Poweo: David and Goliath in the French Electricity Market

According to this article, Electricity supply has been a challenging business in France.

Over the years, it has been greatly dominated by the Electricite’ de France (EDF). As a well established corporation, EDF has been enjoying economy of scale, an advantage which has wrecked havoc on other emerging firms like Poweo and French Direct Energy (FDE). Things have been so difficult for Poweo because it can not withstand the stiff competition in this market. According to Charles Beigbeder, its founder and president, it has been making no progress in the recent years. In fact, it made a historic loss of 94 million pounds in 2009. This has been attributed to the unfavorable energy regulations and stiff competitions from well established suppliers such as EDF.

Unlike all the other firms, EDF has been having a support from the French government. This has enabled it to have a lion share in this lucrative venture. Besides, the energy sector has also faced a lot of challenges due to the drastic changes in the European Union (EU) and the 2007/8 global economic melt down. It resulted into a sharp drop in the consumer demands for this precious commodity in the French economy. In order to remedy this situation, I would like to recommend that the French government should reform the energy regulatory policies.

The energy market should be open to all the willing suppliers. No company should be given preference over others. Moreover, taxation rates should be lowered in favor of smaller suppliers. This will be a relief in the production costs and in turn help in the reduction of prices to consumers. At the same time, alternative sources of energy like nuclear and wind powers should be established. They will provide adequate alternative energy for retailers.

This is the only way through which smaller firms such as Poweo can be liberated.