4.3.3. Digitisation

The Basque Country’s strong position in the households with broadband access indicator contrasts with a weaker position in the online shopping indicator

Table 26 includes two indicators related to Internet use as proxies for the sophistication of demand. The households with broadband access indicator increased significantly in the last year, as it had done in previous years, especially beginning in 2016, when it moved past the level of the Spanish and European averages. In 2017, it also topped the comparable regions and in 2018 it is on a par with Germany. Consequently, in 2018 the Basque Country ranks high in comparison with the average for Europe and the autonomous communities and cities, and in the middle within the group of comparable regions. This was made possible due to the rollout of infrastructure. Not only does broadband now reach almost all households, but they are also signing up to a greater extent than in previous years. This contrasts with the indicator for online shopping, in which the Basque Country remains in the lower part of the ranking among European regions, at the bottom among comparable regions, and in an intermediate position within Spain. Box 3 discusses some other aspects of the digitisation of the Basque economy and society.

Table 26. Status of the Basque Country in terms of digitisation indicators
Table 26. Status of the Basque Country in terms of digitisation indicators. Households with broadband access
Table 26. Status of the Basque Country in terms of digitisation indicators. Individuals who make online purchases
Source: Eustat (Basque Statistics Office), Eurostat. Compiled by authors.
NB: Except when no data were available, the rankings have been compiled based on 218 European regions (in blue), the Basque Country and the group of 30 comparable regions (in green), and the 19 Spanish autonomous communities and cities (in red).
Graph 21. Variation in digitisation indicators
Graph 21.  Variation in digitisation indicators. Households with broadband access
Graph 21.  Variation in digitisation indicators. Individuals who make online purchases
Graph 21.  Variation in digitisation indicators. Leyenda
Source: Eustat (Basque Statistics Office), Eurostat. Compiled by authors.

BOX 3 Principal conclusions of the DESI report on the Basque Country

In line with the business environment indicators, Orkestra has prepared a report on the digitisation of the Basque economy and society, measured by means of the DESI indicator. As data are not available for the European regions, the comparison is with countries. It should therefore be remembered that within these countries there are significant differences which disappear when we look at the national average.

In 2018, according to this indicator, the Basque Country continued to make progress on digitisation, moving up one position from the previous year, into fifth place, behind the Scandinavian countries. The positive situation in the Basque County rests on four of the five pillars that comprise the index: advanced connectivity, human capital, integration of digital technology by businesses, and the development of digital public services. In contrast, use of Internet services by households remains a barrier to the full digitisation of Basque society.

Graph 22. Digital Economy and Socity Index, DESI 2018
Graph 22. Digital Economy and Socity Index, DESI 2018

On the other hand, the progress made in almost every dimension, subdimension and indicator has not made it possible to move up the ranking in comparison with other countries, an unambiguous sign that digitisation occupies an important place in all of their agendas.

This indicator has made it possible to confirm some of the main levers for producing a digital Basque Country, as well as the main barriers. Noteworthy among the first group is digitisation by businesses, connectivity infrastructure elements for digital networks, and the existence of advanced skills in the society and economy of the Basque Country. In contrast, utilising channels for e-commerce, the use of digital services that involve financial transactions, and the relative price of broadband are still in need of improvement. Therefore, they require continued close attention.

Source: Zubillaga Rego, A. y Peletier Espiga, C. (2019) Economía y sociedad digitales en el País Vasco 2018. Cuadernos de Orkestra 2019/50.

BOX 4 Energy context

The energy sector is a key element of territorial competitiveness, due both to the weight of the industry itself in generating jobs and wealth, and to the impact of energy, as an input, on the other sectors. This box deals with different aspects which help to understand this context.

In 2017, Basque industry accounted for 39% of the territory’s energy consumption, just behind transport (40%). This percentage, which is only comparable to the figure for Finland (44%) and close to that for Sweden (35%), Belgium (34%) and Austria (34%), is primarily due to the Basque economy’s specialisation in the industrial sector. Additionally, Basque industry has specialised in energy-intensive sectors such as: iron and steel and pipe manufacturing, cement, glass, paper, basic chemicals, and refining, as well as other industries such as wood and rubber.

The energy cost context faced by Basque industry is not especially favourable, both because the price of energy has increased in recent years and due to the comparison with energy prices in other European countries. Thus, the wholesale marginal cost of natural gas in the Iberian market is consistently higher than natural gas prices in other surrounding markets. This is due primarily to the Iberian gas system’s considerable exposure to liquefied natural gas prices and its vulnerability to supply shortages (e.g., at times of high demand for natural gas in the winter and summer), given the relatively low interconnection capacity with the rest of continental Europe. In general, the price of natural gas for industrial consumption is indexed to the price at the most liquid hub in Europe (TTF), with a high mark-up that takes the particular features of the Iberian gas system into account. The resulting final prices for industrial consumption, once grid access charges and taxes are added, are above the EU average.

In the case of electricity, taking Eurostat data as a benchmark, we find that electricity prices in Spain for industrial consumption are around average EU values for all consumption bands, with higher prices for consumers with consumption below 20 GWh/year. The share of the wholesale price of electricity in the final price of electricity in Spain is higher than that found in other European markets, reflecting the exposure of the marginal cost of the Iberian electricity system to fossil fuel prices, despite the relatively high weight of renewable energies (plus nuclear energy) in the electricity mix. Only in the case of oil and petroleum products are prices for final consumption in Spain generally lower than the EU average, due to less fiscal pressure.

However, it is significant that the Basque economy has lower energy intensity (ratio of energy consumption to gross domestic product, GDP) than the average for the Spanish economy and the European average, thus making it more efficient.

For their part, the share of renewable energies in gross final consumption of energy is below the Spanish and European averages, despite having industry associated with the development of this type of energy (wind, biomass and even solar).