Bulletin of the Transilvania University of Bra șov [623085]

Bulletin of the Transilvania University of Bra șov
Series V: Economic Sciences • Vol. 8 (57) No. 1 – 2015

Energy efficiency and performance indicators of
European electricity market

Constantin DUGULEAN Ă1, Liliana DUGULEAN Ă2

Abstract: The electric power system plays a vital role in the developmen t of every country,
ensuring the “fuel” which feeds its economic mo tor. The efficient functioning of this motor is
essential for economy. The efficiency and the performances of electric power systems are
reflected on the living level of population, through the money spent and the satisfaction level
of their needs. The continuity of power distribution process, the good communication between the suppliers and consumers, the promptitude of interventions, the environment
protection – all these are aspects characterizi ng the performance level of power distribution
systems. The paper analyzes the evolution of quality indicators of power distribution systems
both for countries’ level and for populatio n on European market of electricity.

Key-words: power system, environment, efficiency, market performance indicators.

1. Introduction

The Europe 2020 Strategy has as main purpo se to attain a smart, sustainable and
inclusive growth, and the transition to a resource efficient economy.
Having the same level of economic activity based on less energy inputs,
means a technical way to obtain energy efficiency. Saving energy through efficiency, also addresses the reduction of consumption through a behaviour changing, in the spirit of avoiding its waste.
The only way for the security of energy supply is ensuring the energy
efficiency. In this way the energy efficiency is considered to be in itself, a big source
of generating energy. The energy efficiency can contribute to the reduction of
emissions of greenhouse gases and of other pollutants.
The EU legislation for liberalization of energy markets constitutes the legal
frame for the action of energy efficiency . The third legislative package in 2007,
completed in 2009 with the 20-20-20 targets, has been transposed into national laws
starting with 2011. The targets of Europe 2020 Strategy are: to reduce EU

1 Transilvania University of Bra șov, [anonimizat]
2 Transilvania University of Bra șov, [anonimizat]

Constantin DUGULEAN Ă, Liliana DUGULEAN Ă
196
greenhouse gas emissions of at least 20% below 1990 levels, at least 20% of EU
gross final energy consumption and at least 10% of transport final energy
consumption to come from renewable energy sources, and a 20% reduction in
primary energy use compared to projecte d levels, to be achieved by improving
energy efficiency .

2. Objectives The main objectives of the paper are to present:
– the indicators of energy efficiency of national power systems, as: energy intensity
and energy productivity, but also
– the way of considering the consumers’ satisfaction as a measure of performance
of the electricity on European market.
The analysis of these indicators shows th e status of fact in European Union
using data until 2012, in correlation with the targets of EU Strategies for future
development.

3. Material and Methods

Using the data from Eurostat, the study is divided into two parts: the analysis of
efficiency indicators of power systems and the analysis of indicators of energy market performance.
The first part contains the evolutions of efficiency indicators of power
systems at European Union level, during the period 2001-2012.
The analyses of the efficiency indicator s of power systems are also presented
and commented at EU countries level, for the period 2001-2012.
The analysis of share of electricity from renewable sources in gross electricity
consumption, of the share of renewable ener gy in the final energy consumption, and
of the share of electricity consumption of households in the electrical energy
consumption – all these aspects emphasize the efficiency of energy production.
The second part of the study analyzes the evolution of electricity consumption
in households, at EU level, during 1990-2012 , and at EU countries level, in 2012.
Monitoring the performance markets indi cators includes also the electricity
market at national level and at European Union level.
Modelling the perceptions of customers for the electricity market of EU,
conduct to few models of consumers’ satis faction about electricity market, in 2012,
at European Union level.

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197
4. Results and Discussions

4.1. Energy efficiency indicators in European Union during 2001-2012

An indicator for measuring the energy efficiency is the energy intensity . It is
obtained dividing the gross inland consumption of energy in kilograms of oil
equivalent (kgoe) to GDP in constant prices of year 2000. The unit measure of
energy intensity is kgoe per EUR 1000. This indicator should decrease if the economy has performance.
Using the data from Eurostat, the calcula ted average changing rate of energy
intensity is negative for all the European countries, for the period 2001-2012.
The chart in Figure 1 shows the level of energy intensity in 2012 and the
countries positions in 2012, depending on their potential of decreasing, during the
period 2001-2012.

Fig. 1. Energy intensity in European Union and Norway, in 2012

The countries’ position shows their effort in reducing the energy intensity, saving
energy for each 1,000 Euro of GDP.

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The countries from the fourth frame have low levels of energy intensity in
2012. Ireland, Denmark, United Kingdom, Ge rmany, Malta and other countries form
a group with low energy intensity. Here is another group formed by Austria, Italy, Norway, Netherlands, Greece and Luxembourg also with low levels of energy intensity, but without making efforts to decrease it.
But it is important to mention that the structure of economy is very important.
There are economies with low energy intensity due to the lack of industries, which
are highly energetic consumers.
The intersection of axes meets the means of both variables: energy intensity
on OY axis and the annual average rate of changing on OX axis.
The countries from the first and the second frame are placed over the mean
level of energy intensity for the analyzed countries in 2012. These countries are later
entered in EU: Estonia, Czech Republic, La tvia and Poland, Romania, Bulgaria and
especially Slovakia and Lithuania – the last two countries have made huge efforts to reduce the energy intensity during 2001-2012.
In Figure 2, it is presented the evoluti on of energy intensity for the EU 28
countries, including Croatia, during 2001-2012.

Fig. 2. The decreasing evolution of energy intensity at EU level, during 2001-2012

The effect of economic crisis can be seen on the chart in 2010, when the level of
energy intensity increased, and then in 2011, when its decreasing tendency
continued.
Energy productivity is an indicator of energy efficiency which is the inverse
of energy intensity; dividing the GDP in million EUR or million Purchasing Power Standard (PPS) by gross inland consumption of energy in thousand tonnes of oil

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199
equivalent. The unit measure can be either EUR per kg of oil equivalent or PPS per
kg of oil equivalent.
The inverse correlation between the two indicators will show the increasing of
energy productivity during 2001-2012, in Figure 3.

Fig. 3. The evolution of energy productivity at EU level, during 2001-2012

The energy efficiency supposes the effici ency use of natural resource and the
environmental protection.
Energy saving ways are: renovation of public and private buildings,
development of heat products with en ergy performance of the components.
Introducing an energy efficiency criteria in public spending and for utilities is an
effective way of saving energy. The transport and industry have energy efficiency
requirements for industrial equipment. In troducing the energy audits and energy
management systems for SMEs may improve the efficiency of power and heat generation.
The economic performance of each country must be considered for the target
of renewable energy, because the development of energetic sector starts from different levels.
Figure 4 presents the share of renewable energy in the gross final energy
consumption, the share of electricity from renewable sources in gross electricity consumption and the share of electricity consumption by households in electrical
energy consumption.

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200

Fig. 4. Shares of renewable energy and electricity, in EU during 2004-2012
Share of electricity from renewable sources in gross electricity consumption
are greater than the share of renewable en ergy in the final energy consumption, but
the share of electricity consumption of households represents around 30% from the
electrical energy consumption.

4.2. Electricity consumption in households of EU countries, during 1990-2012

The households consumption can vary as resu lt of a range of factors, which can be
clasified in:
– personal factors: monthly income, number of family members, habits,
education level;
– national level factors: culture, structure of economic activities, labour
productivity, degree of technologisation of industries, degree of dependence on
imports, urbanisation degree, proportion of rural/urban, weather, geographical
position;
– other factors of conjectural nature : economic international competition,
liberalization of energy market at Euro pean Union level, globalization process.
A proportion of 20-31% of total househol d consumption expenditure is spent
for housing, water, electricity, gas and other housing fuels. The evolution of
electricity consumption of households in the countries of EU, during 1990-2012, is
presented in Figure 5.

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Fig. 5. Electricity consumption of hou seholds in EU28, during 1990-2012

Analyzing the level of electricity consumption of households for the countries of European Union, Norway and Iceland, in 2012 and the potential of development
during 2004-2012, it results the chart from Figure 6.

Fig. 6. Level and potential of EU electricity consumption of households

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There are well developed countries with higher numbers of population, such
as France, Germany, United Kingdom, Spain, which have high levels of households’ electricity consumption. The average rate of changing the households’ electricity consumption in Spain is more than 3% per year. In Germany and United Kingdom,
the annual decreasing rate shows that th e population is making efforts for saving
electricity.
Belgium, which is a small country, al so has saved electrical energy of
households. At the other end, it seems th at the households in Romania are not
preoccupied by the electricity saving. But the truth is of other nature. Romania is placed at the same level of electricity consumption with the group of small
countries: Bulgaria, Estonia, Cyprus, Lit huania, Latvia and Iceland, which have
dynamic rates between 2% and 4%. But in Romania the living standard of households is still undeveloped as compared to the other countries.
A deeper analysis can show that some countries are great producers of
electrical energy. Also, the patterns of obtaining electricity from nuclear energy
plants, power stations using combustible fuels (natural gas, coal and oil), and
electricity generated from solar and wind turbines – can offer interesting
conclusions.

4.3. Analyzing the consumers’ satisfaction about electricity market, in 2012

Starting with 2010, EU assesses the performance of goods and services' markets.
There were organized monitoring surveys of consumer markets to ask the opinion of
consumers from EU, Iceland and Norway about the 51 markets' performances.
The assessments are very different between countries, not only because of
market performance but also because of cultural and economic differences of
consumers. Their expectations are influen ced by the education, age, gender, the
confidence in national policies of governme nt, movements of prices, unemployment
etc. The purpose of monitoring surveys is to find the functioning ways of markets for ensuring the outcomes desired by consumers.
The questionnaires for each market have contained mostly the same eight
questions respecting the following aspects:
– comparability – refers to the ability of consumers to compare the outcomes
of the different suppliers on the market; it comprises comparisons of price and
quality;
– trust – refers to the confidence ac corded to suppliers, existing rules,
regulations and organization actions for the consumers’ protection;
– consumer problems and complaints – they count the occurrences of
problems and their severity, the possibility of complaining and the results of the
complains;
– expectations – refers to the satisfied desires of customers;

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– choice – means that the customers can choose the providers in a certain
market;
– switching – refers to the situation when customers have an on-going contract
and how they make a choice for other suppliers.
Last two characteristics: "choice" and "s witching" cannot be applied on all the
markets. For electricity mark et even there exists the po ssibility to choose from more
providers, sometimes is difficult because of geographical distribution of electricity
companies which have monopoly status for their origin regions. In Romania, for electricity market also "switching" seems to be very difficult.
The answers are receiving marks between 0 and 10; then there are calculated
average levels for all respondents, for a cer tain market. The results are presented as
scores in a normalised way, for ensuring the comparability and to eliminate other
influences over the Market Performance Indicators, MPI.
The MPI scores are normalised to the av erage score of the analyzed market,
whereby the average score equals 100 a nd it is named nMPI. Some markets may
have a better performance than the averag e of all markets in their respective group
and so they can receive more than 100. Th e markets under the average level, receive
a score below 100.
The base of comparison is important to be considered. When analyzing all the
markets in a certain country, the normalizati on operation will be to the average of all
markets within that country and when there is analyzed a single market at EU level,
the average will be for all the countries having that market. In different points of
view the MPI scores of a market can be different depending on the areal criterion.
The MPI is a measure of the extent to which the market responds to the
desires of its customers. It is calculated as a composite index including the four key components: "comparability", "trust", "problems and complaints", and
"expectations". The weight for each component is equal with 1/4. The mean of the
answers of all respondents for the charact eristics: "comparability", "trust" and
"expectations" – is therefore always a num ber between 0 and 10. The component of
"problems and complaints" is calculated based on the answers for problems experienced and for the complaint behaviour.
The nMPI is calculated using the formula: nMPI = MPI – Average MPI +100.
In the report on 2012, the market of electricity services is the 46
th in
descending order of nMPI scores of the 51 an alyzed markets, having nMPI = 96.3.
The MPI for electricity market was obtained based on the nMPI of each EU
country, Iceland and Norway. The MPI in descending order is presented in Figure 7.
Trying to modelling the perceptions of customers for the electricity market of
EU, we considered the scores nMPI of anal yzed countries depending on its influence
factors.

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(Source data: ”Monitoring consum er markets in the European Union”, GfK EU3C, 2012)
Fig. 7. The electricity market nMPI by EU country, Iceland and Norway, in 2012

It has resulted only one important factor , Overall Life Satisfaction Index (OLSI).
The regression equation has the determination coefficient R2=21.7%:

, where

(11.16) (2.74) (*) – t Student, P=95%

Considering the OLSI as a measure of customers’ satisfaction, the obtained
multiple linear models are the following:
•

(21.55) (-2.03) (-3.39) (1.99)

(*) – t Student ratio,
, R2=54.03%, for probability P=90%, where:
–
= correlation coefficient between the electricity consumption of
households and Human Development Inde x (HDI) during 2005-2012, for each
country, i. It signifies the measure of correlation showing how electricity
consumption contributes to HDI; –
= the energy intensity for each country (kgoe per 1,000 EUR);
–
= share of renewable energy in gross final energy consumption (%),
for each country.
•

(27.23) (-2.96) (-2.26) (-4.52)

(*) – t Student ,
, R2=60.4%, for probability P=95%, where:

Energy efficiency and performance indi cators of European electricity market
205
= the annual dynamic rate of electricity consumption of households
during 2005-2012, for each country.
The econometric modelling has used also other indicators, as: the electricity
prices in EUR per kWh, share of electricity generated from renewable sources expressed as % of gross electricity consumption, the energy productivity in PPS per kgoe and HDI. But the two models presen ted above were the only significant.

5. Conclusions

The analyses presented in this study can c ontribute to the evaluation process of the
state of energy indicators, efficiency of energy consumption, sources of energy
producing, environment protection, consum ers’ satisfaction a nd energy market
performance.
The paper presented some statistical coor dinates about the energy efficiency
in the European Union, in the last d ecade. Statistical methods to analyze the
electricity consumption in the households of EU countries, during the period 2004-
2012 revealed aspects about the positi ons of countries depending on their
development potential, the trends of renewable energy share and share of electricity
generated from renewable sources.
The satisfaction of customers is subject to monitoring each year. Modelling of the evolution of market performance indicators cannot be
validated only with data of three years for the period 2010-2012.
Monitoring the satisfaction of customers on the electricity market can be a
good estimation for the well-being of population.

All these aspects are the bases of attaining the EU targets, established by its
strategies.
In January 2014 the European Commission established energy and climate
objectives for 2030. The targets are: 40% cut in greenhouse gas emissions,
compared to 1990 levels and at least a 27% share of renewable energy consumption.
For energy efficiency it was not established any specific target.
In order to attain a low-carbon economy and energy system, EU prepares
forecasts until 2050. These targets have stra tegic importance to ensure a competitive
and sustainable economic growth in the future.

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