ZEW Energy Market Barometer – National Champions Unnecessary

Politicians tend to favour the model of so-called 'national champions' to ensure the international competitiveness of German enterprises. With regard to the energy sector, this should be seen in the light of the fact that in other European countries, individual companies like EdF, a French quasi monopolist, hold larger market shares than the German companies do on the German market. However, this industrial policy approach to the German energy sector earns little approval from energy experts.

A clear majority of 85 per cent of the experts interviewed for the ZEW Energy Market Barometer consider it unnecessary to further increase the concentration of the German energy market to uphold the competitiveness of German companies in Europe. These are the findings of the recent ZEW Energy Market Barometer conducted by the Centre for European Economic Research (ZEW) in Mannheim. The biannual survey is conducted among more than 200 experts from energy supply companies, energy-trading companies, and energy service providers, who are asked to give their expectations concerning short and medium-term developments on the national and international energy markets.

Regardless of this debate, the experts expect little change in environmental and energy regulations. Both are difficult topics on the negotiating table of Germany’s grand coalition and policy-makers avoided concrete commitments on many issues. A clear majority of 65 per cent estimates that the density of regulations in the environmental sector will remain unchanged. The expectations regarding an increase or decrease in governmental intervention are mainly balanced (16 and 19 per cent). In the energy sector, 56 per cent expect the regulating process to be continuous. In this context however, the experts forecasting an increase in regulations (39 per cent) were far more numerous than those expecting a decrease (five per cent).

In July 2005, Germany’s Bundesnetzagentur (the Federal Network Agency for Electricity, Gas, Telecommunications, Post and Railway) was assigned to supervise electricity and gas networks. It yet remains to be seen what plans and regulatory practices the Federal Government will pursue in this regard. The majority of experts interviewed by ZEW assume that the agency’s work will reduce electricity transmission fees (52 per cent) as well as gas transmission fees (54 per cent). Only about 11 per cent expect rising transmission costs while 37 or 35 per cent forecast stagnating charges for electricity and gas transmission.

One key purpose of the Bundesnetzagentur consists in monitoring and ensuring the quality of electricity and gas networks. This is supposed to guarantee sufficient grid investment – that is investment in the maintenance and construction of pylons – to ensure the long-term energy supply of the population despite the official limit on returns from grid operation. The experts’ view on this matter is even clearer: a majority of 65 per cent and 71 per cent respectively forecast a stagnating quality of electricity and gas networks. About 31 per cent or 25 per cent expect the quality to worsen whereas only four per cent expect it to improve.

Contact

Dr. Ulf Moslener, E-mail: moslener@zew.de