The European Electricity has been under pressure for

Report
The future of Power Industry & Prospects
of Regional Energy Trading
Dr Anastasios Garis
Chairman & CEO LAGIE
29 April 2014
Electricity Market Operator S.A. – LAGIE SA
1
The European Electricity has been under pressure for the last few
years, as depicted by the major Utilities financial performance
Key forces impacting the
industry
Electricity Market Operator S.A. – LAGIE SA

Economic austerity
adversely impacting
electricity demand

RES significant
penetration driving out
conventional capacity and
reducing wholesale prices

Retail prices increasing
due to higher taxes and
levies (primarily to cover
RES costs)

Relatively low coal prices
driving natural gas
generation capacity to
extremely low levels
(stranded assets in some
companies)
The European Commission has embraced the problem and issued new
Guidelines to be valid from July 2014 to the end of 2020
Issued Guidelines
“The Problem” and “The Premise”
 Gradual introduction of Market based
mechanisms for RES
̶
“it is time for RES to join the Market” (A. Almunia)
The remarkable growth of renewable
energy over recent years, partly
induced by public support,
has helped to make progress on
environmental objectives but has
also caused serious market
distortions and increasing costs
to customers
o Gradual introduction of competitive bidding processes (pilot
2015-16) and replacement of FITs by feed-in premiums for
some plants
 Promoting competitiveness of European
industry
̶
Reducing the burden for a limited number of energy
intensive sectors defined for the whole EU (e.g. Metals.
Paper, chemicals, etc.)
 Supporting cross-border energy
infrastructure to further the Single European
Energy Market
̶
The Commission has reflected this
in the new guidelines, which will be
valid from 1 July 2014 until the end
of 2020
Focusing on projects that improve cross-border energy
flows in less developed regions
 Permit aid to secure adequate electricity
generation
̶
Encourage producers to build new capacity or prevent
them from shutting down existing plants or to reward
consumers to reduce consumption in peak hours
Electricity Market Operator S.A. – LAGIE SA
3
EUROPEX wellcomes the new Guideline which could potentially
facilitate an effective integration of RES in the EU electricity market
Power Exchanges and Trading platforms in Europe
EUROPEX is a not-for-profit Association of European Energy
Exchanges representing the interests of exchange-based
wholesale electricity, gas and environmental markets with regard to
developments of the European regulatory framework for wholesale
energy trading and provides a discussion platform at European
level.
Electricity Market Operator S.A. – LAGIE SA
EUROPEX support for the Guidelines

European solution regarding
support for RES would further
boost their development as well
as diminish the impact of nonmarket based factors onto the
electricity price.

The main issues of current support
schemes stem from the distortions
they cause in the Market. These
problems will be reduced by the
Guidelines requirements regarding
direct market participation,
balancing responsibilities and
reducing incentives to sell at
negative prices.

Already implemented market
coupling projects harmonising
power trading, increasing volatility,
and increasing capability to cope
with the intermittent nature of RES
The European Power Exchanges (PXs) offer a wide variety of products
to their customers to enhance market visibility and efficiency
GME’s mission is to organize and economically manage the Electricity Market fostering competition between
producers, as well as economically manage an adequate availability of reserve capacity, under principles of
neutrality, transparency and objectivity
GME
POWER (IPEX)
 Intraday Market
 Green certifictes Market
 Guarantees of Origin
 Efficiency Credits Market
 OTC contracts platform
 Emissions Allowances Market
 Forward Market
 Green Certificates OTC
 Derivatives
–
–
–
–
Spot Market
 Day-ahead Market
ENVIRONMENT
registration platform
GAS
 Italian Gas Market
•
Day-ahead & Intraday
Gas Markets
•
Forward Gas Market
 Long term brokering
platform or compulsory sale
of imports and royalties
 Gas balancing platform
Italy achieved in 2011 its coupling with the Slovenian market (price coupling) for trans border trading
GME has agreed with EEX to use GME’s SMP as Index in EEXs derivatives business in Italy
RES is operated by GSE. GME plays no part in RES
GME is owned 100% by the State but its legal/operational model resembles that of private companies
Electricity Market Operator S.A. – LAGIE SA
5
The trend in PXs industry structure is consolidation whilst growing in
scale and products bandwidth to enhance liquidity and risk mitigation
(eex/epex as an example covering nine EU countries with plans to grow further)
Structure of the German EEX PX (spot and
derivatives arm)
PX industry structure strategic direction

PXs tend to offer paper and spot (derivatives/physical) trading
products and perform the Clearing/Settlement tasks primarily under
their own umbrella.

The margins for energy trading are relatively low and would
probably reduce further as the markets mature with time. It is most
probable that energy derivatives trading across Europe would be
operated by a few large companies who would provide the necessary
liquidity for risk management.

The entry of mega US energy traders and risk managers in Europe
such as ICE, CMX and Nasdaq, would speed up the industry
consolidation. It is unlikely that Local derivatives players will survive.

Clearing and Settlement activities, whilst today offer higher margins, will
probably go the same way.

Spot energy trading would require local presence, although
(through Coupling PCR) in some cases would be subsidiaries of
regional PXs.

Banks and Stock Exchanges have not made a mark in energy
trading as the volumes are very small compared to that of stocks and
interest markets. In the future, and when the volumes increase, they
might try to enter the Derivatives energy markets as they do not
have capability in Spot. They have no capability on the physical/spot
energy markets.
Bodies and Supervision for EEX
Electricity Market Operator S.A. – LAGIE SA
As another important step towards an effective integration of EU
markets, EUROPEX has announced the full coupling between NEW and
SWE regions by 14th May 2014
Μη σύγκλιση των τιμών μεταξύ Γαλλίας και Γερμανίας.
NWE Project: Coupling of CWE, Scandinavia, Baltic Region and GB
NWE and CWE are coupled since Feb. 2014
SWE (France, Spain, Portugal) coupling until mid 2014

Price Coupling of Regions (PCR) is an
important step for the implementation of the
internal energy markets in EU, to be
accomplished by end 2014 through dayahead and intra-day market solutions

PCR optimises the use of cross-border
capacities delivering signals for a more
effective use of investment in the Power
sector across Europe leading to:
 Increased liquidity
 Decreased volatility
 Drive for optimising buyers and sellers
surplus across all involved markets

The coupling of NWE with SWE will cover 17 EU
countries accounting for some 75% of the EU
power market
Electricity Market Operator S.A. – LAGIE SA
Despite the Market coupling in NEW/CWE and the consolidation of PXs
across Europe, wholesale prices are not converging as yet
Εξέλιξη ΟΤΣ σε Γαλλία και Γερμανία (2011-2014)
Average of FRANCE
Μη σύγκλιση των τιμών μεταξύ Γαλλίας και Γερμανίας.
Average of GERMANY

Η μη σύγκλιση των τιμών οφείλεται
κυρίως στη μεγάλη διείσδυση των ΑΠΕ
στη Γερμανία. Αυτό είχε ως αποτέλεσμα
τις εξαγωγές ενέργειας από την Γερμανία
προς την Γαλλία. Έτσι οι μέσες τιμές
ενέργειας στα έτη 2012-2014 είναι
μικρότερες στη Γερμανία από τις
αντίστοιχες της Γαλλίας.

Το Market Coupling επιτυγχάνει βέλτιστη
χρήση των διασυνδέσεων και του
ευρωπαϊκού κοινωνικού πλεονάσματος.

Θα υπάρξει απόλυτη ταύτιση των τιμών
μεταξύ δύο περιοχών που είναι
συζευγμένες μόνο στην περίπτωση μη
συμφόρησης των διασυνδέσεων. Κάτι
τέτοιο μπορεί να επιτευχθεί μόνο με τη
κατασκευή νέων διασυνδέσεων.
60
50
40
30
20
10
0
2011
2012
2013
2014
Electricity Market Operator S.A. – LAGIE SA
In Greece, the Electricity industry has also significant structural
challenges
 Economic recession has stalled electricity consumption
 The whole electricity Market is subsidised at various degrees
 Drive to meet EU 2020 targets has resulted in expensive and uncontrollable
RES growth with adverse effects in the RES industry liquidity as well as in the
whole electricity industry structure
 Wholesale prices are kept at relatively low levels and display erratic behaviour
 Retail prices are rising (primarily due to extra taxes and levies) but the overall
cost structure across the industry value chain has to be altered to allow full
competition at the retail side
 Generation appears to be in oversupply whilst RES capacity continuous to
increase
 The conventional generation sector industry structure excebits imbalances
between the participants in terms of size, cost and fuel mix
Electricity Market Operator S.A. – LAGIE SA
We are experiencing significant structural changes in the Greek
Electricity market as RES changing the dynamics of the market
Ετήσια παραγωγή ενέργειας (TWh) ανά καύσιμο – 2011, 2012, 2013
2011
2012
2013
ΕΤΗΣΙΑ
ΠΑΡΑΓΩΓΗ
(TWh)
%
ΕΤΗΣΙΑ
ΠΑΡΑΓΩΓΗ
(TWh)
%
ΕΤΗΣΙΑ
ΠΑΡΑΓΩΓΗ
(TWh)
%
ΛΙΓΝΙΤΗΣ
27,6
52%
27,6
52%
23,2
45,6%
ΦΥΣΙΚΟ ΑΕΡΙΟ
14,9
28%
14,4
27%
11,1
21,6%
ΥΔΡΟΗΛΕΚΤΡΙΚΑ
3,7
7%
3,9
7%
5,6
11,1%
ΠΕΤΡΕΛΑΙΟ
0,0
0%
0,1
0%
0
0%
ΣΥΝΟΛΟ ΣΥΜΒΑΤΙΚΗΣ
46,1
86%
45,9
86%
39,9
78,3%
ΑΠΕ & ΣΗΘΥΑ
4,0
8%
5,8
11%
8,9
17,5%
ΕΙΣΑΓΩΓΕΣ-ΕΞΑΓΩΓΕΣ
3,2
6%
1,8
3%
2,1
4,2%
100%
53,5
100%
ΣΥΝΟΛΟ
ΟΤΣ
53,4
59,36 €/MWh
56,73 €/MWh
50,9
100%
41,47 €/MWh
Η σημαντική διείσδυση νέων σταθμών ΑΠΕ που μπαίνουν στο σύστημα κατά προτεραιότητα και σε
υψηλές εγγυημένες τιμές είχε σαν αποτέλεσμα την αύξηση του κόστους ηλεκτροπαραγωγής
Πηγή : ΛΑΓΗΕ / ΑΔΜΗΕ, ΜΗΝΙΑΙΑ ΔΕΛΤΙΑ ΕΝΕΡΓΕΙΑΣ, Ιανουάριος 2014
Λειτουργός Ηλεκτρικής Ενέργειας – ΛΑΓΗΕ Α.Ε.
10
In the first quarter 2014 the SMP increased by some 50% from last year
primarily due to the abolition of the 30% rule on thermal unit offers
Παραγωγή ενέργειας (TWh) ανά καύσιμο – Q1.2013 vs. Q1.2014
Q1.2013
Q1.2014
ΠΑΡΑΓΩΓΗ
(TWh)
%
ΠΑΡΑΓΩΓΗ
(TWh)
%
ΔΙΑΦΟΡΑ
(TWh)
%
ΛΙΓΝΙΤΗΣ
5,55
43%
6,12
49,3%
+ 0,57
+10,27
ΦΥΣΙΚΟ ΑΕΡΙΟ
2,62
20,3%
1,83
14,7%
- 0,79
- 30,15
ΥΔΡΟΗΛΕΚΤΡΙΚΑ
2,3
17,8%
0,77
6,2%
- 1,53
- 66,52
ΠΕΤΡΕΛΑΙΟ
0,0
0%
0
0%
0
0
ΣΥΝΟΛΟ ΣΥΜΒΑΤΙΚΗΣ
10,47
81,1%
8,72
70.2%
- 1,75
- 16,71
ΑΠΕ & ΣΗΘΥΑ
2,08
16,11%
2,14
17.2%
+ 0,06
+2,88
ΕΙΣΑΓΩΓΕΣ-ΕΞΑΓΩΓΕΣ
0,36
2,79%
1,56
12,6%
+ 1,2
+333,3
100%
12,42
100%
- 0,49
-3,79
+19,17€/M
+47,45
ΣΥΝΟΛΟ
ΟΤΣ
12,91
40,4 €/MWh
59,57 €/MWh
Η λήψη Ρυθμιστικών Μέτρων (κατάργηση κανόνα 30%) είχε ως αποτέλεσμα τη σημαντική αύξηση της ΟΤΣ
και των καθαρών εισαγωγών (διασύνδεση Ιταλίας εκτός)
Πηγή : ΛΑΓΗΕ / ΑΔΜΗΕ, ΜΗΝΙΑΙΑ ΔΕΛΤΙΑ ΕΝΕΡΓΕΙΑΣ, Μάρτιος 2014
Λειτουργός Ηλεκτρικής Ενέργειας – ΛΑΓΗΕ Α.Ε.
11
There is trend of declining SMPs since 2011 primarily due to the RES
growth and the full participation of CCGTs using the 30% rule
Μέση Ημερήσια ΟΤΣ και ΟΤΑ (2011,2012,2013)
Κατάργηση
Κανόνα
30%
Προβλήματα
Τροφοδοσίας Φ.Α.
Υψηλή
Υδραυλικότητα
Κατάργηση
Προσαύξησης
10% ΜΑΜΚ
Η αύξηση της ΟΤΣ που παρατηρείται από τα μέσα του 2013 οφείλεται στην κατάργηση της προσαύξησης του 10%
του Μηχανισμού Ανάκτησης Μεταβλητού Κόστους
Λειτουργός Ηλεκτρικής Ενέργειας – ΛΑΓΗΕ Α.Ε.
Πηγή : Μηνιαίο Δελτίο Συστήματος Συναλλαγών ΗΕΠ, Δεκ.2013
12
The increase in RES penetration is challenging the current operation of
the system and influences the SMP level during the day
Electricity Market Operator S.A. – LAGIE SA
The RES deficit accelerated in the last few years, but could be reduced by
year end following recent legislation
Εξέλιξη σωρευτικού λογιστικού ελλείμματος 2002-2013 (€ εκατ.)
549
600
Πλεόνασμα (€
εκατ.)
Έλλειμμα (€
εκατ.)
500
Ο ρυθμός αύξησης των πόρων
τα τελευταία χρόνια δεν είναι
 On the 28th April the Cash
deficit (including that of
Accounting) was at around
780 €Μ
ικανός για να καλύψει τις
400
αντίστοιχες δαπάνες με
343
αποτέλεσμα τη σημαντική
διεύρυνση του ελλείμματος
300
από το 2010 και εφεξής
199
200
111
100
0
1
8
11
-17
-13
48
24
2002
2003
2004
2005
2006
2007
2008
2009
-
0
2010
2011
2012
 The Accounting deficit
should be eliminated by end
2014, following the
implementation of the recent
legislation
2013
-100
 There have to be
mechanisms in place to
ensure that following the
“New Deal” reduced FITs, a
sustained liquidity of the
RES market across the
technologies and
topographies
 Τα έτη 2010-2012 σημειώθηκε σταθερή αύξηση του ελλείμματος
 Παρά την είσοδο πολλών νέων έργων στις αρχές 2013, το ΥΠΕΚΑ δεν προέβλεψε ώστε τα έσοδα του
Ε.Λ. να επαρκούν για τα απαιτούμενα έξοδα και να διασφαλιστούν οι νέες επενδύσεις ΑΠΕ
Λειτουργός Ηλεκτρικής Ενέργειας – ΛΑΓΗΕ Α.Ε.
14
Going forward, the Participants in the Greek electricity industry must
focus on “Fixing the Basics” sooner rather than later
Some the Basics that we must focus on
 Building the Engine for the Wholesale Market reforms
 Reforming the industry structure to enable healthy competition
 Managing the RES growth
 Releasing the capability in LAGIE
Electricity Market Operator S.A. – LAGIE SA
Design and implement the “Engine” for the Target Model
Initial thoughts for the Greek Wholesale Electricity Market design
 Hybrid approach [voluntary pool and bilateral markets] (operated by LAGIE)
 Forward national market (operated by LAGIE)
 gradual increase of maximum allowed bilateral contracts (OTC)
 Forward cross-border market (operated by ADMIE)
 Day-ahead market compatible with the PCR (operated by LAGIE)
 Intra-day continuous trading (operated by LAGIE)
 Centralized balancing market (operated by ADMIE)
 Responsibility for RES imbalances to ADMIE
Electricity Market Operator S.A. – LAGIE SA
Greece is expected to enter Market Coupling within the CSE region and
from there to the whole EU power markets
EU Commission has been decided to start a cooperation for
elaborating a design for a day ahead market coupling on Italian
borders using PCR. A Cooperation agreement for a Design
Phase was signed end of 2012 between the following parties :
On TSO
side:
ADMIE,
APG
ELES
RTE
Swissgrid
TERNA
On Power
exchange side:
BSP Southpool
EPEX Spot
EXAA
GME
LAGIE
Electricity Market Operator S.A. – LAGIE SA
Coupling advantages to Greece

Increase of market liquidity

Decrease of price volatility in
the wholesale market

Optimal
use
interconnections

Leverage existing technical and
processes
architecture
as
already in use by the other PCR
PXs
of
the
NOME type auctions, due to start 9/2014, would allow retailers
competitive access to the Market
 Introduction of NOME-type auctions of part of the incumbent PPC (Public Power
Corporation) baseload capacity (PPC owns at the moment 98% of the supply market),
to create new suppliers.

NOME stands for “Nouvelle Organisation du Marché de l'Electricité”. It is a transitional
reform of the electricity market.
 Eligible participants in NOME-type auction are limited to generators and suppliers.
 Ensuring that implementation of NOME-type products is compatible and coherent with the
privatization process of PPC and the creation of small PPC.
 The NOME auctions and products will remain until the Greek electricity retail markets
are fully competitive. The creation of a fully operational small PPC will constitute a
necessary milestone in this regard.
 To bring competition in the supply side of the electricity market, the auctioning of PPC
capacity (NOME) would be brought ahead and started on September 2014.
Electricity Market Operator S.A. – LAGIE SA
RES penetration has to be prudent ensuring cost effective operation of
the Market whilst measures are taken to eliminate current deficits
ΑΠΡΙΛΙΟΣ 2014
Τεχνολογία
ΟΥΡΑ
ΑΔΜΗΕ
ΛΑΓΗΕ
Ισχύς σε
λειτουργία
(MW)
Αιτήματα προς
Μη
υπογραφή
λειτουργούντα σύμβασης
με σύμβαση
πώλησης
πώλησης (MW) (MW)
ΟΥΡΑ
ΔΕΔΔΗΕ
Πρόβλεψη
Διείσδυσης
επιπλέον MW στο
Δελτίο ΛΑΓΗΕ
Με Οριστική
μέχρι τέλους
Προσφορά
2015 (MW)
Σύνδεσης (MW)
Με Οριστική
Προσφορά
Σύνδεσης
(MW)
Key RES messages
ΕΘΝΙΚΟΙ ΣΤΟΧΟΙ
2014
(MW)
The State has passed legislation to eliminate the
accounting RES deficit by end 2014 by reducing
FITs and introducing “credit options” to existing
RES investments
•
It has also set some targets for RES growth over
the next few years per different technology
2020
(MW)
Αιολικά
1.581,7
865,8
72,0
380,2
4.375,0
210,0 4.000,0 7.500,0
Φωτοβολταϊκά
2.077,2
1.003,2
0,0
46,8
1.084,0
290,0 1.500,0 2.200,0
ΜΥΗΣ
•
219,8
19,3
5,2
30,2
8,0
58,0
300,0
350,0
Βιοαέριο-Βιομάζα
46,3
25,9
7,5
153,7
0,0
69,0
200,0
350,0
ΣΗΘΥΑ
98,1
0,3
1,0
11,9
0,0
5,0
•
Στέγες
373,6
The key driver now is to ensure liquidity in the
market by eliminating the deficits asap
5.467,0
632,0
•
To fully alleviate the current cash deficit and avoid
build up of further deficits in the future, the State
has to consider setting yearly budget (not just
MW) targets for RES investments making sure
that the funds would be available for the
required compensation
•
Planning the gradual penetration of RES, the
State should also consider the effects of
increasing RES production in the SMP and the
overall cost of production as RES “must run”
would take out lignite generation
•
The State would moreover prepare for
implementation of the new EU Guidelines for new
RES investments “to join the Market”
Σύνολα
4.396,7
36,0
1.914,6
85,7
658,7
Ν.4254/2014: Όρια Εγκατεστημένης Ισχύος σε λειτουργία ανά Τεχνολογία μετά την
1.1.2014 (MW)
Σε λειτουργία μετά την Όριο
Διαφορά προς
Κατηγορία
1.1.2014 (MW)
(MW)
κάλυψη (MW)
Φωτοβολταϊκά*
3,71
200,00
196,29
Φωτοβολταϊκά (FAST TRACK)
0,00
300,00
300,00
Ηλιοθερμικά
0,00
100,00
100,00
Γεωθερμικά
0,00
50,00
50,00
Βιομάζα
0,00
40,00
40,00
Βιοαέριο (Γεωργικά απόβλητα)
0,50
50,00
49,50
* Φωτοβολταϊκά: όριο ανά έτος μέχρι το 2020
Electricity Market Operator S.A. – LAGIE SA
Releasing the capability in LAGIE
Electricity Market Operator S.A. – LAGIE SA
Apply yourself.
Get all the “education” you can, but then , by God, do
something.
Do not just stand there, Make it Happen
Lee Iaccoca
Electricity Market Operator S.A. – LAGIE SA

similar documents