Managing Electricity Sourcing in Europe's Energy Intensive Industry : A Methodology to Develop an Electricity Sourcing Strategy

Several regulatory changes in Europe's electricity sector have stimulated competition in the market. National power companies, with monopolistic structures, have evolved into competitive entities, creating increased choices for consumers. Electricity prices have also been very much affected by these new regulations and have been particularly influenced by climate change policy that was introduced in 2005. Electricity prices are now affected by both the volatility of the fossil fuel market and the prices of CO2. We recognize the effort to develop and introduce renewable electricity in Europe – 20% renewable energy by 2020. In order to achieve this, governments have promoted the creation of a more CO2-friendly generation capacity. All of these new conditions have introduced more competition into the market, while offering more choice in terms of sourcing electricity. Consumers have identified and assessed the market changes to better select the way of sourcing their electricity needs; consequently, we have developed a new electricity sourcing methodology. The new sourcing methodology integrates a series of steps that will allow electricity users to better understand the current electricity sourcing options and then look to the future in order to identify market trends. Details about company organization and resources have to be considered in order to make a complete assessment of the feasibility of implementing a possible option. The methodology has been tested in three countries (Croatia, Spain and the UK), each with different market conditions. Case studies focus on each of these markets and provide an overview of electricity consumers, as well as their electricity profile and market conditions, including details about electricity prices, electricity demand and electricity sourcing options in relation to the market structure. A decision making tool has been developed to incorporate all of the steps described in the methodology in order to facilitate the creation of scenarios from both the supply and demand sides. This will help the organization to frequently monitor and assess the changes in the market, as well as identify new business opportunities.