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Title:
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Energy Market Trends in the Netherlands 2001
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Author(s):
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Published by:
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Publication date:
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ECN
Policy Studies
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1-12-2001
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ECN report number:
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Document type:
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ECN-P--01-014
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Other
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Number of pages:
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Full text:
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98
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Download PDF
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Abstract:
Energy Market Trends in the Netherlands 2001 satisfies a need for anoverview
of information for a broad spectrum of people interested in the Dutch
energy market.Information about developments in the energy market is
presented in two ways in each part. Factual information about developments
in the energy market is presented in Overview. After each Overview there
is a section called Insight where one or two observations are made regard-ing
important developments occuring in the energy market, followed by an
analysis of these de-velopments and expectations about the near future.
Energy Market Trends in the Netherlands is divided into four parts,
each of which deals with an important aspect of the energy market as
its theme:
- Energy Policy and Market Regulation
The establishment of guidelines for the free energy market in the Netherlands
is nearing completion. After the introduction of detailed regulatory
procedures for the electricity market in 1999 and 2000, more guidelines
have been established for the gas market by the appointed supervisor,
the DTe, in 2001. In this same year the market for renewable energy
became completely ?free?. In 2002 the free energy market will be further
enlarged because medium-sized customers will then also be free to choose
their energy supplier.
It is gradually becoming clear whether regulation of the free energy
market is functioning well and whether the promised advantages of liberalisation
will be obtained. The government recognises that a liberalised energy
market may entail new risks, e.g., regarding supply security and price
formation resulting from energy market forces. In the coming years more
attention will be paid to monitoring market forces, and if necessary
regulatory procedures will be adjusted to counter undesired effects.
The beginning of part one of Energy Market Trends in the Netherlands
2001 presents an overview of the development of policy and regulatory
procedures for the electricity and gas markets. This is followed by
an analysis of the problems that need to be surmounted for a properly
functioning competitive gas market in the Netherlands.
Energy policy and market regulation consists of the following chapters:
Overview: Development of regulatory processes.
Insight: Difficult implementation of the Gas Act.
- Market structure and strategy
Liberalisation of the electricity and gas markets has led to mergers
and acquisitions in the energy sector, both in electricity production
and energy distribution. There appears to be a certain consolidation.
The relative quiet is probably also a result of the conditions set by
the government on the privatisation of Dutch energy companies. Energy
companies, however, are expecting scale increase. The electricity production
sector is already dominated by foreign energy companies, and in energy
distribution the expectation is that the role of foreign companies will
also become greater.
Meanwhile, energy suppliers are preparing themselves for the next fase
of the liberalisation: in 2002 a second group of large users will be
able to choose their own energy supplier. In 2001 the market for green
electricity has become free. Large energy suppliers have launched public
campaigns in which they seem to use the image of renewable energy to
gain public favour. This part of Energy Market Trends in the Netherlands
2001 further describes the way in which energy suppliers are preparing
themselves for competition in the retail market. Two analyses in Insight
examine, in succession, competition in the green electricity market
and competitive strategies of existing energy suppliers in a free retail
market. Overview, which precedes the two analyses, presents the current
structure in the markets for electricity, gas and green electricity.
The beginning of part one of Energy Market Trends in the Netherlands
2001 presents an overview of the development of policy and regulatory
procedures for the electricity and gas markets. This is followed by
an analysis of the problems that need to be surmounted for a properly
functioning competitive gas market in the Netherlands.
Market structure and strategy consists of the following chapters:
Overview: Dutch energy market.
Insight: Competition in the retail market starts with green electricity.
Insight: The new face of existing energy utilities.
- Choice of technology and environmental consequences
The energy sector is a capital-intensive branch of industry. Liberalisation
of the energy market has a great influence on the way in which investment
decisions are made. This applies to the replacement and expansion of
installations and systems, and even more so for investments in new energy
technologies. Technological changes in the energy supply emanate from
striving towards lower environmental impacts ? especially reductions
in greenhouse gas emissions ? and the increased use of renewable energy
sources.
Measures to limit the environmental effects of energy production have
an increasing influence on the price of energy produced. The introduction
of trade in emission reductions (NOx, CO2) will decrease emission reduction
costs and also define the choice of technologies to be used.
The increasing demand for forms of green energy stimulates the development
of renewable energy technologies. For the Netherlands, wind and biomass
are the most important sources of renewable energy. This third part
of Energy Market Trends in the Netherlands 2001 provides insight into
expected developments of two of these renewable energy technologies:
offshore wind turbines and use of biomass in coal-fired power plants.
These insights are preceded by an overview of technologies used for
energy production in the Dutch energy market and in neighbouring countries,
as well as an overview of the environmental effects of energy production.
Choice of technology and environmental consequences consists of the
following chapters:
Overview: Energy production and emissions
Insight: Growth of renewable energy supply depends on success of offshore
wind energy.
Insight: Leading role for coal power plants in Dutch renewable energy
supply.
- Energy prices
A well-functioning liberalised energy market should lead to cost efficiency
for the energy supply, enabling the energy prices to reflect these costs.
However, there must be a distinction made between the part of energy
prices that are actually established by competition, such as the production
and supply of energy, and the part that has to do with regulated activities
in the energy market, such as energy transport. Government levies, such
as the fuel tax and regulatory energy tax, are also part of end-user
prices.
Competition in the supply of electricity can cause an initial fall in
prices. However, in the mid to long term there may be a supply shortage,
which will cause prices to increase and, in particular, fluctuate more.
In the gas market, the relationship between gas price and oil price
may play a less important role as a consequence of an increasing gas-to-gas
competition. For the moment, however, competition in the gas market
is even less developed than in the electricity market.
In this last part of Energy Market Trends in the Netherlands 2001 an
overview is first given of different prices, tariffs and taxes that
play a role in the gas and electricity markets. This is followed by
two analyses that give insight into price formation in the electricity
market and the structure of both gas and electricity prices. Furthermore,
the structure of the current prices for green electricity is also described.
Lastly, expectations are given about energy prices in a future, fully
open energy market.
Energy prices consists of the following chapters:
Overview: trends in energy prices.
Insight: Price formation and market behaviour in the electricity market.
Insight: Structure of current and future energy prices.
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