Energy sector

• Special sector:– Depend on energy inputs (imported)– Strategic sector (linkages)– Non-competitive markets, high regulation

• Liberalization of net energy sectors (petrol, gas, electricity): Oligopoly, with cross stocks in Spanish companies (construction sector, Latin America)

Classification

• Primary energies: coal, petrol, gas, hydraulic, and nuclear

• Secondary energies: electricity (final consumption)

• Non-renewable: coal, petrol, gas• Renewable: water, nuclear, “new energies”

(solar, wind)

Evolution of energy sector

• Industrial revolution (19th century), petrol and electricity (20th century)

• Increase in consumption, less concentrated in petrol (since 1970’s)

• High intensity in energy consumption (petrol) and less efficiency

• Industry ↓ energy, households and transport ↑• Product and employment not very important,

BUT it is important in imports (3/4), ↓ prices and ↑ productivity

Productive and commercial specialization

• Petrol dependency: 75% in 1970’s, 50% nowadays (coal, nuclear, natural gas)

• Self-supply: Spain (1/4), Europe (1/2), OECD (3/4)

• Problems: cost, quality, security

Productive efficiency

• Efficiency problems: very protected and regulated sector

• Nowadays: privatization, liberalization, new regulation

• Measurement of efficiency:– Real productivity (x 2 since 1985, but based on

labor decrease)– Prices of energy (based on imported inputs and

extreme concentrated firms): prices ↓ more than in Europe, overall in households

• Petrol: “Ley de Hidrocarburos 1998”– High firm concentration (Repsol, Cepsa, BP)– High vertical integration (oil refining plants,

transportation and distribution)

• Gas: “Gas Natural”, high prices

• Electricity: firm structure and state regulation– Competition activities (generation and

commercialization) and non-competition (transportation and distribution)

– Prices ↓ (convergence to Europe) because of state regulation rather than competition

Sector policies

• Problems in industrialization, caused by:– Low resources, bad quality, high cost of energy– Energy policy

• Coal: reduction (Plan 2006-2012)• Net sectors: privatization but firm

concentration → new regulation (EU):– Open generation– No discriminatory nets– Consumers freedom to chose– Vertical disintegration– Domestic markets connection

• Petrol and gas (“Ley de Hidrocarburos 1998”):– Firm concentration– Increase in international prices– More formal than real liberalization

• Electricity.– Need of regulation: irreplaceable input, economies

of scale, “natural monopoly”, homogenous prices– “Ley del sector eléctrico 1997”: freedom of

openness and supply (pool with marginal prices), and freedom to choose (demand)

• No global policy. Only in energy savings (renewable energies and Kyoto Protocol)