The European energy model is broken

摘要

The now traditional vertical integrated large utility model that exists across Europe, and which has resulted in the Big Six in the UK, has arisen as it has enabled the large incumbent companies to supply its customers and achieve its margins whiLe taking relatively low risk. The low risk achieved by the large European utilities arose though their ownership of large thermal generating assets, whose economics and margin largely set the overall wholesale price through possession of a large balance sheet. This enables the forward hedging of commodity prices and their inheritance of a Large customer base with a regulatory system that had a high inertia to customer switching. All of these factors resulted in a steady and profitable business model.