20141110 Unicen Press Conference Handout

8/20/2019 20141110 Unicen Press Conference Handout

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Roland Berger Study – Executive Summary

Athens, November 2014

Competitiveness of the

Greek electricityintensive industry


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120141110_Unicen_Press_Conference_Handout.pptx

S T R I C T L Y C O

N F I D E N T I A L

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 maynot 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

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


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S T R I C T L Y C O

N F I D E N T I A L

A. Current situation and

project objectives


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S T R I C T L Y C O N F I D E N T I A L

Current situation and main project objectives

Analysis about the competitiveness of the Greek electricity intensiveindustry and possible measures for improvement

Source: Unicen, Roland Berger

A CURRENT SITUATION AND PROJECT OBJECTIVES

Current situation

> Strong GDP decline of Greek economy, hascritically affected the production system of the

country> The Greek electricity intensive industry suffers inthe last years from increasing taxes, regulatedfees and continuous increasing electricity prices

> Production costs, which strongly depend onelectricity price, are perceived by the Greekmarket players in comparison to other EUcountries as not competitive and as endangering

the Greek productivity and economy> Need for policies and governmental measures

that will lead to immediate and sustainedrecovery of the economy is more urgent thanever

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 bythe electricity intensive industries in the benchmarkcountries

> Analyzing and benchmarking the electricitymarkets in the three selected countries Germany,Italy and Spain

> Validation of the results of analysis by interviewingGreek, German, Italian and Spain industrial

consumers> Elaboration of possible adaption and adjustments

of the electricity system/pricing in Greece basedupon above findings.


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B. Analysis of the

market prices




Starting point: Eurostat shows good competitive situation for Greekindustries – verification through Roland Berger necessary

Source: Eurostat

Electricity prices for industrial consumers (70 GWh – 150 GWh per anno)1)

0

20

40

60

80

100

120

Germany Greece Spain Italy

Taxes & Levies Network costs Energy & Supply

B MARKET PRICE ANALYSIS

Prices2) in 2013-S2 [ € /MWh] Electricity price evolution year end [ € /MWh]

0

20

40

60

80

100

120

140

2009-S2 2010-S2 2011-S2 2012-S2 2013-S2

Greece Germany Italy Spain

1) Eurostat data for a consumption higher than 150 GWh is not available2) UNICEN: In case of Greece the price in 2013-S2 was 74 €/MWh, 62 €/MWH is the price for 2014-S1,

97,1

66,075,8

116,2




Price components in selected countries comparable – Example Germany

Source: VEA, BDEW; Stand: 05/2014

Annual consumption < 20 GWh (Medium-Voltage: 100kW/1.600h - 4.000kW/5.000h)

Generation & supply

CHP Cogeneration

Interruptible services

Concession

§19 StromNEV

Excise duty

RES (Renewables)

Offshore liabilities

B MARKET PRICE ANALYSIS




Price discount of more than 50% in the classical price components

124,5

Greece

20%

46%

54%

161,2

52%

48%

146,2

40%

Germany

60%

SpainItaly

140,6

80%

Price without taxes and levies Non refundable levies

Small industrial consumers Electricity intensive consumers with discounts1)

Executive summary for classical discount in selected countries – prices 2014 [ €/MWh]

Greece

5%

17%

59,5

92%

8%

74,8

53,7

85%

15%

61,9

SpainItaly

83%

95%

Germany

Source: Roland Berger analysis

1) industrial consumer with a consumption profile not flexible, annual consumption higher than 150 GWh; 2) Average of 3 countries - excl. Greece

Ø 149.12)

Ø 62.72)

B MARKET PRICE ANALYSIS – CLASSICAL DISCOUNTS




Greek electricity intensive Industries are paying between98 and 62 €/MWh – RES discount with the highest impact

Source: Roland Berger analysis, UNICEN

Electricity prices for Greek electricity intensive Industries [ €/MWh]

Components 150KV level normal tariff 150KV level tarif discount

Prices in €/MWh 0,5 GWh < C ≤ 13 GWh 13 GWh < C ≤ 50 GW h 50GWh < C ≤ 1000GWh 50GWh < C ≤ 1000GW h

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 2,20PSO( 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

Price Structure 2014customers connected to 20KV

Price without taxes and levies

Non refundable levies

B MARKET PRICE ANALYSIS – CLASSICAL DISCOUNTS (Backup)




High additional compensation like interruptible services and specialTSO-agreements in Italy and Spain

Prices after classical discounts1)

1) industrial consumer with a consumption profile not flexible, annual consumption higher than 150 GWh; 2) Average of 3 countries - excl. Greece

Possible additional compensation (Interruptible etc.)

52,0

8% 47,5

Germany

22%

47,7

Italy

91%

9%

78%

92%85%

15%

GreeceSpain

61,9


Germany

5%

95%

Italy

74,8

83%

Spain

85%

61,9

15%8%

17%

Greece

59,5

92%

53,7

Price without taxes and levies Non refundable levies

B MARKET PRICE ANALYSIS – ADDITIONAL COMPENSATION

Executive summary for additional compensation in selected countries - prices [ €/MWh]

Ø 62.72)

Ø 49.12)



S T R I C T L Y C

O N F I D E N T I A L

Average pool prices of approx. 50 €/MWh – High price volatility up to50 €/MWh between peak and offpeak time in Italy


March 3rd 2014 August 18th 2014

> Average price: 48,20 € /MWh

> Min price: 39,83 €/MWh

> Max price: 63,13 €/MWh

> Average price: 49,18 € /MWh

> Min price: 26,00 €/MWh

> Max price: 79,30 €/MWhΔ=23 € /MWhΔ=53 € /MWh

Italian pool prices – Examples

B MARKET PRICE ANALYSIS – FURTHER POSSIBLE REDUCTION (Backup)



S T R I C T L Y C


After taking discounts and compensations into account, Greekindustry has competitive disadvantage regarding electricity price


Average electricity price1) for electricity intensive industries2) [ €/MWh]

97

116

76

66

54

75

60 62

4852

48

62

38 35

45

0

20

40

60

80

100

120

Germany Italy Spain GreeceEurostat 2013-S2

Electricity price after discounts (2014)

Electricity price after additional compensation (2014)

Further possible price reduction (e.g. offpeak arangements) - Estimation

1) Offpeak prices during 24 hours are noticeable lower than average prices2) 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

3)

Comments

> Highest classical discount for electricityintensive industries in Germany

> Additional compensation e.g. interruptibleservices in Italy and Spain with high priceimpact for the local industry, in Germany with lessimpact

> Further price reduction possible, Greece withprice compensation by special night tariffs

> Greek electricity prices represents temporarydiscounts for 2014, uncertainness about further

support in 2015> Eurostat data are inadequate and misleading

for policy making purposes

> To create competitiveness in the Europeanmarket, governmental actions should be taken under consideration

B MARKET PRICE ANALYSIS – SUMMARY



S T R I C T L Y C


C. Analysis andcomparison of the

electricity markets


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German market with a fully liberalized market model and highestcompensation rate - Greek market still lacking behind

GREECE GERMANY ITALYSPAIN

Flexibilities and key market factors

1. Efficient marketstructure

Source: Euroconsultants; Roland Berger

Key market factors

3. Imports for selfconsumption

4. Bilateral contracts1)

5. Capacity payments

6. Overall discounts – compensations forElectricity IntensiveIndustries2) [ €/MWh]

Impact

2. Interruptible services

23 274) 47 123)

1) Bilateral contracts outside the pool between generators and consumers; 2) Estimation for 2014; 3) Uncertainness about further support in 2015 4) Estimation for 2013

C ELECTRICITY MARKET ANALYSIS - SUMMARY


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D. Recommendations


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Short term governmental actions can be taken immediately

What are the major recommendations? Result of the discussion about possible governmental actions

Shortterm

Longterm

Source: Roland Berger, Interview with Unicen

Maintain PPC discounts to HV electricity tariffs1

Implementation of interruptible services2

Adjustment of the non-energy costs to EU levels3

Allow virtual imports4

Market opening by replacement of mandatory pool5

TIMELINE

IMPACT ONCOMPETI-TIVENESS

IMPROVEMENT

High

Low

1 2

34

5

D RECOMMENDATIONS


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Let's think:act!

20141110 Unicen Press Conference Handout

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