69 Annual Report 2021 As a measure of supplier concentration in the competitive Cyprus electricity market, the Herfindahl-Hirschman Index (HHI) was used, which is calculated by taking the sum of the squared market shares of all the firms in the market. Market shares can be calculated based on final consumption and the number of customers or the metering points. For a result of • HHI = 0 – 1500, is considered a competitive marketplace, • HHI = 1500 – 2500, is considered moderately competitive (a partially concentrated market), • HHI > 2500, cannot be considered competitive (highly concentrated marketplace) • HHI = 10000, is considered a monopoly, i.e., with only one participant in the marketplace. EAC is currently, in effect, the largest and only vertically integrated electricity corporation, a fact which: • Classifies the EAC generation activity in a position of strength in the wholesale electricity market which is substantiated by historical data of the HHI Index (Figure 3). It is concluded that the wholesale electricity market of Cyprus is classified as a highly concentrated marketplace and in particular without competition and this is due to the position of strength of EAC's generation activity. • Classifies the EAC Supply activity in a position of strength in the retail electricity market which is substantiated by historical data of the HHI Index (Figure 4). It is concluded that the retail electricity market of Cyprus is classified as a highly concentrated marketplace and in particular without competition and this is due to the position of strength of EAC's Supply activity. Based on the above, it is ascertained that due to the size and position of the EAC, there is no effective competition in the wholesale and retail markets.
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