European EnergyMarkets Observatory

2007 and Winter 2007/2008 Data SetTenth Edition, November 2008

the way we see itEnergy, Utilities and Chemicals

In collaboration with

vaasa ett

Contents

©2008 Capgemini.Reproduction in part or in whole is strictly prohibited.

A strategic overview of the European energy markets 4

Competitive Power 12Generation 12Electricity Wholesale Markets 22Electricity Retail Markets 28

Competitive Gas 35Upstream 35LNG 40Gas Wholesale Markets 44Gas Retail Markets 48

Infrastructures and Regulated Activities 54Electricity Transmission 54Electricity Distribution 59Gas Transmission 66Gas Storage 69Gas Distribution 72

Sustainable Energies and Climate Change 75

Strategy and Finance 82

Glossary 88

Country Abbreviations and Energy Authorities 91

Team and Authors 92

Table 1.1 Peak load, generation capacity andelectricity mix (2007) . . . . . . . . . . . . . . . . . . . . .12

Table 1.2 Real margin vs. theoretical margin(2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14

Table 1.3 Projects of new generationcapacities, in MW (2007) . . . . . . . . . . . . . . . . . .16

Table 1.4 Generation market concentration(2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18

Table 1.5 Overview of nuclear capacities(as of Sept. 2008) . . . . . . . . . . . . . . . . . . . . . . .19

Table 1.6 Electricity generating costs(US$c/kWh), projection for 2010 . . . . . . . . . . . .21

Table 2.1 Commodity prices(2007 and H1 2008) . . . . . . . . . . . . . . . . . . . . .22

Table 2.2 Average electricity spot prices . . . . . .23

Table 2.3 Electricity spot market prices . . . . . . .23

Table 2.4 Map of electricity trading (2007) . . . . .24

Table 2.5 Assessment of power exchangematurity and attempts to develop abroad . . . . .25

Table 2.6 Electricity spot market priceson the continental markets . . . . . . . . . . . . . . . .26

Table 3.1 Size of I&C and Residential electricitymarkets (2007) . . . . . . . . . . . . . . . . . . . . . . . . .28

Table 3.2 I&C electricity prices (H2 2007) . . . . .29

Table 3.3 Residential electricity prices (H2 2007)30

Table 3.4 Status of electricity price regimes (as ofend 2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30

Table 3.5 Annual European electricity switching(2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31

Table 3.6 Electricity retail market concentration(2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31

Table 4.1 Domestic gas production vs. imports(2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35

Table 4.2 Proven gas reserves (2007) . . . . . . . .36

Table 4.3 Gas imports through pipelines andpipelines projects (2007) . . . . . . . . . . . . . . . . . .38

Table 4.4 Gas pipelines in the Caucasian region(2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39

Table 4.5 Gas production and Europeanproved reserves by company (2007) . . . . . . . . .39

Table 5.1 Map of LNG terminals and flows(2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40

Table 5.2 LNG imports to Europe (2007) . . . . . .41

Table 6.1 Gas spot prices (2007 and Q1 2008) .44

Table 6.2 Map of gas trading (2007) . . . . . . . . .45

Table 6.3 Types of trading transactions,July 2007 vs. August 2006(in brackets, the year before) . . . . . . . . . . . . . . .47

Table 7.1 Size of I&C andResidential gas markets (2007) . . . . . . . . . . . . .48

Table 7.2 Gas retail market concentration(2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50

Table 7.3 I&C gas prices (H2 2007) . . . . . . . . . .52

Table 7.4 Residential gas prices (H2 2007) . . . .53

Table 7.5 Status of gas price regimes(as of June 2007) . . . . . . . . . . . . . . . . . . . . . . .53

Table 8.1 Total annual investments inthe national transmission grid of14 major Western European TSOs . . . . . . . . . .54

Table 8.2 Electricity TSOs in Europe (2007) . . . .55

Table 8.3 Level of interconnections, bottlenecksand priority interconnections (2007) . . . . . . . . .56

European Energy Markets Observatory 3

Energy, Utilities and Chemicals the way we see it

Tables Country Focus

Key issues in the UK . . . . . . . . . . . . . . . . . . . . .13

Key issues in Eastern Europe . . . . . . . . . . . . . .36

Key issues in Italy . . . . . . . . . . . . . . . . . . . . . . .37

Key issues in France . . . . . . . . . . . . . . . . . . . . .42

Key issues in Spain . . . . . . . . . . . . . . . . . . . . . .46

Key issues in Denmark . . . . . . . . . . . . . . . . . . .59

Key issues in Germany . . . . . . . . . . . . . . . . . . .66

Key issues in Switzerland . . . . . . . . . . . . . . . . .67

Key issues in Belgium . . . . . . . . . . . . . . . . . . . .71

Key issues in The Netherlands . . . . . . . . . . . . .73

Key issues in Sweden . . . . . . . . . . . . . . . . . . . .78

Topic Focus

Coal: hype or reality? . . . . . . . . . . . . . . . . . . . .15

Continuous Improvement Process: Flexibleapproach towards operational excellence . . . . .20

Industrials are investing in power generation . . .21

Energy markets and regulation offinancial markets . . . . . . . . . . . . . . . . . . . . . . . .27

Increasing switching activity in Europe . . . . . . .32

Cost to serve . . . . . . . . . . . . . . . . . . . . . . . . . .33

Demand Response: How Europe could saveGigawatts, billions of euros andmillion of tons of CO2 . . . . . . . . . . . . . . . . . . . . .34

New entrants in retail markets:How to win the challenge of Upstream /Downstream Integration? . . . . . . . . . . . . . . . . .49

Beating the UK Credit Crunch . . . . . . . . . . . . . .51

Ownerhship unbundling in electricity . . . . . . . . .54

EMIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .61

The Smart Power Grid trend . . . . . . . . . . . . . . .63

Smart Metering . . . . . . . . . . . . . . . . . . . . . . . . .64

Examples of Smart Metering initiativesin Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . .65

Ownership unbundling in gas . . . . . . . . . . . . . .68

Implementation of the EU Energy andClimate Change package . . . . . . . . . . . . . . . . .76

Political focus on CO2 sequestration . . . . . . . . .79

In-home energy usage display units . . . . . . . . .81

Are Windfall Profits undue? . . . . . . . . . . . . . . . .83

Table 8.4 Congestion methods andelectricity TSOs (2007) . . . . . . . . . . . . . . . . . . .57

Table 8.5 Levels and components oftransmission tariffs (2007) . . . . . . . . . . . . . . . . .58

Table 9.1 Electricity DNOs in Europe (2007) . . .60

Table 9.2 Level of Unbundling(as of Jan 2008) . . . . . . . . . . . . . . . . . . . . . . . .60

Table 9.3 Economic regulatory framework fordistribution in some European countries . . . . . .61

Table 9.4 Total distribution cost per customer(2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .62

Table 10.1 Map of gas storage (2007) . . . . . . . .69

Table 10.2 Gas storage capacities (2007) . . . . .70

Table 10.3 Storage facilities projects . . . . . . . . .70

Table 11.1 Gas DNOs in Europe (2007) . . . . . .72

Table 11.2 Gas distribution market penetration(2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .73

Table 11.3 Approximate network tariff forsmall commercial and household (2007) . . . . . .74

Table 11.4 Gas distribution regulatory regime(2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .74

Table 12.1 3x20 EU climate change objectives .75

Table 12.2 EU Member States renewablesand GHG emission reduction objectives . . . . . .77

Table 12.3 CO2 prices (2007 & H1 2008) . . . . . .79

Table 12.4 Growth rate of electricitygenerated from RES . . . . . . . . . . . . . . . . . . . . .80

Table 13.1 Companies on the panel andtheir main characteristics (2007) . . . . . . . . . . . .82

Table 13.2 Profitability evolution (2007) . . . . . . .84

Table 13.3 Total investment as a % of sales(1990-2007) . . . . . . . . . . . . . . . . . . . . . . . . . . .85

Table 13.4 Examples of investment plans(2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .85

Table 13.5 Utilities sector comparedwith the European equity index(base one on January 1, 1995) . . . . . . . . . . . . .86

Table 13.6 Sector performance (2007) . . . . . . .86

Table 13.7 War chests comparison . . . . . . . . . .87

A strategic overview of the Europeanenergy marketsEditorial by Colette Lewiner

Based on these underlying difficulties,“surface” problems became more acute.Nationalistic attitudes from producingcountries grew stronger, therefore raisinggeopolitical tensions. The US dollarcontinued to depreciate against all majorcurrencies thereby decreasing the actualpurchasing power each barrel of oil canexchange. There have been activespeculations. All these factors pushed oilprices up.

Recently, oil prices started to drop. First ofall, demand pressure is reducing a littlebit. In June 2008, to curb oil demand,some emerging countries decided to lowertheir domestic subsidies on gasoline.Prices increased 29% in Indonesia, 16% inChina and 10% in India. People in the USand other western countries also started toreact to high energy prices and fears ofeconomic recession, by lowering theirconsumption. For example, oilconsumption in the US decreased by 3.8%in the first half of 2008. Thesedevelopments led the International EnergyAgency (IEA) to revise downward itsworld demand growth forecast2.

On the supply side, Saudi Arabiaincreased its production by 500,000barrels per day in May and June 2008. Inaddition, the US dollar strengthened, andspeculation decreased. Oil prices droppedto less than $70 in October, below itsJanuary 2008 level.

Central banks welcomed this oil pricedrop as it decreases inflation risks. In thecontext of the worsening credit crunch,central banks have to take quick decisionswith two different objectives. On one side,they need to inject massive liquidities intothe markets in order to avoid a totalcollapse of the financial system. On theother hand they have to control inflation

to avoid longer term damage to generaleconomies. Lower oil prices can providemaneuvering space for bolder decisions.

However, this round of oil price drop couldbe short-lived. IEA lowered its forecast onnon-OPEC production growth for 2008 to270 thousand barrels per day, which is lessthan a third of the one million barrels perday growth predicted at the start of theyear. In its September conference, OPECdecided to decrease its overall oilproduction by 520,000 b/d. In its Octobermonthly report, OPEC foresees in 2007, a890,000 b/d oil consumption decrease inOECD countries. For 2009, the globaldemand should grow by 760,000 b/d(compared to 600,000 b/d in 2008).Hence, the oil price level for the next fewmonths is difficult to predict.

What conclusions can we draw for the future?

• Long term investments in explorationprojects require stability in oil prices.Price volatility increases investment risks,

• A big drop in oil price will renderexpensive projects no longer financiallyviable. According to one of the IOCs3, $90per barrel is about the threshold belowwhich production from the extra heavy oilsand in Canada would not give asatisfactory Return on Investment. At thesame time, this heavy oil is needed for thefuture, and investment needs to start now,

• Even if economies of Western countries slowdown or even go into recession, pushingdown their oil consumption, it will not beenough to offset the steady consumptiongrowth in the developing world,

• Technical difficulties to replace currentoil production with new discoveries willremain,

• Unfortunately, there is little hope thatgeopolitical tensions between some oiland gas producing countries, notably

Before writing this editorial, I read againthe one I wrote last year. It is a valuableexercise. I found that many predictions wemade at that time turned out to be right.Most of the trends that we identified thencontinued to materialize in the past year,but we were too optimistic on security ofsupply improvement and competitivenessgrowth in the retail market.

We believe that the most strikingevent in the last 12 months was theoil price volatility

In our previous report we concluded:“This overall situation is not rosy, and it isclear that unless the worldwide economy willexperience a downturn, the (energy) supplyand demand balance will be more and moredifficult to reach with conventional oil.” andlater “oil spikes are not precluded in thefollowing months.” This analysis has beenproved right. Crude oil price increasedfrom $70 per barrel in July 2007 to nearly$150 in July 2008. It stayed in the rangeof $90 to $150 during the first half of2008.

These high oil prices reflect all thetensions that have been detailed in ourprevious reports between high growth inglobal demand, especially from emergingcountries, and fears that oil output growthwould not match the speed of risingdemand. The bottleneck in output growthcomes from various technical andeconomic problems:

• Inflation in raw material costs and a lackof skilled personnel have pushed up thecost of production from existing fields,

• Mature fields are depleting,

• Costs of new exploration projects areescalating,

• Newly discovered large fields1 are verydifficult to exploit and it will take yearsbefore oil can be produced from them.

4

1 Last year’s biggest discovery was the Tupi field in Rio bay in Brazil, containing an estimate of 5 to 8 billion barrels of oil.It is located more than 250 km off the coast. The oil is trapped around 7,000 meters below sea level; above it are 2,000 meters of water and up to 2,000 meters ofhot high pressure volatile salt, among other factors.

2 IEA forecast: In 2008 demand should reach 86.8 mb/d. It is 0.8% or 0.7 mb/d increase versus 2007, but it is 0.1 mb/d lower than previously estimated. Forecast for2009 is 87.6 mb/d, which is 1.0% growth year on year and 0.14mb/d lower than previously estimated.

3 IOC : International Oil Company (or Major)

will extend coverage from CO2to other

greenhouse effect gases. It will imposevery significant reductions of overallemissions, including from sectors that arecurrently out of the ETS scope. Also it willimpose a big boost in renewable energycontribution to the total energy supply.

This package will also further reform ETS,by imposing the following changes:

• A phased reduction of the ETS cap onemission rights, from 2,082 Mt/y duringPhase II (2008 to 2012) to 1,720 Mt/yby the end of Phase III (2013-2020),

• Starting from 2013, 100% of theEmission Rights will be auctioned to thepower sector which currently gets mostof them free of charge. This change willresult in tens of billions of euros in extracost for the Utilities which will certainlybe passed onto the electricity prices. Theauction revenue will be only partiallyreallocated on Climate Change relatedR&D projects,

• Over phase III, there will be muchtighter control on emission certificatesacquired through the CleanDevelopment Mechanism5 or JointImplementation mechanism6.

These “Climate Package” proposals haveraised concerns and protests from certainindustrial sectors as well as politicians.Oppositions argue that industries wouldoutsource their production from Europe tocountries with less stringent conditions,therefore resulting in job losses (“carbonleakage”). Moreover, certain EasternEuropean countries, notably Poland, arefighting against the plan on the basis thatthese measures would compromise theireconomic development.

No matter how, time will be very short tohave this “Climate Package” adoptedbefore the next European Parliamentelections in June 2009.

Are we on the right track?

On CO2 emission limitation, theEuropean Union (EU) is a front runnerwith the Emission Trading System (ETS—a “cap and trade” system for CO

2

emissions) implemented since 2006. Manymeasures are taken based on this system.In March 2007, the Member States agreedto a 20% reduction in CO

2emissions by

2020, together with a 20% reduction inenergy consumption and a 20% share ofrenewable energies in the totalconsumption, all compared with theactual levels of 2005.

In early 2008, the ETS was reformed. Itnow allows full emission certificatesbanking from Phase II (2008-2012) toPhase III (2013-2020). This change is inline with what we suggested in ourprevious EEMO edition. Also, during thefirst half of 2008, all EU Member Statesagreed with the European Commission(EC) on more restrictive Phase II (2008-2012) National Allocation Plans on CO

2

emissions. It totals 2,082 million tons ofCO

2per year compared to 2,298 Mt/year

during Phase I (2005 to 2007). Thecombined effect of all these measures havepushed the CO

2Emission Certificate price

up from €0.05/ton at the end of 2007 toaround €23/ton in September 2008.However, we need to point out that evenas the CO

2price soared, no real switches

from coal to gas generation have beenobserved so far.

These measures are on the right track, butwill probably not be sufficient to meet the2020 objectives.

This is why the EC has proposed a“Climate Package” in January 2008. It isviewed as a priority for the FrenchEuropean Presidency in the second half of2008. This “Climate Package” includesplans during phase III (2013-2020) that

A Strategic Overview of the European Energy Markets 5

Energy, Utilities and Chemicals the way we see it

Russia and Iran, and the western importcountries, will ease soon.

With a stronger US dollar and a foreseeableeconomic recession, oil prices should decreaseon the short term. On the longer term, thetensions described above will remain pushingagain the prices up.

Limited progress on the crucialquestion: “How to respond toEuropean energy demand, whiledecreasing CO2 emissions?”Huge investments in energyinfrastructures are needed

In order to comply with the forecastedenergy demand growth and replace aginginfrastructure, huge investments areneeded. At 2% global economic growthrate, the world would need about $22trillion cumulative investments in energy(oil, gas and electricity) infrastructurebetween 2006 and 20304, half of them indeveloping countries.

In the previous EEMO editions, weestimated that €1 trillion investment isneeded in electricity and gasinfrastructures in Europe. Our reportcautioned that without a vigorousconstruction program, security of energysupply would be threatened. Since then,raw material cost growth and difficulties infinding qualified human resources havepushed investment amounts up anddelayed commissioning dates of somemuch needed plants, electrical grids andpipelines. We will come back on thesepoints later on.

Building these infrastructures on time isalready a huge challenge. It is made morecomplex because of the need to curb CO

2

emissions in order to fight climate change.So, it is not just any investment, but of theright kind, that is required.

4 International Energy Agency Nov 2007 report5 The Clean Development Mechanism (CDM) is an arrangement under the Kyoto protocol allowing industrialized countries with a greenhouse gas reduction

commitment (called Annex 1 countries) to invest in projects that reduce emissions in developing countries, thus acquiring emission rights.6 The Joint Implementation (JI) mechanism is an arrangement under the Kyoto protocol allowing Annex 1 countries to earn emission reduction units from an

emission-reduction project in another Annex 1 country.

6

compared to the 1990 level. Energydemand and CO

2reduction should

come from cars, industries, publicbuildings and private homes,

- In France, a major debate took placearound the “Grenelle del’environnement” in October 2007.After this gathering, different measuresare being adopted by the FrenchParliament to build insulationregulation and have incentives thatswitch towards less CO

2emitting

transportation means,

- The Danish government reached abroad parliamentary agreement inFebruary 2008 to have 20% grossenergy consumption reduction by2011, compared to the 2006 level. Thegovernment will provide energytechnologies R&D funding of onebillion Denmark Kroner (€135million) by 2010,

- In September 2008, the UK PrimeMinister revealed a £1 billion (€1.26billion) energy package funded by the“big 6” energy companies operating inthe country. It is designed to help lowincome families make necessaryrenovations which will bring long termbenefits by reducing energyconsumption and therefore energybills. Among the measures, insulationfunding is a prominent one.

• Individuals are more and more sensitiveto sustainable development. People arestarting to change their behavior. Forexample, smaller hybrid cars andelectrical cars are becoming increasinglypopular,

• The same is true for companyexecutives who now rank sustainabledevelopment among their top priorities.They should start taking actions8,

• Innovative devices are being developedand marketed to limit energyconsumption and thus CO

2emissions.

For example, Light Emitting Diodesconsume a fraction of the electricity usedby equivalent incandescent lights,

meet its 2020 objectives. For example,CO

2emissions in the EU were stable in

2007, whereas the objective was adecrease!

It is worse on a worldwide perspective7:CO

2emission is expected to increase by

46% by 2030.

This worrying trend has to be reverted.Strong actions are needed to:

• Boost energy conservation,

• Develop sustained renewable energies,

• Make carbon capture and storage areality,

• Sustain the current nuclear energyrevival.

Energy conservation: In 2007, the EUcountries had a mild average temperaturein the summer and winter. However,electricity consumption continued to growby 0.9% year-on-year, although this paceis slower than the previous years. Gasconsumption decreased slightly by 1.6%.All forms of primary energy consumptionin EU-25 decreased by a small 0.15%.

These figures show that for the first timein many years, the trend is reverting or atleast energy demand growth has stopped.Barring the scenario of an abnormally coldwinter, this tendency is likely to beconfirmed in 2008 because energydemand decreases as a response to highprices and economic slowdown. Thoughwe are on the right direction here, thetarget of 20% demand reduction is veryambitious.

We are in a critical situation but there aresome reasons for hope:

• In the last year, some interesting actionswere launched by politicians in variousEuropean countries. For example:

- In August 2007, German ministersagreed on a 30-point program toreduce 35% of CO

2emissions by 2020,

Windfall profits: In many regional powermarkets in the European Union, the fullprice of ETS certificates is already reflectedin the wholesale power market prices,despite the fact that many of thesecertificates are actually allocated toelectricity generators free of charge. This isa clear windfall profit for those Utilitiesthat are able to get free CO

2certificates

and charge them at full price to theircustomers.

The calculation of windfall profit dependson valuation methods and underlyingassumptions, such as the percentage offree certificate allocation, ETS price, etc.For example, we estimate that the twobiggest German Utilities, E.ON and RWE,had earned additional €5 billion profitsfrom free certificates in 2007 alone. Suchhuge profits have triggered taxationproposals from politicians in manyEuropean countries, notably in the UKand Belgium. These politicians are alsoalerted by increasing retail electricityprices, as household budgets are comingunder more and more pressure from risingfood, gasoline and home heating bills withan economic slowdown or even recessionlooming.

In Germany, the large electricity users’association VIK complained that Germanconsumers paid €5 billion in 2005 for anactual nine million tons of CO

2emission

reduction in Germany, or about €550 perton of CO

2emission reduced, “the

equivalent of €10/MWh [extra price] thatcompanies are taking from customerswithout any service in return.” The debateis far from closed. It will only come to anend if the “Climate Package” is adopted, inwhich clearly rules will be set on CO

2

emission rights auctioning during phaseIII (2013-2020).

Where are we standing now?

Despite the existing and futureregulations, it is disappointing to see thatEurope is not on the right trajectory to

7 International Energy Agency November 2007 report8 http://www.us.capgemini.com/PlattsStudy/

process by which carbon dioxide isseparated at power plants, transported andthen buried underground. It has long beenseen by the energy industry as a means tomake coal a climate-friendly fuel.

Many Utility companies have plans tobuild carbon capture technology enabledcoal plants. In September 2008, Vattenfallfired up a 30 megawatts carbon captureplant in eastern Germany. It sees this €70million project as an important milestoneon the road towards widespread use ofcarbon capture and storage technology.Others, such as E.ON and Enel, haveinvestment plans totaling hundreds ofmillions of euros for this technology.

However, the experience at BritishPetroleum has underscored the complexityof these projects. In May, BP abandonedplans for a plant in Australia after itdiscovered that geological problems madethe long term storage of CO

2unfeasible.

Today, CO2capture equipments installed at

coal plants significantly decreaseproduction efficiency, thereby roughlydoubling electricity generation cost. CO

2

transportation and storage would increasethe cost even more. More research work isneeded on finding reliable CO

2storage

technologies. It is clear that only very highand sustained CO

2emission prices could

render these projects economically viable.In the meantime, Utility companies haveplans to retrofit their coal fired plantswhich can increase efficiency up to 50%.

Nuclear revival: Having been out in thecold for many years, nuclear is now onceagain being embraced as an importantenergy source. There are 439 reactors inoperation, 34 under construction andaround 320 new nuclear projects plannedall over the world. The IAEA11 expectsglobal nuclear power capacity in 2030 torange from a low-case scenario of 473 GW,27% higher than today’s 372 GW, to ahigh-case scenario of 748 GW.

There is an appetite for nuclear power in

GW in 2007. RES now represents 9% ofEuropean generation capacity.

Today, the cost of electricity generated bywind farms is much higher than that ofmany existing energy sources. In France, itis estimated to be twice as expensive asnuclear energy. Solar electricity has asignificant higher cost than wind power.This is why the development of these twonew forms of energy is strongly linked tofinancial incentives. Countries such asSpain, Denmark and Germany, with alarge share of RES in their electricalgeneration capacity, have established longterm regulations with incentives, forexample, obliging Utilities to buy RESelectricity at higher prices. In turn, theUtilities will pass this extra cost to theirend customers.

While allocating seed money forinnovative equipment is wellunderstandable, subsidizing costlyenergies on a long term basis isquestionable. It is not a sustainablebusiness model because governmentpolicies could change. So, even if windpower continues to develop in the nextfew years, it is not obvious that it will besustained in the long term. The case forsolar energy is different.

Though today solar power is more costlythat wind power, it has a much biggerpotential for improvement, both in termsof energy efficiency with differentphotovoltaic cells matrices, and in termsof the manufacturing process andtechnologies. Both wind and solar energiesare not schedulable; therefore pose manyproblems to grid operators both on griddevelopment and on instantaneousbalance of electricity supply and demand.Also, grid operators cannot rely on these“theoretical” installed capacities to provideelectricity needed on peak load days. Ifthere is no wind, there will be noelectricity output.

Clean Coal technologies’ first industrialsteps: Carbon capture and storage is a

• Some Utilities are launching DemandResponse programs, incentivizing theircustomers to reduce their consumption.These programs, enabled by innovativedevices such as smart meters, can savesignificant amounts of energy and CO

2

emissions9.

However, these positive signs are notenough. Tougher measures should betaken in developed countries in order toconserve energy. Also, more funds need tobe allocated to fundamental and appliedenergy research such as solar energy, CO

2

capture and storage, second generation bio-fuel, fourth generation nuclear plants, etc.

Adapted measures, including energyefficiency improvements, need to bedesigned for developing countries,keeping in mind that their energyconsumption and CO

2emissions per

capita are still very low and they want,rightfully, to reach better standards ofliving. They should take advantage of newtechnologies and innovation to limit theirCO

2emission growth.

Fighting climate change is a globalchallenge. If big CO

2emitting countries

such as the US, Russia, Japan, India andChina don’t curb their emissions, the EUefforts will be like a drop of water in theocean, and at the same time jeopardizeEurope’s economic competitiveness.

Growth in renewable energies: The paceof investment into renewable andsustainable energy is increasing fast.Worldwide, it attracted $112 billioninvestments10 in 2007. This is a 41%increase compared to 2006. Wind energycontinues to be the industry’s favorite,with 20 GW of new capacity installed in2007. Solar technology continues to growfast, albeit on a small scale. Estimatessuggest a global investment of around $20billion during 2007.

In Europe, RES (Renewable EnergySources), particularly wind, contributed togeneration capacity increase by adding 8.3

A Strategic Overview of the European Energy Markets 7

Energy, Utilities and Chemicals the way we see it

9 Capgemini “Demand Response” study, in collaboration with VaasaETT and Enerdata, shows if these programs are implemented actively, they could achieve 25 to50% of the EU’s 2020 energy savings and CO

2emission reductions targets.

10 Source: EFI and New Energy finance report11 IAEA: International Atomic Energy Agency

In existing nuclear countries as well as in“new” countries, governments, localauthorities, financial institutions andmainly the whole value chain of thenuclear industry has to get organizedquickly in order to make this nuclearrenaissance a long standing success.

Security of supply

We have already pointed out that it isimperative to quickly invest significantamounts on energy infrastructures inEurope. In this respect, it is encouragingto see that since the low point in 2005,Utilities have started to invest again oninfrastructures.

However their energy mix choices raiseconcerns. The majority (58%) of theplanned generation plants in Europe willbe fossil fuelled, dominantly gas fired, andthus CO

2emitters. Moreover, investments

on RES whose outputs are not schedulabledo not contribute much to guarantee peakhour generation capacities.

These unfavorable energy mix choices,combined with long plant constructiontimes, delays in plant commissioning andlower availability of the French nuclearplants due to maintenances, explain whydespite increased investments, the overallelectricity security of supply actuallydeteriorated in 2007.

Electricity security of supplydeteriorated

Despite the mild weather, the realgenerating margins in the UCTE13

perimeter, taking into account non-usableand unavailable generation capacities,dropped from 7.6% in 2006 to 5.3% in2007. Some worrying signs can benoticed:

• In France the real margin is at -5.7%. Inthe UK it is down from 7.9% to 2.2%compared with 2006. In Germany it isdown from 4.4% to 2.0%,

• Central and Eastern European (CEE)countries have low margins: Hungary(-8.3%), Slovakia (-11.2%), Slovenia(-21.5%) and Latvia (-25.9%). CEE

countries struggled with supplyshortages due to big plant maintenancein Bulgaria and Slovakia, as well asgeneration capacity drop.

Some countries kept their real generationmargin high, such as Austria (+26.3%),Norway (+11.8%) and Lithuania (+17.1%).

We can notice that although theoreticalgeneration margins increased, the realmargins did not follow. This is partlydue—as explained earlier—to theincreased share of wind power in theinstalled capacity.

This new deterioration of electricity securityof supply, after improvements seen in 2006,reinforces our message on the need to speedup investments in infrastructures and tochoose the right energy mix!

Gas security of supply: Last year’strends continued to materialize

In last year’s editorial, we wrote, “One caneasily predict that the EU/Russia battle forgas supply and value chain control is onlystarting.” This is a hot issue as the share ofRussian gas in total European gas supplyshould reach 50% in 2030, with varyingdependency levels from one Europeancountry to another. Finland and manyEastern European countries will be morethan 80% dependent.

As in the year before, this battle notablycontinues through the control oftransportation and local pipelines:

• Russia successfully signed morepartnership commitments to the SouthStream pipeline project which waslaunched in 2006 between Gazprom andEni (Italy),

• Gazprom recently agreed withKazakhstan and Turkmenistan toconstruct a new pipeline along the BlackSea coast.

All these agreements are undermining theEuropean sponsored Nabucco project,which could end up with not havingenough gas to transport. In addition:

8

“old” nuclear countries as well as in newones, in developed countries as well as inthe developing world, in countries withexperienced nuclear authorities and inthose were they don’t yet exist, and finally,countries with savvy nuclear operators aswell as those with non-experienced ones.There are prerequisites for this nuclearenergy “renaissance” to sustain and turninto a success.

As with other large scale industrialprojects, nuclear plants constructioncarries multidimensional risks related totechnical difficulties, contractual andenvironmental concerns, regulatorycomplexity, skilled human resourcescarcity and local communities’opposition. All these factors can lead toconstruction delays and cost overruns thathave to be borne by the variousstakeholders including the end customers.

In addition, the nuclear industry has someunique and especially stringentrequirements to comply with. Capabilitiesto meet these requirements are paramountprerequisites for the industry to succeed.The most important ones are12:

• Nuclear non proliferation control,

• Safety management over a nuclear plant’sentire lifetime, from design,construction, operation, radioactivewaste treatment to decommissioning,

• Mastering the exceptionally long projectlifetime and large investment: Leadconstruction time and plant operationlifetime combined is well in excess ofhalf a century. €4 to 5 billion areneeded for a 1,600 MW plant,

• Long term financial competitivenessbased on stable environmental regulatoryframeworks and sound business models,

• Smooth industrial ramp up in the face ofthis sudden and big revival, includingrevamping the entire supply chain aswell as attracting competent humanresources,

• Public acceptance is a specially sensitiveand difficult point.

12 Point of View « How to sustain the nuclear renaissance », by Colette Lewiner and Alva Qian, Capgemini13 UCTE: Union for the Co-ordination of Transmission of Electricity

only 7% of European gas consumption.It is estimated that LNG could represent15% to 18% of European gas supply by2020.

We observed the same movement in theUS and in Asia, where LNG demand isalso growing to bridge the gap betweengas demand and supply. This trend willlead to a tight LNG market in the 201514

timeframe.

The LNG market is increasinglydominated by the LNG producers becausethere are now much less technical or havecontractual obstacles to LNG cargoarbitrage between destinations. Accordingto a study on LNG regasification terminalscommissioned by the French RegulatoryAuthorities (CRE), the major challenge forEurope is how to attract LNG supply intoterminals located in Europe rather than tothose in US or Asia.15

Over the period, progress was madetowards a common electricity marketin Europe

In last year’s editorial, we briefly analyzedthe then freshly announced EC ThirdPackage and especially the ownershipunbundling proposal for electrical gridsand gas pipelines. We concluded that“unbundling alone is not enough (to create atruly liberalized energy market) and othermeasures would also need to be implementedto achieve that objective.”

In fact, the Third Package was notadopted. On June 17 (for electricity) andJuly 8, 2008 (for gas), the EuropeanParliament voted on different texts in lieuof the EC’s compromise. On October 10,2008, the Energy Council reached formalagreement on this Package. Now, co-ordinations and reconciliations betweenthe Parliament texts and the Commissiontext need to take place before the term ofthe present Parliament that ends Easter2009.

The political wrangling over ownershipunbundling did not prevent the energy

market actors (TSOs16 and PowerExchanges) from entering into agreementsenabling progress towards a commonmarket. This is reflected in the increasedconvergence between wholesale electricityprices in different European markets.

• Consolidation in the power exchangebusiness is accelerating:

- December 2007, Powernext (France)and EEX (Germany) signed acooperation deal regarding their spotand futures trading operations,

- March 2007, OMEL (Spain) and OMIP(Portugal) agreed to implement a singleIberian power market (OMI) by theend of 2007,

- Belpex, Europe’s first project of marketcoupling started two years ago. In June2007, a memorandum ofunderstanding was signed to extendthe Belpex market coupling toLuxembourg and Germany in 2009.

• Some major new infrastructure werecommissioned in 2007/2008:

- The 580 km 700 MW NorNed subseapower cable linking Norway and theNetherlands went into full operation inMay 2008,

- The 350 MW Estlink HVDC submarinecable between Estonia and Finland isthe first interconnection between theBaltic and the Nordic electricitymarkets,

- A new line between Romania andHungary should be completed soon.

• Some other projects have also beenagreed upon or proposed in 2008:

- The long awaited interconnectionreinforcement between France and Spain,

- TenneT (The Netherlands) andNational Grid (UK) agreed to buildBritNed link interconnector,

- Italy and Albania decided to build anew interconnector,

- A new 550 MW connection cablebetween Finland and Sweden (Fennoskan 2) and a 600 MW power cablebetween Denmark and Norway (newSkagerrak cable) have been submitted

• Gazprom took joint control of localpipeline companies in Serbia and Belarus,

• Also Gazprom has increased its presenceall along the value chain bystrengthening its retail operations inmany European countries, such asGermany, the UK, Italy and France.

While Gazprom is increasing its control oncross border pipelines, it seems that itsgrip on the Russian gas industry isweakening. Russian State regulators saidthat Gazprom would be fined forrestricting an independent gas producerfrom accessing its vast pipeline network.In view of the same, will networksunbundling happen in Russia beforeEurope?

More worrying is the recent war in Georgiathat is compromising the stability in theCaucasus region. Large populations of theRussian minority are living in countrieslike Georgia, Kazakhstan, Ukraine andMoldavia, and this unstable politicalsituation is threatening gas security ofsupply because numerous oil and gaspipelines run across this sensitive region.

All these facts analyzed above reinforce ourlast year’s message: “Europe needs to decreaseits dependence on Russian gas supply.”

To have better control over the situationand to improve its security of gas supply,Europe should take the followingmeasures:

• Increase its gas storage capacities: In2007, gas storage capacity in Europeincreased by roughly 7% reaching almost80 bcm. Over 59 bcm of additionalstorage capacity can be expected by2015,

• Develop greater fluidity within theEuropean market to enable moreefficient pooling of resources amongdifferent countries in the event of supplycrisis,

• Diversify supply sources by importinglarger quantities of Liquefied Natural Gas(LNG), which currently accounts for

Energy, Utilities and Chemicals the way we see it

A Strategic Overview of the European Energy Markets 9

14 2015 corresponds to the commissioning of many planned LNG regasification infrastructures.15 http://gttm.cre.fr/16 TSO : Transmission System Operator

governments’ nationalistic attitudes,convince their own personnel and bow toEC requests for divestments.

These divested assets were acquired byother Utilities: Eni took Distrigas andCentrica took SPE, both in Belgium. Tocomply with the EU anti-trust legislation,Enel had to sell its assets in France, Italyand Poland to E.ON.

After this long and difficult gestation, GDFSuez emerged as one of the largestconvergent (gas and electricity) playerswith big ambitions. It has announced a€30 billion investment plan over the nextthree years and is actively acquiringelectricity and gas assets all over the world.

Most recently, EDF took over BritishEnergy at £12.4 billion. It will give EDFalmost all the UK’s nuclear power stationsand control over most of the best sites forbuilding new nuclear plants, giving it adominant position in the planned revivalof the UK’s nuclear industry.

We could expect other mergers andacquisition in the year to come, notablythe Gas Natural/Unión Fenosa mergerwhich is expected to be completed in thefirst half of 2009.

How will the market look like in the comingyears?

Impact of the present financial andeconomic crisis

It is probably too early to evaluate the fullextent and impact of the present financialand economic crisis. We believe that theUtility sector will surely be much moreresilient than many others, but this doesnot mean that it is immune to the currentturbulences.

Governments confronted with financialand economic crisis will have less taxrevenues, and therefore will have to limittheir spending, for example, by reducingfinancial subsidies to renewable energies.The Spanish government has started bylimiting its incentives to solardevelopment. As renewable energies needsubsidies to be financially competitive,such decisions could jeopardize theirgrowth, especially as far as wind powerand solar energy are concerned.

Traded companies could suffer fromsignificant stock price falls due to negativeanalyst assessments or credit ratingdowngrade. In the present hectic financialenvironment, sudden and large share pricedrops can quickly turn into a matter ofsurvival. This is what happened withConstellation Energy, which, afterexperiencing a 70% share price drop inone day, concluded a purchase agreementwith Warren Buffet owned MidAmericanEnergy. The negotiated price was $4.7billion, less than half of what FloridaPower and Light offered just two yearsago. However, EDF that owns 9.5% ofConstellation shares is preparing togetherwith investment funds a counter offer.

More generally, this financial crisis shouldtrigger more M&A activities (e.g. theannounced Exelon/NGR Energy merger inthe US). Companies with weak balancesheets (notably new entrants) will beespecially vulnerable.

Longer term view

In a recent statement, GDF Suez’schairman split the current Europeanpower Utility sector into three categories:

• The very big players and ultimateconsolidators, including EDF, GDF Suezand E.ON,

• The second tier, which includes Iberdrola,RWE and Enel. All three have the

for government approval,

- In Ireland, the second interconnectorto the UK has been approved,

- RTE (France) and National Grid (UK)have launched consultations for theconstruction of a secondinterconnection between the twocountries.

• Three (E.ON, RWE and Vattenfall) out ofthe four German network operators arepresently discussing to create a uniqueGerman transmission electrical gridunbundled from the incumbent Utilities,

• TSOs have significant investment plans:According to a recent UCTE study17,TSOs plan to invest €17 billion on theirnational grids and on interconnections inthe next five years.

This demonstrates that even without the ThirdPackage, the players are voluntarily pushingtowards a liberalized fluid electricity marketand they have plans to invest!

Changes in the Utilities landscapeMarket consolidation

Mergers and Acquisitions continuedduring the period. The long awaited Gazde France/Suez and Enel/Endesa mergers

were finalized. Both cases took almosttwo years to complete, during

which the Utilities had tostruggle with

10

17 UCTE Transmission Development Plan, edition 2008

- Cost per customer,

- Average access time to connect a newcustomer,

- Time commitment for responding tosupply failure,

- Average time for meter reading.

As analyzed in this benchmarking study,there are many reasons to explain thesedifferences in performance levels.Nevertheless, there is often large room forimprovement for Utilities to progresstowards “best in class.”

And the customers?

The situation is not rosy for thecustomers:

Prices have continued to go up:Electricity retail prices have skyrocketed inmost European geographies since lastwinter, with year-on-year increasesbetween 5 and 40%. Compared to 2006levels, gas retail prices in all consumingsegments have remained substantiallystable in 2007 but have increaseddramatically since the beginning of 2008,reflecting the delayed effect19 from the oilprice surge. As oil prices declined in thesecond half of 2008, retail gas pricesshould also decrease in 2009.

Competition in newly deregulatedcountries did not significantly increase,while the footprint of large incumbentshas steadily grown across Europe.Innovation in energy retail markets isprogressing slowly, focusing primarily onenergy efficiency and billing schemes. Andfinally, as discussed earlier, security ofenergy supply has not improved.

In the future, customers should becomemore active players that are conscious ofenergy conservation and perhaps alsobecome energy generators, thanks to solarphotovoltaic technologies.

The relationship between Utilities andtheir customers would change radically.Utilities will become energy and CO

2

savings advisors and no longer thriving forconstant sales increase. This would be akind of revolution, triggering thoroughchanges in the Utility retail business,

calling for a new set of mission statements,objectives, organizations and IT systems.

Now, it is my pleasure to introduce the10th edition of the European EnergyMarkets Observatory (EEMO), in whichwe continue to monitor the mainindicators within the European electricityand gas markets.

For this edition, our partners continue toenrich our analysis by providing us withtheir sound expertise on regulations andlegal questions at the European level (CMSBureau Francis Lefebvre), on customerswitch and behavior in electricity retailmarkets (VaasaETT) and on financialperformances and strategies of the mainUtility companies (Société Générale EquityResearch).

Again, throughout the report, the mainenergy issues for key European markets(Belgium, Denmark, Eastern Europe,France, Germany, Italy, the Netherlands,Spain, Switzerland, Sweden and the UK)are embedded in various chapters.

I hope that you will enjoy reading thisnew edition of the European EnergyMarkets Observatory and that theinformation and analysis it provides willbe useful for you.

necessary size to also becomeconsolidators,

• The third tier is made up of a wholerange of smaller Utilities that will needeither to forge a partnership with one ofthe bigger players or will beconsolidated.

Utilities have to accelerate theirbusiness model changes

In the past period, Utilities have benefitedfrom high electricity prices and sometimesreceived big windfall profits linked to theCO

2Emission Trading System. They have

started to spend their war chest oninternal or external investments.

In the near future, with a loomingeconomic slowdown, pressures will mounton Utilities to reduce electricity prices.Customer associations will complain moreand more on the electricity retail pricessurge that is eroding purchasing power ofhousehold customers. Politicians couldreact by imposing price caps or taxes.Competition from existing rivals or newentrants will increase.

Utilities have to adapt to this newlandscape by thriving towards operationalexcellence. This means that they will haveto streamline their internal processes,simplify their organizations and increasetheir reactivity while continuouslybenchmarking their results with the “bestin class.”

Some parts of the value chain areparticularly urged to move fast. Forexample:

• The profitability of Utility retail, onceunbundled from distribution, is usuallyquite low or in some cases evenincurring losses. The “cost to serve” ishigh due to ineffective processes andhigh customer contact ratios. Ourexperiences indicate that to becompetitive, the incumbent Utilityretailer should drive down their cost toserve by 30-50%,

• Our recent Distribution NetworkOperators (DNO)18 Benchmark Study,shows big discrepancies amongEuropean DNOs on key performanceindicators such as:

Energy, Utilities and Chemicals the way we see it

A Strategic Overview of the European Energy Markets 11

18 Capgemini European distribution benchmarking survey 2008.19 There is usually a delay of six to nine months for oil price fluctuation to be reflected on gas prices, mainly due to long term gas supply contracts.

Colette LewinerGlobal Leader of Energy,

Utilities and Chemicals Sector at Capgemini

Paris, October 20, 2008

Gas Wholesale MarketsOscar Barrero Giloscar.barrero-gil@capgemini.com

Gas Retail MarketsAntonio Michelonantonio.michelon@capgemini.com

Infrastructures and RegulatedActivities

Electricity Transmission & DistributionJagtar Basijagtar.basi@capgemini.com

Philippe Chanelphilippe.chanel@capgemini.com

Gas Transmission Antonio Michelonantonio.michelon@capgemini.com

Oscar Barrero Giloscar.barrero-gil@capgemini.com

Gas Storage Christian Sgardchristian.sgard@capgemini.com

Florent Andrillonflorent.andrillon@capgemini.com

Gas Distribution Philippe Chanelphilippe.chanel@capgemini.com

Sustainable Energies and ClimateChangeAlain Chardonalain.chardon@capgemini.com

Oskar Almenoskar.almen@capgemini.com

Strategy and FinanceVincent Escoffiervincent.escoffier@capgemini.com

John Honoré+33 1 42 13 51 55john.honore@sgcib.com

Thierry Bros+33 1 58 98 11 70thierry.bros@sgcib.com

Regional FocusBelgiumPierre Lorquetpierre.lorquet@capgemini.com

DenmarkMarius Ostmoemarius.ostmoe@capgemini.com

Eastern EuropeMichael Trampertmichael.trampert@capgemini.com

FranceVincent Escoffiervincent.escoffier@capgemini.com

Germany/SwitzerlandMarc Sauthoffmarc.sauthoff@capgemini.com

Bernd Woellnerbernd.woellner@capgemini.com

ItalyAntonio Michelonantonio.michelon@capgemini.com

NetherlandsPeter Meulmeesterpeter.meulmeester@capgemini.com

SpainOscar Barrero Giloscar.barrero-gil@capgemini.com

SwedenLars Moldelars.molde@capgemini.com

UKAlistair Greenalistair.green@capgemini.com

Acknowledgements to Céline Alléaume,Alain Désandré, Gerard Egan, Pierre-LouisLeblond, Alva Qian, Trygve Skjotskift,Martin Wells, Jessica Strömbäck, JoãoTorres

Team and Authors

92

Research LeaderPhilippe David+33 1 49 00 22 11philippe.david@capgemini.com

Core TeamSopha Ang+33 1 49 00 22 30sopha.ang@capgemini.com

Philippe Coquet+33 1 49 00 22 09philippe.coquet@capgemini.com

Switching insightsVaasaETTDr Philip Lewis+358 40 529 5852philip.lewis@vaasaett.com

European Energy Policy insightsCMS Bureau Francis LefebvreMr Christophe Barthélémy+33 1 47 38 55 00christophe.barthelemy@cms-bfl.com

Competitive Power

GenerationAna-Maria Popaana-maria.popa@capgemini.com

Arnault Prêtetarnault.pretet@capgemini.com

Marc Sauthoffmarc.sauthoff@capgemini.com

Electricity Wholesale MarketsJérôme Natalijerome.natali@capgemini.com

Electricity Retail MarketsPhilippe Coquetphilippe.coquet@capgemini.com

Competitive Gas

Upstream GasFlorent Andrillonflorent.andrillon@capgemini.com

LNGChristian Sgardchristian.sgard@capgemini.com

Florent Andrillonflorent.andrillon@capgemini.com

Société Générale Corporate & Invest-ment Banking

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About VaasaETT and the Global En-ergy Think Tank

The VaasaETT Global Energy Think Tank isa coordinator of expertise for the energyand utilities industry, comprising expert ex-ploration, events and knowledge sharing,supervised by a senior independent advi-sory committee. The Think Tank affordsoutstanding opportunities to search out an-swers to key questions using the bestknowledge from around the world. Throughthe thousands of high and medium levelexecutives, officials, researchers, consult-ants and other experts that we know andtrust personally, the Global Energy ThinkTank creates partnerships and consortiumsfor research, strategic advice, solutions andeven independent lobbying support. What-ever you need to know, we probably knowsomeone, somewhere who has the answer.Covering over 50 countries in four conti-nents, our network covers a wide range ofinterest areas, from Demand Response andSmart Metering, to Customer Switching,from Renewable Energy to Smart Grids,from Regulatory Efficiency to CompetitivePricing.

VaasaETT is a highly innovative researchand advisory agency, providing world lead-ing customer psychometrics and relatedstrategies through research and collabora-tion with the Global Energy Think Tank®.Unrivaled expertise of utility customer psy-chology and behaviour is applied to threecore focus areas: Customer Value, MarketEfficiency and Demand Response withinliberalized and smart metering environ-ments. VaasaETT is arguably the world’sleading collector and analyst of global cus-tomer switching, churn, loyalty and elastic-ity trends in competitive (liberalized /deregulated) retail electricity and gas mar-kets.

For more information, please visitwww.vaasaett.com

Energy, Utilities and Chemicals the way we see it

European Energy Markets Observatory 93

About Société Générale

Société Générale is one of the largest fi-nancial services groups in the euro-zone.The Group employs 151,000 people world-wide in three key businesses:

� Retail Banking & Financial Services: So-ciété Générale serves more than 30 mil-lion individual customers worldwide.

� Global Investment Management & Serv-ices: Société Générale is one of thelargest banks in the euro-zone in terms ofassets under custody (EUR 2 733 billion,June 2008) and under management (EUR381.4 billion, June 2008).

� Corporate & Investment Banking: SociétéGénérale ranks among the leading banksworldwide in euro capital markets, deriva-tives and structured finance.

Société Générale is included in 3 socially-responsible investment indexes: FTSE,ASPI and Ethibel. www.socgen.com

About CMS Bureau Francis Lefebvre

CMS Bureau Francis Lefebvre is one of theleading business law firms in France. Its or-ganization based on the active assistanceby specialist lawyers and its recognizedknow-how for over 80 years ensure thatcompanies are provided with reliable andsound advice relating to their strategic andtactical decisions at national and interna-tional level.

CMS Bureau Francis Lefebvre is a memberof CMS, the organization of 9 major inde-pendent European law firms providing busi-nesses with legal and tax services acrossEurope and beyond. Operating in 48 busi-ness centres around the world, CMS hasover 595 partners, more than 2,200 legaland tax advisers and a total complement ofover 4,600 staff.

CMS member firms: CMS Adonnino Ascoli& Cavasola Scamoni, CMS Albiñana &Suárez de Lezo, CMS Bureau FrancisLefebvre, CMS Cameron McKenna LLP,CMS DeBacker, CMS Derks Star Busmann,CMS von Erlach Henrici, CMS HascheSigle, CMS Reich-Rohrwig Hainz.

CMS member firms' offices and associatedoffices worldwide: Amsterdam, Berlin,Brussels, London, Madrid, Paris, Rome, Vi-enna, Zurich, Aberdeen, Algiers, Antwerp,Arnhem, Beijing, Belgrade, Bratislava, Bris-tol, Bucharest, Budapest, Buenos Aires,Casablanca, Cologne, Dresden, Dussel-dorf, Edinburgh, Frankfurt, Hamburg, Kyiv,Leipzig, Ljubljana, Lyon, Marbella, Milan,Montevideo, Moscow, Munich, New York,Prague, Sao Paulo, Sarajevo, Seville,Shanghai, Sofia, Strasbourg, Stuttgart,Utrecht, Warsaw and Zagreb.

The members of CMS are in associationwith The Levant Lawyers with offices inBeirut, Abu Dhabi, Dubai and Kuwait.

More information at info@cms-bfl.comand www.cms-bfl.com

vaasa ett

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www.capgemini.com/energy

Capgemini, one of theworld’s foremost providers of

consulting, technology and outsourcingservices, enables its clients to transformand perform through technologies.

Capgemini provides its clients with in-sights and capabilities that boost theirfreedom to achieve superior resultsthrough a unique way of working - theCollaborative Business Experience® -and through a global delivery modelcalled Rightshore®, which aims to offerthe right resources in the right location atcompetitive cost. Present in 36 countries,Capgemini reported 2007 global rev-enues of EUR 8.7 billion and employsover 86,000 people worldwide.

With 1.15 billion euros revenue in 2007and 10,000+ dedicated consultants en-gaged in Energy, Utilities and Chemicalsprojects across Europe, North Americaand Asia Pacific, Capgemini’s Energy,Utilities & Chemicals Global Sectorserves the business consulting and infor-mation technology needs of many of theworld’s largest players of this industry.

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