Changing Energy Supplier on the Market with a Strong Position of Incumbent Suppliers—Polish Example

Dariusz Dudek,Marcin Lipowski,Ilona Bondos

doi:10.3390/en14133933

Abstract

The purpose of the study is to identify factors affecting the intention to change an energy supplier. This is in a country, Poland, where competition in the energy market has been intensifying over several years, but incumbent suppliers still have an extremely strong position on the market, and the tendency to change an energy supplier is relatively low. The survey was conducted in 2020 on a sample of 1216 adults. The research results were used for a multigroup SEM (Structural Equation Modelling) analysis using AMOS 26. The main findings indicated a strong impact on a general image of a company, as well as the lack of importance of a green image of the current energy supplier. In the general research approach, there are no visible differences in the impact of the perceived price transparency on the intention to switch the supplier. However, taking into consideration two groups (a low energy bill vs. a high energy bill), some interesting differences are visible. In the markets with low consumers’ intention to switch, the strong position of incumbent suppliers is due to their exceptionally strong image in these markets. Spending time on maintenance is the biggest disadvantage for new energy suppliers who, when entering the market, have to look for differentiators.

Highlights

Over the past several years, many countries have been liberalising the electricity market, enabling consumers to choose their supplier freely
The model fit for our research model is as follows:—CMIN/DF 2.765, goodness-of-fit index (GFI) 0.963, adjusted goodness-of-fit index (AGFI) 0.943, root mean square error of approximation (RMSEA) 0.027 (LO 90 0.025—HI 90 0.030), PCLOSE 1.00
The conclusions may be useful for EU member states that have a similar structure of the energy market in terms of energy suppliers

Summary

Introduction

Over the past several years, many countries have been liberalising the electricity market, enabling consumers to choose their supplier freely. A typical enterprise strategy in this sector was vertical integration, where several large companies often had controlled generation, transmission, distribution and retailing of energy on domestic markets [1]. It was assumed that breaking up the vertical integration would allow enterprises to be competitive in the area of generation and retailing of energy, while transmission would retain its monopoly status. In Central and Eastern European countries, it was the decentralisation of government control of the energy sector and partial privatisation of the industries, while in the US, increased competition between private suppliers and reduced regulation [3] was the main driving force. One of the effects of energy sector reforms is the third-party access (TPA) to the electricity transmission grid. This allows each end customer to choose an electricity supplier

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Conclusion