SCHOOL OF SOCIAL STUDIES

MASTER IN BUSINESS ADMINISTRATION (MBA)

Household Electricity Market in Greece

George Iliadis

Supervisor: Dr. Lamprini Piha

Co-Supervisor: Dr. Apostolos Giovanis
 Background of the Thesis

• EU’s energy policy: Single European Electricity Market that operates

• under free competition
• guarantees safer, more economic and effective use of electric energy for civilians and
companies.
• The liberalization of the electricity market in Greece has been underway for
many years.
• Although competition is increasing, household consumers seem still
reluctant to switch their electricity supplier.
• Basic contribution of this thesis is to:
• Analyze Greek household electricity market characteristics
• Greek consumers’ behavior, barriers and motivators of electricity provider switching.

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 Research Gaps

• No significant research for:

• Greek Electricity Market (retail and household market).
• Switching behavior of Greek household electricity consumers.

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 Objectives of the Dissertation

• Describe and analyze the household electricity market in Greece.

Identify its characteristics, and the role of all participants.

• Identify, analyze, and interpret the reasons that prevent consumers

from switching and remain apathetic to market developments.

• Empirically investigate consumer behavior and determine the

switching determinant factors.

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 Research Methodology

• Study the current electricity market structure in EU and Greece

(legislation, directives, regulations, and national laws)
• Secondary data collected and analyzed for the Greek household
electricity market
• Literature review for:
• consumer switching behavior
• consumer electricity market engagement
• annual switching rate and other metrics for retail electricity market analysis.
• Survey via questionnaire on household electricity consumers in Greece.
• Statistical analysis. Determine Switching provider factors.
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 Greek Household Electricity Market
Secondary Data
Electricity Characteristics
• Production, Transmission, Distribution, Consumption
• Electricity cannot be stored
• Electricity generated should be consumed by end
users.
• The demand for electricity is highly fluctuating not
only during the year but also intraday.

Greek Electricity Markets

• Wholesale Market (Producers-Suppliers)
• Retail Market (Suppliers-Customers)
• Transmission-Distribution network management
are natural monopolies

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 Greek Household Electricity Market
Secondary Data
Details Cost of Electricity (2018)
Customers 5,858,357 meters Final Price (FP) 16,6 €/kWh
Energy Consumption 32% Electric Energy 45% of FP
Suppliers 25 companies Distribution 14% of FP
Market Share (M.S.) P.P.C. 80% (Kwh) RES and Islands 11% of FP
5 companies M.S.>1% Taxies-Levies 31% of FP

Mark-Ups Performance Indicators

Price Regulation NO Since 2013
Wholesale-Retail Prices Correlation LOW Bad Performance
Supplier Mark-Ups HIGH Low Competition
Herfindahl-Hirschman Index (HHI) >8000 High Concentration.
Annual Switching Rate 4,5% 2018 (UK 19,1%)

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 Literature Review
Key Points
• Well-functioning retail markets require the involvement of consumers in market activities. (CEER, 2018)
• Switching rate a good indicator of consumer’s engagement and market performance. (EU, 2018).
• Switching rate plays an important role in boosting competition and in improving overall quality of service in a given market.
(Shin and Managi, 2017)
• European consumers can save €29 - €389 per year if they switch electricity provider. Only seven EU countries have a
switching rate above 10%. (BEUC, 2017)
• Customers Switching Behavior extensive review (Nimako and Winneba, 2012).
• Service Provider Switching Model switching process in retail services (Morgan and Dev, 1994) .
• Switching depends on: service quality, switching cost, individual attitudes towards switching, social influences and
satisfaction. (Bansal and Taylor, 1999)
• Switching depends on: (1) loyalty to current provider; (2) costs of switching; (3) service complaints management; (4)
economic attractiveness of alternatives. (Research for the household electricity market in Denmark, Yang, 2014)
• Switching factors can be divided into two categories; economic and psychological factors. Economic factors represent a cost
or benefit to consumers. Psychological factors satisfaction with the incumbent provider, perceptions of market conditions,
social influences. Past studies have shown that some household demographic factors are often significant effects on
switching decisions, such as income, gender, education level etc. (He and Reiner, 2015).

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 Literature Review
Key Points
• Consumers are more willing to switch as electricity expenditures increase. Behavioral factors may affect switching
decisions. Low expected gains are significant switching demotivating factors. (Sirin and Gonul ,2016)
• Switching barriers: Consumer perception; Insufficient monetary gain; Lack of trust; Complex switching process;
Satisfaction/loyalty; Commercial contract conditions; Unjustified termination fees. (CEER, 2017b)
• Switching barriers: Consumer perception about insufficient gain, reliability to new entrant companies, complexity and
time required for switching. CEER (2016)
• The most important motivator for switching in the retail electricity market is price. (OFGEM, 2016).
• Switching barriers: two in three consumers perceive that there are risks associated with switching, low levels of trust. In
these report the energy consumers where classified in six groups and the characteristics of each group were presented.
(OFGEM, 2017)
• The time required for a consumer to switch provider is crucial for this behavior (ACER, 2019).
• Barriers of suppliers switching in EU: lack of information; aggressive selling practices; complex energy offers; switching
cost (BEUC, 2017).

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 Greek Household Electricity Market
Survey
• Online Questionnaire
• Sample size 377 adult individuals (households)
• 59 questions in 7 sections
• Demographics (age, sex, education, residence and family details).
• Use of electricity (heating, AC, hot water).
• Cost of Electricity.
• Electricity Provider details
• Switching provider
• Opinion questions electricity/other services provider companies.
• Personality questions (beliefs and personal attitude in different aspects of life)
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 Descriptive Analysis
Sample Population
Characteristics
(%) (%)
Personal Characteristics
Sex Male 45,1 48,5
Female 54,9 51,5
Age 18 - 29 7,2 15,5

• Representative Sample
30 - 40 34,2 18,8
41 - 50 35,8 18,2
51 – 60 15,1 16,0
Over 60 7,7 31,5

• 85% PPC customers

Education Level Master, PhD 41,6 2,3
Bachelors 48,3 18,5
High School 9,8 46,0
Primary School 0,3 25,1
None 0,0 8,1

• 99% informed for alternative

Family Characteristics
Annual Family Income (€)Less than 9.000€ 14,3 8,8
9.000-21.200 39,0 40,5
21.200 - 33.600 23,1 27,2
Over 33600 € 23,6 23,5

electricity providers Family Size 1 person

2 persons
3 persons
12,7
30,0
19,1
25,7
29,5
19,8
4 persons 31,8 17,6

• 48% Never thought to switch 5 persons 4,5 2,5

6 persons + 1,9 5,1
Social Residential Tariff Yes 11,9 13,4
No 88,1 86,6

• 50% expect more than 50€ annual

Residence Characteristics
Residence Type Detatched House 38,7 39,3
Flat 61,3 60,7
Residence Size 50 m2 or smaller 5,3 14,0

savings to switch 50 - 70 m2 13,3 22,0

71 - 90 m2 23,1 27,4
91 - 120 m2 28,9 23,2
120-150 m2 17,2 8,4
151 m2 or bigger 12,2 4,9

• 19% Refuse to switch no matter the Region Population Less than 1.000
1.000-5.000
5.000-10.000
10.000-50.000
5,3
12,2
6,4
19,1
18,1
15,1
5,6
22,1

economic benefit Ownership

50.000-100.000
Over 100.000
Rental
32,9
24,1
24,4
20,0
19,1
19,1
Owned 64,2 74,0
Guest 11,4 6,9

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 Descriptive Analysis

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 Descriptive Analysis
TOTAL NON-SWITCHERS SWITCHERS
Satisfied current provider 29% 25% 49%
Switching provider is difficult 11% 11% 6%
Switching provider costs 6% 6% 5%
Switching is time consuming 9% 9% 6%
Never thought switching 22% 27% 0%
No cost difference among providers 31% 30% 38%
Alternative providers are less reliable 24% 27% 10%
I am not able to switch 4% 4% 3%
I have found the Best 6% 4% 21%
I will switch provider soon 10% 10% 13%

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 Switching Behavior
Customer Groups
Sample Potentials Pearson Sample Potentials Pearson Sample Potentials Pearson
Characteristics Characteristics Characteristics
(%) (%) χ2-Coef (%) (%) χ2-Coef (%) (%) χ2-Coef
Group Size 377 persons 100,0 17,2 I will save money if I switch Disagree 24,4 16,9 0,156
Sex Male 45,1 40,0 0,657 Electricity Bill 0-60€ 29,4 21,5 0,268 Neutral 34,2 29,3
Female 54,9 60,0 per Month 60-80€ 17,2 23,2 Agree 41,4 53,8
80-100€ 21,8 20,0
Age 18 - 29 7,2 6,2 0,658 80-100€ 26,0 33,8 The prices differ among providers Disagree 35,0 32,3 0,023
30 - 40 34,2 33,8 Don't Know 5,6 1,5 Neutral 40,1 29,2
41 - 50 35,8 29,2 Agree 24,9 38,5
51 – 60 15,1 18,5 Switch No 83,3 84,6 0,944
Over 60 7,7 12,3 Yes 16,7 15,4 I should spend a lot of time to switch Disagree 28,4 38,5 0,146
Neutral 33,2 26,1
Family Income 0-5.000 4,2 4,6 0,670 Annual Savings Never 18,8 1,5 0,000 Agree 38,5 35,4
5.000-10.000 10,1 7,7 to switch 0-50€ 10,3 13,8
10.000-15.000 18,6 12,3 50-100€ 22,8 27,8 Thinks may go wrong if I switch Disagree 22,8 35,4 0,000
15.000-20.000 20,4 21,5 100€+ 35,8 43,1 Neutral 31,6 35,4
20.000-30.000 23,1 30,8 Don't Know 12,2 13,8 Agree 45,6 29,2
30.000-50.000 18,6 16,9
50.000+ 5,0 6,2 Thought Switching No 39,8 13,8 0,000 I couldn't switch even if I wanted Disagree 68,7 81,5 0,000
Yes 60,2 86,2 Neutral 19,4 13,8
Family Size 1 person 12,7 10,8 0,591 Agree 11,9 4,6
2 persons 30,0 33,9 Switch in N12M No 58,4 58,4 na
3 persons 19,1 15,4 Neutral 24,4 24,4 Some providers are more reliable Disagree 7,2 6,2 0,020
4 persons 31,8 29,2 Yes 17,2 17,2 Neutral 30,2 43,1
5 persons 4,5 9,2 Agree 62,6 50,8
6 persons + 1,9 1,5 Current Electricity Unsatisfied 39,8 66,2 0,000
Provider Satisfaction Neutral 45,9 29,2
Social Tariff Yes 11,9 6,2 0,043 (Cost) Satisfied 14,3 4,6
No 88,1 93,8
Current Electricity Unsatisfied 21,5 46,2 0,000
Residence Size < 50 m2 5,3 1,5 0,429 Provider Satisfaction Neutral 48,8 40,0
50 - 70 m2 13,3 10,8 (General) Satisfied 29,7 13,8
71 - 90 m2 23,1 18,5
91 - 120 m2 28,9 35,4 Confident choose No 22,3 43,1 0,000
120-150 m2 17,2 13,8 best provider Neutral 51,7 47,7
> 151 m2 12,2 20,0 Yes 26,0 9,2

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 Switching Behavior
Customer Groups
Customer Groups Basic Characteristics
Indifferents (37%) • PPC customers
• No market engagement
• Neutral satisfaction for provider
• Switching is risky

Skeptics (31%) • PPC customers

• Unsatisfied with current provider
• Expect significant annual savings to switch
• Switching is risky and time consuming

Potentials (15%) • PPC customers, 71% not satisfied current provider

• Intention to switch in next 12 months
• Less worried for the switching process
• Believe prices differ among provider

Switchers (17%) • Switch provider at least once

• Satisfied with their current provider
• Switching is easy and safe

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 Logit model
Switching Determinants

• Logit regression model used to identify

• Switching Determinants
• Switching Probability estimate

• Switching Behavior Determinants (descending order)

• Belong to indifferent group
• Consider Switching Risky
• Level of satisfaction with current provider
• Consider Switching Time Consuming
• Belong to social tariff

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 Logit model
Not Correlated to Switching

• Switching Behavior NOT correlated to:

• demographic factors (age, sex, education level, family income, family size,
residence type/size/ownership
• Electricity consumption.
• Personal beliefs
• I always read the details in contracts
• Everything seems complicated nowadays
• I like to find methods to save some money
• I don’t like to deal with economics

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 Logit model – Predicted Switching Probability Customer
Group

Overall Model’s Predictability 90,2%

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 Conclusions and Proposals

• Household electricity consumers in Greece:

• Low degree of engagement with the market

• Unsatisfied electricity supplier even if they have an economic benefit, they
did not decide to switch.
• Inertia that favors the incumbent provider.
• Cost saving is not a significant motivator
• Non-financial factors are mainly determining their switching decision
(indifference, switching consider risky, time consuming, current supplier
satisfaction)

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 Conclusions and Proposals

• Greek electricity market perspectives:

• Demand is expected to rise due to further electrification of the economy (electric vehicles,
heat pumps).
• Electricity cost reduction mainly due to the interconnection of islands in Greece to the
mainland electricity network
• Household consumers more active role in the market (smart meters, prosumers)
• Policy makers and retail electricity companies strategies should aim to:
• Increase consumers involvement with electricity market and switching process
• Remove switching barriers
• simplify the switching process
• reduce the time of switching,
• reduce consumers risk perceptions
• Conduct annual switching rate surveys

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 Limitations, Directions for further
research

•Τhe sample size is relative small for a national survey. Future research can be done on a larger more
representative sample.
•The survey is based only on the results of an online questionnaire. Additional methods for primary data (price
analysis, mystery shopping, behavioral experiments, expert opinions)
•Τhis research is limited to household consumers of the Greek electricity market. Non household consumers
market is an equally significant and important field for analysis from future research.
•No available data for comparison with previous years. Similar surveys should be made annually
•Internal switching (switch contracts, same supplier) in Greece is still limited. However it is very important
factor that boosts competition Future surveys should incorporate internal switching in their analysis.
•Future research should explicitly examine the implications of renewable energy production in the Greek
electricity market.

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 Thank you for your attention.

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