Publication

Marriages and engagements in the German energy market - the future of regional providers?

Energy suppliers are searching for new ways to meet the increasing demands caused by market regulation and competition. Liberalisation creates a need for big investments which some energy suppliers financially can not handle alone. Insecurity and displeasure over prices determine with whom clients do business. Compatible energy and gas products require differentiated price and service offerings – an extra cost driver. Energy suppliers need to become more efficient and they see cooperation as a suitable solution to maintain their market position.

PA Consulting Group has conducted a survey on the subject of co-operation in the German energy market. Co-operation is defined as long-term collaboration between companies – from financing to merger. The survey captures objectives and risks, ascertains the structure and outlines planned co-operation activities.

The incidence of co-operation between players in the German energy market are going to increase considerably in 2008. Almost one third of the respondent companies are planning to expand or establish co-operative links to another company this year. It is expected that synergy potentials are considerable. One fifth of the companies participating in the survey expect cost reductions above 15%. One fourth estimate cost reductions of between 5 to 15%.

In addition, half of the respondents aim for qualitative improvements. The objectives are expected to be realised in the medium term. One third are not going to meet their objectives until the end of 2010. The biggest challenge is to be found in the alignment of process organization and in the necessary co-ordination between the partners involved. All value adding activities are considered to be attractive for joint ventures. More than 50% of the respondent companies are planning co-operation in production, trade, accounts (for instance invoicing) or via shared services. However, the main future area for co-operation will be the energy networks: 80% of  respondents focus on the networks because they are estimated to have the highest potential for efficiency gains compared to the other areas.

Please note: This publication is available in German language only.

The complete survey can be requested at PA Consulting Group per e-mail to sylvia.rogalla@paconsulting.com or per telephone +49 (0)211-88242112.