3FOOD

Third Industrial Revolution Consulting Group
Luxembourg should take a holistic approach to planning a market that is fit-for-purpose. This
would include orienting its market arrangements to support the development of emerging
technologies that enable unique services and capabilities, layered into the system.
Enhanced Retail Competition
In the electricity and gas supply chains, the retail market includes the provisioning of energy to
end-use customers. The retail energy market provides customers with the ability to purchase
energy services from licensed/accredited retail businesses of their choice. To support this
choice, the retail market provides the systems and processes to track and support the
relationships and flow of information between retailers, distributors, and customers, to ensure
that customer transfers can take place and that costs in the supply chain are correctly allocated
and billed.
In Luxembourg, the supply market is fully open to favor competition and to be attractive to
additional suppliers. Nevertheless, the market is dominated by the national champion Enovos
Luxembourg. 45 Such a structure can provide advantages as well as risks for competitive and
efficient market development. Enovos’ retail market dominance should be monitored in the
light of transparency, competitive neutrality, and other competition issues. Luxembourg has the
third lowest switching rate in the EU, despite the country being ranked sixth in the EU for ease
of switching. Studies show that one reason for the low level of switching is the high customer
satisfaction. Luxembourg should work on further enhancing competition.
Finally, a retail market assessment should be considered simultaneously with the evolution of
wholesale markets. There are strong links and interplays between the wholesale and retail
markets, with the competitiveness of each segment influenced by the respective market
arrangements. For example, a competitive retail electricity market is influenced by the nature
of the wholesale arrangements and the ease of entry and operation. This includes the ability to
access generation at a competitive price; the ability to manage market risk, simplicity, and
clarity of the regulatory framework and market interfaces; the nature of the hub balancing
arrangements; access to timely and accurate data; transparency and symmetry of market
information; or the nature of the wholesale settlement arrangements. These factors are
similarly relevant in natural gas markets.
45 International Energy Agency (IEA). “Energy Policies of IEA Countries – Luxembourg 2014 Review” 2014. Available
at: http://www.iea.org/publications/freepublications/publication/energy-policies-of-iea-countries---luxembourg-
2014-review.html
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