Competitiveness of the Greek electricity intensive industry

Transcription

1 Competitiveness of the Greek electricity intensive industry Roland Berger Study Executive Summary Athens, November 2014

2 Contents Page A. Current situation and project objectives 2 B. Analysis of the market prices 4 C. Analysis and comparison of the electricity markets 12 D. Recommendations 14 This document shall be treated as confidential. It has been compiled for the exclusive, internal use by our client and is not complete without the underlying detail analyses and the oral presentation. It may not be passed on and/or may not be made available to third parties without prior written consent from Roland Berger Strategy Consultants. RBSC does not assume any responsibility for the completeness and accuracy of the statements made in this document. Roland Berger Strategy Consultants 1

3 A. Current situation and project objectives 2

4 A CURRENT SITUATION AND PROJECT OBJECTIVES Analysis about the competitiveness of the Greek electricity intensive industry and possible measures for improvement Current situation and main project objectives Current situation > Strong GDP decline of Greek economy, has critically affected the production system of the country > The Greek electricity intensive industry suffers in the last years from increasing taxes, regulated fees and continuous increasing electricity prices > Production costs, which strongly depend on electricity price, are perceived by the Greek market players in comparison to other EU countries as not competitive and as endangering the Greek productivity and economy > Need for policies and governmental measures that will lead to immediate and sustained recovery of the economy is more urgent than ever Project objectives > Analyzing the current pricing models (e.g. regulated RES fees, public sector fees, grid fees, excise duty etc.) and identify the final price paid by the electricity intensive industries in the benchmark countries > Analyzing and benchmarking the electricity markets in the three selected countries Germany, Italy and Spain > Validation of the results of analysis by interviewing Greek, German, Italian and Spain industrial consumers > Elaboration of possible adaption and adjustments of the electricity system/pricing in Greece based upon above findings. Source: Unicen, Roland Berger 3

5 B. Analysis of the market prices 4

6 B MARKET PRICE ANALYSIS Starting point: Eurostat shows good competitive situation for Greek industries verification through Roland Berger necessary Electricity prices for industrial consumers (70 GWh 150 GWh per anno) 1) Prices 2) in 2013-S2 [ /MWh] Electricity price evolution year end [ /MWh] , , ,0 75, Germany Greece Spain Italy S S S S S2 Taxes & Levies Network costs Energy & Supply Greece Germany Italy Spain 1) Eurostat data for a consumption higher than 150 GWh is not available 2) UNICEN: In case of Greece the price in 2013-S2 was 74 /MWh, 62 /MWH is the price for 2014-S1, Source: Eurostat 5

7 B MARKET PRICE ANALYSIS Price components in selected countries comparable Example Germany Annual consumption < 20 GWh (Medium-Voltage: 100kW/1.600h kW/5.000h) Generation & supply CHP Cogeneration Interruptible services Concession 19 StromNEV Excise duty RES (Renewables) Offshore liabilities Source: VEA, BDEW; Stand: 05/2014 6

8 B MARKET PRICE ANALYSIS CLASSICAL DISCOUNTS Price discount of more than 50% in the classical price components Executive summary for classical discount in selected countries prices 2014 [ /MWh] Small industrial consumers Electricity intensive consumers with discounts 1) 161,2 146,2 140,6 Ø ) 54% 48% 40% 124,5 20% 53,7 8% 74,8 5% 59,5 17% 61,9 15% Ø ) 46% 52% 60% 80% 92% 95% 83% 85% Germany Italy Spain Greece Germany Italy Spain Greece Price without taxes and levies Non refundable levies 1) industrial consumer with a consumption profile not flexible, annual consumption higher than 150 GWh; 2) Average of 3 countries - excl. Greece Source: Roland Berger analysis 7

9 B MARKET PRICE ANALYSIS CLASSICAL DISCOUNTS (Backup) Greek electricity intensive Industries are paying between 98 and 62 /MWh RES discount with the highest impact Electricity prices for Greek electricity intensive Industries [ /MWh] Price Structure 2014 Price without taxes and levies Non refundable levies Components customers connected to 20KV 150KV level normal tariff 150KV level tarif discount Prices in /MWh 0,5 GWh < C 13 GWh 13 GWh < C 50 GWh 50GWh < C 1000GWh 50GWh < C 1000GWh Energy & supply 83,20 69,70 58,00 46,00 CO2 4,90 4,90 4,60 3,40 Grid fees 11,20 11,20 3,50 3,50 Sum (1) 99,30 85,80 66,10 52,90 RES (Renewables) 12,80 2,30 2,20 2,20 PSO( Public services) 6,90 4,14 4,14 4,14 Excise duty 5,53 5,45 2,80 2,70 Sum (2) 25,23 11,89 9,14 9,04 Total 124,53 97,69 75,24 61,94 Source: Roland Berger analysis, UNICEN 8

10 B MARKET PRICE ANALYSIS ADDITIONAL COMPENSATION High additional compensation like interruptible services and special TSO-agreements in Italy and Spain Executive summary for additional compensation in selected countries - prices [ /MWh] Prices after classical discounts 1) Possible additional compensation (Interruptible etc.) 74,8 5% 53,7 8% 59,5 17% 61,9 15% Ø ) 47,7 9% 52,0 8% 47,5 22% 61,9 15% Ø ) 95% 92% 83% 85% 91% 92% 78% 85% Germany Italy Spain Greece Germany Italy Spain Greece Price without taxes and levies Non refundable levies 1) industrial consumer with a consumption profile not flexible, annual consumption higher than 150 GWh; 2) Average of 3 countries - excl. Greece Source: Roland Berger analysis 9

11 B MARKET PRICE ANALYSIS FURTHER POSSIBLE REDUCTION (Backup) Average pool prices of approx. 50 /MWh High price volatility up to 50 /MWh between peak and offpeak time in Italy Italian pool prices Examples March 3 rd 2014 August 18 th 2014 > Average price: 49,18 /MWh > Min price: 26,00 /MWh > Max price: 79,30 /MWh Δ=53 /MWh > Average price: 48,20 /MWh > Min price: 39,83 /MWh > Max price: 63,13 /MWh Δ=23 /MWh Source: Roland Berger analysis 10

12 B MARKET PRICE ANALYSIS SUMMARY After taking discounts and compensations into account, Greek industry has competitive disadvantage regarding electricity price Average electricity price 1) for electricity intensive industries 2) [ /MWh] Source: Roland Berger analysis Germany Italy Spain Greece Eurostat 2013-S2 3) Electricity price after discounts (2014) Electricity price after additional compensation (2014) Further possible price reduction (e.g. offpeak arangements) - Estimation 48 1) Offpeak prices during 24 hours are noticeable lower than average prices 2) Industrial consumer with an annual consumption higher than 150 GWh; 3) Industrial consumer with an annual consumption higher than 70 GWh up to 150 GWh 45 Comments > Highest classical discount for electricity intensive industries in Germany > Additional compensation e.g. interruptible services in Italy and Spain with high price impact for the local industry, in Germany with less impact > Further price reduction possible, Greece with price compensation by special night tariffs > Greek electricity prices represents temporary discounts for 2014, uncertainness about further support in 2015 > Eurostat data are inadequate and misleading for policy making purposes > To create competitiveness in the European market, governmental actions should be taken under consideration 11

13 C. Analysis and comparison of the electricity markets 12

14 C ELECTRICITY MARKET ANALYSIS - SUMMARY German market with a fully liberalized market model and highest compensation rate - Greek market still lacking behind Flexibilities and key market factors Key market factors Impact GREECE GERMANY SPAIN ITALY 1. Efficient market structure 2. Interruptible services 3. Imports for self consumption 4. Bilateral contracts 1) 5. Capacity payments 6. Overall discounts compensations for Electricity Intensive Industries 2) [ /MWh] 12 3) ) 23 1) Bilateral contracts outside the pool between generators and consumers; 2) Estimation for 2014; 3) Uncertainness about further support in ) Estimation for 2013 Source: Euroconsultants; Roland Berger 13

15 D. Recommendations 14

16 D RECOMMENDATIONS Short term governmental actions can be taken immediately What are the major recommendations? Result of the discussion about possible governmental actions High 5 1 Maintain PPC discounts to HV electricity tariffs IMPACT ON COMPETI- TIVENESS IMPROVEMENT Implementation of interruptible services Adjustment of the non-energy costs to EU levels 4 Allow virtual imports Low Short term TIMELINE Long term 5 Market opening by replacement of mandatory pool Source: Roland Berger, Interview with Unicen 15

17 Let's think: act! 16