*Article* **Renewable Energy Producers' Strategies in the Visegrád Group Countries**

**Adam Sulich 1,\* and Letycja Sołoducho-Pelc 2**


**Abstract:** Companies that belong to the energy sector can use Sustainable Development Goals (SDGs) for their strategies and diversify electrical energy production with reverence to the natural environment. This article aims to analyze sustainability strategy types among the Visegrád Group (V4) countries' energy producers, who decided to generate electrical energy from the renewable resources. This research uses an inductive inference approach supported by a literature study and deductive reasoning supported by a statistical reference method. The main finding is that the energy producers from the V4 group have a common direction of evolution in their strategies. This change is based on a growing share of renewable energy sources to achieve environmental excellence strategies. The lack of renewable energy sector organizations' strategies translates into disappointment with the goals pursued by these organizations. The significance of this study lies in an explanation of how sustainability strategies compare at a firm and country-level in a proposed classification. The analysis can open future research areas to examine development of strategies in the renewable energy sector.

**Keywords:** Hellwig's method; sustainability strategies; sustainable development; Visegrád Group; sustainable strategic management; the renewable energy sector

#### **1. Introduction**

The energy sector worldwide is crucial for the economic development. Electrical energy producers are involved in the economy because energy sources impact prices of energy goods and services [1]. Future development strategies apply to all organizations, especially those that counteract environmental pollution and climate change [2]. There are organizations that implement sustainable strategies [3] towards sustainable development (SD) despite their main activities [4]. Therefore, increasing investment in Renewable Energy Sources (RES) as a part of strategy can contribute to achieving chosen Sustainable Development Goals (SDGs) among electrical energy producers [5] in different countries [6]. SDGs can also set the course for sustainable strategies in electrical energy sector companies [7]. However, electrical energy production is the main cause of climate change [8] and accounts for the majority of global greenhouse emissions [9]. Any future effort to achieve the SDGs will thus generate demand for more energy [10,11]. The Renewable Energy (RE) sector is the basis for green technology investments [12] and together with the nonrenewable energy sector, it creates the backbone for domestic economy development [13]. There are multiple examples of technology innovations in biomass, wind, solar and hydro power generation worldwide [14]. Achieving SD through the use of RES to mitigate the unfavorable effects of climate change can generate direct and indirect economic benefits [15]. Therefore, some energy producers have decided to generate electrical energy from RES [16]. The importance of energy sector companies is indisputable, and their efforts towards achieving SDGs serve as a model for other organizations in other sectors of the economy [17,18]. Successful implementation of the chosen sustainability strategy level among renewable electrical

**Citation:** Sulich, A.; Sołoducho-Pelc, L. Renewable Energy Producers' Strategies in the Visegrád Group Countries. *Energies* **2021**, *14*, 3048. https://doi.org/10.3390/en14113048

Academic Editors: Akhtar Kalam and Vincenzo Bianco

Received: 19 April 2021 Accepted: 21 May 2021 Published: 24 May 2021

**Publisher's Note:** MDPI stays neutral with regard to jurisdictional claims in published maps and institutional affiliations.

**Copyright:** © 2021 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (https:// creativecommons.org/licenses/by/ 4.0/).

energy suppliers can influence the domestic economy. On the other hand, if there is a lack of strategy it translates into disappointment with the SDGs pursued by these organizations.

The aim of the paper is to analyze types of sustainability strategies formulated among the Visegrád Group (V4) energy producers who decided to produce electrical energy from RES [19–22]. Inspiration were strategies derived from the RE sector [5] and discussions related to consistency of management style [23]. In this paper, we consider nuclear energy as clean energy but not renewable. The Visegrád Group is a political group formed by four central European countries Czechia (CZ), Poland (PL), Slovakia (SK) and Hungary (HU), which all belong to the European Union (EU) [24]. An important common feature of the V4 countries is the fact that energy transformation in these countries began later than in other EU member states [25].

With this purpose, our work is structured as follows. In the first place, the paper develops a theoretical framework within a literature review that covers the main subjects: sustainable development, sustainability strategies and related terms. Then, a brief description of the electrical energy production sector together with RE sector development conditions in the V4 is discussed. In this part, a SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats) of the Visegrád Group countries RE sector is presented. In the third part of this paper, the materials and methods are described along with the results and discussion. In the conclusions, comprehension of strategies and evolution-based classifications are discussed. This classification constitutes the authors' theoretical and practical contribution to the science. The presented work develops a quantitative empirical study comprising four different countries' perspectives for the strategies in the RE sector among their main energy producers. The study is based on business data and opens a new level of cross-border comparisons among energy producers. The paper ends with conclusions and possible future study proposals, along with listed limitations and practical business, environmental and social implications.

#### **2. Literature Review**

In this paper, the authors focus mostly on the RE sector and its development conditions in the Visegrád Group without describing the whole energy production sector in detail in relation to other energy sources and technologies. The scope of the literature review is renewable electrical energy generation development conditions and sustainability strategies.

#### *2.1. Sustainable Development and Related Terms*

SD is an approach to build a common future through such human activity which meets the "needs of the present and future generations" [26,27]. SD is also a concept of quality of life with an unlimited time horizon because its assumptions are based on natural laws, are timeless and universal [17,18,28,29]. The concept of SD is a counterbalance to the "brown economy", which is based on fossil fuels and has resulted in environmental degradation [28]. The "brown economy" is known for its negative environmental impact due to the inability to overcome the current ecological crisis. The energy demand is growing, associated with the growing demand for natural resources and resulting in an increasing amount of harmful waste. The search for solutions to reconcile growing energy needs with environmental resources and protection is still ongoing [29].

SD approaches differ between countries, regions and organizations, but for all of them achieving a balance between output and input within the natural environment is a priority. Thus, SD is based on the ability to use renewable resources, reduce pollution and avoid reduction of nonrenewable assets [12]. For many years, natural resources have been exploited and, as a result, environmental problems have become common global issues. Modern economic growth is driven mainly by the exploitation of natural resources that results in environmental degradation. The energy sector and related industries struggle to achieve SDGs and, paradoxically, their activities are in opposition to the SD assumptions.

The world community has adopted SD as a concept based on the three defined pillars of sustainability: environment, economy and society [30]. These three aspects are essential and have been developed to be more applicable to business policy and strategy. However, elements of the SD idea [31] are related to business development issues within the focus of Sustainable Strategic Management (SSM). Therefore, the idea of Environmental Sustainability (ES) emerged from the consolidation of environment and business sustainability [32]. ES assumes maintaining the business integrity and ecological balance of the natural environment system [33]. Such a balance is possible, assuming that people consume natural resources at a rate and with amounts that complement each other [12]. ES depends on the maintenance of natural capital to meet people's current needs, while protecting raw materials for future generations [34]. On the other hand, ES assumes that waste can be stored as a future resource and be used when the proper technology is developed [35]. Therefore, the cleaning and removal processes for environmental services must be maintained and improved in the future [12,34]. There are other dimensions of SD, including economic and social systems. Economic Sustainability is the capacity to operate at a defined economic level [36,37], while Social Sustainability (SS) is the ability of a society [38] to perform at a higher level of wellbeing [13,39]. The evolution of strategic management for sustainable development incorporates strategic perspectives of corporate sustainability management and introduces [40] sustainable strategic management (SSM). SSM connects all possible approaches to SD, defined or indicated by the three SD pillars [4].

The need to achieve SDGs, build a balance with the environment and strengthen the organization's competitiveness led to the synergy of sustainable development and SSM strategy [27]. The concept was derived from ecological trends such as the influence of business on the natural environment, protection of natural resources, social trends and business management and strategy [41]. SSM assumes strategically importance processes for the organization that meet social responsibility criteria, harmony with the cycles of nature and economic competitiveness [42]. Combination of the economic and environmental goals included in SSM leads organizations towards sustainable competitive advantage [43].

#### *2.2. Sustainability Strategies*

Lack of SD achievement can be induced by nonstrategic approach in organizations. Therefore, the main problem is to transfer SDG ideas and assumptions into SSM and business practice [44]. Additionally, many sustainability strategies (in scientific publications also known as 'sustainable strategies') have been developed and described to solve environmental problems, but many have not been implemented [5]. The problem with SSM is implementation of strategies consistent with the type industry and natural environment conditions [23]. Although the idea of SD is popular with politicians, business leaders, entrepreneurs and societies, its implementation causes many problems in business practice [45]. Therefore, there is the tendency to use the same strategic approaches in many different economic sectors. The implementation of SSM faces various barriers, but the most critical problem is related to the process of changing the organization's management [27] and management style, and is associated with consistency of strategy type [44,46]. According to this article, strategy-type consistency means internal and external consistency between an organization's activities, management style, decision making, culture, the values of the organization and the implemented strategy. Difficulties in maintaining consistency result from management in a changing environment, where management is constantly transformed under the influence of a large number of different factors important to competitive advantage [47]. It can be assumed that strategy type consistency is the capability to balance economic, social and environmental dimensions combined with industry type. This balance should facilitate the strategy's implementation by ensuring management's harmonization with the strategy [48]. The evolution of the SSM approach has led to the recognition that environmental and social performance [42,49] is as important as an organization's economic performance [50].

A sustainability strategy is not limited to the planning of future activities [51]. Furthermore, strategic initiatives in organizations should be broader in many areas [52]. "Sustainable organizations demonstrate successful long-term performance aimed the restrictions imposed by economic, social, and environmental systems by developing a strategy that sustainably generates and captures value into the future" [53]. Sustainability strategy increases the company's value and shapes the organization's success in the long term [54]. There is a need to indicate that for many production organizations reduction of pollution is a major problem because it is associated with the limitation of anthropopressure and is associated with production cycles. Reduction of pollutions emission is not enough to achieve a sustainable competitive advantage over the longer term [55].

There are different sustainability strategy levels among organizations and administrative units [27]. These sustainability [27,50] or sustainable [56] strategies are focused on the internal conditions of processes and compliance with external conditions (frame) formulated by government environmental management and SDGs implementation. Various types of sustainability strategies can be implemented within SSM (Figure 1). Sustainability strategies represent the different levels of the implementation of SDGs [57]. The levels range from basic environmental strategy, pro-ecological strategy, and finally the full engagement and consistency of management with SDG,s which is the green strategy [7]. Therefore, there are three types of sustainability strategies differentiated on coherence degree in SDG implementation concerning natural environment protection [58,59]. Based on this division, there are also fewer and more engaged organizations in the SDGs, which reflect their involvement in natural environment protection (represented by an arrow in Figure 1).

**Figure 1.** Relationship between sustainability strategies and management approaches. Source Authors' elaboration.

Environmental strategy is implemented by organizations that adapt to the environmental requirements legislated, and environment management formulated, by government [57]. It can be considered as a basic and minimum version of environmental measures that must be executed and met by organizations to avoid legal and financial consequences [60]. This type of strategy has obligatory implications and must be adopted by all organizations. The environmental strategy defines the organization's processes that impact the environment and points to environmentally-friendly practices [23]. In this strategy, organizations specify how they shape relations with the natural environment, and they adopt strategic attitudes [61]. The environmental strategy should be adapted to the circumstances of the

organization's internal and external business environment conditions [23]. The environmental strategy can be used at a country level as well at the organization level, and it can be developed towards the next levels of sustainable strategies.

Proecological strategy concerns involvement in activities that go beyond the norms established by law and assumes the realization of chosen SDGs and treats them as sustainable strategic measures. Besides the obligatory law regulations, there are formal internal and external certificates, or industry standards, developed in this strategy level, which are not obligatory but voluntary [31]. Proecological strategy has a tactical nature and creates a connection between operational (environmental strategy) and strategic level (green strategy). Its purposes in organizations or in country-based strategies [42] are to enhance improvement of the natural environmental conditions or reduce anthropopressure (the negative impact of all human activity). On the other hand, if measurement of pro-ecological strategy implementation processes is not possible, there is no sustainable strategic management at this level [17,49]. However, if the development of a single government or organization's proecological strategy does not bring results, then action is required towards the next level of sustainability strategy [62].

The green strategy is most developed (Figure 1), which enhances quality of life by using new technological and organizational solutions and supporting green industry development. This type of strategy involves the almost maximum possible number of SDGs in the organization's activities. The practice of green strategy requires the involvement of top management and focusing their attention on the decision-making process related to the environment [43]. The choice of a green strategy is mainly due to internal factors, shaped by the commitment of the organization's management to consistency between management style and goals induced by the SD idea [23]. "A green strategy implies a proclivity to collaborate with stakeholders concerning environmental improvements, share information with competitors concerning environmental improvements, emphasize environmental improvements rather than short-term economic gains, and emphasize environmental improvements as a means of increasing earnings" [63].

#### *2.3. Electrical Energy Production Sector—Selected Characteristics*

Electrical energy has great importance for economic and social development and quality of life [64]. It is also assumed that energy demand will grow on a global scale in the near future [65]. Nowadays, for the majority of countries, energy production is based on coal combustion diversified by nuclear energy (recognized as clean energy) and some portion of RES [66]. The dominance of coal as a fuel has strategic political and socioeconomic importance [61,67]. The electric power industry burns coal, emits pollutants and produces solid wastes that damage the environment and cause large-scale changes to the landscape. Despite modification of the technology of generating electrical energy from coal, and improvement in processes related to reclaiming exhaust gases, coal combustion still harms the environment [68]. The majority of electricity producers are state-owned enterprises. These companies not only produce energy in their facilities but also distribute it because they possess the required infrastructure. Therefore, this economic sector harms the environment mainly due to electrical energy production processes and related direct hazards. This industry also shapes and changes the landscape during energy generation (renewable installations), transfer, distribution and retail of electricity. The transmission of electrical energy is managed by each country's transmission system operator [69]. Each operator within to the Visegrád Group belongs automatically [70] to the Central Europe Energy Partners, and they also belong to the European Union organization Union for the Coordination of Production and Transmission of Electricity (UCPTE).

Despite numerous declarations by politicians and leaders of business organizations involved in the energy sector, Sachs [71] drew attention to the problems and failures in implementing the idea of SD, especially in electric energy production practice [15]. On the other hand, when analyzing the possibilities of organizations such as energy producers, one can indicate the chances of implementing strategies that consider the needs of the

natural environment. A beneficial development alternative for organizations operating in the energy sector is implementing strategies to reduce the negative impact on the natural environment. In this approach to the strategy, the most critical problems to be solved are pollution and waste generated during the energy production process and increasing power generation efficiency. Enterprises implementing environmentally-friendly strategies have a wide range of possibilities ranging from activities with a low impact on environmental protection to comprehensive initiatives built with a long-term perspective and considering the organization's ecological responsibility [72].

The implementation of different sustainable strategies (Figure 1) is related to technological progress, which has provided a new ecological solution [18]. This shift has also forced companies to slowly withdraw from the so-called 'linear economy' approach [5]. The first strategies were characterized and named as 'end of pipe' technology-based solutions. These early strategies were based on the dilution of wastes and pollutions to meet the basic legal requirements for environment management imposed by the government [5,30]. To implement environmental strategy, energy producers' techniques dealt with emissions and were based on the limitation of pollution emission in uncomplicated processes.

Many companies invested significant amounts of money for environmental compliance [51]. The most important aspect for them was to increase process productivity [18]. Nowadays "it is considered that pollution and waste are a sign of low process efficiency" [5]. Therefore, electrical energy producers try to increase energy production effectiveness and implement clean production related to the proecological strategy.

Some companies from Standard and Poor's group involved in energy production [51], obtained a costly competitive advantage in a short time by reducing the emission of pollution [51]. Technological or process changes requires greater financial expenses than organizational shifts [51,73]. However, from a financial perspective [74], initial decrease of pollution yields the greatest results [51]. When the degree of emission approaches zero pollution, capital expenditures grow in a significant way. This is associated with an ever-deeper change within the organization. It is also necessary that the result of the main business process (product of service) is environmentally friendly. Then, the organization has both clean processes and clean products [57]. This includes a progressive change from process greening towards SSM [75].

Complementing one of the chosen sustainability strategy types should be the attitude of the whole company with aims toward SD. It is possible to specify strategy types due to the method of achieving harmony between the natural environment and organization or business environment [26,58,63]. Electrical energy producers often implement renewable energy technologies to diversify their energy production process and try to deliver more green electricity [65]. Such a change in power production is a result of the adopted type of sustainability strategy.

#### *2.4. Renewable Energy Sector in the V4*

Energy production in Central Europe is traditionally based on nonrenewable energy sources [76]. The V4 energy sector is historically rooted in fossil fuels, which occur abundantly in these countries, and among them are some of the biggest coal producers (Poland possesses the ninth largest coal deposits in the world). In electrical energy production in Central Europe, two major fuels are significant: hard coal and nuclear energy [77]. Changes in electrical production are moving towards more renewable energy in electricity production [15,17,66]. Therefore, the electrical energy generation subsystems in the Visegrád Group of countries is mixed and encompasses power plants, industrial power plants and heating plants, hydroelectric power plants, wind power, biomass and biogas [78]. Access to electrical energy is a criterion of wealth, as it determines economic and social development. Surprisingly, in the EU, the lowest rate of energy used per capita is achieved by Hungary (approx. 100 GJ per year) and Poland (approx. 115 GJ per year) [79,80]. It can be assumed that limited access to electricity determines the low wealth of a society and undermines the development of economies [81]. In the Visegrád Group of countries, there are active foreign

investors and conventional energy producers who decided to develop their portfolios in the renewable energy sector. These investors are Axzon (biogas plants), Dalkia (biomass combustion), EDF, EDP Renewables, E.ON, GDF Suez (wind farms) and RWE, that along with the domestic companies are also investing in renewables [82].

In **Czechia**, primary electrical energy production is based on the use of fossil fuels [83]. The Czech Republic uses coal and lignite for approximately 47% of its electricity production and is second in Europe after Poland (73.6%) [84]. Czechia was the fourth-biggest net electricity exporter in the EU in 2018, after France, Germany and Sweden [85]. However, the country's energy security is based on coal and lignite as conventional energy sources. Apart from coal (53%), the country uses nuclear energy (35%) and renewable energy (12%) [86]. Czechia coal consumption records a decline in favor of biofuels, waste combustion and nuclear energy [87]. The largest electricity producer in Czechia is CEZ ( ˇ Cesk ˇ é Energetické Závody), and there are four much smaller producers: Severní Energetická, Sokolovská Uhelná, Elektrárny Opatovice and Teplárna Kladno. Electricity generation from renewables is driven by biogas, biomass, and solar (around 25% each), followed by water energy (around 18%). The remaining electricity production is covered by other RES, especially wind projects [87]. The fastest-growing renewable source of electricity in Czechia is photovoltaic power plants. The reason is the fall in the price of solar panels and the possibility of storing electricity. According to plans, by 2030 wind energy should cover one-third of electricity demand, whereas the development of biogas plants is subject to restrictions due to odors. Considering the various barriers that hinder the development of RES in Czechia, legislative restrictions are the most important [83].

In **Hungary,** the renewable energy sector has a small share in electricity generation and is dominated by biomass producers [80]. The energy sector in Hungary is mostly privatized, despite the largest company, MVM (Magyar Villamos M ˝uvek) group being owned by the state [88]. In Hungary, conventional electricity generation comes mostly from nuclear (49.3%) and coal (8.5%), with natural gas contributing to nearly a quarter of the total electricity generated in Hungary in 2018 [89]. In Hungary, around 10% of electricity production came from RES in 2018. Recognition that solar energy is particularly important for the development, means photovoltaic panels have been developed. The most important sources of renewable energy are solar energy and biomass, and wind energy has become much less important [90]. In Hungary, 4.5% of renewable energy is produced, and electricity from renewable sources is mainly supplied by hydro and geothermal power plants [80].

In **Poland,** investments in renewable energy sources are developing rapidly despite regulatory barriers. The largest companies in Poland operating in the energy sector are PGE (Polska Grupa Energetyczna), Tauron, Enea, Energa and ZE PAK (Zespół Elektrowni P ˛atnów Adamów Konin). Therefore, the biggest renewable energy sector is constituted of listed electrical energy suppliers with Polish branches. The four key players the renewable energy market are PGE, Tauron, Enea and Energa [58]. Some changes influence the renewable energy sector development in this country. The geographic conditions favor wind power plants, but the majority of renewable energy is generated by hydropower plants [91]. Hydropower development is expected to be mainly based on the use of existing damming structures to produce electricity [92]. Another opportunity is favorable changes in law (prosumers energetics) that make more organizations and households interested in photovoltaic panels. This creates a new strategy, considering a for the prosumer client in the electricity generation processes [15]. In Poland, various sources of renewable energy do not play an important role in energy production [82]. The use of wind energy has developed little, while the use of solar energy is growing faster [93].

In **Slovakia,** the electricity market is relatively small compared to other EU countries [94]. Almost 55% of energy production is supplied by nuclear power stations, 21% by conventional power stations, 14.4% by hydroelectric stations and 8.9% from other renewable sources [95]. Slovakia is considered one of the most energy-consuming economies in the EU countries [96]. In Slovakia, the major player in the electricity producer sector

is Slovenské Elektrárne (SE). Slovakia is a relatively water-rich country, boasting many natural lakes, dams and rivers that support various water-intensive operations such as tourism, manufacturing and power generation [97]. Therefore, in Slovakia, hydropower is the most significant renewable energy source, accounting for around 40% of total energy production [95]. Geothermal waters and biomass plants are used to a small extent, while the possibilities of using solar energy, and thus solar panels and photovoltaic power plants, are growing [98].

A SWOT analysis (Figure 2) can be used in the RE sector to facilitate the selection and implementation of a sustainability strategy. Then, the results can be used to determine how strengths and development opportunities influence the process of achieving competitive advantage and reflect the sector's situation [99]. The analysis indicates weaknesses and threats which V4 countries have to eliminate or mitigate to provide better conditions for renewable energy organizations' development. Then, these organizations can project their strategy using strengths and opportunities, and avoid major problems [100]. Figure 2 presents the elements of the SWOT analysis for renewable energy sector industry development created by the electrical energy producers in V4 countries. The result of this analysis can be presented as similarities and differences.


**Figure 2.** SWOT analysis of the V4 renewable energy sector. Author's elaboration based on [5].

Factors influencing the development of the RE sector and the directions of their impact on renewable energy producers were examined in the presented SWOT analysis. Similarities are identified among V4 countries, and each has developed some sustainability strategies [76]. What is more, among Visegrád Group countries, forecasting the future and planning in the long-term can improve the state of the environment in the next 10 or 20 years [6]. These have set their development goal to become carbon neutral by 2050. This eco-approach is promoted by the EU; therefore setting pro-eco policies may be motivated by the money offered by the EU for investments in the renewable energy sector [68]. All of the V4 countries are quickly improving their renewable energy industries, and their geographic locations and environmental conditions create good circumstances for increasing use of renewable energy [101]. The analysis presented in Figure 1 shows that there is a huge potential for the development of the renewable sector in the Visegrád Group. Development conditions for the V4 countries' renewable energy sources are convoluted and mainly rely more on external environmental factors than internal conditions.

One of the most important connections between these countries is membership in European Union. The EU's aims in terms of energy are clear. These objectives are reduction of CO<sup>2</sup> emissions, development of renewable energy sources, an increase of efficiency and creation of a European energy market. Considering the EU's goals with the priorities of various sectors of the energy market will be a major threat for each of the V4 countries, especially since the objectives of the EU mean moving away from coal. This raises the question of the role of the mining industry in the future. There is an attempt to protect the mining industry by combining it with the energy industry, so that extraction costs of mining are reduced.

There are differences among the Visegrád Group countries in the renewable energy sector. For example, in Hungary and Czechia, the ecological awareness of residents and the willingness to implement proecological investments are growing, but this trend is less visible in Slovakia and Poland despite huge campaigns and education spending [77]. In Czechia, the renewable energy sector is divided almost equally between biogas, biomass, solar power and other types of renewable energy generation [6]. Contrasts are visible in various technologies used to achieve set goals for the renewable energy sector [1], and differences between them may result from different stages of the country's development or a different sustainability strategy implementation level [102]. The energy sector depends on the geographical location of the country, which results in differences between countries in adopting various energy generation technologies. For example, different climate conditions may either support or make renewable projects difficult or impossible to accomplish.

#### **3. Materials and Methods**

The subjects of the study were the main conventional energy produces in the Visegrád Group countries that decided to generate electrical energy from RES. This paper excludes nuclear energy as renewable energy; therefore, data related to this type of energy were not subject to analysis. Following the RE sector's transformation, the six energy producers emerged in the countries studied (Table 1). In Poland there are four main energy producers: PGE (Polska Grupa Energetyczna), Tauron, Energa and Enea. These companies have different characteristics related to RE generation, CO<sup>2</sup> emissions, and shares in the electricity market in Poland. Unlike Poland, in the other Visegrád Group countries, there is only one main energy producer in each state. In Czechia the main producer of the energy is CEZ ˇ (Cesk ˇ é Energetické Závody). In Slovakia it is SE (Slovenské Elektrárne), and in Hungary the main energy producer is MVM (Magyar Villamos M ˝uvek). Besides these companies, there are foreign investors for both conventional and renewable energy producers, which market shares, but these are players in all V4 member states. All companies listed in Table 1 are the biggest energy producers and hold stakes in the Visegrád group's RE market [103]. The dominance of single organizations in Hungary, Slovakia, and Czechia is due to the fact that in these countries a significant amount of the electric energy is generated in nuclear power plants. The aim of this research was to research energy producers' sustainability strategies

in the Visegrád Group countries. The common points of their sustainability strategies, based on the indicators for monitoring implementation, are listed in Table 1. The data were obtained from the companies' integrated reports. A quantitative research statistical reference method (the Hellwig's method) was implemented. The indicators presented in Table 1 were selected based on the Fitch Solutions reports [91].


**Table 1.** Basic indicators for monitoring the sustainability strategy in 2019.

Source: Authors' elaboration based on companies' integrated reports.

The reference method involves the determination of a synthetic variable being a function of the normalized features of the data input set. The essence of this method lies in a procedure according to which, from the explanatory variables in the matrix, a combination of variables is selected. Moreover, this method allows measurement and comparison of variables of different sizes and dimensions because a data standardization procedure is used. The purpose of the method is to compare the level of sustainability strategies among companies of the Visegrád Group countries that decided to produce electrical energy from RES. Indicators were defined by Eurostat [104] because their compatibility with the SDGs was accepted in the companies' reports. The variables used in calculations were assigned by the symbol x with the number noted as a lower index. As a result, total number of five variables was determined in this way [58].

Secondary data from the year 2019 collected by the companies' integrated reports were used for the calculations, which ensured the comparability and reliability of the data. The reason for the choice of the reference method, especially the zero unitarization method [105], was the presentation of current sustainability strategies in the V4. Moreover, the application of the standard method allowed for the verification of the obtained results in the comparison with countries having similar development [30,106], as described in the literature [107]. Since the set of independent characteristics contains variables that cannot be aggregated directly using appropriate standardization, normalization formulas were applied. Among the formulas, the method of zero unitarization was selected to standardize the process based on the interval of a normalized variable. Variables that positively influence the described phenomenon are called stimulants (x1–x4). The only variable with the symbol x<sup>5</sup> is a destimulant. Indicators were selected for the standardization process based on the following formulas:

$$\text{for stimulus}: \quad z\_{ij} = \frac{\mathbf{x}\_{ij} - \min\left(\mathbf{x}\_{ij}\right)\_i}{\max\left(\mathbf{x}\_{ij}\right)\_i - \min\left(\mathbf{x}\_{ij}\right)\_i} \tag{1}$$

$$\text{for de} - \text{stimulated}: \, z\_{i\bar{j}} = \frac{\max\left(\mathbf{x}\_{i\bar{j}}\right)\_i - \mathbf{x}\_{i\bar{j}}}{\max\left(\mathbf{x}\_{i\bar{j}}\right)\_i - \min\left(\mathbf{x}\_{i\bar{j}}\right)\_i} \tag{2}$$

where:

*zij* is the normalized value of the j-th variable in the i-th country; *xij* is the initial value of the j-th variable in the i-th country.

Diagnostic features normalized in this way take the value from the interval (0;1). The closer the value to unity, the better the situation in terms of the investigated feature; the closer the value to zero, the worse the situation.

In the next step, the normalized values of variables formed the basis for calculating the median and standard deviation for each of the countries studied. Median values were determined using the formulas:

$$\text{for even numbers of observations}: \ M e\_i = \frac{Z\left(\frac{m}{2}\right)\_i + Z\left(\frac{m}{2} + 1\right)\_i}{2} \tag{3}$$

$$\text{for odd numbers of observations}: \ M e\_i = Z \left( \frac{m}{2} + 1 \right)\_i \tag{4}$$

where: *z<sup>i</sup>* (*j*) is the j-th statistical ordinal for the vector (*Zi*<sup>1</sup> , *Zi*<sup>2</sup> , . . . , *Zim*), i = 1, 2, . . . , n; j = 1, 2, . . . , m.

The standard deviation was calculated according to the following equation:

$$S\_{di} = \sqrt{\frac{1}{m} \sum\_{j=1}^{m} (z\_{ij} - \overline{\mathbf{z}})} \tag{5}$$

Based on the median and standard deviation, an aggregate measure *w<sup>i</sup>* of the sustainability strategies was calculated for each country:

$$w\_i = M\_{ei}(1 - S\_{di}); w\_i < 1\tag{6}$$

Values close to unity indicate a higher level of the sustainability strategy in the V4 member state, resulting in a higher rank. The aggregate measure places a higher rank on countries with a higher median of features describing the specific country, and those with a smaller differentiation between the values of features in the chosen state, as expressed by the value of the standard deviation [107]. The procedure selected for evaluating the sustainability strategy levels provided a multidimensional comparative analysis. Such an analysis allowed for a comparison between the Visegrad Group countries and grounds for classifying them into four groups (Table 2), where *w* is the mean value of the synthetic measure and S is the standard deviation of the synthetic measure.


**Table 2.** Sustainability strategies aggregate measures comparative analysis.

Source: Authors' elaboration.

The biggest energy producers in the Visegrad Group countries play the main role in sustainability strategies in these countries. The differences between conventional energy producers who decided to generate energy from the RES reflect the disparities between the countries in which they operate.

#### **4. Results**

According to the calculated *w<sup>i</sup>* values, the V4 countries were assigned to one of the groups concerning their sustainability strategy level. In Table 3, the main energy producers from each country (countries symbols in brackets) are presented.


**Table 3.** Results for the V4 countries main energy producers.

Source: Authors' calculations.

The results presented in Table 3 show that the largest generation of electrical energy from RES in 2019 was in the Czech Republic, followed by Slovakia, Hungary and Poland. The number of retail customers is the highest in Poland, then in the Czech Republic, Hungary and Slovakia. The share of total domestic production of electrical energy has the highest percentage in Slovakia, followed by Poland (four companies contributed 79.3% in total), the Czech Republic and Hungary. Renewable energy source installation power is the highest in Poland (2445 MW in total), and lower in Czechia, Hungary, and Slovakia. On the other hand, the annual volume of CO<sup>2</sup> emissions is the highest in Poland, then in Czechia, Slovakia and Hungary.

The analysis shows that there are countries in which main energy producers implement different sustainability strategy levels (Table 4).


**Table 4.** Groups of the V4 countries based on the main energy producers' strategies.

Source: Authors' calculations; \* calculated as an average value.

#### **5. Discussion**

The SWOT analysis presented in Figure 2 shows that there is potential for the future development of the RE sector in the Visegrád Group countries. Energy producers examined in this study belong to the Visegrád Group countries' states corporations. These organizations have common projects and cooperate with other renewable energy sector companies. Furthermore, favorable legislative changes (prosumer energetics) encourage a growing number of households' adoptions of renewable energy sources (e.g., photovoltaic panels). The role of the client in this process requires a change in strategy based on a new customer approach [108]. An evaluation of the sustainability strategy levels by measuring the effects of energy sector company indicators was based on the reference method [105], modified by the authors from its use in macroeconomic development research. A difficulty in analyzing the renewable energy sector in V4 countries is the deficit of harmonized data allowing comparison between countries and checking of the dynamics of changes over the years.

There are distinct tendencies that support growth of the RE sector in the Visegrád Group countries which are the largest beneficiaries of EU capital and support [91]. Many producers of electrical energy have implemented different levels of sustainability strategies because of growing ecological trends in business [5]. The multidimensional evolution of the strategies in the energy sector is shown in Table 5. Sustainability strategies in the RE producers' sector in the V4 countries are similar to the relationships presented in Figure 1, as in the third column showing sustainable strategies typology [109]. These strategies are a result of three pressure directions on the electrical energy producers. The first has a legal character, the second is the economic pressure of clients and the third is social opinion related to energy production hazards. However, changes in strategy are usually forced by external requirements imposed by legislation at the level of a country or a superior international organization. This external pressure is still applied, and it is even increased by the occurrence of environmental degradation.

Energy sector companies can choose between a broad spectrum of sustainable strategy levels (Table 5). There is a basic, minimum approach characterized by the organizations which implement the "end-of-pipe strategy" [51,110], which reflects the legal requirements for all companies. The "end of pipe" strategy refers to an environmental strategy characterized by isolation and a competition-oriented approach [111]. According to the Worthington's classification, there are other names for this approach, such as indifferent stage or defender position (organization self-defense) [57]. A characteristic feature from the point of view of implementing SDGs in the technological process is the occurrence of dirty processes and dirty products/services. The isolation strategy (minimum-level strategy) is based on minimalization of interactions between the natural environment and the organization (businesses environment) [112]. This strategy decreases the stability of the organizational system and is related to the limited interaction of the organization with the natural and business environment.

A cleaner-type production strategy can also be incorporated into the environmental strategy. Not paying attention to redundancy, organizations implement dirty processes but offer a clean product or service [108]. The redundancy strategy is based on maintaining access to various resources by the organization. These resources allow organizations to survive in crises and avoid short-term adaptation [113]. Due to access allowing restoration of stability at the interface between the organization and the environment, the system can operate in a partially independent manner, both from initial knowledge and the possibility of later obtaining reliable information about the environment. This strategy type encompasses proactive and crisis preventive approaches that stay in accordance with sustainable strategy topologies described by Worthington [57].

There is also the so-called "zero strategy" (also called the "no waste" strategy), which qualifies as the proecological strategy [57]. This strategy assumes an adaptive approach and implementation of clean processes and clean products/services. Adaptability is the potential for the organization to change itself or change its surrounding. This change allows at least some of the lost effectiveness to be regained.

Developing all the above-mentioned sustainable strategies leads to environmental excellence [114], or a green strategy. A green strategy is related to the natural environment, is built on SD and expresses greening of the organization. A green strategy assumes cooperation within the network. Then, the organization can obtain an environmental leadership position [57], not just a sustainable competitive advantage. The organization's technological process is optimal, as both the processes and products/services are clean.

In the literature, there are many sustainable strategy typologies, and the most common is the evolutionary one based on technological progress. This type of development is focused on better environmental protection. The authors of this paper extended a new classification of proecological strategies, as presented in Table 5. These multiple stages or types of sustainable strategies are considered in the strategic management literature. They vary between three and five elements; however the most popular consist of four levels [57]. According to the Hart classification, these are end-of-pipe, pollution prevention, product stewardship and sustainable development [115]. These levels are in accordance with the authors' proposition in Table 5. As listed by Worthington, four element stages or positions [57] are related to the findings of Verbke and Buysse [110].

*Energies***2021**, *14*, 3048


**5.**Strategiesevolution-basedclassifications.

Source: Authors own elaboration based on: [58,111,116].

#### **6. Conclusions**

Even though the SD idea is 50 years old, it has developed more in theory than in practice. Lack of interest and skills in implementing the concept means that there are no measurable social, economic and environmental results. It may even be stated that since the 1970s, social, economic and ecological inequalities between countries and regions have deepened. Despite the declarations and implementation of proecological initiatives, companies' actions are chaotic and inconsistent.

In this paper, research on the RE producers' strategies is limited to the V4 group intentionally. It was assumed that due to historical, political, economic and geographical conditions, companies from these countries would operate in a similar business environment and conditions. This, however, limits research results to countries from the Visegrád Group, where we can make comparisons among countries at a similar level of development. In the study, we did not measure the degree of translation of the SDGs into the implementation of the strategy, and only chosen measures were compared, which means that the study focused on selected, comparable indicators reported by the energy producers in the renewable energy sector.

The novelty of this work covers several aspects presented in the research. The authors presented a new view on renewable energy producers' strategies in the Visegrád Group Countries. The starting point for the considerations was the theory of sustainable development and sustainable strategic management. The authors proposed a new concept of sustainability strategies for companies that can choose between an environmental strategy, a pro-ecological strategy, and a green strategy (Figure 1). Contribution to science is a factor in the strategy types that energy sector companies can choose. The authors highlighted the wide range of opportunities associated with different levels of energy support in environmental efforts, from end-of-pipe to environmental excellence (Table 5). The authors used a statistical reference method (Hellwig's method) based on data gained from the businesses. There are few similar types of research on renewable energy producers based on business data and calculated with Hellwig's method. Other authors using this method in different contexts usually based their studies on the administrative level comparisons and classifications into groups or ordering in ascending/descending orders.

This study contributes to sustainable strategic management (SSM), sustainability strategies and SDG research. The observations in this study were limited to the degree of implementation of SDGs, so future research is required in this area. Indicated problems result from inadequate SSM [49] and the lack of implementation of strategies. Therefore, it is not so much the strategy implementation declaration that matters, but the strategy implementation process. The selection of strategic goals that positively impact the environment is essential only when this is translated into the strategy implementation.

Concerning practical implications, one should pay attention to several problems. The need to transition electricity generation from fossil fuels to renewable energy sources should be reflected in the implementation of SDGs in energy producers' strategies. The use of electricity generated from fossil fuels depletes natural resources and degrades the environment. Despite declaring the intention to reduce energy demand, there is an increase in electricity consumption in the world, still obtained mainly from fossil fuels. This increase in demand for electricity is driven by economic development. Growing investments in the energy sector, and use of RES, can be seen as a way to achieve energy independence among Central European countries. Therefore, all Visegrád Group countries are strong proponents of the diversification of energy supplies and transit routes and try to enhance and support the energy sector transition. These countries are building mutual network connections to enhance the region's security and reduce the negative effects of one-sided dependency. Therefore, fossil fuel and "brown-based" international policy lead towards strong dependencies when renewable energy sources promise independence. All the initiatives of the Visegrád Group energy producers are aimed at supporting energy stability in the Central European region. There is development capacity for the renewable energy sector based on sustainable strategies within the SD movement, and there is also space for the greening the electricity producers by a green strategy.

Regarding social implications, it is worth paying attention to new opportunities related to shaping consumer behavior. Information about electricity producers' strategies can be an essential factor in influencing consumer choices. The growing requirements of customers as to the composition of products and production processes has been reflected in the creation of labels confirming compliance with social criteria. Similarly, consumers using electricity can decide on the choice of supplier, bearing in mind the company's commitment to respect for the natural environment and implementing sustainability strategies. Thus, consumers are able to find out about renewable strategies and make more aware of energy supplier choices.

The assessment of the RE sector development conditions leads to the conclusion that only the state can take the risk of the transformation of the energy sector towards greener and sustainable practices and based on RES. The reasons are the scale of the investments and regulations associated with energy production. The state is a major stakeholder, or owner, of the power plants, suppliers, and related distribution infrastructure which constitute the energy producer companies studied in this research. In this study, we encountered multiple misunderstandings, and false or unchecked information, in the reports of the energy sector in the Visegrád Group countries. The most reliable data used in our research were expensive reports, which, in our opinion, restrict important information for decision-making processes.

In the Visegrád Group topics related to the transition towards a green economy, such as aspects of electromobility, have gained attention in recent years. However, implementation is an illusion, since the majority of generated energy comes from nonrenewable resources. Only an increase in RES can reduce the emissions generated by energy-related economy sectors. The problem is that nuclear energy is considered safe and ecofriendly among the V4 societies, despite the hazards associated with it. In domestic statistics, this type of energy is also classified as renewable, which effectively changes the internal electricity market image of Slovakia, Czechia and Hungary.

An opposite approach is when organizations choose a green strategy that responds to legal requirements and results in the organizations adopting an active attitude towards environmental protection and management evident in green decisions. Changes in technology support changes in the proecological and green strategies in the natural environment. Organizations face the choice of various technological solutions related to the chosen organization's development strategy. On the other hand, technology allows protection of scarce resources and an open perspective for resource-based strategies. These green strategy-driven organizations do much more than required by law and their actions are not based on fear of penalties. Organizations that implement green strategies represent a type of strategic thinking that looks far into the future and translates their strategic goals into a specific management style that is consistent with a sustainability strategy level.

Developing the RE sector can not only reduce negative impacts and protect the natural environment, but it is also possible to act towards energy independence from big suppliers of energy providers and producers in the region [106]. The energy sector is especially involved in the economy because RES can impact prices of goods and services and shape wellbeing.

Accelerating the development of RE requires creating a new conceptual framework, where the basic tool for the usage of SDGs is the implementation of the strategy. We recognized the possibility of a future research direction dedicated to the SWOT analysis for each V4 country's electrical energy sector. To increase the effectiveness of strategy implementation, it is necessary to research the organization in the V4 group regarding difficulties related to the implementation of sustainability strategies. A possible research avenue is to study how to implement a corporate environmental strategy, or green strategy, and propose tools to measure this process. This can reveal possible new approaches to sustainability strategy level implementation related to the research presented in this paper. Such analysis can also open future research areas to examine development of strategies in the renewable energy sector.

**Author Contributions:** Conceptualization A.S. and L.S.-P.; methodology A.S. and L.S.-P.; formal analysis A.S. and L.S.-P.; investigation A.S. and L.S.-P.; writing—original draft preparation A.S., L.S.-P.; writing—review and editing A.S., L.S.-P.; visualization A.S., L.S.-P.; supervision A.S.; project administration, A.S., and L.S.-P.; funding acquisition, A.S., and L.S.-P. All authors have read and agreed to the published version of the manuscript.

**Funding:** (A.S.) The project is financed by the National Science Centre in Poland under the program "Business Ecosystem of the Environmental Goods and Services Sector in Poland", implemented in 2020–2022; project number 2019/33/N/HS4/02957; total funding amount PLN 120,900.00. (L.S.-P.) The project is financed by the Ministry of Science and Higher Education in Poland under the program "Regional Initiative of Excellence" 2019–2022; project number 015/RID/2018/19; total funding amount PLN 10,721,040.00.

**Institutional Review Board Statement:** Not applicable.

**Informed Consent Statement:** Not applicable.

**Data Availability Statement:** Not applicable.

**Conflicts of Interest:** The authors declare no conflict of interest. The funders had no role in the design of the study; in the collection, analyses, or interpretation of data; in the writing of the manuscript, or in the decision to publish the results.

#### **References**


**Tomasz Rokicki 1, \* , Piotr Bórawski 2 , Barbara Gradziuk 3 , Piotr Gradziuk 4 , Aldona Mrówczy ´nska-Kami ´nska 5 , Joanna Kozak 5 , Danuta Jolanta Guzal-Dec <sup>6</sup> and Kamil Wojtczuk 7**


**Abstract:** The paper's main purpose is to identify the differentiation and variation of electricity prices for households in EU countries. The specific objectives are to highlight the directions and differentiation of price changes in EU states, determine the degree of volatility (or stability) of electricity rates, and establish the correlation between electricity prices for household consumers and economic and energy parameters. All members of the European Union were chosen for this project as of 31 December 2019 (28 countries). The analyzed period covered the years 2008–2019. The source of collected information was the thematic literature review and the data from Eurostat. Descriptive, tabular and graphical methods, constant-based dynamics indicators, coefficient of variation, Kendall's tau correlation coefficient, and Spearman's rank correlation coefficient were used to analyze and present the materials. It was determined that higher electricity prices for households in the EU states were associated with better economic parameters. Developed countries must have higher energy rates because they will ensure energy transformation, i.e., implementing energy-saving technologies. In the EU, electricity prices for household consumers showed little volatility, but that variability increased in line with the surge of the volume of household energy consumption.

**Keywords:** electricity prices; households; EU countries; directions of price changes

#### **1. Introduction**

Electricity is obtained by burning fossil fuels such as hard coal, lignite, oil, and natural gas. In addition to such conventional sources, energy is also obtained from renewable resources such as wind, solar power, water, and geothermal heat. Such heterogeneity results in different energy production costs. There are also variabilities between countries regarding the structure of energy sources [1–10].

The creation of a common electricity market in the European Union has been going on for almost 30 years. Actions and regulations are mainly based on EU agreements and objectives. EU energy policy is based on three pillars: competition, security of supply, and sustainable development. Energy security includes aspects such as availability of supply, affordability, and sustainability [11–13]. There are also important goals such as reducing

**Citation:** Rokicki, T.; Bórawski, P.; Gradziuk, B.; Gradziuk, P.; Mrówczy ´nska-Kami ´nska, A.; Kozak, J.; Guzal-Dec, D.J.; Wojtczuk, K. Differentiation and Changes of Household Electricity Prices in EU Countries. *Energies* **2021**, *14*, 6894. https://doi.org/10.3390/en14216894

Academic Editor: Victor Manuel Ferreira Moutinho

Received: 23 September 2021 Accepted: 16 October 2021 Published: 21 October 2021

**Publisher's Note:** MDPI stays neutral with regard to jurisdictional claims in published maps and institutional affiliations.

**Copyright:** © 2021 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (https:// creativecommons.org/licenses/by/ 4.0/).

greenhouse gas emissions, increasing the consumption of energy produced from renewable sources, improving energy efficiency, and expanding electricity connections [14–20]. On the one hand, the electricity policy focuses on the liberalization of the entire sector, while on the other hand, it concentrates on development towards more innovative and more sustainable electricity sector [21–27]. All goals were introduced gradually and evolved. The first energy package in 1996 assumed the separation of generation from transmission and distribution, competition in electricity generation, opening the market for large consumers, non-discrimination in access to the grid, and the obligation to provide a safe, reliable, and efficient service by the distribution system operator [28]. The second energy package of 2003 dealt with competition in the retail market for households, unbundling of network activities, the creation of national electricity regulators, and the obligation of the distribution system operator to provide information enabling efficient access to the network [29]. The third energy package assumed the definition of retail supplier switching procedures, the procedures for ownership unbundling of transmission system operators, emphasizing the importance of modernizing the electricity distribution network, and the significance of smart grids and energy efficiency [30]. The 2010 strategy focused on achieving energy efficiency targets and implementing low-carbon technologies [31]. In 2011, targets were set for 2050 for a low-carbon economy [32]. Another document from 2015 concerned supporting the previous goals in the field of EU energy policy [33]. One should also mention the 2016 document on renewable electricity [34].

Electricity is a classic example of a homogeneous commodity. Homogeneous goods (services) can be characterized as physically indistinguishable or perceived as identical in the eyes of the consumer. Since the customer cannot differentiate one product from another it becomes very hard for the seller to compete. Therefore, the consumer can compare prices in different areas and periods. Since 1999, customers have been free to choose their electricity supplier. They have a very large selection in this regard. The area is served by a single operator and by a large number of participants. Energy rates can even vary within the same area. It is the customer who has to seek the best price for himself actively. However, studies show that such activities were not very common. Most often, customers were served by the local operator. Studies have found that only households informed about the tariffs are sensitive to price modifications, in the case of uninformed households the electricity demand is completely price inelastic [35–42]. That is why the EU is taking action to change this. Citizens should take action and be responsible for the energy transition by actively participating in the market. They can choose tariffs as needed but also try to change their electricity consumption patterns. For example, they can use energy to a greater extent during periods of lower grid load. However, information services are needed to achieve these effects [43–48].

In the future, consumers will be prosumers, i.e., they will produce electricity on their own and feed its surplus into the grid. Micro-networks will be created that are isolated or connected to the main network. As a result, prosumers will achieve better economic efficiency by reducing operating costs, and at the same time, contributing to the improvement of the natural environment. However, such transformation takes time [49–60].

Electricity prices is the topic of research in the field of wholesale markets. Many researchers are concerned with the electricity rates in the futures markets. Therefore, energy is the subject of the trade [61–65]. There is very little research about retail prices that relates to private households. In Moreno et al. [66], the authors investigate the determinants which affect the electricity rates in wholesale markets. However, they indicate that the impact on the determinants of household prices is unclear. In the studies by Verbic et al. [67] the relationship between the retail electricity price and energy intensity was examined, but only for households consuming 2500–5000 kWh per year. Waddams Price and Zhu [68], in the paper on the example of the British market, state that the retail electricity market has been subject to free-market laws since the end of the 20th century. Energy distribution companies were divided into regions, but they could also compete in other territories. Nevertheless, companies focused more on securing their position in their region than on

acquiring new clients in other territories. It also caused problems, such as a greater impact on energy prices in a given area by one or two companies. As a result, the prices were higher than in the case of competition with multiple companies. Additionally, according to Giulietti et al. [41] the problem is the behavior of consumers who consider it too costly to find a new electricity supplier. Littlechild [69] states in his research that competition in the market is often understood as price competition. The European Commission uses this approach in relation to the retail electricity market. A well-functioning market will require some form of regulatory intervention, but the legal constraints should not be strong.

In many countries, energy prices are part of electoral policies and promises. For example, in Great Britain, the Conservative party promised a tariff protection cap and the Labor party a price cap that would ensure low energy rates [70]. Therefore, there are differences between countries. Another reason is price asymmetry, i.e., prices are more responsive to rising costs than falling costs. With rising electricity rates, households look more for a cheaper solution than falling prices [71–77]. Additionally, households are generally reluctant to change their electricity contract. In Sweden, only 15% of households changed their contracts every year. It is also a problem for policymakers [78]. There are significant financial benefits to shifting tariffs [79]. The moment of changing the contract is also important [80]. There are very few studies that determine that consumers are not paying attention to the price changes. These customers also do not want to receive personalized information on their energy consumption and costs. Such a situation takes place only until a certain threshold is exceeded. Then there is a reduction in energy absorption [81–83]. Other studies confirm the impact of personalized information sent directly to a specific consumer on reducing energy consumption. This effect continued for a long time. Information comparing the absorption of electricity in a given household to neighbors or the national average and moral factors were of particular importance on energy consumption. The price factors were of much less importance [84–91]. This research can influence the choices of decision-makers in the scope of proposed tariffs and shaped pricing policy. Such solutions are already used in the Western Europe [92–94].

There is a lack of research relating retail electricity prices to the parameters of the economy and other factors related to the energy sector. The presented article may fill the resulting research gap.

The paper's main objective is to identify the differentiation and variation of electricity prices for households in EU states. The specific goals are to show the directions of price changes and differentiation in this regard in EU countries, determine the degree of volatility (or stability) of electricity prices, and establish the correlation between electricity prices for household consumers and economic and energy parameters.

Determining the regularities that are present may be useful for policymakers with influence on the electricity markets. The research can also be treated as preliminary for further analysis. Taking the example of the most developed economies, it can be determined what future electricity retail prices in developing countries may become. As a rule, models and regularities are duplicated. Much depends on the level of economic development of the country. Additionally, the division of households into groups shows how the retail price degression is applied depending on electricity consumption. This phenomenon occurred in most EU states. Of course, there were exceptions. Based on these studies, in-depth investigations can be made in the future.

Two hypotheses were put forward in the paper. According to the first one, the level of electricity prices intended for households in the EU states was closely related to the economic situation in a given country, but the strength of this relationship decreased with higher electricity absorption in households. The economic situation was determined by parameters such as: total and per capita GDP value, total and per capita household expenditure, the size of exports and imports. The second hypothesis was that electricity prices for household consumers showed little volatility, but this variability increased with the growth in household energy consumption, especially in the group of economically developed countries.

The limitation of the study is the availability of information. Data was aggregated by country. There were no complete details available for specific regions. Additionally, the data was provided on a semi-annual basis, in line with reporting to statistical offices. In most EU countries, retail energy prices are rarely changed. Therefore, the information used can be considered as sufficient. The division into groups of households according to the amount of energy consumption during the year was also imposed. The given limitations should not affect the interpretation of the obtained test results.

#### **2. Materials and Methods**

All members of the European Union were chosen for this project as of 31 December 2019 (28 countries). The analyzed period covered the years 2008–2019. The sources of collected information were the thematic literature review and the data from Eurostat. Descriptive, tabular and graphical methods, constant-based dynamics indicators, coefficient of variation, Kendall's tau correlation coefficient and Spearman's rank correlation coefficient were used to analyze and present the materials.

The research was divided into stages. Figure 1 shows a diagram of the conducted research.

**Figure 1.** Diagram of the conducted research.

The first stage of this project portrays the average electricity prices for household consumers in the entire EU in 2008–2019. In addition, the share of taxes and fees in the price of electricity was also presented. In both cases, the prices were depicted in five groups of households differing in the volume of electricity consumption during the year. This approach was also used in subsequent stages of the research. This section provides an overview of the general patterns of retail electricity prices in the EU.

In the second phase of the research, electricity prices for households in selected EU countries were presented, i.e., two with the highest prices and two with the lowest price level. As a result, it was possible to determine trends and differences in countries that are on two different poles in the level of retail prices of electricity.

In the third stage, the dynamics indices for electricity prices for households in individual EU countries were estimated. As a result, the data concerning strength and directions of changes in electricity rates was obtained.

The dynamics index with a fixed base can be estimated as follows [95]:

$$i = \frac{y\_n}{y\_0} \text{ or } i = \frac{y\_n}{y\_0} \cdot 100\% \text{.} \tag{1}$$

where:

*yn*—the amount of the occurrence in a certain period,

*y*0—the amount of the occurrence during the reference period.

In the fourth phase, the variation coefficients for electricity prices for households in individual EU states were calculated. As a result, it was possible to determine whether electricity prices are stable or are subject to substantial fluctuations.

The variation coefficient marked as *C<sup>v</sup>* eliminates the unit of assessment from the standard deviation of a set of digits. It is done by obtaining the quotient of standard deviation divided by the arithmetic mean. Formally, for sequence of *N* numbers, the variation coefficient is calculated as follows [96]:

$$\mathcal{C}\_{v} = \frac{\mathcal{S}}{M'} \tag{2}$$

where:

*S*—the standard deviation from the exemplar set of numbers,

*M*—the arithmetic mean of the exemplar set of numbers.

In the fifth stage, the relationship between average EU electricity prices for household consumers and the parameters related to the economy and energy were analyzed. The parameters were purposefully selected based on the literature review. Introduced parameters indicate all the most significant aspects associated with the economy of a particular country and the level of energy development. Thanks to this research project, it is possible to determine the importance of parameters and their strength of association with retail electricity prices. In this phase of the project, two non-parametric tests were applied to define the correlation between the variables. The former one is Kendall's tau correlation coefficient. It is established on the difference between the probability that two variables fall in the same sequence (for the interpreted data) and the probability that these factors are different. This coefficient fluctuates in the range of values <−1, 1>. Value 1 means complete match, value 0 indicates no match of order, and value −1 indicates the complete opposite. The Kendall coefficient suggests not only the robustness but also the direction of the interdependence. It is a good tool to represent the similarity of the ordered sets of data. The following formula can be used to calculate Kendall's tau correlation coefficient [97]:

$$\pi = P[(\mathbf{x}\_1 - \mathbf{x}\_2)(y\_1 - y\_2) > 0] - P[(\mathbf{x}\_1 - \mathbf{x}\_2)(y\_1 - y\_2) < 0].\tag{3}$$

The given formula evaluates Kendall's tau based on a statistical sample. First, all possible pairs of the observed population are combined. Next, the pairs are split into three possible units:

*P*—compatible pairs, when the analyzed factors within two observations fluctuate in the same trend, i.e., either in the first observation both are higher than in the second, or both are less significant;

*Q*—incompatible pairs, when the factors differ against each other in the opposite trend, i.e., one of them is more significant for this observation in the pair, while the other is smaller;

*T*—related pairs in the case of one of the variables having equal values in both observations.

The Kendall tau coefficient is then calculated from the following formula:

$$
\pi = \frac{P - Q}{P + Q - T}.\tag{4}
$$

Moreover,

$$P + Q + T = \left(\frac{N}{2}\right) = \frac{N(N-1)}{2},\tag{5}$$

where:

*N*—the sample volume.

The pattern can be quantified as:

$$
\pi = 2 \frac{P - Q}{N(N - 1)}.\tag{6}
$$

The latter form of non-parametric tests is the Spearman's rank correlation coefficient, which describes the strength of the correlation of two characteristics. It is used to analyze the relationship between quantitative traits for the small amount of observations. Spearman's rank correlation coefficient is estimated according to the following formula [98]:

$$r\_S = 1 - \frac{6\sum\_{i=1}^n d\_i^2}{n(n^2 - 1)},\tag{7}$$

where:

*di*—the disparity between the range of the corresponding factors *x<sup>i</sup>* and feature *y<sup>i</sup>* (*i* = 1, 2, . . . , *n*)

The Spearman's rank coefficient fluctuates in the range −1 ≤ *r<sup>s</sup>* ≤ +1. A positive number indicates a positive correlation, while a negative digit indicates a negative correlation. The more similar modulus (absolute value) of the correlation coefficient, the more robust the correlation between analyzed variables.

The following techniques were used for data presentation: descriptive, tabular, and graphic.

#### **3. Results**

#### *3.1. Medium Electric Prices for Households in the EU Together*

Electricity prices for households in the member states of European Union are grouped by category according to the amount of consumption. There are five clusters. Firstly, the average electricity prices for household customers in all EU countries in 2008–2019 are presented (Figure 2). The prices were given on a semi-annual basis. By far the highest electricity prices were in the case of the lowest consumption, up to 1000 kWh per year. The more electricity was consumed by the households, the lower the price for 1 kWh. Such a regularity seems logically justified and results from the economy of scale. Nevertheless, the disproportions between prices in individual classes were visible, especially in households consuming the least energy and those with the highest consumption. In the following years, the differences deepened. In 2008–2019, energy prices in households consuming up to 1000 kWh increased by 53% to EUR 0.38 per kWh. This increase was slightly smaller in the next group (from 1000 to 25,000 kWh) (46%). In the next group, i.e., 2500 to 5000 kWh, prices increased by 37%, and in the following two (from 5000 to 15,000 kWh and above 15,000). kWh) by 33 and 30% respectively.

**Figure 2.** Electricity prices for private customers in European Union in 2008–2019.

The share of taxes and tariffs in the price of electricity supplied to private households was also determined (Figure 3). It was by far the highest in the case of households with the highest electricity consumption. A regularity was found according to which the higher the consumption of electricity, the more taxes and charges were included in the price of energy. Additionally, the disproportions deepened. In 2008, in households consuming up to 1000 kWh in the price of energy, there were 29% in taxes and fees, and in 2019 as much as 32%. On the other hand, in households with the highest electricity consumption (over 150,000 kWh), these shares amounted to 40% in 2008 and 43% in 2019, respectively. It can be concluded that higher energy consumption was burdened with relatively higher taxes, although the unit energy price was lower compared to households with low energy consumption.

**Figure 3.** The contribution of levies and taxes in electricity prices for private customers in European Union in 2008–2019.

#### *3.2. Electric Prices for Households in Selected EU Countries*

Electricity prices for private households varied. It could also be the case in the direction of changes. There was no country with the highest electricity prices in each consumption group. In order to select examples of countries for a more detailed analysis, the investments received by individual countries in each of the groups in terms of energy consumption were compared. The highest electricity prices for households were in Germany. In 2019, this

country was in the first positions in the groups of 1000–2500 kWh and 5000–15,000 kWh, second in 2500–5000 kWh and above 15,000 kWh, and fourth in the group below 1000 kWh. Another state with very high electricity prices was Denmark, ranking 1st, 2nd, 3rd, 4th, and 11th in individual groups. The same was done in the case of countries with the lowest electricity prices for households. It was a little easier in this case. Bulgaria was last in the EU in all groups in terms of consumption volume, while Hungary was in the penultimate place respectively.

In Germany, the electricity prices intended for households in the group with the smallest consumption volume, i.e., up to 1000 kWh, were the highest (Figure 4). Additionally, the differences between extreme groups deepened. Electricity prices in Germany in the 1000 kWh group increased by 34%, and in the over 15,000 kWh group by only 24%. The share of taxes and tariffs in the price of electricity in Germany in 2008 was 31% in the group with consumption up to 1000 kWh and 41% in the group with consumption above 15,000 kWh. In 2019, it was 40 and 61%, respectively. Therefore, it can be concluded that the increase in electricity prices in Germany was largely due to the increase in taxes and fees.

**Figure 4.** Electricity prices for private customers in Germany in 2008–2019.

In Denmark, in 2008–2019, there was a 9% drop in electricity prices for private households consuming the highest volumes, i.e., over 15,000 kWh (Figure 5). In the group with the lowest consumption, up to 1000 kWh, electricity prices increased by 26%. As a result, the disparities widened even more. In the case of Denmark, the prices in 2008–2014 in the groups with the lowest energy consumption, i.e., up to 1000 kWh and 1000–2500 kWh, were at the same level. It was similar in the given period in the two groups with the highest consumption, i.e., 5000–15,000 kWh and above 15,000 kWh. Since 2015, there have been differences in electricity prices between the five groups differing in terms of consumption. In Denmark, in 2008, in the price of electricity intended for households, taxes and charges accounted for 54% of this price in the group with consumption up to 1000 kWh, and 59% in the group above 15,000 kWh. In 2018, it was 55 and 56%, respectively. The tax burdens and charges for the electricity price in the group consuming more than 15,000 kWh decreased and slightly increased in the group with the lowest energy consumption.

One of the lowest electricity prices for private households was in Hungary (Figure 6). In addition, in this state in 2008–2019, there was a decrease in energy prices in all groups. On average, it was 30%, but it was the highest in energy consumption above 15,000 kWh (a decrease by 33%). Additionally, the differentiation by the group has become less and less visible. Price levels, especially in 2019, were almost identical. In Hungary, there was also a small fraction of taxes and tariffs in the price of electricity intended for private households. In 2008, it was 17–18% in individual groups, and in 2019, 21%. Still, it must be remembered

that this is a relative share, and energy prices have fallen. The tax burden on consumers has not changed in real terms, taking into account only the absolute value.

**Figure 5.** Electricity prices for household consumers in Denmark in 2008–2019.

**Figure 6.** Electricity prices for private customers in Hungary in 2008–2019.

Definitely, the lowest prices of electricity for households were in Bulgaria (Figure 7). Although in 2008–2019 electricity prices soared by 32–37% in individual groups, the prices were still the lowest in the entire EU. In the case of Bulgaria, there were also no big differences in electricity prices between private households with different consumption volumes. It also results from the approach of the state and energy companies to the pricing policy. The share of taxes and charges in the energy price did not change in this country and amounted to 17%.

The presented examples of countries show some models of electricity pricing for households. In countries with the highest electricity prices, there was a significant differentiation of the price level depending on the volume of energy consumption. Additionally, prices were systematically growing there, and there was a very large share of taxes and fees in the price of electricity. On the other hand, in the countries with the lowest electricity prices, there was little variation between clusters in terms of the volume of energy absorption. Very low taxes and fees were also applied. Maybe that is why electricity prices were very low. The differences resulted from trends in prices, because in Hungary they fell

by 30%, while in Bulgaria they increased by over 30%. Therefore, the directions of price changes were different.

**Figure 7.** Electricity prices for private customers in Bulgaria in 2008–2019.

#### *3.3. Directions of Changes of Electric Prices for Households in EU Countries*

In the next stage, the dynamics indicators for electricity prices intended for private households were calculated. Similarly, the division into clusters according to the consumption volume was applied. As the basis the level of prices from 2008 was applied (Table 1). The results were ordered in descending order due to the dynamics for the smallest volume of electricity consumption, i.e., up to 1000 kWh. Electricity prices have risen in most EU countries over the past 11 years. In addition to the aforementioned Hungary and Denmark, there were also declines in Ireland. The most significant increase in electricity prices was recorded in Malta for households consuming up to 1000 kWh. Prices there increased more than six times. There was only one energy supplier in Malta, which could have had the most significant impact on such a large increase in energy. On the contrary, the level of energy prices doubled in Latvia, Great Britain, and Estonia. In Latvia and Estonia, the markets were dominated by single energy suppliers with a large market share, 63% and 80%, respectively, in 2019. In Great Britain, the largest supplier had around 20% of the market share. The shifts in electricity prices may also result from energy policies implemented by individual EU states. Each country should be analyzed individually due to the existing socio-economic circumstances. In general, the largest increases in electricity prices occurred in the economically developed countries of Western Europe. The largest price drops or the smallest increases in developing economies of Central and Eastern Europe. In these countries, there was more significant public pressure to keep electricity prices lower.

#### *3.4. Variability of Electric Prices for Households in EU Countries*

Then, the coefficients of variation for electricity prices intended for households were calculated. The results, as before, were presented in five groups differing in the volume of energy consumption. The results concern the years 2008–2019 and have been ordered in ascending order according to the volatility of electricity prices in the group of households consuming up to 1000 kWh per year (Table 2). Electricity price volatility was not too great. In many countries, the price change took place twice a year, and the amplitude of these changes was small. As a result, the prices slightly deviated from the average price over the period. The largest price fluctuations occurred in Latvia, Malta, Greece, and Belgium. Slovakia, Poland, the Czech Republic, Croatia, and Bulgaria were the most stable countries regarding energy prices for households. These were economically developing countries that wanted to ensure the stability of electricity prices to their citizens. In general, there was

no universal trend for all EU states. The reason, except from diverse economic development and applied government policies in these countries, could also be the various levels of energy development, the pressure of society, as well as the social consent to apply various charges in the price of energy, e.g., for the development of renewable energy.

**Table 1.** Dynamics indicators for electricity prices for household consumers by volume of consumption in EU member states in 2008–2019 (year 2008 = 100).


**Table 2.** Coefficients of variation for electricity prices for private customers by volume of consumption in EU states in 2008–2019.



**Table 2.** *Cont.*

*3.5. Relation between Electric Prices for Households and the Economic and Energy Parameters in the EU*

Kendall's tau and Spearman's rank correlation coefficients were computed to find the relationship between the prices of electricity intended for households in the EU and the economic and energy parameters (Tables 3 and 4). *p* = 0.05 was used as marginal value of the level of importance. Irrelevant results are highlighted in the table as red font. Correlation coefficients were computed for the entire EU for the whole period of 2008–2019. The research project attempted to check the correlation, which does not suggest that a given factor impacts on another but that there is a significant or minor relationship. In the case of electricity prices for households, the calculations were made using the average annual prices in particular groups that differ in the volume of energy consumption. Electricity prices for private customers were normally distributed. For example, the distribution of electricity prices was also given for households consuming between 2500 and 5000 kWh per year, i.e., for the middle group according to the volume of consumption (Figure 8).

For most parameters, strong association with electricity prices intended for households was found. This relationship was strong or very strong in most cases. Strongly positive relationships were found in the relation of electricity prices and all economic parameters. It was not important whether the parameters apply to the entire EU as a political group or apply per capita. It can therefore be concluded that a higher standard of living was associated with higher electricity prices. The societies of economically developed countries are wealthy and can accept higher energy prices. In contrast, in developing countries, the society is poorer, and people only accept lower electricity prices to match their incomes. Higher imports were also associated with higher consumption. On the other hand, exports proved that the obtained funds were obtained, for example, for the import of goods. Additionally, along with the increase in energy absorption by households, the strength of the association between electricity prices and economic parameters decreased. Such results were noticed in both tests.

**Table 3.** Kendall's tau correlation coefficients between energy economy parameters and the electricity prices for private customers in the EU.


Another group of parameters concerns energy indicators. A very high positive correlation was found between electricity prices for households and energy production yield in Euro per weight unit of oil equivalent and energy production yield in purchasing power standard (PPS) per weight unit of oil equivalent. The purchasing power standard parameter already considered the differences between countries resulting from different product prices and different levels of wages, i.e., differences in the purchasing power of the society. As a result, the situation in individual countries was somewhat more realistic. Electricity prices were also high in countries with high energy productivity. As a rule, higher productivity was associated with a higher level of economic development. Electricity was not the key factor in many countries, so the total energy consumption parameter was less important. The negative relation was significant only in the case of groups of households consuming more energy. In the parameter related to energy consumption per capita, there were significant negative relationships in all groups of farms. The level of renewable energy utilization in electricity production was significant. In turn, considering the extent of renewable energy utilized in the total energy production, the dependencies were significant. Along with the growth of energy absorption by households, the strength of the relationship between electricity prices and energy parameters decreased. A very strong and negative relationship was found between the energy consumption and the intensity of greenhouse gasses emissions. Lower emissions of greenhouse gases corresponded to higher electricity prices. As a rule, economically developed countries use less harmful technologies to the environment, and those developing countries paid less attention to environmental aspects, including greenhouse gas emissions.

**Table 4.** Spearman's rank correlation coefficients between energy economy parameters and the electricity prices for private customers in the EU.


**Figure 8.** Graph of kernel density estimation for electricity prices for household consumers in a group consuming 2500–5000 kWh in EU in 2008–2019.

#### **4. Discussion**

In developed economies' markets, renewable energy resources (especially wind and solar power) reduced electricity prices, and increased their variability. With a small share of renewables, the price volatility decreased [99–107]. The study of the authors of the article also confirmed these dependencies because Western European states, with higher percentage of renewable energy in total energy, were represented by greater electricity prices than Eastern EU states with a lower contribution of renewable energy. The differences in electricity prices in individual countries result from the approach to their determination. Often, the electricity price depends on the node rather than market conditions, i.e., over or under energy. Marginal costs that vary with the technologies and energy sources used are also taken into account. The price of electricity is increasingly dynamically set in realtime depending on energy demand and supply [108–112]. Therefore, there are significant differences in the price of electricity in Western European states, depending on the amount of consumption. In the price of electricity there are also included taxes and tariffs that reflect external environmental costs and effectively reduce energy consumption. Thus, many countries have a double dividend that stimulates economic activity while reducing emissions. Such systems were more effective in economically developed countries than in developing countries [113–117].

In the short run, the low price of electricity may favor economic development. However, the low price of electricity, in the longer term, will encourage expansion of energyintensive industries with low added value, which is not good for the optimization and modernization of the industrial structure. Therefore, the policy of low electricity prices is detrimental to sustainable economic growth in the long term. [118–121]. In the study by the authors of this article, a fairly clear division between developing countries with low electricity prices and economically developed countries with high prices was found. Rising electricity prices are forcing countries to invest in improvement of energy efficiency. Promoted technologies were based on renewable energy that stimulates economic growth [122–125]. The presented relationships are consistent with those obtained during the research of the authors of the article.

Research of other authors also found a high dependence of GDP per capita on energy consumption and electricity prices in households. A higher level of DGP per capita was associated with better energy consumption and higher electricity prices [66,126]. Raising electricity prices in many countries is an effective method of increasing energy efficiency. It is performed by using various types of taxes and levies as part of the electricity price [127–130]. There is a belief that electricity prices should take into account all externalities and thus affect consumers. Such an impact is possible, especially in economically developed countries [131].

In the future, electricity prices will be affected by changes taking place in the energy market. Virtual power plants will be created, connecting scattered producers of renewable energy. Thus, intelligent energy networks will be created, and the system will be highly decentralized [132–134]. The structure of devices that use electricity will also change. The greatest consumption will be related to devices using information technology, including mobile. Households will, in a way, depend on these devices and will agree to the prices of electricity. However, the innovations introduced in this industry contribute to the greater energy efficiency of the devices used [135–139].

#### **5. Conclusions**

The conducted research allowed for drawing several conclusions:

1. Electricity prices in the EU grew steadily. However, there were differences in these rates depending on the volume of consumption. The more electricity a household consumed per year, the less it paid for 1 kWh. These regularities were not always met in individual countries, especially in developing countries in Central and Eastern Europe such as Hungary and Bulgaria. Hungary was one of the few countries where electricity prices fell;


**Author Contributions:** Conceptualization, T.R.; methodology, T.R.; software, T.R.; validation, T.R.; formal analysis, T.R.; investigation, T.R.; resources, T.R.; data curation, writing—original draft preparation, T.R., P.B., B.G., P.G., A.M.-K. and J.K.; writing—review and editing, T.R., P.B., B.G., P.G., A.M.-K., J.K., D.J.G.-D. and K.W.; visualization, T.R.; supervision, T.R.; project administration, T.R. All authors have read and agreed to the published version of the manuscript.

**Funding:** This research received no external funding.

**Institutional Review Board Statement:** Not applicable.

**Informed Consent Statement:** Not applicable.

**Conflicts of Interest:** The authors declare no conflict of interest.

#### **References**

