Energy Sector

Topics: Electricity generation, Electricity distribution, Energy development Pages: 46 (11381 words) Published: November 29, 2008

Energy sector is one of the most important sectors for the current economy. Nowadays, the access to energy is a key point for the development and welfare of a country. With that purpose, all the countries try to push forward their energy sectors, aiming to have enough resources to sustain their growing perspectives.

Within the energy sectors, the electricity sector is considered a strategic one, considering the increase of electricity demand occurred during the last 15 years all over the world, and especially in Europe and United States. For that reason, in order to assure the efficiency and rationality of this essential sector, some adjustments have been made in it legal and political frame.

In 1996, the European Union figured out that the best way to improve the performance of the electricity sector was opening a long but straightforward process of liberalization and deregulation. National companies come into public trying to guarantee competition, costs reduction and efficient management. One of the most relevant examples of this key transformation for the European economy was the Spanish company Endesa.

Spain, as other European countries, needed at that moment to update electrical capacities and electrical offer, playing Endesa a decisive role in this period. Step by step, the rapid overcome of the domestic market lead to a progressive international growing based on accurate decisions that positioned Endesa in incipient markets as Latino America or other European Countries.

10 years after, Endesa is a global company with a huge market share in Spain and operations in more of 15 countries, with great financial results and a solid prestige in terms of corporative image. As one of the three most important European companies of the electricity sector, Endesa is focuses on a constant growing that imply the exploration of new opportunities in new markets.

With that purpose - in order to face that challenge- the company has developed more strengths that weaknesses. as a way to be ready and capable, from an internal point of view, to take advantage of the opportunities that the renovated external conditions offer to a company as Endesa.

1. Objective and scope of the Project

The objective of this project is to introduce the general situation of the whole energy sector in Spain and analyze the international strategy of one of the main players in the specific electricity sector- ENDESA.

In order to develop the analysis above, the project includes:

• The whole situation of the energy sector in Spain and one of its subsector i.e. electricity. • Introduction of ENDESA
• Selection of segmentation of ENDESA
• Generic analysis (main activities, value chain, macro and micro environment), SWOT, sensitivity analysis • Strategy analysis

2. Introduction

Chart 1



1. Introduction of the energy sector in Spain:

The energy is the motor of our world. All the industries depend on it, such as commerce and real estate. It has a direct influence on the well-being of the citizens, the productivity, the competitiveness, the quality of our businesses and, at the end, on the economic growth.

The actual economic situation is characterized by a bonanza with sustained growth, lifted prices of oil, increasing needs of energy, which also increase environmental concerns. It is a clear tendency of the globalization. In these surroundings, the companies feel the necessity to have a stable energy supply that reduces the uncertainties on this key factor, on the strategic decisions of investment.

Spain produces 27,829 ktep and consumes 105,753 ktep, needing to import most of the coal that it is consumed and almost 100% of oil and gas. (See Chart N° 2 and N° 5)

The rate of growth of the consumption from 2000 until 2006 has been 16%.

The degree of self-supplying is only 19.8%, one can point out that from 1998 to 2006 it has been decreasing from 26.1% to...
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