MEKH_Presentation_final

Overview of European residential markets

A focus on the CEE countries

Christophe Dromacque, VaasaETT

Budapest, Hungary

May 12th 2014

Outline

• Introducing VaasaETT

• HEPI – Media and market professionals

• Household Energy Price Index developments

• Retail Vs. wholesale prices in European markets

• Overview of European electricity and gas prices

• Insights into energy affordability indicators

• Market competition indicators

• Relationship between energy prices and market competition

• Discussions

Best Practice, Data, Analysis &

Expertise from around the World

Customer Psychology & Behaviour

Customer Lifetime Value(Switching and Loyalty, Prices/Savings/Margins, Billing/CRM, Branding, New Offerings

Smart Energy Issues(smart grid, demand response, dynamic pricing, feedback, smart billing energy efficiency, smart home, distributed generation)

Our Key Focus

VaasaETT 4

‘DSM program database’

• About 140 residential and I&C pilot

programs

• Over 500 sample groups

• 630,000+ participants

• 75% organised after 2005

• Results measured: energy

conservation, peak clipping and

financial savings

Uncover the potential of residential

demand response through a mass

pilot comparison

http://esmig.eu/resource/empower-demand-report-phase-i

http://esmig.eu/resource/empower-demand-report-phase-i

€4.5 EU funded project to provide best

practice for smart grid technology,

regulation and consumer engagement in

smart grid. Partners include ENEL,

Iberdrola, ENEL, EDF and others.

More info at: http://www.advancedfp7.eu/

Smart Energy Projects

A major European Union funded project for

the EU Director General of Energy to

develop a cross border balancing market

platform (Virtual Power Plant).

More info at: http://www.ebadge-fp7.eu/

Equal partners in €4.1m EU funded project

to build a platform for the realistic DR and

Energy Efficiency modeling of energy

market stakeholders and consumer

behaviour.

More info at: http://www.cassandra-fp7.eu/Energy efficiency trials - University of Coventry - UK

Energy efficiency and TOD trials – Residential

building - Sweden

Energy efficiency and TOD trials – Shopping

center - Milan, Italy

Smart Energy Research

• A project for the European Commission’s Information Society

and Media Directorate General.

• Measured the potential of the Smart Grid to lower Green House

Gas emissions around Europe.

• Analysis of the potential impact of residential, commercial and

industrial demand response, feedback and informative billing.

• The report is available at:

http://www.capgemini.com/sites/default/files/resource/pdf/Dema

nd_Response__a_decisive_breakthrough_for_Europe.pdf

• Partnered with Capgemini and Enerdata.

• Explored the current development of Demand Response

throughout the EU-15, to quantify its future potential, and to

identify the pre-requisites for the efficient fulfillment of its

potential by 2020.

• The report is available at: http://ec.europa.eu/digital-

agenda/en/news/methodologies-measure-potential-smart-grids-

green-house-gas-reductions

Smart Grid Global Impact ProjectAnnual Report and Global Road-show, Powered by VaasaETT

www.smartgridimpact.com

Market data and monitoring

Energy pricesHEPI

CompetitionUCSRP

Energy affordability

HEPI in figures

23 countries

500 million people

97% of the EU-28 population

200 subscribers to the monthly update

1,400 people downloaded the annual report

652 visits to the HEPI website over the past 30

days (UK, USA, Netherlands, Germany, Belgium)

HEPI in the media: BBC

BBC

HEPI in the media: FT

HEPI in the media: Platts power in

Europe

HEPI used for market monitoring: DG

ENER

COMMISSION STAFF WORKING DOCUMENT Energy prices and costs report

HEPI used for market monitoring:

ACER/CEER

Annual Report on the Results of Monitoring the Internal Electricity and Natural Gas Markets in 2011

Abstract from call for tender by DG

SANCO

Household Energy Price Index

developments

Evolution of residential energy and distribution

prices excluding taxes in the EU


prices excluding taxes in the EU

EU-15 (Jan 2009=100)

Electricity Gas

Latest 117 107

Highest 118 110

Lowest 96 81


prices excluding taxes in the EU-22


prices excluding taxes in the EU-22

EU-22 (Jul 2013=100)

Electricity Gas

Latest 103 100

Highest 103 101

Lowest 100 99

Retail Vs. wholesale prices in European

markets

Please note that the following information relate to State capital cities unless specified otherwise

Average monthly end-user electricity prices excluding taxes

in EU-15 countries vs. average monthly wholesale price on

key European power exchanges (2009-2013)

Two examples of the evolution end-user Vs. wholesale

prices – electricity

Sweden Austria

Average monthly end-user gas prices excluding

taxes in EU-15 countries vs. average monthly

wholesale price on key European exchanges

(2009-2013)

Two examples of the evolution end-user Vs. wholesale

prices - gas

Overview of European electricity prices


Residential end-user electricity price (includes all taxes)

Average

Residential end-user electricity price at PPS

Average

Residential electricity price evolution adjusted for inflation

(2013/2012)

Average

Residential end-user electricity price breakdown (H2 2013)

Overview of European gas prices


Residential end-user gas price (includes all taxes)

Average

Residential end-user gas price at PPS

Average

Residential gas price evolution adjusted for

inflation (2013/2012)

Average

Residential end-user gas price breakdown (H2 2013)

Insights into energy affordability indicators


Electricity expenditures as a share of disposable

income (H2 2013)

Average

Gas expenditures as a share of disposable

income (H2 2013)

Average

Market competition indicators

Electricity: Residential customer choice as of December 2013

Gas: Residential customer choice as of December 2013

Number of electricity suppliers

Number of gas suppliers

Relationship between energy prices and

market competition

Potential savings from switching electricity supplier (2013)

Potential savings from switching gas supplier (2013)

R²=0.2155

R²=0.1096

R² = 0.00001

R² = 0.1146

THANK YOU

Christophe DROMACQUE

Head of Research

[email protected]

www.vaasaett.com

Discussions

Next year?

SME prices?

Aims of HEPI

VaasaETT 69

Aims

• Reflect the prices typically paid by residential customers in Member States;

• Comparable prices for household energy consumption (both electricity and gas);

• In relatively short time intervals (monthly);

• Taking into account different national consumption patterns (typical consumption levels);

• Reflecting different emerging tariff schemes, such as fixed tariffs, variables tariffs, green tariffs offered by incumbents and competitors;

• Clearly separating out between the price for energy as a commodity, distribution and transmission charges, associated taxes and VAT.

Data characteristics

VaasaETT 70

Data characteristics

All prices and other statistics relate to:

• The first day of the month the data is collected;

• Customers in the State capital city area of the state considered;

• To ensure comparability, sign in and other temporary bonuses and other forms of non-monetary benefits are not taken into account since they can distort the overall tariff offered, especially in cases where they are offered on a “one-off” basis;

• Standing fees are added to the price per kWh so that the entire end-user cost is taken into account;

• Exchange rate = 3-month moving average

• 97% rule.

Step 1: Background market data

1 Typical residential customer consumption level

2Proportion of residential customers who have never changed contact (who are still on their by-default contract)

3Proportion of residential customers who have never changed supplier (who are still supplied by their local incumbent supplier)

4 Incumbent or historical supplier for state capital city

5 Main competitor to the incumbent or historical supplier for state capital city

VaasaETT 71

Current methodology

MEKH_Presentation_final

Documents

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