Vattenfall s views on the electricity market 2005

Transcription

1 Vattenfall s views on the electricity market 25 Stockholm, Lars G Josefsson, President and CEO, Vattenfall AB

2 Effects of the Swedish market reform (1) New study: Regulatory Reform in the Swedish Electricity Industry Good or Bad? (Damsgaard & Green, Sept. -5) Cost-benefit analysis with data for 1996 to 23 Deregulation has been good Investments in generation capacity saved Gain to society approx. SEK 11 billion ( 1.2 billion) for the period

3 Effects of the Swedish market reform (2) It created winners and losers 2/3 of gain to producers. 1/3 to customers. Some customers lost - being a passive consumer is a bad idea Distribution of gains heavily dependent on hydro conditions Improvements are possible, examples: Peak capacity problem advocates more demand side response but some capacity market may be needed Network regulation improved incentives for investments/quality Congestion management price areas within Sweden Ease of switching faster and simpler process 3

4 Why a marginal cost-based pricing? (1) Marginal cost-based pricing ensures that generation resources are taken into operation in order of cost Effective resource allocation Marginal cost-based pricing sends price signals to generators to build more capacity Clear market signals a prerequisite for investments Marginal cost-based pricing avoids gaming Gaming would probably lead to higher prices 4

5 Why a marginal cost-based pricing? (2) Marginal cost-based pricing ensures that all generators receive the same price the market price All supplies compete on the same terms Marginal cost-based pricing ensures fair treatment of all consumers Limited supply of low-cost power who would pay the higher price? Are there alternatives? Return to a regulated monopoly, where capacity expansion is a matter of planning rather than market driven 5

6 Electricity prices to pulp & paper in different European countries EUR/MWh Austria Belgium Finland France Germany Spain Sweden United Kingdom Including supply and energy taxes, excluding VAT. Source: Electrowatt-Ekono Oy & Jaakko Pöyry Consulting 6

7 Changes in Base Power Sweden 2,7 TWh Wind 5,2 Hydro 1,9 Nuclear power uprating 8,9 Natural gas CHP 1,6 Biofuel CHP 5,1 Decommissioning of nuclear units - 4,4 Base oil condense 2,4 Finland 14,6 TWh Wind,9 Hydro,3 CHP 4,7 Nuclear 12, Decommissioning of coal condens units -3,3 Norway 11,3 TWh Denmark,3 TWh Wind 5,4 Natural gas 3,5 Hydro 2,4 Wind 2,8 Decommissioning of coal condens units -2,5 46,9 TWh Increased electricity demand: 24,9 TWh 7

8 Vattenfall aims to be a leading windpower producer Today 6 GWh of 679 GWh = 9 % Including Karlskrona (6 GWh) = 739 GWh Including Örestad (33 GWh) = 1,69 GWh Including Kriegers flak (164 GWh) = 2,79 GWh Including Denmark (323 GWh) = 3,32 GWh 8

9 Development of renewable feed-in volumes in Germany Feed-in volume (financial in EUR billion) Total Photovoltaics Wind Geoth. Biomass Gas Hydro Feed-in volume (energy in GWh) Photovoltaics Wind Geoth. Biomass Gas Hydro

10 The cost of new thermal generation capacity. Capture costs are included in the blue bars. 6, 5, 4, Cost for CO2 transport and storage EUR/MWh 3, Cost for CO2 emissions EUR/MWh 2, 1, Electricity generation costs EUR/MWh, Gas CC Gas CC CO2 free Precomb Lignite today CO2 free CO2/O2 Lignite Lignite future CO2 free Lignite future IGCC today IGCC today CO2 free IGCC future IGCC future CO2 free Source: Vattenfall 1 EUR/MWh

11 In depth

12 Spot prices and futures in the Nordic market Average yearly prices SEK/MWh Spot price - Sweden Average yearly prices Futures price - System price , öre/kwh ,4 öre/kwh ,1 öre/kwh ,9 öre/kwh 2-12, öre/kwh 21-21,1 öre/kwh 22-25,2 öre/kwh 23-33,3 öre/kwh 24-25,6 öre/kwh Source: Nord Pool, updated

13 Spot prices and volumes in the German market EUR/MWh Spot price Futures price Source: European Energy Exchange (EEX), updated

14 Average monthly wholesale price and volumes in Poland, August 24 July 25 25, , MWh 15, 1, PLN/MWh 16 5, Aug 4 Sep 4 Oct 4 Nov 4 Dec 4 Jan 5 Feb 5 Mar 5 Apr 5 May 5 Jun 5 Jul 5 Aug 5 Sep 5 Oct 5 Monthly volume Average prices 14

15 Forward electricity prices for baseload 26 on European power markets EUR/MWh 6, 55, 5, 45, 4, No rdic Germany France Netherlands 35, 3, 25, Source: Vattenfall Trading Services 15

16 Electricity prices for household customers in Sweden and Finland Sw eden: 5, kwh/yr, household SEK/1 kwh VAT Tax El cert. Energy Distribution Energy + Distr. CPI Finland: 5 kwh/yr, household EUR/1 kwh Nominal prices, VAT Tax Energy Distribution Energy+Distr. CPI

17 Electricity prices for household customers in Germany and Poland Germany: 3,5 kwh/yr, household 25 VAT EUR/1 kwh Poland: 5 kwh/yr, household Tax CHP support RES support Kohlepfennig Concession fee Energy + distr CPI PLN/MWh Nominal prices, VAT Tax Energy Distribution CPI

18 Electricity price trends in the power-intensive industrial sector in Sweden 3 25 öre/kwh* Excluding transmission cost. Red line prices without liberalisation; green line actual prices post liberalisation Source: Vattenfall 18

19 Estimated power prices in the powerintensive industrial sector in 24 EUR/MWh France Germany Italy Spain Sweden UK Source: CRU and Electrowatt-Ekono Oy & Jaakko Pöyry Consulting 19

20 Spot price trends on Nord Pool since deregulation Request for long-term contracts Open positions, physical supply contracts Request for long-term contracts Date Source: Nord Pool 2

21 Generation capacity and consumption in the Nordic Countries TWh Basic prod. Consumption Consumption incl. el. boilers Source: Vattenfall 21

22 Prices and volumes in the CO2 market Price in /t Volume in t EUA`5-7 Volume in t EUA`5 Price in /t Source: Point carbon, Vattenfall Trading Services 22