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Transforming the Danish retail market
Søren Dupont Kristensen, Vice President, Energinet.dk
Electricity Market Day 2016
About Energinet.dk
The danish retail market transformationIn 2009 the Danish TSO, Energinet.dk, received an assignment from the Danish government, to develop a datahub for the danish retail market.
But we are not the only ones…
Datahubs are introduced to all Nordic countries between 2013-2020.
Strong Nordic cooperation ensures coherent retail market development towards common goals and objectives.
Nordic retail markets – guiding principlesA larger market to support competition and innovationA regional harmonised retail market with low entry barriers will reflect real costs of energy and support innovation of new products and services for the consumers.
Easy and equal access to data to support transparent marketsEasy and equal access to data as a basis for a transparent retail market in which consumers can make informed choices, and where suppliers and third parties can develop new products and services.
Linking wholesale and retail market to support security of supplyEnabling increased demand response and consumer flexibility to support cost-effective integration of new-renewable energy sources.
• 3.3 mio. Consumers
• Full liberalisation in 2003
• Central data management model in 2013
• Supplier Centric Market design in 2016
• Smart meter deployment (1,8 mio. in 2016 – all consumers in 2020)
The Danish retail market reform - acceleration of a liberalised retail market
Consumer
DataHub
Supplier Centric Model
Non-regulated pricesHourly
settlement of small
consumers
Increased
transparency
(elpris.dk)
Deployment of smart meters
2016
2013
2016
2016
2016
2020
DataHub - central data management
Ensure a level playing field for all market parties/suppliers through:• Standardized processes for registering and distribution of market data• Reduced entry barriers for new suppliers• One point of entry for changes of supplier
Go-live: March 2013
5. Datahub is "counterpart" for supplier changes and move in/out – faster, more efficient
7. International integration
8. Reduced industry costsRef: Elhub kostanalyse
1. Market neutrality – equal treatmant - fair competition
2. Single source for all metering values and responsible for distribution
6. Aggregator for all grid areas – input to balance settlement
3. High quality and efficient distribution of metering data (common QA standard and benchmarking)
4. Market development through one interface (Datahub towards Suppliers)
9. Better access to data for energy services (3rd parties and ESCO's)
10. Secures privacy and data protection
Datahub – 10 value propositions
Datahub
Supplier centric – new consumer oriented market design
Stimulate innovation through a consumer oriented market design where: Electricity suppliers get 100% customer contact Distribution System Operators become suppliers of wholesale services
(wholesale model) Consumers receive one bill
Go-live as we speak!
Key succes factorsCritical elements for success
Political and regulatory mandate
Clear roles and responsibilities
Strong cooperation and coordination between TSO
and market parties
InnovativeMarketsNon-discriminatory
market access
Incentives for consumers to act
More (and new) products and
services
Consumer convenience
Preconditions
Changing market shares for households
Herfindahl-Hirschman index on a national level 2013Source: Konkurrence om detailkøb af electricitet, Copenhage Economics and Dansk Energi
HHI as a weighted average per grid area 2013-2015Source: Detalmarkedsrapport, Energinet.dk
Mar-13Jun
-13Sep
-13Dec-
13Mar-
14Jun
-14Sep
-14Dec-
14Mar-
15Jun
-15Sep
-15Dec-
150
2000400060008000
10000
Profiled consumersHourly settled consumers
Market concentration per grid areaMarket concentration on a national level
Small increase in supplier swiching
The number of supplier swiches has reached a historical level (7,2%) in 2015.
A further increase is expected after 1. April 2016.2010 2011 2012 2013 2014 2015
0.0%1.0%2.0%3.0%4.0%5.0%6.0%7.0%8.0%
Supplier switch, percent of total amount of consumers
Supplier switching rate
Datahub
Market players are finding new ways…
The total number of suppliers registred in Denmark is 70.
An increasing number of suppliers are active in the four largest grid areas more product offerings for consumers
Mar-13
Jun-13
Sep-13
Dec-13Mar-
14Jun
-14Sep
-14Dec-
14Mar-
15Jun
-15Sep
-15Dec-
1520
25
30
35
40
45
Number of active suppliers in four large grid areas
Source: Detalmarkedsrapport, Energinet.dk
More than just gross margins…
Stimulating innovation and the creation of new offerings is a key objective
Competition is contributing to more than reducing gross margins
Source: Konkurrence om detailkøb af electricitet, Copenhage Economics and Dansk Energi
Composition of energy is changing
Linking wholesale and retail markets
Wholesale Market Retail Market
Regional balancing markets
Network Codes (CACM)
Hourly settlementMarket Coupling
Increased price cap in markets
non-regulated prices
Third party acces to data
Supplier centric model - driving innovation
Central Data Management
Aggregators
Framework for distributed flexibility
European/regional driven National driven
Electricity value chain is changing
Transmission DistributionProduction Sales
Energy products &services
What are the new value propositions?
Consumer flexibility- Enable clear price signals to consumers and industries
Solution selling through financial products
Financial products
+ Energy savings
Energy together with hardware and
software?
Market driven digital development and new technologies are game changers
Ekspotential technologies influencing the energy sector:
1. Sensors / automation (IoT)2. Artificial Intelligence3. Electric vehicles4. Solar panels5. Storage of elektricity (batteries)6. Mobile / Cloud solutions7. Open Data / Big Data8. Digitale money (Bitcoins)
New business models
Traditional vs
innovative products
Gap between wholesale and retail markets
Increasning RES technologies with
ZMC
Weak investment signalsLacking consumer flexibility
Electricity Market Disruptive technologies
GAME CHANGER
Liberalised markets
GAME CHANGER
New market partiesGAME CHANGER
DigitalisationGAME CHANGER
Low prices ?New game changers will impact the future market.. but how?
3rd parties
