Managing uncertainty in the developing German gas market

For almost a decade, politicians and regulators in Germany tried to introduce competition into the country’s gas market.

Yet, while they prepared the right framework for a competitive market, it is economic developments that have finally made competition a reality.

The short-term oversupply of gas following the recent financial crisis allowed gas to be traded on virtual trading points. As a result, the use of supply-demand-based market prices for gas valuation, previously confined to UK gas purchasing and sales contracts, can now be observed in continental markets too. This will have a significant impact on German utilities.

PA’s survey of German utilities captures the impact of competition on players at all points in the energy value chain.

Our key findings suggest that:

• the traditional roles of supplier and distributor no longer hold – established and new market entrants are reaching out to all customer segments and continue to enter new regions

• utilities are less optimistic than they were about the sales potential in new geographies and new customer segments

• utilities do not expect market conditions to ease and, as a result, plan to move more customers to fixed and hub-based pricing regimes.

To talk through the full findings of PA’s Gas Market survey with one of our gas experts, please contact us now.

PA has a successful track record of helping energy clients in key areas of strategic decision making and commercial advisory, risk management, organisational design and transformation.  Our recent global survey, Managing Uncertainty, asked 200 senior business leaders from around the world how they had responded to the financial crisis and what management strategies had proved most effective. Click here to recieve a copy.