LA NUEVA NORMATIVA DE TRANSPARENCIA DE SERVICIOS BANCARIOS

After the existing market conditions are detected, the external environment should be monitored and analyzed with two purposes. First, it is critical to know the trends, or driving forces, regarding important factors which might affect the sourcing process and second, to detect the level of uncertainty of those factors, in order to better assess the risk involved in the decision making process.

In our case, anticipating the future will be used to explore the range of potential future contexts for the electricity supply market in EU countries. The objective of this study is not to find the best possible power supply strategy but rather, it is to anticipate future market conditions that may act as forces, which influence strategy development.

The use of trends enables procurement managers to explore the shape and nature of electricity sourcing under a variety of circumstances – some good and others not as preferable. Therefore, by exploring these possibilities and examining their implications for the portfolio, procurement managers will be better prepared to react in a more reasoned and thoughtful way, should these future events come to pass.

It is recommended that PESTE analysis be applied because it is concerned with the environmental influence on a business and can affect its strategic development, as is the case with a quality sourcing process. With major climate changes occurring (due to global warming) and increased awareness of this issue around the globe, the environment is an external factor, which is becoming a significant factor for company managements.

The growing desire to protect the environment is affecting the energy industry, as well as how electricity is sourced. Therefore, industrial users are, in general, moving toward more environmental friendly options.

Regulation trends, including EU energy policy and environmental regulations, are leading to uncertain and significant changes in the electricity sector. They define what a firm is now allowed, or not allowed, to do for its electricity sourcing. Another significant driver in making a final sourcing decision is, of course, the price of electricity – defined by the technology, fuel, and CO₂ cost, as well as the supply and demand, which can shift up or down depending upon market conditions. Social trends encompass consumers’ behavior

and environmental awareness. Some factors in those trends are more predictable (demographics, for example) than others (such as consumers’ preferences). However, the impact of all of these elements is significant when analyzing market conditions. In order to make this process less complex, a short explanation about the dimensions that dominate these five factors follows:

Political dimension. The EU Energy Policy and Environmental Regulations are leading drivers in terms of change in the energy and electricity sectors (refer to Table 2). Factors to be considered within political dimensions are the different regulatory and policy changes that can either directly or indirectly affect the way electricity has been supplied.

Table 2 Policy dimension of the PESTE analysis

P1

Liberalization of the electricity market is in progress

Unbundled service — supply and transmission can be negotiated separately

Self generation will be allowed (back-up, partial generation, selling excess, etc)

Access to the grid will be available to deliver electricity in different regions

Allowed selling of electricity (self generated electricity to the market — new business opportunity)

(Source: Treviño 2010)

Those changes might include opening up the electricity market, the availability of freely choosing suppliers, a tendency towards building a single EU electricity market, an imperative on the diversification of energy supply, different regulations on network access, various policies to promote more secure and sustainable energy delivery, the increase of renewable energy, and the like.

Economic dimension. This covers different drivers influencing the future of the electricity market from an economic point of view, such as the economic growth of EU countries; the situation in financial markets and the existence of financial support for the particular sourcing options (refer to Table 3). Those changes could take the form of financial support for renewable energy or penalties for the use of fossil based technologies or credit restrictions to access different electricity supply forward markets.

Table 3 Economic dimension of the PESTE analysis Increasing number of incentives for selling the electricity

from renewable energy sources (RES)

Electricity prices index to the spot market

Electricity prices index to the forward market

Trend to build additional production capacity to improve load management practices

The generation and transmission system have constraints and provide incentives for interruptible contracts

Economic Supply / Demand, RES/

Nuclear, Fossil fuel price

Fossil fuel prices will remain volatile and unpredictable

Electricity prices index to a commodity (exc., nat gas) Increasing economic incentives for load management practices (load shedding and load shifting)

Electricity purchasing through the market

Increasing number of support schemes for investment in renewable energy sources (RES)

(Source: Treviño, 2010)

Electricity prices are the function of a supply/demand ratio; any changes in these two aspects must be taken into account. Moreover, the changes in the fuel markets must also be analyzed and their potential impact taken into account.

Social dimension. This refers to customer behavior and demographic changes.

Population ages, becomes more or less affluent, changes on a regional basis and so on – all of these elements can have an important bearing on demand as a whole. Consumer attitudes and opinions, media views, education and fashion are also part of the social environment. Consumer preferences regarding different technologies (such as nuclear vs.

green vs. fossil based), price acceptance, living standards, orientation to environmental issues (accepting practices such as reducing consumption, reuse the material, recycling, etc.), as well as their preferences and actions are all important factors for decision making (see Table 4).

Table 4 Social dimension of the PESTE analysis

Social Consumer (large S1 industrials) preferences

People are becoming more concerned about the environmental changes — positive attitude about recycling, willingness to pay a higher price for "green"

electricity

(Source: Treviño, 2010)

Technological dimension. The future of electricity market depends upon technological trends and improvement in the efficiency of existing technologies (for instance, fossil, some of renewable, nuclear) and development of new ones (such as carbon capture and storage, energy efficiency, clean technologies). Frequently, new technologies are categorized as being disruptive, such as semiconductors, power electronics, hydrogen, electrical storage, and the like. Some of the common disadvantages of these are the high costs, due to the fact that they are not mature enough to be standardized. Technology trends in other sectors – indirectly contributing to the electricity market – have to be captured and used. So, technological breakthroughs can create new markets, which might prove to be a threat to existing ones. In equal measure, new technology can be a useful input for different industries (see Table 5).

Table 5 Technological dimension of the PESTE analysis

T1

Technology is available to generate electricity at a competitive cost

Dominance of technologies to offset CO2 emissions (CO2 capture and storage is available)

New renewable energy technologies (RES) will grow in the market (e.g., RE, nuclear, etc.)

New automation technology will support energy efficiency and load management practices

(Source: Treviño, 2010)

Environment dimension. Refers to climate change an environment-related regulation in the EU community. The new regulation will restrict the allowance to emit CO2 in the atmosphere affecting the price of electricity. This may lead to changes in the EU’s economy (see Table 6).

Table 6 Environmental dimension of the PESTE analysis

E1

E2 Environmental Environmental issues

New regulations regarding pollution and the environment are expected to intensely affect the prices of CO2 and electricity

New environmental regulations will not affect the price of CO2

(Source: Treviño, 2010)

The main idea behind monitoring the trends is to help users expand their thinking beyond the urgency and immediacy of the here and now, as well as to identify the external factors that may have an anticipated impact on the electricity market today and, consequently, on the decision making process tomorrow.

Applying PESTE, users will find that some of the expected changes are more predictable than others. Apart from the predictable or expected changes, users may also recognize changes with a high level of variation and unexpected behavior – these are called uncertainties and deserve our full attention, due to the fact that their impact on the sourcing process may be enormous and unpredicted. The responsibility of the strategist is to keep monitoring these uncertain changes and be prepared to react to them as fast and as rationally.

Usually, consumers face a great challenge in perceiving upcoming changes and evaluating their potential impact. After managers recognize the existing market conditions and have learned about potential changes, they are ready to explore the new options. Therefore, the next step is to build a profile of new options.