countries  will  increase  interconnection 
capacity  and  ensure  that  electricity  flows  where  it  is  most 
valued. 

Gas

The  German  Energy  Act  requires  the  gas  TSOs  to  jointly 
prepare  a  National  Development  Plan  (NDP)  Gas  on  an 
annual basis. The current NDP will lead to new pipelines with 
a total length of 522 km and new or extended compressors 
with a total capacity of 344 MW. Most of these measures are 
important for the transport of gas from North to South. They 
are also important to help to relieve critical situations in the 
supply of gas down to the distribution systems, especially in 
southern Germany. Furthermore, capacities at cross-border 
points will be enhanced. For the first time, the NDP Gas also 
focuses on decreasing L gas volumes, in particular in the 
Netherlands, and identifies specific grid areas for conversion 
to H gas. 

7.  Security of supply

Electricity

Bundesnetzagentur  has  prepared  a  series  of  reports108 
assessing security of electricity supply in order to establish 
the need for reserve capacity during the winter period. The 
aim  of  maintaining  reserve  capacity  is  to  provide  relief 
when critical situations arise in the transmission network as 
a  result  of  the  increase  in  energy  from  renewable  sources 
and  conventional  plant  shutdowns.  Network  operators 
contracted  2.6  MW  of  reserve  capacities  for  the  winter  of 
2012/2013.  In  addition  to  this,  TSOs  can  use  generation 
units  nominated  for  decommissioning  if  they  define  these 
units  as  systemically  relevant  entities.  The  owner  of  such 
reserve capacities is then compensated for costs of keeping 
the unit available and generating the required power. Until 
now five of such nominated generation units with a total net 
capacity of 668 MW were defined as systemically relevant. 
Finally, TSOs may intervene into generation dispatch plans in 
order to stabilize the system. System interruption is still at a 
low level of 15.91 minutes in 2012. 

In  respect  of  the  national  balance  between  demand  and 
supply, ENTSO-E calculated a negative reserve margin of 
-0.6%  for  Germany  for  the  winter  of  2012/2013  which 
indicates  that  national  demand  of  electricity  could  be 
higher than available generation capacities. Germany may 
therefore need to rely on imports in certain situations.

In 2012, total electricity demand remained almost constant 
whilst  the  total  volume  of  traded  electricity  across  the 
border  increased  by  7.7%  (79.7  TWh).  The  net  export 
increased significantly, by 700% to 21.7 TWh (2011 imports: 
35.5 TWh and exports 38.4 TWh), so that Germany became 
a  net  exporter  of  power.  The  cross-border  trading  volume 
of electricity increased from 74  TWh in 2011 to 79.7  TWh 
in 2012, of which 50.7  TWh were exported and 29  TWh 
imported. The biggest change occurred in the export between 
Germany and the Netherlands which more than doubled and 
the imports from France which dropped by almost one third. 

Gas

The  average  interruption  duration  in  gas  was  constantly 
on  a  low  level  in  2012  (1.91  minutes).  During  gas  year 
2011/2012 capacities have been shifted from entry to exit 
in parallel to significant sign offs of booked capacities after 
price increases. Given the total volume of 2.69  billion  kWh 
transported, only 0.05% of the nominated quantities of gas 
were interrupted in the gas year 2011/2012.

107   http://www.netzausbau.de/cln_1422/DE/Vorhaben/EnLAG-

Versorgungssicherheit/Berichte_Fallanalysen/berichte_

Vorhaben/EnLAGVorhaben-node.html

fallanalysen-node.html#doc266870bodyText3

108   http://www.bundesnetzagentur.de/cln_1912/DE/Sachgebiete/

ElektrizitaetundGas/Unternehmen_Institutionen/

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G E R M A N Y

G E R M A N Y   –  K E Y   I N D I C A T O R S

E L E C T R I C I T Y

G A S

Number of companies representing at least 95% 
of net power generation

Number of main power-generation companies

>450

4

Number of entities bringing natural gas  
into country

Number of main gas entities

38

3

Market share of the largest power-generation company N/A

Market share of the largest entity bringing natural 
gas into country

30.1%

Number of electricity retailers

>1 000

Number of retailers selling natural gas to final customers 851

Number of main electricity retailers

4

Number of main natural gas retailers

3

Switching rates (entire electricity retail market)

10.4% (1)

Switching rates for gas (entire retail market)

10.68% (2)

Regulated prices for households – electricity 

Regulated prices for non-households – electricity

HHI in power-generation market

HHI in electricity retail market

Electricity market value (3) (bn€)

Installed generation capacity (MW) 

National instantaneous peak load (MW) (2012)

Number of smart meters installed

No

No

2 021

n/a

Regulated prices for households – gas

Regulated prices for non-households – gas

HHI in gas supply market

HHI in gas retail market

74.906

Gas market value (3) (bn€)

No

No

1 886

300

27.511

171 681 

81 858

N/A

Sources: Eurostat, CEER, National Regulatory Authority, EC calculations.

(1)   In terms of volume of the entire electricity retail market 2012. The switching rate in terms of metering points was at 5.8%.

(2)   In terms of volume of the entire gas retail market 2012. The switching rate in terms of metering points stood at 7.59%.

(3)   Market value is an estimation of the size of the retail electricity and gas markets. It is calculated using data on electricity  

and gas consumption in the household and non-household sectors (average bands) and annual average retail prices.

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Key issues

 → Following the successful establishment of the power grid connection Estlink2 − the 
second  electricity  interconnection  with  Finland  –  in  March  2014,  cooperation  with 
Latvia (and Lithuania) on making available increased interconnection capacity – both 
through better use of existing capacity and by building a new interconnector – must 
now be accelerated with a view to improve electricity wholesale market functioning in 
the wider Baltic area.

 → Estonia’s gas market remains isolated from the rest of Europe. Estonia should increase 
efforts to diversify its gas supplies, primarily through a regional Baltic LNG terminal 
and the construction of the BalticConnector. Preparations should also be made to 
the law to legally lay down the rules applicable after the end of this isolation 
and the related exemption from market opening.

A

I

N
O
T
S
E

1.  General overview

F I G U R E S  1   A N D   2

The  Estonian  national  gross  energy  consumption  in  2012 
was  6.13  Mtoe109.  It  was  based  largely  on  solid  fuels 
(shale  oil),  less  notable  was  crude  oil,  petroleum  products 
and  natural  gas,  while  the  share  of  renewables  in  gross 
final  energy  consumption  in  2012  amounted  to  25.2%109. 
According to Eurostat, the renewables share between 2008 
and 2012 grew from 19.0% to 25.2% accordingly. The 
Estonian renewables target for 2020 is 25%.

In  2012,  the  total  power  generation  was  1 967  GWh109,  a 
significant part of it was derived from solid fuels (81%). 
Renewables and natural gas took smaller parts, respectively 
12.3%109  and  1.0%.  Renewables  increased  from  2.1%  to 
12.3% (between 2008 and 2011). In 2012, the increase in 
Estonia’s electricity demand was higher than in the rest of 
the EU countries – 8.7% (in comparison to 2011 level)110.

Cogeneration111  represented  9.75%  of  gross  electricity 
generation  in  2011109.  In  2012,  the  total  import  and 
consumption  of  natural  gas  in  Estonia  amounted  to 
0.545  Mtoe109.  Estonia  has  cross-border  natural  gas 
connections  with  Russia  and  Latvia  only,  and  Russia  (OAO 
Gazprom)  is  the  sole  supplier  of  gas  to  all  three  Baltic 
countries.

Gross inland consumption mix 2008-2012

70% 

60% 

50% 

40% 

30% 

20% 

10% 

0% 

2008 

2009 

2010 

2011 

2012 

Solid fuels
Nuclear

Natural gas
Renewables

Crude oil and petroleum products
Other

Source: Eurostat

Gross electricity generation mix 2008-2012

100% 

90% 

80% 

70% 

60% 

50% 

40% 

30% 

20% 

10% 

0% 

109   Eurostat.
110   ACER/CEER, Annual Report on the Results of Monitoring  

the Internal Electricity and Natural Gas Markets in 2012,  

November 2013.

111   The share of electricity produced in combined heat  

and power plants (CHP).

2008 

2009 

2010 

2011 

2012 

Solid fuels
Renewables

Crude oil and petroleum products
Natural gas

Sources:  EU energy in figures - “Statistical Pocketbooks 2012 and 2013”, 

European Commission

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E S T O N I A

2.  Regulatory framework

General

Estonia transposed fully the Third Energy Package Gas 
Directive  in  April  2014.  In  2014,  additional  amendments 
will be enforced both in the Electricity Market Act and in the 
Natural Gas Market Act, which harmonise other requirements 
arising from the transposition of the Third Package into the 
Estonian legislation112.

National Energy Regulator

The Estonian Competition Authority (ECA) acts as the 
regulator for several sectors. It employs 61 staff members 
(of which 21 work on energy issues) with an annual budget 
of  almost  EUR  1.83  million  in  2012113.  The  Commission 
questions  whether  the  allocated  human  and  financial 
resources  are  sufficient  for  ECA  to  carry  out  its  regulatory 
tasks.

Unbundling

The electricity TSO, state-owned Elering AS, was certified by 
the ECA in December 2013 as compliant with the ownership 
unbundling rules. There is a single operator in gas, AS EG 
Võrguteenus,  which  provides  transmission  and  distribution 
services and belongs to the vertically integrated gas supply 
company AS EestiGaas. Although art. 49 of Directive 2009/73/
EC sets out an exemption for Estonia and does not require the 
unbundling  of  the  transmission  system,  on  8  July  2012  the 
amendment to the Natural Gas Market Act chose not to apply 
the exemption in future, but selected the route of complete 
ownership  unbundling.  On  31  December  2012,  the  system 
operator EG Võrguteenus submitted to ECA the plan for the 
fulfilment of the requirements of the ownership unbundling 
that are planned to be finished by 1 January 2015.

3.  Wholesale Markets

Electricity

The 2012 load in the Estonian electricity system peaked at 
1 572 MW (on 6 February 2012), while the installed capacity 
in  the  Estonian  electricity  system  was  2 278  MW.  Effective 
competition  is  limited  by  the  dominant  position  of  Eesti 
Energia AS, which accounted for 88% of the total electricity 
production in 2012114.

There  are  17  traders  that  operate  through  the  Nord  Pool 
Spot’s Estonian price area and in total there are 201 eligible 
customers  in  Estonia  who  buy  electricity  either  through 
bilateral contracts or from the power exchange. An average 
price  in  the  Nord  Pool  Spot  Estonian  price  area  in  2012 
was  EUR  39.20/MWh,  which  is  lower  than  the  2011  price 
by  almost  10%115.  In  2012,  the  highest  hourly  price  was 
EUR 183.48/MWh, while the lowest was EUR -7.06/MWh.

From  1  January  2013  Estonia’s  electricity  market  was 
completely opened and all customers are eligible consumers. 
An  average  price  in  the  Nord  Pool  Spot  Estonia  price 
area  in  2013  was  EUR  43.14/MWh.  In  2013,  the  highest 
hourly  price  was  EUR  210.01/MWh,  while  the  lowest  was  
EUR 5.08/MWh.116

Gas

Estonia imports natural gas exclusively from Gazprom. During 
winter, the Inčukalns gas storage facility in Latvia is used by 
Gazprom to supply Estonia. In 2012, gas imports amounted 
to  679  mcm  (100%  of  gross  inland  consumption)115.  In 
2012, there was only one wholesale trader on the market – 
AS EestiGaas. An import license has been issued to other two 
companies: AS Nitrofert, which obtains gas only for its own 
needs, and to Baltic Energy Partners OÜ, which has not made 
any material gas imports so far. 

As  there  is  no  competition  between  the  sellers  or  traders, 
there is no organised gas hub. According to the contract, the 
import price of gas is calculated using a price formula based 
on the previous nine months heavy and light fuel oil average 
prices in USD/ton proceeding to the accounting month, taking 
into account the USD/EUR exchange rate.

4.  Retail Markets

Electricity

In 2012, the share of eligible consumption was 2 785 GWh, 
which equals to 37.6% of the final consumption of electricity 
(total consumption without network losses –  7 407 GWh)115. 
The largest share of 82.9% of electricity sales in 2012 was 
held by Eesti Energia AS, followed by Imatra Elekter AS with 
2.7%  and  VKG  Elektrivõrgud  OÜ  with  2.6%.  Elektrum  Eesti 
AS with 13.0% and 220 Energia OÜ with 1.5%. In 2012, the 
number of electricity retailers to final consumers was 42114.

112   On 9 April 2014 Estonia notified new legislation for the 

transposition of the Gas Directive which is under assessment  

by the Commission in order to verify whether the Directive 

could now be considered fully transposed.

115   ECA, http://www.ceer.eu/portal/page/portal/EER_HOME/EER_

113   http://www.konkurentsiamet.ee/public/Aastaraamat/ECA_

PUBLICATIONS/NATIONAL_REPORTS/National%20Reporting%20

Annual_Report_2012.pdf

114   Eurostat.

2013/NR_En/C13_NR_Estonia-EN.pdf

116   http://www.nordpoolspot.com/

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E S T O N I A

F I G U R E S  3   A N D   4

Electricity price change by component 2008-2013 (in € cent/kWh)

Natural gas price change by component 2008-2012 (in € cent/kWh)

H O U S E H O L D S

I N D U S T R Y

H O U S E H O L D S

I N D U S T R Y

16 

14 

12 

10 

8 

6 

4 

2 

0 

6 

5 

4 

3 

2 

1 

0 

2008

2013

2008

2013

2008

2012

2008

2012

Taxes+Levies 

Networks

Energy+Supply

Taxes+Levies 

Networks

Energy+Supply

Source: Eurostat

Sources: EC, EPCR metadata

In  2012,  there  were  five  independent  suppliers,  who  sold 
electricity  to  eligible  consumers.  Non-eligible  consumers 
were  obliged  to  buy  electricity  from  regulated  suppliers. 
According to the Electricity Market Act, in 2012 ECA approved 
the average selling price to non-eligible customers.

The  import  price  of  gas  is  calculated  according  to  the 
changes in the average price of oil derivatives (heavy and 
light fuel oil), which drive the fluctuation of the gas price. End 
users pay the full import price, plus transportation cost and 
a regulated profit margin. 

As non-eligible customers did not have an option to change 
supplier, between year 2011 and 2012 there was no supplier 
switching117. In 2013 there were 15 suppliers118, who had an 
opportunity  to  sell  electricity  to  consumers  which  now  can 
change supplier.

In 2013, the average gas retail price consisted of: energy and 
supply costs – 51%; network costs – 22%; VAT and other taxes 
–  26%119.  No  formal  decision  and  no  plan  to  roll-out  smart 
meters in natural gas system had been made by 2013119.

The roll-out of smart meters is due to be dealt with in the 
next  Energy  Sector  Development  Plan  2030.  The  Estonian 
grid code determines that all consumers must be provided 
with  a  “remote  reading  device”  by  2017.  No  cost-benefit 
analysis has yet been carried out.

Gas

Similar  to  the  wholesale  market,  AS  Eesti  Gaas  also  has 
a dominant position in the retail market. Its retail market 
share  in  2012  was  89.0%,  while  the  remaining  11.0% 
was sold by another 27 licensed gas sellers. The number 
of customers in the retail market is approximately 42 000, 
of which 41 000 are households. In 2012, 1 913 customers 
switched (1 810 of these were households), or 4.5% of the 
customers. 

5.  Consumers

The retail gas market is assessed fourth highest in the EU 
(79.3 points compared to 74.1), with the fifth highest score on 
the overall consumer satisfaction. The incidence of problems 
is  second  lowest  in  the  EU,  following  a  small  but  steady 
decrease since 2010. However, consumer assessment of the 
choice of providers is the lowest in the EU, and switching 
rates  are  the  second  lowest  (and  have  been  falling  since 
2010). 

In  contrast  to  the  gas  market,  the  performance  of  the 
retail electricity market is assessed below the EU average  
(23th  position  with  66.2  points  compared  to  72.0)  and 
the  lowest  among  31  domestic  services  markets.  The 
performance  of  this  market  has  seen  the  largest  decrease 

117   ACER/CEER, Annual Report on the Results of Monitoring  
the Internal Electricity and Natural Gas Markets in 2012, 

November 2013.
118   http://mtr.mkm.ee/

119   ACER/CEER Annual Report on the Results of Monitoring  

the Internal Electricity and Natural Gas Markets in 2012, 

November 2013.

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E S T O N I A

The  BEMIP  initiative  is  launched  with  a  view  to  end  the 
isolation  of  the  Baltic  region  in  general  and  Estonia  in 
particular from the European market. Proposed investment 
projects  include  an  interconnection  between  Lithuania 
and  Poland,  and  a  planned  regional  LNG  terminal.  The 
BalticConnector is a proposed natural gas pipeline between 
Finland  and  Estonia,  which  would  connect  the  Baltic  and 
Finnish gas grids. 

In 2013, it was decided that a regional Baltic LNG Terminal 
would be best placed on either the Finnish or the Estonian 
side of the Finnish gulf. It is important that the Baltic States 
reach  a  final  agreement  on  the  location  of  the  terminal  in 
order  to  start  construction  and  introduce  diversification  of 
gas supplies as soon as possible.

7.  Security of supply

Electricity

Estonia has sufficient production capacity to cover domestic 
electricity  demand  and  for  export  to  Latvia  and  Lithuania. 
The  Estlink  projects  enhanced  security  of  electricity  supply 
and  Estonia’s  independence  of  Russian  supplies  was 
increased.  However,  the  Estonian  grid  continues  to  operate 
in  synchronous  mode  with  the  Russian  and  Byelorussian 
grids. In 2012, negotiations were launched by the European 
Commission with the aim to conclude an Intergovernmental 
Agreement.  Negotiations  have  been  suspended  at  the 
request of the Baltic States pending their analysis of a study 
on  the  de-synchronisation  of  the  Baltic  grids  and  a  move 
towards synchronisation with continental European grids. 

Gas

Estonia  has  two  interconnections  with  the  Russian  natural 
gas network (Värska and Narva) and an interconnection with 
Latvia  (Karksi).  However,  natural  gas  in  the  share  of  final 
consumption of energy in 2012 was only circa 5%. For the 
Estonian gas network criterion N-1 equals 104.5%, thus the 
coverage of infrastructural peak demand or the coverage of 
supply deficit is ensured123. However, given that the gas from 
the Latvian Incukalns storage facility is contracted from the 
same  supplier,  the  de  facto  insecurity  of  supply  continues 
to exist. 

of all electricity markets in the EU between 2012 and 2013 
and the largest decrease among domestic services markets. 
Trust  in  providers  and  comparability  are  particularly  low, 
and the latter indicator has considerably decreased in score 
since 2012. On the other hand, however, the market scores 
high on switching (6th place out of 25).120

ECA acts as an alternative dispute resolution body. Consumers 
can also contact the Consumer Protection Board of Estonia. 
In 2012, the Competition Authority received 82  complaints 
and  inquiries  concerning  the  electricity  retail  market  and 
19  inquiries  concerning  the  natural  gas  retail  market121. 
There is no price comparison site available for the electricity 
and gas retail market. 

In  Estonia,  during  2013,  there  was  no  definition  of  a 
“vulnerable consumer” in the electricity sector122. Nevertheless 
interruption of electricity supply is very detailed regulated in 
the Electricity Market Act. The supply of electricity to household 
customers (household customer who heated residential space 
in full or primarily by electricity) in the winter period may be 
interrupted only after the consumer has been given 90 days 
to pay the bill. In the summer it is 15 days. As regards natural 
gas, the term “vulnerable consumer” is defined. The supply 
of natural gas to vulnerable customers (family or individual 
receiving subsistence benefits) may be interrupted only when 
the consumer has been given 45 days in the winter period to 
pay the bill. In the summer it is 7 days.

6.  Infrastructure

Electricity

Estonia is interconnected to the EU electricity market through 
the Estlink1 and Estlink2 interconnectors with Finland and 
has  recently  joined  the  Nord  Pool  Spot  by  creating  the 
Estonia  price  area  for  the  day-ahead  market,  intraday  and 
trading in the power exchange. 

However, the limited capacity of the connection between 
Estonia and Latvia creates cross-border bottlenecks, which 
have an adverse impact on the electricity markets of Estonia 
and other Baltic States. 

Gas

Estonia’s gas grid is connected to the Russian Federation gas 
system as well as to Latvia. There is no link with the rest of 
the EU gas market. 

120   10th Consumer Markets Scoreboard, http://ec.europa.eu/consumers/
consumer_evidence/consumer_scoreboards/10_edition/index_en.htm

121   ECA,http://www.ceer.eu/portal/page/portal/EER_HOME/EER_

PUBLICATIONS/NATIONAL_REPORTS/National%20Reporting%20

123   http://www.ceer.eu/portal/page/portal/EER_HOME/EER_

2013/NR_En/C13_NR_Estonia-EN.pdf
122   CEER, National Indicators Database, 2013.

PUBLICATIONS/NATIONAL_REPORTS/National%20Reporting%20

2013/NR_En/C13_NR_Estonia-EN.pdf

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E S T O N I A

E S T O N I A   –  K E Y   I N D I C A T O R S

E L E C T R I C I T Y

G A S

Number of companies representing at least 95% 
of net power generation

Number of main power generation companies

6

1

Number of entities bringing natural gas  
into country

Number of main gas entities

1

2

Market share of the largest power generation company 87.0%

Market share of the largest entity bringing natural gas 86.5%

Number of electricity retailers

Number of main electricity retailers

Switching rates (entire electricity retail market)

Regulated prices for households – electricity 

Regulated prices for non-households – electricity

HHI in power-generation market

HHI in electricity retail market

Electricity market value (1) (bn€)

Peak demand (MW, 2012)

Installed generation capacity (MW, 2012)

Number of smart meters installed

42

1

0

Yes

Yes

7 748

6 869

0.427

1 572

2 647

N/A

Number of retailers selling natural gas to final customers

Number of main natural gas retailers

Switching rates for gas (entire retail market)

Regulated prices for households – gas

Regulated prices for non-households – gas

HHI in gas supply market

HHI in gas retail market

Gas market value (1) (bn€)

27

1

4.5

No

No

>8 500

7 943

0.093

Sources: Eurostat, CEER, National Regulatory Authority, EC calculations.

(1)   Market value is an estimation of the size of the retail electricity and gas markets. It is calculated using data on electricity  

and gas consumption in the household and non-household sectors (average bands) and annual average retail prices.

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Key issues

 → Irish authorities and their Northern Irish counterparts should continue efforts to align 
the SEM market design with the European target model. The TSO certification process 
needs to be completed to ensure compliance with the Electricity Directive142.

 → Efforts for the diversification of its gas supplies should continue as power generation 
relies heavily on gas imports from the UK and both interconnectors experienced 
outages in winter 2012/13. The limited sourcing options have also resulted in the lack 
of a liquid gas wholesale market (trading is in the highly liquid UK market instead). 
Gas  field  development,  greater  storage  and  LNG  capacity  have  all  been  proposed, 
but developments keep being delayed. A revision of the permitting process for these 
projects may help ensure they can be developed more rapidly.

 → Ireland  should  continue  developing  networks  and  systems  to  accommodate  a  large 
proportion of wind generation, which is particularly challenging in a small system. 

 → Retail market competition in the case of gas remains below the required level for 
retail price deregulation while in electricity the incumbent’s market shares remain 
high. Further efforts are required to improve competition in the retail sector 
and encourage customers to switch. 

1.  General overview124

Energy consumption in 2012 (14.0 Mtoe) was based largely 
on fossil fuels, notably petroleum products, natural gas, 
and  to  a  lesser  extent  solid  fuels.  The  contribution  from 
renewable energy sources was less significant in the overall 
energy  mix  at  7.2%.125  The  2020  renewable  target  for  the 
energy sector is 16%, which is lower than the EU-27 average 
(20%). 

F I G U R E S  1   A N D   2

The power generation mix in 2011 (27.5 TWh) remained 
dominated  by  gas-fired  power  generation  (with  a  share  of 
54.2%)  and  solid  fuels  (25.2%).  The  renewable  share  of 
power  generation  increased  to  19.8%  and  cogeneration126 
provided 7.1% of the total electricity generation in 2011.127 
For  2012  the  estimated  electricity  fuel  production  mix 
in  Ireland  is  as  below  –  gas  continues  to  be  the  biggest 
fuel  source,  with  renewable  generation  (mostly  wind)  now 
accounting for approximately 20% of the mix in Ireland.

Gross inland consumption mix 2008-2012

Gross electricity generation mix 2008-2012

60% 

50% 

40% 

30% 

20% 

10% 

0% 

70% 

60% 

50% 

40% 

30% 

20% 

10% 

0% 

2008 

2009 

2010 

2011 

2012 

2008 

2009 

2010 

2011 

2012 

Solid fuels
Nuclear

Natural gas
Renewables

Crude oil and petroleum products
Other

Solid fuels
Renewables

Natural gas
Other

Crude oil and petroleum products

Source: Eurostat

Sources:  EU energy in figures - “Statistical Pocketbooks 2012 and 2013”, 

European Commission

124   Directive 2009/72/EC concerning common rules for the internal 

market in electricity and repealing Directive 2003/54/EC.

126   The share of electricity produced in combined heat  

125   http://epp.eurostat.ec.europa.eu/cache/ITY_PUBLIC/8-

and power plants (CHP).

10032014-AP/EN/8-10032014-AP-EN.PDF

127   Eurostat.

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I R E L A N D

2.  Regulatory framework

General

In January 2012, the European Commission referred Ireland 
to  the  European  Court  of  Justice  for  failure  to  adopt  EU 
gas market rules. This was resolved in 2012, when the 
access  conditions  to  the  Irish  gas  network  at  the  Moffat 
Interconnection Point and the South-North gas pipeline were 
amended to include a reverse flow.

In January 2014, Ireland was referred to the European Court 
of Justice for failing to fully transpose the EU’s renewable 
energy  directive.  The  aspects  of  the  EU  directive  not  yet 
transposed include the commitment that 10% of all transport 
energy  would  come  from  renewable  sources  by  2020,  the 
management  of  grid  access  for  renewable  electricity  and 
sustainability criteria for biofuels and bioliquids.128

An infringement procedure for partial transposition of the 
Third  Energy  Package  Electricity  Directive  is  still  on-going 
and has been referred to the Court of Justice of the EU in 
February 2014. Ireland had failed to adopt provisions related 
to unbundling of transmission system operators.129

National Energy Regulator

The  Commission  for  Energy  Regulation  (CER)  is  Ireland’s 
energy  regulator  with  a  range  of  economic,  safety  and 
customer  functions.  In  2014  the  CER  was  also  appointed 
as  Ireland’s  economic  water  regulator.  The  CER’s  economic 
responsibilities in energy are to regulate the Irish electricity 
and  natural  gas  sectors.  As  part  of  this  role,  CER  jointly 
regulates  the  all-island  wholesale  Single  Electricity  Market 
(SEM)  with  its  counterpart  in  Northern  Ireland,  the  Utility 
Regulator  (NIAUR)  as  part  of  the  SEM  Committee.  The 
Committee  consists  of  three  NIAUR  representatives,  three 
CER representatives, an independent member and his deputy. 

The number of staff at CER is currently about 90, though 
many of these staff works in non-energy economic areas, 
for  example  energy  safety  and  water.  The  CER’s  actual 
expenditure in 2012 was EUR 10.8 million across the range 
of its functions.

Unbundling

ESB  owns  the  electricity  transmission  network  assets 
and  owns  and  operates  the  distribution  network.  EirGrid 
is  responsible  for  the  operation  and  development  of  the 
transmission system. ESB and Eirgrid are both state-owned. 
EirGrid has been certified as an independent transmission 
system  operator  for  Ireland  in  2013.  The  certification 

followed the decision of the European Commission130 that 
the arrangements in place, if effectively implemented; clearly 
guarantee  more  effective  independence  of  the  TSO  than 
would  be  the  case  under  the  other  unbundling  options131. 
However, to ensure their effective implementation and as set 
out in both the European Commission’s and CER’s decisions, 
CER now needs to monitor and assess these arrangements. 
CER expects to receive an application from EIL (East-West 
Interconnector  Ltd)  in  due  course  for  certification  of  the 
East-West interconnector between Ireland and Britain.

Bord Gáis Éireann is a vertically integrated state owned 
company,  with  both  transmission  and  distribution  gas 
infrastructure (Bord Gáis Networks) and retail supply of gas 
and electricity (Bord Gáis Energy), although it has no interests 
in  production  activities.  The  system  operator  Gaslink  is  an 
independent subsidiary of Bord Gáis Éireann.

In 2010, BGE confirmed its intention to adopt the “Independent 
Transmission Operator model” by amalgamating Gaslink and 
Bord Gáis Networks, to form a new independent subsidiary. In 
2013, CER certified BGE as an ITO subject to the completion 
of  outstanding  work  items.132  The  Irish  Government  is  in 
negotiations to sell the retail arm of the business, and in 
December  2013  they  announced  their  preferred  bidder:  a 
consortium of Centrica, Brookfield Renewable Power and 
iCON Infrastructure133. The State will retain ownership of the 
gas network (both transmission and distribution). Following 
the  transaction,  Bord  Gáis  Éireann  will  be  fully  ownership 
unbundled.

3.  Wholesale Markets

Electricity

Since  2007,  the  SEM  has  been  the  electricity  market  for 
Ireland and Northern Ireland. The SEM includes a centralised 
all-island gross mandatory pool market. All electricity is 
bought  and  sold  through  a  market  clearing  mechanism. 
Generators receive the System Marginal Price (SMP), 
payments through a capacity mechanism and constraint 
payments. 

SMP closely follows the gas price, since gas is the key fuel for 
electricity generation. In recent years, the average SMP fell 
from over EUR 80/MWh in October 2008 to under EUR 40/MWh  
for most of 2009, and then increased to over EUR 50/MWh  
in 2010 and EUR 60/MWh in 2011 and 2012.134

128   http://europa.eu/rapid/press-release_IP-14-44_en.htm
129   http://europa.eu/rapid/press-release_IP-14-155_en.htm

130   Pursuant Article 9(9) of the Electricity Directive.
131   Set out in Chapter V of the Electricity Directive.
132   CER/13/161, CER’s ITO Certification Decision.
133   There was no update on progress by 17 March 2014.
134   CER, 2012 Ireland National Report to the European Commission, 

July 2013.

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I R E L A N D

In the 10 year forecast, the Irish gas market is expected to 
continue  to  be  heavily  reliant  on  interconnection  with  the 
UK  market  for  the  foreseeable  future,  and  gas  demand  is 
forecast to rise by 12% over the period to 2021/22.138 The 
capacity limits of Moffat are expected to be approached in 
2014/15  and  any  subsequent  years  that  Corrib  is  delayed. 
Bord  Gáis  Networks  and  Gaslink  have  recommended 
reinforcements  in  Scotland  to  improve  capacity,  and  the 
EU has identified this reinforcement project in the UK as a 
potential “Project of Common Interest” in improving supply 
to Ireland. To decrease Ireland’s dependence on import from 
Britain, potential new sources of supply will include the Corrib 
gas  field,  which  is  currently  expected  to  begin  commercial 
flows in 2015, and the Shannon Liquefied Natural Gas (LNG) 
terminal (also a “Project of Common Interest”), which could 
become operational in 2017. Unfortunately development of 
both projects has been significantly delayed due to planning 
permission  issues  with  the  Corrib  field  and  disputes  over 
levies that Shannon LNG should pay (on this latter issue, the 
High Court in Ireland found in favour of the CER). 

Most  gas  for  Ireland  is  sourced  from  Great  Britain’s 
National  Balancing  Point  (NBP)  which  is  characterised  by 
high  levels  of  liquidity.  Trades  in  Ireland  can  take  place  at 
a  notional  balancing  point  called  the  Irish  Balancing  Point 
(IBP), however the IBP is extremely illiquid. Elements of the 
revised  guidelines  on  Congestion  Management  Procedures 
(CMP139) were implemented on the GB-Irish interconnectors 
on  1  October  2013  (some  other  elements  remain  to  be 
implemented), and the network code on Capacity Allocation 
Mechanisms  (CAM140)  is  required  to  be  implemented  by 
November  2015.141  Since  2008,  the  two  regulators  on  the 
island  (CER  and  NIAUR)  have  been  working  together  to 
develop  Common  Arrangements  for  Gas  (CAG).  This  would 
allow the gas transmission systems in Ireland and Northern 
Ireland  to  operate  on  an  all-island  basis.142  However,  there 
have  been  challenging  issues  raised  including  physical 
capacity limitations to the operation of a single physical 
balancing regime, so implementation has been delayed.

To  help  ensure  that  there  is  no  abuse  of  market  power, 
the  Regulatory  Authorities’  Market  Modelling  Group  has 
the power to require any market participant deemed able 
to independently influence market prices to issue “Directed 
Contracts”. Currently, only ESB Power Generation is required 
to sell Directed Contracts (2013)135 since they have circa 
45%  share  of  the  SEM  spot  market.  Without  action  the 
spot market would be quite highly concentrated; Directed 
Contracts are set to achieve a concentration level of 1 150.

The  close  relationship  between  SMP  and  the  biggest  fuel 
input (gas) is an indication that there has been no significant 
exercise of market power in SEM. 

The  Moyle  and  East-West  interconnectors  make  capacity 
available  through  explicit  long-term,  daily  and  intraday 
auctions. “Use-it-or-sell-it” conditions apply to long-term 
capacity. 

European market integration creates some unique challenges 
for  Ireland.  The  EU  Target  Model  was  not  designed  with 
centralised pool markets like the SEM in mind. The more 
common European market design is decentralised bilateral 
trading with self-dispatch and the Target Model generally 
reflects  this.  Therefore  the  change  required  to  implement 
the Target Model with SEM is substantially greater than for 
most other Member States. ACER and ENTSO-E therefore 
proposed  to  include  for  Ireland  a  two  year  transitional 
period  in  the  Network  Code  on  Capacity  Allocation  and 
Congestion  Management  (CACM).  The  SEM  Committee  has 
committed  itself  to  implementing  the  Target  Model  by 
the  end  of  2016.  This  commitment  is  not  only  based  on 
compliance with EU legal requirements. The SEM Committee 
views the implementation of the Target Model as a positive 
development  that  will  bring  significant  benefits,  especially 
in  light  of  the  developments  that  have  occurred  since 
the creation of the SEM in 2007. These include increased 
interconnection with the market in Great Britain, increased 
generation  from  renewable  resources  and  the  potential 
for more active involvement of the demand side in market 
arrangements.136

Gas

Ireland currently sources most of its gas from Great Britain. 
Great  Britain  provided  91%  of  Ireland’s  gas  demand  in 
2012/13.137 There is production at the Kinsale and satellite 
fields,  but  it  is  declining.  The  Southwest  Kinsale  Gas  Field 
was adapted for gas storage in October 2001. 

138   http://www.gaslink.ie/media/

GaslinkNetworkDevlopmentPlan20131.pdf

139   http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2012:

231:0016:0020:en:PDF

135   http://www.allislandproject.org/en/market_decision_

140   http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2013:

documents.aspx?article=c9e3a4bc-f41e-463d-b247-

408ea8bd136b&mode=author

273:0005:0017:EN:PDF
141   http://www.gaslink.ie/media/

136  http://www.allislandproject.org/en/wholesale_overview.aspx
137   http://www.gaslink.ie/media/

GaslinkNetworkDevlopmentPlan20131.pdf

GaslinkNetworkDevlopmentPlan20131.pdf
142   http://www.niassembly.gov.uk/Documents/RaISe/
Publications/2013/north_south/13213.pdf

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I R E L A N D

F I G U R E  3

5.  Consumers

Electricity price change by component 2008-2013 (in € cent/kWh)

H O U S E H O L D S

I N D U S T R Y

30 

25 

20 

15 

10 

5 

0 

2008*

2013

2008

2013

Taxes+Levies 

Networks

Energy+Supply

Source: Eurostat - *no data available

4.  Retail Markets

Electricity

In  electricity,  Electric  Ireland  continues  to  be  the  largest 
supplier  in  terms  of  customers  across  all  segments  and  in 
terms  of  energy  supplied  in  the  domestic  (residential)  and 
Large  Energy  User  (LEU)  markets.  The  domestic  market 
share  (MWh)  of  Electric  Ireland  is  just  under  the  threshold 
at  which  it  was  deregulated  at  60%,  while  CMP  measures 
introduced  in  2013  will  require  review  to  ensure  that  they 
remain compatible with CAM rules when introduced in 2015. 

Gas

The incumbent supplier in the gas retail market is Bord Gáis 
Energy, who is the largest supplier. The Irish gas market has 
not yet been price deregulated as CER judge that Bord Gáis is 
still in too dominant a position (January 2014). The threshold 
market shares for deregulation are 60% with rebranding and 
the  55%  without  rebranding.  Although  the  market  is  close 
to these levels, it has not yet reached that point, suggesting 
that retail competition is still too low in Ireland.

CER is leading the implementation of the smart meters roll-
out.  Phase  1  consisted  of  trials  and  cost  benefit  analysis 
carried  out  from  2008  to  2011.  ESB  Networks  installed 
10 000  meters  and  provided  over  1000  in-home  displays 
as  part  of  the  smart  metering  trial.143  In  July  2012,  CER 
announced  its  decision  to  approve  the  rollout  of  smart 
meters.  Since  then,  CER  has  worked  with  stakeholders  to 
formally initiate Phase 2. While not yet decided, the roll-out 
is expected between circa 2016 and 2019.

Irish  consumers  assess  the  performance  of  their  retail 
electricity  and  gas  markets  above  the  EU  average  with 
the  difference  being  very  small  for  the  latter  (75.1  points 
compared  to  72.0  and  74.6  compared  to  74.1144),  which 
corresponds  to  13th  and  14th  place  in  the  EU  ranking. 
In  addition,  both  markets  show  a  score  slightly  above  the 
one seen for the average of all domestic services  markets 
(electricity is in the 14th position and gas in the 15th position 
out  of  31  markets).  While  the  performance  of  electricity 
market  has  stayed  relatively  stable  since  2012,  the  gas 
market has decreased its score by 2.3 points. Both markets 
are  assessed  particularly  well  on  the  ease  of  switching 
(electricity 3rd and gas 5th highest in the EU) and switching 
gas providers/tariffs is 5th highest in the EU.145

Competition continued to develop in the electricity and gas 
retail markets in 2012 and switching rates were above 10% 
in both markets. The total number of switches completed in 
the electricity market in 2012 was 252 056 (a decline of 25% 
from 2011 levels).146 While good by EU standards, this still 
means a large number of customers have never switched. To 
support switching, CER has set-up an accreditation process 
for price comparison websites.147

CER’s Energy Customers Team148 acts as single contact point 
providing  consumers  with  information  on  electricity  and 
gas.  They  also  provide  a  free  dispute  resolution  service.  In 
2012 the Energy Customers Team received 3 067 contacts 
from  customers,  an  increase  of  almost  11%  on  2011.149 
The  reasons  that  customers  contact  the  ECT  vary,  from 
straightforward  requests  for  information  to  complex 
complaints. Although complex complaints made up just 10% 
of the customer contacts in 2012, they made up the majority 
of the team’s work. 

In  2012,  CER  set  out  the  minimum  service  levels  that 
suppliers  must  provide  their  customers  with.  CER  has  also 
put  obligations  on  suppliers  to  ensure  that  disconnections 
are  a  last  resort.  Prior  to  disconnection,  all  suppliers  are 
required to offer customers a free Pay-As-You-Go meter.150

144   However the difference is not statistically significant.
145   10th Consumer Markets Scoreboard, http://ec.europa.eu/

consumers/consumer_evidence/consumer_scoreboards/10_

edition/index_en.htm

146   CER, 2013 Ireland National Report to the European Commission, 

July 2013.

147   http://www.cer.ie/docs/000884/cer11144.pdf
148   http://www.cer.ie/customer-care
149   http://www.cer.ie/docs/000451/CER13288%20ECT%20

Annual%20Report%202012.pdf

150   CER, 2012 Ireland National Report to the European Commission, 

143   http://www.esb.ie/main/sustainability/smart-meters.jsp

July 2013.

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6.  Infrastructure

Gas

I R E L A N D

To  meet  Third  Package  requirements,  in  2013  Gaslink  as 
TSO has submitted a draft Network Development Plan152 to 
the CER which was submitted to ENTSO-G. The network plan 
found that high pressure transmission system currently have 
sufficient  capacity  to  meet  forecast  gas  demand,  although 
the  southern  part  of  the  network  is  anticipated  to  require 
reinforcement in the mid-to long term. 

In order to provide for more flexibility to the gas supply, 
a  cluster  of  Project  of  Common  Interest  will  address 
implementing of reverse flows between Ireland and UK –as 
in  Moffat–,  increased  storage  in  Northern  Ireland  and  the 
LNG plant in Shannon. The need for greater interconnection 
(through  reinforcements  in  GB)  and  LNG  investment  is 
highlighted elsewhere in this report.

7.  Security of supply

CER has a duty to monitor the security of supply of electricity 
and  can  take  such  measures  as  it  considers  necessary 
to  oblige  the  regulated  companies  to  take  action.  Given 
the  significant  reliance  on  natural  gas,  CER  requires  gas 
generators to hold fuel stocks for between 3 and 5 days. 

The  Planning  Board  has  been  appointed  as  the  one-stop-
shop  (OSS)  for  the  permitting  of  energy  infrastructure 
Projects of Common Interest (PCI).

Electricity

The new 500 MW EirGrid East-West electricity interconnector 
to the UK began full commercial operation in May 2013. It 
received an EU funding of EUR 110 million from the TEN-E 
Initiative. Investment in the onshore electricity network has 
also been necessary, for the connection of expanding wind 
power as well as system security and efficient distribution. 

Ireland  has  a  grouping  process  or  “Gate“  process  for 
connecting the large number of renewable generators, and 
the  next  round  to  be  developed  will  be  connected  under 
Gate  3  which  is  intended  to  help  meet  Ireland’s  20:20:20 
targets  from  an  electricity  perspective  –  in  other  words 
to  meet  an  Irish  Government  target  of  40%  of  Ireland’s 
electricity  consumption  coming  from  renewable  generation 
by 2020. The CER is commencing the process of reviewing 
the  connection  and  access  policy  for  renewable  and  non-
renewable generators to the grid, post Gate 3.

CER  authorised  over  a  billion  euros  of  investment  in  the 
electricity  transmission  system  over  the  years  2011  to 
2015.151  To  facilitate  renewables  integration  and  improve 
flexibility, several PCIs are on the scope. Some PCIs regard 
further interconnections with UK (Northern Ireland and Great 
Britain), and possibly France; Hydro Storage is also addressed 
under PCI scheme in connection to these developments.

Another cluster of PCIs will facilitate connecting generation 
from renewable energy sources, both in Ireland and the UK, 
such  as  an  offshore  interconnected  electricity  grid  based 
on  renewable  resources  (wind,  wave  and  tidal,  connecting 
3 200  MW)  consisting  of  850  km  of  HVDC  interconnectors 
with a capacity of 500-1000 MW in the northern area.

151   http://www.ceer.eu/portal/page/portal/EER_HOME/EER_

PUBLICATIONS/NATIONAL_REPORTS/National%20Reporting%20

152   http://www.gaslink.ie/media/

2013/NR_En/C13_NR_Ireland-EN.pdf

GaslinkNetworkDevlopmentPlan20131.pdf

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I R E L A N D

I R E L A N D   –  K E Y   I N D I C A T O R S

E L E C T R I C I T Y

G A S

Number of companies representing at least 95% 
of net power generation

Number of main power-generation companies

5

5

Number of entities bringing natural gas  
into country

Number of main gas entities

13

5

Market share of the largest power-generation company 55%

Market share of the largest entity bringing natural gas 42%

Number of electricity retailers

Number of main electricity retailers

6

4

Number of retailers selling natural gas to final customers

Number of main natural gas retailers

8

6

Switching rates

10% (1)

Switching rates for gas (entire retail market)

10% (1)

Regulated prices for households – electricity 

Regulated prices for non-households – electricity

HHI in power-generation market

HHI in electricity retail market

Electricity market value (2) (bn€)

Installed generation capacity (MW, 2011)

Peak demand (MW)

Number of smart meters installed

No

No

1 150

4 759

3.207

8 791 

4 589

10 000

Regulated prices for households – gas

Regulated prices for non-households – gas

HHI in gas supply market

HHI in gas retail market

Gas market value (2) (bn€)

Yes

Yes

N/A

4 780

0.800

Sources: Eurostat, CEER, National Regulatory Authority, EC calculations.

(1)   Domestic 10% across gas and electricity.

(2)   Market value is an estimation of the size of the retail electricity and gas markets. It is calculated using data on electricity  

and gas consumption in the household and non-household sectors (average bands) and annual average retail prices.

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E
C
E
E
R
G

Key Issues

 → Electricity  prices  were  fully  liberalised  in  July  2013  but  no  effective  entry  into  the 
market has taken place and the incumbent electricity company remains the dominant 
supplier as a result. Electricity prices should be cost-reflective and appropriate steps 
should be taken towards the creation of an investment-friendly framework in order to 
attract new potential suppliers and effectively open up the retail market to competition 
while ensuring a smooth transition for consumers.

 → In gas, the continued independent operation of gas TSO DESFA after its privatization 
needs to be ensured by the national regulatory authority. Greece should furthermore 
draw a timeline and an action plan for facilitating the transition to a more mature 
gas market model, fostering competition also on the retail level, ending the 
exclusivity  rights  of  regional  gas  suppliers  and  thus  allowing  consumers  to 
switch suppliers and reap benefits from the liberalised market.

1.  General overview

F I G U R E S  1   A N D   2

The  gross  inland  energy  consumption  in  2012  was 
27.04 Mtoe, a decrease of 2.9% compared to 2011. Crude 
oil  and  petroleum  products  account  for  46.2%.  Solid 
fuels represent 30.1%, natural gas represents 14.1% and 
renewable  energies  provide  9.6%  of  gross  inland  energy 
consumption.  In  2012,  the  renewables  share  in  gross  final 
energy  consumption  reached  15.1%153,  and  thus  Greece 
is  showing  good  progress  towards  achieving  its  2020  RES 
target of 18%154.

The gross electricity generation in 2011 was 59.4  TWh. 
Electricity  is  generated  mainly  by  indigenous  lignite,  which 
represents 51% of the total electricity production, followed 
by natural gas (23.5%), renewable energies (14%) and crude 
oil and petroleum products (10%). The increase of electricity 
generation  in  2012  came  mainly  from  renewables,  which 
increased  its  share  by  23%  compared  to  2011  levels.  This 
was due to the additional solar photovoltaics installed in the 
year. 

Cogeneration155 of heat and power represents 4.5% of gross 
electricity generation in 2011156. 

Gross inland consumption mix 2008-2012

60% 

50% 

40% 

30% 

20% 

10% 

0% 

2008 

2009 

2010 

2011 

2012 

Solid fuels
Renewables

Natural gas
Other

Crude oil and petroleum products

Source: Eurostat

Gross electricity generation mix 2008-2012

60% 

50% 

40% 

30% 

20% 

10% 

0% 

153   Eurostat.
154   Greek Ministry of Environment, Energy & Climatic Change, 

2008 

2009 

2010 

2011 

2012 

Solid fuels
Renewables

Natural gas
Other

Crude oil and petroleum products

National Renewable Energy Action Plan,  

Sources:  EU energy in figures - “Statistical Pocketbooks 2012 and 2013”, 

http://ec.europa.eu/energy/renewables/action_plan_en.htm

European Commission

155   The share of electricity produced in combined heat  

and power plants (CHP).

156   Eurostat.

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G R E E C E

2.  Regulatory framework

3.  Wholesale markets

General

Electricity

The  Third  Energy  Package  was  implemented  in  Greek 
legislation in August 2011. In the gas sector a decoupled 
entry-exit  tariff  model  was  introduced  in  2013  by  the 
Regulatory Authority. 

National Energy Regulator

The  Regulatory  Authority  for  Energy  (RAE),  which  was 
established  in  July  2000,  is  an  independent  administrative 
authority. The Board of Commissioners of RAE is comprised 
of 7 members157. The budget of RAE was EUR 7.3 million in 
2012, a decrease of 11% compared to 2011158.

Since  the  transposition  of  the  Third  Energy  Package,  the 
Regulator has been influenced by severe budget and salary 
cuts and, most importantly, a hiring freeze, that has limited 
its  ability  to  carry  out  the  increased  powers  and  duties 
assigned to it by the Third energy package. 

Unbundling

Following  the  Energy  Law  4001/2011,  the  Public  Power 
Corporation  (PPC),  which  is  the  state  owned  vertically 
integrated electricity company, established a 100% subsidiary, 
ADMIE  SA,  which  owns  and  operates  the  transmission 
system, according to the Independent Transmission operator 
(ITO) model. 

In 2012, the Regulatory Authority for Energy (RAE) certified 
ADMIE  SA  as  the  independent  power  transmission  system 
operator.  The  government  decided  to  fully  separate  ADMIE 
from  PPC,  which  should  be  completed  still  during  2014159. 
The  distribution  network  ownership  remained  with  PPC, 
although  its  operation  was  assigned  to  another  100% 
subsidiary of PPC, DEDDIE SA.

In the gas sector, the TSO of the national grid is DESFA SA. It 
is currently controlled by Hellenic Petroleum (“HP”, 35%) and 
the  Hellenic  Republic  Assets  Development  Fund  (“HRADF”, 
65%). In 2012, HP and HRADF signed an agreement with the 
Azeri State-owned company SOCAR for the sale of 66% of 
the shares in DEFSA. The certification of DESFA as controlled 
by SOCAR is currently pending.

In  May  2013,  the  government  decided  to  establish  a  new 
vertically  integrated  electricity  company,  which  will  be 
formed  from  the  transfer  of  approximately  30%  of  the 
assets of PPC. The new company should be fully operational 
in the first quarter of 2015. 17% of the PPC’s shares owned 
by the Hellenic Republic Assets Development Fund (HRADF) 
are foreseen to be sold by the first quarter of 2016.

In July 2013 RAE decided to reform aspects of the market 
design,  which,  due  to  the  technical  nature  of  the  plant 
dispatch  algorithm,  creating  stronger  incentives  for  gas-
fired power plants to follow the fluctuations of the demand 
curve and wholesale prices to better reflect marginal costs. 
Further reforms of the capacity mechanism are planned to 
be introduced in 2014.

The  Greek  electricity  sector  was  hit  in  2012  by  a  liquidity 
crisis.  Several  factors,  such  as  unpaid  electricity  bills, 
liquidity tensions in the Greek banking system and structural 
deficiencies of the Greek energy market have tightened 
the cash position of PPC. In parallel, the market operator, 
LAGIE  SA,  had  accumulated  unsustainable  debts  due  to 
the  renewable  energy  support  schemes,  given  the  level  of 
revenues from the market which was insufficient to cover the 
payments to RES generators. As a result, the main actors in 
the Greek electricity system have significant arrears160.

The Hellenic Parliament adopted a temporary tax on revenues 
from renewable energy installations in 2012161. Following an 
increase in the renewables levy in July 2013, the authorities 
committed to further adjustments every six months in order 
to eliminate the debt in the renewables account by the end 
of 2014161.

Gas

DEPA  is  the  incumbent  natural  gas  importer  and  supplier. 
Pending  the  privatisation  process  of  DEPA  the  state  owns 
65% of DEPA while the remaining shares are held by Hellenic 
Petroleum SA. 

Since  2010  other  companies  than  DEPA  a  total  of  six 
companies  have  started  importing  natural  gas.  In  2012, 
from  the  total  natural  gas  imports  48.1  TWh  in  Greece, 
90%  were  imported  by  DEPA  SA,  and  10%  by  two  other 
market  players.  However  a  sharp  decline  was  observed  in 

157   www.rae.gr
158   RAE’s Balance Sheet 2012, http://www.rae.gr/site/file/system/

160   The EC, The Second Economic Adjustment Programme  

for Greece First Review, December 2012.

docs/ActionReports/balance2012

161   The EC, The Second Economic Adjustment Programme  

159   Greek Ministry of Environment, Energy & Climatic Change.

for Greece Third Review, July 2013.

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the year of 2013 in the percentage share of gas imports by 
the other parties. This is mainly attributable to the increased 
price  of  LNG  worldwide  as  most  of  the  competition  in  the 
market stemmed from third party access to the Revythoussa 
LNG Terminal. In March 2014, DEPA and GAZPROM EXPORT 
agreed to the decrease of the price of the imported natural 
gas by 15%, approaching the respective average EU price162. 

4.  Retail markets

Electricity

Electricity prices for both industrial and domestic consumers 
increased significantly in 2012 (29% and 37.3% respectively), 
although in both cases they remained below the EU average. 
In part these increases were due to the introduction of non-
recoverable  tax  rates163,  but  also  due  to  the  gradual  move 
towards cost recovery and removal of cross subsidies. Retail 
prices in Greece also include a public service obligation levy 
to recover the higher cost of power generation in the non-
interconnected  islands.  Low-voltage  end  user  prices  have 
been completely liberalised since 1 July 2013.

In 2012, domestic tariffs (competitive elements only) of the 
incumbent  (PPC)  increased  by  around  11-34%,  depending 
on the consumption category. The evolution of retail prices 
in households and industrial consumers is presented in the 
following figures.

F I G U R E  3

Electricity price change by component 2009-2012 (in € cent/kWh) 

H O U S E H O L D S

I N D U S T R Y

16 

14 

12 

10 

8 

6 

4 

2 

0 

2009

2012

2009

2012

Taxes+Levies 

Networks

Energy+Supply

Source: Eurostat

G R E E C E

Electricity  demand  in  2012  declined  by  0.2%  compared  to 
2011. This decline was very close to the average EU-27 rate164. 
The concentration on the retail electricity market remains high. 
The  switching  rate  in  Greece  was  3.6%  (volume-related)  in 
2012, mainly due to the exit of four suppliers from the market 
and the temporary (3-month) activation of the supplier of last 
resort.  In  2013,  electricity  demand  declined  further  by  1.9%, 
while the switching rate was confined to merely 0.27%.

Greece is proceeding with (and has mandated) a large-scale 
roll-out of smart meters to 80% of consumers by 2020. A 
pilot programme involving the replacement of 160 000 old 
electricity  meters  with  smart  metering  systems  was 
announced, and is expected to be completed in 2015.

Gas

Distribution and supply of natural gas to retail consumers 
is done by three companies (called EPAs) for the regions of 
Attica, Thessaloniki and Thessalia. DEPA supplies natural gas 
to these three local monopoly distributors. In general, only 
those customers with an annual consumption of greater than 
100 GWh are eligible to select their supplier of gas in Greece. 
A major reform of the Greek gas retail market is envisaged 
that seeks to abolish the regional monopolies of the EPAs for 
gas supply and to progressively extend eligibility to all retail 
customers. A total of ten natural gas supply authorizations 
have been issued in the period 2010-2013.

Natural gas price in households was EUR 2.3/GJ in 2012. The 
total taxes were EUR 4.8/GJ (EUR 3.2/GJ for VAT and EUR 1.6/GJ  
for other taxes). The tariff for the industrial sector in 2012 
was  EUR  16.1/GJ,  while  the  non-recoverable  taxes  were 
EUR 1.6/GJ165. The Pre-Tax Total Price (PTP) for gas in Greece 
was the high est among EU-27.

Gas demand in 2012 decreased by 7.7% compared to 2011. 
DESFA  forecasts  that  gas  demand  will  almost  double  by 
2019,  compared  to  2009  levels.  This  increase  will  mainly 
come from electricity generation.

5.  Consumers

Despite considerable improvement since 2012 (of 4.9 points), 
the retail electricity market is assessed fourth lowest in the EU, 
with a score which is almost 7 points below the EU average 
(65.2 compared to 72.0). In addition, the market is considered 
to be the worst of all 31 domestic services markets. Overall 
consumer  satisfaction  is  the  2nd  lowest  in  the  EU  and  the 
incidence of consumer complaints is the 2nd highest166.

162   DEPA.
163   The EC, Energy Prices and Costs report, 2014.

164   ACER/CEER – Annual Report on the Results of Monitoring the Internal 
Electricity and Natural Gas Markets in 2012, November 2013.

165   Eurostat.
166   10th Consumer Markets Scoreboard, http://ec.europa.eu/consumers/

consumer_evidence/consumer_scoreboards/10_edition/index_en.htm

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The assessment is more favourable for the gas market for 
which Greece is more than 4  points above the EU average 
(78.5 vs. 74.1), which corresponds to 6th position in EU and 
16th position in the ranking of 31 domestic services markets. 
Greek  consumers  show  the  3rd  highest  level  of  trust  in 
providers. However, the percentage of Greek consumers who 
have switched their provider or tariff plan with the existing 
provider in the past 12 months is the lowest in the EU (less 
than 1% against an average of almost 10% in the EU). 

A  total  of  9.8%  of  all  residential  customers  benefit  from 
a  social  tariff,  to  a  total  of  560 126  in  February  2014167. 
In 2013, the Electricity Supply Code was published, which also 
includes provisions for consumer protection measures and a 
Ministerial decision was issued defining criteria, conditions and 
the procedure for a consumer to be classified as vulnerable 
electricity consumer and to be included in the registry.

The provisions of the definition of vulnerable gas consumers 
of Law 4001/2011 have not been fully adopted by the EPAs. 
Compliance  with  the  categories  of  vulnerable  groups  and 
economic  protection  schemes  and  the  Supply  Code  is  not 
yet available. The distribution license of the EPAs, operating 
under a regime of exclusive right for both the activities  of 
distribution and supply of gas in their areas, include some 
non-economic  provisions  for  domestic  customers  “with 
special needs”168.

6.  Infrastructure

As required by the TEN-E Regulation, Greece has established 
a one-stop-shop for the permitting of Projects of Common 
Interest (PCIs).

Electricity

In  2012,  the  total  installed  generating  capacity  was 
18 879  MW 169.  Thermal  power  plants  accounted  for 
9 624 MW, hydroelectric power plants were 3 017 MW, wind 
power farms were 1 466 MW and solar photovoltaic power 
generating units were 1 126 MW. The electricity generation 
capacity of wind farms increased by 23%, while the electricity 
generation capacity of photovoltaic parks more than tripled, 
compared to 2010 levels169. 

The  Greek  network  has  a  central  position  in  South-East 
Europe  with  the  existing  and  future  connections  to  Italy, 
Bulgaria, Turkey and the Western Balkans. Therefore, Greece 
could play the role of an electricity hub in the region. Greece 
is  investing  in  the  connection  of  islands  to  the  grid  and 
the integration of RES.

In  October  2013,  two  electricity  interconnections  were 
labeled PCIs by the European Commission: the AC 400kV 
interconnection  between  Maritsa  East  1  (in  Bulgaria) 
and Nea Santa (in Greece) and the DC 600kV underwater 
interconnection between Israel, Cyprus and Greece170. 

Gas

Greece has the potential to become a regional gas hub as it 
is located at the EU entry door of the Southern Gas Corridor, 
has  access  to  LNG  and  gas  supplies  from  Russia.  It  has 
therefore all the characteristics needed for the development 
of  a  liquid  hub,  providing  price  competition,  security  of 
supply and market integration in the Region.

The Trans Adriatic Pipeline (TAP) was selected by the Shah-
Deniz  Consortium  in  June  2013  as  the  route  to  transport 
gas  from  the  Shah-Deniz  II  field  in  Azerbaijan  to  Europe. 
Together with the Southern Caucasus Pipeline and the Trans 
Anatolian  Pipeline,  the  TAP  will  form  part  of  the  Southern 
Gas Corridor allowing for the supply of Europe with gas from 
Caspian sources.

The regulatory framework for the development and operation 
of  TAP  was  also  concluded  in  June  2013  following  the 
comprehensive assessment of TAP AG’s exemption application 
by the regulatory authorities of two Member States (Greece 
and Italy) and one Contracting Party of the Energy Community 
(Albania) on the basis of the energy third package.

Several  projects  are  currently  planned  to  enhance  supply 
opportunities and connections with its direct neighbors. This 
is most notably the case with the upgrade of the existing 
LNG terminal (Revithoussa) and the development of new 
ones, interconnections with Bulgaria through the reverse flow 
in  Kula-Sidirokastron  and  the  IGB,  to  Italy  with  the  Trans-
Adriatic Pipeline and, potentially, with IGI Poseidon and from 
Turkey with the upgrade of the compressor station in Kipi.

7.  Security of supply

Electricity

Electricity demand in 2012 remained fairly stable, exhibiting 
a minor decline of 0.5% relatively to 2011, while electricity 
production increased by 3.54% compared to 2011. Exports 
of electricity in 2011 increased by 40.4% compared to 2010, 
particularly due to exports to Albania171. Imports of electricity 
decreased by 15.7% in 2011, reaching 7 180 GWh. The main 
importers  were  Bulgaria  and  Turkey,  accounting  for  75.4% 
of total imports171.

167   DEDDIE SA.
168   RAE, 2012 National Report to European Commission, 2014.
169   LAGIE, Monthly Report December 2012.

170   Greek Ministry of Environment, Energy & Climatic Change.
171   Eurostat.

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G R E E C E

During 2012, there was no change regarding interconnection 
infrastructure  of  the  Greek  transmission  system  with 
neighboring gas systems, namely Bulgaria and Turkey. 

RAE has been assigned by the Greek State as the Competent 
Authority  for  the  implementation  of  the  provisions  of 
Regulation  (EU)  No  994/2010  concerning  measures  to 
safeguard security of gas supply. During 2011-2013 the 
risk  assessment  study,  the  preventive  action  plan,  the 
emergency action plan, and the joint reverse flow proposal 
of the two TSOs, of Greece and Bulgaria, for the activation 
of reverse flow on the border of Greece and Bulgaria have 
been approved by RAE.

To  enhance  security  of  supply  to  the  Aegean  islands 
and  facilitate  further  development  of  renewable  energy, 
underwater  interconnection  of  the  Cyclades  islands  is 
planned by ADMIE. The first phase of the interconnection will 
be  completed  by  2016  while  the  second  phase  is  planned 
for  2017.  According  to  the  last  approved  10-year  network 
development plan172, the interconnection of Crete is planned 
to take place during the period 2017-2020.

Gas

The demand for natural gas in 2011 was 4.80 bcm, out of 
which  approximately  66%  was  for  the  power  generation 
sector173. Imports of natural gas amounted to 41.8  TWh in 
2013, the majority of which (66% of total imports) came from 
Russia174. During 2012 DEPA imported gas primarily through 
existing long-term contracts from three different  suppliers, 
namely Gazprom, Sonatrach (LNG) and BOTAS, while several 
spot cargoes were also unloaded in Revithoussa.

G R E E C E   –  K E Y   I N D I C A T O R S

E L E C T R I C I T Y

G A S

Number of companies representing at least 95% 
of net power generation

Number of main power-generation companies

3

1

Number of entities bringing natural gas  
into country

Number of main gas entities

3

3

Market share of the largest power-generation company 63.5%

Market share of the largest entity bringing natural gas 88.6%

Number of electricity retailers

Number of main electricity retailers

11

1

Number of retailers selling natural gas to final customers

Number of main natural gas retailers

4

3

Switching rates (entire electricity retail market, by volume)

3.6% 

Switching rates for gas (entire retail market)

0.0%

Regulated prices for households – electricity 

Regulated prices for non-households – electricity

HHI in power-generation market

HHI in electricity retail market

Electricity market value (1) (bn€) 

Installed generation capacity (MW)

Peak demand (MW)

Number of smart meters installed

No

No 

6 183 

>9604 

4.249

16 521

9 894

N/A

Regulated prices for households – gas

Regulated prices for non-households – gas

HHI in gas supply market

HHI in gas retail market

Gas market value (1) (bn€)

Yes

Yes

N/A

0.753

Sources: Eurostat, CEER, National Regulatory Authority, EC calculations.

(1)   Market value is an estimation of the size of the retail electricity and gas markets. It is calculated using data on electricity  

and gas consumption in the household and non-household sectors (average bands) and annual average retail prices.

172   Government Gazzette B’ 556/05.03.2014.
173   RAE, 2012 National Report to European Commission, 2014.
174   Eurostat.

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Key issues

 → In 2013, Spain began an electricity market reform, with the main aim of eliminating 
the  tariff  deficit.  The  Parliament  passed  a  new  Electricity  law  in  December  2013, 
which was followed by a range of new secondary regulations in 2014. The reform was 
criticized for having retrospective effects and limited consultation with stakeholders, 
therefore  Spain  should  increase  participation  and  transparency  in  the  regulatory 
process to reduce perceived regulatory risks. The market reform should be completed, 
to reach further regulatory harmonization with the rest of Europe and reduce State 
intervention. Also, necessary steps should be taken to minimise impact of this reform 
on the renewable and cogeneration energy production to ensure that Spain is able to 
meet its 2020 renewable targets.

 → Spain should continue its efforts to complete the electricity and gas interconnections 
with neighbouring countries, particularly France. The creation of an Iberian Gas hub 
in  line  with  the  South  Gas  Regional  Initiative  and  the  Gas  Target  Model  is  a  key 
challenge. Consumer satisfaction remains low. Whereas for electricity a large 
segment  of  the  population  is  identified  as  vulnerable  customers,  for  gas  no 
vulnerable customer group has been identified. 

1.  General overview

2.  Regulatory framework

Total gross energy consumption has continued to fall in 
recent years in line with economic output. In 2012 it totalled 
127.3 Mtoe, 0.7% down from previous year and 10.2% down 
from 2008. Despite the overall decrease, consumption from 
renewable sources and solid  fuel has grown and  displaced 
other energy sources. In 2012, the renewables share in 
gross final energy consumption reached 14.3%175, remaining 
above  the  country’s  2011/2012  interim  trajectory.  Thus, 
Spain is currently on track to achieve its national 2020 RES 
target of 20%.

F I G U R E S  1   A N D   2

General

In  December  2013,  the  Spanish  Parliament  passed  a  new 
electricity law. The law is part of an electricity market reform 
package which was announced in early 2013. It is mainly 
aimed at eliminating the tariff deficit by reducing regulated 
costs allocated to the system and increasing the revenue, 
e.g. from additional taxes. The new regulatory framework 
establishes  that  no  new  costs  shall  be  introduced  into 
the  electric  power  system  without  an  equivalent  revenue 
increase or cost reduction.

Gross inland consumption mix 2008-2012

Gross electricity generation mix 2008-2012

60% 

50% 

40% 

30% 

20% 

10% 

0% 

45% 

40% 

35% 

30% 

25% 

20% 

15% 

10% 

5% 

0% 

2008 

2009 

2010 

2011 

2012 

2008 

2009 

2010 

2011 

2012 

Solid fuels
Nuclear

Natural gas
Renewables

Crude oil and petroleum products

Solid fuels
Nuclear

Natural gas
Renewables

Crude oil and petroleum products
Other

Source: Eurostat

Sources:  EU energy in figures - “Statistical Pocketbooks 2012 and 2013”, 

European Commission

175   Eurostat.

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S P A I N

The reform includes a new support scheme for existing and 
new renewable and CHP plants, changes in the remuneration 
of network activities and changes in final users’ tariffs. The 
changes in tariffs include a new regulated price for small 
customers and a new injection charge for those users with 
micro-generation  plants,  created  to  reflect  unavoidable 
supply  costs.  The  new  measures  have  been  objected  to  by 
energy producers (renewable and conventional), distribution 
system  operators,  consumer  associations  and  political 
parties  on  different  grounds.  Most  stakeholders  complain 
that the reform unduly reduces their remuneration while 
increasing  regulatory  risks,  and  consumers  criticise  the 
increase in electricity charges. 

Increased  participation  and  transparency  in  the  regulatory 
process could contribute to reduce opposition and regain the 
trust  of  stakeholders  and  consumers.  Regulation  in  Spain 
could also benefit from greater harmonization with the rest 
of Europe in topics such as retail and renewable support.

A  reform  of  the  gas  sector  has  also  been  announced.  In 
particular, a new gas exchange is planned to start functioning 
by 1 January of 2015, in order to increase transparency for 
wholesale gas prices.

Spain  could  make  use  of  the  on-going  reform  to  simplify 
the legislative framework applicable to the energy sector, to 
limit the number of legislative acts in force and to reduce the 
recourse to urgent measures, for the sake of legal certainty 
of the market players. 

National Energy Regulator

In October 2013, the role of the National Energy Regulator 
was attributed to a new agency, the National Authority for 
Markets and Competition (Comisión Nacional de los Mercados 
y la Competencia, CNMC). The CNMC is the result of a merger 
of  the  previous  antitrust  authority  with  six  regulatory 
agencies (responsible for telecom and audiovisual, electricity 
and  natural  gas  markets,  postal  sector,  airport  and  certain 
aspects of the railway sector).

The CNMC is a public law entity with its own legal personality 
and full public and private capacity. 

Unbundling

Currently,  the  entire  electricity  transmission  network  is 
owned  and  operated  by  Red  Eléctrica  de  España  (REE), 
a  certified  TSO.  REE  is  independent  of  other  companies 
in  the  sector.  Enagas  Transporte,  S.A.U.  was  certified  as 
an  ownership  unbundled  TSO  for  its  own  network  (more 
than  95%  of  gas  transport  pipelines)  and  as  ISO  for  other 
companies’  pipelines.  The  electricity  and  gas  DSOs  are 
legally and functionally unbundled. 

3.  Wholesale markets

Electricity

Electricity  production  in  Spain  fell  in  2013  to  274  TWh  – 
after a small recovery in the previous year – driven by the 
continued fall in electricity consumption and a reduction in 
electricity exports (which were 37.9% lower than in 2012). 
Production from gas fuelled CCGTs saw the biggest reduction, 
while production by renewable power plants increased.

In 2014, the Iberian day-ahead market, OMIE, was coupled 
with  the  Central  and  Northern  European  markets,  as  part 
of  a  Europe-wide  market  coupling  process.  OMIE  has  been 
the market operator for both Spain and Portugal since mid-
2007. The coupling process will allow infrastructure between 
Spain and France to be used more efficiently, although the 
interconnection  is  already  used  at  nearly  full  capacity.176 
Conversely, congestion in the Spain-Portugal interconnection 
has  continued  decreasing  in  2013,177  partly  due  to  the 
increase  in  the  interconnection  capacity.  The  next  step  will 
be to focus on integrating the intraday market with the rest 
of Europe, which is especially relevant in terms of facilitating 
renewable energy integration.

Also  in  2014,  on  25  March,  the  first  joint  auction  of 
electricity  interconnection  capacity  between  Spain  and 
Portugal took place, under a mechanism based on financial 
transmission  rights  (FTR)  established  in  the  MIBEL  Council 
of  Regulators  (CR  MIBEL).  This  auction  constitutes  the  first 
European capacity allocation mechanism based on financial 
transmission rights (FTR).

The  current  annual  budget  of  CNMC  to  carry  out  all  of  its 
tasks – not just energy – amounts to 52.8 million Euros and 
the number of staff is 519 people. It is important that CNMC 
retains adequate human and financial resources and that it can 
exercise its powers and tasks under the Third energy package 
effectively and independently, especially on tariff setting. 

Market concentration, which had been falling for a number 
of  years  with  the  increase  in  smaller  renewable  energy 
generating companies, has remained stable in recent years. 
The largest generation company in Spain in 2012 accounted 
for  a  23.8%  of  the  total  energy  sold  and  there  were  five 
other companies that generated more than 5%.

176   Since June 2013, the Government has lifted the ban on electricity 
imports imposed to companies tagged as dominant players.

177   CNMC, Informe de supervisión del mercado peninsular 

mayorista al contado de electricidad, July and August 2013.

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After  a  short-lived  reduction  in  2012,  forward  trading  in 
the Spanish market recovered its growth trend. The trading 
volume  in  the  period  up  to  March  2014  (109.85  TWh) 
increased  42.2%  compared  to  the  same  period  in  2013. 
Furthermore,  the  OTC  volumes  cleared  and  settled  by  the 
Portuguese and Spanish clearing houses (i.e. OMIP clearing 
house (OMIClear) and by BME Clearing) measured 71.84 TWh, 
increasing significantly (+95.1%) in year 2013 compared to 
year  2012  (36.82  TWh).  OTC  physical  trading  consistently 
accounts  for  around  30%  of  the  final  energy  delivered  in 
the daily schedule.178 Trading in the Spanish part of the day-
ahead OMIE market recovered in 2013, to 185 TWh, but is 
still  17%  below  the  2008  figure.  Intraday  trading  volumes 
also dropped in 2013 to 36 TWh after a sustained increase 
during  the  previous  years.  Balancing  energy  has  also  been 
falling,  even  after  accounting  for  the  decrease  in  energy 
traded.

LNG  terminals  as  well  as  the  virtual  balancing  point  and 
the  virtual  storage  point).  78.2%  of  trades  occurred  in  the 
LNG terminals. In addition to OTC trading, the gas wholesale 
market  is  comprised  of  auctions  at  different  horizons  for 
regulated activities (for the Last Resort supply and working 
and  cushion  gas).  These  auctions  are  run  by  OMIE,  the 
electricity market operator. 

Due to the absence of an organised gas hub, there is no 
single liquid transparent gas reference price in Spain. CNMC 
has developed a gas import index price, reflecting the cost of 
long term contracts supplying the Spanish gas market. This 
index shows that gas import prices nearly doubled between 
July 2009 and December 2012 (to EUR 27.10/MWh) linked 
to oil price developments. During 2013 the import price is in 
slight decline (to EUR 26.39/MWh in December 2013).

The average price in the day-ahead market was EUR 44.26/
MWh in 2013, falling from 47.23 in 2012 and 49.93 in 2011. 

It would appear appropriate for CNMC to review the entry-exit 
regime in Spain with the aim to enhance cross-border trade 
and allocate system costs on a non-discriminatory basis.

Gas

Spain  imports  most  of  the  gas  it  consumes,  since  its  gas 
production is minimal (392 599  GWh of imports in 2012 
against  393  GWh  of  domestic  production).  Natural  gas 
consumption  decreased  by  8%  in  2013  because  of  the 
reduction  of  the  use  of  gas  in  power  generation  due  to 
the  favourable  coal  prices  and  the  increase  of  generation 
by renewable sources. By contrast, industry and household 
demand for gas in 2013 remained constant, at 2012 level.

There are three main supplier countries: Algeria (42.4%), 
Nigeria  (15.4%)  and  Qatar  (11.6%),  and  up  to  eighteen 
companies  injecting  gas  in  the  system  (in  2012).179  In 
fact, Spain has one of the highest levels of gas supplier 
diversification in Europe. In 2012, most imports were still in 
the form of LNG (60.6% of the total). In 2012, Spain was the 
only major market in Europe which imported less gas through 
pipelines than through LNG terminals. However, LNG imports 
are  decreasing  (e.g.  by  23%  in  the  first  quarter  of  2013 
compared  to  2012),  and  in  2013  imports  through  pipelines 
surpassed LNG, due to a drop in demand, high LNG prices and 
the newly commissioned interconnection with Algeria. In the 
last few years, Spain has been re-exporting LNG.

Gas  is  traded  bilaterally,  mostly  through  OTC  contracts. 
At  present  there  are  two  different  initiatives  competing  to 
become a Spanish gas hub. In March 2014 the two initiatives 
signed a MOU that may result in a merge of both projects. 
To date, trading can take place at eight balancing points (six 

4.  Retail markets

Electricity

Since 2003, all electricity consumers are eligible to choose 
their electricity supplier. However, most are still supplied 
under regulated tariffs. Customers with contracted capacity 
below  10  kW  have  the  right  to  be  supplied  under  the 
regulated  regime  (93.8%  of  all  customers).  At  the  end  of 
2013,  60%  of  those  customers  were  supplied  under  the 
regulated mechanism while in 2011 this share was 76%. 

Competition  in  retail  supply  continues  to  rise,  with  a 
significant  and  steady  increase  in  the  switching  rate  (from 
5.2% in 2009 to 12.1% in 2012). However, most competitors 
focus  on  the  commercial  and  industrial  segments.  The 
largest retailer at the end of 2012 was Endesa with a 37% 
market share of the whole free market.

Despite the competitive market conditions, final customers’ 
prices have increased considerably in previous years. From 
2008 to 2012, final electricity prices have increased by an 
average 9.9% per year for domestic customers and 3% for 
industrial customers.180 The increase for domestic customers 
is due to an increase in network costs and taxes (26% and 
14.8% annual increase respectively). In 2012 network costs 
accounted for 54.0% of the price without taxes and 42.5% 
after  taxes.  For  industrial  electricity  prices,  the  share  of 
network costs was 19.0% of the final price.

178   Sources: Part of the OTC physical trades is reversed  

in the day-ahead market. Daily schedule refers to the PBF 

schedule. Source: based on data from REE and OMIE.

179   Including all companies which produce natural gas domestically 

as well as abroad.

180   Eurostat.

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F I G U R E S  3   A N D   4

Electricity price change by component 2008-2012 (in € cent/kWh)

Natural gas price change by component 2008-2012 (in € cent/kWh)

H O U S E H O L D S

I N D U S T R Y

H O U S E H O L D S

I N D U S T R Y

S P A I N

25 

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10 

5 

0 

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7 

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5 

4 

3 

2 

1 

0 

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2008

2012

Taxes+Levies 

Networks

Energy+Supply

Taxes+Levies 

Networks

Energy+Supply

Source: Eurostat

Sources: EC, EPCR metadata

In July 2013, the Government rebalanced the two components 
in  the  electricity  tariffs,  a  capacity  component,  per  kW 
contracted, and an energy component, per  kWh of energy 
consumed. The change aimed to make tariffs more cost-
reflective and increased the average supply cost for customers 
with lower than average load factors, such as holiday homes.

Since 1 April 2014, the Spanish Government has put in place 
a  new  mechanism  that  links  the  retail  market  electricity 
price  to  the  wholesale  market  price.  This  new  mechanism 
seeks  to  remove  the  regulation  of  the  commodity  prices 
in  electricity  bills  for  householders  in  Spain  established 
in  2009  and  in  place  until  now.  Whilst  this  is  expected  to 
bring positive changes with regard to competition, it should 
be  accompanied  with  intensive  information  campaigns 
addressed to consumers at large. 

Gas

The  market  concentration  level  of  the  Spanish  natural  gas 
retail  sector  shows  moderate  concentration  with  a  HHI 
of  2 250  in  2012.  The  three  largest  companies  still  cover 
almost 70% of the share of natural gas supply, but there are 
stronger signs of new entrants’ activity. 

The total number of gas consumers in December 2012 was 
7.4  million,  with  gas  demand  of  362  TWh.  By  December 
2012,  69.07%  of  customers  were  supplied  at  a  free 
price,  while  30.93%  remained  under  the  regulated  last 
resort tariffs. Only small customers, consisting mostly of 
households  are  eligible  for  this  tariff  that  the  Government 
sets with reference to periodic gas auctions.

Customers’  switching  rate,  19.32%  in  2012,  stabilised 
around the 2011 value after the previous year’s increases. 
80% of the switching rate occurred within the free market 
and less than 20% was due to a move from the last resort 
supplier to the free market. 

5.  Consumers

Spanish  consumers  rate  the  performance  of  their  retail 
electricity  market  second  lowest  of  all  EU  countries 
(58.5  points  compared  to  72.0)  and  the  assessment  has 
further decreased (by 1.4 points181) since 2012. The market 
also ranks 4th lowest in the ranking of 31 domestic services 
markets.  The  scores  on  trust  in  providers  and  overall 
consumer  satisfaction  are  second  and  third  lowest  in  the 
EU respectively while the incidence of problems is second 
highest. The retail gas market is ranked third lowest in the 
EU (69.4 points compared to 74.1), with the 3rd lowest score 
for  trust  and  highest  incidence  of  consumer  complaints  to 
third parties. Both markets score below the EU average on all 
indicators, with the exception of switching in the electricity 
market (which is slightly above the EU average). 182 

New measures have been introduced, including the Ministry 
taking over responsibility for information and complaint 
handling,183 although the CNMC remains in charge of other 
protective functions, such as operating web-based gas and 
electricity price comparison tools. Suppliers need to inform 
clients  about  their  rights  and  establish  a  procedure  in  the 

181   However the difference is not statistically significant.
182   10th Consumer Markets Scoreboard, http://ec.europa.eu/

consumers/consumer_evidence/consumer_scoreboards/10_

edition/index_en.htm

183   Law 3/2013, of creation of the National Markets  

and Competition Commission.

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S P A I N

case  of  complaints.  Free  customer  information  services 
must be made available. Additionally, a new law adopted on 
27 March 2014 has introduced new measures in switching 
for  gas  and  electricity,  setting  up  clear  procedures  when 
desisting  from  a  switching  request  and  procedures  in  case 
of non-requested switches.

In the context of the TEN-E Regulation, Spain has 5 Projects 
of  Common  Interest  (PCI)  that  will  help  to  increase 
interconnection  level  with  Portugal  and  France  and  will 
contribute to integrate RES into the grid. However, the 10% 
Barcelona  target  will  not  be  reached  by  2020  with  the 
selected PCIs.

Spain  maintains  public  service  obligations  through  Last 
Resort Suppliers. Customers whose retailers fail are supplied 
under the last resort tariffs until they sign a new contract. 
The concept of vulnerable costumers has only been defined 
so far for electricity customers. Vulnerable customers should 
fulfil at least one of the following criteria: a large family or 
a family where all members are unemployed; be low voltage 
consumers  (less  than  1  kV)  with  contracted  demand  lower 
than or equal to 3 kW; or a pensioner older than 60 years with 
a minimum level pension. Vulnerable customers’ electricity 
tariffs are reduced by means of a “social bonus”, which sets 
their  tariffs  at  the  July  2009  level.  As  of  December  2012, 
2 544 170 customers were defined as vulnerable. 

6.  Infrastructure

The Spanish authorities should ensure a proper and timely 
adoption  of  the  measures  stemming  from  the  TEN-E 
Regulation, including the establishment of the one-stop-shop 
for Projects of Common Interest (PCIs) (due by 16 November 
2013),  and  other  measures  foreseen  for  2014  and  2015, 
including  the  publication  of  the  manual  on  the  permit 
granting process for project promoters, and the adoption of 
legislative  and  non-legislative  measures  streamlining  the 
environmental assessment procedures.

Electricity

The reduction in electricity demand has delayed the need 
for  new  infrastructure  and  led  to  adjustments  in  the 
remuneration of networks. Conventional generation capacity 
has  been  reduced  by  1 600  MW  since  2010  due  to  the 
closure of some old coal, fuel-oil and diesel plants. However, 
renewable  capacity  commissioned  in  2013  has  decreased, 
following  Government  measures  to  freeze  subsidy  costs, 
although at lower rates than in previous years. In mainland 
Spain,  540  MW  of  new  capacity  was  installed  in  2013 
against 2 860 in 2012. 

Reinforcements to the transmission network have added 747 km 
of new line to the grid (1.9% of the total network length), down 
from 860 km in 2012. Despite these reinforcements, there has 
been  an  increase  in  transmission  constraints  in  recent  years, 
potentially due to intermittent generation. 

Gas

Spain  has  six  LNG  terminals  and  a  seventh  regasification 
plant  in  Gijon  was  completed  in  2012.  The  new  plant  is 
not in operation at the current time as the stagnated level 
of  demand  does  not  justify  it.  Spain  has  interconnection 
pipeline  connections  with  Morocco,  Portugal,  France  and  a 
direct  connection  with  Algeria.  The  transmission  capacity 
with  France  was  upgraded  in  2013  providing  reverse  flow 
interconnection at Larrau which reinforced the North-South 
interconnections.  There  are  four  underground  storage 
facilities  covering  9.1%  of  the  demand.  An  underground 
storage project expected to enter into operation in 2013 
has been delayed after gas injection works led to intense 
local  earthquakes.  The  project  would  have  increased  the 
underground storage capacity to around 14% of the demand. 
Forthcoming planned investments in gas infrastructure were 
revised and delayed (excluding international commitments) 
because of lower than expected demand.

In  the  context  of  the  TEN-E  Regulation,  Spain  has  one  PCI 
that will help increase interconnection level with France.

7.  Security of supply

Electricity

Spain has a comfortable generation capacity margin, due 
to earlier strong investments in CCGT and renewable plants 
and the reduction in electricity demand. No significant new 
capacity will be required in the coming years. 

The steady increase in interconnection capacity with Portugal 
and France is helping Spain to manage the integration of 
high  volumes  of  renewable  energy.  In  August  2012,  the 
Balearic  Islands  electricity  system  was  connected  to  the 
Mainland  system,  enhancing  the  security  of  supply  in  the 
islands. However, new investments in transmission may still 
be required to provide better integration for those areas 
facing frequent congestions.

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S P A I N

Gas

Spain  has  managed  its  dependency  on  imported  gas  by 
increasing the capacity of LNG terminals and diversifying its 
gas suppliers. In addition, it requires shippers to maintain a 
certain volume of stored natural gas at the beginning of the 
winter season.

S P A I N   –  K E Y   I N D I C A T O R S

E L E C T R I C I T Y

G A S

Number of companies representing at least 95% 
of net power generation

Number of main power-generation companies

>15

5

Number of entities bringing natural gas  
into the country

Number of main gas entities

18

4

Market share of the largest power-generation company  23.8%

Market share of the largest entity bringing natural gas 48%

Number of electricity retailers

Number of main electricity retailers

225

4

Number of retailers selling natural gas to final customers

Number of main natural gas retailers

14

6

Switching rates (entire electricity retail market)

12.07%

Switching rates for gas (entire retail market)

19.32%

Regulated prices for households – electricity 

Regulated prices for non-households – electricity 

HHI in power-generation market 

HHI in electricity retail market 

Electricity market value (1) (bn€)

Installed generation capacity (MW, 2011)

Peak demand (MW)

Yes

Yes

1 329

2 240

27.199

102 804

43 527

Regulated prices for households – gas

Regulated prices for non-households – gas

HHI in gas supply market

HHI in gas retail market

Gas market value (1) (bn€)

HHI for gas imports 

HHI for retail market  
(household/industry/electricity generation)

Numbers of smart meters installed

7 910 569

HHI for households  
(excluding industry and electricity generation)

Yes

No

2 399

2 264

7.414

2 710

2 250

3 800

Sources: Eurostat, CEER, National Regulatory Authority, EC calculations.

(1)   Market value is an estimation of the size of the retail electricity and gas markets. It is calculated using data on electricity  

and gas consumption in the household and non-household sectors (average bands) and annual average retail prices.

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E
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F

Key issues

 → Both wholesale and retail electricity and gas markets continue to be highly 
concentrated. Despite improvements, especially for gas, regulated tariffs continue to 
prevent alternative suppliers from entering the retail and wholesale markets. France 
would benefit from further liberalising the wholesale electricity market which remains 
one  of  the  most  concentrated  in  the  EU.  The  renewal  of  hydroconcessions  appears 
as  an  opportunity  to  foster  a  more  competitive  landscape  for  electricity  generation 
in France. 

 → Despite a good degree of market integration, limited electricity interconnection 
capacity with neighbouring countries (especially with Spain) continues to inhibit the 
development of competition and constrain the security of supply. 

 → Gas  infrastructure  should  also  be  developed  to  alleviate  internal  congestion 

between balancing zones and increase cross-border flows. 

1.  General overview

F I G U R E S  1   A N D   2

The  structure  of  the  national  energy  mix  has  remained 
relatively  stable.  Nuclear  energy  continues  to  hold  the 
highest market share (approximately 43%), followed by  oil 
products (32%) and natural gas (14%).

France  has  an  obligation  to  reach  23%  of  RES  share  in 
gross final energy consumption by 2020. Despite the fact 
that  France  has  stayed  somewhat  below  its  2011/2012 
interim target (12.8%), the share of renewable energy has 
nevertheless  increased  from  11.3%  (2011)  to  13.4%  thus 
showing a positive trend (2012). This positive result is mainly 
due  to  contribution  from  the  heating  and  cooling  sector, 
which increased as a result of improved use of biomass.

On 18 June 2014, the French Energy Minister presented to 
the Council of Minister a draft law on Energy Transition. It 
will  be  debated  in  the  French  Parliament  this  autumn  and 
adopted early 2015. It sets ambitious targets such as a 40% 
reduction in greenhouse gas emissions in 2030 and a target 
of 32% of renewables in the total final energy consumption 
by  2030,  30%  reduction  in  fossil  fuels  consumption  by 
2030  and  final  energy  consumption  to  be  divided  by  2  at 
horizon  2050.  It  also  foresees  the  public  tendering  of 
hydroconcessions.

According  to  the  electricity  TSO  RTE184,  gross  electricity 
demand,  peaked  in  2010  (513  TWh)  and  later  returned  to 
near  2008  levels  (495  TWh  in  2013),  with  a  record  day 
consumption level registered in February 2012 (102.1 GWh). 
Trends  show  that  demand  is  becoming  more  sensitive  to 
daily  temperatures,  as  a  result  of  the  increased  use  from 
the residential sector.

184   http://www.rte-france.com/uploads/Mediatheque_docs/vie_systeme/

annuelles/Bilan_electrique/bilan_electrique_2013.PDF

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Gross inland consumption mix 2008-2012

50% 

45% 

40% 

35% 

30% 

25% 

20% 

15% 

10% 

5% 

0% 

2008 

2009 

2010 

2011 

2012 

Solid fuels
Nuclear

Natural gas
Renewables

Crude oil and petroleum products

Source: Eurostat

Gross electricity generation mix 2008-2012

90% 

80% 

70% 

60% 

50% 

40% 

30% 

20% 

10% 

0% 

2008 

2009 

2010 

2011 

2012 

Solid fuels
Nuclear

Natural gas
Renewables

Crude oil and petroleum products
Other

Sources:  EU energy in figures - “Statistical Pocketbooks 2012 and 2013”, 

European Commission

 
 
 
 
 
 
 
 
 
F R A N C E

The  market  share  of  nuclear  generation  is  stable  at  around 
74% of market supply, whilst the contribution of renewables 
has progressively increased, reaching 19% in 2013 (in 
comparison to 14% in 2010), with a decline in oil and gas 
generation. However, there has been a slowdown in the growth 
rate of both wind and photovoltaic productions, reflecting both 
the financial crisis and a reduction in incentives.

There  are  three  DSOs  operating  in  the  natural  gas  sector 
that serve more than 100 000  customers. In the electricity 
sector,  one  DSO  (ERDF,  a  100%  subsidiary  of  EDF)  serves 
over 95% of French consumers. DSOs compliance with the 
rules  of  independence  remains  mixed.  If  for  some  DSOs 
the  situation  has  improved,  the  NRA  noticed  that  some  of 
its  annual  requests  and  recommendations  have  remained 
unanswered  and  several  breaches  of  DSOs  independence 
rules were discovered in 2012 and early 2013.189 

2.  Regulatory framework

General

3.  Wholesale markets

France  has  notified  full  transposition  of  the  Third  Energy 
Package Directives.

Electricity

National Energy Regulator

Despite the new duties and powers attributed to the French 
National Regulatory Authority (Commission de Régulation de 
l’énergie  –  CRE)185  with  the  adoption  of  the  NOME  Law  in 
2010 (new organisation of the electricity market)186 and with 
the adoption of the law of 15  April 2013187, its resources 
have  further  decreased  reaching  18.9  million  euros188  in 
2014.  The  staff  limit  will  decrease  in  2014  to  130,  thus 
reinforcing  the  pressure  on  the  resources  of  the  regulator. 
CRE  has  expressed  once  more  serious  concerns  about  the 
situation as this puts at risk the fulfilment of its tasks.

Unbundling

The Réseau de Transport d’Electricité (RTE) is entirely owned 
by  EDF,  the  historical  national  utility  company.  RTE  owns 
and  manages  the  electricity  transmission  network.  The 
high pressure gas network is owned by two operators. The 
first operator is GRTgaz, who is jointly owned by GDF SUEZ 
(75%)  and  by Caisse  des  Dépôts  et  des  Consignations  and 
CNP Assurances (25%). The second operator is TIGF, which 
since July 2013 is owned by a consortium of Snam (Italian 
utility,  45%),  GIC  Private  Limited  (Singapore  utility,  35%), 
and EDF (20%). All three operators were certified in January 
2012 as TSOs under the ITO model. Further to a change in 
its shareholders, TIGF has been recertified in 2014 under the 
full ownership unbundling model.

The power generation market is highly concentrated. The HHI 
index  as  regards  installed  capacity  is  still  above  8 000  for 
electricity generation. Next to EDF who still exploits 91.5% 
of installed capacity, GDF Suez exploits 5.1% of the installed 
capacity  and  E.On  France  2.6%190.  Efforts  are  being  made 
to  reduce  market  concentration  through  measures  such  as 
the ARENH price, which secures access to a limited volume 
of  nuclear  generation  (maximum  of  100  TWh/year)  under 
regulated tariffs for alternative suppliers191, or Virtual Power 
Plants.  These  measures  should  be  further  improved  to 
continue to promote market access for alternative suppliers. 
France  plans  to  start  tenders  for  hydroelectric  concessions 
in  the  first  half  of  next  year  to  bring  competitors  into  the 
market.  The  vast  majority  of  France’s  hydro  plants,  the 
nation’s biggest source of power after nuclear reactors, are 
run by EDF (more than 80%), the remaining being operated 
by  GDF  Suez.  Under  the  latest  plan,  the  government  may 
group them by valley into concessions and adjust the expiry 
dates for current operating contracts. The renewal of these 
concessions appears as a unique opportunity to reshape the 
French electricity market in a more competitive way. 

The  wholesale  market  in  France  has  low  liquidity;  with  the 
majority (87% in 2012) of trading taking place over-the-counter 
(OTC).  In  February  2014  the  Northwest  European  coupling  of 
the  day-ahead  markets  from  the  Nordic  region,  Great  Britain 
and the Central Western Europe region (with which France was 
already  coupled)  went  live.  It  was  further  extended  to  Spain 
and Portugal in May and should extend to Italy and Slovenia at 
the end of 2014. Intraday market integration of the Northwest 
Europe  region  is  on-going.  A  project  for  coupling  with  spot 
markets is also under consideration.

185   The new competences regard mainly four activity fields: 

network tariffs definition, investments in network infrastructure 

development, TSOs’ certification and regulation of the access 

to nuclear power generation of the incumbent.

186   Nouvelle Organisation du Marché de l’Électricité, 7 December 2010.
187   This law implements the REMIT regulation n°1227/2011 according 
to which national regulators shall ensure that the prohibitions 

and the obligation set out in this regulation are applied.

188   http://www.assemblee-nationale.fr/14/budget/plf2014/b1428-

189   CRE, Respect des codes de bonne conduite et indépendance 
des gestionnaires de réseaux d’électricité et de gaz naturel, 

September 2013.

190   CRE, Annual Report to the European Commission, July 2014. 
191   Alternative suppliers are defined as non-incumbent suppliers. 
Incumbent suppliers are EDF, Local Distribution Companies 

tIII-a19.asp

and their subsidiaries.

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F R A N C E

Baseload spot price decreased by 7.8% in 2013, with respect 
to  2012,  assuming  an  average  value  of  EUR  43.24/MWh. 
Production  costs  have  decreased  due  to  low  coal  prices 
as well as low CO2 emissions prices. Furthermore, the high 
production of renewables in Germany influences the French 
wholesale  prices.  The  decline  of  the  day-ahead  price  also 
continued into the first quarter of 2014 with temperatures 
above normal.

Gas

France  imports  almost  all  its  natural  gas.  The  majority 
of  imports  (40.4%)  came  from  Norway.  LNG  market 
share,  reflecting  the  low  competitiveness  of  LNG  prices, 
decreased from 35% (2011) to 18% (2013). The market has 
traditionally been dominated by long-term import contracts 
linked  to  oil  product  prices.  Despite  historical  dominance, 
these  contracts  decreased  from  92%  of  overall  imports 
(2010) to 85% (2013). In addition, renegotiation efforts of 
French gas importers resulted in more hub indexation within 
the price formula of long-term contracts.

In  France  there  are  three  virtual  trading  points  (PEG  Nord, 
PEG  Sud  and  PEG  TIGF).  The  PEGAS  project  was  launched 
in  2013  as  a  cooperation  agreement  between  Powernext 
and  European  Energy  Exchange  (EEX).  It  combines  both 
companies’  natural  gas  market  activities,  increasing  the 
liquidity.  PEG  Nord  and  PEG  Sud  day-ahead  gas  price 
increased  in  2013  by  8%  and  12%  respectively.  PEG  Nord 
evolution reflects the trend of the adjacent continental hubs 
whereas  PEG  Sud  suffers  from  the  physical  congestion  at 
the  North-to-South  link  of  GRTgaz’s  transmission  system. 
Despite a still sluggish industrial demand, total consumption 
increased by 1.4% in 2013, mainly due to the cold weather 
conditions during winters 2011-2012 and 2012-2013.

4.  Retail markets

Electricity

Market concentration at retail level remained high in 2012 
as  only  8%192  of  consumers  were  served  by  alternative 
suppliers.  Since  2007,  consumers  have  had  the  choice 
between opting for free market prices and regulated tariffs 
which can only be offered by incumbents193. However by the 
end of 2013, 92% of residential customers and 86% of non-
residential customers remained under regulated tariffs. 

192   CRE, Annual Report to the European Commission, July 2014.
193   Return to the regulated tariff is possible for consumers under 

certain conditions.

Switching rates in the retail electricity market decreased in 
2012 to 3.4% in number of sites (a decrease of 0.3 points 
compared to 2011). It should be noted that there was also 
a registered increase in market opportunities awareness194.

Regulated tariffs were raised significantly in July 2013195 
and are expected to increase again in 2014196. This is mainly 
due  to  the  financing  needs  of  EDF  and  especially  to  the 
modernisation of its nuclear fleet197. These increases still 
do not cover totally EDF costs. Nevertheless, they slightly 
improved the competitiveness of free market priced offers.

Gas

Competition  increased  during  the  past  few  years.  On 
the  segment  of  industrial  consumers,  in  2013,  99%  of 
consumption was on market offers in volume, including 51% 
from  non-incumbents.  On  the  other  segments,  similarly  to 
electricity, concentration in gas at retail level remained high in 
2012 with approximately 12% of the final consumers supplied 
by alternative suppliers. Consumers have the choice between 
opting  for  regulated  or  non-regulated  prices.  However  in 
2013,  77%  of  residential  sites  and  50%  of  non-residential 
sites, remained under regulated tariffs198. The principal gas 
supplier,  GDF-Suez,  which  is  the  exclusive  provider  of  the 
regulated gas tariffs set by the government199, still dominates 
the market for households and small businesses. Switching 
rates retail market increased slightly, from 3.5% in 2010 to 
4.0% in 2011, and reached 5.0% in 2012.200

A formal decision to proceed with the roll-out of smart-
meters  has  been  taken  for  both  the  electricity  and  natural 
gas sector, after the cost-benefit analysis returned a positive 
outcome. There are currently two pilot projects on smart 
metering going ahead:

>  Linky:  started  in  2010,  the  project  conducted  by  ErDF 
involves 300 000 customers connected to the low-voltage 
grid. The project is at an early stage of intelligent network 
construction  and  aims  for  a  final  installation  target  of 
35 million smart meters.

194   http://www.cre.fr/documents/publications/rapports-thematiques/le-
fonctionnement-des-marches-de-detail-francais-2012-2013
195   http://legifrance.gouv.fr/affichTexte.do?cidTexte=JORFTEXT0000

27778284&categorieLien=id

196   http://www.cre.fr/operateurs/service-public-de-l-electricite-cspe/

montant

197   For more details, http://www.cre.fr/documents/publications/

rapports-thematiques/analyse-des-couts-de-production-et-de-

commercialisation-d-edf

198   CRE, Annual Report to the European Commission, July 2014.
199   GDF is the only provider of regulated gas tariffs for customers 

connected to the distribution network (GrDF). 

200   http://www.cre.fr/documents/publications/rapports-thematiques/
le-fonctionnement-des-marches-de-detail-francais-2012-2013

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F I G U R E S  3   A N D   4

Electricity price change by component 2008-2013 (in € cent/kWh)

Natural gas price change by component 2008-2012 (in € cent/kWh)

H O U S E H O L D S

I N D U S T R Y

H O U S E H O L D S

I N D U S T R Y

F R A N C E

18 

16 

14 

12 

10 

8 

6 

4 

2 

0 

7 

6 

5 

4 

3 

2 

1 

0 

2008

2013

2008

2013

2008

2012

2008

2012

Taxes+Levies 

Networks

Energy+Supply

Taxes+Levies 

Networks

Energy+Supply

Source: Eurostat

Sources: EC, EPCR metadata

>  Gazpar: the mass roll-out of gas smart meters was officially 
launched in the summer of 2013. The project is on behalf 
of GrDF and will start with a pilot project of 150 000 smart 
meters  by  2016,  to  be  extended  to  11  million  meters 
between 2017 and 2022201. 

5.  Consumers

French  consumers  rate  the  performance  of  their  retail 
electricity market well above the EU average (79.2  points 
vs.  72.0,  corresponding  to  4th  place)  as  well  as  above  the 
average of all domestic services markets (12th place out 
of  31).  The  market  has  the  third  lowest  percentage  of 
complaints  and  second  highest  assessment  of  trust  in  the 
EU. However, switching remains low in this market. This 
component  is  in  fact  the  only  component  evaluated  below 
the EU average. The assessment of the retail gas market is 
above the EU average (77.6 points compared to 74.1), which 
corresponds  to  7th  place  in  the  EU  ranking.  The  market  is 
evaluated  above  EU  average  for  all  its  components  except 
for switching, which remains low in France. The proportion of 
consumers  complaining  for  having  encountered  a  problem 
is  the  lowest  in  the  EU,  but  consumers  tend  to  complain 
more towards third-parties (5th highest proportion in the EU). 
Both  markets  have  seen  a  considerable  increase  in  score 
since  2012  (4  points  in  the  case  of  electricity  market  and 
4.6 points in the case of electricity).202

CRE  and  the  Energy  Ombudsman  (MNE)  jointly  manage 
an  information  website  on  energy  issues  which  provides 
information  on  the  opening-up  of  energy  markets  and  a 
comparison  tool  for  electricity  and  gas  retail  prices.  In 
2012,  371 000  consumers  received  information  through 
the  energie-info  platform.  An  online  tool  for  network  tariff 
calculation is also available on CRE’s website203.

Special  tariffs  are  reserved  for  households  with  an 
income  below  or  equal  to  a  threshold  of  entitlement  to 
supplementary  universal  health  cover.  These  tariffs  are 
available for both electricity and natural gas consumers. 
From  the  end  of  2013204,  these  social  tariffs  were  further 
extended to cover all households with an annual reference 
fiscal  income  per  unit  (revenu  fiscal  de  reference)  lower 
than EUR 2 175. The number of households benefitting from 
the social tariff is expected to increase from 1.9  million to 
4.2 million, equivalent to 8 million people205.

6.  Infrastructure

The  French  authorities  should  ensure  a  proper  and  timely 
adoption  of  the  measures  stemming  from  the  TEN-E 
Regulation, including the establishment of the one-stop-shop 
for Projects of Common Interest (PCIs) (due by 16 November 
2013),  and  other  measures  foreseen  for  2014  and  2015, 
including  the  publication  of  the  manual  on  the  permit 

203   http://www.cre.fr/reseaux/reseaux-publics-d-electricite/

calculatrices-des-tarifs

204   Décret no 2013-1031 du 15 novembre 2013 portant  

201   http://www.developpement-durable.gouv.fr/spip.

extension à de nouveaux bénéficiaires des tarifs sociaux  

php?page=article&id_article=37166

de l’électricité et du gaz naturel, http://www.legifrance.gouv.fr/

202   10th Consumer Markets Scoreboard, http://ec.europa.eu/

affichTexte.do?cidTexte=JORFTEXT000028200044&dateTexte=

consumers/consumer_evidence/consumer_scoreboards/10_

&categorieLien=id

edition/index_en.htm

205   Based on CRE estimations.

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F R A N C E

granting process for project promoters, and the adoption of 
legislative  and  non-legislative  measures  streamlining  the 
environmental assessment procedures.

7.  Security of supply

Electricity

Electricity

The  French  electricity  network  is  interconnected  with  all 
neighbouring  countries  through  export  capacities  totalling 
12  GW  and  import  capacities  of  8  GW.  This  export/import 
percentage  represents  between  8%  and  10%  of  the  French 
maximum  consumption206.  France  is  the  largest  exporter 
of  electricity  in  the  world  according  to  the  IEA  (47.6  TWh  in 
2013). The use of import capacity from Germany207 reached 
its  maximum  limit  during  50%  of  the  hours  in  2013.  The 
2013  RTE’s  ten-year  network  development  plan,  foresees 
investments of 3 billion euros in infrastructure before 2017. 
The first direct current underground trans-European link should 
be commissioned between France and Spain in 2015, for a total 
investment of EUR 700 million, including EUR 225 million from 
the European Energy Programme for Recovery (EEPR).

In the context of the TEN-E Regulation, France has 9 PCIs 
that  will  help  increase  interconnection  levels  with  the 
United Kingdom, Ireland, Belgium, Italy and Spain, remove 
bottlenecks and integrate RES to the network. Furthermore, 
these  PCIS  will  contribute  to  reach  the  10%  Barcelona 
target by 2020 with all the neighbouring countries with the 
exception of Spain.

Gas

Natural gas infrastructure in France consists of 6 entry/exit 
points, 15 storage facilities and 3 LNG terminals208. Market 
development has been facilitated by the implementation of 
a full entry-exit system. The number of market zones has 
progressively  been  reduced.  However,  market  development 
is limited by a division in three market zones. The creation 
of  a  single  French  hub  by  2018,  which  requires  important 
investments to eliminate internal congestions, is under study. 
In this respect, the commissioning by CRE of a cost-benefit 
analysis to evaluate the creation of a single French hub by 
2018  was  an  important  step  forward.  The  interconnection 
capacity  between  France  and  Spain  (doubling  the  size  of 
the  Larrau  interconnection)  was  successfully  upgraded  in 
both directions in 2013, which further reinforces the North-
South  interconnections.  Interconnection  with  Belgium  and 
the  reinforcement  of  the  French  network  in  the  North  of 
France by GRTgaz are ongoing, while a fourth LNG terminal 
in Dunkirk is being developed by EDF.

System’s adequacy is measured through the capacity margin/
shortfall  indicator  addressed  in  the  national  adequacy 
assessment  report  elaborated  by  RTE.  RTE  considers  it 
guaranteed  until  2015209.  However  from  2016  onwards, 
the risk of failure of the system is expected to increase. 
Despite  a  drop  in  total  electricity  demand,  the  hourly  peak 
load of France has recorded a drastic growth rate over the 
past few years, increasing by 18% between 2006 and 2012. 
At  the  end  of  2012  a  decree  introducing  a  decentralised 
capacity obligation mechanism, involving both the demand 
and the supply side, was approved. In 2013 RTE launched 
a  consultation  on  the  design  and  rules  governing  this  new 
mechanism.  The  Minister  of  Energy  approved  the  findings 
in November 2013. The expected first delivery year for the 
capacity market is anticipated between around 2017.

In  addition,  the  modalities  of  several  reserve  procurement 
mechanisms  to  ensure  short  term  operational  security 
reserves (ancillary services, replacement) were adapted 
to  foster  competition,  economic  efficiency  and  to  facilitate 
wider involvement of balance service providers. 

Gas

In  terms  of  infrastructures,  the  French  system  has  good 
capacity levels at entry points, LNG terminals and storages. 
Recent  market  developments  have,  however,  led  to  a 
decrease  in  LNG  imports,  due  mainly  to  the  rerouting  of 
cargoes towards the Asian market where prices have been 
much higher than in Europe. As a result, the French market 
has suffered from higher prices in the Southern region which 
is heavily dependent on LNG. At the same time, the volume 
of  gas  in  storages  has  been  tightening  up,  raising  some 
concerns about security of supply in case of cold winter. 
Consequently,  through  a  governmental  decree  adopted  in 
March 2014, the French authorities have decided to increase 
the level of mandatory storage that must be booked by all 
gas suppliers operating on the French market. 

Irrespective  of  levels  of  interconnection  capacities  at  the 
borders,  it  should  be  noted  that  France  is  constrained  on 
its  internal  interconnection  between  the  North  and  the 
South of the country. This constraint has not prevented gas 
flows to Spain to grow significantly after the commissioning 
of  new  interconnection  capacity  in  2013  at  Larrau.  Some 
interoperability  limitations  with  other  countries  in  north-

206   CRE estimates on average Net Transmission Capacities  

in 2012, http://www.cre.fr/documents/publications/rapports-

thematiques/rapport-interconnexions-2012

209   Based on RTE indications on system adequacy,  

207   Germany is the only net exporter of electricity to France.
208   http://www.developpement-durable.gouv.fr/IMG/pdf/Panorama-

http://www.rte-france.com/uploads/Mediatheque_docs/

vie_systeme/annuelles/bilan_previsionnel/bilan_

energies-climat_E2013.pdf 

actualisation_2013_v2.pdf

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F R A N C E

western  Europe  can  be  mentioned,  affecting  the  potential 
capacity  of  France  to  contribute  to  the  security  of  supply 
of Germany and Belgium. Two projects are under discussion 
which could benefit security of supply. The doubling of the 
Burgundy  artery  between  the  PEG  North  and  PEG  South 
zones  of  GRTgaz  and  the  de-odorisation  of  natural  gas 
and the implementation of reverse flows at the border with 
Germany which would allow flows from France to Germany 
of about 100 GWh per day.

F R A N C E   –  K E Y   I N D I C A T O R S

E L E C T R I C I T Y   (1)

G A S

Number of companies representing at least 95% 
of net power generation

Number of main power-generation companies

>5

1

Number of entities bringing natural gas  
into country

Number of main gas entities

20

4

Market share of the largest power-generation company 86%

Market share of the largest entity bringing natural gas 59%

Number of electricity retailers

Number of main electricity retailers

Switching rates (entire electricity retail market)

Regulated prices for households – electricity 

Regulated prices for non-households – electricity

HHI in power-generation market

HHI in electricity retail market

Electricity market value (2) (bn€)

Installed generation capacity (MW, 2011)

Peak demand (MW)

Number of smart meters installed

183

1

5.7%

Yes

Yes

>8 500

>4 500

34.259

131 353

102 098

270 000

Number of retailers selling natural gas to final customers

Number of main natural gas retailers

77

3

Switching rates for gas (entire retail market, 2011)

4.5%

Regulated prices for households – gas

Regulated prices for non-households – gas

HHI in gas supply market

HHI in gas retail market

Gas market value (2) (bn€)

Yes

Yes

4 000-5 300

>3 000

14.422

Sources: Eurostat, CEER, National Regulatory Authority, EC calculations.

(1)   Table contains 2012 data unless stated otherwise. Peak demand is taken from ENTSOE, Yearly Statistics & Adequacy Retrospective 2012.  

HHI in power-generation market is in terms of power generation. HHI in gas supply market is in terms of gross import of natural gas.

(2)   Market value is an estimation of the size of the retail electricity and gas markets. It is calculated using data on electricity  

and gas consumption in the household and non-household sectors (average bands) and annual average retail prices.

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Key Issues

 → Competition in Croatia’s energy market is still very limited. Market opening is needed 

to improve the investment climate and create incentives for new entrants. 

 → Croatia should step up its efforts to deregulate wholesale prices and prices for end-
users  and  complete  the  unbundling  process.  Market  liberalization  depends  on  the 
effective  enforcement  of  EU  law  including  competition  and  State  aid  rules  and  the 
removal of barriers to the export and import of gas. 

 → Investment in LNG terminal on the Croatian island of Krk is of strategic importance 

to regional energy security.

A

I
T
A
O
R
C

1.  General overview

Croatian  national  gross  energy  consumption  in  2012 
amounted to 8.12 Mtoe210. Crude oil, petroleum products and 
natural gas contributed the largest shares to the energy mix.

renewable energy sources in gross final energy consumption 
in 2012 amounted to 16.8%212, above Croatia’s 2011/2012 
interim trajectory, and is showing good progress towards its 
national target of 20% by 2020.

In  2012,  total  power  generation  reached  10.5  TWh  (a 
significant  decrease  compared  to  2010,  when  it  was 
14.1 TWh). Almost half of power generation mix comes from 
hydro. 

2.  Regulatory framework

General

Croatia has a long tradition of gas production by which it 
covers  over  70%  of  its  annual  domestic  demand.  In  2012, 
the domestic production of natural gas decreased. Imports 
increased significantly and a large amount of imported gas 
has  been  stored  in  underground  facilities211.  The  share  of 

The Energy Law adopted in 2012 aims at incorporating the 
Third  Energy  Package  into  Croatian  national  legislation213. 
Implementation  has  not  yet  taken  place.  In  2013,  the 
Croatian  Parliament  enacted  the  Strategic  Investments 
Act214.  It  gives  preferential  treatment  to  energy  projects  of 
national interest, regardless if they are private or public.

F I G U R E S  1   A N D   2

Gross inland consumption mix 2008-2012

Gross electricity generation mix 2008-2012

60% 

50% 

40% 

30% 

20% 

10% 

0% 

70% 

60% 

50% 

40% 

30% 

20% 

10% 

0% 

2008 

2009 

2010 

2011 

2012 

2008 

2009 

2010 

2011 

2012 

Solid fuels
Renewables

Crude oil and petroleum products
Waste (non-renewable) 

Natural gas
Other

Solid fuels
Renewables

Oil & gas products 
Other

Source: Eurostat

Sources:  EU energy in figures - “Statistical Pocketbooks 2012 and 2013”, 

European Commission

210    Eurostat.
211   The Croatian gas storage operator is Podzemo Skladiste Plina 
d.o.o (PSP) operating the storage facility Okoli Underground 

Gas Storage http://www.unece.org/fileadmin/DAM/energy/se/pp/

wpgas/23wpg_jan2013/NG_Croatia_Report_2012.pdf

212   Eurostat.
213   Official Gazette 120/12.
214   Official Gazette 133/1.

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C R O A T I A

National Energy Regulator

The  Croatian  Energy  Regulatory  Agency  (HERA)  was 
established  in  2004.  HERA’s  annual  budget  of  4.5m  EUR 
is  not  part  of  the  government  budget.  Funds  for  financing 
the  work  of  HERA  are  secured  from  income  from  its  own 
activities (collection of one-off fees and compensations).

The Cross-border transmission and allocation of interconnection 
capacity is progressing. In 2012, HEP TSO carried out its first 
multilateral coordinated cross-border transmission capacity 
auctions  with  Slovenian  and  Hungarian  operators.  HOPS  is 
striving  to  improve  further  integration  with  neighbouring 
electricity systems, including models for market coupling. 

Unbundling

Gas

The  unbundling  process  in  Croatia  is  not  yet  completed. 
The HEP Group (Hrvatska Elektroprivreda) is a state owned 
electricity  company,  engaged  in  electricity  production, 
transmission  and  distribution,  supply  and  trade,  as  well  as 
in  many  other  supporting  activities  including  other  energy 
sectors such as heat and natural gas.

In mid-2013 the Croatian TSO, HEP-OPS changed its name 
to Croatian Transmission System Operator (HOPS). The 
equity  capital  of  HOPS  was  increased  and  founding  acts 
amended to ensure functional unbundling from the rest of 
HEP Group, including a different visual identity. However, 
unbundling  certification  by  HERA  has  not  been  yet  notified 
to the Commission. The HEP Group has a monopoly on the 
energy  market  but  the  TSO  and  DSOs  have  independent 
accounting, legal and management systems. 

The gas transmission system operator Plinacro has been separated 
from the company INA for more than a decade, but its certification 
is still pending. Gas is distributed by 36 companies which operate 
at  a  local  level,  of  which  13  have  unbundled  their  supply  and 
distribution  operations215.  The  remaining  DSOs  serve  less  than 
100 000 customers and are exempted from the unbundling rules. 

3.  Wholesale markets

Electricity

The  power  generation  sector  is  also  dominated  by  HEP.  It 
was the largest electricity generator, covering 82% of the 
market in 2012. It owns a 50% stake in the Krsko nuclear 
power plant in Slovenia, near the Croatian border. HERA has 
so far issued 24 licenses for electricity generation, the most 
significant two being HEP and the independent producer TE 
Plomin  d.o.o.,  co-owned  by  HEP  and  RWE  Power216  (50:50), 
operating a 210 MW power plant217. At the wholesale level, 
the market is based on bilateral contracts. 

215    http://www.hera.hr/hr/html/dozvole_tab11.html
216   RWE Energija objective is to gain control of 10% of the total 
electricity market over the next three years. RWE Energija is 

entering the Croatian natural gas market: the aim is to expand 

its electricity provision services to include gas provision.

217   Croatia’s biggest telecom operator, T-HT (majority owned by Deutsche 
Telekom)  announced  it  would  start  delivering  electricity  to  local 

households and companies as part of a diversification plan.

There is currently no commodity exchange or gas hub. Wholesale 
gas trading is based on bilateral contracts. The conditions for a 
de  facto  opening  of  the  gas  market  have  been  met  with  the 
construction of the interconnecting gas pipeline between Croatia 
and Hungary which became operational on 3 August 2011. The 
Croatian gas market began its transition to an entry/exit model 
on 1 January 2014. Rather than seeking a new long-term deal 
(the supply contract with Italy’s ENI ended in December 2013), 
the Croatian oil and gas group INA-Industrija Nafte is focusing 
on  domestic  gas  resources  and  spot  markets.  INA’s  plan  to 
purchase all its gas imports on the spot market has sparked 
interest  from  Slovenia  and  Hungary,  from  which  shippers  can 
import. By moving to the new model, traders will be able to book 
entry and exit capacity separately and shipping gas to Croatia 
will be easier. However, some provisions in the Gas Market Act 
represent a serious obstacle to cross border gas flows, by obliging 
domestic gas producers to offer their gas primarily to suppliers of 
customers in the territory of Croatia and obliging public service 
suppliers to primarily purchase gas from domestic producers.

Until 31 March 2014, the company Prirodni Plin (owned by 
INA) remained the “supplier of suppliers” under the public 
service obligation of gas procurement at regulated prices. 
From  April  2014  until  2017,  this  function  was  transferred 
to HEP, which purchases the necessary gas from INA also 
at  a  regulated  price.  This  marked  the  beginning  of  a  three 
year transitional period before complete liberalisation of the 
market, which contradicts Croatia’s commitments under the 
accession negotiations. During this period households prices 
will remain regulated. 

4.  Retail markets

Electricity

In June 2013, two new power retailers entered the market 
offering electricity to customers connected to the distribution 
network. The response of small customers and households 
at  first  seemed  high,  although  the  actual  switching  rate  is 
unclear. This development is significant given that the price 
for  household  customers  remains  fully  regulated.  Recently 
the competition for customers gained momentum. Operators 
launched  advertising  campaigns,  promising  savings  on 
energy  bills  of  30%.  Though  the  Croatian  regulator  issued 
15  electrical  energy  supply  licences,  the  two  companies 
leading the campaign for swapping suppliers are Slovenia’s 
GEN-I  and  Germany’s  RWE.  In  practice,  supplier  switching 
rules are yet to be developed.

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C R O A T I A

F I G U R E S  3   A N D   4

Electricity price change by component 2008-2013 (in € cent/kWh)

Natural gas price change by component 2008-2012 (in € cent/kWh)

H O U S E H O L D S

I N D U S T R Y

H O U S E H O L D S

I N D U S T R Y

16 

14 

12 

10 

8 

6 

4 

2 

0 

7 

6 

5 

4 

3 

2 

1 

0 

2008

2013

2008

2013

2008

2012

2008

2012

Taxes+Levies 

Networks

Energy+Supply

Taxes+Levies 

Networks

Energy+Supply

Source: Eurostat

Sources: EC, EPCR metadata

Although below the EU average, Croatia’s domestic electricity 
prices  rose  by  16.9%  between  2008  and  2012.  Industrial 
price rises were lower (4%), in part due to a decrease in the 
network  costs  paid  by  industry.  In  2012,  energy  and  supply 
costs  accounted  for  60%  of  domestic  prices,  while  network 
costs  accounted  for  40%  (share  in  price  without  taxes  and 
levies).  For  industrial  consumers,  the  shares  were  58%  and 
42% respectively. In 2013, the price for industrial customers 
(without VAT) was EUR 91/MWh. For households, price reached 
a value of EUR 106/MWh (without VAT and other taxes).

Gas

Between  2008  and  2012,  Croatia’s  gas  prices  rose  by 
45%  and  94%  for  domestic  and  industrial  consumers 
respectively.218 The growth was due to a VAT increase (25% 
for both electricity and gas), and a major rise in the natural 
gas shipping rate. Although permitted, there were almost no 
switches  of  supplier  in  2012.  The  steep  rise  in  gas  prices 
has made helping customers a priority for the government. 
In 2013, industrial consumers paid 12.9 EUR/GJ on average, 
which  is  more  than  industry  pays  for  gas  in  North  West 
Europe. High prices negatively impact competitiveness of the 
Croatian economy.

5.  Consumers

According  to  the  law,  all  customers  are  eligible  and  free  
to  choose  their  supplier.  Protection  of  customers  is 
strengthened, particularly in terms of ensuring quality of 
service  and  protection  of  vulnerable  customers.  HERA  is 
in  the  process  of  preparing  a  rule  which  should  simplify 
the  switching  procedure  and  ensure  it  takes  no  more  than 

218    Eurostat.

3 weeks. It has appointed a council for customer protection, 
which  makes  recommendations  and  opinions  to  assist  the 
ongoing transformation of the sector.

6.  Infrastructure

The Croatian authorities should ensure a proper and timely 
adoption  of  the  measures  stemming  from  the  TEN-E 
Regulation, including the establishment of the one-stop-shop 
for Projects of Common Interest (PCIs) (due by 16 November 
2013),  and  other  measures  foreseen  for  2014  and  2015, 
including  the  publication  of  the  manual  on  the  permit 
granting process for project promoters, and the adoption of 
legislative  and  non-legislative  measures  streamlining  the 
environmental assessment procedures.

Electricity

There  are  several  Projects  of  Common  Interest  under  the 
guidelines for trans-European energy infrastructure planned 
in  Croatia,  including  two  electricity  clusters,  a  high  voltage 
transmission line between Croatia and Bosnia and Herzegovina 
and a high voltage transmission line between Croatia, Hungary 
and  Slovenia.  Considerable  investment  is  expected.  An 
800 million EUR investment in a 500 MW coal-fired power plant 
Plomin, is underway. The government is trying to find investors 
that would enable the delivery of a 500 MW gas plant in Osijek, 
which would help reduce imports of electricity, especially from 
Serbia. Investment scenarios are optimistic. 

Gas

The  gas  pipeline  Donji-Miholjac  –  Dravaszerdahely  between 
Croatia  and  Hungary  has  created  conditions  for  gas  market 
opening. This is the second supply route for imported natural 
gas with an annual pipeline capacity of 6.5 bcm. The cross-
border interconnector in Rogatec between Croatia and Slovenia 
is the supply route for Russian gas. Plinacro has finalised the 

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C R O A T I A

Due to its geographical position and location of generating 
plants, electricity is transported for most of the year from 
the  south  to  the  north  and  vice  versa,  and  from  the  north 
towards  the  east221.  Croatian  security  of  power  supply  is 
strengthened by  interconnecting  infrastructure  with  the 
systems of neighboring countries222.

Gas

Croatian Regulation on Security of Natural Gas Supply is not 
fully aligned with Regulation (EU) No 994/2010. The Preventive 
Action and Emergency Plan have not yet been adopted; there 
is no bi-directional flow obligation; no obligation to perform 
the Risk Assessment and no official obligation for a N-1 
rule application. Croatia is strategically located in terms of 
regional security of gas supply. A recent survey revealed the 
existence of promising deposits of gas and oil in the central 
and southern Adriatic. Delivery of  a PCI in LNG  terminal in 
Krk is quickest way to improve the whole region’s natural gas 
supply security.

implementation of its previous Network Development Plan by 
putting into operation the transmission pipeline Benkovac-Split219. 

The LNG terminal on Krk, on the list of PCIs, would open a cross 
European North-South corridor. To deliver the project, the government 
should  encourage  investors  but  for  the  time  being  contradictory 
signals are being conveyed. In January 2013, Gazprom and Plinarco 
adopted an action plan to implement the South Stream project in 
Croatia by 2016. A strategically important PCI (a least costly N-1 
solution for Croatia) is the Ionian-Adriatic Pipeline to Albania which 
creates a new energy corridor for the region.

7.  Security of supply

Electricity

The  Croatian  power  system  is  one  of  the  smallest  in 
Europe. It has 4  GW of installed generation capacity and 
15 000 MVA 220 of gross installed interconnection capacity. 

C R O A T I A   –  K E Y   I N D I C A T O R S

E L E C T R I C I T Y

G A S

Number of companies representing at least 95% 
of net power generation 

Number of main power-generation companies 

2

2

Number of entities bringing natural gas  
into country

Number of main gas entities

5

2

Market share of the largest power-generation company  82%

Market share of the largest entity bringing natural gas  60.8%

Total Number of electricity retailers

Number of main electricity retailers

Switching rates (entire electricity retail market) 

Regulated prices for households – electricity 

Regulated prices for non-households – electricity 

HHI in power-generation market

HHI in electricity retail market 

Electricity market value (1) (bn€)

Installed generation capacity (MW) 

Peak demand (MW)

Number of smart meters installed

9

2

N/A

Yes 

Yes 

7 738

4 516

1.197

4 000

3 193

N/A

Number of retailers selling natural gas to final customers

Number of main natural gas retailers

Switching rates for gas (entire retail market) 

Regulated prices for households – gas

Regulated prices for non-households – gas

HHI in gas supply market

HHI in gas retail market

Gas market value (1) (bn€)

36

3

N/A

Yes

Yes 

4 833

1 588

0.505

Sources: Eurostat, CEER, National Regulatory Authority, EC calculations.

(1)   Market value is an estimation of the size of the retail electricity and gas markets. It is calculated using data on electricity  

and gas consumption in the household and non-household sectors (average bands) and annual average retail prices.

219   http://www.energy-community.org/pls/portal/docs/2304177.PDF 
220    MVA is a measurement that also takes into account the reactive 

system of Bosnia and Herzegovina, the Transmission System 

Operator HEP OPS constitutes the control block SLO – HR – BIH 

power in the power load.

within the UCTE grid.

221   In 2012, the total cross-border Electricity Exchange by Borders (GWh) 
was: power flows to Croatia, 13 191; power flows from Croatia, 5 568.

222   Together with the Slovenian power system and the power 

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I

Key issues

 → Competition in the electricity market has been enhanced by the development of the 
electricity network and the excess of supply caused by demand reduction and growth 
in renewables. Despite all this, power prices in Italy are generally still higher than in 
other EU member states. 

 → Increasing  interconnection  capacity  and  developing  congestion  management  rules 
with neighbouring markets should be encouraged to allow the secure integration of 
renewables and better price alignment with adjacent countries. National infrastructure 
capacity should be increased to tackle the North-South disparities within the country. 

 → Competition within the gas sector has improved due to successful unbundling of the 
TSO and the implementation of new capacity allocation rules. Nevertheless, the spot 
market liquidity is still low. Security of supply at peak periods is limited due to low 
flexibility. Access rules to interconnection capacity should be further developed 
to avoid contractual congestions.

1.  General overview

2.  Regulatory framework

In  2012,  after  a  5%  decrease,  gross  energy  consumption 
reached 163 Mtoe. The share of oil products over the total 
consumption  (37%)  fell  below  the  share  of  natural  gas 
(38%)  for  the  first  time,  while  the  share  of  solid  fuel  and 
renewables  (13.5%)  increased,  thus  moving  Italy  closer  to 
achieving the 2020 renewables target of 17%.

General

A  new  national  energy  strategy  (Strategia  energetica 
nazionale, SEN) was approved at the beginning of 2013223 and 
confirmed  by  the  latest  Italian  Government.  Infrastructure 
development,  import  reduction  and  further  integration  into 
the  European  single  market  are  among  the  primary  goals 
for the electricity sector. Meanwhile, the natural gas sector 
focused on continuous development and integration into the 
European gas market, with the final aim of Italy becoming 
the primary hub in southern Europe.

F I G U R E S  1   A N D   2

Gross inland consumption mix 2008-2012

Gross electricity generation mix 2008-2012

45% 

40% 

35% 

30% 

25% 

20% 

15% 

10% 

5% 

0% 

60% 

50% 

40% 

30% 

20% 

10% 

0% 

2008 

2009 

2010 

2011 

2012 

2008 

2009 

2010 

2011 

2012 

Solid fuels
Renewables

Natural gas
Other

Crude oil and petroleum products

Solid fuels
Renewables

Natural gas
Other

Crude oil and petroleum products

Source: Eurostat

Sources:  EU energy in figures - “Statistical Pocketbooks 2012 and 2013”, 

European Commission

223   Interministerial decree of 8 March 2013,  

http://www.sviluppoeconomico.gov.it/, http://www.sviluppoeconomico.

gov.it/images/stories/normativa/decreto-8marzo2013-sen.pdf

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In 2012, Legislative decree 28/11 came into force, reshaping 
incentives for renewables: the Green Certificates mechanism 
was  replaced  by  feed-in  tariffs,  with  caps  to  limit  overall 
expenditure and to incentivise capacity. Auction procedures 
are planned for larger plants. 

National Energy Regulator

The  Italian  National  Energy  and  Water  Service  Regulatory 
Authority (Autorità per l’Energia Elettrica, il Gas ed il sistema 
idrico), which has been in operation since 1997, working in 
both  energy  and  water  services  regulation  had  172  staff 
in  2012  with  an  annual  budget  of  EUR  58.5  million.  The 
Authority  collects  levies  from  energy  market  and  water 
service stakeholders to cover this budget. 

Unbundling

In the first half of 2013 the Italian Regulator certified Terna, 
the main transmission system operator, under the ownership 
unbundling  regime.  There  is  a  total  of  138  electricity 
distributors, 10 of which serve more than 100 000 customers 
each.  In  2012,  the  market  share  of  Enel  Distribuzione,  the 
dominant  operator  in  distribution,  remained  stable  at  86% 
of total volume distributed.

Snam Rete Gas’s unbundling process from its former parent 
company (Eni) has been concluded and it is now certified 
as  an  ownership  unbundled  TSO.  In  September  2013 
Infrastrutture  Trasporto  Gas  was  certified  as  independent 
transmission  operator.  There  were  232  gas  distributors  in 
2012, of which 35 served more than 100 000 customers. In 
2013, there were five distributors with market share higher 
than 5%, with Snam providing almost 23% of market. In the 
coming years, the number of gas distributors will be reduced 
to 177 and each concession will be auctioned.

3.  Wholesale markets

Electricity

Competition on the wholesale market continues to improve: 
the  market  share  of  the  four  largest  operators  decreased 
by  5%,  compared  to  2011  (49%).  ENEL  remains  the  main 
market operator holding 25% of the market (26% in 2011), 
followed  by  ENI  (9%),  Edison  (7.2%)  and  E.On  (4.4%). 
Further progress was made by small-sized operators whose 
collective shares rose to 30.2%224. Global national electricity 
consumption  dropped  from  328.2  TWh  in  2012  to  317.1 
in 2013.225 

I T A L Y

Congestion  management  rules  were  improved  as  the 
introduction of market coupling between Italy and Slovenia 
brought  about  tangible  benefits,  mainly  by  improving 
efficiency  in  cross-border  capacity  transmission  rights 
allocation. As a result of this and a decrease in natural gas 
prices, a decline of the day-ahead prices was observed from 
the end of 2012. Even though Italy remains one of the best 
interconnected  European  countries,  the  average  price  of 
electricity was still above the rest of the Europe due to the 
generation park composition by far led by combined cycles 
gas fired plants (see Fig. 2). 

Gas

Final gas consumption continued to decrease, reaching the 
lowest  level  since  sector’s  liberalisation  (70  Gm3  in  2013 
against  74.9  Gm3  in  2012).  Net  volumes  of  imported  gas 
fell  consequently  as  well,  but  Italy’s  dependency  on  gas 
imports  remains  high  (90%).  In  2012,  Russia  was  Italy’s 
main  supplier  (35.2%)  followed  by  Algeria  (32.2%).226  LNG 
is imported mainly from Qatar. Most imported gas is based 
on  long-term  contracts,  with  just  4.6%  of  the  total  import 
purchased on European exchanges. 

Eni,  Edison  and  Enel  continued  to  dominate  gas  supply, 
increasing  their  share  to  a  combined  amount  of  78.2% 
(74.3% in 2011) but the concentration remains low (HHI in 
2012 below 500). 

Despite  rather  low  market  liquidity  (the  churn  rate  of  the 
Italian PSV remained stable at the 2011 level of 2.6) the 
level of competitiveness was enhanced by early introduction 
of congestion management rules at the North border. Prices 
on  the  OTC  spot  market  at  PSV,  after  a  21%  increase  in 
2012, remained largely stable at around EUR 28/MWh with 
reduced spread in respect of main European hubs. Products 
available at the gas exchange are increasing (the organised 
forward market was activated in 2013). 

4.  Retail markets

Electricity

Due  to  a  significant  downturn  in  power  demand  the  size 
of the retail market in 2012 decreased by 4.2% compared 
to  2011,  reaching  264  TWh.  Despite  the  numerous  active 
suppliers  (about  140),  the  standard  offer  market  remained 
concentrated,  as  85.4%  of  the  total  supply  was  provided 
by  Enel.  The  free  market  was  less  concentrated  with  a 
combined  share  of  the  three  main  operators  (Enel,  Edison 
and Eni) at 34.3%, of which the leading operator (Enel group) 
accounted  for  20.3%.  The  competition  on  the  overall  retail 
market was at medium level (HHI just above 1800) with only 
two companies having a market share greater than 5%.

224   AEEG, 2013 National report to the European Commission.
225    Assoelettrica,  

http://www.staffettaonline.com/articolo.aspx?ID=123738

226   AEEG, 2013 National report to the European Commission.

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I T A L Y

F I G U R E S  3   A N D   4

Electricity price change by component 2008-2012 (in € cent/kWh)

Natural gas price change by component 2008-2012 (in € cent/kWh)

H O U S E H O L D S

I N D U S T R Y

H O U S E H O L D S

I N D U S T R Y

25 

20 

15 

10 

5 

0 

10 

9 

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7 

6 

5 

4 

3 

2 

1 

0 

2008

2012

2008

2012

2008

2012

2008*

2012*

Taxes+Levies 

Networks

Energy+Supply

Taxes+Levies 

Networks

Energy+Supply

Source: Eurostat

Sources: EC, EPCR metadata - *no data available

In Italy, consumers that do not choose a supplier remain with 
a default supplier, the local DSO, which provides electricity 
according to a ‘standard offer’. In this case, the local DSOs 
buy  electricity  from  the  Single  Buyer  at  wholesale  market 
price.  Today  the  majority  (80%)  of  households  and  SMEs 
are  still  served  on  the  base  of  this  ‘standard  offer’.  Other 
consumers (i.e. other than households and SMEs) are obliged 
to  find  a  supplier,  but  if  they  cannot  find  a  suitable  offer, 
electricity  is  supplied  by  a  Last  Resort  Supplier,  selected 
through  an  open  auction.  Customers  remained  relatively 
active  in  switching  suppliers:  7.6%  of  the  total  number  of 
withdrawal  points  changed  supplier  in  2012  (compared  to 
7.0%  in  2011).  An  independent  data  hub  to  support  the 
switching process has been launched in 2013.

Gas

In 2012, domestic demands in the gas sector decreased by 
9% compared to 2011, with 64.2  Gcm of natural gas sold 
to the end market. As the share of the top three sellers (Eni, 
Enel  and  Edison)  decreased  slightly  (from  49%  in  2011  to 
47.5% in 2012) the market remained concentrated.

Consumers  have  been  able  to  choose  their  own  supplier 
since  January  2003.  Nevertheless,  the  majority  (84%)  of 
households  and  SMEs  are  still  served  on  the  base  of  this 
‘standard  offer’.  4.7%  of  overall  gas  customers  changed 
supplier in 2012, representing 45.2% of the total volume of 
gas  consumption.  An  independent  data  hub  to  support  the 
switching process has been launched in 2013. 

In 2013 the gas retail market regulatory framework in Italy 
has been redefined. The new balancing market, introduced in 
2011, decoupled the price from petroleum products, which 
led to a renegotiation of prices and quantities. This reform 
has incentivised the wholesale spot market and has brought 
prices  more  in  line  with  those  of  other  European  markets. 
The aim was to pass on the benefits deriving from wholesale 
spot  commodity  prices  to  consumers  through  a  reform  of 
the economic terms for the “servizio di tutela gas” (standard 
offer for domestic consumers).

5.  Consumers

Italy  has  implemented  several  instruments  to  protect 
consumers  and  promote  informed  choices.  The  NRA  acts 
as  single  point  of  contact  providing  online  information  to 
consumers  through  the  Consumers’  Atlas  as  well  as  an 
online price comparability tool. Italy has undertaken specific 
institutional  communication  campaigns.  In  2013,  the  NRA 
set up a new Energy Customer Conciliation Service227 parallel 
to the existing joint dispute resolution procedure protocols.

In 2012, the number of cases processed by the Energy Help-
Desk  228  decreased  by  6%  when  compared  with  2011  and 
numbering  almost  36 000,  submitted  mostly  by  residential 
customers.  The  NRA  has  also  adopted  a  Resolution  on 
the transparency of billing. Other forms of protection are 
the presence of a last resort supplier and of social tariffs 

227   This service is provided completely online, and provides  
for a third-party conciliator who is independent of the 

two parties with expertise in mediation and energy.

228   A help tool managed in collaboration with the Single Buyer 

(Acquirente Unico) that is conducting material, informational 

and fact-finding activities and ensuring the effective processing 

of complaints.

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I T A L Y

available for vulnerable customers who suffer from financial 
hardship  or  serious  health  conditions229.  The  number  of 
families  who  have  benefited  from  social  tariffs  is  957 192 
for the electricity sector and 609 301 for the gas sector230. 

The  assessment  of  both  retail  electricity  and  gas  markets 
in  Italy  is  the  5th  lowest  in  the  EU  and  well  below  the  EU 
average (65.7 and 71.0 points compared to 72.0 and 74.1, 
respectively).  In  addition,  the  score  of  both  markets  is 
well  below  the  average  observed  for  31  domestic  services 
markets  (almost  8  points  for  electricity  and  over  2  points 
for  gas),  with  30th  and  21st  position  in  the  ranking.  While 
the performance of gas market has stayed relatively stable 
since  2012,  the  electricity  market  has  seen  a  considerable 
(4.2) decrease in score. The electricity market scores below 
the  EU  average  on  all  indicators  (with  the  third  lowest 
score on trust in providers) with the exception of switching 
provider or tariff plan with the existing provider (which is 4th 
highest in the EU). Likewise gas services are assessed below 
EU  average  on  all  the  components  with  the  exception  of 
switching provider or tariff plan (with the 4th lowest EU score 
on  overall  consumer  satisfaction  and  4th  highest  incidence 
of complaints). 231

Electricity

Various  upgrades  of  the  internal  grid  were  completed  in 
2012  allowing better integration  of different  market zones 
and  improving  the  transit  of  electricity  throughout  the 
critical  South-Central-South  section.  Future  investments 
include  19  Projects  of  Common  Interest  under  the 
guidelines for trans-European energy infrastructure, mainly 
interconnecting Italy with France, Switzerland and Austria 
and  the  necessary  internal  reinforcements.  Altogether 
such investments will ease the grid constraints and reduce 
differences between price zones. The SAPEI project doubled 
the existing interconnection capacity between Sardinia and 
the Italian mainland thus contributing to resolving congestion 
issues  in  that  area.  A  sub-sea  transmission  cable  between 
Sicily  (“Sorgente-Rizziconi”)  and  the  continent  is  still  under 
construction;  entry  into  operation  is  expected  in  2015.  The 
Italian TSO is among a small number of entities worldwide 
that  have  decided  to  implement  electricity  storage  pilot 
projects  on  a  large  scale  to  manage  congestion  caused  by 
renewable  generation.  The  electricity  sector  roll-out  of  the 
smart  meters  is  almost  complete,  ENEL  has  installed  over 
32 million smart meters.

6.  Infrastructure

Gas

The  Italian  authorities  should  ensure  a  proper  and  timely 
adoption  of  the  measures  stemming  from  Regulation 
347/2013  on  the  trans-European  energy  infrastructure, 
including the establishment of the one-stop-shop for Projects 
of Common Interest (PCIs) (due by 16 November 2013), and 
other measures foreseen for 2014 and 2015, including the 
publication  of  the  manual  on  the  permit  granting  process 
for project promoters, and the adoption of legislative and 
non-legislative  measures  streamlining  the  environmental 
assessment procedures.

The new offshore LNG regasification terminal in Livorno was 
completed at the end of 2013. Despite the third party access 
exemption obtained, the terminal asked for admission to the 
regulated  system.  Another  one  in  Porto  Empedocle,  Sicily, 
started construction activities in 2013.

Snam Rete Gas is developing a Project of Common Interest 
within  the  North-South  East  Corridor  to  allow  future  flows 
from  the  Southern  Gas  Corridor  project,  the  construction 
of  Trans  Adriatic  Pipeline  transporting  Azeri  gas  from  the 
Turkish  border  to  the  South  of  Italy  through  Greece  and 
Albania will start in 2015. It also has a PCI ensuring reverse 
flow  capacity  towards  the  north  western  markets  and  a 
planned pipeline for Algerian gas through Sardinia. 

The  AEEG  has  proposed  updating 232  the  previously 
established233  timeframe  for  the  mass  roll-out  of  smart 
meters in the gas sector, delaying it by 2018.

229   Resolution 2 August 2012, 350/2012/R/eel pursuant to Ministry 
of Health Decree dated 13 January 2011 entitled “Identification 

of medical-therapeutic equipment powered by electricity 

required to keep people with serious health conditions alive”, 

and pursuant to the provisions of Ministerial Decree dated 

28 December 2007.

230   Resolution 72/2014/E/com of 27 February 2014  

(http://www.autorita.energia.it/it/docs/14/072-14.htm).
231   10th Consumer Markets Scoreboard, http://ec.europa.eu/

consumers/consumer_evidence/consumer_scoreboards/10_

232   Resolution 575/2012/R/gas,  

http://www.autorita.energia.it/allegati/docs/12/575-12.pdf
233   Resolution ARG/gas 155/08, http://www.autorita.energia.it/

edition/index_en.htm

allegati/docs/08/del.ARG-gas155-08.pdf

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I T A L Y

7.  Security of supply 

Electricity

Gas

The Italian system is characterised by substantial surplus 
of  generation  capacity  which  currently  stands  at  over 
twice the peak load. The excess of available capacity has 
been enhanced by a very large amount of new renewable 
generation  capacity  commissioned  in  the  last  two  years. 
A capacity market mechanism is expected to substitute the 
existing temporary scheme of capacity payment. According 
to the proposed scheme, the TSO will purchase guaranteed 
options  from  the  generation  companies  (physically  backed 
call  options)  for  the  amounts  required  to  ensure  system 
adequacy,  however,  implementation  is  still  awaiting  final 
approval. 

Despite the excess of overall import capacity Italy’s reserves 
at peak daily demand are rather tight. Given the high (and 
increasing) share of residential consumption over the  total 
demand (around 30%), the daily demand is very sensitive to 
temperatures. The new storage site of Bordolano (Stogit) is 
completed and expected to go on online in 2015, meanwhile 
the  construction  of  the  San  Potito  e  Cotignola  (Edison 
Stoccaggio)  and  Cornegliano  (Italgas  Storage)  sites  have 
been  delayed  and  the  concession  for  Rivara  (Independent 
Resources plc) was cancelled. Because of the high share of 
gas fired generation capacity a shortage of gas may create 
flow problems in the electricity sector. The emergency plan 
for the gas system, in line with Regulation (EU) No 994/2010 
is  based  on  reactivation  of  cold  reserve  oil  plants  and 
disconnection of industrial customers.

I T A LY   –  K E Y   I N D I C A T O R S

E L E C T R I C I T Y   (1)

G A S

Number of companies representing at least 95% 
of net power generation

Number of main power-generation companies

291

3

Number of entities bringing natural gas  
into country

Number of main gas entities

85

3

Market share of the largest power-generation company 25%

Market share of the largest entity bringing natural gas 44.6%

Number of electricity retailers

Number of main electricity retailers

Switching rates (entire electricity retail market) 

Regulated prices for households – electricity 

Regulated prices for non-households – electricity

HHI in power-generation market

HHI in electricity retail market

Electricity market value (2) (bn€)

Installed generation capacity (MW)

Peak demand (MW) 

Number of smart meters installed

412

2

7.6%

No

No

884

1 865

39.410

124 224

54 113

32 mln (3)

Number of retailers selling natural gas to final customers

Number of main natural gas retailers

Switching rates (entire retail market)

Regulated prices for households – gas

Regulated prices for non-households – gas

HHI in gas supply market

HHI in gas retail market

Gas market value (2) (bn€)

465

4

4.7%

No

No

<500

1 275

23.110

Sources: Eurostat, CEER, National Regulatory Authority, EC calculations.

* AEEG updates and publishes every 3 months standard conditions for households and small enterprises based on wholesale market conditions

(1)   Table contains 2012 data unless stated otherwise. Peak demand is taken from ENTSOE, Yearly Statistics & Adequacy Retrospective 2012.  

For the number of smart meters installed,  

see http://www.enel.com/en-GB/innovation/project_technology/zero_emission_life/smart_networks/smart_meters.aspx

(2)   Market value is an estimation of the size of the retail electricity and gas markets. It is calculated using data on electricity  

and gas consumption in the household and non-household sectors (average bands) and annual average retail prices.

(3)   http://www.enel.com/en-GB/innovation/project_technology/zero_emission_life/smart_networks/smart_meters.aspx

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Key issues

 → The full liberalisation of the electricity market was formally achieved on 1 January 2014,  
but it is not yet implemented in practice, as EAC, a semi-public body, is currently the 
sole supplier. Consequently, there is no scope yet for consumer switching. 

 → Liberalisation should be planned in detail, taking into account the EU targets for 
renewables,  energy  efficiency  and  GHG  emissions.  There  is  a  need  to  create  an 
investment-friendly framework in order to attract alternative suppliers and ensure a 
smooth transition for consumers.

 → Renewable energy could play a vital role in security of supply and should be 

promoted.

S
U
R
P
Y
C

1.  General overview

F I G U R E S  1   A N D   2

The gross inland energy consumption in 2012 was 2.51 Mtoe, 
a drop of 6.3% from 2011. The energy mix pattern continues 
to  be  dominated  by  oil  and  petroleum  products,  which 
represent 94.9% of the gross energy consumption in 2012. 
The  contribution  of  renewable  energy  to  the  gross  inland 
energy consumption has steadily increased over recent years 
and  the  renewables  share  has  reached  6.8%234  in  2012. 
Cyprus  remained  above  its  2011/2012  interim  trajectory 
and is on track to reach its national 2020 RES target of 16% 
by 2020235.

The gross electricity generation in 2012 was 4.72 TWh, a drop 
of 4.3% compared to 2011. Electricity in Cyprus is generated 
mainly  by  crude  oil  and  petroleum  products.  Only  3.6%  of 
electricity  is  generated  by  renewables,  despite  Cyprus’ 
remarkable potential in solar and wind. However, renewables 
are increasing their contribution in electricity generation. In 
2012,  electricity  generation  from  renewables  more  than 
tripled compared to 2010 levels, mainly due to the increase 
of  wind  power  generation.  The  National  Renewable  Energy 
Action Plan projected that by 2018 the electricity generation 
capacity  from  renewable  energy  sources  would  reach 
400  MW.  In  2012,  the  installed  renewables  have  reached 
172  MW.  The  gross  electricity  generation  is  presented 
graphically the period 2008-2011234.

234   Eurostat.
235   CERA, 2013 National Report to the European Commission, 2013.

Gross inland consumption mix 2008-2012

120% 

100% 

80% 

60% 

40% 

20% 

0% 

2008 

2009 

2010 

2011 

2012 

Solid fuels
Nuclear

Natural gas
Renewables

Crude oil and petroleum products
Other

Source: Eurostat

Gross electricity generation mix 2008-2012

120% 

100% 

80% 

60% 

40% 

20% 

0% 

2008 

2009 

2010 

2011 

2012 

Crude oil and petroleum products

Renewables

Sources:  EU energy in figures - “Statistical Pocketbooks 2012 and 2013”, 

European Commission

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C Y P R U S

2.  Regulatory framework

General

An important regulatory development for 2012 was the 
implementing legislation of the Third Energy Package, which 
came into force in late 2012236.

National Energy Regulator

The  Cyprus  Energy  Regulatory  Authority  (CERA)  was 
established  in  2003.  The  objective  of  CERA  is  to  regulate 
and  monitor  the  Electricity  and  Natural  Gas  Markets.  CERA 
employs 11 people. Further recruitment has been postponed 
as  a  result  of  government  decisions  for  the  wider  public 
sector; CERA’s lack of resources is a source of concern. The 
revenue of CERA for the year 2012 was EUR 1.96 million, an 
increase of approximately 14% from 2011. CERA closed the 
year with a net surplus of EUR 0.97 million237.

Unbundling

The  incumbent  Electricity  Authority  of  Cyprus  (EAC)  owns 
both the transmission and the distribution system. The TSO 
is legally but not functionally unbundled from EAC, since all 
its staff is seconded from EAC. The obligation of ownership 
unbundling  of  the  TSO  does  not  apply,  since  Cyprus  has 
obtained  a  derogation  from  Article  9  of  the  2009/72/EC 
Directive.  The  DSO  is  responsible  for  managing,  operating 
and  developing  the  network,  safeguarding  access  to  the 
distribution network and equal treatment for all users. EAC 
has unbundled the accounts of the DSO.

The  installed  generating  capacity  in  2012  was  1 546  MW, 
out  of  which  1 374  MW  was  thermal  power  stations  and 
172 MW was renewable capacity mainly from wind parks. 
The  installed  capacity  of  cogeneration  of  heat  and  power 
was 9.4 MW in 2012237. 

Based on the supply interruption data for 2012 the overall 
minutes  lost  per  voltage  level  per  year  are  estimated  at 
41 minutes for H/V, 157 minutes for M/V and 8 minutes for 
L/V.  This  represents  an  increase  over  the  years  for  which 
data was available238. 

Gas

Currently, natural gas is not supplied to Cyprus. However in 
December 2011, significant gas resources were discovered 
within the Eastern Mediterranean Sea. The Cypriot authorities 
have  established  two  National  Hydrocarbons  Companies 
whose  respective  tasks  and  functions  are  currently  being 
defined:  in  principle  EYK  (formerly  KRETYK)  should  be  in 
charge  of  upstream  and  export  issues,  while  DEFA  should 
focus  on  the  development  of  domestic  market.  Both  have 
the  legal  form  of  private  companies  100%  owned  by  the 
State.  In  addition,  an  interim  solution  was  planned  for  the 
supply of the electricity generation sector with natural gas 
until the indigenous natural gas reserves are made available. 
On 27 September 2012, DEFA and EAC issued an invitation 
for the Expression of Interest for the supply of natural gas 
to Cyprus. Seventeen applications were submitted, but none 
was  accepted.  A  second  invitation  was  issued  in  January 
2014  with  a  deadline  of  24  March  2014239,  subsequently 
extended to 14 April 2014.

3.  Wholesale markets

4.  Retail markets

Electricity

Whilst full liberalisation of the market was legally achieved 
on  1  January  2014  when  a  derogation  granted  under  the 
Second  Energy  Package  pursuant  to  its  status  of  small 
isolated system expired, Cyprus is not integrated and not 
interconnected  with  any  neighbouring  power  systems. 
No  wholesale  market  is  currently  operating  in  Cyprus;  in 
the Memorandum of Understanding with the “Troika” (the 
European Commission, the International Monetary Fund and 
the European Central Bank) Cyprus engaged to develop open 
and competitive energy markets.

Domestic  consumers  became  legally  eligible  to  switch 
suppliers on 1 January 2014. However, EAC is still the sole 
electricity supplier in Cyprus and thus switching procedures 
do not exist. Electricity prices are well above the EU average. 
The network component in households represented 15% of 
the total bill, while in industry it represented 11% of the end 
price240.

236   CERA, 2013 National Report to the European Commission, 2013.
237   Annual Report of the Cyprus Energy Regulatory Authority 

238   CERA, 2013 National Report to the European Commission, 2013.
239   Annual Report of the Cyprus Energy Regulatory Authority  

for the year 2012, October 2013.

for the year 2012, October 2013.

240   Eurostat.

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F I G U R E  3

Electricity price change by component 2010 – 2013 (in € cent/kWh)

H O U S E H O L D S

I N D U S T R Y

30 

25 

20 

15 

10 

5 

0 

C Y P R U S

The consumer protection measures, including those set out 
in Annex I of the directives 2009/72/EC and 2009/73/EC, are 
effective and enforced through the Laws N.211(I)/2012 and 
N.219(I)/2013 on Regulating the Electricity and Gas Markets, 
respectively. As stated earlier, from 1 January 2014 the 
electricity  market  is  technically  fully  liberalised,  but  there 
is still only one supplier, and no scope for switching. Energy 
poverty,  vulnerable  consumers’  categories  and  measures 
to protect them were defined in a Ministerial Decree, which 
includes  measures  such  as  reduced  prices  on  electricity 
tariffs  and  financial  incentives  for  participating  in  a  Plan 
for  setting  up  a  Photovoltaic  system  at  their  house,  with 
a  capacity  of  up  to  3kW  with  the  net-metering  method. 
In  2012,  3%  of  all  household  consumers  were  defined  as 
consumers with special needs.

2010

2013

2010

2013

Taxes+Levies 

Networks

Energy+Supply

6.  Infrastructure

Source: Eurostat

Electricity demand in 2012 decreased by 4.6% compared to 
2011, which was the largest drop amongst all EU Member 
States241. 

According to EU law, Member States are obliged to ensure 
the deployment of smart metering systems, which may be 
subject  to  a  cost-benefit  analysis,  on  80%  of  electricity 
customer premises by 2020 where positively assessed. To 
prepare for this medium-term goal, the EAC is implementing 
a pilot project of 3 000 smart meters242 243.

5.  Consumers

The  retail  electricity  market  in  Cyprus  is  performing  just 
below  the  EU  average  (70.7  points  compared  to  72.0244) 
and  ranks  18th  EU-wide.  The  proportion  of  consumers 
encountering problems in this market is the lowest in the EU. 
(The  questions  on  switching,  ease  of  switching  and  choice 
have not been asked given that the market is a monopoly).245

In accordance with the requirement in the TEN-E Regulation, 
Cyprus authorities have established a one stop shop for the 
permitting of Projects of Common Interest (PCIs).

Prior to the discovery of gas resources in the EEZ of Cyprus, 
the  construction  of  an  LNG  regasification  terminal  and 
pipelines  to  the  three  power  stations  in  Vasilikos,  Moni 
and  Dhekelia  were  planned  by  the  Cypriot  Authorities. 
The  construction  of  the  pipelines  is  supported  under  the 
European Energy Program for Recovery (EEPR) and entitled 
to a EUR 10 million grant.

With the recent discoveries, infrastructures are also planned 
for the export of gas. Pipeline and LNG projects are currently 
being assessed and should allow for gas export by the end 
of the decade. These infrastructures have been identified as 
PCIs  under  the  Regulation  on  the  Guidelines  for  the  Trans-
European Energy Network. 

A future interconnection project called “Euroasia Interconnector” 
is in the feasibility phase. The project will have a capacity of 
2 000 MW and interconnect the Cypriot, Israeli and the Greek 
transmission networks. 

In  total  four  projects  involving  Cyprus  have  been  identified 
as PCIs in accordance with the guidelines for Trans-European 
energy infrastructure.

241   ACER/CEER – Annual Report on the Results of Monitoring  
the Internal Electricity and Natural Gas Markets in 2012, 

November 2013.

242   V. Efthimiou, “Digital Agenda for Europe & Cyprus –  
Smart Meter Agenda for Cyprus”, November 2011.

243   European Monitoring Centre on Change, European Monitoring 
Centre on Change, http://www.eurofound.europa.eu/emcc/

244   However the difference is not statistically significant.
245   10th Consumer Markets Scoreboard, http://ec.europa.eu/

consumers/consumer_evidence/consumer_scoreboards/10_

edition/index_en.htm

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C Y P R U S

7.  Security of supply

The  consequences  of  the  energy  crisis  after  the  explosion 
which damaged the Vassilikos Power Station in July 2011, 
ended  earlier  than  originally  estimated.  This  was  due  to 
both the adequacy and the swift repair achieved in restoring 
Vassilikos  Power  Station  and  to  a  reduction  in  demand. 
Although  the  installed  capacity  of  thermal  power  stations 
in 2012 was 1 374 MW (a decrease of 13.6% compared to 
2011246), including 286.6 MW of temporary generating units, 
the  maximum  generation  demand  was  997  MW,  achieving 
a  reserve  of  38%,  which  was  the  largest  reserve  recorded 
since  2004247  248.  All  existing  fossil  fuel  generators  run  on 
heavy fuel oil or diesel oil, and some can be converted to run 
on natural gas. 

C Y P R U S   –  K E Y   I N D I C A T O R S

E L E C T R I C I T Y

G A S

Number of companies representing at least 95% 
of net power generation

Number of main power-generation companies

1

1

Number of entities bringing natural gas  
into country

Number of main gas entities

N/A

N/A

Market share of the largest power-generation company 100%

Market share of the largest entity bringing natural gas N/A

Number of electricity retailers

Number of main electricity retailers

Switching rates (entire electricity retail market)

Regulated prices for households – electricity 

Regulated prices for non-households – electricity

HHI in power-generation market

HHI in electricity retail market

Electricity market value (1) (bn€) 

Installed generation capacity (MW)

Peak demand (MW)

Number of smart meters installed

1

1

N/A

Yes

Yes 

10 000

10 000

1.2

1 742

997

N/A

Number of retailers selling natural gas to final customers N/A

Number of main natural gas retailers

Switching rates for gas (entire retail market)

Regulated prices for households – gas

Regulated prices for non-households – gas

HHI in gas supply market

HHI in gas retail market

Gas market value (1) (bn€)

N/A

N/A

N/A

N/A

N/A

N/A

N/A

Sources: Eurostat, CEER, National Regulatory Authority, EC calculations.

(1)   Market value is an estimation of the size of the retail electricity and gas markets. It is calculated using data on electricity  

and gas consumption in the household and non-household sectors (average bands) and annual average retail prices.

246   Eurostat.
247   CERA, 2013 National Report to the European Commission, 2013.
248   Annual Report of the Cyprus Energy Regulatory Authority  

for the year 2012, October 2013.

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A

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V
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A
L

Key issues

 → Improper  functioning  of  the  wholesale  electricity  market  is  the  key  issue  for  the 
power sector, along with the necessary renewal of outdated infrastructure. Electricity 
connections  to  Estonia  are  inadequate  and  challenges  remain  as  regards  smooth 
functioning  of  the  regional  electricity  market.  Active  participation  of  Latvenergo  to 
Nord Pool Spot market is necessary. The electricity retail market is not developing and 
the phasing out of regulated tariffs is one of the key measures to be implemented. 

 → For gas, the focus needs to be on creating a functioning market. Crucial infrastructures 
for  the  diversification  of  supply  need  to  be  put  in  place.  The  Latvian  Parliament 
adopted the amendments to end the emergent market derogations on 13 March 2014. 
However,  its  enforcement  was  postponed  until  2017,  meaning  that  the  monopoly 
in  the  gas  markets  de  facto  continues.  Unbundling  of  DSOs  would  support  the 
transition as Latvia’s gas infrastructure is integrated into the Baltic and EU gas 
systems. Latvia should urgently develop and implement clear rules for third 
party access to the Incukalns storage.

1.  General overview

F I G U R E S  1   A N D   2

Latvian national gross final energy consumption in 2012 
amounted  to  4.538  Mtoe249.  The  energy  consumption  mix 
has  the  highest  renewables  share  (35.8%)  in  all  three 
Baltic  States249.  The  main  renewable  sources  in  Latvia  are 
hydropower  and  biomass.  The  country’s  renewables  target 
for 2020 is 40%, which is twice as high as the EU average 
of 20% and Latvia is currently on track to achieve it. Natural 
gas,  oil  and  petroleum  products  also  played  an  important 
role  in  gross  energy  consumption  in  2012  with  a  share  of 
30% and 27% respectively (Figure 1)249.

In  2012,  total  power  generation  reached  6.17  TWh249  with 
most  derived  from  natural  gas  (55.1%).  The  remaining 
electricity  production  came  from  renewables249.  The  vast 
majority of electricity produced from RES today comes from 
the  Daugava  hydropower  plants  cascade,  which  consists 
of  three  large  HPPs  and  in  total  generated  3.63  TWh  of 
electricity,  which  constitutes  53%  of  the  total  electricity 
output in 2012250.

Gross inland consumption mix 2008-2012

40% 

35% 

30% 

25% 

20% 

15% 

10% 

5% 

0% 

2008 

2009 

2010 

2011 

2012 

Solid fuels
Nuclear

Natural gas
Renewables

Crude oil and petroleum products
Other

Source: Eurostat

Gross electricity generation mix 2008-2012

70% 

60% 

50% 

40% 

30% 

20% 

10% 

0% 

249   Eurostat.
250   http://latvenergo.lv/eng/about_us/generation/hpps/

2008 

2009 

2010 

2011 

2012 

Natural gas

Renewables

Sources:  EU energy in figures - “Statistical Pocketbooks 2012 and 2013”, 

European Commission

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L A T V I A

2.  Regulatory framework

General

Latvia  was  granted  a  derogation  from  the  Third  Energy 
Package  as  an  emergent  gas  market.  In  March  2014 
amendments  to  the  Energy  Law  were  adopted  in  the  third 
and  final  reading.  The  gas  market  in  Latvia  will  not  be 
opened before April 2017, but a gradual liberalisation of the 
gas market is implemented in several stages starting from 
4 April 2014. The liberalisation of the electricity retail market 
envisaged for 1  April 2014 was postponed until 1  January 
2015.  The  market  for  industrial  users  is  fully  liberalised 
since November 2012. 

National Energy Regulator

In  2012,  the  total  installed  capacity  of  power  plants  in 
Latvia  was  2 576  MW.  Of  this  total,  hydropower  plants 
had an installed capacity of 1 576  MW, while combustible 
fuels power plants contributed 964 MW. The peak load was 
1 368 MW252and electricity consumption increased by 1.6%, 
to 7 459 TWh253.

In  November  2012,  the  electricity  market  for  industrial 
users  was  fully  liberalised.  Latvia  joined  the  regional 
Scandinavian – Baltic Nord Pool Spot market for electricity 
contracting in June 2013. However, performance was not as 
good  as  anticipated.  The  interconnector  with  Estonia  was 
often congested, contributing to price spikes in the Latvian/
Lithuanian  price  area.  The  largest  electricity  producer 
Latvenergo  AS  did  not  participate,  which  resulted  in  low 
activity on the spot market.

The Latvian national regulator, the Public Utilities Commission 
(PUC),  is  a  multi-sector  regulator.  PUC  employed  120  staff 
members (21 of them responsible for energy) in 2013 and 
had a budget of around EUR 4.7 million.

In  2013  the  majority  of  demand  was  met  by  domestic 
generation  (80.3%)  and  the  remainder  was  imported 
(19.7%)254. 

Unbundling

Gas

The electricity TSO is Augstspriegumatīkls JSC. Legally 
unbundled since 2005, it became an independent company 
in January 2012. The PUC has certified Augstspriegumatīkls 
JSC as an independent transmission system operator. The 
main  DSO  is  Sadalestīkls  JSC  and  there  are  another  ten 
smaller local electricity distribution companies. 

The gas TSO is Latvijas Gāze with E.ON and Gazprom owning 
the majority of its shares. Latvia has an explicit derogation 
from the Gas Directive exempting it from unbundling rules 
(Article  49). The certification of this gas TSO has therefore 
not taken place yet. 

3.  Wholesale markets

Electricity

The dominant electricity producer, Latvenergo AS, produced 
89% of all power in 2012 and it was the only company 
with  market  share  exceeding  5%.  In  total  there  were 
17  companies  in  2012,  representing  at  least  95%  of 
electricity generated251.

251    Eurostat.

Latvia does not have its own natural gas resources and all 
gas  consumed  is  imported  from  the  Russian  Federation. 
Latvijas  Gāze  JSC  is  the  only  player  in  the  wholesale  gas 
market with a market share of 100%255. In 2012 the average 
price of imported gas was EUR 31.7/MWh256.

Total consumption of gas in Latvia in 2012 was 1 508 mcm, 
a decrease of 6%, compared to 2011257. The reduction was 
due  to  lower  heating  demand  (including  cogeneration)  and 
greater use of biomass.

Gas  imported  from  Russia  during  the  summer  is  stored  at 
Inčukalns underground gas storage (UGS) facility. During 
the  winter  Latvia  satisfies  all  its  natural  gas  needs  from 
Inčukalns UGS, which is also used to supply Estonia and to 
a lesser extent Lithuania.

252   ENTSOE, YS&AR report, 2012.
253   Statistics Latvia, 2013.http://www.csb.gov.lv/en/notikumi/2012-

export-energy-resources-has-grown-109-36464.html

254   Statistics Latvia, 2013, http://www.csb.gov.lv/en/statistikas-

temas/energy-key-indicators-30736.html

255   http://epp.eurostat.ec.europa.eu/statistics_explained/images/ar
chive/1/19/20110407081503%21Number_of_main_entities_

bringing_gas_into_the_country_and_their_cumulative_market_

share%2C_2009.png

256   EC, Quarterly Report on European Gas Markets, 2012.
257   Statistics Latvia, 2013, http://www.csb.gov.lv/en/notikumi/2012-

export-energy-resources-has-grown-109-36464.html

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F I G U R E S  3   A N D   4

Electricity price change by component 2008-2013 (in € cent/kWh)

Natural gas price change by component 2008-2012 (in € cent/kWh)

H O U S E H O L D S

I N D U S T R Y

H O U S E H O L D S

I N D U S T R Y

L A T V I A

16 

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6 

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2012

Taxes+Levies 

Networks

Energy+Supply

Taxes+Levies 

Networks

Energy+Supply

Source: Eurostat

Sources: EC, EPCR metadata

4.  Retail markets

Electricity

In  2012,  most  customers  (90%)  bought  electricity  from 
Latvenergo, which imports and exports electricity, and also 
fulfils the functions of the supplier of last resort as a public 
trader.  Latvenergo  supplied  6 708  GWh  of  electricity  to 
Latvian  consumers258,  while  the  other  five  electricity  retail 
market participants259 supplied the remaining 10%.

Power prices for households and industrial consumers have 
been increasing in recent years, mostly due to an increase in 
commodity prices.

It  is  possible  to  switch  suppliers  for  industrial  consumers, 
and in 2013 the switching rate for non-household customers 
was 15%.260 There are no legal provisions in place for smart 
metering and a cost-benefit analysis has not been conducted.

Gas

As  in  the  wholesale  market,  Latvijas  Gāze  JSC  is  the  only 
player in the gas retail market in Latvia. Switching supplier is 
therefore not an option. The price is indexed to oil derivatives.

Until the end of 2013 there was no formal decision and no 
plan to roll-out smart meters in the natural gas system.

5.  Consumers

Latvian consumers’ assessment of the performance of their 
retail electricity market in 2013 is more than 3 points below 
the EU average (68.6 vs. 72.0), corresponding to 21th place 
EU-wide.  The  market  is  also  around  10  points  below  the 
average for domestic services markets (second worst among 
31  markets).  The  retail  gas  market  is  assessed  somewhat 
above the EU average (75.4 vs. 74.1), corresponding to 13th 
place EU-wide, but has seen a decrease of 2.2 points261 since 
2012.  For  the  retail  electricity  market,  the  country  scores 
the lowest in the EU on comparability, 2nd lowest on ease of 
switching  and  choice  and  5th  lowest  incidence  of  switching 
(provider or tariff plan). As for gas services, the country is in 
the 4 last positions of the EU ranking on comparability, choice 
of  providers,  incidence  of  switching  and  ease  of  switching 
while,  on  the  positive  side,  the  incidence  of  problems  is 
the 5th lowest in the EU and the incidence of complaints is 
second lowest. 262

According  to  the  Law  on  Regulators  of  Public  Utilities, 
PUC  deals  with  customer  complaints.  Consumers  can  also 
approach the Consumer Rights Protection Centre for out-of-
court  dispute  settlement.  No  particular  actions  to  improve 
consumer  access  to  information  about  the  market  and/
or  their  rights  have  been  taken  recently.  There  is  no  clear 
definition  of  vulnerable  consumers  yet,  but  plans  exist  to 
introduce several measures to inform and support vulnerable 
consumers.

258   Latvenergo data, http://www.latvenergo.lv/eng/about_us/sales/
259   Eurostat.
260   ACER/CEER Annual Report on the Results of Monitoring the 

261   However the difference is not statistically significant.
262   10th Consumer Markets Scoreboard, http://ec.europa.eu/

Internal Electricity and Natural Gas Markets in 2012, November 

consumers/consumer_evidence/consumer_scoreboards/10_

2013.

edition/index_en.htm

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E

/

7

9

 
 
 
 
 
 
 
 
 
L A T V I A

6.  Infrastructure

Gas

The  Latvian  authorities  should  ensure  a  proper  and  timely 
adoption  of  the  measures  stemming  from  the  TEN-E 
Regulation, including the establishment of the one-stop-shop 
for Projects of Common Interest (PCIs) (due by 16 November 
2013),  and  other  measures  foreseen  for  2014  and  2015, 
including  the  publication  of  the  manual  on  the  permit 
granting process for project promoters, and the adoption of 
legislative  and  non-legislative  measures  streamlining  the 
environmental assessment procedures.

Electricity

There  are  currently  no  bottlenecks  between  Latvia  and 
Lithuania.  However,  the  interconnector  between  Latvia  and 
Estonia  is  regularly  congested.  For  historical  reasons,  the 
Latvian electricity system is heavily interconnected with the 
networks of Belarus, Russia, Estonia and Lithuania. 

In  March  2013,  the  three  Baltic  States’  TSOs  –  Litgrid 
(Lithuania),  AugstspriegumaTīkls  (Latvia)  and  Elering 
(Estonia)  –  signed  an  agreement  on  the  principles  of 
calculation  and  allocation  of  the  cross-border  capacity 
within  the  Baltic  States  and  with  third  countries.  The 
agreement contributes to a successful integration of the 
Baltic electricity markets.

As  part  of  the  NordBalt  project,  funded  by  the  EEPR,  the 
interconnector  between  Lithuania  and  Sweden  and  the 
transmission network in Latvia and Lithuania are reinforced, 
improving  the  supply  reliability  in  the  region.  The  project 
is expected to be completed by the end of 2018. The third 
interconnector  between  Latvia  and  Estonia,  a  Project  of 
Common  Interest  under  the  guidelines  for  Trans-European 
infrastructure, will enhance security of supply, effectiveness 
of operation and competitiveness of energy markets in the 
entire Baltic region. The project is scheduled to be completed 
by  2020,  but  as  this  is  the  project  that  is  expected  the 
biggest  beneficial  impact  on  wholesale  market  functioning 
Latvia should assess ways to accelerate its construction. 

Latvia is dependent on gas imports from Russia for all of 
its gas consumption with no alternative suppliers or supply 
routes.  The  Latvian  gas  market  is  isolated  from  the  rest 
of  the  EU  and  only  has  interconnection  with  Lithuania  and 
Estonia. 

The enhancement of the Latvian-Lithuanian interconnection 
was  realized  in  early  2013  by  increasing  cross-border 
capacity to more than 6 mcm/day in both directions. Moreover, 
a  further  enhancement  to  12  mcm/day  on  a  40-kilometer 
section between Daugmale and Iecava is currently planned 
and  has  been  granted  PCI  status  under  the  guidelines  for 
trans-European energy infrastructure. At the same time, the 
enhancement  of  the  Estonia-Latvia  interconnection  is  also 
part of the first PCI list.

7.  Security of supply

Electricity

Currently, in the event of failure of large generating units in 
Latvia and Lithuania, security of supply for the entire Baltic 
Region  could  be  in  danger.  The  infrastructure  investments 
under  construction  will  significantly  increase  security  of 
supply,  in  particular  the  third  interconnector  to  Estonia.  In 
particular, the investments will have a positive effect on the 
voltage and stability level under stressed network conditions.

Gas

In  2012,  the  total  consumption  of  natural  gas  in  Latvia 
represented  about  43%  of  transmission  capacity,  which 
means  the  natural  gas  delivery  system  is  never  over-
loaded and can ensure a stable supply of natural gas to all 
consumers. According to 2012 data, the N-1 criterion equals 
188.6%, implying that coverage of peak demand or supply 
deficit is ensured from an infrastructure perspective.

Gas  supply  is  mainly  secured  by  the  Inčukalns  UGS,  where 
4.47 bcm of gas can be stored (of which 2.32 bcm is active 
or  regularly  extracted).  The  capacity  of  the  Inčukalns  UGS 
can be increased to 3.2 bcm of active gas.

4

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L A T V I A

L A T V I A   –  K E Y   I N D I C A T O R S

E L E C T R I C I T Y

G A S

Number of companies representing at least 95% 
of net power generation

Number of main power generation companies

17

1

Number of entities bringing natural gas  
into country

Number of main gas entities

1

1

Market share of the largest power generation company 89%

Market share of the largest entity bringing natural gas 100%

Number of electricity retailers

Number of main electricity retailers

6

2

Number of retailers selling natural gas to final customers

Number of main natural gas retailers

Switching rates (entire electricity retail market)

0% (1)

Switching rates for gas (entire retail market)

Regulated prices for households – electricity 

Regulated prices for non-households – electricity

HHI in power generation market

HHI in electricity retail market

Electricity market value (2) (bn€)

Peak demand (MW)

Installed generation capacity (MW, 2011)

Number of smart meters installed

Yes

No

7 932

8 196

0.512

1 885

3 691

N/A

Regulated prices for households – gas

Regulated prices for non-households – gas

HHI in gas supply market

HHI in gas retail market

Gas market value (2) (bn€)

1

1

0

Yes

No

10 000

10 000

0.165

Sources: Eurostat, CEER, National Regulatory Authority, EC calculations.

(1)   Households, 15% non-households.

(2)   Market value is an estimation of the size of the retail electricity and gas markets. It is calculated using data on electricity  

and gas consumption in the household and non-household sectors (average bands) and annual average retail prices.

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Key issues

 → Lithuania remains highly dependent on electricity imports, particularly from the 
Russian Federation. Interconnectors with Sweden and Poland have to be completed 
so as to decrease the generation deficit and foster security of supply and wholesale 
market functioning. Lithuania should continue to promote competition through better 
integration of the Baltic energy markets.

 → Lithuania relies on Gazprom as its single source of gas supplies. Diversification of 
gas supply will be introduced by an LNG terminal in Klaipeda, expected to start 
operating in December 2014. It is important that the planned interconnector with 
Poland (GIPL) is also constructed in order to further diversify gas supplies to 
the country and the larger Baltic region. 

A

I

N
A
U
H
T
I
L

1.  General overview

F I G U R E S  1   A N D   2

The  Lithuanian  national  gross  final  energy  consumption  in 
2012  was  7 084  Mtoe263.  It  was  based  largely  on  natural 
gas (37%) and oil (35%). The renewables share increased 
from  18.0%  to  21.7%  between  2008  and  2012,  and  the 
country is currently very close to reaching the 2020 national 
renewable energy target of 23%264.

In 2012, the total power generation was 5 043  TWh265, 
the largest part of it was derived from natural gas (63%). 
The major change in power generation occurred in 2010, 
when Ignalina Nuclear Power Plant was decommissioned 
and power generation in the country dropped by 63%. As 
a result Lithuania became dependent on electricity imports 
(in 2012 electricity import was 169.8% higher than gross 
inland production)266. In 2012 Lithuania’s electricity demand 
increased by 5.9% in comparison to the 2011 level267.

Cogeneration268  represented  37.5%  of  gross  electricity 
generation in 2011269. In 2012 gross inland consumption of 
natural gas in Lithuania was 2.65 Mtoe269.

Gross inland consumption mix 2008-2012

45% 

40% 

35% 

30% 

25% 

20% 

15% 

10% 

5% 

0% 

2008 

2009 

2010 

2011 

2012 

Solid fuels
Nuclear

Natural gas
Renewables

Crude oil and petroleum products
Other

Source: Eurostat

Gross electricity generation mix 2008-2012

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263   Eurostat.
264   Renewable Energy Directive 2009/28/EC.
265   Eurostat.
266   Statistics Lithuania, Energy Balance 2011, 2012.
267   ACER/CEER Annual Report on the Results of Monitoring  

the Internal Electricity and Natural Gas Markets in 2012, 

November 2013.

268   The share of electricity produced in combined heat  

and power plants (CHP).

269   Eurostat.

80% 

70% 

60% 

50% 

40% 

30% 

20% 

10% 

0% 

2008 

2009 

2010 

2011 

2012 

Crude oil and petroleum products
Nuclear

Renewables

Natural gas
Other

Sources:  EU energy in figures - “Statistical Pocketbooks 2012 and 2013”, 

European Commission

 
 
 
 
 
 
 
 
 
L I T H U A N I A

The  Lithuanian  Power  Exchange  operated  by  Baltpool 
commenced operation in Lithuania in January 2010. Trade 
is  based  on  the  Nord  Pool  Spot  model  since  June  2012 
when  the  administration  of  Lithuanian  Power  Exchange 
has been transferred to the power exchange operator for 
Nordic and Baltic countries – Nord Pool Spot AS licensed by 
the  Norwegian  energy  regulator,  with  bilateral  exchanges 
between producers, importers and suppliers. In 2013, the 
volume of electricity traded on the Lithuanian electricity 
market  was  circa  7.983  TWh  with  an  average  price  of 
EUR 0.0489/kWh273. 

Low liquidity and limited interconnection capacity in the 
region have caused price spikes to occur in the summer and 
autumn of 2013. In the short run, cooperation between the 
Baltic TSOs is necessary to better calculate available cross-
border capacities. In the mid term the interconnector with 
Sweden is essential for better market functioning.

Gas

Lithuania does not have natural gas resources of its own. 
All its gas is imported from Russia via a single pipeline from 
Belarus.  On  the  upstream  gas  market  Gazprom  is  the  only 
market  player.  Natural  gas  supply  undertakings  have  an 
obligation to accumulate and store the natural gas reserves 
sufficient for vulnerable consumers to meet their gas demand 
in cases foreseen in Art. 8(1) of Regulation (EU) No 994/2010. 
As  a  result,  Inčukalns  underground  gas  storage  facility 
in  Latvia  stores  gas  reserves  for  Lithuanian  gas  supply 
companies amounting to 37  mcm on 1  September 2013. 
The new LNG terminal, which is planned to start its operation 
by December 2014, is intended to increase competition and 
security of supply. It will have an initial capacity of 2 bcma 
which could be expanded to 4 bcma. LNG supplies that are 
not immediately consumed are likely to be stored in Latvia 
as well. For the Klaipeda LNG Terminal to fully exploit its role 
as a regional supplier it is necessary that the transmission 
grid is expanded, notably on the border with Latvia.

In  2013,  Lithuania  imported  2 701.5  mcm  of  natural  gas 
which was 18.6% less than in 2012274. During 2013, the main 
players in the gas market remained unchanged and included 
Lietuvos Dujos AB, Achema AB, Haupas UAB, Kaunas CHP 
Plant and Dujotekana UAB (the only one that purchases gas 
from OAO Gazprom via Gas Stream AG LT).

2.  Regulatory framework

General

Lithuania has by now fully transposed the provisions of the 
Third Energy Package.

National Energy Regulator

In 2013, the Lithuanian Regulator, the National Commission for 
Energy Control and Prices (NCC), employed 83 staff members 
and an annual budget of almost EUR 2.78 million in 2013. 

Unbundling

In the electricity sector, the ownership unbundling model 
was chosen for unbundling the state-owned TSO Litgrid AB, 
making  use  of  the  possibility  provided  for  in  Article  9(6) 
Electricity Directive to implement the ownership unbundling 
model by means of separate public bodies within the State. 
Litgrid AB received its final certification decision by NCC in 
August 2013. In 2013, there was one major DSO (LESTO AB) 
and six other smaller electricity DSOs.

The  vertically  integrated  gas  company  Lietuvos  Dujos  AB 
submitted its unbundling plan to the NCC on 31 May 2012. On 
1 August 2013 a newly established, legally unbundled company, 
Amber Grid AB, commenced operations as a TSO. Certification is 
to follow after implementing full ownership unbundling which is 
to take place by 31 October 2014. The planned implementation 
of ownership unbundling has been challenged by Gazprom (co-
shareholder of Lietuvos Dujos AB and Amber Grid) and the case 
is currently in arbitration. In 2013, in the gas distribution sector 
Lietuvos Dujos AB had a market share of over 99%. Five other 
small gas DSOs were also active in the market.

3.  Wholesale markets

Electricity

The closure of Ignalina NPP in 2009 created opportunities 
for new suppliers on the market with the bulk of the shortfall 
being replaced by imports from Russia. In 2013, there were 
six main electricity generating companies with 24 generating 
companies  representing  at  least  95%  of  the  national  net 
electricity generation270.

The total installed capacity of the power plants in 2013 increased 
by 1.2% up to 40 304 MW, including an increase in thermal power 
plants and renewables271. Final electricity consumption decreased 
by 0.13%, from 9.659 TWh to 9.646 TWh272. 

270   Eurostat.
271   ENTSOE, YS&AR report, 2012.
272   NCC, http://www.regula.lt/en/SiteAssets/ncc-reports/NCC-

report-2012.pdf

273   NCC, http://www.regula.lt/en/SiteAssets/ncc-reports/NCC-

report-2012.pdf

274   Energy in Lithuania 2012,http://www.lei.lt/_img/_up/File/atvir/

leidiniai/2013/Lietuvos_energetika-2012.pdf

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L I T H U A N I A

F I G U R E S  3   A N D   4

Electricity price change by component 2008-2013 (in € cent/kWh)

Natural gas price change by component 2008-2012 (in € cent/kWh)

H O U S E H O L D S

I N D U S T R Y

H O U S E H O L D S

I N D U S T R Y

16 

14 

12 

10 

8 

6 

4 

2 

0 

7 

6 

5 

4 

3 

2 

1 

0 

2008

2013

2008

2013

2008

2012

2008

2012

Taxes+Levies 

Networks

Energy+Supply

Taxes+Levies 

Networks

Energy+Supply

Source: Eurostat

Sources: EC, EPCR metadata

In 2013, the price of the imported gas was on average 5.4% 
lower than in 2012 and made EUR 359.5/tcm (the average 
price of the imported gas in 2012 was EUR 380.2/tcm)275. 
A new gas exchange to organize secondary trade in natural 
gas, operated by Baltpool, was launched on 1 March 2012. In 
November 2012, NCC issued second gas exchange operator 
license  for  UAB  GET  Baltic.  Trade  on  the  UAB  GET  Baltic 
exchange since the beginning of 2013 resulted in a total 
traded  volume  in  a  176  deals  realized  against  an  average 
price of EUR 334.91/tcm276.

4.  Retail markets

Electricity

In  2013,  the  independent  electricity  suppliers  supplied 
5 646.0 GWh of electricity to customers; the public supplier 
AB  LESTO  supplied  2 582.7  GWh  of  electricity  to  the 
regulated customers and 478.1  GWh of electricity to the 
eligible customers. When 2013, is compared to 2012, the 
share of AB LESTO in the retail supply market decreased 
from 42.6% to 35.2%. 

Changing electricity supplier in Lithuania was permitted 
but during 2013 no switches were made277. A cost-benefit 
analysis addressing smart meters has been carried out, but 

275   NCC, http://www.regula.lt/en/SiteAssets/ncc-reports/NCC-

report-2012.pdf

276   UAB GET Baltic, https://www.getbaltic.lt/en/news/news_1/ 

reportoftradeonnaturalgasexchangeoffourthquarterof2013 

hasbeenannounced

277   ACER/CEER Annual Report on the Results of Monitoring  

the Internal Electricity and Natural Gas Markets in 2012, 

no formal decision or plans about smart meters roll-out has 
been made so far.

Today,  end-user  price  regulation  still  exists  for  household 
consumers. Full liberalization is scheduled for the beginning 
of 2015. For industrial consumers, price regulation was fully 
removed at the beginning of 2013.

Power prices for households and industrial consumers have 
kept increasing during the recent years, mostly due to the 
transmission  and  commodity  prices,  but  also  because  of 
public  service  obligation’s  component  during  2012-2013. 
This component in electricity price includes: compensation 
to  electricity  generation  company  “Lietuvos  energijos 
gamyba” AB, operating as reserve capacity; support to CHPs; 
promotion  of  renewables;  and  financing  infrastructure  of 
strategic importance.

Gas

The functioning of the natural gas retail market is determined 
by the situation on the wholesale market. Theoretically, the 
market is 100% liberalised and customers are free to choose 
among gas suppliers, however during 2013 only modest 
interest in switching was observed.

Natural gas was supplied to customers by eight supply 
companies  and  in  2013  gas  sales  totalled  1 430  mcm. 
As compared with 2012, the sale of natural gas decreased 
by 11.4%278. Retail gas supply as well as the wholesale 
is   d o mina t ed   by  o ne  s uppl i er   (Li e t uv o s  Du jo s   AB),  
which  together  with  UAB  Dujotekana  holds  98.1%  of 
natural  gas  supply  market  (Lietuvos  Dujos  AB  –  69%  and  

November 2013.

278   NCC data, April 2014.

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L I T H U A N I A

UAB  Dujotekana  –  29%  accordingly)279.  Other  gas  supply 
companies’ joint market share is as low as 2% of the retail 
market.  Gas  prices  for  final  consumers  followed  a  similar 
trajectory to that of electricity prices.

6.  Infrastructure

The Lithuanian authorities have already established the one 
stop shop for Projects of Common Interest (PCI) as required 
by the TEN-E Regulation.

A cost-benefit analysis addressing smart meters in natural 
gas is being carried out by NCC, but no formal decision or 
plans about smart meters roll-out has been made so far280.

Electricity

Lithuania is not directly connected to the European grid and 
therefore is working in BEMIP towards the creation of the 
Baltic regional electricity market. 

Two electricity projects are of key importance. The cross-
border electricity transmission line “NordBalt” is the 700 MW 
capacity (400 kV) cable from Klaipeda (Lithuania) to Nybro 
(Sweden). This link is expected to increase possibilities for 
electricity trade, and by December 2015 and it will allow 
full integration of the Baltic and North European electricity 
markets. 

Secondly, the cross-border electricity transmission line “LitPol 
Link”, a PCI project, is the 500 MW capacity (400 kV) double 
circuit electricity transmission line from Alytus (Lithuania) to 
Elk  (Poland).  The  interconnector  will  link  the  electric  power 
systems of the Baltic States and Continental Europe and will 
create preconditions for electricity trade, and will enhance 
the security of electricity supply in Lithuania. 

Gas

The Lithuanian gas network is connected to the Belarusian, 
Latvian and Russian Federation (Kaliningrad) gas systems. 
Enhancement  of  the  Latvian-Lithuanian  interconnection 
was successfully finalised in early 2013 by increasing the 
cross-border  capacity  to  more  than  6  mcm/day  in  both 
directions. Secondly, the new Klaipeda – Jurbarkas pipeline 
was  constructed  and  made  operational  in  2013.  It  allows 
for looping the national gas transmission system and it will 
also ensure the efficient send-out from the LNG terminal in 
Klaipeda that is to become operational in December 2014.

The  Lithuania-Poland  gas  interconnection  (“GIPL”)  which 
is necessary to end pipeline-based the energy isolation of 
Lithuania  and  other  Baltic  States  should  be  considered  a 
top priority project. In 2013, its feasibility study was started 
and the project could be finalised by 2018. Furthermore, 
Lithuania  should  make  efforts  to  upgrade  the  Klaipeda 
– Kursenai pipeline that is necessary to achieve the full 
4 bcma operation of the LNG terminal and for enhancing its 
interconnection with Latvia.

5.  Consumers

The  assessment  of  both  the  electricity  and  the  gas  retail 
markets  in  Lithuania  is  well  above  the  EU  average  thus 
placing the country high in the EU ranking (6th and 2nd place, 
respectively).  Both  markets  have  considerably  improved 
their performance since 2012 (by 4.6 points in the case of 
gas and 7.5 in the case of electricity, which represents the 
highest and 2nd highest increase EU-wide). The electricity 
market in the country shows the highest score in the EU 
as far as comparability is concerned while on the negative 
side  the  incidence  of  problems  is  the  fourth  highest  in  the 
EU  and  the  scores  on  switching,  ease  of  switching  and 
choice of providers are below EU average. As far as the gas 
market  is  concerned,  Lithuania  has  the  second  EU  score 
on comparability and the 2nd highest on overall consumer 
satisfaction with respect to expectations.281

The  NCC,  the  State  Energy  Inspectorate  and  the  State 
Consumer Rights Protection Authority investigate individual 
consumer  complaints.  The  number  of  complaints  per 
thousand inhabitants in 2012 was more than three and was 
almost two times higher than in 2011280. It was documented 
by  the  NCC  that  30  complaints  concerning  natural  gas 
market282 were received during 2013.

The supply of natural gas is guaranteed as a matter of priority 
to those groups of vulnerable consumers — household 
customers and non-household customers — which consume 
less than 20 000 cm of gas per year. According to the Law on 
Electricity, suppliers have to conclude agreements for supply 
of electricity at the public electricity price to consumers who 
have  not  chosen  independent  electricity  supplier,  also  to 
socially vulnerable customers.

279   Eurostat, http://epp.eurostat.ec.europa.eu/statistics_explained/

index.php/Electricity_market_indicators

280   ACER/CEER Annual Report on the Results of Monitoring  

the Internal Electricity and Natural Gas Markets in 2012, 

November 2013.

281   10th Consumer Markets Scoreboard, http://ec.europa.eu/

consumers/consumer_evidence/consumer_scoreboards/10_

edition/index_en.htm

282   NCC, 2013 data.

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L I T H U A N I A

7.  Security of supply

Electricity

Gas

After the shutdown of the Ignalina NPP, Lithuania has become 
an importer of electricity. The abovementioned NordBalt link 
and LitPol Link are necessary to integrate Lithuania into a 
common European electricity market, thus contributing to 
a more reliable electricity supply, more stable prices and 
enhanced competition on the Lithuanian market. 

At present, the Lithuanian grid is operated in synchronous 
mode with the Russian and Belorussian grids. In 2012, 
negotiations  were  launched  by  the  European  Commission 
with the aim to conclude an Intergovernmental Agreement. 
Negotiations have been suspended at the request of the 
Baltic States pending their analysis of a study on the de-
synchronisation  of  the  Baltic  grids  and  a  move  towards 
synchronisation with continental European grids.

As  regards  the  local  supply  security,  the  total  investments 
into the network infrastructure were increased by 9.59% to 
EUR 148.1 million in 2012.

To  diversify  the  supply  of  gas,  as  per  the  approved 
National Energy Independence Strategy of 2012, Lithuania 
has determined the necessity for the LNG Terminal and 
interconnection with the gas network of Poland to enable 
access to the EU-wide natural gas system.

Making the LNG Terminal operational requires investment in 
the outdated gas transmission line extending in the northern 
part of Lithuania and also connecting Latvia (Klaipeda – 
Kursenai). The underground storage facility in Inčukalns 
(Latvia)  is  used  for  the  supply  security  for  vulnerable 
consumers of Lithuania in case of emergency. Analysis 
has revealed that the present status of the Lithuanian gas 
network failed to fulfil the EU requirements prescribed by 
the Regulation (EU) No 994/2010. The analyses of the N-1 
rule showed a result equal to 31.4% while the requirement 
of regulation states that N-1 must be above 100% in order 
to have a secure network.

L I T H U A N I A   –  K E Y   I N D I C A T O R S

E L E C T R I C I T Y

G A S

Number of companies representing at least 95% 
of net power generation

Number of main power generation companies

30

6

Number of entities bringing natural gas  
into country

Number of main gas entities

5

4

Market share of the largest power generation company 25%

Market share of the largest entity bringing natural gas 69%

Number of electricity retailers

Number of main electricity retailers

Switching rates (entire retail market)

Regulated prices for households – electricity 

Regulated prices for non-households – electricity

HHI in power-generation market

HHI in electricity retail market

Electricity market value (1) (bn€)

Installed generation capacity (2013, MW)

Peak demand (MW)

Number of smart meters installed

27

5

N/A

Yes

No

1 162.6

2 124.4

0.733

4 304

1 686 

N/A

Number of retailers selling natural gas to final customers

Number of main natural gas retailers

Switching rates for gas (entire retail market)

Regulated prices for households – gas

Regulated prices for non-households – gas

HHI in gas supply market

HHI in gas retail market

Gas market value (1) (bn€)

8

2

N/A

Yes

No

>5 000

>5 000

0.274

Sources: Eurostat, CEER, National Regulatory Authority, EC calculations.

(1)   Market value is an estimation of the size of the retail electricity and gas markets. It is calculated using data on electricity  

and gas consumption in the household and non-household sectors (average bands) and annual average retail prices.

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Key issues

 → The share of renewable energy levels remains far from the target of 11%. 

 → To improve security of supply, further investments are required in new interconnectors 
with neighbouring countries, and in additional generation capacity capable of providing 
flexibility to the electricity system.

 → The natural gas sector is almost 100% dependent on imports. Reinforcing the 
interconnections  with  neighbouring  countries  would  alleviate  current  concerns.  Firm 
entry capacity in Luxembourg remains limited, and a better congestion mechanism 
would help to address this issue.

 → More should be done to encourage competition in the retail market, especially 

for domestic customers.

G
R
U
O
B
M
E
X
U
L

1.  General overview

2.  Regulatory framework

Oil  products  for  energy  production  provided  63%  of 
Luxembourgian gross inland consumption in 2012, while the 
share of natural gas increased to 24% (compared to 2011). 
The contribution of renewable sources also increased, reaching 
3.1%. However, this figure continues to fall short of the 11% 
target for 2020. In 2011, power generation saw a decline of 
20% in internal production (mainly thermal generation) from 
2010 levels due to one of the combined cycles operating on 
reduced availability283. Gas is the primary fuel for electricity 
generation  (62%  of  total  electricity  generated),  followed  by 
renewable energy (35% with most coming from hydro power). 

F I G U R E S  1   A N D   2

General

Two laws284 came into force in August 2012 transposing 
Directives 2009/72/EC and 2009/73/EC, concerning common 
rules  for  the  internal  market  in  electricity  and  gas.  An 
infringement procedure for incorrect transposition of the 
Third  Energy  Package  Directives  was  launched  in  March 
2014 and is on-going285.

Gross inland consumption mix 2008-2012

Gross electricity generation mix 2008-2012

70% 

60% 

50% 

40% 

30% 

20% 

10% 

0% 

2008 

2009 

2010 

2011 

2012 

80% 

70% 

60% 

50% 

40% 

30% 

20% 

10% 

0% 

Solid fuels
Renewables

Natural gas
Other

Crude oil and petroleum products

2008 

2009 

2010 

2011 

2012 

Natural gas

Renewables

Other

Source: Eurostat

Sources:  EU energy in figures - “Statistical Pocketbooks 2012 and 2013”, 

European Commission

283   ILR, http://www.ilr.public.lu/electricite/documents_NEW/rapport/
VERSION_FINALE_rapport_benchmark_2012_20130906.pdf

285   Information on the letter of formal notice issued is available at 
http://ec.europa.eu/eu_law/eulaw/decisions/dec_20140328.htm

284   Law of 7 August 2012 on electricity market, http://www.legilux.
public.lu/leg/a/archives/2012/0178/a178.pdf#page=2, and Law 

of 7 August 2012 on natural gas market, http://www.legilux.

public.lu/leg/a/archives/2012/0179/a179.pdf#page=2

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L U X E M B O U R G

National Energy Regulator

Gas

In  2012,  the  Luxembourg  national  regulatory  authority, 
the Institut Luxembourgeois de Régulation (ILR), had 
51 employees and an annual budget of almost EUR 7 million. 
ILR is also responsible for regulating other sectors such as 
the telecoms and postal sectors.

To promote competition in the electricity and natural gas 
markets, new responsibilities were assigned to the ILR 
in  network  access  and  pricing,  cross-border  cooperation, 
monitoring investment plans and monitoring the function 
and transparency of the energy markets.

Unbundling

Luxembourg  has  been  granted  a  derogation  from  the 
unbundling  provisions  of  the  Third  energy  package  on  the 
basis of Article 44(2) of the Electricity Directive and Article 
49(6)  of  the  Gas  Directive.  The  legislative  framework, 
however,  guarantees  a  relative  degree  of  independence  of 
system  operators  through  legal,  functional  and  financial 
requirements.  The  electricity  grid  is  jointly  managed  by 
Creos Luxembourg S.A (who has been granted transmission 
and distribution system operator license), five distribution 
system operators (DSOs) and one industrial system operator 
(ISO).  In  the  gas  sector  Creos  is  the  transmission  and  the 
main distribution system operator. The gas distribution grid 
is also managed by two other DSOs. 

3.  Wholesale markets 

Electricity

At generation level, the three largest producers (GdF Suez, 
Enovos, Soler) provided 89% of power generation volume. 

The volume of electricity traded on the wholesale market in 
2012 amounted to 6.93 TWh (17% less than the previous 
year).  Luxembourg  relies  on  imports  from  neighbouring 
countries, mainly Germany, for the majority of its domestic 
consumption (57%)286. 

There  is  currently  no  power  exchange  or  spot  market  for 
electricity, but the absence of congestion on interconnectors 
means wholesale operators can participate on other power 
exchanges.

286   All figures on electricity and gas markets, including those  

of the following paragraphs, are extracted from ILR’s latest 

report on energy markets in 2012, unless otherwise specified, 

http://www.ilr.public.lu/electricite/documents_NEW/rapport/

VERSION_FINALE_rapport_benchmark_2012_20130906.pdf

The  national  consumption  of  natural  gas  was  13.6  TWh, 
slightly  higher  than  2011.  2012  was  characterised  by  a 
particularly high peak demand due to extreme temperatures 
in  the  beginning  of  the  year.  The  vast  majority  of  gas  is 
imported  from  Belgium,  Germany  and  (to  a  lesser  extent) 
France,  with  only  a  small  part  locally  produced  by  biogas 
plants. The Luxembourg market has been is impeded by the 
limited availability of firm entry capacity. However, in 2013 
and  2014,  additional  firm  entry  capacity  has  been  made 
available which has resolved congestion issues.

There is no wholesale market in Luxembourg and the gas 
market  has  a  quasi  monopolistic  structure.  In  2012,  the 
dominant  company  (Enovos)  consolidated  its  market  share 
despite the fact that transparent and non-discriminatory 
access to transmission capacity has been made available.

4.  Retail markets

Electricity

2012 saw 11 suppliers provide around 6.4 TWh of electricity 
to  final  consumers.  The  retail  market  was  concentrated  as 
the four biggest distributors accounted for 93% of the total 
amount  of  energy  supplied.  Enovos  dominated  the  market 
for all three segments (residential, business and industrial) 
with 55% of the total consumption. The supplier switching 
rate in 2012 was 0.22% by customer number and 9.7% by 
consumption  volumes,  demonstrating  that  industrial  users 
were more active in switching suppliers. 

Gas

The  natural  gas  sector  was  much  more  concentrated  than 
the electricity sector. In 2012, a total of eight suppliers 
served final consumers, with just three suppliers holding 
94%  of  the  market.  Competition  differs  significantly  within 
the different segments. As a result of the small number of 
players a monopoly within segments of industrial consumers 
and power producers has been created. The opening of the 
gas sector remained very low with supplier switching rates 
less than 0.1%.

5.  Consumers

The consumers’ assessment of both the electricity and gas 
retail markets in Luxembourg is the 3rd highest in the EU and 
in  both  cases  well  above  the  EU  average  (80.3  points  vs. 
72.0 and 79.7 vs. 74.1 respectively). The electricity market 
scores better than the EU average on all components (with 
the lowest incidence of consumer complaints in the EU) 
with the exception of switching (which is third lowest in the 
EU  despite  Luxembourg  being  6th  in  the  EU  ranking  on  the 
ease of switching). A similar picture is seen for gas services, 
with all the components – except for switching – assessed 
above the EU average. Comparability, ease of switching and 

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L U X E M B O U R G

F I G U R E S  3   A N D   4

Electricity price change by component 2008-2012 (in € cent/kWh)

Natural gas price change by component 2008-2012 (in € cent/kWh)

H O U S E H O L D S

I N D U S T R Y

H O U S E H O L D S

I N D U S T R Y

18 

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2012

Taxes+Levies 

Networks

Energy+Supply

Taxes+Levies 

Networks

Energy+Supply

Source: Eurostat

Sources: EC, EPCR metadata

choice are within the 3 best EU ratings and the incidence of 
complaints is the third lowest in the EU.287

6.  Infrastructure

The  Luxemburgish  authorities  should  ensure  a  proper  and 
timely adoption of the measures stemming from the TEN-E 
Regulation, including the establishment of the one-stop-shop 
for Projects of Common Interest (PCIs) (due by 16 November 
2013),  and  other  measures  foreseen  for  2014  and  2015, 
including  the  publication  of  the  manual  on  the  permit 
granting process for project promoters, and the adoption of 
legislative  and  non-legislative  measures  streamlining  the 
environmental assessment procedures.

Electricity

The  total  generation  capacity  amounted  to  1 785  MW, 
including the Vianden pump storage power plant (1 096 MW 
of capacity installed) which is directly connected to the 
German transmission grid. The generation assets currently 
available are not sufficient to provide the required electricity 
to cover the national demand of Luxembourg, which relies 
on imports from neighbouring countries.

Upgrade  of  the  existing  internal  grid  is  underway  and 
there  are  planned  investments  to  ensure  continued  n-1 
contingence on internal lines. Luxembourg’s transmission 
network is connected with Germany by two interconnectors 
whilst the industrial grid of Sotel is connected to the Belgian 
transmission network. 

PCIs  under  the  guidelines  for  trans-European  energy 
infrastructure have been identified in order to increase the 
capacity at the Belgian/Luxembourg border, also including 
Phase Shift Transformers for better load management.

Various services are now available to consumers to provide 
information on services and their rights. An online information 
point288 provides extensive support to customers with details 
on  suppliers,  products,  switching  procedures,  opportunities 
and  rights  and  responsibilities  in  the  context  of  the  non-
regulated  market.  An  automated  on-line  price  comparison 
tool289 is now available to residential customers. Additional 
services include the alternative dispute resolution procedure 
which  has  been  available  to  residential  customers  since 
2011. In 2012, two dispute resolutions were registered under 
the alternative dispute resolution procedure. In addition 
the  ILR  is  responsible  for  the  electricity  labelling  system 
to  provide  customers  with  information  on  environmental 
impact depending on type of energy sources used.

All  customers  are  de  facto  considered  as  potentially 
vulnerable  in  Luxembourg.  Both  the  electricity  and  the 
gas legislations foresee provisions governing the situation 
of  customers  in  default  payment  of  their  bill.  Clear  rules 
determine  disconnection  conditions  in  case  of  default 
payment  and  the  installation  of  prepayment  meters  for 
individuals  in  a  precarious  social  situation.  Situations  of 
default payment are also covered by the law of 18 December 
2009 on social aid. 

287   10th Consumer Markets Scoreboard, http://ec.europa.eu/

consumers/consumer_evidence/consumer_scoreboards/10_

edition/index_en.htm

288   http://www.ilr.public.lu/electricite/stroumagas/index.html or  

http://www.STROUMaGAS.lu
289   http://www.calculix.lu/web/tk/tk

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L U X E M B O U R G

Gas

Internal production of natural gas is only from three biogas 
plants being connected to the gas network in 2013. Almost 
all  gas  for  consumption  is  imported  from  neighbouring 
countries  through  high  pressure  pipelines  from  Germany 
and Belgium and medium pressure pipelines from France. 
There are four entry points: two on the Belgian border, which 
are combined in one virtual entry point, one for the German 
border and one on the French border. 

Luxemburg has no storage infrastructure; it relies upon the 
storage capacity of neighbouring countries. PCIs foresee 
increase  of  the  existing  interconnection  with  France  and 
Belgium.

Two new Laws in August 2012 provide the opportunity for 
mass roll-out of smart meters. This is expected to reach 
95% of electricity consumers by 2018, and 95% of natural 
gas consumers by 2020. Provisions for the public charging 
infrastructure of electric vehicles were made to promote 
their use.

7.  Security of supply 

Electricity

According  to  the  latest  evaluations,  the  n-1  criterion  is 
covered  by  existing  German  interconnections.  The  need 
for investment in new cross-border interconnections with 
Belgium  and  France,  in  new  generation  capacity  and  in 
upgrades of the internal grid is being analysed to improve 
security  of  supply.  As  there  are  insufficient  emergency 
generation reserves in Luxembourg, load shedding might be 
the only viable emergency response tool290. 

Gas

In 2013 and 2014, additional firm entry capacity has been 
made available resolving congestion issues. Interruptible 
capacity  and  flexibility  mechanisms  are  currently  used  by 
Creos  in  order  to  manage  cases  of  missing  firm  capacity. 
Due to the absence of storage facilities in the country, load 
shedding can be used in case of emergencies. However, it 
has  never  been  used  till  now.  With  about  half  of  the  gas 
supplied  through  the  German  entry  point,  Luxembourg 
does  not  comply  with  the  N-1  rule.  However,  it  obtained  a 
derogation under Regulation (EU) No 994/2010.

L U X E M B O U R G   –  K E Y   I N D I C A T O R S

E L E C T R I C I T Y

G A S

Number of companies representing at least 95% 
of net power generation

Number of main power-generation companies

4

2

Number of entities bringing natural gas  
into country

Number of main gas entities

5

1

Market share of the largest power-generation company 82%

Market share of the largest entity bringing natural gas N/A

Number of electricity retailers

Number of main electricity retailers

11

4

Number of retailers selling natural gas to final customers

Number of main natural gas retailers

8

3

Switching rates (entire electricity retail market)

0.22%

Switching rates for gas (entire retail market)

0.1%

Regulated prices for households – electricity 

Regulated prices for non-households – electricity

HHI in power-generation market

HHI in electricity retail market

Electricity market value (1) (bn€)

Installed generation capacity (MW, 2012)

Peak demand (MW)

Number of smart meters installed 

No

No

2 311

High

0.425

1 785

1 009

N/A

Regulated prices for households – gas

Regulated prices for non-households – gas

HHI in gas supply market

HHI in gas retail market

Gas market value (1) (bn€)

No

No

High

High

0.282

Sources: Eurostat, CEER, National Regulatory Authority, EC calculations.

(1)   Market value is an estimation of the size of the retail electricity and gas markets. It is calculated using data on electricity  

and gas consumption in the household and non-household sectors (average bands) and annual average retail prices.

290   http://www.creos-net.lu/index.php?id=556

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Key issues

 → In September 2012, the Czech-Slovak-Hungarian market coupling became operational, 
resulting in an increased price convergence towards regional markets. It also increased 
liquidity  on  the  Hungarian  power  exchange,  decreased  price  volatility  and  narrowed 
spreads on the  national market. Efforts  to extend  market  coupling  to  southern 
neighbours and successively couple with North-Western and South-Western European 
markets should be continued.

 → Key parameters for calculating network tariffs are set by the Ministry and seriously 
limit  the  NRA’s  ability  to  set  network  tariffs  autonomously.  The  NRA  should  have 
effective powers to set network tariffs independently from the government. In addition, 
appeal procedures appear to be unsuited to ensure that regulatory decisions can be 
challenged effectively. The independence of the national regulatory authority should 
be strengthened. 

 → Regulated energy prices were cut by 20% in 2013 and further cuts in the regulated price 
are occurring in 2014 for both electricity and gas. In combination with other regulatory 
measures (e.g. special taxes), and market interventions network operators and energy 
suppliers  now  suffer  financial  losses.  The  investment  climate  has  deteriorated  as  a 
result  of  changes  in  the  regulatory  framework.  As  foreign  utilities  are  selling  their 
businesses to the Hungarian State, Hungary is on the trajectory to have a largely 
state  owned  energy  sector.  Overall,  the  country  would  benefit  from  adhering  to 
a regulatory framework which is stable and conducive to investment and 
competition in the electricity and gas markets. 

1.  General overview

Gross energy consumption in 2012 amounted to 23 569 Mtoe291. 
Consumption decreased by 12.1% compared to 2008. The 
primary energy mix remained largely the same as in previous 
years, although demand dropped further for oil (to 25.22%) 
and natural gas (to 35.24%). 

Directive  2009/28/EC  requires  from  Hungary  a  13% 
renewables share within the total gross energy consumption 
by  2020.  However,  this  target  was  raised  in  Hungary’s 
National Reform Programme to 14.65%; above the binding 
minimum  target.  The  level  of  renewables  in  the  overall 
energy production remained stable in 2012 (7.52%). The 
share  of  total  renewable  energy  in  the  gross  final  energy 

F I G U R E S  1   A N D   2

Gross inland consumption mix 2008-2012

Gross electricity generation mix 2008-2012

50% 

40% 

30% 

20% 

10% 

0% 

50% 

45% 

40% 

35% 

30% 

25% 

20% 

15% 

10% 

5% 

0% 

2008 

2009 

2010 

2011 

2012 

2008 

2009 

2010 

2011 

2012 

Solid fuels
Nuclear

Natural gas
Renewables

Crude oil and petroleum products
Other

Solid fuels
Nuclear

Natural gas
Renewables

Crude oil and petroleum products
Other

Source: Eurostat

Sources:  EU energy in figures - “Statistical Pocketbooks 2012 and 2013”, 

European Commission

291   Eurostat. 

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H U N G A R Y

consumption was 9.57% in 2012. In 2012, Hungary was on 
track of its national action plan trajectory for overall share 
of  renewable  energy  in  the  final  energy  consumption  and 
in heating sector. However, in 2012 Hungary was behind its 
national action plan trajectory in the electricity and transport 
sectors  in  which  the  share  of  renewable  energy  decreased 
in  2011  and  2012  (In  the  electricity  sector  the  share  of 
renewable energy in 2012 was below 2009 level). Limited 
progress  has  been  made  on  development  of  a  stable, 
efficient and reliable legal and regulatory framework for the 
support for renewable energy sources.

In  2012,  total  power  generation  amounted  to  34.6  TWh, 
significantly less than in 2008 (40.02 TWh). In parallel, net 
imports have been growing significantly, reaching 7.97 TWh 
in 2012, up from 3.90 TWh in 2008. Total gross electricity 
demand in 2012 was 39.95 TWh, slightly less than in 2008 
(41.3 TWh)292.

Electricity  generation  from  fossil  fuels  is  decreasing.  Due 
to market trends – and decreased profitability, natural gas 
constituted  only  27.12%  of  total  generation  compared  to 
around 40% prior to the economic crisis. Cogeneration293 
represented 16.6% of gross electricity generation in 2011.

Natural gas consumption continues to sharply decrease, as 
it has in prior years, reaching 8.3 Mtoe in 2012. Domestic 
production  accounted  for  20.32%  of  total  demand.  E.ON 
Földgáz Trade (purchased by the state owned company MVM 
in 2013) has a long-term gas supply contract with Gazprom. 
In 2012 imports from the West (from Austria, HAG-pipeline) 
exceeded imports from the East (from Ukraine, Beregdaróc) 
while in 2013 imports from the East were higher again. 
A large share of the western entry capacity was contracted 
by  E.ON  for  Russian  imports.  Small  scale  gas  transit  has 
occurred in the direction of Serbia, Romania and Croatia294.

2.  Regulatory framework

General

The political and regulatory debate during 2012 and 2013 
continued to focus on the price moratorium, on special utility 
sector  taxes  and  since  December  2012  on  price  cuts  for 
household consumers. The Minister of National Development 
approved a price adjustment equal to annual inflation at 

the beginning of 2012. Nevertheless, the price rise in gas 
imports created a mismatch between the level of regulated 
retail prices and the wholesale import price. 

The  energy  sector  is  subject  to  an  energy  tax,  a 
differentiated  profit  tax  and  a  crisis  tax.  The  crisis  tax 
was  set  on  (generation  and  supply)  energy  companies’ 
taxable revenue and was due to expire in 2013. However, 
the  government  at  the  same  time  imposed  a  new  tax  on 
infrastructure,  set  by  the  length  of  transmission  and 
distribution lines and pipelines. 

In  2013,  regulated  prices  for  household  consumers  in  the 
gas  and  electricity  sector  were  cut  by  20%  and  further 
decreases were announced for 2014 (electricity by 5.7% and 
gas by 6.5%). 

National Energy Regulator

The Hungarian Energy and Public Utility Regulatory Authority 
(“Magyar  Energetikai  és  Közmű-szabályozási  Hivatal”)  – 
HEA, called until 2013 the Hungarian Energy Office, HEO – is 
an  independent  body  of  the  administration.  In  2012,  HEO 
employed  122  staff  and  had  a  EUR  12.68  million  budget. 
Recently its staff and budget increased due to its widening 
responsibilities. At the end of 2013, the HEA staff was 235.

Since 1 January 2012, HEA is obliged to calculate gas tariffs 
using the methodology imposed by the Ministry. 

Parliament adopted a new law increasing HEA’s competence 
in the public utility realm. This new law foresees that some 
of the regulatory decisions (namely decisions on connection 
prices and system use charges) are made in the form of HEA 
regulation  which  cannot  be  appealed  in  regular  courts,  but 
only before the Constitutional court. 

Unbundling

The electricity TSO, MAVIR Zrt., is owned by the state-owned 
company Magyar Villamos Művek Zrt. (Hungarian Electricity 
Ltd.,  MVM),  a  major  player  both  in  generation  and  on  the 
wholesale  markets.  Mavir  was  certified  by  the  Regulator 
in  March  2012  as  an  independent  transmission  system 
operator (ITO). The gas TSO FGSZ Zrt. is owned by MOL 
(Magyar Olaj-és Gázipari Nyrt, MOL Hungarian Oil and Gas 
Plc.), a listed company, and is also certified as an ITO.

3.  Wholesale markets

Electricity

292   HEA and MAVIR, Statistical Data of the Hungarian Power 

System 2012, 2012, http://www.mekh.hu/gcpdocs/86/MAVIR_

MEKH_VER_statisztika_2012.pdf 

293   The share of electricity produced in combined heat  

and power plants (CHP).

294   FGSZ Zrt, Foldgazszallito, Energikus Csapat 21. Szazadi 

Teljesitmeny, 2012, http://fgsz.hu/sites/default/files/documents/

fgsz_eves_jelentes_2012_magyar.pdf 

The generation market is relatively concentrated within the 
hands of state-owned MVM. 

Net imports have been growing steadily reaching 19.95% 
of  gross  demand  in  2012.  Hungary  is  also  an  important 
transit country connecting markets between the Balkans and 
Central Europe. Imports come from Slovakia, Austria and 

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F I G U R E S  3   A N D   4

Electricity price change by component 2008-2012 (in € cent/kWh)

Natural gas price change by component 2008-2012 (in € cent/kWh)

H O U S E H O L D S

I N D U S T R Y

H O U S E H O L D S

I N D U S T R Y

18 

16 

14 

12 

10 

8 

6 

4 

2 

0 

8 

7 

6 

5 

4 

3 

2 

1 

0 

2008

2012

2008

2012

2008

2012

2008

2012

Taxes+Levies 

Networks

Energy+Supply

Taxes+Levies 

Networks

Energy+Supply

Source: Eurostat

Sources: EC, EPCR metadata

Ukraine (76.77% share of total imports), exports are the 
highest towards Croatia and Serbia (73.74%)295.

E.ON, GdF and MOL297. The gas exchange market, CEEGEX, 
owned by MVM, became operational in early 2013.

In  September  2012,  the  Czech-Slovak-Hungarian  market 
coupling became operational. This resulted in an increased 
price convergence towards regional markets and decreased 
price volatility, narrowing spreads on the national market. 
The market coupling was an essential factor in the liquidity 
increase  of  HUPX,  the  Hungarian  power  exchange,  a 
subsidiary of MAVIR. Day-ahead turnover was 3.78, 6.32 and 
9.07  TWh,  in  2011,  2012  and  2013  respectively296.  Prices 
fell  from  EUR  55.81/MWh  in  2011  to  EUR  42.33/MWh  in 
2013. Trade in physical futures, launched only in 2011, has 
also seen steady growth. 

Gas

In  2012,  20.32%  of  gas  consumption  was  supplied  by 
domestic  sources,  the  rest  being  mainly  imported  from 
Russia.  E.ON  Földgáz  Trade  is  a  major  player  on  the 
wholesale  market.  It  was  purchased  by  state-owned  MVM 
in October 2013. 

Gas wholesale market concentration has been decreasing 
for a couple of years primarily due to diversified imports and 
their  increased  share  in  the  reduced  domestic  demand.  In 
2013, MVM increased further its presence on the wholesale 
market,  in  particular  in  imports  previously  dominated  by 

Transit  through  Hungary  comes  from  Russia  via  Ukraine 
flowing  towards  Serbia  and  Bosnia-Herzegovina298,  with 
smaller scale exports to Romania and Croatia. Negotiations 
about reverse flow to Ukraine were actively conducted at the 
end of 2012, with gas flows starting in April 2013.

4.  Retail markets

Electricity

In  2012,  12.19  TWh  of  electricity  was  purchased  under 
regulated prices. Almost all households remain under the 
regulated price regime with four companies covering 67.93% 
of the retail market. The switching rate for household 
consumers  remained  low  i.e  1.6%,  up  from  0.3%  in  2011. 
Non-household consumers had higher switching rates with 
13.3%  of  those  customers  switching  supplier  in  2012,  up 
from 9.7% in 2011.

Household prices were composed of electricity and supply 
costs  for  43%,  network  costs  for  35%.  VAT  and  other  fees 
and  costs  make  up  the  remaining  22%  of  the  total  price. 

295   HEA, http://www.mekh.hu/statisztika/energia-statisztika/adatok-
es-tablazatok/villamosenergia-ipari-tarsasagok-adatai.html
296   HUPX, HUPX Year 2012 in Detail., 2012, https://www.hupx.hu/hu/
Kommunikacio/Documents/item_339.pdf and HUPX, HUPXDAM 

297   MVM Csoport, MVM Csoport Eves Jelentes 2012, 2012,  

http://www.mvm.hu/hu/szakmai-informaciok/szakmai_kiadvanyok/
eves-jelentes/Documents/MVM_EVES_2013_09_végleges.pdf  

Import capacity at HAG (Austria) interconnector was reallocated 

in favor of MVM by the Ministry’s decision in 2011.

298   Data is not available for this transit to Serbia and Bosnia-
Herzegovina, from other documents an educated estimate 

Annual Report 2013, 2013. https://www.hupx.hu/en/Market%20

would be around 2 bcma. FGSZ Zrt. “Foldgazszallito, 

data/Public%20reports/DAM/2013%20Annual/DAM%20

Eves Jelentes 2012, 2012. http://fgsz.hu/sites/default/files/

public%20annual%20report%20of%202013.pdf

documents/fgsz_eves_jelentes_2012_magyar.pdf

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H U N G A R Y

Due  to  a  decrease  in  the  European  wholesale  prices,  the 
price  moratorium  in  2010  did  not  have  significant  effects 
until  2012.  In  2013,  the  20%  utility  rate  cut  led  to  some 
distortions  and  increased  the  price  divergence  between 
wholesale and retail markets. 

Gas

In  2012,  3.66  bcm  of  natural  gas  was  purchased  under 
regulated  prices,  88%  of  which  were  sold  to  household 
consumers.  Almost  all  households  remain  under  the 
regulated prices regime. The retail market is relatively 
concentrated with six companies covering almost the entire 
retail  market  (83.79%).  The  switching  rate  for  household 
consumers was 1.5%, down from 10.4% in 2011. The high 
figure  for  2010-2011  was  probably  due  to  the  liquidation 
of  EMFESZ,  a  supply  company  with  considerable  retail 
books. Data for 2012 is likely to be much more typical for 
the market. Industrial consumers on the wholesale markets 
switch  more  frequently  (ratios  for  consumers  equipped 
with metering devices above 20 m3/h vary between 18.2% 
and  31.5%).  Non-household  prices  are  only  regulated  for 
consumers with gas meters below 20 m3/h.

5.  Consumers

The  overall  assessment  of  the  retail  electricity  market 
in  Hungary  is  slightly  below  the  EU  average  (71.5  points 
compared  to  72).  This  is  also  reflected  in  the  country’s 
position  in  the  EU  ranking  (17th  position)  and  the  ranking 
of  31  domestic  services  markets  (20th  position).  Switching, 
ease  of  switching  and  overall  consumer  satisfaction  are 
within the 5  lowest ratings in the EU, and the incidence of 
consumer  problems  is  the  5th  highest  in  the  EU.  Yet,  trust 
in providers is above the EU average. The retail gas market 
ranks lowest in the EU (with a score of 65.9 points compared 
to  the  EU  average  of  74.1)  and  28th  among  31  domestic 
service  markets.  It  has  also  seen  a  4.9  point  decrease  in 
its score since 2012 (highest in the EU). The market scores 
lowest in the EU in terms of overall consumer satisfaction, 
and 2nd lowest on comparability of offers while the incidence 
of problems is the highest in the EU.

Consumer  satisfaction  with  electricity  services  was  down 
slightly in 2012, with gas services steeply below EU-27  
average299.  Consumers  can  turn  to  both  HEA  and  the 
Hungarian  Authority  for  Consumer  Protection  (HACP)  with 
their  complaints.  These  institutions  also  provide  dispute 
settlement opportunities. 

299   10th Consumer Markets Scoreboard,  

http://ec.europa.eu/consumers/consumer_evidence/consumer_

scoreboards/10_edition/index_en.htm

Since 2008, the legislation recognises vulnerable consumers 
on a social and on a health-related basis. Depending on their 
category  vulnerable  consumers  may  benefit  from  deferred 
payment, prepayment options, individual assistance to help 
consumers understand their bills, consumers with disabilities 
whose  life  or  health  is  directly  jeopardized  if  disconnected 
from the electricity supply system, including any disruption 
in service, may not be disconnected in case of late payment 
or non-payment of charges, etc. 

6.  Infrastructure

Hungary has a robust infrastructure both in electricity and 
natural  gas  sectors.  Due  to  important  utility  rate  cuts  in 
2013 and extraordinary taxation on energy infrastructure, 
companies are dissuaded from making further investments. 
Investment  levels  within  the  electricity  and  gas  sectors 
have decreased, and some non-essential assets have been 
mothballed. Development of infrastructure has been limited 
to  state-owned  actors  (primarily  MVM)  mainly  with  the 
support from EU funds. 

The  Hungarian  authorities  should  ensure  a  proper  and 
timely adoption of the measures stemming from Regulation 
347/2013  on  the  trans-European  energy  infrastructure, 
including the establishment of the one-stop-shop for Projects 
of Common Interest (PCIs) (due by 16 November 2013), and 
other measures foreseen for 2014 and 2015, including the 
publication  of  the  manual  on  the  permit  granting  process 
for project promoters, and the adoption of legislative and 
non-legislative  measures  streamlining  the  environmental 
assessment procedures.

Electricity

Hungarian  electricity  infrastructure  is  relatively  strong, 
containing  robust  interconnections  (equal  to  30%  of 
domestic installed capacity) with the neighbouring countries. 
The Hungarian network facilitates North-South transit flows 
between  Central-Europe  and  the  Balkans.  It  is  involved  in 
five PCIs under the guidelines for trans-European energy 
infrastructure: Two new 400kV interconnections with 
Slovakia are planned for 2018 and a 3rd one for 2021. 
Negotiations on a similar interconnection with Slovenia are 
under way and planned to be commissioned in 2016.

Gas

Hungary has almost finished its major interconnectivity 
programme  launched  in  2009.  Interconnections  with 
Romania and Croatia were commissioned in 2010 and 2011. 
It is involved in seven PCIs on the 2013 list. Negotiations 
about reverse flow in the former case (from Romania to 
Hungary, PCI), as well as on the HAG pipeline (from Hungary 
towards Austria) are under way. Construction of the Hungary-
Slovakia pipeline is also under way (PCI) and has received 
funding from the European Energy Programme for Recovery 
from  an  amount  of  up  to  EUR  30  million.  The  Hungarian 
section of the South Stream pipeline is in the planning 

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H U N G A R Y

Gas

Natural  gas  imports  from  Austria  grew  due  to  favourable 
price conditions, putting considerable pressure on Take-
or-Pay  clauses  in  the  long-term  contract  with  Gazprom. 
Increasing  interconnectivity  is  one  of  the  policy  goals, 
reiterated  by  the  National  Energy  Strategy.  Romanian 
and  Croatian  interconnectors  were  built  prior  to  2012, 
but  remained  underutilised.  At  the  same  time  imports 
from  Austria  were  constrained  by  scarce  pipeline  capacity 
(4.6  bcma)  in  2012.  The  construction  of  Hungarian-Slovak 
interconnector (max. capacity 5  bcma) in 2015 will further 
diversify transportation routes.

phase.  Other  PCIs  with  planned  commissioning  dates  after 
2017 (altogether five) and some minor improvements to 
facilitate  better  management  of  internal  flows  have  been 
significantly postponed or cancelled due to the deteriorating 
investment climate.

7.  Security of supply

Efforts  in  diversification  of  supply  continue  in  both  the 
electricity and gas sectors. Both trends rely on favourable 
regional economic processes and articulated policy efforts. 

Electricity

Electricity  imports  from  European  markets  are  growing 
due  to  the  phasing-out  of  domestic  gas  power  generation. 
Cross-border capacities are adequate both for imports and 
North-South  transit  towards  the  Western  Balkans.  These 
achievements were fostered by the Czech-Slovak-Hungarian 
market coupling in autumn 2012, which resulted in increased 
price convergence towards regional markets and decreased 
price volatility on the domestic market.

H U N G A R Y   –  K E Y   I N D I C A T O R S

E L E C T R I C I T Y

G A S

Number of companies representing at least 95% 
of net power generation

Number of main power-generation companies

32

4

Number of entities bringing natural gas  
into country

Number of main gas entities

20

4

Market share of the largest power-generation company 47.10%

Market share of the largest entity bringing natural gas 32.91%

Number of electricity retailers

Number of main electricity retailers

43

4

Number of retailers selling natural gas to final customers

Number of main natural gas retailers

Switching rates (households)

1.6% 

Switching rates for gas (households)

Regulated prices for households – electricity 

Regulated prices for non-households – electricity

Yes

Yes

Regulated prices for households – gas

Regulated prices for non-households – gas

HHI in power-generation market

HHI in electricity retail market

Electricity market value (1) (bn€) 

Installed generation capacity (MW)

Peak demand (2012, MW)

Number of smart meters installed

2 296.85

HHI in gas supply market

1 584.38

HHI in gas retail market

Gas market value (1) (bn€)

2.758

9 551

6 016

N/A

30

6

1.5% 

Yes

Yes

1 494.26

1 245.89

2.327

Sources: Eurostat, CEER, National Regulatory Authority, EC calculations.

(1)   Market value is an estimation of the size of the retail electricity and gas markets. It is calculated using data on electricity  

and gas consumption in the household and non-household sectors (average bands) and annual average retail prices.

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Key issues

 → Given the current physical isolation of Malta’s electricity sector, the high voltage 
connection  with  Italy  should  be  seen  as  a  high  priority  project  to  secure  electricity 
supply and reduce the vulnerability of the sector. 

 → Malta should step up its efforts to diversify the energy mix and energy sources, notably 

by developing renewable energy and by creating access to natural gas. 

 → Currently  progress  towards  European  targets  for  renewables  has  been  slow  but 
has improved recently thanks to the increased use of solar energy. Development 
of  renewable  energy  post  2020  may  be  challenging  due  to  geophysical 
restrictions.

A
T
L
A
M

1.  General overview

Unbundling

Malta  is  almost  100%  dependent  on  oil  and  petroleum 
products.  The  gross  inland  energy  consumption  in  2012 
was  0.91  Mtoe,  a  decrease  of  2.5%  compared  to  2011. 
Renewable energy accounted for only 1.1% of gross inland 
energy consumption. There is no supply of natural gas. 

The gross electricity generation in 2012 was 2.29 TWh, an 
increase of 4.4% compared to 2011. Electricity generation in 
Malta is dominated by crude oil and petroleum products. In 
2011, a small amount of electricity (8 GWh) was generated 
by photovoltaic systems, increasing to 13 GWh in 2012. 

Malta has an obligation to reach 10% of renewable energy 
in  the  gross  energy  consumption  by  2020.  According  to  the 
present  reporting  data  available  in  Eurostat,  the  RES  share 
in gross final energy consumption for 2012 is below Malta’s 
2011-2012  indicative  trajectory  and  the  country  therefore 
appears to lag behind its 2020 obligation. Cogeneration of heat 
and power remained negligible during 2012 (only 0.4%) 300.

There is no electricity transmission system in Malta. A single 
distribution system serves all electricity consumers. The 
function of the distribution system operator (DSO) is carried 
out by the Enemalta PLC, a vertically integrated power utility. 
The  requirements regarding the unbundling of transmission 
system operators and distribution system operators do not apply 
to Malta, which has derogations from Article 9 on the unbundling 
of TSOs, Article 26 on the unbundling of DSOs, Article 32 on third 
party access and Article 33 on market opening. 

3.  Wholesale markets

Enemalta PLC enjoys legal monopoly in electricity supply 
and is currently the main producer of electricity in Malta. 
The existing independent electricity producers are small and 
generate  electricity  from  renewable  energy  sources  either 
for their own consumption or to sell to Enemalta PLC. In 
the  absence  of  large  independent  electricity  producers  a 
wholesale market is not in place and the balancing between 
generation and demand is carried out by Enemalta PLC. 

2.  Regulatory framework

General

4.  Retail markets

The Third Energy Package has been transposed in 2011, it 
however provides for ample derogations. 

National Energy Regulator

Enemalta PLC has a 100% share of the electricity retail market, 
which  is  not  open  to  competition  and  therefore  customer 
switching is not possible in Malta. There were no changes in 
the methodologies used to determine the tariffs during 2012. 
All consumers of electricity are on regulated retail tariffs.

The  Malta  Resources  Authority  (MRA)  was  established  in 
2002 and is responsible for the regulation of energy, mineral 
and  water  resources.  MRA  is  composed  of  seven  Board 
members and 39  employees within the organisation. The 
2012 budget for MRA was approximately EUR 2 million301. 

Malta’s electricity prices, for industrial consumers, have been 
at the same level for the last four years, after an increase 
in  2010  due  to  the  increase  of  energy  and  supply  cost 
component.  The  electricity  prices  for  domestic  consumers 

300   Eurostat.
301   MRA, Annual Report 2012.

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have  been  revised  downwards  in  2014,  whereas  those  for 
the  industry  are  expected  to  be  reduced  during  2015.  The 
prices for Malta’s industry were above the EU average while 
the  retail  prices  for  households  were  below  EU  average302. 
Electricity generation remained dependent on heavy fuel oil 
and gasoil, thus making the cost of electricity in Malta highly 
susceptible to changes in the international market price of 
these two fuels. A new 215MW gas-fired Combined Cycle Gas 
Turbine  (CCGT)  plant  together  with  a  floating  LNG  storage 
and regasification unit, which would shift Malta’s electricity 
generation away from fuel oil and significantly increase the 
overall generation efficiency, is planned for 2015.

The energy component accounted for 82% of the household 
electricity  price  while  for  industrial  consumers  the  energy 
component was 88%. The network component represented 
13% and 12% of the total bill for households and industry, 
respectively 302.  In  Malta,  a  charge  for  the  support  of 
renewables  is  not  included  in  the  electricity  tariff,  as  this 
support is financed through taxes in the national budget303.

Electricity  demand  in  2012  increased  by  5%  compared  to 
2011,  which  was  the  4th  largest  percentage  among  all  EU 
Member States. However, Malta was the only one of these 
four Member States which did not witness a respective GDP 
increase. In Malta, the increase in consumption was due to 
the weather conditions, since electricity is the main source 
for heating and air conditioning303.

F I G U R E  1

Electricity price change by component 2008-2013 (in € cent/kWh)

H O U S E H O L D S

I N D U S T R Y

20 

18 

16 

14 

12 

10 

8 

6 

4 

2 

0 

2008

2013

2008

2013

Taxes+Levies 

Networks

Energy+Supply

Source: Eurostat

302   Eurostat.
303   ACER/CEER, Annual Report on the Results of Monitoring  
the Internal Electricity and Natural Gas Markets in 2012, 

November 2013.

M A L T A

5.  Consumers

The assessment of the retail electricity expressed by Maltese 
consumers is well above the EU average (76.1  points vs. 
72.0304) with the country occupying the 10th position in the 
EU ranking. The incidence of both problems and complaints 
is the 4th lowest among EU countries, and trust in providers 
is  the  5th  highest.  (The  questions  on  switching,  ease  of 
switching  and  choice  have  not  been  asked  given  that  the 
market is a monopoly).305

Vulnerable consumers, including families with low income, 
persons  with  a  disability  and  other  humanitarian  cases 
and families on social assistance or special unemployment 
benefit, persons with an age pension or a career’s pension, 
may  benefit  from  energy  bill  discounts.  During  2012, 
24 142  consumers  received  energy  benefits306.  12%  of 
household  consumers  were  defined  as  consumers  with 
special needs303.

The replacement of electricity meters with smart meters is 
underway. By the end of 2012 the number of smart meters 
installed  was  170 346  (62%).  The  full  replacement  of  the 
electricity  meters  with  smart  meters  is  expected  to  be 
completed by the end of 2014306.

6.  Infrastructure

The Maltese authorities have ensured the adoption of the 
measures stemming from the TEN-E Regulation, including 
the  establishment  of  the  one-stop-shop  for  Projects  of 
Common  Interest  (PCIs),  and  other  measures  foreseen  for 
2014 and 2015, including the publication of the manual 
on  the  permit  granting  process  for  project  promoters,  and 
the  adoption  of  legislative  and  non-legislative  measures 
streamlining the environmental assessment procedures.

Electricity

In  December  2012,  a  new  generation  plant  came  into 
operation  and  thus  the  nominal  generation  capacity 
of  the  two  power  stations  of  Malta  increased  to  620  MW. 
A  225307  MW  high  voltage  interconnection  between  Malta 
and Sicily, which is currently under construction, is expected 
to be completed by the end of 2014. In 2013, the government 
of  Malta  agreed  to  the  construction,  by  private  investors,  
of a new 215 MW CCGT power plant using gas supplied by an 

304   However the difference is not statistically significant.
305   10th Consumer Markets Scoreboard,  

http://ec.europa.eu/consumers/consumer_evidence/consumer_

scoreboards/10_edition/index_en.htm

306   MRA, Malta’s Report to the European Commission  

on the Implementation of Directive 2009/72/EC, Directive 

2009/73/EC and Directive 2005/89/EC, July 2013.

307   http://ieeexplore.ieee.org/xpl/articleDetails.

jsp?arnumber=6347769

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M A L T A

LNG Floating Storage Unit permanently berthed at Delimara. 
An  existing  149  MW  Combined  Diesel  Engine  currently 
operated on heavy fuel oil will be converted to natural gas. 

7.  Security of supply

Electricity

Gas

Natural gas is not available in Malta. For an interim period, 
natural gas for electricity generation will be provided by an 
LNG  Floating  Storage  Unit  (FSU)  permanently  berthed  at 
Delimara Power Station with an onshore re-gasification unit 
once the infrastructure is available. 

A  project  consisting  of  the  FSU  and  a  pipeline  connecting 
it to both Delimara (Malta) (12km approximately) and Gela 
(Sicily)  (150km  approximately)  for  transmission  of  Natural 
Gas,  entitled:  Floating  LNG  Terminal  in  Malta  and  new 
interconnection Malta to Italy, was selected as a Project of 
Common Interest (PCI).308 The final design of the project will 
depend  on  the  outcome  of  the  cost-benefit  and  feasibility 
study which is currently being carried out. 

M A LT A   –  K E Y   I N D I C A T O R S

The installed electricity generation capacity by thermal 
power plants was 571 MW, in 2011309. In 2012, the nominal 
generation capacity was increased to 620 MW. The maximum 
peak demand was 429 MW and was recorded on 9 August 
2012.  The  total  fossil  fuel  electricity  generation  capacity 
available when the peak demand occurred was 505 MW310. 
Additional electricity generation capacity is required to 
ensure security of supply. 

Gas

To increase the diversification of primary energy sources, Malta 
has submitted a project to connect Malta to the European gas 
grid as a project of Common European Interest (PCI).

E L E C T R I C I T Y

G A S

Number of companies representing at least 95% 
of net power generation

Number of main power-generation companies

1

1

Number of entities bringing natural gas  
into country

Number of main gas entities

N/A

N/A

Market share of the largest power-generation company 100%

Market share of the largest entity bringing natural gas N/A

Number of electricity retailers

Number of main electricity retailers

Switching rates (entire electricity retail market)

Regulated prices for households – electricity 

Regulated prices for non-households – electricity

HHI in power-generation market

HHI in electricity retail market

Electricity market value (1) (bn€) 

Installed generation capacity (2012, MW)

Peak demand (MW)

Number of smart meters installed

1

1

N/A

Yes

Yes 

10 000

10 000

0.350

620

429

244 000

Number of retailers selling natural gas to final customers N/A

Number of main natural gas retailers

Switching rates for gas (entire retail market)

Regulated prices for households – gas

Regulated prices for non-households – gas

HHI in gas supply market

HHI in gas retail market

Gas market value (1) (bn€)

N/A

N/A

N/A

N/A

N/A

N/A

N/A

Sources: Eurostat, CEER, National Regulatory Authority, EC calculations.

(1)   Market value is an estimation of the size of the retail electricity and gas markets. It is calculated using data on electricity  

and gas consumption in the household and non-household sectors (average bands) and annual average retail prices.

308   http://ec.europa.eu/energy/infrastructure/pci/doc/2013_pci_

309   Eurostat.
310   MRA, Malta’s Report to the European Commission  
on the Implementation of Directive 2009/72/EC,  

projects_country.pdf 

Directive 2009/73/EC and Directive 2005/89/EC, July 2013.

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Key issues

 → For electricity, at the current pace of development, the Netherlands seems likely to 
miss its 2020 target for renewables. Implementing the recently established national 
Energy  Agreement  for  Sustainable  Growth  (‘Energieakkoord’)  should  speed  up  the 
development. The problem of insufficient interconnection is seen when the price drops 
in Germany because of high renewables production, but the price in the Netherlands 
does not respond.

 → The increase in earthquake activity has renewed concerns about the decline in Dutch 
gas  production.  Following  the  recent  decision  to  decrease  production  by  2016,  the 
Netherlands needs now to determine its gas production policy from 2017 onwards.

S
D
N
A
L
R
E
H
T
E
N

E
H
T

1.  General overview

F I G U R E S  1   A N D   2

Energy consumption in 2012 (82.0 Mtoe) was based mainly 
on fossil fuels, notably natural gas, crude oil and petroleum 
products,  and  to  a  lesser  extent  solid  fuels.  Renewable 
energy and nuclear energy were less important in the energy 
mix (with shares of 4.3% and 1.2%, respectively).

The  power  generation  mix  in  2011  (113.0  TWh)  was 
dominated  by  gas-fired  power  generation  (with  a  share  of 
63.5%) and by solid fuels (18.9%); renewables represented 
10.9% and other sources such as nuclear power (3.6%) were 
less important. 

The Netherland’s 2020 renewables target is 14%, which is 
lower than the EU average (20%). The renewable share in 
gross final energy consumption grew slowly from 3.4% to 
4.5%  between  2008  and  2012.311  At  this  pace,  the  2020 
target will not be reached. 

Cogeneration312 provided for 32.5% of the total electricity 
generation in 2011, and it has been at a comparable level for 
several years. In 2012 electricity demand in the Netherlands 
decreased by 1.5% in comparison to the 2011 level313, this 
decline can be attributable to the economic recession.314

311   Eurostat.
312   The share of electricity produced in combined heat  

and power plants (CHP).

313   ACER/CEER, Annual Report on the Results of Monitoring  
the Internal Electricity and Natural Gas Markets in 2012, 

November 2013.

314   Ministerie van Economische Zaken, Landbouw en Innovatie, 
Monitoringsrapportage Leverings- en Voorzieningszekerheid 

Elektriciteit en Gas 2012, July 2012.

Gross inland consumption mix 2008-2012

50% 

45% 

40% 

35% 

30% 

25% 

20% 

15% 

10% 

5% 

0% 

2008 

2009 

2010 

2011 

2012 

Solid fuels
Nuclear

Natural gas
Renewables

Crude oil and petroleum products
Other

Source: Eurostat

Gross electricity generation mix 2008-2012

70% 

60% 

50% 

40% 

30% 

20% 

10% 

0% 

2008 

2009 

2010 

2011 

2012 

Solid fuels
Nuclear

Natural gas
Renewables

Crude oil and petroleum products
Other

Sources:  EU energy in figures - “Statistical Pocketbooks 2012 and 2013”, 

European Commission

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T H E   N E T H E R L A N D S

2.  Regulatory framework

General

In September 2013 more than 40 social organisations, including 
central, regional and local government, employers and unions, 
nature conservation and environmental organisations, and 
other civil-society organisations and financial institutions – 
have endorsed the Energy Agreement for Sustainable Growth. 
The parties to the Energy Agreement aim to achieve a saving 
in final energy consumption averaging 1.5% annually, and 
an  increase  in  the  proportion  of  energy  generated  from 
renewable sources to 14% in 2020, in accordance with EU 
arrangements (and a further increase in that proportion to 
16% in 2023). It also involves the shutting down by 2016-
2017 of the 5 oldest coal fired power plants from the 1980s. 
Beyond 2020, the Energy Agreement includes the long-term 
goal of an 80 to 95% reduction on greenhouse gases for the 
whole economy.315

National Energy Regulator

The  Dutch  Office  of  Energy  Regulation  is  part  of  the 
Netherlands  Authority  for  Consumers  &  Markets  (ACM). 
ACM was established on 1  April 2013, and is the new 
market  authority  created  through  the  consolidation  of  the 
Netherlands  Consumer  Authority  (CA),  the  Netherlands 
Independent  Post  and  Telecommunication  Authority 
(OPTA)  and  the  Netherlands  Competition  Authority  (NMa). 
In 2012, the Dutch Office of Energy Regulation employed 
approximately  88.5  staff  and  had  an  annual  budget  of 
EUR 8.2 million.316

Unbundling

TenneT is the national TSO for the transmission of electricity 
and Gas Transport Services (GTS) is the TSO for gas. Both 
are  fully  owned  by  the  Dutch  state.  It  was  announced  in 
October 2013 that privatisation will not be considered for 
the time being, however the government encourages both 
TSOs to seek closer cooperation with certified TSOs abroad, 
which is a commendable approach from an internal market 
perspective.  In  December  2013,  ACM  certified  both  TSOs 
under the ownership unbundling model. The TSOs operating 
the  interconnectors  BritNed  and  BBL  will  also  be  certified. 
BBL was certified in August 2013 and the draft decision for 
BritNed,  was  received  by  the  Commission  in  March  2014. 
Both interconnectors have been granted an exemption for 
new interconnectors.

Since the end of 2010, all but two DSOs are fully ownership 
unbundled from the integrated company and are mostly 
owned by Dutch municipalities and provinces. There are 
eight DSOs that distribute both gas and electricity and one 
that distributes gas only. Due to a court decision, part of 
the law on ownership unbundling of DSOs expired, which led 
the final two integrated companies to delay unbundling. The 
Ministry of Economic Affairs appealed to the Supreme Court 
of  the  Netherlands  and  a  decision  is  pending.  Following  a 
request  for  a  preliminary  ruling  the  European  Court  of 
Justice  ruled  in  October  2013  that  the  Netherlands  could 
adopt stricter DSO unbundling measures (comparing to the 
Third package requirements) that constitute restrictions 
on  the  free  movement  of  capital  if  such  measures  are 
justified  by  overriding  reasons  in  the  public  interest  (such 
as  undistorted  competition).317  The  Court  said  it  was  up  to 
the  Dutch  Supreme  Court  to  decide  if  the  government’s 
measures passed that test taking into account the criteria 
that the restrictions at issue need to be appropriate to the 
objectives pursued and do not go beyond what is necessary 
to attain those objectives.

3.  Wholesale markets

Electricity

The Dutch power generation market is moderately concentrated. 
Following  several  successful  market  coupling  projects 
in North-Western Europe, with years of increasing price 
convergence,  2012  and  2013  saw  a  decline.  Increasing 
shares of low marginal cost renewables in Germany have 
led  to  an  increase  in  exports  to  the  Netherlands  up  to 
the  point  where  the  cross-border  capacity  between  the 
Netherlands and Germany is no longer sufficient to absorb 
the  price  difference.  Hence,  the  price  convergence  in  2012 
with Germany declined to 55%, coming from 88% in 2011. 
In  2012,  the  two  interconnectors  BritNed  (with  the  UK) 
and  NorNed  (with  Norway)  successfully  implemented  new 
allocation methods for intraday trading.

In  2013,  the  annual  average  of  wholesale  day-ahead 
power prices on the APX market was EUR 52/MWh, up from  
EUR  48/MWh  in  2012.  The  annual  traded  volume  of 
wholesale day-ahead power in 2013 was 47 TWh.

Gas

The production and wholesale gas markets in the Netherlands 
are highly concentrated due to the exploitation of the 
large Groningen field by a single producer, the Nederlandse 
Aardolie  Maatschappij  (NAM).  The  gas  is  produced  by  NAM 
is  sold  exclusively  on  the  wholesale  market  by  the  trading 
company  GasTerra.  In  2012,  the  average  day  ahead  gas 

315   http://www.energieakkoordser.nl/
316   In 2012, the energy and transport regulation was combined  
in one department. The provided data is the energy share  

317   http://curia.europa.eu/jcms/upload/docs/application/pdf/2013-

of that directorate.

10/cp130137en.pdf 

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T H E   N E T H E R L A N D S

F I G U R E S  3   A N D   4

Electricity price change by component 2008-2013 (in € cent/kWh)

Natural gas price change by component 2008-2012 (in € cent/kWh)

25 

20 

15 

10 

5 

0 

H O U S E H O L D S

I N D U S T R Y

H O U S E H O L D S

I N D U S T R Y

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7 

6 

5 

4 

3 

2 

1 

0 

2008

2013

2008

2013

2008

2012

2008

2012

Taxes+Levies 

Networks

Energy+Supply

Taxes+Levies 

Networks

Energy+Supply

Source: Eurostat

Sources: EC, EPCR metadata

price  at  the  virtual  trading  point  (the  TTF  hub)  oscillated 
around EUR  20/MWh in spring and summer months and 
EUR 23/MWh in autumn and winter. The 2012 average price 
has  been  unprecedentedly  convergent  with  average  prices 
on the other major West European hubs. The traded volume 
of  day-ahead  gas  on  the  TTF  hub  increased  steeply  to 
1 818 TWh in 2012.318 

The Netherlands is the biggest natural gas producer in the EU. 
According to Eurostat data, the country accounted for 43.2% of 
EU-28 gas production in 2012. The country’s annual production 
was 57.4 Mtoe in 2012, down from 57.7 Mtoe in 2011. Dutch 
gas  production  is  forecasted  to  decline  significantly  by  2020. 
In addition to this long term development, the government 
also  decided  in  January  2014  to  decrease  production  in  the 
short term due to the increase of earthquakes in the province 
of  Groningen.  Through  to  2016  production  will  be  reduced 
by about 10 Mtoe a year from recent production levels. How 
production will develop from 2017 onwards will be determined 
over the next couple of years.319 

Following  a  decision  by  ACM  in  December  2013,  European 
rules  on  capacity  allocation  and  congestion  management 
were implemented by 1  January 2014. This takes into 
account  rules  on  auctioning  capacity  at  interconnection 
points,  the  surrender  of  booked  capacity,  and  capacity 
increase by means of an oversubscription and buy-back 
arrangement.

A  higher  utilisation  of  the  cross-border  capacity  with 
Germany  and  Belgium  can  therefore  be  expected  in  2014 
compared to previous years.

4.  Retail markets

Electricity

Market  concentration  at  retail  level  was  high,  as  the  three 
largest companies covered 83% of the retail market at the 
end of 2012, while the HHI index was 2 338. For both indices 
this implies a slight decrease compared to 2011.320 

In 2012, 12.6% of small-scale electricity users switched 
supplier. This implies an increase compared to previous years 
and contributes to the trend of increasing annual switching 
rates over time.

In  2013  the  two  year  small-scale  roll-out  programme  for 
smart  meters  came  to  an  end.  This  programme  resulted 
in  458 182  smart  meters  being  installed  by  July  2013.321 
Following  a  positive  cost-benefit  analysis,  the  Netherlands 
are  proceeding  with  the  large  deployment  of  smart 
metering  –  the  expected  diffusion  rate  for  electricity  is 
100%  of  consumers  for  electricity  and  80%  of  consumers 
for  gas  by  2020.  The  Netherlands  have  launched  pilot 
programmes since 2012 and have mandated a large-scale 
smart  metering  roll-out  to  start  in  2015  (exact  timetable 
to be confirmed). Relevant legislation for smart metering is 
pending Parliamentary approval.

318   DG Energy, Quarterly report on European Gas Markets, Market 
Observatory for Energy, vol. 5 issue 4, 4th quarter 2012, p. 15. 
For a more in-depth assessment of the liquidity on the Dutch 

market see ACM’s Liquidity Report 2014, https://www.acm.nl/nl/

320   ACM, National report on energy regulation in 2012, 

download/publicatie/?id=11897

17 September 2013.

319   Minister of Economic Affairs, Letter to parliament “Gaswinning 

321   ACM, Monitoringrapportage Kleinschalige Aanbieding  

in Groningen”, 17 January 2014.

Slimme Meter, 7 November 2013.

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T H E   N E T H E R L A N D S

Gas

6.  Infrastructure

Even though the market is fully liberalised in the Netherlands, 
market concentration at retail level remains high, as the 
three  largest  companies  covered  81%  of  the  retail  market 
and the HHI index was 2 258 at the end of 2012.322 

The number of small-scale gas users that switched supplier 
in 2012 (12.3%) increased compared to previous years, as 
a part of a trend of increasing annual switching rates over 
time.

The Dutch authorities should ensure a proper and timely 
adoption  of  the  measures  stemming  from  Regulation 
347/2013  on  the  trans-European  energy  infrastructure, 
including the establishment of the one-stop-shop for PCIs 
(due by 16 November 2013), and other measures foreseen 
for 2014 and 2015, including the publication of the manual 
on the permit granting process for project promoters, and 
the  adoption  of  legislative  and  non-legislative  measures 
streamlining the environmental assessment procedures.

5.  Consumers

Electricity

Dutch consumers rate their electricity and gas retail markets 
above  the  EU  average  (76.3  and  75.8  points  compared  to 
72.0  and  74.1323),  which  corresponds  to  9th  and  10th  place 
EU-wide, respectively. The assessment of the two markets 
is  also  slightly  above  the  average  of  31  domestic  services 
markets (13th and 15th respectively). Both markets rank well 
above  average  on  choice  (2nd  and  1st  highest  score  in  the 
EU,  respectively),  switching  rates  (2nd  and  3rd  highest)  and 
overall consumer satisfaction. Around 19% of electricity and 
gas  consumers  have  switched  their  provider  or  tariff  with 
existing provider in the past 12 months, almost double the 
EU  average.  Especially  in  the  gas  market,  consumers  face 
fewer problems than the EU-28 average; yet virtually all who 
experienced a problem have complained about it to at least 
one party (highest percentage in the EU). 324

Online  price  comparison  tools  for  electricity  and  gas  are 
available and operated by private companies. ACM regularly 
monitors these tools and publishes the results on the website 
of the national point of contact, Consuwijzer. Consumers can 
direct requests for information and complaints to Consuwijzer, 
run  by  ACM.  ACM  also  handles  complaints.  Vulnerable 
consumers – defined by law as consumers for whom being 
disconnected from electricity or gas would have very serious 
health  consequences  –  can  never  be  disconnected.  A  ‘no-
disconnection period’ running from 1 October to 1 April also 
applies  to  all  households.  Low-income  households  benefit 
from social support schemes.

322   ACM, National report on energy regulation in 2012, 

17 September 2013.

323   However the difference is not statistically significant.
324   10th Consumer Markets Scoreboard, http://ec.europa.eu/

consumers/consumer_evidence/consumer_scoreboards/10_

edition/index_en.htm

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To accommodate the rise in generation capacity since 2008 
(and  to  reduce  the  need  for  congestion  management  and 
keeping re-dispatching costs down) the 380 kV grid needs 
to be expanded. Expansion of the 380 kV grid in the West of 
the Netherlands (‘Randstad 380 kV project’) has been under 
development  since  2002.  The  South  ring  was  completed 
in September 2013 and the North ring is expected to be 
completed in 2018. Further expansion of the 380 kV grid is 
under construction in the North of the Netherlands (‘North-
West 380  kV project’, PCI project) and planned for in the 
South of the Netherlands (‘South-West 380 kV project’). 

As a result of previous investments and improved coordination, 
an additional 300 MW of interconnection capacity became 
available between Belgium and the Netherlands in 2012/2013. 
The fourth AC interconnector with Germany is planned for 
2016 and will increase interconnection capacity by 1.5 GW.

Energy infrastructure investments that are judged to be of 
national importance are being coordinated by the Minister of 
Economic  Affairs  according  to  the  ‘Rijkscoördinatieregeling’ 
regulation. Decisions on permits and exemptions are taken 
simultaneously  in  coordination  between  national  and  local 
governments.

Gas

The most recent “Open Season” organised by GTS in 2012, 
showed that no expansion investments are required to 
accommodate  demand  for  transportation  capacity.  This 
experience  is  consistent  with  the  converging  wholesale 
prices  observed  at  the  Northwest  European  hubs  and  the 
low congestion levels.

The  seasonal  storage  system  that  is  being  developed  by 
TAQA is due to become operational in 2014. Seasonal storage 
can deliver the flexibility to meet the seasonal residential 
gas demand. In December 2013, ACM introduced specific 
entry and exit tariffs for gas storages to be applicable from 
January 2014 onwards. One Project of Common Interest has 
been identified in the gas sector.

 
 
 
 
 
 
 
 
 
T H E   N E T H E R L A N D S

7.  Security of supply

Electricity

The  Dutch  market  has  surplus  available  (firm)  production 
capacity. This surplus is expected to increase to 11.7 GW in 
2020.325 Generation adequacy therefore seems guaranteed 
for the coming years.

Gas

The  Dutch  government  is  preparing  itself  for  when  more 
imports will be necessary with a strategy to become 
Europe’s  ‘gas  roundabout’,  and  diversify  supply  sources 
(LNG, countries of origin). As mentioned, production from the 
Groningen field will be reduced but will still meet the peak 
demand  of  low-calorific  gas  in  the  Netherlands,  Germany, 
Belgium and France.

Dutch  legislation  prescribes  that  GTS  is  responsible  for 
reserving  sufficient  transport  capacity  and  gas  for  the 
additional  demand  of  gas  during  days  with  a  temperature 
below minus 9 degrees Celsius.

T H E   N E T H E R L A N D S   –  K E Y   I N D I C A T O R S

E L E C T R I C I T Y

G A S

Number of companies representing at least 95% 
of net power generation

Number of main power-generation companies

800

4

Number of entities bringing natural gas  
into country

Number of main gas entities

N/A

N/A

Market share of the largest power-generation company N/A

Market share of the largest entity bringing natural gas N/A

Number of electricity retailers

Number of main electricity retailers

35

3

Number of retailers selling natural gas to final customers

Number of main natural gas retailers

32

3

Switching rates (entire electricity retail market)

12.6%

Switching rates for gas (entire retail market)

12.3%

Regulated prices for households – electricity 

Regulated prices for non-households – electricity

HHI in power-generation market

HHI in electricity retail market

Electricity market value (1) (bn€)

Installed generation capacity (MW, 2011)

Peak demand (MW)

Number of smart meters installed (July 2013)

No

No

1 492

2 338

8.706

28 049

18 438

458 182

Regulated prices for households – gas

Regulated prices for non-households – gas

HHI in gas supply market

HHI in gas retail market

Gas market value (1) (bn€)

No

No

6 455

2 258

9.474

Sources: Eurostat, CEER, National Regulatory Authority, EC calculations.

(1)   Market value is an estimation of the size of the retail electricity and gas markets. It is calculated using data on electricity  

and gas consumption in the household and non-household sectors (average bands) and annual average retail prices.

325   Ministerie van Economische Zaken, Monitoringsrapportage 

Leverings- en Voorzieningszekerheid Elektriciteit en Gas 2013, 

July 2013.

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Key issues

 → In  the  electricity  sector,  market  coupling  with  Southern  and  Eastern  neighbouring 

countries would be beneficial. 

 → In  gas,  the  number  of  system  operators  could  be  reduced  in  view  of  the  new  gas-
market model. An extension of the gas network based on market demand is needed 
to enable injections and withdrawals on a firm basis from the gas storage capacities. 
The efficiency of the gas balancing regime should be improved in order to create a 
level playing field on the retail market.

A

I

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S
U
A

1.  General overview

2.  Regulatory framework

Energy consumption in 2012 (33.7 Mtoe) was based largely 
on crude oil and petroleum products (35.54%), renewables 
(30.05%) and natural gas (22.8%)326. Austria has committed 
to reach 34.2% of RES share in gross final energy consumption 
by 2020. The country is showing good progress towards its 
European  target  as  the  RES  share  in  2012  was  32.1%326, 
well above its 2011/2012 indicative trajectory.

In 2011, approximately two thirds of the electricity generated 
(67.5%) was provided by renewables and 21.8% by natural gas.

Cogeneration327 accounted for 15.7% of the total electricity 
generation in 2011, which is in line with the last few years326. 
The relevant indicator for pump storage generation (base/
peak  spread)  decreased  by  10.5%  (EUR  11.5/MWh)  and  the 
generation from hydro power stations reduced due to high 
tides and dry periods. Full load hours of gas fired power plants 
reduced by 17.9% in 2012 (1859 hours, 2011: 2265 hours).

General

The Directives of the Third Energy Package were transposed 
into national law in 2010 for electricity and in 2012 for gas. 

An important development has been the introduction of 
an entry-exit system in gas in January 2013, replacing the 
previous system based on contractually agreed transport 
paths. Austria has three market areas and entry-exit zone 
(East, Tirol and Voralberg). As the market areas of Tirol and 
Voralberg  are  neither  connected  with  East  or  each  other 
but  supplied  via  the  market  area  Net  Connect  Germany, 
they  have  been  partly  integrated  in  to  the  German  market 
area Net Connect Germany (NCG) since October 2013. 
Approximately 95% of Austrian gas consumption takes place 
in the Eastern market area. The new regime foresees that 
any gas transported through the Austrian network is traded 
at a centralised virtual trading point (Central European Gas 

F I G U R E S  1   A N D   2

Gross inland consumption mix 2008-2012

Gross electricity generation mix 2008-2012

45% 

40% 

35% 

30% 

25% 

20% 

15% 

10% 

5% 

0% 

80% 

70% 

60% 

50% 

40% 

30% 

20% 

10% 

0% 

2008 

2009 

2010 

2011 

2012 

2008 

2009 

2010 

2011 

2012 

Solid fuels
Renewables

Natural gas
Other

Crude oil and petroleum products

Solid fuels
Renewables

Natural gas
Other

Crude oil and petroleum products

Source: Eurostat

Sources:  EU energy in figures - “Statistical Pocketbooks 2012 and 2013”, 

European Commission

326   Eurostat.
327   The share of electricity produced in combined heat  

and power plants (CHP).

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Hub – CEGH) both bilateral and exchange trades are possible. 
The new regime also foresees new balancing rules of which 
the efficiency is however not proven. The new market model 
delegates system-relevant tasks to a number of system-
operators  beyond  the  TSOs  and  DSOs  (Distribution  Area 
Manager,  Market  Area  Manager,  Clearing  and  settlement 
agent, Operator of the virtual trading point) which leads to 
administrative burden for market participants.

National Energy Regulator

In 2012 the Austrian Energy Regulator “Energie-Control Austria 
für  die  Regulierung  der  Elektrizitäts-  und  Erdgaswirtschaft” 
(E-Control) had an average of 113 employees and a budget 
of around EUR 20 million328.

Unbundling

The electricity TSO Austrian Power Grid (APG) was legally 
unbundled in March 2012 from its shareholder Verbund AG, 
whose main shareholder is the Austrian Government  (51%). 
APG  was  certified  as  an  Independent Transmission Operator 
(ITO). The second electricity TSO in Austria, Vorarlberger 
Übertragungsnetz GmbH (VÜN), whose main shareholder is the 
federal state Vorarlberg (51%), was certified as an Ownership 
Unbundled TSO in June 2012. The gas TSO, Gas Connect 
Austria GmbH (GCA) was for the first time certified as an ITO in 
July 2012 and received in July 2014 an updated certification 
as  ITO  covering  the  operation  of  WAG  pipeline  which  was 
until  September  2014  operated  by  Baumgarten-Oberkappel 
Gasleitungsgesellschaft mbH (BOG). 329 After the rejection of the 
application to be certified as ISO in March 2013 Trans Austria 
Gasleitung GmbH (TAG) was in July 2014 certified as ITO.

3.  Wholesale markets

Electricity

On the Austrian energy exchange for electricity (EXAA, Energy 
Exchange Austria), electricity is traded on a day-ahead basis for 
delivery in Austria or Germany. In the absence of congestion, 
the wholesale market for electricity is fully coupled with 
Germany and forms a single price zone. Therefore electricity 
can also be traded at EPEX Spot situated in Paris on an Intraday 
and Day-Ahead basis for the Austrian/German delivery zone. 
Similarly, derivatives at EEX (European Energy Exchange) 
situated in Leipzig, such as Phelix Futures can be traded for 
Austria/Germany. Hence, through Germany, Austria is indirectly 
coupled with the North West European electricity market. It is 
not yet coupled with its Eastern and Southern neighbours.

A U S T R I A

The average wholesale electricity price was EUR 51.9/MWh 
in  2011  but  decreased  in  2012,  caused  mainly  by  the  low 
worldwide prices for coal and emission certificates, increasing 
generation of subsidised RES in the joint German-Austrian 
price zone and a bleak economic outlook. In summer 2013 
Austria has introduced an obligation for electricity suppliers 
supplying  Austrian  end  consumers  to  provide  a  certificate 
of origin of the energy supplied. It will need to be assessed 
further whether this new obligation restricts imports of 
supplies from other Member States.

Gas

The wholesale gas market in Austria was still very concentrated 
(Herfindahl-Hirschmann Index – HHI – of 3 371) in 2011. 
The  wholesale gas market in particular was affected by 
significant  price  changes,  which  brought  about  major 
developments.  On  the  one  hand,  new  suppliers  made  use 
of  the  opportunity  to  enter  the  relatively  high-priced  retail 
gas  market  (including  household  consumers),  which  led  to 
a  larger  spectrum  of  rates  available.  On  the  other  hand, 
suppliers adapted their contracts with importers to reflect 
better actual market conditions, i.e. adjusting their prices to 
the short-term spot market.330

Being  dependent  on  gas  imports,  it  is  essential  for  Austria 
to have cross-border transport capacity available to gas 
traders.  In  the  past  years,  new  entrants  wanting  to  trade 
in  the  Austrian  gas  market  faced  congestions  in  the 
transmission  system  at  the  border  with  Germany  and 
therefore only had limited access to transport capacity. With 
the implementation of the European guideline on congestion 
management procedures and the European network code on 
the allocation of capacity in gas pipelines, this situation has 
improved significantly.

In 2012, the average price for natural gas was EUR 26/MWh,  
a  small  increase  from  2011.  In  2012,  the  price  varied 
between EUR 25/MWh and EUR 27/MWh, except in January 
and  February  2012  when  prices  of  up  to  EUR  39.5/MWh 
were recorded, which is the highest price seen at CEGH. This 
significant increase was due to extraordinary temperatures 
and lower imports from Russia. Usually spot prices at CEGH 
are  above  the  German  NCG  prices,  however  in  the  fourth 
quarter of 2012 this spread was reversed. At CEGH a total 
volume  of  48.9  bcm  was  traded  OTC  in  2012,  which  is  a 
significant  increase  compared  to  38.9  bcm  in  2011.  The 
average churn rate was 3.53 in 2012 and 3.38 in 2011. On 
the normal exchange 3.06 TWh was traded in total.330

328   E-Control, Annual financial report, 2012. 
329   By end of 2013 the former shareholders of BOG E.ON and GRT 
Gaz sold their shares to OMV. As of 30 September 2014 GCA will 

330   ACER/CEER Annual Report on the Results of Monitoring  

the Internal Electricity and Natural Gas Markets in 2012, 

become, by way of merger, the universal legal successor to BOG.

November 2013.

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A U S T R I A

The  total  Austrian  gas  demand  was  4 391  Mtoe  in  2011 
of  which  approximately  one  third  came  from  national 
production331. In 2011, the largest share of the imported gas 
came from Russia (52%). Austria also exported natural gas 
to Germany and Italy.332

4.  Retail markets

Electricity

The retail market can be divided into three different sections: 
households,  small  business  companies  and  large  scale 
consumers with special contracts. The number of active 
suppliers  for  households  decreased  from  143  to  139  in 
2011 and for small business companies from 142 to 137 as 
some smaller suppliers were taken over by bigger ones. The 
market consists just of domestic suppliers for households 
and SMEs, of which 15 are operating at a national level and 
the  remainder-wide,  the  others  are  regional  suppliers.  This 
implies that there are regionally operating suppliers. For 
special contract consumers the number of suppliers has not 
changed, giving industrial customers a chance to choose 
between 12 different suppliers.333, which are either domestic 
or foreign suppliers. Normally, foreign suppliers only offer 
contracts if a certain amount (10-20 GWh) is supplied.333

Market concentration has not changed considerably and 
remains at a high level given the HHI of 1 769 for household 
customers (2011: 1 764) and 1 685 for commercial customers 
(2011: 1 696). The overall market share of the three largest 
retailers (for households and SMEs) remained at a level of 
about 56% across all consumer groups. Alternative suppliers 
gained some market share relative to the local suppliers who 
still have a strong market power.

The household energy price increased by 3% in 2012 
(EUR 0.2224/kWh), which is higher than the average electricity 
price in the EU (EUR 0.2061/kWh). In 2013, household prices 
consisted of energy costs (41%), network costs (25%) and 
taxes and levies (34%). Prices for industrial customers have 
decreased since 2010 and in 2012 the reduction was about 
4.5% for large industrial customers.

331   Eurostat.
332   http://ec.europa.eu/energy/gas_electricity/doc/at_energy_

market_2011_en.pdf

333   ACER/CEER Annual Report on the Results of Monitoring  

the Internal Electricity and Natural Gas Markets in 2012, 

November 2013.

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F I G U R E  3

Electricity price change by component 2008-2013 (in € cent/kWh)

H O U S E H O L D S

I N D U S T R Y

25 

20 

15 

10 

5 

0 

2008

2013

2008

2013

Taxes+Levies 

Networks

Energy+Supply

Source: Eurostat

Most of the suppliers slightly reduced their prices at the 
beginning of 2012 mainly because the reduction of transfer 
prices for the mandatory acquisition of renewable energy. 
Following the renewal of the law in respect of renewable 
energy (ÖSG), the costs for renewable energy became 
transparent and understandable as they are determined 
by  law.  Additional  price  reduction  due  to  the  positive 
developments on the wholesale market has not been passed 
through to the household customers by the suppliers.

Regarding smart meters, a cost-benefit analysis came out  
in favour of smart meters for both electricity and gas. 
A Ministerial Decree mandated the roll-out of smart meters for 
electricity customers by the end of 2019 at the latest with a 
specific timetable for implementation. A modification, in 2013, 
to the Elektrizitätswirtschafts-und-organisationsgesetzes of 
2010 makes provision for up to 5% of consumers to express 
the wish to their supplier not to have a smart meter installed. 

Regarding switching of energy supplier the switching 
rate dropped from 1.5% to 1.1% in 2012. In contrast, the 
switching rate of specially metered customers increased by 
almost 50% (to 6.8%) New rules, which came into force on 
1 January 2013, have probably contributed to an increase in 
the number of consumers who subsequently switched gas 
and electricity supplier. During 2013, 148 000 consumers 
and businesses switched supplier. This represents an 
increase of 68% in comparison with 2012. 

 
 
 
 
 
 
 
 
 
A U S T R I A

Gas

The Austrian gas market is divided into two segments. Prices 
for small consumers (households, smaller consumers etc.) 
with a consumption of less than 400 MWh are published. 
For large customers with consumption above 400 MWh, the 
prices and conditions are negotiated individually. In 2012, 
49% of household prices were for the energy itself, network 
costs accounted for 22% and VAT and energy taxes made up 
the remaining 29%. 

Market concentration for the small consumer group is 
still  very  high  (HHI:  3 726)  even  though  it  reduced  by  8% 
in  2012.  The  cumulated  market  share  of  the  three  largest 
gas  suppliers  was  72%  in  2012.  The  largest  individual 
market player is EnergieAllianz Austria GmbH with a market 
share  of  60%.  EnergieAllianz  Austria  GmbH  includes  the 
retail companies: Wien Energie GmbH, EVN AG and Energie 
Burgenland AG. 

wide range of online applications. About 500 000 customers 
used the so-called “Spritpreisrechner” calculator to identify 
the  cheapest  petrol  station.337  Furthermore,  a  significant 
number of customers checked their opportunities for saving 
of energy in their households. 

In 2012, the rights of vulnerable customers were strengthened. 
If consumers fail to pay their bills, then the supplier may only 
switch off supply after repeatedly sending reminders, including 
threatening  disconnection.  Moreover,  suppliers  are  obliged  to 
deliver natural gas or electricity to vulnerable costumers who 
claim their respective right, at their general terms and conditions 
in force and at rates for universal service to vulnerable 
costumers that may not exceed the rates at which most of their 
customers are supplied (universal service obligation).

Whilst a protection mechanism for vulnerable customers 
does  exist  in  Austria,  the  authorities  have  still  to  make  a 
precise definition of the concept of vulnerable customers.

In  2012,  about  23 400  final  customers  changed  their 
supplier (about 1.7% of all final customers in Austria). Since 
January  2013  the  process  has  been  further  simplified,  so 
that the switching process can be successfully completed 
within three weeks.

New regulatory guidance (ordinance) has been put in place 
defining the format of consumption information by system 
operators towards consumers. These measures seem to have 
had a positive impact on the overall consumers’ assessment 
of both electricity and gas markets between 2012 and 2013.

5.  Consumers

6.  Infrastructure

Overall consumer assessment of the retail electricity market 
is above the EU average (77.0 points compared to 72.0), 
corresponding  to  8th  place  EU-wide.  The  market  is  also 
assessed  just  above  the  average  of  31  domestic  services 
markets (15th place). The electricity market has the second 
highest score in the EU on the ‘overall consumer satisfaction’ 
indicator.  However,  consumer  assessment  of  the  retail 
gas  market  is  just  below  the  EU  average  (74.0  points  vs. 
74.1334,  ranked  17th)  as  well  as  below  the  average  of  the 
31 domestic services markets (ranked 21st). While the score 
on  comparability  has  been  increasing  (although  slowly) 
every year since 2010, it remains 4th lowest in the EU. Both 
electricity and gas markets have improved their performance 
since 2012 (respectively by 2.8 and 2.2. points).335

E-Control has launched a service hotline for all gas and 
electricity customers336 where customers can find a wide 
range of information on electricity and gas markets. In 2012, 
the hotline recorded 6 373 calls, which is a reduction of 33.4% 
on 2011 when the price comparison tool was introduced. The 
main reasons for calling the hotline were related to questions 
on switching and energy bills. In addition, E-Control offers a 

In  accordance  with  the  TEN-E  Regulation,  Austria  has 
designated one national competent authority responsible for 
facilitating and coordinating the permit granting process for 
the Projects of Common Interest (PCIs) in gas and electricity 
(“one-stop-shop”). 

Electricity

The Austrian energy market faces substantial challenges due 
to the proposed increase of electricity from renewables and 
the integration of European energy markets. The high capacity 
high-tension 380-kV ring in Austria remains to be completed 
and cross-border capacities to Italy, Slovenia, Switzerland and 
Germany enhanced.  To address these mentioned challenges 
extensive  network  reinforcements  and  network  expansion 
are  required.  Therefore  Austria  is  involved  in  13  projects 
of  common  interest  (PCI)  under  the  guidelines  for  trans-
European energy infrastructure, including large scale projects 
like  the  new  construction  of  the  174  km  long  Salzburg  line 
(380  kV)  with  a  capacity  of  2  x  2400  MVA.  Remaining  PCIs 
include  five  internal  lines,  three  interconnectors  to  Italy  and 
three hydro-pump storages.

334   However the difference is not statistically significant.
335   10th Consumer Markets Scoreboard,  

http://ec.europa.eu/consumers/consumer_evidence/consumer_

scoreboards/10_edition/index_en.htm

336   The hotline number is: 0810 10 25 54 (tariff EUR 0.044/minute).

337   www.spritpreisrechner.at

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A U S T R I A

Gas

In  gas,  the  network  development  needs  to  be  closely 
coordinated  with  neighbouring  countries  especially  with 
regard to the development of new gas sources from the 
Caspian Region. 

Gas  Connect  Austria  (in  its  role  as  Market  Area  Manager) 
established  the  second  Coordinated  Network  Development 
Plan  (KNEP)  for  the  Austrian  Market  Area.  Potential 
bottle-necks  have  been  identified  at  the  entry-exit  points 
Überackern  SUDA  and  ABG,  7  Fields,  and  the  exit  point 
Mosonmagyaróvár.  Even  though  extension  was  requested 
on a non-binding basis for Penta West to offer guaranteed 
capacities for the use of storage and incremental capacity at 
the  entry-exit  point  Überackern338,  no  bookings  were  made 
in  the  course  of  the  auction  of  the  respective  incremental 
capacity via Prisma in March 2014. A total of six projects of 
common interest in the gas sector are carried out by Austria.

A U S T R I A   –  K E Y   I N D I C A T O R S

7.  Security of supply

Electricity

Generation capacities are expected to rise by 6.7 GW until 
2020. The overall generation capacity will then be 29.6 GW, 
what implies that there should be no issues of generation 
adequacy. However, in periods when hydro generation 
capacities  are  not  able  to  generate  due  to  high  tides  or 
dry periods and gas fired stations are no longer running, 
maintaining security of supply may need complementary 
measures.

Gas

Given the latest survey regarding the security of gas supply 
Austrian suppliers fulfil the requirements of Regulation 
(EU)  No  994/2010.  One  important  element  is  the  storage 
capacities (67.8 GWh) which cover about 90% of annual gas 
demand (91.2 GWh).

E L E C T R I C I T Y

G A S

Number of companies representing at least 95% 
of net power generation

Number of main power-generation companies

145

4

Number of entities bringing natural gas  
into country

Number of main gas entities

6

3

Market share of the largest power-generation company 2012 56.6%

Market share of the largest entity bringing natural gas N/A

Number of electricity retailers

Number of main electricity retailers

Switching rates (entire electricity retail market)

Regulated prices for households – electricity 

Regulated prices for non-households – electricity

HHI in power-generation market

HHI in electricity retail market

Electricity market value (1) (bn€)

Installed generation capacity (MW, 2011)

Peak demand (MW)

Number of smart meters installed 

152

6

1.1

No

No

N/A

~1 800

7.265

22 787

11 617

590

Number of retailers selling natural gas to final customers

Number of main natural gas retailers

Switching rates for gas (entire retail market)

Regulated prices for households – gas

Regulated prices for non-households – gas

HHI in gas supply market

HHI in gas retail market

Gas market value (1) (bn€)

41

N/A

1.7

No

No

3 371

~2 200

2.658

Sources: Eurostat, CEER, National Regulatory Authority, EC calculations.

(1)   Market value is an estimation of the size of the retail electricity and gas markets. It is calculated using data on electricity  

and gas consumption in the household and non-household sectors (average bands) and annual average retail prices.

338   E-Control, Coordinated Network Development Plan  

2014-2023, December 2013.

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Key issues

 → Although important improvements have been made to modernise Polish energy 
infrastructure, significant investments are still needed to ensure a sustainable supply 
of energy, reduce the share of carbon-intensive plants and increase the exploitation 
of renewable energy sources. Despite significant emission reductions realised over the 
last two decades, Poland is reluctant to support ambitious EU climate policy targets 
beyond  2020.  This  seems  to  be  due  to  its  concerns  about  energy  security  and  its 
heavy reliance on coal, of which it has the biggest reserves in the EU and which is 
instrumental for electricity generation. 

 → Poland should step up its efforts and extend the development of the electricity grid. 
Obstacles in electricity cross border exchange should be eliminated and the problems 
resulting from unscheduled flows properly addressed.

 → The gas sector in Poland has yet to complete its liberalisation process. Market 
conditions have improved. Progress so far includes implementation of the European 
Network  Codes  with  the  introduction  of  the  virtual  trading  point,  pilot  projects  with 
bundled capacities, capacity auctioning platform379, market-based balancing, and 
launching of both virtual and subsequent physical reverse flow on the Yamal pipeline 
at Mallnow. In addition, a gas exchange (PolPx) was established and an exchange trade 
obligation was put in place. 

 → However, these measures which have improved Polish chances to develop a competitive 
wholesale gas market have proven to be insufficient so far to boost competition on 
the  market  and  change  the  current  market  structure.  Although  a  process  has  been 
initiated, Poland still needs to phase out regulated prices in the gas sector, what would 
help to reinforce competition380. Effort should be made to further accelerate new gas 
interconnections  and  expansion  of  the  existing  ones  with  neighbouring  countries. 
Barriers to trade (including the import diversification requirements) should be revised.

 → Security of gas supply is expected to improve thanks to the country’s first LNG terminal 
to be commissioned in 2015 (to enter into commercial operation mid-2015) as well 
as  development  of  new  infrastructure  to  support  the  North-South  gas  corridor. 
Poland  has  improved  considerably  its  interconnections  with  Germany  (Lasow 
interconnection point and the introduction of physical reverse flow on Yamal 
at Mallnow). 

1.  General overview339 340

Polish  national  gross  final  energy  consumption  in  2012 
amounted  to  97.97  Mtoe.  It  was  based  mostly  on  fossil 
fuels:  hard  coal  (41%),  oil  (26%),  gas  (13%),  and  lignite 
(11%)341. In 2012, share of renewables in gross final energy 
consumption  amounted  to  11%,  increasing  from  7.8% 
in  2008.  Poland  remained  above  its  2011/2012  interim 
trajectory and is currently on track to achieve its national 
binding target for renewables of 15%. 

In 2012, total power generation reached 162 TWh with most 
(88.6%) coming from fossil fuels, principally coal and lignite. 
Renewables accounted for 10.7%. In 2012, a rise in share 
of lignite was caused by decreased profitability of hard coal 
power  generation.  Poland  maintained  traditional  export  of 
electricity, mainly to the Czech Republic and Slovakia342.

339   Gaz-System Auctions Platform.
340   In some instance, the Regulator has released entities trading in 

natural gas from the obligation to submit tariffs for his approval. 

341   Eurostat and Polish Central Statistical Office, Energy 2013, 

2 September 2013. 

342   Eurostat.

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F I G U R E S  1   A N D   2

Gross inland consumption mix 2008-2012

Gross electricity generation mix 2008-2012

60% 

50% 

40% 

30% 

20% 

10% 

0% 

100% 

90% 

80% 

70% 

60% 

50% 

40% 

30% 

20% 

10% 

0% 

2008 

2009 

2010 

2011 

2012 

2008 

2009 

2010 

2011 

2012 

Solid fuels
Nuclear

Natural gas
Renewables

Crude oil and petroleum products
Other

Solid fuels
Renewables

Natural gas
Other

Crude oil and petroleum products

Source: Eurostat

Sources:  EU energy in figures - “Statistical Pocketbooks 2012 and 2013”, 

2.  Regulatory framework

General

The Third Package Directives were transposed only in 2013 
and their compliance is currently under review. An infringement 
procedure on regulated gas prices for non-household customers 
and the Third Energy Package Gas Directive is ongoing before 
the Court.343 In March 2013, the European Commission referred 
Poland to the Court of Justice for non-transposition  of  the 
renewables  directive344,  which  has  been  controversial  and 
hampered for many years. Arguments arise mainly about the 
design of the support scheme for renewables. 

National Energy Regulator

The President of Energy Regulatory Office (URE) is a central  
body for governmental administration and has been in operation 
since  1997.  In  2012,  URE  employed  about  300  staff.  Its 
annual revenues totalled EUR 23.8 million while expenditures 
reached EUR 8.8 million345. The surplus of income is part 
of  the  government  budget.  Amendments  to  Energy  Law 
introduced  a  5-year  term  for  President  of  URE  with  a 
possibility of one reappointment.

Unbundling

The TSO in electricity is PSE S.A. and for gas, Gaz-System S.A. 
Both companies were certified as ownership unbundled TSOs 
(on the networks they own) in the course of 2014. The rules 
on certification of independent system operators were only 
adopted in 2013. 

European Commission

There  were 158  electricity DSO’s at the end of 2013,  but 
only five serve more than 100 000 customers. Each company 
within the “big five” is legally unbundled346 and 4 of them are 
controlled by the Polish State Treasury. In 2013 distribution 
of gas was performed by 40 system operators including one 
incumbent system operator347 subject to legal unbundling346. 

3.  Wholesale markets

Electricity

The Polish wholesale power generation market still remains rather 
concentrated.  However,  initial  data  for  2013  show  that  HHI  for 
electricity production dropped to less than 2000, meaning that the 
market shall no more be considered as highly concentrated. PGE, 
TAURON, and EDF remained the biggest power generators in 2012 
and in 2013. The market concentration HHI index for installed 
capacity was 1587.9 in 2012. For the amount of power introduced 
to  the  grid  this  index  reached  2096.  The  HHI  index  decreased 
further in 2013 based on the recently published data.348

In 2012, the power exchange’s role became well established, 
following the introduction in 2010 of obligation to sell certain 
percentage  of  produced  electricity  by  generators  through  the 
power exchange. Electricity sold through the exchange accounted 
for 61.8% of electricity sold by generation companies in 2012 
(up  from  58.8%  in  2011).  Bilateral  contracts  represented 
around 33% of wholesale trade in 2012. It has to be noted 
that the volumes traded on the exchange decreased in 2013.348

343   C-36/14, See IP/13/580.
344   C-320/13, See IP/13/259.
345   URE, Annual Report of the President of URE, March 2013.

346   URE, National Report 2013.
347   Mid-2013, six unbundled DSOs merged into one. 
348   URE, National Report, 2014.

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According to the Polish Power Exchange (POLPX), in 2012 the 
annual average wholesale day-ahead power price was PLN 
179.45/MWh,  which  is  a  decrease  from  PLN  205.19/MWh 
in 2011 (12% decrease). The annual traded volume in day-
ahead transactions in 2012 was 19.1 TWh349. 

Poland  participates,  currently  as  an  observer,  in  a  five-
way  market  coupling  project  known  as  “5M”.  Poland 
intends  to  join  the  Czech  Republic,  Slovakia,  and  Hungary 
in the arrangement of capacity allocation on the common 
borders in implicit auctions later in the context of the CEE 
FBMC  (Central  East  Europe  Flow-Based  Market  Coupling) 
initiative350. Poland also participates in the coupling of the 
North-Western European Market via the SwePol Link. 

Gas

Annual natural gas inland consumption in 2012 amounted to 
approximately 15.9 bcm. The total imports of natural gas to 
Poland in 2012 amounted to 11.6 bcm, out of which imports 
from  Russia  and  Central  Asian  countries  were  9.2  bcm, 
corresponding  to  57.6%  of  gross  inland  consumption  and 
79.8%  of  all  imports.  Imports  from  Germany  amounted  to 
1.7 bcm and from Czech Republic 0.55 bcm351. Domestic gas 
production in 2012 was 4.46 bcm (in terms of methane-rich 
natural gas) which accounted for approximately 28% of the 
annual demanded of all consumers.352

It  should  be  noted  that  imports  from  Germany  increased 
thanks to physical connection via Lasow and the reverse flow 
via Mallnow. However, the import diversification requirement 
under the Polish law remains an obstacle limiting abilities of 
gas shippers to use the reverse flow on Yamal. 

The  wholesale  gas  market  in  Poland  was  still  dominated 
by  PGNiG  in  2012  (ca  95%).  The  remaining  5%  of  total 
sales  were  supplied  by  other  traders.  Since  2013  the  gas 
exchange obligation has provided grounds for competition in 
the Polish gas market, but in 2013 PGNiG failed to trade the 
mandatory 30% share on the exchange as there were too 
few buyers. The prices available under bilateral agreements 
were temporarily lower than prices offered on the exchange 
and the overall demand for gas was insufficient to drive sales 
up. However, in 2014, the situation changed – the volume of 
gas traded on the gas exchange is now increasing.

P O L A N D

In 2012, as a result of the renegotiation of the long-term 
supply  contract  with  PGNiG,  Gazprom  lowered  the  price  of 
natural gas deliveries to Poland. The agreement ended the 
price dispute between PGNiG and its Russian partner. Even 
after the correction, Poland still pays one of the highest 
prices for Russian gas in the EU.

The  latest  legal  developments  are  positive  for  natural 
gas  market  liberalisation,  including  already  mentioned 
amendments  of  the  Energy  Law  in  2013,  an  important 
change  concerning  the  structure  of  the  incumbent  and  the 
adoption  and  the  subsequent  changes  in  the  Transmission 
Grid Code. The code includes provisions of the Third Energy 
Package  as  well  as  system  operation  rules  for  capacity 
allocation.  The  code  also  introduced  a  virtual  trading  point 
for  gas353  and  allowed  for  early  introduction  of  bundled 
capacity  products  between  Poland  and  Germany  which  are 
tested  until  September  2014353  354.  Subsequent  changes, 
which entered into force in August 2014, implemented 
Network  Code  on  Congestion  Management  Procedures 
(CMP), Capacity Allocation Mechanisms (CAM) and Balancing 
(BAL), improving the  interoperability of polish  gas system 
with those of neighbouring countries.

4.  Retail markets

Electricity

Poland  continues  to  regulate  retail  electricity  prices  for 
households.  The  approval  of  the  electricity  prices  by  the 
President  of  ERO  remains  for  households.  In  2012  the 
regulation of electricity prices for households applied to all 
consumers who did not switched to the free market. Similarly 
to the previous years, “incumbent” suppliers continued to 
detain the largest share in sale of electricity to the end-users 
in 2012. In 2012, 82 active suppliers were operating on the 
electricity market. The total number of entities licensed to 
trade amounted to around 360, but these were mainly the 
vertically integrated industrial power companies conducting 
sale and distribution services. In 2012 the main five retailers, 
which used to be part of distribution companies before the 
market opening, covered 80% of the market355.

349   POLPX data – Annual Summary for 2012, http://www.polpx.
pl/pl/27/aktualnosci/307/podsumowanie-roku-2012-na-

towarowej-gieldzie-energii

350   Memorandum of Understanding w sprawie przyłączenia Polski 
i Rumunii do zintegrowanego mechanizmu market coupling  

353   Transmission Network Code, President of Energy Regulatory 
Office Decision DRR-4322-5(9)/2013/JBu from 22 November 

na rynku dnia następnego, 11 July 2013.

2013; Transmission Network Code of Polish Section of the 

351   Report on monitoring of security of supply (2012), Ministry 

Jamal Pipeline, President of Energy Regulatory Office Decision 

of Economy of Poland http://www.mg.gov.pl/files/upload/8356/

PL_MG_DRO_Sprawozdanie%20za%202012.pdf

352   Report  on  the  result  of  monitoring  the  security  of  gaseous  fuels 
supply for the period from 01 January 2012 to 31 December 2012.

DRR-4322-6(5)/2-13/2-14/KG01 from 3 February 2014.
354   Produkt powiązany w Lasowie, http://www.gaz-system.pl/
centrum-prasowe/aktualnosci/informacja/artykul/201643/

355   Eurostat.

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P O L A N D

F I G U R E S  3   A N D   4

Electricity price change by component 2008-2013 (in € cent/kWh)

Natural gas price change by component 2008-2012 (in € cent/kWh)

H O U S E H O L D S

I N D U S T R Y

H O U S E H O L D S

I N D U S T R Y

16 

14 

12 

10 

8 

6 

4 

2 

0 

7 

6 

5 

4 

3 

2 

1 

0 

2008

2013

2008

2013

2008

2012

2008

2012

Taxes+Levies 

Networks

Energy+Supply

Taxes+Levies 

Networks

Energy+Supply

Source: Eurostat

Sources: EC, EPCR metadata

In 2012 four times more consumers exercised their right to 
switch  supplier  than  in  2011.  In  total  the  number  of  non-
household  consumers  who  switched  the  supplier  increased 
from  21 716  (cumulative  numbers  for  2007-2011)  at 
the  end  of  2011  to  66 019  in  2012356.  The  number  of 
households  supplied  under  the  TPA  rule  increased  from 
14 341 to 77 284 consumers356. This was partially caused by 
an  increased  advertising  activity  of  the  suppliers,  resulting 
probably  from  the  decrease  in  electricity  demand  in  the 
business consumers segment. 

Gas

In  2012,  gas  prices  for  households  and  industry  were 
regulated.  Nevertheless,  following  Poland’s  referral  to  the 
Court of Justice on regulated gas prices for non-household 
customers, Poland decided to introduce some changes in the 
way  prices  for  non-household  customers  are  determined. 
Prices for households and small commercial consumers are 
expected to be deregulated at later stage. 

In February 2013, the President of Energy Regulatory Office 
published the “Roadmap of Natural Gas Prices Liberalisation” 
making  the  deregulation  of  prices  for  commercial  and 
household  consumers  a  priority357.  This,  however,  did 
not  translate  into  the  deregulation  of  gas  prices  to  non-
household  customers  and  derogations  are  still  decided  by 
the President of ERO. This is subject to a court case which is 
now pending before the Court of Justice. 

The  Polish  gas  market  is  still  characterized  by  very  high 
concentration levels with the gas incumbent, PGNiG Capital 
Group  holding  95%  of  the  wholesale  and  retail  markets 
in  2012  in  2013.  The  remaining  5%  of  the  gas  market  is 
supplied  by  several  dozen  of  other  entities  striving  for 
strengthening  their  position  on  the  market.  In  2012,  the 
households  constituted  the  largest  group  (96.9%)  among 
all PGNiG Capital Group’s consumers. The number of gas 
retailers, independent from PGNiG, is growing, but their 
market  position  is  highly  fragmented.  At  the  end  of  2013 
there were 120 gas retailers.

In  2012,  99.5%  of  households  were  supplied  with  gas 
under regulated prices (in 2011 this share was 99.9%). The 
number of consumers switching gas supplier has increased 
significantly  in  the  past  years  but  is  still  relatively  low.  In 
2011, only a few switches were noted. In 2012 there were 
210 cases and 402 by the end of September 2013. 

5.  Consumers

The Information Point for Electricity and Gas Consumers, 
established in September 2011, received during its first year 
of  activity  first  full  year  of  functioning  2 636  questions  in 
total.  Almost  a  half  of  the  cases  concerned  the  supplier 
switching procedure. In case of gas consumers the most 
frequent problems were related to the settlements as well 
as to changes in gaseous fuel prices and invoicing.

356   URE, Annual Report of the President of URE, March 2013.
357   URE, MAPA DROGOWA uwolnienia cen gazu ziemnego, 

Warszawa, January 2013.

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P O L A N D

To address those issues, the URE organized a nationwide 
campaign promoting an effective and economical management 
of electricity. The right to switch the supplier was a leading 
motive of this campaign. Information on consumers’ rights 
and on how to switch supplier is provided in the regulator’s 
website.  There  is  a  special  section  in  place  (“You  have  a 
choice”)358.  URE  also  offers  an  internet  tool  that  compares 
prices (tariff calculator). 

Consumers’ overall assessment of retail electricity market 
is  slightly  below  the  EU  average  (70.6  points  compared  to 
72.0,  which  corresponds  to  19th  place  EU-wide)  and  below 
the  average  of  31  domestic  services  markets  (24th  place). 
Retail  gas  market  is  ranked  slightly  above  the  EU  average 
(75.5  points compared to 74.1), ranking 12th EU-wide and 
among  31  domestic  services  markets.  The  market  records 
the 3rd lowest incidence of consumer problems in the EU. 
Both  markets  have  seen  a  considerable  improvement  in 
overall  assessment  since  2012,  with  increases  of  4.4  and 
2.9  points,  respectively  (first  and  second  highest  increase 
domestically).  This  is  due  to  improvements  in  all  the 
components  (except  for  switching  rates),  in  particular  the 
ease of switching and choice359.

An  amendment  to  the  Energy  law  was  adopted  in  2013 
which provides consumers with new rights. In addition, new 
energy  allowances  were  introduced  for  which  consumers 
with financial difficulties may apply. 

6.  Infrastructure

The  Polish  authorities  should  ensure  a  proper  and  timely 
adoption  of  the  measures  stemming  from  Regulation 
347/2013  on  the  trans-European  energy  infrastructure, 
including  the  establishment  of  the  one-stop-shop  for 
Projects  of  Common  Interest  (due  by  16  November  2013), 
and other measures foreseen for 2014 and 2015, including 
the publication of the manual on the permit granting process 
for  project  promoters,  and  the  adoption  of  legislative  and 
non-legislative  measures  streamlining  the  environmental 
assessment procedures. However, gas infrastructure projects 
of  major  importance  are  now  streamlined  by  specific  a 
legal  act,  which  purpose  is  to  facilitate  process  on  the 
administrative level.

Electricity

A large part of Polish energy infrastructure is ageing and 
in need of replacement. Significant investments in energy 
sector  are  in  progress,  mostly  based  on  fossil  fuels,  while 
future investment plans include construction of two nuclear 
power plants, expected to be commissioned by 2025. 

At  distribution  level,  half  the  extensive  grid  replacement 
will take place, with half the financing coming from the EU’s 
Cohesion Fund360. 400 000 smart meters have already been 
installed and are currently tested361. 

The  interconnector  between  Poland  and  Lithuania  (LitPol 
link) is expected to be operational in late 2015. It will connect 
the  Baltic  countries  with  the  Western  European  Electricity 
System and increase energy security in the region.

Gas

The major on-going investment in gas infrastructure is linked 
to the construction of the LNG terminal in Swinolujscie. It will 
have  a  5  bcm  capacity  and  is  scheduled  to  be  operational 
in  2015.  In  2012  Poland  enhanced  its  gas  interconnection 
with Germany (in Lasow). In 2014, the investment enabling 
physical reverse flow at the border with Germany (in Mallnow) 
was completed. Furthermore, the expansion of the existing 
UGS facilities (e.g. in Wierzchowice) and the construction of 
the new UGS facility (Kosakowo) should also be noted. 

Construction  of  the  gas  interconnector  between  Poland 
and  Lithuania  (“GIPL”)  that  is  necessary  to  end  the  energy 
isolation of the Baltic countries should be considered a top 
priority  by  Poland.  There  are  also  plans  to  develop  import 
capacity  at  the  southern  border  with  Slovakia  and  with 
the Czech Republic (as a part of North-South gas corridor). 
Moreover, from the security of supply point of view, one 
of the most significant investments was a modernisation 
of Polish-German interconnection point at Mallnow. The 
investment (completed on April 1, 2014) enabled provision 
of physical reverse flow of gas from Germany to Poland. In 
February 2014 Polish and German TSOs carried out a pilot 
auction on a bundled capacity at Mallnow which is the first 
stage of the procedure of physical reverse allocation.

358   http://www.maszwybor.ure.gov.pl/
359   10th Consumer Markets Scoreboard, http://ec.europa.eu/

consumers/consumer_evidence/consumer_scoreboards/10_

edition/index_en.htm

360   http://www.pgedystrybucja.pl
361   Energa operator.

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P O L A N D

7.  Security of supply

Electricity

Gas

Polish generation capacity reserves may reach a record low 
in 2014. According to the Polish TSO, if the peak demand 
for  electricity  increases  above  26 000  MW  (in  2012  the 
instantaneous peak load was almost 24 000)362, the system 
will  fail  to  deliver  without  support  from  neighbouring 
countries. Therefore, there is a need for enhanced demand 
side  response.  The  TSO  already  work  with  large  industrial 
users to develop system management. Poland is considering 
developing capacity market measures. 

Limited  grid  connections  between  the  North  and  South  of 
Germany result in unscheduled flows to Poland limiting 
cross-border  capacity  available  to  market  participants 
very  often  to  zero  MW.  In  2014,  Polish  and  German  TSOs 
reached  an  agreement  on  the  operation  of  phase  shifting 
transformers  to  better  manage  the  flows363,  but  the  issue 
requires long term solutions.

P O L A N D   –  K E Y   I N D I C A T O R S

In 2013, the Ministry of Economy, responsible for the 
security  of  gas  supply,  adopted  the  Preventive  Action  Plan 
and  Emergency  Plan  meeting  the  requirement  set  in  the 
Regulation  (EU)  No  994/2010  concerning  measures  to 
safeguard security of gas supply364. 

Heavy dependence on gas imported from Russia is balanced 
with  domestic  gas  production.  Further  diversification 
is  expected  when  the  LNG  terminal  in  Świnoujście  is 
commissioned  and  if  shale  gas  could  be  exploited  on  a 
sufficient scale. The gas import trend is upward, but imports 
from  the  East  have  fallen  in  favour  of  purchases  from 
Germany and Czech Republic365. In October 2012 the Polish 
TSO opened up the possibility of transporting gas to Ukraine.

E L E C T R I C I T Y

G A S

Number of companies representing at least 95% 
of net power generation

Number of main power-generation companies

32

6

Number of entities bringing natural gas  
into country

Number of main gas entities

40

1

Market share of the largest power-generation company 39.3%

Market share of the largest entity bringing natural gas 96.9%

Number of electricity retailers

Number of main electricity retailers

82

5

Number of retailers selling natural gas to final customers

Number of main natural gas retailers

Switching rates (entire electricity retail market)

0.6% (1)

Switching rates for gas (entire retail market)

Regulated prices for households – electricity 

Regulated prices for non-households – electricity

HHI in power-generation market by volume  
of power fed into a grid

HHI in electricity retail market

Electricity market value (2) (bn€) 

Installed generation capacity (MW, 2011)

Peak demand (MW)

Number of smart meters installed

Yes

No

2 096

2 099

9.376

34 554

23 970

400 000

Regulated prices for households – gas

Regulated prices for non-households – gas

HHI in gas supply market

HHI in gas retail market

Gas market value (2) (bn€)

120

1

0.8%

Yes

Yes

N/A

9 073

3.658

Sources: Eurostat, CEER, National Regulatory Authority, EC calculations.

(1)   0.86% for households

(2)   Market value is an estimation of the size of the retail electricity and gas markets. It is calculated using data on electricity  

and gas consumption in the household and non-household sectors (average bands) and annual average retail prices.

362   ENTSO-E, YS&AR Report, 2012.
363   PSE operator, press release, http://www.pse-operator.pl/index.

php?dzid=32&did=1669

364   Ministry of Economy, Plan Działań Zapobiegawczych, Warsaw 2013.
365   Ministry of Economy, Report on the results of monitoring  
the security of gaseous fuel supply for the period from 

01 January 2012 to 31 December 2012, Warsaw 2013.

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Key issues

 → Electricity and gas sectors have undergone reforms as part of the Financial Assistance 
Program. Regulated tariffs are being phased out gradually until 2015 and some 
State-controlled  companies  will  be  privatised.  At  present,  both  the  wholesale  and 
retail markets are still concentrated. However, deregulation has led to an increase in 
customer switching.

 → In the gas sector, wholesale market development is still constrained due to slow 
integration  with  the  Spanish  market.  Integration  should  be  promoted  notably 
through  the  harmonisation  of  entry-exit  tariffs  in  both  transmission  systems,  the 
use of platform PRISMA to allocate capacity, the harmonization of the congestion 
management procedures and the creation of an Iberian Gas hub in line with the 
South Gas Regional Initiative and the Gas Target Model. 

L
A
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1.  General overview

F I G U R E S  1   A N D   2

Portuguese  energy  demand  decreased  again  in  2012  by 
5.9%, to 22.2 Mtoe, following a 2.9% drop in 2011. Falling 
demand has reduced fossil fuel consumption, although it 
remains the main source of energy.

The power generation mix in 2011 (52.5 TWh) was dominated 
by renewables (47.0%), gas-fired power generation (28.4%) 
and  solid  fuels  (18.7%).  Net  imports  were  2.7  TWh,  to  a 
total electricity demand of 49.2 TWh. The share of gas-fired 
generation has however decreased considerably in the last 
two years.

The  domestic  power  generation  mix  in  2013  (47.8  TWh) 
was made up by 53.8% from hydro, coal and CCGT and 
46.2% from renewable resources366. The share of renewable 
energy varies yearly due to hydrological and wind conditions. 
Portugal’s  2020  renewables  target367  is  31%,  which  is 
higher than the EU-27 average. According to Eurostat data, 
between 2008 and 2012, the renewables share in gross final 
energy  consumption  increased  from  22.8%  to  24.6%  and 
the country is showing good progress towards its 2020 RES 
obligation.

366   http://www.ren.pt/
367   Share of RES in Gross Final Energy Consumption.

Gross inland consumption mix 2008-2012

60% 

50% 

40% 

30% 

20% 

10% 

0% 

2008 

2009 

2010 

2011 

2012 

Solid fuels
Nuclear

Natural gas
Renewables

Crude oil and petroleum products
Other

Source: Eurostat

Gross electricity generation mix 2008-2012

60% 

50% 

40% 

30% 

20% 

10% 

0% 

2008 

2009 

2010 

2011 

2012 

Solid fuels
Renewables

Natural gas
Other

Crude oil and petroleum products

Sources:  EU energy in figures - “Statistical Pocketbooks 2012 and 2013”, 

European Commission

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P O R T U G A L

2.  Regulatory framework

3.  Wholesale markets

General

Electricity

The  evolution  of  the  energy  sector  in  Portugal  has  been 
driven  by  reforms  as  part  of  the  Financial  Assistance 
Program.  These  reforms  aim  to  reduce  the  energy  tariff 
deficit.  The  privatisation  of Redes  Energéticas  Nacionais 
SGPS and Energias de  Portugal (EDP) was accelerated and 
regulated gas and electricity retail tariffs are being phased 
out. In this context, Portugal is undertaking other measures, 
discussed later in this report. 

Total electricity consumption in Portugal stabilised in 2013 
at  49.1  TWh  after  a  two-year  period  of  decline.  Electricity 
production was 12.4% higher, driven by higher than average 
rainfall.  Generation  from  hydro  plants  in  2013  more  than 
doubled compared to 2012. Renewables also increased their 
production  16.4%  when  compared  with  2012  data.  This 
increase was compensated by a reduction in imports, CCGT 
and coal production. 

National Energy Regulator

The independent Portuguese Energy Services Regulatory 
Authority,  Entidade  Reguladora  dos  Serviços  Energéticos 
(ERSE) has been in operation since 1997. It had a budget of 
almost EUR 9 million in 2012 and employed a staff force of 
75 people.368

Unbundling

REN  (Rede  Elétrica  Nacional)  and  REN  Gasodutos  are  the 
electricity and gas TSOs. Both are part of REN SGPS (Redes 
Energéticas  Nacionais  SGPS).  After  the  re-privatisation 
of a 40% share capital of REN SGPS in 2012, the process 
continued  and  currently  the  Portuguese  government  does 
not hold shares in the capital of REN SGPS. These TSOs have 
both been certified in 2014 under the ownership unbundling 
model, after the opinion of the Commission issued in May 
2014369  and  subject  to  the  fulfilment  of  a  number  of 
conditions.370

EDP  is  the  main  electricity  distributor  and  was  privatized 
in  2013.  It  holds  the  concession  to  operate  the  national 
distribution  network  in  high  and  medium  voltage,  and 
most  municipal  concessions  to  operate  in  the  low  voltage 
distribution network. There are a few other smaller electricity 
distributors. The distribution of natural gas is provided by six 
distributors (four of them belong to GALP) that work under 
concession  contracts  and  five  autonomous  natural  gas 
distribution  units  (four  of  them  belonging  to  GALP)  which 
have a license. 

Electricity  generation  in  Portugal  has  an  unconventional 
structure.  While  EDP,  the  former  State-owned  company, 
remains the largest generation entity (43% of electricity sold 
in 2013), a 42% share is supplied through regulated agents 
which are not exposed to market risks.371 REN Trading, which 
accounts for 7.6% of the domestic power generation mix, 
acts as a regulated market agent for the two historical PPAs. 
The renewable and CHP generators, which earn a feed-in-
tariff, are represented in the market by a regulated single 
buyer. Imports account for 6% of energy supply and there 
is a high level of market integration and price convergence 
with Spain.

Changes to one of the most contentious issues, the regulated 
contracts  for  difference  known  as  CMECs  that  aim  to 
compensate for stranded costs arising from the liberalization 
process, are still pending. Portugal has already reduced 
the discount rate applied in the CMECs, but it is studying a 
retrospective reduction in previous years payments after the 
energy regulator and the antitrust authority advised of flaws 
in ancillary service related payments.372

Portugal and Spain have been integrating their electricity 
markets  into  a  single  Iberian  Electricity  Market,  MIBEL. 
They share a common spot market operator, OMIE, which 
has been operating in both countries since July 2007, and 
a forward market operator, OMIP, launched in July 2006. In 
2013,  day-ahead  prices  were  the  same  in  both  countries. 
In  February  2014,  OMIE  was  coupled  with  the  Central  and 
Northern European markets. In 2013, 54.5 TWh were traded 
in  the  Portuguese  part  of  OMIE  day-ahead  market.372  The 
average  price  in  the  day-ahead  market  in  Portugal  was  
EUR  43.65/MWh  in  2013.  Since  March  2014,  OMIP  has 
auctioned FTR for the Spain-Portugal interconnection and 
allowed  continuous  trading  of  that  product  in  its  trading 

368   Employment of 80 people in 2010.
369   http://ec.europa.eu/energy/gas_electricity/interpretative_notes/

doc/certification/certifications_decisions.pdf

371   Share over total production plus net Exchange. Source: REN, 
Sistema eletroprodutor. Informação mensal, Dezembro 2013.

372   Own estimation. OMIE quotes trading in Portugal based  
on purchases for Portuguese customers (i.e. it does not  

370   http://www.erse.pt/pt/imprensa/comunicados/2014/

report sales in Portugal that are sold in Spain).  

Comunicados/CertORT%20Decisao_Comunicado_vfinal.pdf

Thus, it is underestimating the real market size.

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P O R T U G A L

So  far,  Portugal´s  gas  market  development  has  been 
constrained by its limited size and the slow progress of 
integration with the Spanish market, partially due to cross 
border  entry-exit  charges  between  both  gas  transmission 
systems. Increased integration would create the Iberian 
Gas  Market,  MIBGAS  and  promising  developments  are  now 
ongoing. In recent years Portugal has taken steps towards 
market opening and integration with Spain. Portugal abolished 
transmission exit fees in the interconnection with Spain 
in June 2012 and Spain reduced the exit price (towards 
Portugal) in the cross border tariffs. Interconnection capacity 
between  both  countries  was  auctioned  for  the  first  time  in 
2013 and for the second time in March 2014. 

As part of the review of the gas regulations finalised in 2013, 
the regulator allows the allocation of binding capacity rights 
in transmission, underground storage and LNG terminal 
infrastructures, for periods of up to one year.

4.  Retail markets

In  August  2012,  the  government  announced  the  complete 
elimination  of  regulated  tariffs.  A  transitory  tariff  (that 
includes an aggravation factor with a view to promoting 
switching) will be in place for three years. ERSE will review 
this tariff on a quarterly basis. 

Electricity

As  a  consequence  of  the  previous  monopolistic  supply 
structure and price regulation, the retail market remains 
concentrated.  In  December  2013,  the  HHI  for  domestic 
and  industrial  consumers  amounted  to  6 778  and  2 239 
respectively.  The  market  share  of  the  three  biggest 
companies  in  the  liberalised  market  was  85%  in  2013. 
In  2013  Portugal  had  its  highest  switching  rate  so  far  of 
household consumers: 26.8% compared to 13.2% in 2012.

Customers’ prices have increased considerably in previous 
years. From 2008 to 2012, final electricity prices have 
increased  annually  on  average  by  7.8%  for  domestic 
customers  and  6.2%  for  industrial  customers.379  The  price 
increase for both domestic and industrial customers was 
due to an average annual increase in taxes and levies380 of 
16% and 19%, respectively. This is influenced by a set of 
subsidies to ordinary producers, namely the compensation 
for stranded costs due to the liberalization process and the 
payments of feed-in tariffs for renewable and CHP.

platform.373  In  2012  Portugal  started  auctioning  forward 
contracts on energy produced by renewable and CHP plants 
under  feed-in-tariffs.  All  forward  contracts  are  settled 
financially,  since  no  bilateral  energy  was  delivered  in  the 
daily schedule in 2013.374 In the last two years there have 
been  some  changes  in  the  Portuguese  wholesale  market. 
In 2012, CHP feed-in tariffs were reviewed and capacity 
mechanisms  were  reduced  and  limited  to  hydro  power 
plants during the Financial Assistance Program.375 Moreover, 
in order to promote the sustainability of the system, 80% 
of  the  income  of  the  CO2  allowance  auctions  are  used  to 
compensate for the over-costs due to the renewable feed-
in  tariffs.375  In  April  2012,  ERSE  approved  a  new  system 
operation regulation376 and in June 2013 the Government 
approved a new measure aimed at cancelling out the effects 
of external events, specifically the increase in prices from 
new  generation  taxes  in  Spain.  At  the  end  of  2013,  the 
Portuguese Government announced an extraordinary tax on 
energy production, transmission, storage and distribution 
activities in order to decrease the tariff deficit and promote 
energy efficiency measures.377

Gas

Portuguese natural gas consumption dropped by 12.7% in 
2012, mainly due to a 44% reduction of gas-fired power 
generation  (all  CCGT).  Since  Portugal  does  not  produce 
natural  gas,  it  covered  its  consumption  in  2012  through 
LNG  imports  (23.9  TWh378)  and  through  two  pipelines  that 
connect Portugal with Spain (27.9 TWh). Portuguese supply 
still comes mainly from a few long term contracts held by 
GALP with Algeria (through Spain) and Nigeria (imported 
as  LNG)  and  signed  before  liberalisation.  At  present,  the 
Portuguese  market  does  not  have  a  transparent  market-
based natural gas price reference.

373   OMIE has auctioned interconnection contract for difference since 
2009, but it is a forward contract –it is settled against the price 

difference  regardless  the  sign–,  while  OMIP’s  FTRs  is  one-sided 

–they have value only if prices in Spain is higher, or vice versa.
374   Bilateral contracts in the day-ahead schedule are cancelled out 
though participation in the day-ahead market, so no net energy 

is added.

375   Although a new Ordinance approved in August 2012 sets an 

incentive to generation capacity that will apply after the end of 

the Financial Assistance Programme, initially in 2015.
376   This regulation results from the merger of two previous 

regulations and includes some changes regarding balance 

areas, registration of market agents, an additional market for 

secondary reserve, settlement processes and retailers balancing 

responsible parties.

377   The proposal still has to be approved in the parliament.
378   Nigeria presents over 80% of all LNG imports, while other imports 

379   EuroStat.
380   Includes concession fees, stranded costs and other taxes linked 
to the energy sector, RES and CHP and the compensation for 

are also received from Qatar, Egypt and Trinidad y Tobago. 

isolated islands, being some of these charged in the Access Tariff.

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P O R T U G A L

F I G U R E S  3   A N D   4

Electricity price change by component 2008-2012 (in € cent/kWh)

Natural gas price change by component 2008-2012 (in € cent/kWh)

H O U S E H O L D S

I N D U S T R Y

H O U S E H O L D S

I N D U S T R Y

25 

20 

15 

10 

5 

0 

9 

8 

7 

6 

5 

4 

3 

2 

1 

0 

2008

2012

2008

2012

2008

2012

2008

2012

Taxes+Levies 

Networks

Energy+Supply

Taxes+Levies 

Networks

Energy+Supply

Source: Eurostat

Sources: EC, EPCR metadata

Gas

5.  Consumers

In April 2013, ERSE approved a new regulatory framework 
for  natural  gas  to  support  the  changes  in  commercial 
relationships following the removal of regulated tariffs. The 
modifications, which were aimed at strengthening consumer 
protection  and  enhancing  competition,  included  extending 
the quality of service to all retailers, reinforcing unbundling 
provisions, adjustments to the supplier switching procedure 
and  modifications  in  capacity  allocation  and  pricing 
provisions.

The gas retail market in Portugal remains highly concentrated 
as liberalisation is recent and there remain some barriers to 
wholesale imports. At the end of 2012, GALP still supplied 
68.8% of total consumption, followed by EDP with a share 
of 16.5% and Gas Natural with 10%. Nevertheless there are 
positive signs for the liberalisation process, such as the entry 
of new retailers381 and the ability for consumers to switch 
supplier. 

Portuguese  gas  retail  prices  for  household  consumers 
(EUR 0.0836/kWh) are one of the highest in Europe, while 
prices for industry (EUR 0.055/kWh) are average respectively 
in the first part of 2013.382 This is partly due to the high 
share of network costs in the final price (in 2012, network 
charges for household consumers represented up to 42% in 
Lisbon)383.

Consumers’ overall assessment of retail electricity market is 
below the EU average (22nd place and 66.3 points compared 
to  72.0,  corresponding  to  22nd  place  EU-wide)  and  second 
lowest  among  domestic  services  markets.  However,  the 
market has seen a considerable improvement (of 3 points) 
between  2012  and  2013.  The  incidence  of  consumer 
problems is third highest in the EU and trust in providers is 
fourth  lowest.  Retail  gas  market  is  ranked  just  below  the 
EU average (74.0 points compared to 74.1384, corresponding 
to  16th  place  EU-wide)  and  just  above  the  average  of 
31  domestic services markets (14th place). However, in 
both  markets  the  scores  on  choice,  ease  of  switching  and 
actual  switching  have  improved  considerably  since  2012. 
The proportions of gas and electricity consumers who have 
switched their provider or tariff in the past year saw increases 
of over 10 percentage points (in the electricity market, this 
has translated to a change from 3rd lowest place in the EU in 
2012 to 3rd highest in 2013). 385 

Around 80% of complaints (7 053 in 2012) dealt with by ERSE 
are concerned with the electricity sector, while the remaining 
20% relate to the gas sector. These complaints are mostly 
related to tariffs, switching of supplier and connection to the 
network. ERSE offers a price simulation tool on their website 
for electricity and natural gas customers and operates a 
telephone information service. A collective switching in the 
electricity sector took place, organised by a Portuguese 
consumer organisation. 

381   In 2012, 6.1% of the consumers switched to Goldenergy. 
382   Eurostat. 
383   ACER/CEER, Annual Report on the Results of the Monitoring  
the Internal Electricity and Natural Gas Market in 2012, 

384   However the difference is not statistically significant.
385   10th Consumer Markets Scoreboard, http://ec.europa.eu/

consumers/consumer_evidence/consumer_scoreboards/10_

November 2013.

edition/index_en.htm

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P O R T U G A L

Portugal  maintains  public  service  obligations  through  the 
concept of vulnerable customers, defined as those who are 
beneficiaries of government social support plans.386 They will 
keep the right to a regulated tariff with a limited increase 
established  by  the  Government  for  each  year.  In  2012, 
665 695 electricity and 17 000 natural gas consumers were 
eligible for this social tariff. During 2012, Portugal approved 
the new provisions for customers’ protection in accordance 
with the Third Energy Package. 

2014-2023, worth EUR  524  million, due to the anticipated 
increase  in  consumer  bills.  After  ERSE’s  opinion,  the 
government is responsible for the final approval of the plan. 

In the context of the TEN-E Regulation, Portugal has 1 project 
of common interest (PCI) that will increase interconnection 
level with Spain (and further on with France) and will help 
Portugal to reinforce its security of gas supply.

7.  Security of supply 

Electricity

Portugal’s  dependence  on  imported  energy  has  been 
historically  high.  Yet,  due  to  an  increasing  amount  of 
renewable  energy  in  the  generation  mix,  total  energy 
dependence has been declining. The National Action Plan 
for Renewable Energy foresees a total increase of special 
regime  generation  capacity  from  6 610  MW  in  2012  to 
8 780  MW  by  2020.  Addition  new  capacity  is  planned  or 
underway as some hydro power plants are being built and 
the  Government  has  granted  permission  to  four  new  CCGT 
plants.

At the beginning of 2013, the Secretary of State announced 
a plan to upgrade the electricity network in the Western part 
of the country (worth EUR 135 million). 

Gas

The LNG Terminal at Sines has allowed Portugal to diversify 
its  supply  sources,  as  well  as  to  take  advantage  of  supply 
diversification in the Spanish market. The expansion of gas 
infrastructure,  including  the  LNG  storage  tank,  is  expected 
to further improve the diversification of supply sources and 
help meet the standard required by the European regulation 
of security of supply. 

The  entry  capacity  in  the  system  (re-gasification  plus 
interconnection  capacity)  is  expected  to  remain  above 
gas  peak  consumption  in  the  next  few  years.  In  2012,  the 
average  daily  peak  in  consumption  represented  36.5%  of 
the entry capacity offered in SNGN.

6.  Infrastructure

The  Portuguese  authorities  should  ensure  a  proper  and 
timely adoption of the measures stemming from the TEN-E 
Regulation, including the establishment of the one-stop-shop 
for Projects of Common Interest (PCIs) (due by 16 November 
2013),  and  other  measures  foreseen  for  2014  and  2015, 
including the publication of the manual on the permit 
granting process for project promoters, and the adoption of 
legislative  and  non-legislative  measures  streamlining  the 
environmental assessment procedures.

Electricity

Investments in electricity transmission have slowed down. 
The  length  of  the  transmission  network,  which  had  been 
growing  in  recent  years,  in  2013  reached  8 519  km.  The 
Portuguese transmission network has eight interconnection 
lines  with  the  Spanish  Transmission  Grid.  In  the  context  of 
the TEN-E Regulation, Portugal has 4 projects of common 
interest (PCI) that will help to increase interconnection level 
with Spain and reach the 10% Barcelona target.

Gas

The Portuguese natural gas system has three entry points: 
an LNG terminal at Sines (whose LNG storage capacity was 
expanded by 943  GWh in 2012) and two interconnections 
with Spain (Campo Maior and Valença do Minho). A third 
interconnection pipeline with Spain, aimed at increasing the 
integration of the Iberian Gas Market, is in the initial phase 
of  construction.  Additionally,  Portugal  has  2 115  GWh  of 
underground storage capacity. In 2012, Portugal commenced 
work on the expansion of underground storage capacity at 
Carriço.

In  May  2013,  the  TSO  presented  a  proposal  investment 
plan for 2014-2023 that had to be analysed by ERSE that 
intended to expand the gas network in Northern Portugal. 
ERSE  asked  REN  to  review  the  gas  investment  plans  for  

386   These schemes are: solidarity supplement for elderly, 

unemployment assistance, 1st step of child benefit, social 
disability pension and social income supplements.  

Source: Diário da República, 1.ª série, N.º 189. 

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P O R T U G A L

P O R T U G A L   –  K E Y   I N D I C A T O R S

E L E C T R I C I T Y

G A S

Number of companies representing at least 95% 
of net power generation

Number of main power-generation companies

104

4

Number of entities bringing natural gas  
into country

Number of main gas entities

5

1

Market share of the largest power-generation company 44.9%

Market share of the largest entity bringing natural gas  85.3%

Number of electricity retailers

Number of main electricity retailers

10

4

Number of retailers selling natural gas to final customers

Number of main natural gas retailers

Switching rates (only for electricity household consumers)

13.2%

Switching rates for gas (entire retail market)

Regulated prices for households – electricity 

Regulated prices for non-households – electricity

HHI in power-generation market

HHI in electricity retail market (domestic consumers)

HHI in electricity retail market (industrial consumers)

Electricity market value (1) (bn€)

Installed generation capacity (MW, 2011)

Peak demand (MW)

Number of smart meters installed

No

No

3 567

6 918

2 815

4.856

19 938

8 554

N/A

Regulated prices for households – gas

Regulated prices for non-households – gas

HHI in gas supply market

HHI in gas retail market

HHI in gas retail market (industrial consumers)

Gas market value (1) (bn€)

20

3

N/A

No

No

3 883

4 484

5 509

0.897

Sources: Eurostat, CEER, National Regulatory Authority, EC calculations.

(1)   Market value is an estimation of the size of the retail electricity and gas markets. It is calculated using data on electricity  

and gas consumption in the household and non-household sectors (average bands) and annual average retail prices.

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Key Issues

 → Correct and complete transposition of the Third Energy Package and its practical 
application needs to continue. Romania should complete the corporate governance 
reform of state-owned enterprises in the energy sector in line with the internal energy 
market legislation.

 → Romania’s roadmap for phasing out regulated gas and electricity prices and improving 
retail competition and energy efficiency needs to be fully implemented. The process of 
electricity market coupling should be finalised following the target model.

 → The completion of gas interconnections and reverse flow projects, including physically 
linking the Romanian gas system with the transit pipelines, are necessary to strengthen 
security of supply and to enable increased exploitation of domestic gas resources.

 → Further electricity interconnection is needed to exploit the high generation capacity.

 → Romania is on track to meet its 2020 renewable target but upgrades to the 

network would help integrate more renewables.

1.  General overview

F I G U R E S  1   A N D   2

In  2009,  the  economic  downturn  led  to  a  decrease  in 
consumption which has recovered slightly since 2011. In 2012, 
the overall renewables contribution was 22.9%, close to the 
24% national target for 2020. 

In  2012,  domestic  natural  gas  consumption  amounted  to 
109 TWh (75.68% of total consumption) while imports were 
35 TWh387. In 2013, the 8.4% decrease in consumption led 
to  a  58%  reduction  in  import  while  domestic  production 
remained at 2012 levels. 

In 2013, the breakdown of electricity generation was 46.2% 
thermal,  25.9%  hydro  and  19.9%  nuclear388.  Renewable 
energy sources amounted to 4 348 MW installed capacity. 
The renewables share in gross final energy consumption 
reached 22.9%389 in 2012 and thus Romania is almost at 
its national 2020 target of 24%.

Gross inland consumption mix 2008-2012

35% 

30% 

25% 

20% 

15% 

10% 

5% 

0% 

2008 

2009 

2010 

2011 

2012 

Solid fuels
Nuclear

Natural gas
Renewables

Crude oil and petroleum products
Other

Source: Eurostat

Gross electricity generation mix 2008-2012

45% 

40% 

35% 

30% 

25% 

20% 

15% 

10% 

5% 

0% 

387   ANRE, National Report 2012, 31 August 2013.
388   National Institute of Statistics, Press Release no.37, 

11.02.2014.

389   Eurostat.

2008 

2009 

2010 

2011 

2012 

Solid fuels
Nuclear

Natural gas
Renewables

Crude oil and petroleum products

Sources:  EU energy in figures - “Statistical Pocketbooks 2012 and 2013”, 

European Commission

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2.  Regulatory framework

General

wholesale  market)  significantly  increased.  The  volume  sold 
on Opcom SA platforms is almost double than that of 2012, 
and represents 71% of internal consumption.

In September 2014 Romania adopted amendments to its energy 
legislation intended to ensure full transposition of the Third 
Energy Package Electricity and Gas Directives.390 An infringement 
procedure on restrictions on the export of gas, initiated in 2012 
under the TFEU and the Gas Directive, is on-going391.

The TSO develops and administrates balancing, ancillary services 
and  cross-border  capacity  markets.  Bilaterally  coordinated 
auctions for long and short term were organised as of 2012 for 
cross-border capacity allocation on the borders with Hungary and 
Bulgaria and, since December 2012, on the border with Serbia. 

National Energy Regulator

The National Energy Regulator, ANRE, was established in 
1998. By law, ANRE may employ a maximum of 300 persons. 
Its total budget in 2013 was EUR 15.8 million.

In July 2013, the Czech Republic, Slovakia, Hungary, Romania 
and  Poland  signed  a  Memorandum  of  Understanding  to 
extend  the  existing  market  coupling  in  Central  Eastern 
Europe by including Romania and Poland. 

Unbundling

Gas

Electricity sector unbundling has been ongoing since 2000392 
when CNTEE Transelectrica SA was appointed as the electricity 
TSO. SNTGN Transgaz SA Medias was appointed as the gas 
TSO. Both companies are state-owned and were certified as 
independent system operators by ANRE in 2013393, subject 
to fulfilling certain additional requirements to be complied 
with394. It has meanwhile been able in 2014 to issue final 
certification decisions after it deemed that these additional 
requirements were satisfied. Legal unbundling of electricity 
and gas distribution operators has been ongoing since 2007.

3.  Wholesale markets

Electricity

Energy  Complex  Oltenia,  Hidroelectrica  and  Nuclearelectrica 
are the three largest generators with a total market share of 
70.01%395 (69.7% in 2013). The HHI in the wholesale market 
is  1 914  (1 759  in  2013).  2012  was  a  dry  year,  leading  to 
very  high  prices  in  the  wholesale  electricity  market,  and  a 
spot base load price of EUR 48.8/MWh. The spot base load 
price  in  2013  decreased  to  EUR  35.3/MWh,  due  to  lower 
demand,  normal  hydrology  and  a  large  amount  of  wind 
generation. Due to significant changes in primary legislation, 
transactions  performed  on  the  centralised  competitive 
wholesale markets organised by Opcom SA (the operator of 

390   The Commission is examining whether the national legislation 
now fully transposes the Directives and will decide on the 

respective infringement procedures for partial transposition 

accordingly (Cases C-405/13 and C-406/13, IP/13/260). 
391   http://europa.eu/rapid/press-release_MEMO-14-470_en.htm
392   Government Decision no. 627/13.07.2000 regarding the 

restructuring of the National Electricity Company.

393   ANRE Order no.90/11.12.2013 and ANRE Order 

no.3/22.01.2014, respectively.

394   Decisions EC 6891 /14.10.2013 and 8485/25.11.2013, 

In  2012,  demand  was  met  by  imports  and  six  domestic 
producers. The two leading gas producing companies, Romgaz 
and OMV Petrom, provided 97.5% of domestic production. The 
market is highly concentrated and the sum of market shares 
of the three main suppliers in the wholesale market (Romgaz, 
OMV Petrom and OMV Petrom gas) is 78.4%. 

In 2012, trading was through long term bilateral contracts and 
capacity allocation on a “first-come first-served” basis. In July 2013, 
OPCOM396 and the Romanian Commodity Exchange BRM397 were 
licensed by ANRE to organise gas centralised trading. The gas market 
development should be fostered by completion of the interconnection 
and reverse flow projects with neighbouring countries.

4.  Retail markets

Electricity

The gradual phasing-out of regulated prices was completed 
in December 2013 for non-household consumers, whilst for 
households it should be completed by December 2017. The 
number of consumers supplied on a competitive basis (which 
have chosen to change suppliers) has constantly increased; 
in  December  2013  it  was  close  to  19 200.  The  switching 
rate  in  the  retail  electricity  market  is  still  very  low  (0.03% 
in 2012). 62 suppliers operate in the retail market while the 
degree  of  real  market  opening  has  only  slightly  increased 
from 55% in 2012 to 57% in 2013. Due to the negative 
or slim margins allowed by price regulation, suppliers are 
discouraged from making offers outside their supply areas, 
therefore consumer choice is in reality often very limited. 

To ensure universal service, five appointed suppliers of last 
resort are required to procure a progressively increasing 
share from the wholesale competitive market, with the costs 
transferred to end-consumers.

respectively.

395   CEER data for 2012.

396   Licence no.1798 / ANRE Decision 2120/2013.
397   License no.1797 / ANRE Decision 2119/2013.

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R O M A N I A

F I G U R E S  3   A N D   4

Electricity price change by component 2008-2013 (in € cent/kWh)

Natural gas price change by component 2008-2012 (in € cent/kWh)

H O U S E H O L D S

I N D U S T R Y

H O U S E H O L D S

I N D U S T R Y

14 

12 

10 

8 

6 

4 

2 

0 

4 

3 

3 

2 

2 

1 

1 

0 

0 

2008

2013

2008

2013

2008

2012

2008

2012

Taxes+Levies 

Networks

Energy+Supply

Taxes+Levies 

Networks

Energy+Supply

Source: Eurostat

Sources: EC, EPCR metadata

Gas

In 2012, gas consumption was 145 TWh of which household 
consumption  was  20%.  During  the  period  2010–2012, 
household prices including taxes and levies have remained 
constant, while the price for industrial users has continued 
to increase. However, the on-going phasing out of regulated 
prices will have an impact on prices for both categories.

Phasing out of regulated prices for non-households will be 
completed  in  December  2014  (or  end  2015  if  there  is  a 
significant difference between the domestic gas price and 
European import price that could endanger market stability). 
For households, the process lasts until December 2018.

5.  Consumers

Consumers’ overall assessment of the retail electricity and gas 
markets is just above the EU average (72.7 points compared 
to 72.0 and 74.4 compared to 74.1), corresponding to 16th 
and  15th  place  EU-wide,  respectively.  The  gas  market  has 
seen a considerable improvement (of 3.4. points) between 
2012  and  2013  (second  highest  increase  domestically). 
However, both markets score low on actual switching, ease 
of  switching,  choice  and  overall  consumer  satisfaction  (for 
gas market the latter three rank among the three lowest in 
the EU). In addition, the incidence of consumer problems is 
relatively high (3rd highest in the gas market) 398.

Vulnerable customers are defined as household consumers 
with low income within the limits laid down in the Ordinance 
27/2013. The road maps for phasing out regulated electricity 

and gas prices includes social measures for vulnerable 
consumers by providing direct subsidies, informing consumers 
about  the  process  of  market  liberalisation,  reviewing  the 
process for changing suppliers and detailing electricity and 
gas  bills. Financial aid for social protection during the cold 
season is in place.

Developing a price comparison tool has been debated, but 
the  decision  is  pending.  Independent  dispute  settlement 
commissions  will  be  established  within  ANRE  for  both  gas 
and electricity.

A study399 has concluded that implementing smart metering 
is feasible for electricity consumers, while for gas consumers’ 
installation  will  be  optional  and  the  decision  will  be  left  to 
the DSOs. The promotion of pilot projects on smart metering 
of  electricity  distribution  systems  is  one  of  the  measures 
included  in  “Main  Commitments  for  the  National  Reform 
Programme 2013”400. 

6.  Infrastructure

The Department of Energy within the Ministry of Economy 
has  been  designated  as  National  Competent  Authority 
responsible  for  facilitating  and  coordinating  the  permit 
granting  process  for  projects  of  common  interest  in 
accordance  with  the  provisions  of  the  TEN-E  Regulation 
(“one-stop shop”).

398   10th Consumer Markets Scoreboard,  

http://ec.europa.eu/consumers/consumer_evidence/consumer_

399   A.T. Kearney, “Smart metering in Romania”, 3 September 2012.
400   Romania, Ministry of Foreign Affairs, “Main commitments 

scoreboards/10_edition/index_en.htm

for the National Reform Programme 2013”.

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Electricity

Transelectrica  is  involved  in  several  infrastructure  projects 
with neighbouring power systems to improve the cross-
border exchange of electricity, relief congestion and improve 
the integration of RES. The projects are focused on enhancing 
interconnector capacity with Serbia, Bulgaria and Republic 
of Moldova401. Six out of seven Projects of Common Interest 
(PCI)  which  have  been  identified  under  the  guidelines  for 
trans-European energy infrastructure on Romanian territory 
focus  on  the  upgrade  of  the  internal  electricity  system 
with  new  400  kV  overhead  lines.  Romania  meets  the  10% 
interconnectivity target set by the Barcelona Council in 2002.

Gas

Transgaz  has  planned  the  redefinition  of  domestic  gas 
transmission  routes  in  line  with  envisaged  national  and 
European flows, including off-shore gas reserves, the shale gas 
perspective and the Southern Corridor. The plan includes new 
high pressure pipelines and rehabilitation of existing assets.

Bulgaria to the markets in Central and Eastern Europe. The 
development  of  interconnection  with  Moldova  and  Serbia 
will only achieve its full potential if additional investments 
are made on both sides of the interconnectors.

The above mentioned issues are covered through the seven 
gas Projects of Common Interest with Romanian participation. 
The construction of a LNG terminal in Constanta could help 
to diversify the country’s supply portfolio.

7.  Security of supply

Electricity

A peculiarity of the Romanian electricity system is its current 
overcapacity in combination with limited export capacity. The 
existing capacity is largely meeting demand, but maintaining 
this capacity will require improvements in export conditions.

Gas

The  interconnection  with  Bulgaria  will  ensure  minimum 
gas  flow  for  emergency  supply,  with  bi-directional  flows 
expected  by  the  end  of  2016.  Further  development  of  the 
interconnector  with  Hungary,  commissioned  in  2010,  will 
lead  to  full  capacity  of  4.4  bcm/year  in  2016.  The  project 
provides  a  transmission  corridor  from  the  Black  Sea  and 

In the gas sector security of supply is jointly ensured by the TSO, 
the 41 DSOs and the two operators of underground storage. 
Special care is given to ensuring conditions for continuity and 
safety of gas supply by ensuring a minimum stock of gas in 
underground storage. The obligations of licensed suppliers to 
maintain the minimum level are set by ANRE.

R O M A N I A   –  K E Y   I N D I C A T O R S

E L E C T R I C I T Y

G A S

Number of companies representing at least 95% 
of net power generation

Number of main power-generation companies

11

5

Number of entities bringing natural gas  
into country

Number of main gas entities

18

2

Market share of the largest power-generation company 26.7%

Market share of the largest production and import gas company 41.7%

Number of electricity retailers

Number of main electricity retailers

Switching rates (entire electricity retail market)

Regulated prices for households – electricity 

Regulated prices for non-households – electricity

HHI in power-generation market

HHI in electricity retail market

Electricity market value (2) (bn€)

Installed generation capacity (MW)

Peak demand (MW)

Number of smart meters installed

54

5

0.033

Yes

No (1)

1 914

1 472

3.471

18 756

8 627

N/A

Number of retailers selling natural gas to final customers

Number of main natural gas retailers

Switching rates for gas (entire retail market)

Regulated prices for households – gas

Regulated prices for non-households – gas

HHI in gas supply market

HHI in gas retail market

Gas market value (2) (bn€)

65

5

N/A

Yes

Yes

N/A

N/A

1.786

Sources: Eurostat, CEER, National Regulatory Authority, EC calculations.

(1)   These regulated prices were totally removed since 1 January 2014.

(2)   Market value is an estimation of the size of the retail electricity and gas markets. It is calculated using data on electricity  

and gas consumption in the household and non-household sectors (average bands) and annual average retail prices.

401   ANRE, National Report 2012, 2013.

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Key issues

 → Further  strengthening  of  the  power  grid  is  needed  to  ensure  the  reliable  and  safe 
operation of the national electricity system. Planned investments in additional cross-
border  capacity  are  needed  to  improve  competition  and  integration  in  the  internal 
energy market. Investments in more flexible sources with lower environmental impact 
would improve supply diversification and integration in the IEM. Finally, the electricity 
TSO ELES needs to be certified urgently. 

 → Contractual congestion of gas interconnection capacity frequently occurs, implying the 
need for the reinforcement of existing capacity. Investments in new gas pipelines could 
help to diversify the Slovenian energy supply, but current projects (notably South 
Stream) tend to extend the role of current suppliers. Slovenia still has to adapt its 
national legislation to comply with the provisions of Regulation (EC) No. 994 on 
security of gas supply. Finally, more should be done to encourage competition 
in the generation market.

1.  General overview

32%. Renewables rised from 25% in 2011 to 29% while the 
contribution of gas remained negligible at 3%.

35% of gross inland energy consumption in 2012 (7.00 Mtoe) 
was accounted for by oil and petroleum products, followed 
by  nuclear  energy  and  solid  fuels  (20%)  and  renewables 
(15%)

In  2012,  renewables  increased  to  20.2%  of  gross  final 
energy consumption, showing good progress to the 2020 
renewables  target  of  25%.  The  share  of  renewables 
increased  mainly  due  to  greater  contribution  (+1.9%)  of 
heating technologies402. 

2.  Regulatory framework

General

Slovenia’s legislation transposing the Third Energy Package 
was approved by Parliament in February 2014. 

National Energy Regulator

In 2012, the market share of different fuels in the electricity 
generation mix changed slightly compared to 2011 levels. 
Nuclear fuel remains the primary source of overall inland 
energy generation at 36%, with solid fuels accounting for 

The  Slovenian  national  regulator,  the  Energy  Agency  of 
the Republic of Slovenia (AGEN-RS) has been in operation 
since 2000. In 2013 it had a budget of EUR 2.8 million and 
46 employees. 

F I G U R E S  1   A N D   2

Gross inland consumption mix 2008-2012

Gross electricity generation mix 2008-2012

45% 

40% 

35% 

30% 

25% 

20% 

15% 

10% 

5% 

0% 

45% 

40% 

35% 

30% 

25% 

20% 

15% 

10% 

5% 

0% 

2008 

2009 

2010 

2011 

2012 

2008 

2009 

2010 

2011 

2012 

Solid fuels
Nuclear

Natural gas
Renewables

Crude oil and petroleum products

Solid fuels
Nuclear

Natural gas
Renewables

Crude oil and petroleum products

Source: Eurostat

Sources:  EU energy in figures - “Statistical Pocketbooks 2012 and 2013”, 

European Commission

402   http://ec.europa.eu/energy/renewables/reports/2013_en.htm

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Unbundling

Electricity infrastructure is managed by one TSO (ELES) 
and  one  DSO  (SODO),  which  are  both  state-owned. 
The  gas  TSO  Plinovodi  is  responsible  for  natural  gas 
infrastructure,  together  with  16  DSOs.  These  DSOs  service 
less than 100 000 customers in total, and therefore no legal 
unbundling is required.

Plinovodi  was  certified  as  an  independent  transmission 
system operator (ITO) in 2012. ELES’s certification is pending 
following the recent approval of the new Energy Act.

3.  Wholesale markets

Electricity

The Slovenian electricity wholesale market remained highly 
concentrated in 2012. HSE, Gen energija and TE-TOL were 
the  three  dominant  (state-owned)  market  players,  both 
in  terms  of  installed  capacity  (84.8%  cumulative  share) 
and production (91.4% cumulative share)403. The measure 
of  market  concentration  (HHI)  was  4 738  for  generation, 
indicating a high level of concentration. The modest market 
size does not facilitate the development of many generators. 

Following market coupling with Italy, Slovenia is part of a 
much  larger  market,  even  though  cross-border  capacity  is 
still limited. Implicit auctions enabled Slovenia to improve 
cross-border  capacity  utilization  and  increase  market 
liquidity.

In  2012  the  day-ahead  market404  registered  4.4  TWh  of 
traded  energy,  three  times  larger  than  2011  results.  The 
average baseload spot price was EUR 53.15/MWh, 7% lower 
than 2011 figures. In October 2012, an intraday market and 
a balancing market were introduced.

Gas

Slovenia depends entirely on imports to meet its domestic 
demand for gas. Demand in 2012 declined further compared 
to 2011 (-4%, reaching 0.87 bcm) due to the economic crisis. 
42% of gas imports supplied from Russia, 35% from Austria, 
16%  from  Algeria,  and  7%  from  Italy.  Geoplin  remained 
the principal importer, supplying over 90% of demand. 
Significant development of the secondary capacity market 
was observed in 2012 as the number of contracts increased 
together with the daily exchange capacity.

4.  Retail markets

Electricity

Electricity demand remained unchanged in 2012, amounting 
to 12.4 TWh. Eight out of thirteen active suppliers provided 
a share higher  than 5%. The  largest  supplier was GEN-I, 
whose  market  share  increased  to  26.2%  of  the  overall 
final  customers.  In  2012,  more  than  five  years  since  full 
market liberalisation (1 July 2007), retail competition finally 
increased due to a new entrant, GEN-I in the household 
market  segment.  The  market  share  of  the  three  largest 
suppliers increased slightly from 57% in 2011 to 59%. The 
concentration of the retail market remained at a medium 
level,  with  an  HHI  of  1 575.  This  indicator  is  however 
misleading  as  the  retail  market  is  supplied  by  many  local 
suppliers, each of them dominant in a specific area.

The switching rate grew to 5.9% (+1.7% compared to 2011). 
The vast majority of switches were undertaken by household 
customers (48 794 consumers) who changed their supplier 
following the entrance of GEN-I and Petrol into the household 
market segment, gaining 12.5% of the final consumers.

Gas

The Slovenian natural gas market is one of the smallest in 
the EU-28, totalling around one billion standard cubic metres 
per  year405.  Most  natural  gas  sold  in  the  retail  market  is 
consumed by industry and other non-household consumers. 
The  quantities  of  gas  consumed  by  end  customers 
amounted  to  0.87  Gm3  in  2012.  The  dominant  supplier, 
Geoplin,  increased  its  market  share  to  63%,  followed  by 
EnergetikaLjubljana (7.8%) and Adriaplin (7.2%). As a result, 
the  retail  gas  market  was  concentrated,  with  an  HHI  of 
4 186. Significant improvements in opening up the retail gas 
market were recorded. This was confirmed by the switching 
rate rising from 0.07% in 2011 to 8.6% by the end of 2012 
(reflecting  GEN-I  entered  the  market)  placing  Slovenia  at 
a level similar to those observed in the Netherlands and 
Germany. In 2013, uniform tariffs for each entry and exit 
point of the gas transmission network were introduced.

As a result of GEN-I’s entry in the market in 2012, natural 
gas prices in Slovenia started declining in the fourth quarter 
of 2012. GEN-I price strategy that included prices lower than 
existing prices by around 10  cents per cubic metre (21.7% 
lower than the largest player’s price before the new entry took 
place), lead to a fast response from incumbent suppliers, that 
started modifying their own offers to consumption patterns, 
taking into account seasonal elements and changing their 
marketing  strate gies.  Since  October  2012  and  well  into 
2013, prices have been declining to less than 40 cents per 

403   The overall installed capacity and power generation were 
considered in market shares’ calculation, including small 

producers connected to the transmission and distribution 

networks. Only 50% of Krško nuclear power plan has been 

405   ACER/CEER Annual Report on the Results of Monitoring  

taken into account.

the Internal Electricity and Natural Gas Markets in 2012, 

404   Organised by BSP Regional Energy Exchange.

November 2013.

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F I G U R E S  3   A N D   4

Electricity price change by component 2008-2013 (in € cent/kWh)

Natural gas price change by component 2008-2012 (in € cent/kWh)

H O U S E H O L D S

I N D U S T R Y

H O U S E H O L D S

I N D U S T R Y

18 

16 

14 

12 

10 

8 

6 

4 

2 

0 

8 

7 

6 

5 

4 

3 

2 

1 

0 

2008

2013

2008

2013

2008

2012

2008

2012

Taxes+Levies 

Networks

Energy+Supply

Taxes+Levies 

Networks

Energy+Supply

Source: Eurostat

Sources: EC, EPCR metadata

cubic metre due to the continued competitive response from 
incumbent suppliers, as well as seasonal factors406. 

The percentage of network charges in the final price of gas 
varies between 15% and 19% for industrial customers, and 
between 17% and 28% for household customers (Figure 4).

Slovenia  is  among  the  Member  States  that  have  not  yet 
initiated  the  mass  rollout  of  smart  meters407.  A  formal 
decision  on  the  rollout,  together  with  the  establishment  of 
a rollout percentage target has yet to be confirmed.

are also assessed very well in the ranking of 31 domestic 
services  markets  (2nd  and  9th  highest,  respectively).  The 
electricity market is assessed above the EU average on all 
indicators,  with  the  exception  of  actual  switching  (which 
is slightly below the EU average). Comparability, ease of 
switching and overall consumer satisfaction rate among the 
3  highest  in  the  EU  and  the  incidence  of  problems  is  third 
lowest. The assessment of the gas market has also slightly 
improved  since  2012  (by  1.3  points408).  All  indicators  are 
assessed above the EU average409. 

5.  Consumers

Slovenia had a very significant increase in switching during 
2012 (especially in the 4th quarter of the year) due to the 
entry of a new player in the liberalised market. The absence 
of price regulation allowed the new player to enter the market 
with a pricing and sourcing strategy very different from that 
of the existing players and obliging the incumbent suppliers 
to  modify  their  price  strategies.  The  existence  of  the  price 
comparability website maintained by AGEN-RS was certainly 
an asset in promoting energy markets’ transparency and in 
facilitating switching.

This situation is also reflected in consumers’ overall assessment 
of retail gas and electricity markets which scores the highest 
and  second  highest  in  the  EU  respectively  (84.4  points 
compared to 74.1 and 81.0 compared to 72.0). Both markets 

6.  Infrastructure

Slovenia has nominated the Ministry of Infrastructure and 
Spatial  planning  as  the  competent  authority  coordinating 
all  permit  granting  processes  (‘one-stop  shop’).  The  one-
stop shop is responsible for facilitating and coordinating the 
permit granting process for Projects of Common Interest, 
in  accordance  with  the  Regulation  on  Trans-European 
infrastructure.

Electricity

In 2012, installed generation capacity amounted to 3.3 GW. 
In  the  medium  term,  significant  investments  in  thermal 
(including  the  controversial410  Šoštanj  lignite  power  plant, 
TEŠ)  and  hydro  power  plants  are  expected  in  accordance 
with the latest transmission network development plan for  
2013-2022 published by ELES. This plan foresees an increase 

406   ACER/CEER Annual Report on the Results of Monitoring  

the Internal Electricity and Natural Gas Markets in 2012, 

408   However the difference is not statistically significant.
409   10th Consumer Markets Scoreboard, http://ec.europa.eu/consumers/

November 2013.

407   CEER, Status Review of Regulatory Aspects of Smart metering, 

consumer_evidence/consumer_scoreboards/10_edition/index_en.htm 
410   http://www.sloveniatimes.com/thermo-plant-tes-6-showcase-of-

September 2013.

catastrophic-corporate-governance

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in installed generation capacity by 2.4  GW in 2022. The 
plan also outlines a range of different investment options, 
including  the  commissioning  of  a  new  nuclear  reactor  in 
Krško.

7.  Security of supply 

Electricity

To  ensure  network  security,  the  transmission  grid  and 
electricity  distribution  networks  must  adhere  to  the  N-1 
criterion.  Network  security  is  dependent  on  its  import 
capacities to meet internal consumption demands.

The  adequacy  of  Slovenia’s  network  varies  significantly 
depending  on  seasonal  peaks,  with  the  winter  period 
highlighted as the critical period411. Summer reserve margins 
are expected to decrease from 10% in 2013 to 3% in 2020.

Gas

Gas  supply  in  Slovenia  is  entirely  dependent  on  its 
interconnections  with  neighbouring  countries  as  there  are 
no  gas  storage  facilities.  Nonetheless,  in  spite  of  extreme 
weather  conditions  at  the  beginning  of  2012,  all  customer 
service requirements were fulfilled.

Despite efforts in implementing the provisions mentioned in 
Regulation (EU) No 994/2010, amendments in the national 
legislation are needed to complete the new rules and 
regulations for security of gas supply.

Since June 2012, when intraday allocation mechanism was 
also  introduced  for  the  Italian  border,  two  explicit  auctions 
are held every day. Allocation of cross-border capacity 
is  carried  out  daily  by  implicit  auctions  within  the  market 
coupling mechanism of Slovenia and Italy.

In  terms  of  infrastructure  development,  the  interconnector 
with Hungary is expected to become operational in 2016. 
There are several electricity Projects of Common Interest 
under the guidelines for trans-European energy infrastructure 
planned  in  Slovenia  including  two  electricity  clusters  with 
a  high  voltage  transmission  line  between  Slovenia,  Croatia 
and Hungary and a high voltage transmission line between 
Slovenia and Italy. The Okroglo-Udine interconnection and 
HVDC line between Slovenia and Italy (PCI 3.20.1) is  not 
expected to be completed before 2022.

Gas

The Slovenian gas transmission network is interconnected 
with  the  gas  transmission  networks  of  Austria,  Italy  and 
Croatia.  Of  these,  the  Austrian  border  point  was  the  most 
congested  and  commercially  attractive  in  2012.  Network 
investments  in  2012  amounted  to  EUR  38  million  (almost 
50%  less  than  in  2011),  of  which  EUR  9  million  was 
granted by the European Union within the European Energy 
Programme for Recovery (total contribution for this project 
amounted  to  EUR  37  million)  for  the  construction  of  the 
Ceršak  –  Kidricevo  section  of  the  gas  pipeline  M1/1.  Two 
upgrades  of  the  transmission  network,  M2/1b  Rogaška 
Slatina−Trojane and M2/1c Trojane–Vodice, were completed 
in  2013.  Work  on  strengthening  the  Kidričevo  compressor 
station is ongoing.

There are several gas Projects of Common Interest, which 
Slovenia  is  involved  in,  including  the  LNG  terminal  in  Krk 
(HR), which is a security of supply asset for the region as 
well as several gas pipeline projects involving Italy, Croatia, 
and Hungary.

411   Considerations based on ENTSO-E’s Adequacy forecast report 
2013-2030, Scenario B. System’s adequacy is evaluated through 

a reserve margin indicator calculated as the ratio between 

Remaining Capacity, net of Adequacy Reserve Maring, and 

the Reliable Available Capacity. ENTSO-E, Scenario Outlook 

& Adequacy Forecast (SO&AF) 2013-2030,April 2013.

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S L O V E N I A   –  K E Y   I N D I C A T O R S

E L E C T R I C I T Y

G A S

Number of companies representing at least 95% 
of net power generation

Number of main power-generation companies

3

2

Number of entities bringing natural gas  
into country

Number of main gas entities

5

2

Market share of the largest power-generation company 55.2%

Market share of the largest entity bringing natural gas 90%

Number of electricity retailers

Number of main electricity retailers

13

8

Number of retailers selling natural gas to final customers

Number of main natural gas retailers

21

4

Switching rates (entire electricity retail market)

5.9%

Switching rates for gas (entire retail market)

8.6%

Regulated prices for households – electricity 

Regulated prices for non-households – electricity

HHI in power-generation market

HHI in electricity retail market

Electricity market value (1) (bn€)

Installed generation capacity (2011, MW)

Peak demand (MW)

Number of smart meters installed

No

No

4 738

1 575

1.161

3 268

2 100

N/A

Regulated prices for households – gas

Regulated prices for non-households – gas

HHI in gas supply market

HHI in gas retail market

Gas market value (1) (bn€)

No

No

5 868

4 186

0.432

Sources: Eurostat, CEER, National Regulatory Authority, EC calculations.

(1)   Market value is an estimation of the size of the retail electricity and gas markets. It is calculated using data on electricity  

and gas consumption in the household and non-household sectors (average bands) and annual average retail prices.

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Key issues

 → Slovakia should enhance the independence of national regulatory authority and ensure 
its  accountability.  Slovakia  should  promote  a  regulatory  framework  conducive  to 
investment in and integration of the electricity and gas markets, including by reviewing 
the  impact  of  price  regulation  and  changes  in  network  charges.  Currently  network 
distribution and transmission charges in Slovakia are among the highest in the EU. 

 → Slovakia should facilitate greater regional integration and strengthen interconnections 
with neighbouring countries in both gas and electricity networks. Market coupling with 
the Hungarian and the Czech day-ahead electricity markets is a positive development 
and such efforts should be continued. 

 → Slovakia should continue its efforts to diversify gas imports in order to foster 
security of supply and in order to address the concentration on the wholesale 
market. 

1.  General overview

F I G U R E S  1   A N D   2

Energy consumption in 2012 (16.7 Mtoe) was based largely 
on  natural  gas,  crude  oil  and  petroleum  products.  The 
share of renewables in gross final energy consumption was 
10.4%.412 Slovakia remained above its 2011/2012 interim 
trajectory  and  is  currently  on  track  to  achieve  its  2020 
renewables target of 14%.

The  biggest  share  in  the  power  generation  mix  in  2011 
(28.66 TWh) was nuclear (53.8%) and renewables (18.7% – 
mostly hydro). The share of natural gas increased in 2011 
compared to 2010 while the volume of power generated 
from solid fuels and oil power remained unchanged.

Cogeneration413 provided 24.5% of gross electricity generation 
in 2011, increasing considerably from 2010.414 

Final consumption of electricity in 2011 was 10.8 Mtoe and 
decreased  compared  to  2010.  The  consumption  of  natural 
gas by final consumers declined in 2012 to 54.2 TWh. The 
economic crisis boosted energy efficiency and reduced power 
prices in Slovakia.

Gross inland consumption mix 2008-2012

30% 

25% 

20% 

15% 

10% 

5% 

0% 

2008 

2009 

2010 

2011 

2012 

Solid fuels
Nuclear

Natural gas
Renewables

Crude oil and petroleum products
Other

Source: Eurostat

Gross electricity generation mix 2008-2012

70% 

60% 

50% 

40% 

30% 

20% 

10% 

0% 

412   Eurostat and  

2008 

2009 

2010 

2011 

2012 

Solid fuels
Nuclear

Natural gas
Renewables

Crude oil and petroleum products
Other

http://ec.europa.eu/energy/publications/doc/2014_pocketbook.pdf
413   The share of electricity produced in combined heat and power 

Sources:  EU energy in figures - “Statistical Pocketbooks 2012 and 2013”, 

European Commission

plants (CHP).

414   Eurostat.

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2.  Regulatory framework

3.  Wholesale markets

General

Electricity

In  July  2012,  Slovakia  adopted  laws  to  transpose  the 
Directives of the Third Energy Package into its national law. 
The main  purpose  of  the  adoption of  that  legislation  was 
the  further  liberalisation  and  harmonisation  of  the  rules 
governing the functioning of the energy market and ensuring 
compliance with the provisions of the third energy package. 
Some stakeholders have raised concerns with regard to the 
independence, transparency and accountability of the national 
regulatory  authority.  In  particular  concerns  were  raised  that 
decisions to substantially change network charges have been 
introduced without sound consultations and proper economic 
analysis  underpinning  the  decisions,  in  particular  without 
analysis  on  the  deterioration  on  the  investment  climate 
and the integration with neighbouring markets this decision 
may have. Network distribution and transmission charges in 
Slovakia are among the highest in the EU.415

National Energy Regulator

Energy regulation in Slovakia is undertaken by the Regulatory 
Office for Network Industries (“Úrad pre reguláciu sieťových 
odvetví”  –  URSO)  which  was  established  in  2001.  URSO 
employed 100 staff members in 2012 and its annual budget 
reached almost EUR 2.95 million. The laws transposing the 
Directives of the Third Energy Package do not  fully  ensure 
that  URSO  can  take  autonomous  decision  independently 
from the Ministry and the State Inspection and do not foresee 
that decisions taken be URSO have to be fully reasoned and 
justified.

Unbundling

SEPS unbundled in 2001 and as a result of unbundling, three 
vertically integrated companies were formed to provide 
electricity  distribution,  electricity  supply  and  services.  In 
2013  SEPS,  the  Slovakian  electricity  transmission  system 
operator,  was  certified  under  the  ownership  unbundling 
model by means of separate public bodies within the State.416 

Eustream  the  only  gas  transmission  system  operator  in 
Slovakia was certified as Independent Transmission System 
Operator (ITO) in 2013.416 SPP-distribúcia, the only operator 
of the gas distribution system, was legally unbundled from 
SPP in 2006. 

The  power  generation  market  is  highly  concentrated.  The 
largest  power  generating  company  (Slovenské  elektrárne) 
had a market share of almost 78% in 2011417. 

Trading  takes  place  mostly  through  bilateral  contracts. 
10% of total annual power production in Slovakia has been 
traded on short term day-ahead exchange platforms.418 The 
main power exchange in Slovakia is Power Exchange Central 
Europe (PXE). Slovakia is part of the Central Eastern Europe 
regional  market.  The  price  convergence  between  Slovakia, 
Czech  Republic,  and  Hungary  increased  from  11%  to  82% 
after  market  coupling  in  September  2012419.  In  2012, 
liquidity of Slovakian intraday market was just 0.04  TWh, 
indicating poor competition on the wholesale market. 

In  2013  an  obligation  for  electricity  producers  to  pay  a 
network  charge,  so-called  G-component  was  introduced. 
Furthermore  for  2013  and  2014,  the  Ministry  of  Economy 
has imposed obligations on the electricity producer Slovenké 
elektrárne,  on  the  transmission  system  operator  and  on 
electricity  distributors  and  suppliers  in  order  to  ensure  the 
production  and  supply  of  a  certain  amount  of  electricity 
from indigenous coal. These obligations cover 6.7% of total 
domestic consumption of electricity in Slovakia in 2012. The 
corresponding electricity price should be maintained at the 
level determined by the Office for the Regulation of Network 
Industries. 

Gas

Concentration  of  the  gas  wholesale  market  remained  very 
high in 2012. SPP withholds almost 70% of gas supply and 
it  imports  gas  within  a  long-term  contract  with  Gazprom. 
The contractual price SPP has to pay to Gazprom has been 
re-negotiated and lowered in 2014 in order to better reflect 
the lower prices on spot markets. 98% of gas consumed in 
Slovakia comes from Russia418. On the Slovak wholesale gas 
market no major trading activity takes place however some 
sporadic over-the-counter deals take place on border points, 
the Slovak virtual trading point and the domestic points. 

In  2012  transit  volumes  reached  56.5  bcm  compared  to 
5.2  bcm  of  domestic  consumption  and  transit  capacity  of 
90 bcma. Transit volumes of natural gas from Russia to the 
EU  through  Slovakia  dropped  from  80%  of  total  Russian 
flows to Europe a few years ago to about 54% in 2013 due 
to the launch of Nord Stream. In the meantime, gas has been 

415   The EC, Energy prices and costs report of 17.3.2014, 

SWD(2014) 20 final/2.

416   After the European Commission has issued its opinion 
of 09.8.2013 pursuant to Article 3(1) of Regulation 

417   Eurostat.
418   URSO, Annual report, 2013.
419   ACER/CEER, Annual Report. on the Results of Monitoring  
the Internal Electricity and Natural Gas Markets in 2012, 

(EC) No 715/2009 and Article 10(6) of Directive 2009/73/EC.

November 2013.

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S L O V A K I A

F I G U R E S  3   A N D   4

Electricity price change by component 2008-2013 (in € cent/kWh)

Natural gas price change by component 2008-2012 (in € cent/kWh)

H O U S E H O L D S

I N D U S T R Y

H O U S E H O L D S

I N D U S T R Y

18 

16 

14 

12 

10 

8 

6 

4 

2 

0 

6 

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4 

3 

2 

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2008

2013

2008

2013

2008

2012

2008

2012

Taxes+Levies 

Networks

Energy+Supply

Taxes+Levies 

Networks

Energy+Supply

Source: Eurostat

Sources: EC, EPCR metadata

entering Slovakia in reverse flow from the Czech Republic via 
Lanzhot  cross-border  point.420  In  2013  the  network  charge 
for  entering  the  Slovak  gas  transmission  system  from  the 
Czech Republic increased by 300% and from Austria by 50% 
compared to tariffs in force in 2012.

The  numbers  of  consumers  switching  power  providers  are 
increasing every year, which is a good sign for energy market 
liberalisation. 57 307 consumers switched in 2012 against 39 762 
in 2011, but the total number of switches remains relatively low. 

In 2013, Slovakia, Hungary, Czech Republic and Poland adopted 
a “Road Map towards the regional gas market among Visegrad 
4 countries”421. 

4.  Retail markets

Electricity

The  number  of  licenced  power  retailers  in  the  whole  retail 
market has been constantly growing and it reached 407 at 
the end of 2012. 19 retailers provide electricity to household 
consumers  at  the  end  of  2012422.  Despite  the  growing 
number  of  competitors  in  the  power  supply  market,  prices 
for household consumers and small and medium companies 
remain regulated. Deregulation of prices for the commercial 
sector  in  2012  was  only  temporary  and  URSO  decided  to 
revert to previous regulation due to increase in power prices 
for small and medium undertakings.

In 2013, electricity prices for household and industrial consumers 
decreased compared to 2012423. Network charges are among the 
highest in all of the EU member states.424 

According to URSO, switching was not beneficial in every case, 
as some power suppliers failed to set prices in a transparent 
manner. Irregularities related mostly to invoicing issues. As a 
result, in 2013 URSO returned to regulating prices for small 
and medium commercial users.

A rollout of smart metering in Slovakia is still being discussed. 
Distribution system operators install smart meters on a 
voluntary basis, usually for energy-intensive customers.

Gas

In 2012, 74% of all inhabitants in Slovakia had access to 
gas425. Slovakia, after the Netherlands, is the second most 
gasified country of the EU. The demand for gas dropped by 
5% between 2012 and 2011425 due to decreasing power 
demand displaced by the increasing use of renewables in 
electricity production.

In Slovakia the distribution system is balanced separately 
from  the  transmission  system  which  creates  a  potential 
barrier for market players to enter the retail market.

Retail market concentration is high. In 2012 there were 
23  gas retailers426 in the entire retail market, of which the 
dominant  supplier  is  Slovenský  plynárenský  priemysel,  SPP 
(70% share of gas market), followed by RWE Gas Slovensko 
(18.7%). 

420   ICIS Heren, European Gas Markets, March 2014.
421   Road Map towards the regional gas market among  

Visegrad 4 countries, June 2013.

422   CEER database.
423   Eurostat.
424   The EC, Energy Prices and Costs Report, 2014.

425   ACER’s Market Monitoring Report.
426   CEER database.

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Gas prices for household consumers increased between 2008 
and 2012. Gas prices for industrial users decreased over the 
same period because their energy component decreased by 
almost 20%.427 Prices for households remained regulated. 

6.  Infrastructure

Electricity

The  number  of  household  consumers  who  switched  gas 
suppliers  in  2012  reached  over  131 000  (9.25%  of  all  the 
households)  and  was  six  times  bigger  than  in  2011.  The 
number of switches is still relatively low.

5.  Consumers

Consumers’ overall assessment of the retail electricity and 
gas markets is above the EU average (78.1 points compared 
to 72.0 and 79.2 compared to 74.1), corresponding in both 
cases to 5th place EU-wide. Both markets are also assessed 
above  the  average  of  31  domestic  services  markets  (13th 
and 10th place, respectively). They score better than the EU 
average on all indicators, with the exception of consumer 
complaints  (which  are  more  numerous  than  in  other  EU 
countries)  and  in  the  case  of  electricity  market  switching 
rates are also slightly lower than the EU average. 428

In 2012, the number of complaints submitted to URSO by 
the  gas  and  electricity  entities  increased  fourfold.  In  2012, 
automatic compensation payments for the violation of quality 
standards for energy services were introduced, but were used 
only  occasionally.  Customers  reported  over  200  potential 
infringements  of  electricity  and  gas  market  rules  and  the 
majority  of  complaints  related  to  switching.  For  better 
consumer empowerment, URSO has a power price comparison 
tool and energy price calculator on their website429.

A  definition  of  “vulnerable  consumer”  was  introduced  in 
2012.  Its  scope  was  extended  from  the  previous  definition 
including only households, to a broader one also covering 
small  businesses.  Even  though  Slovakia  has  defined 
“vulnerable consumers” and “energy poverty”, there are no 
specific support measures available for vulnerable customers 
and consumers in energy poverty.

An  important  part  of  energy  infrastructure  investment  in 
Slovakia involves funds from BIDSF (Bohunice International 
Decommissioning  Support  Fund).  Almost  EUR  150  million 
has been made available to private companies and housing 
associations  for  implementation  of  energy  efficiency  and 
renewable energy projects430. 

Slovakia  is  interconnected  to  Czech  Republic,  Hungary  and 
Poland.  The  Slovak  transmission  system  is  affected  by  the 
loop  flows  which  originate  most  frequently  from  Germany 
and  are  passed  through  Poland  into  Czech  Republic  and 
Slovakia.  Significant  congestions  also  occur  on  the  Slovak-
Hungarian  border.  Further  interconnections  with  Hungary 
are planned, three projects having been selected as Projects 
of  Common  Interest  (PCIs)  under  the  guidelines  for  Trans-
European  Energy  Infrastructure.  Adding  to  these,  the 
reinforcement of the national grid is envisaged through the 
construction  of  two  internal  lines  projects  that  also  have 
PCI  status.  The  importance  of  the  PCIs  implementation  is 
reflected  in  the  increase  of  the  electricity  interconnection 
level  (import  capacity/net  generation  capacity)  from  37% 
nowadays to 54% after their implementation. Moreover, the 
impact is even more visible for neighbouring countries, such 
as Hungary, increasing from 15-30% to values above 30% 
on the 2020+ time horizon.

The construction of two additional units at Mochovce power 
plant was started in 2008.

Gas

A bi-directional high pressure gas pipeline interconnecting 
the  gas  systems  of  Hungary  and  Slovakia  has  been 
constructed  and  is  expected  to  start  operating  very  soon. 
The  project  is  co-financed  through  the  European  Energy 
Programme for Recovery and has also acquired PCI status. 
The  Polish–Slovak  interconnection,  also  a  PCI,  is  currently 
being  developed.  These  projects  will  diversify  the  routes 
of  gas  supply  pipelines,  running  across  Visegrad  group 
countries,  and  connect  two  LNG  terminals  in  Poland  and 
Croatia. 

427   The EC, Energy Prices and Costs report, 2014.
428   10th Consumer Markets Scoreboard, http://ec.europa.eu/

consumers/consumer_evidence/consumer_scoreboards/10_

edition/index_en.htm

429   http://www.urso.gov.sk:8088/CISRES/Agenda.nsf/

KalkulackaElektrinaNewWeb

430   IEA, Energy Policy Highlights, 2013. 

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7.  Security of supply

Electricity

Gas

Security of supply in Slovakia is expected to be strengthened 
considerably  after  the  two  additional  units  at  Mochovce 
nuclear power plant, each of 440 MW installed capacity, are 
commissioned. 

Slovakia  suffers  from  unscheduled  electricity  loop  flows 
from  Germany,  threatening  the  secure  grid  operation  and 
cross-border wholesale trade. To mitigate the loop flows 
Slovakia reconfigurated its border substations. It helped 
to  restore  the  N-1  security  principle,  but  also  increased 
losses in the transmission system. Slovakia has considered 
installing phase shift transformers. This problem could also 
be alleviated by increased interconnecting capacity. 

S L O V A K I A   –  K E Y   I N D I C A T O R S

Natural gas is currently the most significant energy source 
in Slovakia and roughly 98% of domestic gas consumption 
is covered by import under the long-term contracts between 
SPP  and  Gazprom.  The  gas  supply  disruption  of  2009 
was an important lesson that Slovakia needs to consider 
diversifying  its  energy  portfolio.  Gas  storage  capacities 
have been increased and reverse flow at the Western border 
interconnectors  has  been  enabled.  Ongoing  investment  in 
gas  interconnecting  infrastructure  will  open  new  directions 
for gas import to Slovakia.

E L E C T R I C I T Y

G A S

Number of companies representing at least 95% 
of net power generation

Number of main power-generation companies

11

1

Number of entities bringing natural gas  
into country

Number of main gas entities

8

3

Market share of the largest power-generation company 78.9%

Market share of the largest entity bringing natural gas 61.8%

Number of electricity retailers

Number of main electricity retailers

Switching rate

Regulated prices for households – electricity 

Regulated prices for non-households – electricity

HHI in power-generation market

HHI in electricity retail market (domestic)

Electricity market value (1) (bn€)

Installed generation capacity (MW, 2011)

Peak demand (MW)

Number of smart meters installed

71

4

5%

Yes

Yes

N/A

N/A

2.662

8 056 

4 395

N/A

Number of retailers selling natural gas to final customers 22

Number of main natural gas retailers

Switching rate for gas (household consumers)

Regulated prices for households – gas

2

11.56%

Yes

Regulated prices for non-households – gas

Yes for SMEs

HHI in gas supply market (domestic)

HHI in gas retail market (domestic)

Gas market value (1) (bn€)

N/A

N/A

1.135

Sources: Eurostat, CEER, National Regulatory Authority, EC calculations.

(1)   Market value is an estimation of the size of the retail electricity and gas markets. It is calculated using data on electricity  

and gas consumption in the household and non-household sectors (average bands) and annual average retail prices.

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Key issues

 → Currently, Finland is reliant on electricity imports during peak demand periods. It will 
continue to be reliant until the 1 600 MW nuclear power plant, Olkiluoto 3, is complete. 
It is expected that the demand for reserve and balancing power will increase in the 
medium term.

 → Finland reached 97% smart metering at the end of 2013, with hourly settlement down 
to domestic level. Plans are in place for greater demand response by consumers and a 
common electricity retail market with Sweden, Norway and Denmark.

 → Finland should step up the development of cross-border gas connection to diversify 
supply sources and continue to promote competition through better integration 
of  the  Baltic  energy  markets.  A  decision  on  the  location  of  the  LNG  terminal  and 
BalticConnector should be taken urgently to improve gas security of supply and 
improve market functioning. Currently, Finland is only connected to Russia. 

1.  General overview

Finnish national gross energy consumption in 2012 amounted 
to  34.1  Mtoe  of  which  renewable  sources  (mostly  biomass 
and  hydropower)  provided  34.3%431,  showing  good  progress 
towards the renewable energy target of 38% for 2020. 

Finland’s  electricity  generation  was  73.5  TWh  in  2011,  of 
which renewables, nuclear and fossil fuels each  accounted 
for roughly one third. There was a significant decline of 9% 
in electricity generation from 2010. This was mainly  due to 
mild weather, the waning growth of manufacturing and higher 
hydropower imports from Norway and Sweden. Finland has 
a relatively high share of combined heat and power (CHP) 
capacity that represented 36.2% of gross generation in 2011. 
The Finnish power production mix is illustrated in Figure 2.

F I G U R E S  1   A N D   2

Installed electricity generation capacity in Finland was 
16 947 MW432 at the end of 2012. The peak demand in that 
year was 14 433 MW and occurred in early February.

2.  Regulatory framework

National Energy Regulator

The  Energy  Market  Authority  was  renamed  the  Energy 
Authority  in  the  beginning  of  2014.  This  marked  the 
introduction of new roles in promoting energy efficiency, 
counselling  and  communication,  ecological  design  and 
energy  labelling.  By  the  end  of  2012,  the  Energy  Market 
Authority employed 66 people and had an annual budget of 
EUR 6.3 million. 

Gross inland consumption mix 2008-2012

Gross electricity generation mix 2008-2012

35% 

30% 

25% 

20% 

15% 

10% 

5% 

0% 

45% 

40% 

35% 

30% 

25% 

20% 

15% 

10% 

5% 

0% 

2008 

2009 

2010 

2011 

2012 

2008 

2009 

2010 

2011 

2012 

Solid fuels
Nuclear

Natural gas
Renewables

Crude oil and petroleum products
Other

Solid fuels
Nuclear

Natural gas
Renewables

Crude oil and petroleum products
Other

Source: Eurostat

Sources:  EU energy in figures - “Statistical Pocketbooks 2012 and 2013”, 

European Commission

431   Eurostat.

432   http://www.nordicenergyregulators.org/wp-content/
uploads/2013/02/Nordic_Market-report_2013.pdf

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F I N L A N D

Unbundling

The  electricity  transmission  system  operator  Fingrid  Oyj  was 
certified in accordance with the model of ownership unbundling 
within the state in 2014 following the sale of shares by Fortum 
Power and Heat Oy and Pohjolan Voima Oy (PVO) to the Finnish 
State. 52 of the 83 DSO operators in Finland were legally declared 
unbundled in July 2013. Finland was granted a derogation from 
the obligation to liberalise its natural gas market, as long as the 
country only has one main supplier of natural gas and is not 
connected  to  the  European  gas  network433.  This  situation  will 
change once a regional Baltic LNG Terminal becomes operational. 

3.  Wholesale markets

Electricity

The  generation  market  is  dominated  by  two  companies: 
Fortum  and  Pohjolan  Voima.  Together  these  companies 
owned  50.5%  of  the  production  capacity  in  2012.  Apart 
from  these  companies,  in  2012,  there  were  approximately 
120 companies producing electricity from 550 power plants.

Finland  forms  an  integrated  wholesale  electricity  market 
with the Nordic and Baltic countries. Physical day-ahead and 
intraday trading takes place in the Nord Pool Spot434 market. 
62%  of  the  Finnish  consumption  was  traded  through  Nord 
Pool  Spot  in  2012  and  the  rest  via  bilateral  agreements. 
Since 4 February 2014 the market is coupled to the Central 
Western and North Western European market.435

F I G U R E  3

Electricity price change by component 2008-2013 (in € cent/kWh)

H O U S E H O L D S

I N D U S T R Y

18 

16 

14 

12 

10 

8 

6 

4 

2 

0 

2008

2013

2008

2013

Taxes+Levies 

Networks

Energy+Supply

Source: Eurostat

There has been little congestion within Finland, but insufficient 
transmission capacities between countries have led to price  
differences. For example, prices between Finland and Sweden 
diverged 53% of the time in 2012. Average wholesale electricity 
price fell from EUR 49.30 in 2011 to EUR 36.64 in 2012 due 
to  the  good  hydro  situation  and  reduced  consumption. 
Net  imports  accounted  for  20.5%  of  the  total electricity 
consumption  in  2012.  However,  imports  from  Russia  have 
decreased since 2011 when the Russian market introduced 
a capacity charge on the price of exported electricity.

Gas

Finland  does  not  produce  natural  gas,  but  imports  gas 
exclusively from Russia. Gasum Oy acts as the sole importer 
and transmission system operator on the basis of long term 
supply contracts. Gasum Oy also operates Kaasupörssi Oy, a 
natural gas exchange, for short term products and a bilateral 
secondary market where large consumers can make offers.

4.  Retail markets

Electricity

There  is  no  retail  price  regulation  in  Finland.  Consumers 
can  select  their  retail  supplier  freely.  The  annual  switching 
rate of suppliers has settled at a level of 7-8%. There were 
approximately 74 retail suppliers of which 44 offered their 
products nation-wide in 2012. Market concentration at retail 
level was moderate as there were four retail suppliers with 
a  market  share  above  5%.  The  market  share  of  the  three 
largest retail suppliers has been around 35-40%. 

One of the strengths of the Finnish retail market is smart 
metering436. The rate of smart metering reached 97% by the 
end of 2013. Balance is settled hourly down to domestic 
level.  Implementation  of  supply  contracts  and  end-user 
applications which encourage demand response is expected 
to increase in the following years.

Distribution tariffs are on the rise due to the aging electricity 
grid and the increased need for network investments to comply 
with  reliability  requirements.  Investments  in  distribution 
networks increased in 2012 (+10% compared to 2011). 

Retail  prices  have  sustained  a  steady  growth  since  2006 
with  notable  increases  in  taxes  in  2011.  Wholesale  energy 
prices are reflected in the retail prices.

433   http://www.tem.fi/en/energy/natural_gas_market
434   Nord Pool Spot is the common power market for the Nordic  

and Baltic countries, http://www.nordpoolspot.com

435   http://www.nordpoolspot.com/How-does-it-work/European-

436   http://www.epsi-finland.org/images/stories/reports/Energy/

Integration/NWE/

electricity_2013_finland_press_release.pdf

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F I N L A N D

Gas

6.  Infrastructure

Market concentration at the retail level was high at the end 
of 2012, as gas retailers in Finland have a monopoly within 
their  own  distribution  network.  There  were  23  natural  gas 
retail suppliers, most of whom only had a dozen customers. 
Natural  gas  retail  prices  for  industrial  users  are  shown  in 
Figure 4, where it is also possible to see that the price of 
natural gas has increased during the last few years.

5.  Consumers

Finnish consumers rate the performance of their retail 
electricity  market  above  the  EU  average  (77.5  points 
compared to 72.0), corresponding to 7th place EU-wide. The 
market  has  seen  an  increase  of  2.8  points  between  2012 
and 2013. It scores better than EU average on all indicators 
with  the  exception  of  comparability  and  complaints  and  is 
assessed particularly well (3rd highest in the EU) on overall 
consumer satisfaction, choice of providers and trust. Results 
show a small but steady year on year increase in score on 
trust since 2010. 437

Electricity  retail  customers  are  satisfied  with  the  ease  by 
which  they  can  switch  supplier  and  the  clarity  of  billing438. 
The Energy Market Act (588/2013) specifies rules for supplier 
switching, information on customer bills, metering, meter 
reading  and  stipulates  a  standard  compensation  payable 
to customers for power outages. A price comparison tool 
provided by the Energy Authority has been used actively439. 
There is no charge to change supplier and customers have 
rights to their own consumption data free of charge.

Social assistance is a last-resort form of income security 
in  Finland.  It  is  based  on  the  client’s  essential  expenses, 
which include electricity and heating bills440. The  Electricity 
Market Act (588/2013, §103) guarantees customers with a 
reasonable notice to allow them time with bills while waiting 
for social assistance for households heated by electricity 
during the winter.

Disputes  between  consumers  and  enterprises  can  either 
be  taken  to  a  general  court  of  law  or  solved  through  the 
Consumer Disputes Board. The Board does not charge fees 
and its written decision is a recommendation.

The Finnish authorities should ensure a proper and timely 
adoption  of  the  measures  stemming  from  the  TEN-E 
Regulation, including the establishment of the one-stop-shop 
for Projects of Common Interest (PCIs) (due by 16 November 
2013),  and  other  measures  foreseen  for  2014  and  2015, 
including  the  publication  of  the  manual  on  the  permit 
granting process for project promoters, and the adoption of 
legislative  and  non-legislative  measures  streamlining  the 
environmental assessment procedures.

Electricity

Finland is connected to Sweden, Norway, Estonia and Russia. 
The total import capacity of electricity at the end of 2012 
was  4 650  MW,  which  is  about  27.4%  of  the  production 
capacity.  On  the  Finnish-Russian  connection  currently  only 
importing  is  possible,  but  exporting  (up  to  350  MW)  has 
become technically possible during the first half of 2014.

A  second  submarine  cable  between  Finland  and  Sweden, 
Fenno-Skan 2, with capacity of 800 MW was commissioned 
in  2011,  but  overall  connection  capacity  between  Finland 
and  Sweden  is  80%  full.  Another  100  MW,  that  connects 
mainland Finland through Åland to Sweden, is planned 
for 2015. Furthermore, a new 650  MW cable to Estonia, 
Estlink2,  started  operation  at  the  beginning  of  2014.  The 
new  cable  triples  the  interconnection  capacity  and  has 
improved  connection  with  the  Baltic  States.  The  Electricity 
Market Act (588/2013) includes new reliability requirements. 
This will result in significant future investment requirements 
in rural areas.

Gas

The  Finnish  natural  gas  market  is  isolated,  as  it  is  only 
connected to Russia. The Baltic Energy Market Interconnection 
Plan (BEMIP), launched by the Commission in 2008, examines 
the options of diversifying gas supplies in the region. The plan 
points out that the most efficient option is the development of 
the of LNG facilities together with the necessary interconnectors. 

Finland in cooperation with Estonia should make its best 
endeavours to develop the gas interconnector the BalticConnector 
which  is  identified  as  a  Project  of  Common  Interest  under  the 
guidelines for trans-European energy infrastructure.

437   10th Consumer Markets Scoreboard, http://ec.europa.eu/

consumers/consumer_evidence/consumer_scoreboards/10_

edition/index_en.htm 

438   http://www.epsi-finland.org/images/stories/reports/Energy/

electricity_2013_finland_press_release.pdf

439   Energy Market Authority, National report 2013 to the Agency 
for the Cooperation of Energy Regulators and to the European 

Commission: Finland, 12 July 2013.

440   http://www.stm.fi/en/income_security/social_assistance

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F I N L A N D

7.  Security of supply

Electricity

Gas

In 2012 there were no interruptions in gas supply to Finland. 
A substantial part of the gas consumption can be substituted 
with  alternative  fuels441.  The  National  Emergency  Supply 
Agency acts as the responsible authority in defining measures 
to safeguard security of gas supply442. Investments into LNG 
terminals in the region and the BalticConnector would help 
secure and diversify the gas supply.

Until  2016  the  available  domestic  production  capacity  will 
not be able to cover winter peak demand441. The resulting 
deficit must be met by imports. A new nuclear power plant, 
Olkiluoto  3  by  Teollisuuden  Voima,  with  a  capacity  of 
1 600 MW is due to be commissioned between 2016-2020 
and remove most of the capacity deficit.

The  Capacity  Reserves  Act  (117/2011)  is  designed  to 
ensure  the  balance  between  supply  and  demand.  Strategic 
reserves which are not allowed to participate and bid on the 
commercial market, have been defined.

F I N L A N D   –  K E Y   I N D I C A T O R S

E L E C T R I C I T Y

G A S

Number of companies representing at least 95% 
of net power generation

Number of main power-generation companies

30

4

Number of entities bringing natural gas  
into country

Number of main gas entities

1

1

Market share of the largest power-generation company 25.6%

Market share of the largest entity bringing natural gas 100%

Number of electricity retailers

Number of main electricity retailers

Switching rates (entire electricity retail market)

Regulated prices for households – electricity 

Regulated prices for non-households – electricity

HHI in wholesale market

HHI in electricity retail market

Electricity market value (1) (bn€)

Installed generation capacity (MW)

Peak demand (MW)

Number of smart meters installed (December 2013)

~70

3

7.7%

No

No

1 102 

N/A

6.979

16 947

14 433

97%

Number of retailers selling natural gas to final customers

Number of main natural gas retailers

Switching rates for gas (entire retail market)

Regulated prices for households – gas

Regulated prices for non-households – gas

HHI in gas supply market

HHI in gas retail market

Gas market value (1) (bn€)

23

1

N/A

No

Yes

N/A

N/A

N/A

Sources: Eurostat, CEER, National Regulatory Authority, EC calculations.

(1)   Market value is an estimation of the size of the retail electricity and gas markets. It is calculated using data on electricity  

and gas consumption in the household and non-household sectors (average bands) and annual average retail prices.

441   Energy Market Authority, National report 2013 to the Agency 
for the Cooperation of Energy Regulators and to the European 

Commission: Finland, 12 July 2013.

442   http://www.nesa.fi/

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N
E
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W
S

Key issues

 → The Swedish electricity market is integrated in the Nordic market and works well. 
However, congestion management and transparency provisions for cross-border 
exchanges  give  rise  to  some  concerns.  The  Swedish  TSO,  Svenska  Kraftnät,  has 
intensified the investments in the grid to further develop the market and prepare for 
an increased share of renewable electricity. 

 → Since  2009,  the  Swedish  DSOs  are  obliged  to  provide  monthly  meter  readings  to 
households  and  hourly  readings  to  industrial  customers.  This  has  resulted  in  a  full 
roll-out of smart meters.

 → Diversifying gas supply sources would encourage more competition and improve 
Sweden’s energy security. Several new LNG-stations are therefore planned in 
Sweden including one of strategic importance for the Baltic market.

1.  General overview

In  2012,  the  total  energy  consumption  reached  49.8  Mtoe 
and  was  satisfied  mostly  by  solid  fuels,  nuclear,  and  oil 
products443 444 445. Sweden’s target for 2020 is to have 49%  
of renewables in gross final energy consumption. The country 
has  already  achieved  its  national  2020  RES  target  as  the 
renewables share improved from 42.4% in 2006 to 51.0% 
in 2012443; this calls for a higher goal for 2020. 

F I G U R E S  1   A N D   2

The  power  generation  mix  in  2011  (166.6  TWh)  was 
dominated by renewable and nuclear sources443. The share 
of cogeneration in electricity production was 10% in 2011443, 
showing a significant increase compared to the level of 6.7% 
in 2005446.

Gross inland consumption mix 2008-2012

Gross electricity generation mix 2008-2012

40% 

35% 

30% 

25% 

20% 

15% 

10% 

5% 

0% 

70% 

60% 

50% 

40% 

30% 

20% 

10% 

0% 

2008 

2009 

2010 

2011 

2012 

2008 

2009 

2010 

2011 

2012 

Solid fuels
Nuclear

Natural gas
Renewables

Crude oil and petroleum products

Solid fuels
Nuclear

Natural gas
Renewables

Crude oil and petroleum products
Other

Source: Eurostat

Sources:  EU energy in figures - “Statistical Pocketbooks 2012 and 2013”, 

European Commission

443   Eurostat.
444   http://www.energimyndigheten.se/Global/Engelska/Facts%20

and%20figures/Energy_in_sweden_2012.pdf

445   http://epp.eurostat.ec.europa.eu/cache/ITY_OFFPUB/KS-

446   ACER, http://www.acer.europa.eu/Official_documents/Acts_of_
the_Agency/Publication/ACER%20Market%20Monitoring%20

DK-13-001/EN/KS-DK-13-001-EN.PDF

Report%202013.pdf

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S W E D E N

2.  Regulatory framework

National Energy Regulator

The Swedish regulator, Energy Market Inspectorate (Ei), has 
been in operation since 2008, employing 100 staff with an 
annual budget of around EUR  11  million447. Despite being 
an agency administratively attached to the Ministry of 
Enterprise, Energy and Communication, it is an independent 
regulatory authority.

Unbundling

Svenska Kraftnät is the Transmission System Operator (TSO) 
for electricity, and Swedegas for gas. Both TSOs have been 
certified under the ownership unbundling model. Baltic Cable 
has  so  far  not  been  certified.  EI  should  cooperate  with  the 
Germany regulator Bundesnetzagentur to ensure compliance 
of this cable with the unbundling requirements. In electricity, 
171  Distribution  System  Operators  (DSO)  are  functionally 
unbundled, and in gas, five.

price on Nord Pool Spot’s day ahead bidding market in four 
Sweden’s bidding areas in 2012 was around EUR 32.5/MWh. 
In terms of liquidity, volumes traded on Nord Pool Spot are 
the highest on European power exchanges. Swedish volumes 
reached 131 TWh, 94% of national electricity consumption.

Gas

Sweden does not produce natural gas. In 2012, it imported 
all of its requirements, about 1.5 bcm, through the pipeline 
from  Denmark.  Sweden  has  around  37 000  end-users,  of 
whom approximately 3 600 are business customers and the 
remainder  domestic.  At  wholesale  level,  two  operators  are 
active, E.ON Sverige and Dong Energy. There is no wholesale 
market  hub  as  all  gas  is  imported.  To  gain  access  to  the 
Swedish market, a supplier needs to acquire transmission 
capacity on the Danish interconnector. There is currently no 
congestion on the grid, either nationally or in the import link 
from Denmark.

3.  Wholesale markets

Electricity

4.  Retail markets

Electricity

The Swedish wholesale power market is part of the integrated 
Nordic power market. In 2012, electricity production was 
dominated by three companies, Vattenfall, Fortum and E.ON, 
together  controlling  79%  of  the  generation448.  However, 
due to the connection with Nord Pool, the actual number of 
players active on the wholesale market is higher. The three 
incumbents  have  joint  ownership  of  nuclear  power  plants, 
and the Swedish Competition Authority is concerned by the 
inherent  risk  of  information  being  shared  between  sites, 
diminishing confidence in a functioning market. This problem 
has  been  addressed  by  the  energy  regulator,  which  forced 
the owners of nuclear power stations to agree on common 
ethical  rules.  However,  the  risks  arising  from  links  among 
major  competing  producers  still  remain  and  the  Authority 
should  continue  to  monitor  the  situation,  intervening  when 
necessary.  Nord  Pool  Spot  is  the  common  Nordic  market 
place  with  which  the  Swedish  wholesale  power  market  is 
integrated and where three-quarters of Nordic electricity is 
traded. New market coupling interconnections between the 
Continent  and  Nordic  countries  (Baltic  Cable  and  SwePol 
Link) are likely to increase continental influence on the Nord 
Pool  system  price.  This  is  seen  as  the  first  step  towards 
Europe widemarket integration. The average wholesale 

The same three incumbents, Vattenfall, Fortum and E.ON, in 
the wholesale market hold 42% of the retail market. Unlike 
the wholesale power market the retail market is national in 
scope. In 2012, there were 121 retail electricity suppliers, 
though smaller players have occasionally found it difficult to 
enter the market449. Switching of suppliers is relatively high. 
Around 10% of domestic customers switched their electricity 
supplier  in  2012  and  a  further  27%  re-negotiated  their 
contract with their current supplier. Thus, 37% of domestic 
customers  took  an  active  part  in  the  retail  market  during 
2012. The wholesale price had a significant influence on the 
retail price, neither one being regulated.

By  2009,  Swedish  DSOs  were  obliged  to  provide  monthly 
meter readings to household customers and hourly readings 
to  commercial  and  industrial  customers.  This  resulted  in 
practically a full roll-out of smart meters, enabling remote 
readings. However, some meters are not suitable for hourly 
readings without additional investment, preventing demand 
response services. Since October 2012, DSOs are obliged to 
provide hourly meter readings to households requesting them.

447   http://ei.se/sv/nyhetsrum/nyheter/nyhetsarkiv/nyhetsarkiv-2012/

extra-pengar-till-ei-i-regeringens-budget/

448   Ei, National Report on the Swedish electricity and natural gas 

markets 2012, June 2013, http://www.ceer.eu/portal/page/portal/

EER_HOME/EER_PUBLICATIONS/NATIONAL_REPORTS/National%20

Reporting%202013/NR_En/C13_NR_Sweden-EN.pdf

449   Ei, National Report on the Swedish electricity  
and natural gas markets 2012, June 2013. 

4

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F I G U R E S  3   A N D   4

Electricity price change by component 2008-2013 (in € cent/kWh)

Natural gas price change by component 2008-2012 (in € cent/kWh)

H O U S E H O L D S

I N D U S T R Y

H O U S E H O L D S

I N D U S T R Y

S W E D E N

25 

20 

15 

10 

5 

0 

14 

12 

10 

8 

6 

4 

2 

0 

2008

2013

2008

2013

2008

2012

2008

2012

Taxes+Levies 

Networks

Energy+Supply

Taxes+Levies 

Networks

Energy+Supply

Source: Eurostat

Sources: EC, EPCR metadata

Gas

In  2012,  there  were  six  natural  gas  suppliers450.  The  three 
largest companies, E.ON, Dong Energy and Goteborg Energi, 
held  around  85%  of  the  market.  The  Swedish  gas  retail 
market  consists  of  around  33 400  domestic  customers  in 
South-Western Sweden. It has been a free market since 2007. 
During  2012,  157  of  these  households  switched  suppliers, 
44%  fewer  than  in  the  previous  year,  and  about  0.5%  of 
domestic customers450. This may be due to the small size of 
the gas market, which does not incentivise competition. End-
user prices are not regulated. Gas prices for final consumers 
moved in line with global gas and oil prices. Both households 
and industry pay high taxes, amounting to almost half the 
retail price. 

5.  Consumers

Consumers’ overall assessment of retail electricity market 
is  slightly  above  the  EU  average  (73.5  points  compared  to 
72.0451, corresponding to 14th place EU-wide), and equal to 
the  average  of  31  domestic  services  markets  (18th  place). 
The  market  has  seen  a  considerable  increase  in  score 
(7.4  points)  since  2012  (which  represents  the  highest  and 
4th highest increase domestically and EU-wide, respectively). 
The  choice  of  providers  records  the  highest  EU  score 
and  switching  rates  are  well  above  the  average;  yet  the 
comparability  of  offers  is  assessed  as  poor.  The  incidence 

of problems reported in the electricity retail market is lower 
than the EU average but those who encounter a problem are 
more likely to complain. 452 

In 2008, Ei launched an online electricity price comparison 
site,  which  enables  consumers  to  compare  prices,  terms, 
and  conditions  for  all  Swedish  suppliers.  For  gas,  there 
is  no  single  price  comparison  site.  Electricity  and  natural 
gas consumers may report disputes with companies to the 
National  Board  for  Consumer  Disputes  (named  Allmänna 
reklamationsnämnden, ARN). ARN is a public authority which 
adjudicates in disputes between customers and companies. 
Since  2011,  there  is  a  definition  of  vulnerable  consumers 
within  the  national  legislation.  This  category  of  consumer 
is  protected  in  the  Swedish  electricity  and  gas  markets 
by  social  legislation  in  that  the  consumer  has  the  right  to 
receive  assistance  with  their  payment  of  electricity  and 
natural gas supplies.

6.  Infrastructure

The  Swedish  Energy  Markets  Inspectorate  has  been 
designated as National Competent Authority responsible 
for facilitating and coordinating the permit granting process 
for  projects  of  common  interest  in  accordance  with  the 
provisions of the TEN-E Regulation (‘one-stop shop’).

450   Ei, National Report on The Swedisch electricity  
and natural gas markets 2012, June 2013.

452   10th Consumer Markets Scoreboard, http://ec.europa.eu/

consumers/consumer_evidence/consumer_scoreboards/10_

451   However the difference is not statistically significant.

edition/index_en.htm

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S W E D E N

Electricity

Gas

Since Sweden has no national production of natural gas, it 
is completely dependent on import. Interconnected only to 
Denmark,  Sweden  is  vulnerable  to  gas  supply  disruption. 
One possible route for diversification was investigated 
through the Skanled pipeline running from Norway, but there 
are currently no plans to implement this pipeline. Sweden 
is  currently  exempted  from  the  N-1  obligation  set  out  by  
Regulation  (EU)  No  994/2010  concerning  measures  to 
safeguard security of gas supply. Sweden has no significant 
storage facilities, and relies on storage, mainly in Denmark, 
to balance seasonal swings in demand.

In  2012,  Ei  published  a  National  Preventative  Action  Plan 
and  a  National  Emergency  Plan,  in  accordance  with  the 
requirements of Regulation (EU) No 994/2010 on the security 
of natural gas453. The plans include market based methods 
to minimise the possible negative effects on several scales 
and divides the responsibility for meeting the natural gas 
demand.

Sweden is divided into four different bidding areas. Most of 
the electricity production occurs in the two northern areas 
and most of the consumption is concentrated to the south. 
At  times,  this  creates  congestion  within  the  national  grid. 
Sweden is interconnected to Norway and eastern Denmark 
through  AC  lines  and  to  Finland,  Denmark,  Germany  and 
Poland  through  undersea  DC  cables.  Svenska  Kraftnät,  the 
Swedish TSO, has an extensive plan to develop the national 
grid  to  ensure  network  stability  and  increase  the  capacity 
while increasing the amount of variable energy on the grid. 
This is part of the Third Energy Package. Currently, work is 
progressing  on  the  Nordbalt01  project,  which  has  received 
funding  under  the  EEPR  and  will  interconnect  Sweden  and 
Lithuania through a HVDC submarine cable. Maintaining 
the grid transfer capacity and ensuring the n-1 criterion 
for  operation  of  the  interconnection  are  being  addressed 
through the construction of the new OHL between Ekhyddan 
and Nybro/Hemsjö on the Swedish territory (PCI 4.4.2).

Gas

Several  new  LNG  terminals  are  planned,  including  one 
in  Gothenburg  labeled  as  a  PCI  (8.6)  and  planned  to  be 
commissioned in 2015 – which is of strategic importance for 
the Baltic energy market and would contribute to increased 
security of supply and flexibility for the Swedish market. 

7.   Electricity

Sweden  is  working  to  ensure  the  power  of  supply  both  in 
short  and  long  terms.  Svenska  Kraftnät  is  responsible  for 
balancing  the  grid  and  ensuring  the  delivery  of  electricity 
to  the  customers.  Local  distributors  are  responsible  for 
maintaining  their  networks  to  ensure  that  the  connections 
between each network meet the required quality standards453. 

To ensure the security of supply in the longer term, Sweden 
is investing heavily in wind power generation. Wind power is 
one way of shifting the production areas to the southern parts 
of  Sweden  where  the  consumption  is  high  and  decreasing 
the  congestion  on  the  grid.  Sweden  introduced  strategic 
capacity reserves in 2003 to meet peaks in demand during 
winter. The mechanism will be gradually reduced until 2020 
when the energy only market is expected to be restored454.

453   http://www.energimarknadsinspektionen.se/Documents/
Publikationer/rapporter_och_pm/Rapporter%202013/Ei_

R2013_10.pdf

454   CREG, Study on capacity remuneration mechanisms, October 2012.

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S W E D E N

S W E D E N   –  K E Y   I N D I C A T O R S

E L E C T R I C I T Y

G A S

Number of companies representing at least 95% 
of net power generation

Number of main power-generation companies

74

3

Number of entities bringing natural gas  
into country

Number of main gas entities

1

1

Market share of the largest power-generation company 44%

Market share of the largest entity bringing natural gas 100%

Number of electricity retailers

Number of main electricity retailers

Switching rates (entire electricity retail market)

Regulated prices for households – electricity 

Regulated prices for non-households – electricity

120

3

9.9%

No

No

Number of retailers selling natural gas to final customers

Number of main natural gas retailers

Switching rates for gas (entire retail market)

Regulated prices for households – gas

Regulated prices for non-households – gas

HHI in power-generation market

HHI in electricity retail market

Electricity market value (1) (bn€)

Installed generation capacity (MW)

Peak demand (MW)

Number of smart meters installed

~2 650

HHI in gas supply market

HHI in gas retail market

Gas market value (1) (bn€)

N/A

13.349

37 353

26 200

100% 

7 

N/A

1.4%

No

No

~5 000

N/A

0.456

Sources: Eurostat, CEER, National Regulatory Authority, EC calculations.

(1)   Market value is an estimation of the size of the retail electricity and gas markets. It is calculated using data on electricity  

and gas consumption in the household and non-household sectors (average bands) and annual average retail prices.

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Key issues

 → Further investment in the UK electricity network infrastructure and generation is 
needed for delivery of 2020 targets. In particular, greater interconnection is needed. 

 → Successive  legislative  and  regulatory  changes  are  increasing  the  complexity  of  the 
UK market, and may be of concern given the level of investment required. There is a 
need to ensure that the interventions are in line with Internal Market and State Aid 
rules510 and support the integration into the wider internal energy market. Existing and 
future  support  schemes  should  provide  a  stable  framework  for  investments  whilst 
keeping costs of the energy transition towards a decarbonised electricity generation 
to a minimum.

 → Consumer confidence in the sector is relatively low. Further action is needed to address 
wholesale and retail price formation and transparency. The UK should also ensure both 
wholesale and retail markets are open to new entrants by removing barriers to entry. 
Another  key  issue  is  to  ensure  that  support  for  fuel-poor  and  other  vulnerable 
consumers is appropriately targeted. 

M
O
D
G
N

I

K

D
E
T
I

N
U

E
H
T

1.  General overview455

F I G U R E S  1   A N D   2

Energy  consumption  in  2012  (202.3  Mtoe)  was  largely 
based  on  fossil  fuels  and  to  a  lesser  extent  on  nuclear 
energy.  Renewable  energy  sources  were  less  important  in 
the overall energy mix than in other Member States (4.1%). 
The  UK’s  2020  renewable  target  is  15%,  lower  than  the 
EU  average.  Final  consumption  of  electricity  in  2012  was 
broadly unchanged on 2011.456 The power generation mix in 
2011 (363.8 TWh) remained dominated by gas-fired power 
generation (with a share of 40.2%) and solid fuels (29.5%). 
The  renewable  share  of  generation  in  2012  increased  to 
10.1%. 

In  December  2013  the  UK  adopted  the  Energy  Act  as  part 
of the Electricity Market Reform (EMR) programme. The key 
elements include support for low carbon generation through 
Contracts for Difference – a form of feed in premium –, an 
Emissions  Performance  Standard  set  at  450g  CO2/kWh  –
preventing new unabated coal plants and a capacity market. 
The UK has also introduced a carbon price floor in addition 
to the existing EU Emission Trading System (ETS).457

455   On 18 December 2013 the Commission opened an in-depth 
investigation to examine whether UK plans to subsidise the 

construction and operation of a new nuclear power plant at 

Hinkley Point in Somerset are in line with EU state aid rules.

456   Digest of UK energy statistics (DUKES), Chapter 5.
457   The Carbon Price Floor is a tax on fossil fuels used  

to generate electricity with levels designed and adapted  

Gross inland consumption mix 2008-2012

45% 

40% 

35% 

30% 

25% 

20% 

15% 

10% 

5% 

0% 

2008 

2009 

2010 

2011 

2012 

Solid fuels
Nuclear

Natural gas
Renewables

Crude oil and petroleum products
Other

Source: Eurostat

Gross electricity generation mix 2008-2012

50% 

45% 

40% 

35% 

30% 

25% 

20% 

15% 

10% 

5% 

0% 

2008 

2009 

2010 

2011 

2012 

Solid fuels
Nuclear

Natural gas
Renewables

Crude oil and petroleum products
Other

on a yearly basis to ensure a certain minimum effective  

Sources:  EU energy in figures - “Statistical Pocketbooks 2012 and 2013”, 

carbon price, which came into effect on 1 April 2013.

European Commission

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T H E   U N I T E D   K I N G D O M

EMR  is  intended  to  deliver  the  first  step  of  a  transition 
towards a low carbon energy system by 2050. These reforms 
promote renewables and new nuclear through Contracts for 
Difference. The expected changes to the energy mix mean 
that the running of thermal plant would change, so a capacity 
market  is  also  planned  to  ensure  enough  investment  for 
security of supply. 

The Department of Energy and Climate Change (DECC) was 
positive  that  the  UK  had  achieved  its  interim  target  for 
renewables by 2012.458 However, some within industry have 
criticised  a  lack  of  certainty  caused  by  changes  to  support 
schemes,  lack  of  clarity  about  the  market  framework,  and 
delays  in  developing  grid  infrastructure.  Recent  publication 
of  the  proposed  support  level  for  renewable  technologies 
has improved this situation.

On  27  March  2014  Ofgem  proposed  to  refer  the  market 
to  the  UK  Competition  and  Markets  Authority  (CMA)  to 
investigate  whether  there  are  further  barriers  to  effective 
competition459.

2.  Regulatory framework

General

The  Third  Package  Directives  have  been  transposed  into 
national law.

National Energy Regulator

The energy regulator in Great Britain is Ofgem. The Northern 
Irish  utility  regulator  is  UREGNI.  Ofgem  regulates  prices 
for  networks,  but  retail  tariff  regulation  was  phased  out 
by  2002  following  the  introduction  of  retail  competition. 
Ofgem  employed  729  staff  in  2012/13.  The  staff  number 
and budget has increased in recent years as it has major 
projects and price reviews underway. 

Unbundling

National Grid Electricity Transmission (NGET) owns the 
onshore  electricity  transmission  network  in  England  and 
Wales and has been certified as fully ownership unbundled. 
In  Scotland  there  are  two  onshore  transmission  networks 
which  are  owned  by  Scottish  Power  Transmission  Limited 
and Scottish Hydro Electric Transmission plc. The GB onshore 
and  offshore  transmission  network  is  operated  by  NGET  in 
its  role  as  System  Operator.  The  Scottish  TSOs  have  been 
certified under Article 9(9) of the Electricity Directive, which 
allows alternative arrangements to the standard unbundling 
models in limited circumstances. To date, Ofgem has also 

certified  nine  Offshore  Transmission  Owners  (OFTOs)  and 
two preferred bidders, as ownership unbundled.

The  high-pressure  gas  transmission  network  in  Britain 
is  owned  and  operated  by  National  Grid  Gas  plc,  which  is 
certified as fully ownership unbundled. 

Ofgem has certified: (i) the BritNed electricity interconnector 
on  the  ground  of  an  exemption  granted  in  accordance 
with Article  22 of Directive 2003/55/EC (“Second Package 
Exemption”); (ii) the IUK gas interconnector (until 3  March 
2015  on  the  ground  of  being  in  a  substantially  similar 
position  to  someone  benefiting  from  a  Second  Package 
Exemption  and  thereafter  on  the  ground  of  full  ownership 
unbundling provided that it demonstrates that it passes the 
ownership unbundling tests at that time); (iii) the BBL and 
SNIP gas interconnectors as fully ownership unbundled; and, 
(iv)  the  Moyle  and  IFA  electricity  interconnectors  as  fully 
ownership  unbundled.  The  interconnector  between  Ireland 
and Britain operated by EirGrid, the Irish TSO, has not yet 
been certified. 

In Northern Ireland, as in Scotland, Article  9(9) has been 
applied.  The  electricity  grid  is  owned  by  Northern  Ireland 
Electricity (NIE) and operated by the certified TSO, SONI, with 
the  Irish  TSO,  Eirgrid,  under  the  all  Island  Single  Electricity 
Market. Bord Gáis Éireann and Mutual Energy own the gas-
transmission  assets  in  Northern  Ireland  and  have  been 
certified as TSOs. The sale of Phoenix Supply to Airtricity in 
June 2012 resulted in unbundling of the gas supply company 
from the gas distribution company (Phoenix Natural Gas) in 
the Greater Belfast area.460

3.  Wholesale markets

Electricity

There are two main power exchanges in Great Britain: APX 
and N2EX. UK power futures exchange traded contracts are 
also  available  on  the  Intercontinental  Exchange  (ICE).  In 
2012, around 85% of power was OTC traded (down from 95% 
in  2011)  and  around  15%  was  exchange  traded  (up  from 
5%). The average day-ahead power price on the APX market 
was GBP 44.54 (EUR 53.89)/MWh in 2012.461 The England-
France  Interconnector  (IFA)  and  BritNed  interconnectors  are 
participating in the North West European project on day-
ahead market coupling and intraday trading. 

The power generation market is moderately concentrated. 
Seven companies had market shares exceeding 5% and the 
largest three generated almost 45% of electricity consumed 
in 2012. In response to concerns about liquidity, Ofgem has 

458   DECC, UK Renewable Energy Roadmap: 2013 Update, 

5 November 2013.

459   https://www.ofgem.gov.uk/press-releases/ofgem-proposes-

460   Ofgem, 2013 Great Britain and Northern Ireland National 
Reports to the European Commission, 22 August 2013. 
461   http://www.apxgroup.com/uncategorized/apx-endex-2012-

reference-cma-investigate-energy-market

volumes-up-by-12/

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F I G U R E S  3   A N D   4

Electricity price change by component 2008-2013 (in € cent/kWh)

Natural gas price change by component 2008-2012 (in € cent/kWh)

H O U S E H O L D S

I N D U S T R Y

H O U S E H O L D S

I N D U S T R Y

20.0 

18.0 

16.0 

14.0 

12.0 

10.0 

8.0 

6.0 

4.0 

2.0 

0.0 

6.0 

5.0 

4.0 

3.0 

2.0 

1.0 

0.0 

2008

2013

2008

2013

2008

2012

2008*

2012

Taxes+Levies 

Networks

Energy+Supply

Taxes+Levies 

Networks

Energy+Supply

Source: Eurostat

Sources: EC, EPCR metadata - *no data available

introduced  a  new  licence  condition  from  31  March  2014. 
This obliges six large vertically-integrated suppliers to post 
prices  at  which  they  will  buy  and  sell  a  range  of  forward 
power products (a market making obligation). It also requires 
the eight largest generating companies to follow rules when 
trading with small independent suppliers. 

Northern Ireland is part of the all-island Single Electricity 
Market (SEM) with Ireland. This is discussed in more detail 
in the separate report covering the Republic of Ireland.

Gas

UK  natural  gas  production  is  decreasing,  and  in  2012  was 
down 14% on 2011 to 452 TWh.462 The majority of the UK’s 
supplies are now imported, either from Norway, Continental 
Interconnection or LNG terminals. The wholesale gas market 
includes both OTC and exchange based trading (ICE and ICE 
Endex).  The  National  Balancing  Point  (NBP)  is  the  virtual 
trading location for UK natural gas. It is the most liquid gas 
trading point in Europe, with a churn rate between 10 and 
20. The number of parties trading at NBP is high with a total 
of 222 licensed shippers, of which between 110 and 120 are 
usually active on a daily basis463. Market concentration in is 
low,  with  the  largest  market  share  of  physical  and  traded 
activity below 8%463.

4.  Retail markets

Electricity

The retail electricity market has been open to competition 
since  the  late  1990s.  At  the  end  of  2012,  there  were 
12  domestic  and  24  non-domestic  suppliers  active  in  the 
market. The domestic retail market is characterised by the 
existence of six large, vertically integrated suppliers (the ‘Big 
6’), which accounted for approx. 95% of the market in 2013, 
a drop of 4% since 2011. These are British Gas (Centrica), 
E.ON  UK,  EDF  Energy,  RWE  npower,  Scottish  and  Southern 
Energy (SSE), and Scottish Power. All of the Big 6 suppliers 
have  a  market  share  of  above  10%.  Market  concentration 
at domestic retail level remained high with an HHI of 1 720. 
There were 12 small suppliers active in the market in 2012, 
with a combined market share of just 2%, up 1% from 2011.

Gas

The British retail gas market is fully liberalised. At the end of 
2012, 13 domestic and 30 non-domestic gas suppliers were 
active in the market. The so-called ‘Big 6’ suppliers supplied 
approx. 95% of the 22.3 million domestic consumers in 2013. 
British  Gas  (Centrica)  is  still  the  largest  party  active  on  the 
domestic market, with a market share of around 40%. Market 
concentration at the domestic retail level remained high with 
an HHI of 2 373 for smaller non-domestic customers; it was 
2 189  and  for  larger  non-domestic  customers  1 153.  British 
Gas remains the leading supplier, with a market share of 40%.

462   https://www.gov.uk/government/uploads/system/uploads/

attachment_data/file/65800/DUKES_2013_Chapter_4.pdf
463   Ofgem, 2013 Great Britain and Northern Ireland National 
Reports to the European Commission, 22 August 2013.

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The British government has decided to replace all of the nation’s 
53 million gas and electricity meters with smart meters. Smart 
metering roll-out464 is at an early stage, with mass roll-out 
planned from 2015. In both gas and electricity markets the 
larger suppliers are operating 89 400 domestic smart meters 
(0.2%) as well as 520 000 in smaller non-domestic sites.

5.  Consumers

Switching and trust

Consumer  overall  assessment  of  retail  electricity  market 
is  slightly  below  the  EU  average  (69.3  points  compared 
to  72.0,  corresponding  to  20th  place  EU-wide465)  and  saw 
a  considerable  decrease  (of  3  points)  between  2012  and 
2013. The market also ranks 3rd lowest among 31 domestic 
services markets. The assessment of the retail gas market 
is 4th lowest in the EU (70.5 points compared to 74.1) and 
5th  lowest  among  domestic  services  markets.  The  overall 
score  has  slightly  decreased  between  2012  and  2013465, 
continuing the downward trend observed since 2010. Both 
markets have particularly poor scores on trust in providers and 
overall  consumer  satisfaction,  and  above-average  number 
of consumer complaints. The electricity market has the third 
highest share of overall consumer complaints in the EU and 
the highest share of complaints to third parties. At the same 
time, both markets have above-average scores for choice of 
providers and actual switching. In the gas market, choice and 
actual switching rank second and fourth highest in the EU. 466

In 2012, 12% of electricity users switched supplier and 11% 
of gas users switched supplier467. By European standards this 
is  high.  However  the  capacity  of  consumers  to  understand 
and choose the most appropriate tariff has been a concern. 
Ofgem  found  that  more  than  three  out  of  five  consumers 
(62%)  claimed  they  have  never  switched,  meaning  they 
are likely to be on standard tariffs with former incumbent 
suppliers  and  typically  paying  above  the  most  competitive 
prices  in  the  market467.  The  true  proportion  of  those  who 
have ‘never switched’ is probably lower, but it does suggest 
that many consumers feel they are inactive in the market.468 

Also,  many  consumers  have  reported  being  confused  by  the 
number of tariffs on offer and their differing structures469. As 
a result, new rules have been introduced to limit the number 
and complexity of tariffs offered by suppliers. Online price 
comparability tools for electricity and gas are available. Ofgem 
has a Confidence Code for switching services, which many have 
signed up to470. A recent innovation has been “collective switching” 
(the first was organised by Which? and 38 Degrees in 2012). 

Complaints and vulnerable customers

If  complaints  are  unresolved  after  eight  weeks,  customers 
can  seek  redress  through  the  Ombudsman,  who  has  the 
power  to  make  a  financial  award  of  up  to  GBP  10 000. 
Domestic consumers and micro businesses can go sooner if 
the company says it can do no more to resolve the complaint.

Ofgem has a Consumer Vulnerability Strategy471 and DECC 
reports on fuel poverty472. There are a number of measures 
targeted at vulnerable customers through the benefits system 
and fuel payment. Measures include a universal fuel benefit 
for  older  people  and  low-cost  energy-efficiency  measures 
through  suppliers  for  those  in  receipt  of  certain  benefits. 
Vulnerable  customers  are  protected  from  disconnection 
in  winter.  Planned  funding  for  energy  efficiency  under  the 
Energy Company Obligation has been scaled back as a result 
of complaints about the impact on bills.

There  is  a  “priority  services  register”  managed  by  network 
companies  and  suppliers,  which  ensures  the  needs  of 
vulnerable  customers  are  met  in  the  event  of  power  cuts 
and  in  other  situations  Awareness  amongst  consumers  of 
these services is low, however, and Ofgem is reviewing how  
take-up of services can be improved.

6.  Infrastructure

The  recent  transmission  price  control  (RIIO-T1)  authorised 
around  GBP  22  billion473  of  investment  in  the  gas  and 
electricity  transmission  networks  in  Great  Britain  over  the 
period  2013-2021.  Ofgem  approves  large  infrastructure 

464   Smart Meters, Great Britain, Quarterly report to end June 2013.
465   However the difference is not statistically significant.
466   10th Consumer Markets Scoreboard,  

469   https://www.ofgem.gov.uk/ofgem-publications/39452/

consumer-engagement-energy-market-information-needs-and-

perceptions-ofgem.pdf

470   https://www.ofgem.gov.uk/ofgem-publications/74615/

http://ec.europa.eu/consumers/consumer_evidence/consumer_

confidence-code.pdf

scoreboards/10_edition/index_en.htm

471   https://www.ofgem.gov.uk/ofgem-publications/75550/consumer-

467   https://www.ofgem.gov.uk/ofgem-publications/74756/customer-

vulnerability-strategy.pdf

engagement-energy-market-tracking-survey-2013.pdf
468   https://www.ofgem.gov.uk/ofgem-publications/39350/retail-

472   DECC, Annual Report on Fuel Poverty Statistics 2013, May 2013.
473   https://www.ofgem.gov.uk/ofgem-publications/64003/

market-review-final-domestic-proposals.pdf

pricecontrolexplainedmarch13web.pdf

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T H E   U N I T E D   K I N G D O M

investments  as  they  arise  throughout  its  8-year  period 
through Strategic Wider Works474 (electricity) and incremental 
capacity provisions (gas). 

A  number  of  gas  projects  of  common  interest  were 
identified under the guidelines for trans-European energy 
infrastructure.  These  include  projects  to  allow  bidirectional 
flows between Great Britain, Northern Ireland and Ireland.475

Electricity

Existing  interconnection  includes  the  1 000  MW  BritNed 
interconnector  with  the  Netherlands,  the  2 000  MW 
IFA  interconnector  with  France,  and  the  500  MW  Moyle 
interconnector with Northern Ireland. The completion of the 
500 MW EirGrid East-West Interconnector in 2012 increased 
interconnection between Britain and neighbouring countries 
from 3.5 GW to 4 GW.

However, the interconnectivity level is still low. As a result, 
around  10  GW  of  potential  new  interconnection  projects 
to  6  different  markets  have  been  proposed.  Under  the 
guidelines  for  trans-European  energy  infrastructure,  17475 
electricity  infrastructure  projects  of  common  interest  were 
selected in the UK.476

As  part  of  its  Integrated  Transmission  Planning  and 
Regulation project, Ofgem is reviewing whether to move 
from the current developer-led approach to more centralised 
planning  of  interconnection.  The  DECC  also  published  the 
document ‘More interconnection: improving energy security 
and lowering bills’ in December 2013.

A competitive tender process is used to grant licences for 
electricity transmission connections offshore. The regime 
has delivered investment of over GBP 1.4 billion to date477.

The  UK  has  designated  the  Secretary  of  State  for  Energy 
and  Climate  Change  as  the  National  Competent  Authority 
(so  called  one-stop  shop  for  Projects  of  Common  Interest) 
by a Written Ministerial Statement to the UK Parliament on 
18  November  2013.  The  one-stop  shop  is  responsible  for 
facilitating and coordinating the permit granting process for 
projects of common interest. The UK has to ensure now that 
the  one-stop  shop  is  functioning  without  any  hurdles  and 
that other measures foreseen for 2014 and 2015, including 
the publication of the manual on the permit granting process 
for project promoters, and the adoption of legislative and 
non-legislative  measures  streamlining  the  environmental 
assessment procedures are adopted timely.

7.  Security of supply

Electricity

There  are  concerns  about  power  generation  adequacy  in 
the mid-term. The introduction of a capacity market under 
Electricity  Market  Reform  is  in  response  to  these  concerns. 
There  is  a  general  expectation  that  generating  margins 
will decrease to historically low levels in the middle of the 
decade.478  There  is  also  an  expectation  that  generating 
margins may decrease in Northern Ireland post 2020.479

Gas

Gas

The British gas system is interconnected with Belgium, the 
Netherlands,  as  well  as  with  Northern  Ireland  and  Ireland 
to  the  west  (export  only).  The  interconnector  with  Belgium 
(IUK)  can  flow  gas  in  both  directions  (import  27  bcm/year 
and  export  20.1  bcm/year).  The  BBL  interconnector  with 
the  Netherlands  has  an  import  capacity  of  19.3  bcm/year 
but  does  not  allow  physical  reverse  flow.  The  exit  capacity 
at  Moffat  is  11.0  bcm/year.  There  are  three  LNG  import 
terminals  (Isle  of  Grain,  South  Hook  and  Dragon  LNG)  and 
one long range storage facility (Rough).

Under  the  EU  Gas  Security  of  Supply  Regulation,  DECC 
published  the  National  Emergency  Plan.  DECC’s  risk 
assessment480 reported that UK gas supply infrastructure 
is  resilient  to  ‘all  but  the  most  unlikely  combinations  of 
severe infrastructure and supply shocks’ given the success 
of  the  market  in  responding  to  record  demand  and  supply 
pressures in the winters of 2009/10 and 2010/11.

474   https://www.ofgem.gov.uk/electricity/transmission-networks/

critical-investments/strategic-wider-works

478   https://www.ofgem.gov.uk/ofgem-publications/75232/electricity-

475   http://ec.europa.eu/energy/infrastructure/pci/doc/2013_pci_

capacity-assessment-report-2013.pdf 

projects_country.pdf 

479   http://www.eirgrid.com/media/Generation%20Capacity%20

476   Regulation (EU) No 347/2013; OJ L 115, 25.4.2013, p. 39–75.
477   https://www.ofgem.gov.uk/publications-and-updates/offshore-

transmission-factsheet

Statement%202014.pdf

480   DECC, Risk assessment for the purpose of Regulation (EU)  
No 994/2010 on security of gas supply, November 2011.

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T H E   U N I T E D   K I N G D O M

T H E   U N I T E D   K I N G D O M   –   K E Y   I N D I C A T O R S

E L E C T R I C I T Y

G A S

Number of companies representing at least 95% 
of net power generation

Number of main power-generation companies

17

7

Number of entities bringing natural gas  
into country

Number of main gas entities

23

6

Market share of the largest power-generation company 25%

Market share of the largest entity bringing natural gas 17%

Number of electricity retailers

Number of main electricity retailers

32

6

Number of retailers selling natural gas to final customers

Number of main natural gas retailers

Switching rates (domestic)

12% (1)

Switching rates for gas (domestic)

Regulated prices for households – electricity 

Regulated prices for non-households – electricity

HHI in power-generation market

HHI in electricity retail market

Electricity market value (2) (bn€)

Installed generation capacity (MW)

Peak demand (MW)

No

No

1 483

1 720

33.670

84 900

56 200

Number of smart meters installed (June 2013)

609 400

Regulated prices for households – gas

Regulated prices for non-households – gas

HHI in gas supply market

HHI in gas retail market

Gas market value (2) (bn€)

36

7

11%

No

No

N/A

2 373

20.696

Sources: Eurostat, CEER, National Regulatory Authority, EC calculations.

(1)   Domestic 12% across gas and electricity.

(2)   Market value is an estimation of the size of the retail electricity and gas markets. It is calculated using data on electricity  

and gas consumption in the household and non-household sectors (average bands) and annual average retail prices.

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