EU Energy Markets in 2014

ISSN 1831-5666

Energy

EU Energy Markets in 2014 This publication presents an adapted version of the Commission Staff Working Documents SWD (2014) 310 final and SWD (2014) 311 final accompanying the Communication «Progress towards completing the Internal Energy Market» COM (2014) 634 final of 13 October 2014.

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Luxembourg: Publications Office of the European Union, 2014

ISBN 978-92-79-37962-8 doi:10.2833/2400

Printed in Belgium

Printed on white chlorine-free paper Table of contents

1. Trends and Developments in European Energy Markets 2014 ...... 6

1. Energy position of the EU ...... 6

1.1. EU energy consumption ...... 6

1.1.1. Gross Inland Consumption ...... 6

1.1.2. Uses of energy sources by sector ...... 6

1.1.3. Energy intensity ...... 8

1.2. EU energy supply ...... 9

1.2.1. EU primary energy production ...... 9

1.2.2. EU electricity generation ...... 10

1.2.3. EU energy imports ...... 10

1.2.4. EU import dependency ...... 11

Electricity from RES ...... 12

2. Recent developments in the European wholesale markets of natural gas ...... 12

3. Recent developments in the European wholesale markets of electricity ...... 19

Traded volume and liquidity in the European wholesale markets ...... 22

Integration of the European electricity markets ...... 23 ENERGY MARKETS IN THE EUROPEAN UNION 2014

/ 3 4 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 2. Countryreports Introduction

CYPRUS ITALY CROATIA FRANCE SPAIN GREECE IRELAND ESTONIA GERMANY DENMARK CZECH REPUBLIC BULGARIA BELGIUM

......

27 91 86 82 76 70 65 59 54 48 43 38 33 28 27

MALTA THE UNITEDKINGDOM SWEDEN FINLAND SLOVAKIA SLOVENIA ROMANIA PORTUGAL POLAND AUSTRIA THE NETHERLANDS HUNGARY LUXEMBOURG LITHUANIA LATVIA

......

164 159 155 150 145 141 135 129 123 118 114 109 105 100

5 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 6 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 Energy Markets 2014 1. 11% ofgrossinlandconsumptionin2012. 184.4 consumption wentupfrom172.1 its sharegrowing from15.9%to17.5%.Renewables increased from280 share: solidfuelsandrenewables.Solidfuelconsumption Two energysourcessawanincreaseinconsumptionand in 2012. consumed decliningfrom236.6 Nuclear energyretaineditsshare,withthequantity declined from25.1%in2010to23.4%. by 11%,reaching393 the power sector. Thequantityofgasconsumedwentdown demand andgrowing roleofsolidfuelsandrenewablesin terms against feeble economicperformance, weak electricity Gas consumptiondecreasedbothinabsoluteandrelative from 35.1%to33.8%. dominate theenergymix,althoughtheirsharedecreased and 2012.Crudeoilpetroleumproductscontinuedto Gross inlandconsumptiondecreasedby 4%between2010 1.1.1. 1.1. EnergypositionoftheEU 1. EU energyconsumption Gross InlandConsumption Mtoe in2012,itssharegrowing from9.8%in2010to

in European Trends andDevelopments Mtoe in2010to293 Mtoe in2012andtheshareofgas Mtoe in 2010to 227.7 Mtoe in2010to Mtoe in2012, Mtoe used inindustry, withashare of75%. two thirdsandindustryfor 22%. Solidfuelsarepredominantly between 2010and2012,withtransport accountingfor about In theareaofpetroleumproducts, sharesremainedunchanged level andsharewentdown between2010and2012. consumption went up slightly. Household gas consumption decreased eventhoughtheshareofindustryinnaturalgas economic performance industrial gas consumption levels Looking by fuel, between 2010 and 2012 against weak – 1 FIGURE (+0.5 stable withtransportat32%(+0.5 2010, thesharesofdifferent endusesectorsremainedfairly energy, followed by industryandhouseholds.Comparedto remaining thelargestconsumeroflevels withtransport 2012 finalenergyconsumptionwas5%below its2010 1.1.2. Usesofenergysourcesby sector Source: Eurostat(preliminarydatafor 2012) p.p.) andhouseholdsat26%(-0.7 Natural gas 23.4%

(as %oftotal EU-28 GROSS INLANDCONSUMPTION Mtoe) (2012) 13.5% Nuclear 33.8% petroleum products Crude oiland p.p.), industryat26% 0.8% Waste, non-ren. p.p.). Total =1 11.0% Renewables 17.5% Solid fuels

682.9 Mtoe Source: Eurostat(preliminarydatafor 2012) – 4 FIGURE Source: Eurostat(preliminarydatafor 2012) – 3 FIGURE Source: Eurostat(preliminarydatafor 2012) – 2 FIGURE 1 000 1 200 1 400 200 400 600 800 0 9519 9719 9920 0120 0320 0520 0720 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 Transport 64.1% 37.0% Industry EU-28 Other sectors EU-28 EU-28 13.9% Agriculture Transport Energy availableforﬁnalconsumption= 515Mtoe 1.1% USE OFPETROLEUMPRODUCTSBY SECTOR (final consumption) (2012) USE OFNATURAL GASBY SECTOR (final consumption) (2012) TOTAL FINALENERGYCONSUMPTIONBY END-USESECTOR (in Services, etc. 22.0% Industry 61.9% Other sectors

Households Energy availableforﬁnalconsumption=259Mtoe Industry 17.5% Services 1.4% Agriculture 41.8% Households 1.2% Other

Mtoe) (1995-2012) 2010 Transport 2011 32% 26% 26% 14% 2% 2012

7 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 8 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 Source: Eurostat(preliminarydatafor 2012) – 6 FIGURE and servicesby 0.6%relativeto2010). electricity consumptionin2012(householdsdown by 2.5% consumption andtogetheraccountedfor 143.9 Households andserviceseachaccountfor 30%ofelectricity consumption slightlydown, reaching36%ofthetotal. share ofindustrialelectricityconsumptionintotal for 86.6 the largest consumer of electricity and in 2012 accounted between 2010and2012.In2012industrycontinuestobe Turning toelectricity, totalconsumptionwentdown by 2% Source: Eurostat(preliminarydatafor 2012) – 5 FIGURE Households 30% 75.1% Industry Mtoe (down from88.5 USEOFELECTRICITYBY SECTOR

(as % of total Mtoe) (2012) (as %oftotalMtoe) EU-28 Final energyconsumption=240.6Mtoe (2 USE OFSOLIDFUELSBY SECTOR (final consumption) (2012) 30% Services Mtoe in2010),withthe 36% Industry

0.1% Transport 2% 2% Transport Other

24.8% Other sectors Mtoe of

798 TWh) between 2002and2003for industry. a slightincreasebetween2008and2009for transportand industrial sectorshasbeenonadownward trendapartfrom industry andtransport:finalintensityinthetransport increase between2002and2003.Thistrendholdsalsofor decreasing sincetheyear2000,althoughwithaveryminor At thelevelofentireeconomyfinalintensityhasbeen of energysources. energy finallyavailabletodifferent sectorsafterconversion against finalenergyconsumptionthatistheamountof intensity measurestheenergyefficiencyofeconomy used toproduceaunitofeconomicoutput.Final energy Energy intensityisanindicatoroftheamountenergy 1.1.3. Energy intensity Energy availableforﬁnalconsumption=48Mtoe 2.4% Services 2.5% Agriculture 0.6% Other 19.3% Households 1 000 1 200 Source: Eurostat(preliminarydatafor 2012) – 8 FIGURE gas intheEUand2012respectivelyaccountedfor 43% Netherlands andtheUKarelargestproducersofnatural energy production–secondonlytonuclearat29%. registered a9%increasereaching22%shareofprimary showed amodestincreaseof1.3%.Renewablesproduction and gasproductiona17%drop.Productionofsolidfuels petroleum products registered a 21% decrease in this period 2010 and2012,afteraslightincreasein2010.Crudeoil EU energyproductiondecreasedby morethan4.5%between 1.2.1. 1.2. Source: Eurostat(preliminarydatafor 2012) – 7 FIGURE 100 200 300 400 500 600 700 800 900 200 400 600 800 0 0 EU energysupply 9519 9719 9920 0120 0320 0520 0720 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 0020 0220 0420 0620 2008 2007 2006 2005 2004 2003 2002 2001 2000 EU primaryenergyproduction Other

EU-28 EU-28 FINALENERGYINTENSITY(in toe/million EUR) (2000-2012) PRIMARY ENERGYPRODUCTION(in Renewables Transport Nuclear Industry Natural gas went down by 56%since1995andofsolidfuelsby 40%. crude oilandpetroleumproduction reached30%.Production Between 1995and2012thedecreaseinnaturalgas producer witha13%share. EU witha60%sharein2012;Denmarkisthesecondlargest largest producer of crude oil and petroleum products in the share ofnaturalgasproductionintheEU.TheUKis producers – Germany and Romania – has a 7% and 6.5% and 26%ofgasproductionintheEU;thirdfourth

Mtoe) (1995-2012) All sectors Crude oilandpetroleumproducts Services 0921 2011 2010 2009 002011 2010 Solid fuels 21% 10% 17% 29% 22% 2% 2012 2012

9 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 10 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 In 2012CO that relyalmostentirelyonoilfor electricitygeneration. around 2%. Cyprus and Malta are the two Member States 2011 and19%in2012.Theshareofoilremainedstableat continuously decreased – from 24% in 2010, to22% in 2010. TheshareofnaturalgasinEUelectricitygeneration solid fuelsandstableinthecaseofnuclearcomparisonto 27% ofelectricitygeneration:upby 2 year-on-year. Solidfuelsandnucleareachaccountedfor 1 Source: Eurostat(preliminarydatafor 2012) – 9 FIGURE Total electricitygenerationin2012was3295 1.2.2. a a up by impressive 50% between 2011 and 2012, following solar accounted for 9% of renewable electricity generation, generation, upby 12%between2011and2012).In2012 2012) andbiomasswaste(19%ofrenewablepower renewable generation,upby 14%between2011and renewable power generation, followed by wind(26%of most importantrenewable source, representing 46% of 3 Renewables accountedfor 24%ofelectricitygeneration: from lessthan45%inthe90s. nuclear, accountedfor 51%ofEUelectricitygeneration–up

petroleum products Note thatwe would adviseagainstpresentinghistorical (methodological change) between 2011 and2012. to data 1995-2012 and comparingindetail(by fuel)2011 doubling ofproductionbetween2010and2011. p.p. above the2010share. Hydro power remainedthe 2012 data Crude oiland EU electricitygeneration Natural gas 19% 2% 2

-neutral sources,namelyrenewablesand in absoluteterms duetoabreakintheseries (as %oftotal EU-28 Solid fuels GROSS ELECTRICITY GENERATION 27% Total GrossElectricityGeneration=3 TWh) (2012) 27% Nuclear p.p. inthecaseof 1% Other TWh 24% Renewables 1 , stable

295 TWh exporters suchastheRussianFederationandAlgeria. in 2012increase market share tothedetriment of other gas-on-gas basis,Norwaywasabletoretainconsumersand of companies.Bychangingthepricesettingmechanismto its long-termpricesbetween2011and2013toanumber planning, buthasbeenoffering anumberofdiscountsin that the oil price link is indispensable for long-term business a spotindexationbasis.Atthesametime,Gazprommaintains pricing policywithnewStatoilcontractsnegotiatedpurelyon Norwegian companieshavebeenactivelychangingtheir to levelscomparablewithRussiannaturalgasexports. 2012 exports of natural gas from Norway to the EU rose Against thebackground ofweaker demandinthecourseof consumption ofgasdomestically. The increaseinUSexportsofcoalisrelatedtoincreasing and theUSremainedsecondthirdlargestexporters. When itcomestohardcoalexporterstheEU,Colombia previously secondtoRussiaincrudeoilexports. and NigeriaexportingmoretotheEUthanNorwaythatwas changed between2010and2012withSaudiArabia,Libya The listofthetopsixexporterscrudeoiltoEU exports. coal totheEUandonparwithNorwayinnaturalgas In of themarekey partnersinanumberoffuelcategories. Partner countriesdiffer fromfueltofuel,althoughsome energy imports. 259 reached anewpeakin2010,butdroppedby 2%to accounted for 58%ofenergyimports.Naturalgasimports registered aslightfall(-4.6%comparedto2010)and In 2012importsofcrudeoilandpetroleumproducts accounted for 13%ofenergyimports. of hardcoalincreasedin2011and2012.Solidfuelimports period 2006-2010,importsofsolidfuelsandinparticular year, reaching922 2008 peak levels and indeed fell in thethirdconsecutive generation, in2012EUenergyimportswere9%below the In linewithlower energy consumption andelectricity 1.2.3. 2012 Russia was the main exporter of crude oil and hard Mtoe sincethenandasof2012accountfor 28%of EU energyimports Mtoe. Afterasignificantdropover the for solidfuelsandfor crude oilandpetroleumproducts.The than in2010drivenby anincreaseintheimportdependency overall energydependencyin2012itwasslightlyhigher 2008, before fallingin2009and2010.At53.3%2012, The overall energyimportdependencyoftheEUpeaked in of gasandDenmarkcrudeoilpetroleumproducts. production, whiletheNetherlandsisanimportantnetexporter Romania satisfyasizeableshareoftheirneedswithdomestic considerable contributiontotheEUenergybalance.TheUKand and gas.Afew MShavesignificantproductionthatmakesa Member States(MS)arehighlydependenton imports ofoil The EUistheworld’s largestenergyimporter. Themajorityof 1.2.4. Source: Eurostat(preliminarydatafor 2012) FIGURE Source: Eurostat(preliminarydatafor 2012) FIGURE 1 000 1 200 100% 10% 20% 30% 40% 50% 60% 70% 80% 90% 200 400 600 800 0% 0 9519 9719 9920 0120 0320 0520 0720 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 EU importdependency – 11 – 10 EU-28 EU-28 SaudiArabia Kazakhstan Norway Crude oil Nigeria Russia Others Libya Other IMPORTS OFFOSSIL FUELSBY COUNTRY OFORIGIN(in %) (2012) NET IMPORTSOFENERGY(in Natural gas Natural gas

Norway Nigeria Algeria Mtoe) (1995-2012) Russia Others Qatar Libya Crude oilandpetroleumproducts drop inimportvolumes(-5%between 2010and2012). between 2010and2012) a somewhatmoremoderate by afastdecreaseingrossinlandconsumptionofgas(-12% by 1.3 The importdependencyfor gaspeaked in2011before falling reached ahistorichighof86.4%. time in2012crudeoilandpetroleumproductdependency fuels ismorethan2 satisfy demand.Yet, at42.2% importdependencyofsolid is increasinglyreliantonprimaryenergyimportsinorderto crude oilandnaturalgashasledtoasituationwheretheEU downturn intheprimaryproductionofhardcoal,lignite, p.p. in 2012 to65.8%. This dynamics was underpinned p.p. below itspeakin2008.Atthesame

SouthAfrica Solid fuels Indonesia Colombia Australia Hard coal Russia Others USA 002011 2010 13% 58% 28% 1% 2012

11 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 12 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 2 Source: Eurostat(preliminarydatafor 2012) FIGURE from biomassandwasteofabout12%. from windregisteredagrowth ofabout14%andelectricity in renewableelectricitygenerationreaching9%.Electricity an impressive growth of more than 50%, with its share Between 2011and2012electricityfromsolarenergysaw The importanceofRESotherthanhydrohasbeengrowing. for 46%ofrenewableelectricitygenerationintheEU. is themostimportantrenewableelectricitysourceandaccounts an increaseofmorethan13%comparedto2011.Hydropower In 2012theproductionofrenewableelectricityreached799 Electricity fromRenewableEnergySources(RES) Source: Eurostat(preliminarydatafor 2012) FIGURE 10% 20% 30% 40% 50% 60% 70% 80% 90%

0% Clean sparkspreads aredefinedasthe average difference between thecostofgasandemissions, andtheequivalentpriceofelectricity. include operation,maintenance ortransportcosts.Thespark spreadsarecalculatedfor gas-firedplantswithstandard efficienciesof50%and 60%. prices showing theaverage difference between thecostofgasdelivered onthegastransmission systemandthepower price.As such,theydonot defined astheaverage difference between thepriceof coalandcarbonemission,theequivalentpriceofelectricity. Sparkspreadsareindicative they donotincludeoperation,maintenance ortransportcosts.Spreadsaredefined for acoal-fired plantwith35%efficiency. Cleandarkspreads are Dark spreadsarereportedasindicative pricesgivingtheaverage difference between thecostofcoaldelivered ex-shipandthepower price.As Solar energy 9519 9719 9920 0120 0320 0520 0720 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 Biomass andwaste 9% – 13 – 12 Wind energy 18% 26%

ENERGY SOURCE(in %) (2012) GENERATION BY RENEWABLE EU-28 EU IMPORTDEPENDENCY(in %) (1995-2012) Crude oilandpetroleumproducts GROSS ELECTRICITY 1% Geothermal energy Total =799Mtoe 46% Hydro power TWh, TWh, Natural gas (as demonstratedby cleansparkanddarkspreads in 2012and2013gaspower plantswereoutcompetedby coal consumption frompower plantsturnedintoanimportantfactor: conditions whichaffected demand for heating.Thereduced low levelsofindustrialdemandandrelativelymildweather Among thefactorsaffecting thesedevelopmentswerethe declines ofgrossinlandconsumption. data fromEurostat,18 level wasrecordedsince1999.Basedonapreliminary2013 representing a2.7%decreaseonyearlybasis.Nolower The consumptionofnaturalgasin2012stoodat4 growth, asillustratedinFigure general decouplingofenergyconsumptionandeconomic imports fromextra-EUtradingpartnersandin terms of a replacement ofdecreasingindigenousproductionwith the long-termprospectsofindustryinterms in theEUmarkets ofnaturalgashadtotake intoaccount Further tothedifficultmacroeconomiccontext,actors in theEUenergymarkets throughout2012and2013. affected theeconomicdecisionsandactionsofmarket participants for someMemberStates,andtheprospectsofgradualrecovery zero growth rates.Theprolongedeconomicslowdown, stillnotover This endedasequenceof5 a year-on-yearincreaseof0.5%duringthethirdquarter2013. The grossdomesticproductoftheEUMemberStatesregistered 2. wholesale markets ofnaturalgas Recent developmentsintheEuropean All fuels Member Statesregisteredfurther consecutive quarters with negative or consecutive quarterswithnegativeor 14. 002011 2010 Solid fuels 2 ) andRES. 500 TWh, 2012 such, such, 3 341 2012, theextra-EUgasimportstotalled3 previous years.AccordingtopreliminaryEurostatdatafor development isincontrast to observed trends in the three also beobservedalongwithfallingconsumption.This In 2011and2012fallingimportsofnaturalgascould (2001) amountingto4%. the averagedecreasesinceyearofpeakproduction production ofnaturalgascontinuedthroughout2012,with As shown inFigure reduced thein-take by morethan13 in Spainalmost2 consumption ofpower plantswasreducedmorethan3 on datafromPlatts–Bentek,itappearsthatin6 Table 1 Source: Eurostat(preliminarydatafor 2012) FIGURE Source: Platts-Bentek – TABLE 1 1 000 2 000 3 000 4 000 5 000 6 000

Conversion rateused:1 by measured at0 FRANCE BELGIUM SPAIN UK ITALY 0

IEA Naturalgasinformation. bcm 96 97 98 99 00 01 02 03 04 05 06 07 08 09 00 01 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 illustratesthereducedintake frompower plants. Based 3 ) in2012,withthemostimportanttradingpartners – 14

ANNUAL GASINTAKE FROMPOWER PLANTS(bcm) Gross inlandconsumption degree Celsiusand 760

BALANCE OFNATURAL GASINTHEEU(TWh) (1996-2012) times intheUKwhereasItalianpower plants 14, thegradualdeclineinEUdomestic bcm =10.533 2008 16.0 24.8 33.4 n.a. n.a. bcm peryear. TWh (normalcubic meter, mm Hg),asdefined 592 2009 13.7 23.1 28.7 n.a. n.a. years, the gas years, thegas TWh (about Total imports times times 2010 11.6 25.3 29.8 n.a. 2.2 The EU-28 EU sources. 5 4 8% Libya, Egypt,Trinidad &Tobago andotherswasless than Algeria (13%)andQatar(8%).ThecombinedpartofNigeria, being Norway and the RussianFederation (31% each), and the majorsourcefor thegrossinlandconsumption. The in 2010andreached0.662012(preliminaryfigures). from 0.43in1995to0.492000,0.572005,0.62

Import dependencyisdefinedasthe ratioofnetimports The “non-specified”tradingpartner categoryofEurostatmay at nationallevel however, itincludestheintraEU trade. The EUimportdependency isnetofintraEUtrade;calculated over thesumofgross inlandconsumptionandbunkers. contain gascomingfromtheabove-mentioned countries. 4 . Anadditional40 majority ofMemberStatestendtorelyonimportsas import dependency Primary production 2011 19.5 27.5 2.5 7.1 9.4 bcm wasimportedby MSfromintra- 2012 5 13.2 24.2 ofnaturalgasincreased 1.5 8.4 7.2 Total exports 2013 13.1 20.1 1.2 7.4 4.8

13 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 14 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 6 aftermath ofFukushimaiswelldocumented The diversionofLNGcargoestothePacific basininthe dropped from20%in2011to15%2012. As aresult,therelativeshareofLNGintotalgassupplied strong decreaseofLNGdeliveries(morethan22 by pipelines (12 Figure transport deliverymodewasquitedifferent. Asillustratedin to slightly more than 10 natural gasdecreasedby 108 Between 2011and2012theEU-28totalimportsof Sources: ThomsonReuters,Waterborne FIGURE Sources: Eurostat,BPGasstatistics,Commissioncalculations FIGURE 10 15 20 25 conditions inJapan(similarprice levelswerealsoobserved provides furtherevidencefor themoreattractivepricing

0 5 bcm Check for exampletheregularpublications oftheMarket observatory/gas/gas_en.htm observatory for energyhere:http://ec.europa.eu/energy/ 100 150 200 250 300 350 400 450 50 2 4 6 8 1 1 1 1 3 5 7 9 0 1 2 2 4 6 8 1 1 1 1 3 5 7 9 0 1 2 2 3 2 1 12 11 10 9 8 7 6 5 4 3 2 1 12 11 10 9 8 7 6 5 4 3 2 1 12 11 10 9 8 7 6 5 4 3 2 1 12 11 10 9 8 7 6 5 4 3 2 1 0 9019 9219 9419 9619 9819 0020 0220 0420 0620 0820 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 15, anincreaseofimportsnaturalgasdelivered – 16 – 15 2010

LNG PRICES,SELECTEDCOUNTRIES($/MMBtu) (2010-2014) IMPORTS OFNATURAL GASINTHEEU-28(1990-2012) bcm / year) was more than matched by a bcm. Theimportevolutionby (le axis)Total(LNG+pipe) Japan TWh, whichisequivalent 2011 6 andFigure bcm /year). Spain 16

for electricity. are alsoapproximately4 consumption in the EU of 4 of stronggrowth. Thisnumbercomparestoagrossinland gas stoodat32 OTC clearedandnon-cleared)oftheEUmarkets ofnatural traded volumes(includingexchangespotandforward and 7 Based on the latest report from decreasing relativeshareofLNGintotalimports. with take orpayobligationsmaybeanotherreasonofthe market participants who are bound to long term contracts in SouthKoreaandChina).Therelativeinflexibilityofsome

“European GasTrading 2012”,Prospex Research,www.prospex.co.uk 2012 (right axis)shareLNG UK 200 TWh in2011,afifthconsecutiveyear times biggerthanthoserecorded 600 TWh. The gas traded volumes Prospex Research US 2013 2011 7 , thetotal 2012 2014 10% 25% 15% 20% 25% 0% 5% 9 8 and 2 and German markets exchanged respectively 6 volumes above 20 The UKmarket isby farthemostliquid,recordingtrading Source: InternationalGasUnion FIGURE Sources: 2 3 4 5 6 7 8 9 (4.4), Belgium(4.2)andGermany(2.5) UK (23.6) and the Netherlands (16.3), followed by Austria 10% 20% 30% 40% 50% 60% 70% 80% 90% 1 FIGURE volumes fromthelongtermcontractsarerecorded. smaller share than thenon-clearedOTC under whichthegas Similar toelectricitymarkets, theclearedOTC hasamuch (OTC) accountsfor morethan80%ofthetradedvolumes.

0% 000 000 000 000 000 000 000 000 000 The low churnfactorfor Germanyonthegrossmarket The churnfactorisdefinedasthe ratio oftraded volume is duetotheimportant shareoflong-termcontracts. that isdiscovered on thatmarket. of themarket placeandthe qualityofthepricingsignal to physicalconsumption.Itinforms abouttheliquidity 0 100 National Grid(UK),GTSandLEBA(Netherlands),Huberator(Belgium),Gaspool(Germany),NCGGRTGaz (France), Snamrete(Italy),CEGH(Austria) Q1 – 18 – 17 TWh. Thehighestchurnfactors Oil indexed

(in shareofconsumption) %) (2005-2012) BREAK-DOWN OFNATURAL GASCONTRACTS BY PRICING MECHANISMINEUROPE TRADED VOLUMES OFNATURAL GASINSELECTEDHUBS(TWh) (2011-2013) Austria Q2 000 2011 TWh. Market operatorsontheDutch 2005 Q3 France Q4 Gas-to-gas competition 9 . Over-The-Counter 2007 8 wereinthe Belgium Q1

500

TWh Q2 2012 Italy 2009 mature hubtrading,thisshare is wellabove 80%. consumption. FortheMember Statesthathavedeveloped to increaseandreachedalmost50%oftheoverall EU the EUunderhubbasedgas-on-gascompetitioncontinued Figure Judging by datafromtheInternationalGasUnion(see The evolutionoftheoverall tradedvolumesisnotyetclear. Austria wentdown). most notableincreaseswhilehubvolumesintheUKand 10 across hubs(theDutch traded volumesstabilized,registeringvaryingfortunes As illustratedinFigure

GTS reportshuband OTC tradesfor the Netherlands. Q3 18), therelativeshareofnaturalgasdeliveredin Regulated Germany Q4 2010 10 Q1 andGermanhubswereamongthe 17, intheperiodafter2011hub Netherlands Q2 2012 2013 Other Q3 UK

15 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 16 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 Sources: Platts,BAFA (DEborder) FIGURE hub priceswereabove theGerman borderprice. earlier, thespreadwasreducedby 2012andinsomecases hub benchmarkwastradedatadiscountsince2010and elements (suchastheGermanborderprice).Whereas against ahybridpricecontaininghubandoilindexation comparing the purehubbenchmark (such asthe NBP price) It is also interesting to observe the dynamicsof gas prices by allowances kept adownward pressureoncarbonprices. structural oversupply ofEUEmissions Trading Scheme(ETS) made availableintheEUatcompetitiveprices.Inaddition,a coal from the USbut also Colombia and other countries were crowding outofcoalby shalegas.Theseextravolumesof of steamcoalontheUSmarket resultedfromthegradual benchmark pricesfor gasintheEU.Apersistentsurplus the evolutionofpricescompetitivefuelsagainstselected fired power generatorsisprovided by Figure Another indicationofthedifficultsituationfacinggas

Prices of competitive fuels (€) 105 45 55 65 75 85 95 2 4 6 8 1 1 1 1 3 5 7 9 0 1 2 2 4 6 8 1 1 1 1 3 5 7 9 0 1 2 2 1 12 11 10 9 8 7 6 5 4 3 2 1 12 11 10 9 8 7 6 5 4 3 2 1 12 11 10 9 8 7 6 5 4 3 2 1 12 11 10 9 8 7 6 5 4 3 2 1 – 19 2010

BENCHMARKS (2010-2014) EVOLUTION OFPRICESFOR COMPETITIVEFUELSVERSUSEUROPEANGASPRICE Prices ofcompetitivefuels(leftaxis)inEurovsgas(rightEuro/MWh (le axis)CoalCIFARASpot(€/t) (le axis)BrentSpot(€/bbl) 2011 19 whichtraces choices werefacingatougherbargainandhigherprices. EU decreasedsomewhat;yetMemberStateswithfew supply page, thedivergenceofwholesalegaspricesacross gas pricesindexedonoil.Asillustratedby themaponnext major oilbenchmarksproviding asupportfor thelongterm Another factormaybelinked totherelativestabilityof Contract indicator. with delivery in North Western Europe, such as the the Germanborderpricefromapureoilindexedbenchmark mechanism; this can also be witnessed by the divergence of price asmoreandsuppliersareturningtothispricing the morepronouncedpartofhubpricesinGermanborder One factor that couldexplain the decrease of thespread is (right axis)NBPaverageprice(€/MWh) (right axis)DEborder(€/MWh) 2012 2013 Platts Gas 2014 12 22 27 32 17 7

prices of gas (€/MWh) FIGURE Sources: EBP and LNG: ESTAT Exchange, LNG: Gas and EBP Finnish Sources: Platts, HUB: COMEXT, Thomson-Reuters; Gaspoint Nordic for Denmark; BAFA for border prices for Germany; Bulgarian regulator for border prices to Bulgaria to prices border for regulator Bulgarian Germany; for BAFA prices Denmark; border for for Nordic Gaspoint For the administrative boundaries : © Eurogeographic; © DG ENER - July 2014 July - ENER DG © Eurogeographic; : © boundaries the administrative For Price in €/MWh €/MWh in Price * Reported by the Bulgarian Regulator the Bulgarian by *Reported **Germany: BAFA data on border price for Germany reported as reported Germany for BAFA price **Germany: border on data 'other' and refers to the first four months of 2014. of four months first the to and refers 'other' net of transmission charges, as of 16.03.2012; 16.03.2012; as of charges, transmission net of Poland, in gas natural for prices Regulated (hub). data POLPX *** Recipients of high natural gas (consumer group E) (other E) group (consumer gas natural high of Recipients based on customs data reported to ESTAT COMEXT for first four first for ESTAT to COMEXT reported data customs on based EBP4 prices are estimations of border border of estimations are prices EBP4 Thomson-Reuters (simple averages of monthly data). LNG prices for Greece and Italy are estimations are Italy and Greece for prices LNG data). monthly of averages (simple Thomson-Reuters EBP3 prices are estimations of border prices for gas from Algeria; first four months of 2014. of months four first Algeria; from gas for prices border of estimations are prices EBP3 LNG prices for Belgium, France, Spain and the UK are landed prices as reported by by reported as prices landed are UK the and Spain France, Belgium, for prices LNG EBP2 prices are estimations of border prices for gas from Russia; first four months of 2014. of months four first Russia; from gas for prices border of estimations are prices EBP2 EBP5 prices are estimations of border prices for gas from Denmark; first three months of 2014. 2014. of months three first Denmark; from gas for prices border of estimations are prices EBP5 EBP1 prices are estimations of border prices for gas from Norway; first four months of 2014. of months four first Norway; from gas for prices border of estimations are prices EBP1 P EBP: EBP prices are estimated border prices (domestic prices not taken into account). into taken not prices (domestic prices border estimated are prices EBP EBP: ortugal not reported due to missing data in ESTAT COMEXT since October 2013. October since ESTATin COMEXT data missing to due reported not ortugal – 20 no data > 30.00 27.51 - 30.00 - 27.51 25.00 - 27.50 - 25.00 < 25.00

COMPARISON OFEU-28 EBP3: 25.79 EBP3: EBP1: 25.21 EBP1: LNG: 31.72 LNG: ------ES (hub, LTC, LNG) in the LTC, the (hub, in LNG) prices of types available all of average simple is defined according to ato according is defined MS each for code The colour respective MS. respective pr ices for gas from the Netherlands; first three months of 2014. of months three first Netherlands; the from gas for ices EBP4: 25.30 EBP4: EBP1: 17.83 EBP1: HUB: 21.80 HUB: LNG: 21.55 LNG: ------UK HUB: 24.12 HUB: LNG: 31.79 LNG: ------FR AVERAGE WHOLESALEGASPRICESDURINGFIRSTHALFOF2014 EBP4: 25.08 EBP4: EBP1: 23.92 EBP1: months of of 2014. months HUB: 21.57 HUB: LNG: 21.65 LNG: ). ------HUB: 21.58 HUB: BE ------NL HUB: 21.99 HUB: Other: 25.83 Other: HUB: 21.81 HUB: ------DK ------DE** EBP4: 25.12 EBP4: EBP3: 31.25 EBP3: EBP2: 28.74 EBP2: EBP1: 32.36 EBP1: HUB: 23.15 HUB: EB5: 31.42 EB5: ------IT ------HUB: 22.55 HUB: EBP2: 27.81 EBP2: SE EBP2: 29.19 EBP2: ------AT CZ ------SI Other: 28.80 Other: HUB: 22.22 HUB: EBP2: 28.40 EBP2: PL*** ------EBP2: 27.47 EBP2: ------SK ------HU HUB: 28,80 HUB: ------EBP2: 35.20 EBP2: FI EBP2: 31.32 EBP2: EBP2: 28.86 EBP2: ------LT ------EE EBP2: 29.81 EBP2: LNG: 31.00 LNG: LV 5 0 Km 500 250 0 ------GR EBP2: 26.30 EBP2: Other: 29.96 Other: ------RO ------BG* Malta Cyprus

17 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 18 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 11 pricing signaltoshipgasflows fromNorthtoSouth. and capacitiesofgasstorage,theneedastrong evolution ismostlikely linked tothepersistentlylow levels North priceandthenfromtheotherhubpricesaswell.This evolution, slowly divergingfromthemoretradedPEG prices. TheFrench PEGSouthpricefollowed anopposite gradually alignedwiththeAustrianandthencontinentalhub hub prices.Bythesecondhalfof2012Italianbenchmark Figure Sources: (1)Pricedata:Platts;(2)Flow nomination data:Fluxys,BBL,ENTSO-GTP – TABLE 2 Source: Platts FIGURE 10 15 20 25 30 35 40

Average FAPD eventsselected AT-DE AT-IT FR PEGNord–Sud NL-UK BE-UK BE-NL # observations/year transactions represent onlyafractionalamountofthetotal tradeongascontracts. That After thedayahead market closes,market participantsstillhave theopportunity tolevel offtheirpositionsonthebalancingmarket. threshold for gasis setat0.5 area toalower pricearea.TheFAPD event isdefined by theminimumthreshold ofpricedifference underwhichno FAPDisrecorded.The An event labelledas anFAPD occurswhencommercial nominations for crossbordercapacitiesaresuchthat gas issettoflow fromahigherprice commercial schedulesfor dayD. on priceinformation for adjacentareas,market participantscan establish pricedifferentials. LaterinD-1,market participantsalsonominate With theclosureofday-aheadmarkets (D-1),thepricefor delivering gasinagiven hubondayDisknown by market participants.Based a Flow againstpricedifferentials (FAPDs): Bycombiningdailypriceandflow data,Flow AgainstPriceDifferentials (FAPDs)aredesignedto give 2 4 6 8 1 1 1 1 3 5 7 9 0 1 2 2 4 6 8 1 1 1 1 3 5 7 9 0 1 2 2 3 2 1 12 11 10 9 8 7 6 5 4 3 2 1 12 11 10 9 8 7 6 5 4 3 2 1 12 11 10 9 8 7 6 5 4 3 2 1 12 11 10 9 8 7 6 5 4 3 2 1 measure oftheconsistencyeconomicdecisionsmarket participantsinthecontextofclosetorealtimeoperationnaturalgassystems. is 21 illustratesthestrongcorrelationacrossEU why a – 21

BE 2010 high level ofFAPD doesnotnecessarily equatetoirrationalbehaviour. Inaddition,itshouldbenoted that close-torealtime FAPD EVENTSBY SELECTED ADJACENT AREAS

EVOLUTION OFTHEMAINGASHUBBENCHMARKS(€/MWh) (2010-2014) AT €/MWh. DE GSP 2011 2011 DE NCG 133 251 41 83 25 0 2 4 FR PEGN flows. decrease ofFAPD events significantly inthelastcoupleofyears,asshown by the in opportunities tomake surepriceswerealigned.Asshown and market participants wereusingtheavailabletrading supply anddemandconditionsindifferent tradingareas As arule,thehubpricesgavefairrepresentationof 2 Table 2012 , the operation of the gas markets improved 2012 112 248 FR PEGS 27 28 17 0 1 6 11 thatmeasureirrationaladverse IT 2013 NL 2013 251 28 13 9 6 0 0 7 minimum minimum UK 2014

minimum wasreachedon10.04.2013(6.23%). French storagelevelswerealsoextremelylow andthe level of2.71%wasreachedon13.04.2013intheNBParea. the winterseasonwascomingtoanend,anewminimum cold spelleventsacceleratedfurtherthewithdrawalandas gas fromstoragesatafaster-thannormalrate.TheMarch Prior toMarch2013,market operators were withdrawing cooler thanthelongtermaveragefor severaldays. by energyefficiencypolicies. household andindustrialelectricitydemandisalsoimpacted performance oftheeconomy. Onthelongertermboth demand for electricity, primarilydepending on thegeneral households (lightingandheatingneeds),theindustrial hand, thedemandsideisaffected by theelectricityneedof for examplecarbonemissionallowance prices.Ontheother availability of power imports and exports andother factors, of generatedpower comparedtodomesticneedsorthe the structure of the power generation mix, the amount influenced on one hand by supply side drivers, such as Power generationcostsandwholesalepricesareprimarily Norway andSwitzerland: prices in2013thememberstatesofEuropeanUnion, averages ofday-aheadwholesalebaseloadelectricity The maponthenextpage(Figure 3. (HDD) – 2013winterseason.Basedonheatingdegreedaysdata than usualmeteorologicalconditionsthroughoutthe2012 in NorthandNorth-Western Europeexperiencedharsher period ofsignificantpriceswings.Themajoritycountries of Europe at the end of the heating season were another The successive cold spell events that hit the Northern part 12 the month,temperaturesacrossUKwere6 In two separate events during the second and third week of more than100 apart fromthelongtermaverage,withsomeMSrecording Commission, theMarchtemperatureswerefurthest

Heating degree days (HDDs) express the severity of a meteorological Heating degreedays(HDDs)expressthe severity ofameteorological for energyneededfor heatingpurposes. These quantitative indicesaredesigned toreflectthedemand The colderistheweather, the higheristhenumberofHDDs. to HDDs condition for agiven areaandinaspecifictimeperiod. wholesale markets ofelectricity Recent developmentsintheEuropean what is 12 fromtheJointResearchCentreofEuropean are definedrelative totheoutdoortemperatureand considered ascomfortable roomtemperature. HDDs inadditiontothelongtermaverage. 22) illustratestheannual 0

C –8

0 C new capacitycomingon-stream. domestic wholesalepower pricesintheshortterm,pending to longstandingplans,havecreatedanupward pressureon fired generationcapacitiestaken offlinein2013according changes intheenergymix,i.e.relatedtosignificantcoal- gas inthecaseofNetherlandsandUK).InUK in settingthemarginalpricewholesalemarket (natural or becauseofthedominanceexpensivegenerationfuels capacities toneighbouringpower markets (ItalyandIreland) either becauseofthelacksufficientinterconnection Netherlands wereamongthehighestinEU2013, Prices inItaly, IrelandtheUnitedKingdomand to neighbouringcountriesandregions,suchastheBalkans. also dependontheavailabilityofelectricityinterconnections price levelinCentralandEasternEurope.Pricesthisregion power generationtrendshave significantlyimpactedthe one ofthelowest averageprice in2013theEU.German the lastcoupleofyears,abundantrenewablesupplyassured solar and wind power generation rapidly increased during Europe. Incountrieslike Germany, wheretheinfluenceof the 2013averagepower prices wereamongthelowest in the wholesalepower pricelevel. Inmostofthesecountries precipitation significantlyimpactsthegenerationcostsand Sweden, Austria,NorwayorSwitzerland)theamountof is significantinpower generation (e.g.:Spain,Portugal, In thosecountries,wherethecontributionofhydroenergy

19 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 20 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 FIGURE For the administrative boundaries : © Eurogeographic;© DG ENER - April 2014 - April ENER DG Eurogeographic;© © : boundaries administrative the For Sources: Platts, National power exchanges power National Platts, Sources: Price in €/MWh €/MWh in Price PT: 32.2 – 22 < < 35.01 > > 55.00 55.00 - 45.01 45.00 - 35.01 no data no IE: 60.6

FIRST COMPARISON OFAVERAGE WHOLESALEBASELOAD ELECTRICITYPRICES, ES: 33.3ES: SEMESTER OF2014 UK: 51.8 FR: 34.7FR: BE: 38.9BE: NL: 40.9 DK: 30.1 DE: 32.5 IT: 49.5 SE: 30.7SE: AT: 32.6 SI: 38.0 CZ: 32.7CZ: HR: HR: No Data PL: 44.6 HU: HU: 38.3 SK: 33.4SK: 5 0 Kilometers 500 250 0 FI: 34.9FI: LT: 46.3 EE: 35.3EE: LV: 46.3 EL: 55.4 RO: 32.2 RO: BG: BG: No Data Malta Cyprus MT: NoMT: Dat CY: No Data CY: No a 13 costs for generation(naturalgas)andelectricityprices sudden increasesinheatingneeds,drivingupbothfeeding stock the wholeEuropeancontinent,like inFebruary2012,canresult prices inthemarket. Ontheotherhand,severecoldsnapsaffecting demand (mainlyfor coolingneedsinhouseholds)andwholesale Greece) highsummertemperaturescansignificantlyincreasepower regions. IntheSouthernEuropeancountries(e.g.:Spain,Italyor as Germanpower pricesservedasapeertomanymarkets inboth prices showed ahighdegreeofconvergenceinthelastfour years, Central Western andCentralEasternEuropean wholesaleelectricity as gas-firedgenerationhasbecomelesscompetitivethancoal. last four years,andtheUKhas had aprice premium since2012 had asignificantpricepremiumtootherEuropeanpeersduringthe ups and falls in power prices, depending on hydro availability. Italy volatility ofSpanishandNordicpower markets; with suddenshoot- The importantroleofhydrogenerationcanbetracked inthe the analysisabove onthe2013averagepricescanbereinforced. Taking alookatthelongertermtrendsonFigure Sources: Platts,power exchangeplatforms FIGURE 100 wholesale power prices,asFigure contributed tolower generationcostsandhavekept alidon On the supply sideseveralfactorshavesimultaneously have alsocontributedtothelower power demand. costs by furtherdecreasingtheirelectricityintensity, whichmight crisis manyindustriesdidnotceasetorespondhighenergy tracked inlimitedindustrialdemandfor power. Afterthe2008 recovery hasputalidonpriceincreases,whichcouldeasilybe in most ofthe regions. Onthedemand side thesluggisheconomic however, in2012and2013priceswereonadecreasing trajectory be observed for most of the regional power prices in Europe, In 2010and2011aslightrecovery fromthelows in2009could 10 20 30 40 50 60 70 80 90

0 See more detailed analysis in the Quarterly Report on European Electricity See moredetailedanalysis intheQuarterlyReportonEuropean Electricity q2_quarterly_report_on_european_electricity_markets.pdf Markets: http://ec.europa.eu/energy/observatory/electricity/doc/20130814_ 2 4 6 8 1 1 1 1 3 5 7 9 0 1 2 2 4 6 8 1 1 1 1 3 5 7 9 0 1 2 2 1 12 11 10 9 8 7 6 5 4 3 2 1 12 11 10 9 8 7 6 5 4 3 2 1 12 11 10 9 8 7 6 5 4 3 2 1 12 11 10 9 8 7 6 5 4 3 2 1 CWE baseload – 23 2010

EUROPEAN REGIONS(€/MWh) (2010-2014) EVOLUTION OFMONTHLY AVERAGE WHOLESALEELECTRICITYPRICESINDIFFERENT CEE -baseload 24 shows. Importcoalpricesin Nordpool -systembasload 2011 , the findings of 23, thefindingsof 13 . UK baseload 15 Trading Scheme(ETS)emissionallowance prices,reaching generation tothedetrimentofnaturalgas.EUEmission prices, increasedtheprofitabilityofcoal-firedpower Decreasing coalprices,incontrasttorelativelyhighgas demand for gasremainedlimitedduringthisperiod. relatively highlevelinEurope,despitethefactthatindustrial competitive prices),naturalgaspriceshavebeenstuckona (LNG quantitieshavebeensoldonAsianmarkets, offering more have substantiallydecreasedsincethefirstmonthsof2011 in manyEUcountriesandLNGshipmentsfromthird and 2011.Asoil-indexgascontractsstillhaveanimportantrole since thebeginningof2012afterasignificantgrowth in2010 the UnitedStates.Atsametimenaturalgaspricesstabilised primarily owing toabundantimportsupplyfromColombiaand North Western Europefell by 40%sincethebeginningof2011, 14 preliminary data from Eurostat 28 gas; theshareofthisfuelfell by almostfivepercentintheEU- These achievementshaveledtoagradualsqueeze-outofnatural proportionally lesscarbon-emission-intensivethancoal. as theycouldnotincentivise gas-fired generationbeing not improve thesituationofgas-firedgenerationeither, 5 and Europeangreenhousegasemission reductionpolicies. generation sourcestocoalraises anewchallengefor national needs backupcapacities,theshift fromlessemission-intensive As renewablepower generation,duetoitsintermittentnature, abandon nuclearpower generationintheforthcoming decade. consequence of decisions in some member states to gradually to coal.Theshareofnuclearenergyalsodiminishedasa contribution inrainyperiods)managedtogainground,similarly energy sources(solarandwindcombinedwithsignificanthydro

€/tonnes in2013onaverage.Thelow carbonpricesdid See Chapter1.2.2 onpage10 power generationmixbetween2010and2012,accordingto €/tonnes of CO 2012 Spain baseload 2 equivalent in June 2011, fell below 14 Italy baseload . At the same time renewable . At the same time renewable 2013 Greece baseload 2014

21 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 22 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 inland electricityconsumptionin agivencountryorregion. defined astheratiooftradedvolume ofpower andthegross power contractsinagivenperiod(e.g.:quarter).Liquidityis of power measurestheamount of day-aheadbaseload the Europeanwholesaleelectricity markets. Traded volume analyse thetradedvolumesofpower andtheliquidityin Besides theevolutionofpricelevelitisimportantto wholesale markets Traded volumeandliquidity intheEuropean Sources: Platts,electricitytradingplatforms andENTSO-E FIGURE RES includeshydro, wind,solar and biomass;RESshareinthetotalpower generationestimation isbasedonmonthlyENTSO-Edatafor theEU-28asawhole DE borderimp.standsfor long termcontractbasedimportnaturalgaspriceontheGermanborder(in€/MWh) Coal CIFARA:PrincipalcoalimportpricebenchmarkinNorthWestern Europe(in€/Mt) Platts PEP:Pan EuropeanPower Index(in€/MWh) Sources: Platts,BAFA 100 FIGURE 30 40 50 60 70 80 90 Quarterly traded volume (TWh) 10 20 0 100 TWh 150 TWh 200 TWh 250 TWh 300 TWh 350 TWh 400 TWh

45 TWh 50 TWh € € € € € € € € € € € 2 4 6 8 1 1 1 1 3 5 7 9 0 1 2 2 4 6 8 1 1 1 1 3 5 7 9 0 1 2 2 1 12 11 10 9 8 7 6 5 4 3 2 1 12 11 10 9 8 7 6 5 4 3 2 1 12 11 10 9 8 7 6 5 4 3 2 1 12 11 10 9 8 7 6 5 4 3 2 1 Platts PEP(€/MWh) – 24 – 25 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 CWE 2010

PRICE ANDTHESHAREOFRENEWABLES INTHEEUPOWER GENERATION MIX(2010-2014) STEAM COAL,GERMANIMPORTBORDERPRICEFOR NATURAL GAS,EMISSIONALLOWANCE EVOLUTION OFTHEPLATTS’ PAN EUROPEANPOWER INDEX,THEIMPORTPRICEOF REGIONS ANDTHEAVERAGE EUROPEANPOWER MARKETLIQUIDITY(2010-2013) EVOLUTION OFQUARTERLY TRADEDVOLUME OFPOWER INTHEMAJOREUROPEAN 2010 NP Coal CIFARA(€/t) Apennine 2011 2011 DE borderimp.(€/MWh) Iberia 16 15 and intheNordicmarkets has alsobeenthemostliquid market, witha liquidityratio this periodintheCentralWestern European highest tradedvolumeofpower couldhavebeenobservedin 2013 for mostoftheEuropeanpower tradingmarkets. The power andtheEuropeanaverageliquiditybetween2010 Figure

Sweden, Denmark,Finland, Estonia,Latvia,Lithuaniaand Norway Germany, France, Belgium,Netherlands AustriaandLuxembourg CEE 2012 25 shows thequarterlyevolutionoftradedvolume 2012 Carbon price(€/t) Greece 16 (Nordpoolspot).Nordpoolspot 2013 (right axis)Liquidityratio RES share(%-rightaxis) 2013 15 (CWE)markets 2014 35% 45% 50% 55% 40 % 15% 17% 19% 21% 23% 25% 27% 29% 31% Traded power volume / gross inland electricity consumption (quarterly) (%) The CentralandEasternEuropean higher thaninother(non-mandatory)markets. these tradingplatforms, resultingintradedvolumesbeing bilateral power trademustcompulsorilybecarriedouton markets areso-called mandatorypools,meaningthatall the grossinlandelectricityconsumption.However, these traded volumesandliquidityratiosasmeasuredagainst 18 17 peninsula, fourth quarterof2013.Power regions,suchastheIberian- be found amongtheliquidones,witharatioof34%in during mostof2012and2013.TheCWEregioncouldalso of 96%inthefourth quarterof2013,beingabove 80% Sources: HUPX,OTE-SK power exchanges FIGURE 100% Nordic markets alreadystartedatthebeginning ofthelast implicit crossbordertradeofelectricity. Thecouplingofthe place amongneighbouringEuropeanmarkets, enablingan During thelastdecadeseveralmarket couplingshavetaken Integration oftheEuropeanelectricitymarkets year longtimeperiod. decreasing grossinlandelectricityconsumptioninthisfour power thisincreaseinthemarket liquiditywasalsodueto quarter of2013.Besidesincreasingtradedvolumein to 51% between the firstquarterof 2010and the fourth mandatory andnon-mandatorymarkets, rosefrom39% The overall European market liquidity, incorporating both liquidity hasrisenfrom6.4%to21.4%. as tradedvolumeshavenearlyquadrupledandmarket the mostdynamicallyevolvingregioninobservedperiod, 10% 20% 30% 40% 50% 60% 70% 80% 90%

0% Poland, CzechRepublic, Slovakia, Hungary, Slovenia, Romania Spain andPortugal 2 4 6 8 1 1 1 1 3 5 7 9 0 1 2 2 4 6 8 1 1 1 1 3 5 7 9 0 1 12 11 10 9 8 7 6 5 4 3 2 1 12 11 10 9 8 7 6 5 4 3 2 1 12 11 10 9 8 7 6 5 4 3 2 1 12 11 10 9 8 7 6 5 4 3 2 1 – 26 17 Apennine-peninsula (Italy)and Greece had high 2010 MONTHLY RATIOS OFHOURLY PRICECONSIDEREDASBEINGCONVERGENTAND AND BETWEENHUNGARY ANDSLOVAKIA (in %) (2010-2013) MONTHLY ADVERSE POWER FLOW RATIOS BETWEENGERMANYANDTHENETHERLANDS DE-NL diff. 18 (CEE)regionhasbeen HU-SK diff. 2011 or significantamount ofexportstotheBalkans. case ofsuddenly increasingdomesticelectricity consumption temporary decoupling manytimesin2013,especially inthe with theCzechandSlovak markets, alsoshowed signsof imports fromRussia.Hungarian power prices,beingcoupled Nordpool markets andheavydependence on electricity in theconsequenceofinsufficient interconnectionstoother significant premium toothercountries of the Nordic region, permanently taken offline.LatviaandLithuaniastillhad a in thefirsthalfof2013,astwonuclearreactorswere from theothermarkets oftheCWEregionin2012and generation inthatcountry. Belgianpricesalsodecoupled from Germanyduringthetimeofabundantsolarandwind Netherlands andtothelackofsufficientimportcapacities significant impactofcostlygas-firedgenerationinthe of 14 the Dutchwholesalepower priceshadanaveragepremium not necessarilyeliminatepricedifferentials. Forexample, markets. However, theexistenceofmarket couplingsdoes convergence inwholesalepricesbetweenneighbouring These market couplingshavealsocontributedtothe Portugal, arecoupledwithNorth-Western Europe. 2014, alsothe South-West European Market, i.e. Spain and the participationoffifteenEuropeancountries.SinceMay forming theNorthWestern Europe(NWE)market, with the NordicregionwascoupledwithUKandIreland, Finally, at the beginning of February 2014 the CWE and Sweden andSlovenia withItalyasfromtheendof2010. to HungaryinSeptember2012.Polandisalsocoupledwith Czech RepublicandSlovakia since2009,whichwasextended Eastern Europe(CEE)amarket couplingexistsbetweenthe was extendedtoGermanyinNovember 2010.InCentraland Belgium andtheNetherlandswasintroducedin2006,which European (CWE)regionatrilateralcouplingbetweenFrance, the partofcoupledregion.InCentralWestern decade andinJune2013,asthelastcountry, Latviabecame DE-NL adv.flow €/MWh toGermanyin2013,primarilyowing tothe 2012 HU-SK adv.flow 2013

23 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 24 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 increase inelectricityconsumption resultedinanincrease Dynamic growth incrossbordertradeasopposedtomodest EU showed onlyamodestincrease(beinglessthan2%). At thesametimegrossinlandelectricity consumptioninthe could clerarlybeobserved. summer periods),anupward trendinmonthlytradevolumes months, aselectricityneedincreases,andlower duringthe seasonality between2010and2013(beinghigherinwinter monthly crossbordertradevolumesshowed ahighdegreeof 21.7 was 17.8 In 2010 Source: ENTSO-E FIGURE price divergences. between thetwomarkets inspiteoftheexistenceobvious of thetime.However, adversepower flows hardlyoccurred while in 2013 thisratiodropped below 40%duringmost between GermanyandtheNetherlandswasabove 90%, hours, whenthehourlypricedifference waslessthan10% between neighbouringmarkets. In2011theratiooftrading of pricedivergencesandlow adversepower flow ratios Figure markets. price differentials couldbeobservedbetweenneighbouring coupling andremainedalmostnegligibleevenifsignificant to zeroshortlyaftertheimplementationofmarket compared to the total number of tradinghoursfell close In mostofthecasesratiosadversepower flows thus minimisingwelfarelossesofcross-borderpower trade. one, providing anexamplefor non-economicalbehaviour), power isflowing fromamoreexpensivemarket toacheaper of thenumberoccurrencesadversepower flows (when Nevertheless, market couplingscontributedtothereduction 30 TWh 10 TWh 15 TWh 20 TWh 25 TWh 0 TWh 5 TWh TWh, showing agrowth of23%inthisperiod.Although 2 4 6 7 6 5 4 3 2 1 26 shows agoodexamplefor theco-existence the monthlyaveragecrossborderelectricitytrade – 27 TWh intheEU,while2013itamountedto

2010 FLOWS COMPARED TO THEGROSSINLANDELECTRICITYCONSUMPTION(2010-2013) MONTHLY CROSSBORDERELECTRICITYFLOWS INTHEEUANDRATIO OFCROSSBORDER 8 1 1 1 1 3 5 7 6 5 4 3 2 1 12 11 10 9 (le axis)Crossbordertradevolume 2011 8 1 1 1 1 3 5 7 6 5 4 3 2 1 12 11 10 9 consumer welfare. other markets helpsinpromotingcompetition andboosting as theincreasingavailabilityofelectricitysourcesfrom of integration of European wholesale electricitymarkets, to nationalelectricityconsumptionclearlyshows goodsigns The increasingtrendofcrossbordertradevolumescompared 9.8% inDecember2013. to consumption,upfrom6%measuredinJanuary2010 the ratioofelectricitycrossbordertradevolumescompared border electricityflows, asFigure electricity markets canalsobecapturedinincreasingcross neighbouring power areasthe integrationoftheEuropean Besides priceconvergenceandadversepower flows between existence ofcrossbordertradingallocationmechanisms. interconnector infrastructureisindispensableinadditiontothe in prices,thedevelopmentofphysicalpower transmissionand prices acrossthecoupledarea.Inordertoimprove convergence necessarily leadtopermanentpriceconvergenceinelectricity cross-border power trade.However, coupledmarkets donot internal electricitymarket, eliminatingwelfarelossesfrom electricity markets withinthecourseofcreationasingle tool for promotingtheintegrationofEuropeanwholesale To putitinanotherway, market couplingcanbeauseful less significantthanitwasbeforehand. divergence stillexistsbetweenthetwomarkets, thoughitis of themarket couplingintheautumnof2012.However, price Slovakia becamealmostnegligible aftertheimplementation On theotherhand,adversepower flows betweenHungaryand 2012 (right axis)Crossbordertrade/consumptionratio 8 1 1 1 1 3 5 7 6 5 4 3 2 1 12 11 10 9 27 shows. 2013 8 1 1 12 11 10 9 10% 5% 6% 7% 8% 9% 25 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014

country andall28 comment ondraftversionsof the reportsrelatedto their Authorities (NRAs) have been given the opportunity to NRAs’ national reports for 2012.National Regulatory by theNRAs.Typicallythisinformation istaken fromthe switching rates,regulatedpricesandHHIsismostlyprovided Information includedinthetablewithkey indicatorson & AdequacyRetrospect2012. generation capacityistaken fromENTSO-E’s Yearly Statistics (partly) installedgenerationcapacity. Alternatively, installed number ofcompanies,market shares,market values,and is sourced from Eurostat. This holds for information on the of theinformation includedinthetablewithkey indicators changes aresourcedfromEurostat.Alsoasignificantpart gross electricity generation and electricity and gas price the countryreportsongrossinlandenergyconsumption, Eurostat. Thedatausedtoproducethefiguresincludedin As tothedataused,primarysourceofinformation is supply situationhasbeenadded. country anewChapterontheelectricityandgassecurityof November 2012.Thereisonesignificantdifference: foreach together withtheInternalEnergyMarket Communicationof the structureusedinpreviousreportsaspublished structure andset-upofthesereportshasbeenchosenas half of2014.Inordertoallow for comparabilityasimilar information availabletotheCommissionduringfirst These countryreportsarebasedonthemostrecent States oftheEuropeanUnion. and functioningoftheenergymarket inthe28Member quantitative andqualitativeterms,oftheimplementation Document is to take stock of thestate of play, both in The purposeoftheCountryReportsinthisStaffWorking Introduction 2.

Country NRAs havedoneso.

reports sources areincludedinthereports. NRAs, TSOs,ACER, CEERandDGEnergy. References tothese Frequently usedsourcesarepublicationsby Ministries, information fromavarietyof(mostlynational)sources. markets, infrastructure andsecurityofsupplycontain The chapters on the regulatory framework, wholesale this chapteristypicallyprovided by NRAs. The smart metersistaken fromvarying national sources. DG SANCO’s market monitoringsurveys.Thenumberof information onconsumersatisfactionfromtheCommission’s The chapterineachcountryreportonconsumerscontains Austria, Finland, GreeceandIreland. able toprovide meaningfulgraphsrelatedtogaspricesfor 2014. On the basis of the data gathered we have not been of theEnergyPricesandCostsCommunicationearlierin up ofthedatagatheringexercisecarriedoutincontext development between2009and2012.Thisworkisafollow- a networkandtaxcomponentdemonstratingthe showing thecompositionofthesepricesinanenergy, individual breakdown ofgasandelectricity retailprices, In thesereportswehavealsostrivedtogiveacountry-

remaining information onconsumeraffairsincludedin

27 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 28 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 and 0.12%respectively plants (30.9%).RESandsolidfuelsaccountedfor 14.2% by nuclearpower (withashareof48.6%)andby gas-fired The power generationmixin2012(82.9 decreased by 2.8%in2012comparedtothe2011level. consumption reached6.8% In 2012,theshareofrenewablesingrossfinalenergy have yettobealignedwithregionalinitiatives. to reduceitsgreenhousegasemissionsby 15%,butthese achieve its2020nationalREStarget.Belgiumalsohasplans 23 22 21 20 19 Belgium’s renewable energy target is 13% by 2020 energy mix(withsharesof5.3%and5.9%,respectively) renewable energysources(RES)werelessimportantinthe gas (27.0%),andnuclearenergy(18.5%).Solidfuels largely oncrudeoilandpetroleumproducts(39.0%),natural Gross energyconsumptionin2012(56.3 Generaloverview 1.

Eurostat. National Reform Programme2013, April 2013. ACER/CEER AnnualReporton the ResultsofMonitoringInternal http://ec.europa.eu/energy/publications/doc/2014_pocketbook.pdf Eurostat. Electricity andNatural GasMarkets in2012,November 2013.

BELGIUM 20 . ElectricitydemandinBelgium 23 andthecountryisontrackto → → → → Key issues costs andareincentivebased. as regionallevelisessentialtoensurethatallnetworktariffsreflectefficient network operationsanddevelopment.Properregulatoryoversight atfederal aswell Belgium should also ensurethatdistributionchargesreflectefficientcosts ofdistribution, gas andelectricitypricesisobserved,italsopassedontothefinalconsumers. enhanced retailcompetition.Thisisnecessarytoensurethatwhendecreaseinwholesale Belgium shouldtake measurestofurtherstimulateconsumerempowerment leadingto pursued. Enhancedinterconnectioncouldhelptoaccommodatepeaksindemand. integrate thephysicalgridandelectricitymarkets withneighbouringcountriesshouldbe countries anddemandsideresponsearerequiredtotacklesuchrisks.Efforts tofurther neighbouring of supplywillincreaseintheupcomingyears.Increasedcooperationwith Due to changes inthe generation mixandretirementofcapacity, risks for security that tendtoreducethemarket shareofincumbentsuppliersontheretailmarkets. The level of market concentration remains high, despite a high switching rate of consumers TWh) wasdominated Mtoe) wasbased 19 21 22 . . Gross inlandconsumptionmix2008-2012 1 FIGURES 10% 20% 30% 40% 50% 60% 10% 15% 20% 25% 30% 35% 40% 45% Sources: EU energy infigures-“StatisticalPocketbooks 2012and2013”, Gross electricitygenerationmix2008-2012 Source: Eurostat 0% 0% 5% 2008 2008 European Commission Nuclear Solid fuels Nuclear Solid fuels AND 2 2009 2009 Natural gas Renewables Natural gas Renewables 2010 2010 Crude oilandpetroleumproducts Crude oilandpetroleumproducts Other Other 2011 2011 2012 2012

(45.22%), founded in2001when Eliawasestablished. core shareholderisthemunicipalholdingcompanyPubli-T Elia hasbeenlistedonthestockexchangesince2005.Its 11 natural gason12 6 Belgian TSOfor electricityasfullyownership unbundledon The CREGcertifiedS.A.EliaSystemOperator(Elia)asthe Unbundling low-pressure networks). distribution ofgasandelectricity(low-voltage (≤70kV)or are now responsiblefor thecontroloftariffsregardingpublic (CWaPE inWallonia, VREGinFlanders,BRUGELBrussels) has beentransferred totheregions.Regionalregulators 1 July 2014, the competence for setting distribution tariffs application, determination and exemption of tariffs. Since that theregulatorhadexclusivejurisdictionwithrespectto the ConstitutionalCourtof7 provisions ofthelawJanuary2012anddecision Its independencefromtheMinistrywasincreasedby the 25 24 3 Gaz”) employed 64 the CREG(“CommissiondeRégulationl’Électricitéetdu In January2014,theBelgianfederal energyregulator, National RegulatoryAuthority implemented asof1October2012. gas market a newentry-exittransmissionmodelwas To furtherincreasecompetitionandliquidityintheBelgium ignited theirinterestinchangingproviders. Belgian consumerstobecomemoreprice-consciousand measures andthesubsequentpublicdebateencouraged based onopaqueindicesandinformation asymmetries.These contracts, protectingtheconsumeragainstpriceincreases to increasetransparencyandpricecomparabilityinvariable 31 December2012.TheaimoftheBelgianauthoritieswas gas priceswascappedprovisionally from1April2012to The indexation of the energy component of electricity and increasing thecompetenceofregionalauthorities. at thesametimestrengtheningconsumerprotectionand an increase in the powers of the national regulator, while law by alawissuedon8 The Third Energy Package was transposed into national General Regulatoryframework 2.

directors) andhadanannualbudgetofEUR January 2012,alongwithS.A.FluxysBelgiumasTSOfor http://www.creg.be/fr/index.html CREG, AnnualReport 2012,2013. July 2013. October 2012andInterconnector(UK)on employees (including1 January 2012.Thisresultedin August 2013,whichconfirmed president and 14 952 24 254. 25

concept ofprivatedistributionnetworks. not (yet)beenintroduced,butitslegislationprovides for a Brussels-Capital regions, the new concept of CDSs has law intheFlemishandWalloon region.IntheWalloon and Distribution Systems(CDS),havebeentransposedinto Directives 2009/72/ECand2009/73/EC,relatingtoClosed less than5%eachandnineofthesedonotevenreach1%. remaining fifteensupplycompaniesholdmarket shares of strengthened itsthirdplace(10.2%in2012,up1.6%).The 31.9% market share(+4.5%in2012).EDFLuminusalso GDF Suezisthesecondlargestsupplieronmarket with Power with a market share of 36.9% in 2012 (2011: 45.7%). gas wholesalemarket. ThelargestsupplierwasEniGas& Eighteen supplycompaniesoperatedin2012ontheBelgian Gas and totaled42attheendof2013. Day-Ahead Market hasincreasedsignificantly inrecentyears of 2012. The number of market participants on the Belpex a reducedavailabilityoftwonuclearpower plantsattheend (2013). Thesharpincreaseintradedvolumecorrelateswith trading volumeincreasedfrom12.3 two euroslower thanin2011.Atthesametimetotal market Belpex was slightly higher than in 2012 and about market in2013 (EUR 89% in2013.Theaveragepriceonday-aheadwholesale Electrabel, EDFLuminusandE.ONhadamarket shareof significantly in the last 5 generation market shareofElectrabel(2013:67%)dropped of 4 concentrated (HerfindahlHirschmannIndex–HHI-in:2013 The Belgianelectricitygenerationmarket isstillhighly Electricity Wholesalemarkets 3. for the24 of theThirdEnergyPackage intheirrespectivelegislations Capital havealsotransposedtheDSOunbundlingprovisions The regionalgovernments ofFlanders, Wallonia andBrussels- and CaissededépôtetplacementduQuébec(20%). Belgium, isowned by amunicipalholdingPubligas(77.7%) (89.97%). FluxysHolding,parentcompanyofS.A. Brussels (10.03%),BelgiumState(1%)andFluxysHolding Major shareholdersofS.A.FluxysBelgiumareEuronext 27 26

HHI andmarket sharebasedongenerationcapacity. CEER, StatusReviewontheTransposition ofUnbundling DSO-Unbundling_Status%20Review_Public.pdf PUBLICATIONS/CEER_PAPERS/Cross-Sectoral/Tab/C12-UR-47-03_ http://www.energy-regulators.eu/portal/page/portal/EER_HOME/EER_ Requirements for DSOs andClosedDistributionSystemOperators, 700 and7 electricity and18 390 in2008)butithasbeenimproving asthe 47.45/MWh) attheBelgianexchange years gas DSOs. 27 . The three largest firms, TWh (2011)to17.0 BELGIUM 26 Articles 28 of TWh

29 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 30 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 new entry-exitregime. trading pointZTP(L)(ZeebruggeTrading Point)aspartofthe This effect wassupportedby therecentlysetupvirtual 29 28 of 45%(2011). was ElectrabelCustomerService(ECS)withamarket share concentration wasstillhighin2012.Thelargestsupplier Despite reductionofthelargestthreeplayers’market shares, Electricity Retailmarkets 4. improved (HHI2013:2 The levelofmarket concentration,althoughstillhigh,has Source: Eurostat BELGIUM Electricity pricechangeby component2008-2013(in€cent/kWh) 3 FIGURES 10 15 20 25 (< 1 (61.9% in2012).However, theshareofshort-termcontracts contracts (duration>5 by 3.3%.Mostgassupplyisprovided viadirectlongterm 10.7% andconsumptionby industrialcustomersdropped (possibly combinedwiththeproductionofheat)droppedby However, atthesametimeconsumptionfor electricitygeneration distribution networksincreasedtheirconsumption(+11.5%). (+1.2%) eventhoughend-consumersconnectedtothe The totalnaturalgasconsumptionwasconstantat185.6 emerging companies. 0 5

CREG, AnnualReport 2012,2013. CREG NationalReport 2014totheEuropeanCommission and ACER, July2014. year) grewfrom22.3%in2011to33.9%2012. 2008 Taxes+Levies HOUSEHOLDS AND 4 2013 332) years) withnaturalgasproducers 28 Networks , aspressureisexertedby 2008 INDUSTRY Energy+Supply 2013

TWh TWh 29

0 1 2 3 4 5 6 7 8 0.0914/kWh. and for industrialconsumersfromEUR remaining 24%. costs was37.25%.Taxes andotherleviesmadeupfor the was 38.75%ofhouseholdprices,whilethesharenetwork EUR The electricitypricesfor householdconsumersdeclinedfrom Sources: EC,EPCRmetadata Natural gaspricechangeby component2008-2012(in€cent/kWh) 31 30 regulators werenegative. of thecost-benefitanalysisconductedby theregional meters intheelectricityandgasmarkets astheoutcome proceed until2020withthewide-scaleroll-outofsmart Belgium formally decided,undercurrentconditions,notto Smart meters supplier. to 6 76.01%. TheHHIalsofell intheBrusselsregionfrom7 largest threeretailingcompaniesfell from91.26%to especially intheFlandersregion,market shareofthe On thegasmarket, concentrationisstillhigh.In2012, Gas electricity enteredintoforce. a VATApril 2014, On 1 on21% to6% from reduction

Ref: C13-RMF-54-05 StatusReviewofRegulatoryaspects Eurostat. of SmartMetering. 476. Asin the electricity market, ECSwas the largest 0.1590/kWh in2012toEUR 2008 Taxes+Levies HOUSEHOLDS 30 In2013theshareofenergyandsupplycosts 30 2012 31 Networks 0.1583/kWh in2013 2008 INDUSTRY 0.0950/kWh to Energy+Supply 2012

402 30

to the11 75.6 7.4 (highest and 2 improved by 6.7 of consumerscomplainingishigherthanaverage(2 problems in both markets is below the EU average, the number 34 33 32 as theonemonthnotificationperiodisrespected). take placeatany momentwithoutcancelationfees (as long regulatory guidancespecifiedthatcontractterminationcan switching wasorganisedby aconsumerorganisation.New place in2012werecontinued2013;atleastonecollective energy purchases. The information campaigns that took tools for comparingenergyprices;andpromotionofjoint informing andassistingconsumersinusingcomparison provider; acampaignorganisedtogetherwithlocalcommunes a modificationoftheenergylawmakingiteasiertoswitch linked toseveral measurestaken by theBelgiangovernment: The improvement ofmarket performance from2012couldbe markets isabove EUaverage(75.7 Consumers’ assessmentof the retailgasand electricity Consumers 5. cost-benefit analysis(CBA) for thesmartmeteringroll-out. Brussels-Capital) hasbeeninchargeoftheirregion-specific Each ofthethreeBelgianregions(Flanders,Wallonia and to thirdpartiesis3 in thecaseofgasservices).Especiallysharecomplaints 3 the 5 and choiceofproviders andthe easeofswitchingarewithin provider intheEU(about3 highest proportionofconsumersswitchingtariffplanorservice rd

highestintheEUfor thegasmarket). Whiletheincidenceof 10 However thedifference isnotstatistically significant. Two different CBAs were realisedonbehalfofVREG: edition/index_en.htm consumers/consumer_evidence/consumer_scoreboards/10_ not togoaheadwithawide-scale roll-out until2020. The Walloon regionhasdecided,undercurrentconditions, negative, whilethe ‘SmartMeterfriendly’scenarioispositive. The resultsreportedarethefollowing: the‘Fullroll-out’is roll-out inWallonia hasbeenrealisedin2012by CWAPE. value for allfour consideredscenarios. ACBAfor smartmetering of Brusselscapitalby BRUGELresultsinnegative netpresent areas ofFlandersduringtenmonths.TheCBAfor the region of 1 started installingnewsmartgasandelectricitymetersas Nevertheless, intheFlemishregion,EandisandInfrax (DSOs) to beinconclusive asitdoesnotyieldastrongpositive result. However theresultunder thereference scenarioisconsidered the reference scenarioresultsinapositive netpresentvalue. Among thethreescenariosconsideredin2011CBA,only the firstin2008andasecondone2011. th vs. 72.0,respectively),whichinbothcasescorresponds best ratings in the EU (the latter component is assessed best ratingsintheEU(thelattercomponentisassessed ConsumerMarkets Scoreboard,http://ec.europa.eu/ October 2012.50 th positionintheEUranking.Thegasmarket has points since2012andtheelectricitymarket by nd rd highest in the EU). Both markets have the highestintheEU. 000 times higher than the EU average), times higherthantheEUaverage), meters willbeinstalledindifferent 34 points vs.74.1

nd highest highest

and

32 Luxembourg. with itsneighbours –Germany, France, TheNetherlands,and West Europe. In addition,Belgiumisalsowellinterconnected contributes significantlytothe securityofsupplyinNorth- several pipelinesandasanimportant LNGterminal,which International trade as a collection of connection points of the developmentofZeebrugge hubisattracting and servesasanimportanttransitcountry. Inparticular, Belgium occupiesakey positionintheEuropeangasgrids Gas with Luxembourg. Germany. Finally thereisanotherinterconnectionproject project willalsocreatethefirstdirectinterconnectionto to theUnitedKingdomviaNorthSea.The“ALEGro” supply. The“NEMO”projectwillcreatethefirstinterconnection they arecrossborderconnectionsandimprove securityof with theguidelinesonTrans-European energynetworkas Several projectshave been identified asPCIsin accordance Belgium andintheregion. frequently fromGermanyandhelptostabilizethegridin which limittheimpactofloopflows whichoriginatemost at theinterconnectionpointalsoincludesphaseshifters, Netherlands, France andLuxembourg.Theinfrastructure transmission networkandhasconnectionswiththe The Belgiannetworkforms anintegralpartoftheEuropean Electricity the CoordinationCommitteehasbeensigned. the FederalStateandRegionsonestablishmentof the TEN-E Regulation and a cooperation agreement between the permitting of Projects Common Interest (PCIs)pursuant The Belgianauthoritieshaveestablishedaone-stop-shopfor Infrastructure 6. were consideredadmissible. 8 to Energy received8 and 230 remained stablecomparedto2011(400 The numberofcustomersbenefitingfromsocialtariffs for Wallonia, asreportedby regionalregulators. in Belgium.Apositiveoutlookisseenfor Flanders,butnot However, thereisstilldivergenceamongthevariousregions seen inneighbouringcountries. gas component is now moving closertotheaverageprices CREG. Asaresult,theaveragepriceofelectricityand regulation thesepricesareconstantlymonitoredby the transparent andthroughtheintroductionofsafety net provisional capping. Since 2013,suppliers’pricesaremore kept theirpricesconstantin2013aftertheendof Customers becamemoreprice-consciousandsuppliers 736 000 for gas).TheFederalMediationServicefor complaints in2011).Ofthesecomplaints,50% 331 complaints during2012(compared 000 for electricity BELGIUM

31 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 32 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 ( Sources: Eurostat,CEER,NationalRegulatoryAuthority, ECcalculations. units whichhavereducedthegenerationcapacityby 3 been exacerbatedby unforeseen outagesinmajornuclear in theconstructionofhigh-voltagelines.Thesefactorshave delays inseveralnewplantsfor fossil-based generationand generation adequacyinBelgium:thenuclearphase-out, A combinationoffactorshasledtoconcernsabout Electricity SecurityofSupply 7. as PCIs. In total, ten projects involving Belgium have been identified Italy (reverse-flow onTENP). improve theinterconnectionof theBelgiumgasmarket to also qualifiedasPCI.Inaddition,thereisanotherprojectto for loadingandunloadingatZeebruggeterminalwhich Dunkirk andFluxysLNGwillbuildasecondlandingstage additional interconnectionlinestotheLNGterminalin Based onmarketbuildconsultation FluxysBelgiumwill BELGIUM BELGIUM – KEYINDICATORS 1 ) Electricity market value( HHI inelectricityretailmarket HHI inpower-generation market Regulated pricesfor non-households–electricity Regulated pricesfor households–electricity Switching rates(entireelectricityretailmarket) Number ofmainelectricityretailers Number ofelectricityretailers Market shareofthelargestpower-generation company Number ofmainpower-generation companies Number ofsmartmetersinstalled Peak demand(MW) Installed generationcapacity(MW, 2012) of Number ofcompaniesrepresentingatleast95% ELECTRICITY and gasconsumptioninthehouseholdnon-householdsectors(average bands)andannualaverage retailprices. Market valueis anestimationofthesizeretailelectricityandgasmarkets. Itiscalculatedusingdata onelectricity net power generation

1 ) (bn€) 3 3 4 4 No No 10% 4 33 65.8% 2 N/A 14 20 46 9.677 000 010 234 800 GW. anticipated growing demandfor naturalgasinLuxembourg. will beenhancedinordertoablecomplywiththe conditions. Finally, the gas network towards Luxembourg order tostabilizetheflows to the UKandtofulfilgasquality storage tankinDudzelewithanewLINblendingfacility Fluxys Belgium reactivated the former liquid nitrogen (LIN) and exitcapacitiesbothintheEastWest. Moreover, on therTr/VTN pipelineinWinksele, whichincreasesentry the networkwasenforced withanewcompressorstation Following thetransitiontoan entry-exitmarket model, Gas construction ofnewCCGTplants. Belgian government haslaunched acallfor tenderfor the In themediumterm,inordertoencourageinvestments, black-outs inaworst-casescenario. controlled regionalpower cuts hasbeenpresentedtoavoid reserve andindustrialloadreduction.Anupdatedplanfor address thesituationwhichincludeanincreasedstrategic Elia, asTSO,andtheGovernment havetaken measuresto HHI ingasretailmarket HHI ingassupplymarket Regulated pricesfor non-households–gas Regulated pricesfor households–gas Switching ratesfor gas(entireretailmarket) Number ofmainnaturalgasretailers Number ofretailerssellingnaturalgastofinalcustomers Market shareofthelargestentitybringingnaturalgas Number ofmaingasentities GAS into country Number ofentitiesbringingnaturalgas Gas market value(

1 ) (bn€)

3 3 4 4 No No 11.2% 4 22 N/A N/A N/A 4.505 900 000 10% 15% 20% 25% 30% 35% 40% 45% Source: Eurostat Gross inlandconsumptionmix2008-2012 1 FIGURES Compared to2011,solidfuelsdecreasedsignificantly. (36.3%), followed byand oil(20.1%). nuclear(21.4%) country’s energy mix was largely based on solid fuels 18.2 Gross nationalenergyconsumptionin2012reached Generaloverview 1. 0% 5% Mtoe, adecreaseof4.5%comparedto2011.The 2008 Nuclear Solid fuels BULGARIA AND 2 2009 Natural gas Renewables 2010 → → → → Key issues authority anditsadministrativecapacityintheenergysector. Bulgaria shouldalsostrengthentheindependenceofnationalregulatory on theBulgarianelectricityandgasmarkets. reducing thedominanceofincumbentcompanyandintroducemorecompetition ownership unbundlingofthetransmission systemoperatorswouldessentiallyhelp The progressivedismantlingoftheBulgarianEnergyHoldingconglomerateandan transmission operatorshouldbecompleted. should beresolvedandpromoted.Thecertificationprocessoftheindependentgas and the delays observedin developing interconnectionswithneighbouringcountries and thetransitsystemviaadequatecapacitylevelremainsanoutstandingissue With regardstothegasmarket, connectionofthedomesticgastransmissionsystem of electricityinterconnectionpointsandenhancethecapacitytocopewithdisruptions. retail market. Furthermore,aneffort shouldbemadetoacceleratetheimplementation businesses connectedatlow voltage andtake necessarystepstowards acompetitive phase outregulatedelectricitypricesalsofor householdsandsmallmedium-sized and thecurrentsingle-buyermodelshouldalsoberemoved. Bulgarianeedstogradually for power plantsintheregulatedsegmentofmarket shouldbephasedoutgradually power exchange and day-ahead market should be increased. The existing quota system functioning balancingmarket includingputtingintoplaceanorganisedindependent generation. To attractindependentproducersandtraders,efforts onestablishingawell- Elektricheska KompaniaEAD(NEK)andcharacterizedby anovercapacity inelectricity Energy Holdinganditsdaughter, thenationalelectricitysupplycompanyNatsionalna With regardstoelectricity, thedomesticmarket isdominatedby theBulgarian Crude oilandpetroleumproducts 2011 2012 10% 20% 30% 40% 50% 60% Sources: EU energy infigures-“StatisticalPocketbooks 2012and2013”, Gross electricitygenerationmix2008-2012 contributor beingsolidfuels,followed by nuclearpower. generation in2012reached47.3 the contributionby oilisnegligible(0.3%).Grosselectricity (4.1%) alsohadavisiblepresenceintheelectricitymix,while nuclear power (32.1%).Renewables(9.3%)andnaturalgas the largestcontributorbeingsolidfuels(54.2%),followed by Gross electricitygenerationin2011reached50.8 0% 2008 European Commission Nuclear Solid fuels 2009 Natural gas Renewables 2010 Crude oilandpetroleumproducts TWh, withthelargest 2011 TWh, with 2012

33 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 34 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 generation since 2008,whenitrepresented10%ofgrosselectricity and respectinggeneralprinciplesofconflictinterest. manner basedontransparentlydefinedprofessional criteria Chairperson ofSEWRCshouldtake placeinamoretransparent the managementofRegulator. Theselectionofthe the independence,professional stabilityandcontinuityof four times in the course of 2013, raises concerns about its legal tasks.The fact thatSEWRC’s Chairpersons changed stable andhighqualitystaffthatisdemandedtocarryout The currentbudgetdoesnotallow SEWRCtobuildupthe a significant increase of resources and number of employees. increased by EUR approximately EUR SEWRC employed 128 electricity, heat,naturalgas,waterandsewerage.In2012, SEWRC isanautonomousregulatoryagencyresponsiblefor Water RegulatoryCommission(SEWRC),established in1999. The BulgarianEnergyRegulatoristheStateand National EnergyRegulator above thecapwillbepurchasedatregulatedretailprice. purchased atthefeed-in tariffpricewasamended.Production transit“ amended in 2013 to abolish the “green surcharge for The Renewable EnergyAct, adopted in July2012 was energy consumptionwas16.3% for 2020is16%.In2012,therenewableshareingrossfinal production. 40 39 38 37 36 35 the Directives2009/72/ECand2009/73/EC The EnergyActwasamendedinJuly2012toimplement General Regulatoryframework 2. Cogeneration BULGARIA Directive 2010/31/EC Efficiency ActwasamendedinFebruary2013toimplement already achieveditsnational2020REStarget.

http://www.kpmg.com/BG/en/IssuesAndInsights/ArticlesPublications/ Ecologic, “Assessmentofclimatechange policiesinthecontext Ecologic, “Assessmentofclimatechange policiesinthecontext SEWRC, Annualreport2012,July2013. Eurostat. The shareofelectricityproducedincombinedheat the-Renewable-Energy-Act-effective-from-1-January-2014.htm Newsletters/Legal/Documents/2014-01-Important-amendments-to- of theEUSemester”,Issue03/2013, June2013. Report for DGClimate Action,2013. of theEuropeanSemester, CountryReport:Bulgaria”, and power plants(CHP). 39 andintroduceafee (ortax)for solarPVandwind 36 40 . The country’s overall renewables target share Alsothelimitationonvolumeofelectricity 35 (with6.7%in2011)hasbeendecline 70 1.86 000 in2013,thisdidnottranslateinto 38 . staff, withanoperatingbudgetof million. AlthoughSEWRC’s budget 36 andBulgariahasthus 37 andtheEnergy

high voltagenetworkandsomemediumconsumers. market in2012includedmainlyconsumersconnectedto a supplierandcommercialexports.Theopenelectricity in 2012, including consumers usingtheirrightto choose About a third of theelectricitymarket was first opened and day-aheadmarket inelectricity been licensedfor operatinganorganizedpower exchange group, IndependentBulgarianEnergyExchange(IBEX),has withdrawn andistoberesubmittedintheautumnof2014 have lessthan100 distribution companiesarelegallyunbundledsincethey companies arelegallyunbundled.Noneofthe30 by CEZ,EVNandEnergo-Pro. Thedistributionandsupply The electricitydistributionnetworkisprivatized and owned were amendedinMay2014 of theelectricitytransactions.TheRulesonElectricityTrade operates mainly at regulated prices, covering roughly half than EUR at awiderangeofprices,fromEUR quota andpriorityrules.Asaresult,NEKpurchaseselectricity Dispatching of power plantstakes place basedonregulated producers atregulatedprices. electricity produced by CHP plants, renewables and industrial suppliers. Moreover, NEKhasthelegalobligationtopurchase the soleelectricitysupplieratregulatedpricesfor end the power generatorsonthehighvoltagegridandremains of theinstalledcapacity. NEKactsasasinglebuyerfrom its subsidiaryNEK,holdgenerationassetsrepresenting45% The state owned Bulgarian Energy Holding EAD (BEH) and Electricity WholesaleMarkets 3. 2014. was submittedtotheEuropeanCommissionuntilSeptember transmission operator, althoughnodraftcertificationdecision now abletostarttheprocessofits certificationasanindependent phase ofitssplitfromtheElectricitySystemOperator(ESO).ESOis the publicproviderIn February2014, NEKcompletedthelast Unbundling 46 45 44 43 42 41 gas transmissionoperator an applicationtoSEWRCfor certificationasanindependent

SEWRC’s decisionof31 State GazetteofBulgaria, issue39of9 SEWRC, Annualreport 2012,July2013. http://ec.europa.eu/energy/gas_electricity/interpretative_notes/ http://www.bulgartransgaz.bg/ http://powermarket.seenews.com/news/bulgarias-beh-says-nek- certification_en.htm eso-split-up-completed-403143 41 In April 2013, the gas TSO Bulgartransgaz EAD submitted InApril2013,thegasTSOBulgartransgazEADsubmitted 350/MWh. Overall,theBulgarianelectricitymarket 000 March 2014. customers. 42 . SEWRC’s initialdraftdecisionwas 45 ; acompanywithintheBEH 44 46 . May 2014. 21/MWh uptomore gas 43 . include thetransit. Energy Package, however this system is not envisaged to an entry-exitmodel,tomeettherequirementsofThird capacities. BulgartransgazEADisexpectedtoimplement transport contractswithpreferential accesstocross-border oversight by SEWRCandbasedonhistoriclongterm alia Turkey and Greece are excluded from theregulatory fee). Atpresent,transitflows throughBulgariatointer The tariffmodelfor transmissionis“postagestamp”(flat end users. Russia andsoldgastoitsdistributioncompaniesaswell Gazprom, enteredthegasmarket, whichimportedgasfrom gas importer. In2013,asecondtrader, affiliatedwith Bulgargaz EAD,whichispartofBEH,thelargestnatural Bulgaria largely depends on gas imports from Gazprom. Gas 2014 comparedtopreviousyears. imposed onpower generatorselectricityexportsincreasedin neighbouring markets. Following theremoval ofsurcharges produced electricitywascurtailedtwicefromBulgariatothe In JanuaryandFebruary2012,theexportofdomestically neighbouring markets havingsufficienthydroresources. decreasing demandfromtheGreekmarket and other 47 country output. share of net country exports was 20.4% of the net electricity Traditionally Bulgaria is a net electricity exporter. In2012,the Source: Eurostat 10 Electricity pricechangeby component2008-2013(in€cent/kWh) 3 FIGURES 0 1 2 3 4 5 6 7 8 9

SEWRC, Annualreport 2012,July2013. 2008 Taxes+Levies HOUSEHOLDS AND 4 47 Thiswaslower than2011becauseof 47 2013 Networks 2008 INDUSTRY Energy+Supply 2013 0 1 2 3 4 5 6 industrial users)werealsosignificantfactors costs, althoughVAT risesandhigherdistribution costs(for drivers behindthesepriceriseswereenergyandsupply 49.2% for industrialusersfrom2008to2012.Themain levies) increasedby 42.2%for residentialconsumersandby highest inEurope.Naturalgasprices(includingtaxesand gas prices for the average consumer in Bulgaria are the customers. Taking purchasingpower into account,retail natural gascloseto4%,for bothhouseholdandindustrial In 2012,Bulgariaregisteredanannualpricedecreasefor for non-householdsand70.2 incentive for traderstoenterthissegment. consumers, thereisnobenefitinswitchingand switching isobserved.Duetotheregulatedpricesfor household Although electricityconsumersareallowed toswitch,noactual of thetotalelectricitypricefor householdconsumersinBulgaria. the low voltagelevel.Therenewableschargemakes upfor 15% From thebeginning of2013,themarket wasonlyregulatedat 2012, 8 The retailelectricitymarket remainedhighlyconcentrated.In Electricity RetailMarkets 4. Sources: EC,EPCRmetadata Natural gaspricechangeby component2008-2012(in€cent/kWh) 49 48 compared to2012 Overall gasdemandinBulgariaincreased2013by 7% Gas

The EC,EnergyPrices andCostsreport,2014. ACER/CEER AnnualReportontheResultsofMonitoring theInternal Electricity andNatural GasMarkets in2012,November 2013. out of total 24 2008 Taxes+Levies HOUSEHOLDS 48 . Thetradedvolumeswere2 2012 power retailers took 92% of the market. mcm for households. Networks 2008 BULGARIA 48 INDUSTRY 49 Energy+Supply . 854.8 2012 mcm

35 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 36 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 place amongtheEUcountries). since 2012.Thismarket scoresparticularlylow ontrust(lowest 53 52 51 50 load of7.8 Total installedcapacityin2012was13.8 Electricity environmental assessmentprocedures. legislative andnon-legislativemeasuresstreamliningthe granting processfor projectpromoters,andtheadoptionof including thepublicationofmanualonpermit 2013), andothermeasuresforeseen for 2014and2015, for ProjectsofCommonInterest(PCIs)(dueby 16 Regulation, including the establishment of the one-stop-shop timely adoptionofthemeasuresstemmingfromTEN-E The Bulgarianauthoritiesshouldensureaproperand Infrastructure 6. transmission networkandgasdisruptions. were concernedwithdelaysingettingconnectedtothegas gas licensees.Themajorityoftherelatedcomplaints licensees werefiledatSEWRC,and45 against licensees.In2013,2 the SEWRCincludereviewofcomplaintsconsumers smart meteringwasnoteconomicallyviable.Thepowers of In July2013,SEWRCconcludedthattheimplementationof below theEUaverage(72.0 The gas market in Bulgaria is scoring better, although also proportion ofcomplaints(whicharejustbelow theEUaverage). problems, switching and ease ofswitching),except for the in providers, overall consumersatisfaction,choiceofproviders, second lowest onallcomponents surveyed(comparability, trust in the28EUMemberStates.Themarket scoresthelowest or In fact, it has the lowest scoreofall surveyed services markets the verybottomofdomesticranking31 decrease inscore(6.9 in theEU(48.9 The retailelectricitymarket inBulgariaisby farthelowest scoring Consumers 5. exclusively intheirlicensedareasofoperation. supplier, noactualswitchingisobservedasDSOsoperate Although consumershavetherighttoselecttheirnaturalgas BULGARIA vulnerable customersaredefinedintheEnergyAct. 18 several PCIs under the guidelines for trans-European energy

ENTSO-E, YSARReport 2012. SEWRC, Annualreport 2012,July2013. 10 However thedifference isnotstatistically significant. consumer_evidence/consumer_scoreboards/10_edition/index_en.htm th

position in the EU and has seen an increase of 2.1 th ConsumerMarkets Scoreboard, http://ec.europa.eu/consumers/ GW observedinFebruary2012. points compared to 72.0) and has seen a highest points comparedto72.0)andhasseenahighest points) since 2012. The market is also at points) since2012.Themarket isalsoat points vs.74.1 332 51 complaints against electricity complaints againstelectricity complaints against 50 52 GW, withthepeak , corresponding to , correspondingto From July2012, services markets. services markets. 53 Thereare November 50

points points line, hasbeensuspended. connection ofthedomesticRomaniansystemtotrunk delayed. Thereverseflow projectwithRomania,entailingthe However, theinterconnectionbetweenBulgariaandTurkey is from Greecehasbeeninstalledatthelevelof1 June 2014–isfacingdelays.Firm reverseflow capacity with Romania–originallyexpectedtobecommissionedin Serbia, Greece,andTurkey isongoing.Theinterconnection Progress ontheinterconnections,PCIs,withRomania, consumption isbelow halfoftheprojectedtransmissioncapacity. from neighbouringMemberStatesintoBulgaria.Annualgas heavy contractualcongestionandthereisminorentrycapacity border. However, cross-borderconnectionpoints suffer from no physicalcongestioninthesystem,eithernationalorcross- region andallowing theNorth-Southconnection accommodating thehighpenetrationofrenewablesin lines in theNorth-Eastern part of Bulgaria is envisaged, construction oftwonew400kVsubstationsandthree To increasethesecurityofsupplyinBurgasregion, the constructionof194 the improvement ofthegasdistribution infrastructure,through In 2013,approximatelyEUR Gas new renewablecapacitiesincertainregionsofthecountry. and lineswereconstructedtosatisfytherequirementsfrom the transmissionnetworkwasrealisedandnewsubstations 2012. Anumberofreconstructionsandanenlargement transmission systemwereapproved by theRegulatorin Technical measuresandrehabilitationoftheelectricity Another importantPCIishydro-pumpedstorageinYadenitsa. border capacityand open North-South priority corridor. lines withGreeceandRomaniathatincreasethecross- infrastructure tobedevelopedwithintheinterconnecting 55 54 and non-scheduledinterruptionswerelower thanforecasted. the interconnectorswithneighbouringcountries.Scheduled cross-border capacities.Short-termcongestionswererarein supply andcongestionsintheelectricitysystem,including has notfacedanysignificantproblemsrelatedtosecurityof issues. Theelectricitytransmissionnetworkofthecountry Eastern Europe,andthusfacesnoparticularsecurityofsupply Bulgaria isoneofthelargestelectricityexportersinSouth Electricity Securityofsupply 7.

ENTSO-E, RegionalInvestment PlanContinental SouthEast,July2012. SEWRC, Annualreport 2012,July2013. km ofpipelines 15.7 million has been invested in million hasbeeninvestedin 54 . Currentlythereis 55 . mcm/d. 54 54

( Sources: Eurostat,CEER,NationalRegulatoryAuthority, ECcalculations. there arepossibilitiesfor reversephysicalflow ofnaturalgas poor andstillunderdevelopment.To ensuresecurityofsupply, Interconnections withtheneighbouringcountriesarevery could helpinbalancingdisruptionshighdemandperiods. only limiteddomesticundergroundstoragecapacitiesthat source of gas on a single route by a single supplier. It has In 2014Bulgariaremainsfullydependentonasingle Gas ( BULGARIA – KEYINDICATORS 2 1 ) ) Regulated pricesfor households–electricity Switching rates(entireelectricityretailmarket) Number ofmainelectricityretailers Number ofelectricityretailers Electricity market value( Market shareofthelargestpower-generation company HHI inelectricityretailmarket Number ofmainpower-generation companies Number ofsmartmetersinstalled Peak demand(MW) Installed generationcapacity(MW) HHI inpower-generation market Regulated pricesfor non-households–electricity of netpower generation Number ofcompaniesrepresentingatleast95% ELECTRICITY and gasconsumptioninthehouseholdnon-householdsectors(average bands)andannualaverage retailprices. Market valueisanestimationofthesizeretailelectricityandgasmarkets. Itiscalculatedusingdataonelectricity ACER/CEER AnnualReportontheResultsofMonitoringInternalElectricityandNaturalGas Markets in2012,November 2013. 2 ) (bn€)

Yes 0% 8 24 N/A N/A 5 N/A 7967 10 N/A Yes 20 1.706

236 ( ( 1 1 ) ) Expansion oftheChirencapacityisenvisaged of which250 gas storagefacility, Chiren,withacapacityof550 57 56 reverse flow capacityof0.36 an existingcapacityof4.3 from Turkey. TheKula-Sidirokastrointerconnectorexhibits from Greeceand,aftereventuallyreachinganagreement, Switching ratesfor gas(entireretailmarket) Number ofmainnaturalgasretailers to finalcustomers Number ofretailerssellingnaturalgas natural gas Market shareofthelargestentitybringing HHI ingasretailmarket Number ofmaingasentities HHI ingassupplymarket into country Number ofentitiesbringingnaturalgas GAS Regulated pricesfor non-households–gas Regulated pricesfor households–gas Gas market value(

Bulgartransgaz, 10 Francese, OpeningtheSouthernGas Corridor, Trans AdriaticPipeline,December2012. mcm isreservedfor emergencysituations. 2 ) (bn€) year development plan, 2013-2022. bcm annually, withtheplanned bcm

56 . Thereisanunderground

BULGARIA 0% 3 30 99.8 N/A for 2012, Approx. 1 3 7 7 2 0.434 Yes Yes 57 753 . for 2011 000 mcm,

37 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 38 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 2010. slightly comparingtoelectricity generationin2011,falling 59 58 is increasingandhasreached11.2% the energyconsumptionmix).Therenewableshare largely onfossil fuels,notablycoal(withashareof40%in Energy consumptionin2012(42.78 Generaloverview 1. solid fuels.Cogeneration power generationmixin2011(87.5 to achieveitsnational2020REStargetof13%by 2020.The was above its2011/2012interimtrajectoryandisontrack to solarandhydrocontributions(8%

The shareofelectricity producedincombinedheat Eurostat. and power plants(CHP).

CZECH REPUBLIC 59 provided for 12.8%ofthetotal → → → → Key issues networks costs,whichinfluencetheelectricityprices for end-users. an ageingelectricityinfrastructure(includingthegenerationportfolio) andhigh The majorconcernsregardingsecurityofsupplyrelatetodepletinglignitereserves, order tointegratepower generating facilities,includingdispersedrenewables. The CzechRepublicshouldreinforce itspower distributionandtransmissionnetworkin the CzechRepublicastheyrisksafe operationofitstransmissionnetworks. and energysecurity. Unscheduledpower flows fromGermanyremainabigconcern for Further investmentincross-borderinterconnectorswillincreasemarket competition remains apriority. improved pricestabilityintheregion. Market couplingwiththerestofEuropeanregions Coupling oftheday-aheadmarkets betweentheCzechRepublic,Slovakia andHungary TWh) wasdominatedby 58 58 ). TheCzechRepublic in2012,mainlydue Mtoe) wasbased

Gross inlandconsumptionmix2008-2012 1 FIGURES 50% 10% 20% 30% 40% 50% 60% 10% 15% 20% 25% 30% 35% 40% 45% Sources: EU energyinfigures-“StatisticalPocketbooks 2012and2013”, Gross electricitygenerationmix2008-2012 Source: Eurostat 0% 0% 5% 2008 2008 European Commission Nuclear Solid fuels Nuclear Solid fuels AND 2 2009 2009 Natural gas Natural gas Renewables Renewables 2010 2010 Crude oilandpetroleumproducts Crude oilandpetroleumproducts Other Other 2011 2011 2012 2012 volume ofEUR at thePXEinfutureenergyexchangeproducts(amarket organised spotmarkets. Atotalof19.8 the OTE systemwithanadditional11 112 electricity andgasmarket operator).In2012,atotalof stock companyestablishedin2001whichactsastheCzech (day-ahead andintraday)organisedby OTE, a.s.(ajoint Power ExchangeCentralEurope(PXE),andinspotmarkets In theCzechRepublic,electricityistradedatPrague-based budget ofEUR 8 Republic. In 2012/13, EROemployed 178 ERO) isresponsiblefor energy regulation in the Czech The EnergyRegulatoryOffice(“Energetickýregulačníúřad”, National EnergyRegulator which hadincreasedrapidlyinthepreviousperiod. 2013. Thishasslowed down thedevelopmentofsector new installations except smallhydroceasedat the end of 62 61 60 market shareclose to80% very high.ČEZisthedominantelectricitygeneratorwitha The concentrationofwholesalepower generationremains Electricity WholesaleMarkets 3. incentive schemefor renewables The CzechRepublichasintroducedamendmentstotheir General Regulatoryframework 2. TSO, gastradingcompaniesandstorageoperators. Gas distributioncompaniesarelegallyunbundledfromthe which optedfor thestatusofIndependentOperator(ITO). 2013 EROissuedacertificationdecisionconcerningNET4GAS, electricity TSO,ČEPS.Inthegassector, atthebeginningof In 2012,EROcertifiedtheownership unbundlingofthe Unbundling legal regulationsandintheenforcement ofsanctions. penalisation andremedialmeasuresincasesofviolations the ERO’s powers, inparticular those of supervision,oversight the amendment to the Energy Act which markedly reinforced

Eurostat. http://www.eru.cz/dias-read_article.php?articleId=51 Act no.165/2012 and amendments tocertainlaws. TWh wastradedunderbilateralcontractsregisteredin 944 million doubledcomparedto2011 on promotedenergysources million). 62 . 60 andthesupportfor all TWh tradedinthe TWh wastraded staff. The2012

61 , dueto (TFS) andICAP. 42 was duetonewbrokering activitiesofthreecompanies: contracts (comparedto0.258 significantly in2012andreached107 Trading activityontheCzechvirtualtradingpointincreased Russia wasEUR domestic resellers.Theaveragepricefor gasimportedfrom contracts, but alsoat European energy exchanges, or from bought mostlyfromRussiaandNorwayunderlong-term countries reached76% been successfulsofar. Thepriceconvergencebetweenthe day-ahead markets startedinSeptember2012andhas The market couplingoftheCzech,Slovak andHungarian 68 67 66 65 64 63 ratio in2012wasrelativelyhigh(7.96% Czech power pricesarefullyliberalized.Thesupplierswitching 70% ofthemarket in2012down from85% in 2011. gradually decreasing.Thethreecompaniescovered closeto position ofthreemainpower suppliers,ČEZ,E.ONandPREis Market concentration remainsveryhigh,butthedominant Electricity RetailMarkets 4. of natural gas importsreached6.9 WINGAS GmbH&Co.KG, and VNGEnergie.Thevolume The largestentitiesimportinggaswereRWE Transgas, In 2012,25 Gas compared to2011). approximately EUR The averageCzechdayaheadwholesalepricein2012was allocation withSlovakia isbased onlong-termnominations. place throughCentralAllocationOffice,GmbH.Capacity transmission for German,PolishandAustrianborderstakes coupling. Cross-bordercapacityallocationfor power enabled. between theCzechvirtualtradingpointandSlovakia was

ACER/CEER, AnnualReportontheResultsof Monitoring theInternal Overall, in2011there were 356 http://www.icis.com/resources/news/2012/12/28/9627306/year- http://ec.europa.eu/energy/observatory/gas/doc/qregam_2012_ Eurostat. OTE’s own estimations. Electricity andNatural GasMarkets in2012,November 2013. in theCzechRepublic. in-review-czech-natural-gas-market/ quarter2_quarter3.pdf Financial Services (42FS),Tradition Financial Services entities imported gas into the Czech Republic. 66 37.4/MWh inthethirdquarterof2012 In2012,abi-directionaltransmission 43/MWh for baseloadpower (adecrease 63 afterthelaunchofmarket CZECH REPUBLIC power retailers TWh in2011).Theincrease Mtoe 68 64 ). ). TWh inbilateral in 2012. It was

67 65 .

39 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 40 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 prices for industrialconsumersreachedEUR 0.034 EUR/kWh. consumers reached EUR (Figure components ofnaturalgaspricesfor industrydecreased between 2008and2012asnetworktaxrelated market prices.Gaspricesfor industrialconsumersdecreased but agrowing numberofsuppliersoffer pricesreflectingspot Gas pricesaregenerallydeterminedby long-termcontracts distributed by sixregionalcompanies. number oftraderscontinuestogrow high. EROreportsthattheretailmarket maysaturateifthe 10 2012, there were 59 Competition intheretailsupplymarket isincreasing.In Gas in 2009tomorethan9%2012. grew fromlessthan2%ofthetotalenergybillfor households related totheshareofrenewablesinelectricityconsumption households hasincreasedsince2010(Figure The networkcomponentofelectricenergypricesfor 72 71 70 69 consumers andincreasedfor householdconsumers Between 2008 and 2012, power prices decreased for industrial Source: Eurostat CZECH REPUBLIC 10 12 14 16 Electricity pricechangeby component2008-2013(in€cent/kWh) 3 FIGURES 0 2 4 6 8

Eurostat. Due tothehighlevel ofcompetition, Some ofthesuppliersoffered theirservicesonlyduringapart Eurostat. motivation for newcomers maybelimited. 2003-2012. number ofretailerssellingnaturalgas tofinalcustomers, customer categories.Source:Eurostat,gasmarket indicators, of theyear, whereasothersoffered theirservicestocertain more thanin2011 4). Inthefirstpartof2013,gasprices for household 2008 Taxes+Levies HOUSEHOLDS AND 4 active gas suppliers in the retail market, 70 2013 . Neverthelessconcentrationremains 0.064/kWh. In the same period, gas Networks

2008 71 . In2012,gaswas INDUSTRY Energy+Supply 3). Thelevies 69 2013 . 72 services markets (24 domestic market isalso assessed below theaverage of 31 is 4 electricity andgassectors to proceedwiththeroll-outofsmartmeteringinboth negative. Consequently, aformal decisionwasmadenot deployment, undertaken by theCzechgovernment, was The outcomeofthecostbenefitanalysissmartmeter Smart meters market andhouseholds the pastfew years,ataround12%for boththewholeretail In thegas sector, switchingrateshaveremainedstablein Sources: EC,EPCRmetadata 0 1 2 3 4 5 6 7 Natural gaspricechangeby component2008-2012(in€cent/kWh) 76 75 74 73 (72.0 Retail gasmarket isassessedbelow the EUaverage Consumers 5. energy consumersareprovided withindividualmeters formally requestedtheCzechRepublictoensurethatfinal retail market is above the EU average (72.9 compared to2012.Consumerassessmentoftheelectricity fourth highestscore.Overall,thismarket hasremainedstable highest intheEUwhileeaseofswitchingreceives

However thedifference isnotstatisticallysignificant. http://ec.europa.eu/energy/newsletter/20140205-newsletter.htm http://www.ceer.eu/portal/page/portal/EER_HOME/EER_PUBLICATIONS/ CEER database. of_Regulatory_Aspects_of_Smart_Metering_FOR_PUBLICATION.pdf CEER_PAPERS/Customers/2013/7-1_C13-RMF-54-05-Status_Review_ th lowest intheEU.However, switchingratesarethesecond points compared to 74.1 2008 Taxes+Levies HOUSEHOLDS th position).Inparticular, trustinproviders 2012 73 74 . . In2014theEuropeanCommission 76 Networks ) and ranks 19 2008 INDUSTRY points compared th Energy+Supply EU-wide. The 2012 75 . 5 and easeofswitching.Thetwolastcomponentshavethe consumer satisfaction,choiceof providers, actual switching between 2012and2013,inparticularwithregardtooverall “vulnerable customer” practises, switchingandbilling.Czechlawdoesnotdefine a frequent subjectofcomplaintsconcernunfaircommercial the Consumer ProtectionUnit operating with ERO. The most address theircomplaints,questions,andsuggestionsto 80 79 78 77 investments alsoincludetheupgradeoftransmission the country’s North-Western and Southern borders. Pending developed intheCzechRepublicaimtoincreasecapacityat Several ProjectsofCommonInterest(fiveintotal)being investment intheCzechenergyinfrastructure. per yeardependingonscenarios),callfor anambitious MW as theforeseen increasingdemand(upofabout200 Czech Republicandothercountriesintheregion,aswell The increasingshareofrenewablesintheenergymix Electricity environmental assessmentprocedures. legislative andnon-legislativemeasuresstreamliningthe granting processfor projectpromoters,andtheadoptionof including thepublicationofmanualonpermit 2013), andothermeasuresforeseen for 2014and2015, for ProjectsofCommonInterest(PCIs)(dueby 16 Regulation, including the establishment of the one-stop-shop adoption ofthemeasuresstemmingfromTEN-E The Czechauthoritiesshouldensureaproperandtimely Infrastructure 6. electricity suppliers on ERO’s website Consumers canaccessatoolproviding information on 348 (from that382 switches intheelectricitysectorwas472 suppliers toobtainthelowest price.Thetotalnumberof integrated incumbentstonewsuppliers,butalsobetween Czech consumersnolongeronlyswitchfromvertically to 72.0 should beforeseen init. is currently underpreparation and non-economicsupport th

ERO, Annualreport 2012,July2013. http://kalkulator.eru.cz/ 10 However thedifference isnotstatistically significant. highestscoreintheEU. consumer_evidence/consumer_scoreboards/10_edition/index_en.htm 000 (fromthat316 th ConsumerMarkets Scoreboard, http://ec.europa.eu/consumers/ 77 ), correspondingto15 000 households) andinthegassectoritwas 80 . The amendment of the Energy Act 000 78 households). th place.Itincreasedby 3 points 79 . Consumers may 000 in2012 November guidelines for Trans-European energynetworks) come onlineafter2020(allthesethreearePCIsunderthe end 2018, with two other projects with Austria planned to Republic andPolandisalreadyplannedtostartoperation Republic andSlovakia. AsecondpipelinebetweentheCzech security ofsupplyhassubstantiallyimproved intheCzech of reverseflow projects(also co-financedby theEEPR), of thegasmarket intheregion.Following theimplementation plays animportantroleintheintegrationandliberalisation Programme for Recovery). TheCzech-Polishinterconnector (partly financedwithfundsfromtheEuropeanEnergy transmission systems(theSTORK project)wascompleted 2012, theinterconnectorbetweenCzechandPolishgas transmission systemsupplyingGermanyandFrance. Also,in to theOPAL andMEGALgaspipelinesthatexpandtothe In 2012,theGAZELLEgaspipelinewascompletedtoconnect Gas is slow andleadtimesarelong. grid. Itisplannedtobecompletedby 2030,butinvestment on-going replacementandexpansionprojectfor kV the400 enable theexpansionofdispersedrenewables.Thereisan Improvement ofdistribution infrastructureisneededto network toconnectthenewandmodernisedpower plants. 82 81 of thelowest intheEU(25.2%2012) The CzechRepublic’s degreeofelectricitydependenceisone Electricity Securityofsupply 7. (loop flows). from unscheduledflows ofpower originatinginGermany of supply, buthasadownside. The Czechnetworksuffers interconnection rateisgenerallypositivefor Czechsecurity German, PolishandSlovak markets. Therelativelyhigh The CzechRepublicisinterconnectedwiththeAustrian, for end-users. and highnetworkscostswhichinfluencetheelectricityprices depleting lignitereserves,ageingelectricityinfrastructure is anetelectricityexporter. Majorconcernsrelatetothe declining. Theycanbeexploiteduntil2050.Thecountry of thetotal.Abundantdomesticcoalresourcesaregradually any singlesourceofenergytoprovide for morethan65% mix iswelldiversifiedasthenationalstrategydoesnotallow

Eurostat. Technical information onProjectsofCommonInterest the Unionlistofprojects ofcommoninterest. guidelines for trans-Europeanenergy infrastructureasregards 347/2013 oftheEuropeanParliament andoftheCouncilon No 1391/2013of14 accompanying theCommissionDelegated Regulation(EU) October 2013amendingRegulation (EU) CZECH REPUBLIC 82 . Thegeneration 81 .

41 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 42 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 under a“take-or-pay” clause for thefirsttimethatacompanydidnothavetopayfines its disputewithGazpromover gascontracts.Thecourtruled in October2012whenRWE’s Czechsubsidiarysucceededin termination. Inthisregard,animportantprecedentwasset stable prices,butcarriesfinancialpenaltiesincaseofearly mostly linked tooilproductsandhardcoal.This maintains pipelines beingputinplace.Thecontractualgaspricesare interconnectors andreverseflow capabilitiesonexisting is relativelyrobustandhasbenefitedfromthenew 84 83 ( Sources: Eurostat,CEER,NationalRegulatoryAuthority, ECcalculations. from Russia(90%)andNorway(9%) Almost allgas consumed intheCzechRepublicisimported Gas CZECH REPUBLIC ( CZECHREPUBLIC – KEYINDICATORS 2 1 ) )

http://ec.europa.eu/energy/observatory/gas/doc/qregam_2012_ Eurostat. quarter2_quarter3.pdf Switching rates Electricity market value( Number ofmainelectricityretailers HHI inelectricityretailmarket (domestic) Number ofelectricityretailers HHI inpower-generation market Market shareofthelargestpower-generation company Regulated pricesfor non-households–electricity Number ofmainpower-generation companies Number ofsmartmetersinstalled Peak demand(2012, Installed generationcapacity(MW) Regulated pricesfor households–electricity of Number ofcompaniesrepresentingatleast95% ELECTRICITY and gasconsumptioninthehouseholdnon-householdsectors(average bands)andannualaverage retailprices. Market valueis anestimationofthesizeretailelectricityandgasmarkets. Itiscalculatedusingdata onelectricity ACER/CEER, AnnualReportontheResultsofMonitoringInternalElectricityandNaturalGas Markets in2012,November 2013. net power generation MW) 2 ) (bn€) 84 . 83 . Securityofsupply 7.96 3 N/A 360 N/A 78% No 1 50 11 20 No 73 5.001 000 324 520 ( 1 ) Number ofmainnaturalgasretailers HHI ingasretailmarket (domestic) Number ofretailerssellingnaturalgastofinalcustomers HHI ingassupplymarket (domestic) Market shareofthelargestentitybringingnaturalgas Regulated pricesfor non-households–gas Number ofmaingasentities Regulated pricesfor households–gas GAS into country Number ofentitiesbringingnaturalgas Switching ratesfor gas(entireretailmarket) Gas market value( 2 ) (bn€)

11 1 1 59 3 3 82.3% No 1 No 25 2.505 12.03 632 358 30.7 Total grosselectricitygenerationin2012droppedto gas hadashareof16.48%andcrudeoil1.42%. were thesecondmostimportantsource(39.77%).Natural largest sharefor thefirsttime(40.34%),whereassolidfuels 10% 15% 20% 25% 30% 35% 40% 45% 85 Source: Eurostat Gross inlandconsumptionmix2008-2012 1 FIGURES (23.3%), naturalgas(21.8%)andsolidfuels(13.6%) oil andpetroleumproducts(39.0%),renewableenergysources (2008) to18.1 Gross energyconsumptionhasdecreasedfrom20.2 Generaloverview 1. 0% 5%

Eurostat. TWh 2008 Renewables Solid fuels 85 . In2011,renewableenergysourcesprovided the DENMARK AND 2 Mtoe (2012).In2012,Denmarkreliedoncrude 2009 Natural gas Waste (non-renewable) 2010 → → → → Key Issues electricity retailmarket wasadoptedinJune2012andwillcomeintoforce by October2015. legislation yettobeproposed,by October 2016(gas).Abillonasuppliercentricmodelfor the Regulated end-user prices willbephased out by October 2015 (electricity) and, based on the latterisentirelydependentonDenmark. Denmark’s securityofsupplyiscloselylinked tothatofSwedenduethefact now partlyrelies on importsthroughGermanytobalanceitsgas supply anddemand. Annual domesticgasproductionwasreducedbyDenmark approximately 10%in2012. without taxesfor industrialconsumersisbelow theEU-27average(5%in2012). the pricefor householdcustomersisthreetimeshigher. However, theelectricityprice a veryhighlevelofenergytaxes.Comparedtoelectricitypricesfor industrialconsumers Danish householdcustomerspayoneofthehighestelectricitypricesinEU,mainlydueto developed tomaintainahighlevelofsecuritysupply. To addressthisinterconnectioncapacitieswithneighbouringcountriesarebeing energy (windpower settoaccount for upto50%ofelectricitygenerationby 2020). The energymixwillchangesignificantlyduetoambitiouspolicytargets for renewable Crude oilandpetroleumproducts 2011 85 2012 . Mtoe generation between2008and2011. provided between40.7%and49.2%ofthetotalenergy 10% 20% 30% 40% 50% 60% 87 86 Sources: EU energyinfigures-“StatisticalPocketbooks 2012and2013”, Gross electricitygenerationmix2008-2012 2020, thusexceedingtheEuropeantargets.Cogeneration decided toraisetheshareofrenewablepower to50%by 35% by 2020.Inspring2011,theDanishgovernment reached 26%in2012andisexpectedtorisemorethan The RESshareingrossfinalenergyconsumptionDenmark 0%

Eurostat. The shareofelectricity producedincombinedheatandpower plants (CHP). 2008 European Commission Renewables Solid fuels 2009 Natural gas Other 2010 Crude oilandpetroleumproducts 87 2011 2012 86

43 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 44 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 with 2011.The gas consumption was at3 5 5 The annualgasproductionfor 2012inDenmarkwas Gas February 2014. ahead market coupling project which began operation in The Danish electricity wholesale market is part of the day- was EUR 90 89 88 DK2 (2012) volume tradedintradaywas0.2 was 20.3 day-ahead orintraday. The totalvolumetraded day-ahead DK1 andEasternDenmarkDK2).Theenergyiseithertraded Denmark isdividedintotwomarket areas(Western Denmark area istradedatNordPoolSpot. countries. Morethan70%of the energygeneratedin Nord PoolSpot,ajointenergyexchangefor theScandinavian of thetotalgenerationcapacities.Denmarkispart Energy andVattenfall whotogetheraccountfor about56.7% The largestelectricitygeneratorsinDenmarkareDong Electricity WholesaleMarkets 3. within thestate. model andmakinguseoftheprovisions relatedtoseparation accordance withtherulesof ownership unbundling adopted finalcertificationdecisionsinFebruary2012 in The TSOfor bothgasandelectricityisEnerginet.dk.DERA Unbundling about EUR in 2000andemploys about50 The DanishEnergyRegulatoryAuthority(DERA)wasfounded National EnergyRegulator with theadoptionofActno.466on18 The ThirdEnergyPackage wasimplementedinnationallaw General Regulatoryframework 2. DENMARK an increaseby morethan10% instaffandbudget.

455 All valuesbasedon theboughtquantities. http://energitilsynet.dk/tool-menu/english/secretariat/ DERA –ResultsandChallenges,http://energitilsynet.dk/fileadmin/ eng/helepubl.htm#kap07 Filer/Information/Resultater_og_udfordringer/Aarsrapport2011_ mcm, productiondecreasedby about10%compared 36.33/MWh inDK1andEUR TWh inDK1and15.3 5.56 90 . Theaverageprice(arithmeticmean)in2012 million in 2012. Compared with 2011 this is TWh inDK2(2012),whilethe employees withabudgetof TWh inDK1and0.2 37.56/MWh inDK2. May 2011. 696 mcm while 88 89 TWh in 92 91 positive cost-benefitanalysis. the remaining1.38 roll-out ledby thedistributionsystemoperators(DSOs),and points where a smart meter is installed following a voluntary have smartmeters.Therearealready1.63 in 2010/2011andcurrentlymorethan50%ofconsumers 2020. Largescalereplacementofexistingmetersbegan securing thefullroll-outofsmartmetersinDenmarkby In 2013,theDanishEnergyAgencyissueda new regulation highest leveloftaxesandleviesincludingVAT (56.7%). electricity pricewithintheEUandprimarilycausedby the remaining constantatEUR between thefirsthalfof2012and2013, fixed andvariablepricesareshown. Thepricesdidnotrise by DERAandpublishedonwww.elpristavlen.dk whereboth The electricitypricesfor consumersarefrequentlyupdated regulated priceswillceaseby October2015. with regulatedprices.However, for mostconsumers,the right tochangesupplierandremainedondefaultcontracts 90 the market, whilst atleastuntiltheendof2012,between the retailmarket (intermsofconsumption),areactivein Consumers above 100 or theliberalisedmarket wherepricesarenotregulated. whether tojointheregulatedmarket withregulatedprices 2003, allDanishelectricityconsumersarefreetochoose is anincreaseon2011levels(3.18%),butstilllow. Since 2012, 6.7%oftheendconsumersswitchedsupplier, which recognises thatthelevelofcompetitionneedstoimprove. In currently 33 The electricitymarket wasliberalisedin2003.Thereare Electricity RetailMarkets 4. in 2012andEUR average priceswereEUR 2008. Thegasexchangewasestablishedin2007. has beenpossibletotradegasontheexchangesince exchange (GasPointNordic)haveby 2014reached25%.It trading (OTC trading),butvolumestradedattheDanishgas The Danishwholesalemarket ismostlybasedonbilateral (35.19%) andGermany(26.96%). export countrieswereSweden(37.84%),theNetherlands amount wasimportedfromGermany. Thethreeimportant an amount of 2

Eurostat. www.ens.dk/en/info/facts-figures/energy-statistics-indicators- energy-efficiency/annual-energy-statistics and 95%ofelectricityconsumershadnotexercisedtheir active suppliersintheretailmarket. DERA 830 23.25/MWh in2011. million willbealsoequippedfollowing a mcm was exported. Only a very small 000 27.98/MWh in2013,EUR 0.3/kWh, whichisthehighest kWh, covering about50%of 91 million metering 25.16/MWh 25.16/MWh 92

Electricity pricechangeby component2008-2013(in€cent/kWh) 3 FIGURES exercised theirrighttochangesupplierandremainedon 2012, thevastmajorityofsmallergasconsumershadnot and unregulatedprices.However, atleast untiltheendof 93 2013 high withaHerfindahl-HirschmanIndex(HHI)of3 switched supplier. Theretailmarket concentrationisrelatively least 12 average theDanishcustomerisabletochoosebetweenat number of14 The gasmarket wasliberalisedin2004.In2012,atotal Gas been operationalsinceMarch2013. and toaccesstheirown consumptiondata.Thedatahubhas makes iteasier for electricityconsumerstochangesupplier between theplayersinDanishelectricitymarket and Energinet.dk, which simplifies the extensive data traffic and managedby theownership-unbundled DanishTSO, is theso-called‘datahub’,adataplatform developed initiative to boost the competitiveness of the retail market may beencouragedtobecomemoreactive.Oneimportant and transmissioncosts.Duetothissimplificationconsumers one pricefor electricitycovering bothenergyconsumption This shouldmake billseasiertoreadastherewillonlybe electricity willbecometheprimarycontactfor consumers. prices willceasefor almostallconsumers.Thesuppliersof electricity” toconsumers.Bythesamedate,regulated buy gridservicesonawholesalebasis,andsell“delivered to asuppliercentricsystem,whereelectricitysuppliers On 1October2015,theelectricityretailmarket willchange Source: Eurostat 10 15 20 25 30 35 0 5

DERA, figures for 2013(basedon volumes). 93 . Customersareabletochoosebetweenregulated different suppliers.In2012,7.7%ofend-consumers 2008 Taxes+Levies HOUSEHOLDS AND 4 retail supplierswereactiveinthemarket. On 2013 Networks 2008 INDUSTRY Energy+Supply 2013 648 in trust in providers and overall satisfaction(2 and lowest for gasintheEU. Bothmarkets scorehighon incidence ofproblemsisthesecondlowest for electricity corresponding to12 previous year. in 2013whichisanincreaseof4.51%comparedtothe 10.74/GJ average pricefor industrialconsumerswasatEUR constantly inthelasttwoyears(2011:EUR for householdswasEUR on www.gasprisguiden.dk. Theaveragenaturalgasprice prices for consumersaremonitoredby DERAandpublished market segment, whilstlargescaleconsumersare.The of smallscalecustomersarenotactiveintheunregulated regulated priceswillceaseby October2016.Themajority default contracts with regulated prices. For most consumers, Sources: EC,EPCRmetadata Natural gaspricechangeby component2008-2012(in€cent/kWh) 96 95 94 (75.4 electricity andgasmarket above the EUaverage Danish consumersratetheperformance oftheirretail Consumers 5. meters onalargescale. At themomenttherearenoplanstoimplementsmartgas 10 12 market scoresjustbelow theaverage(17 for thegasmarket and5 comparability isamongstthelowest ratedintheEU,(lowest in the EU in thecase of gas market). On theotherhand, services markets (12 The gasmarket alsoranksabove theaverageofalldomestic 0 2 4 6 8

10 However thedifference isnotstatistically significant. Eurostat. edition/index_en.htm consumers/consumer_evidence/consumer_scoreboards/10_ th points comparedto72.0and77.0 ConsumerMarkets Scoreboard,http://ec.europa.eu/ 2008 Taxes+Levies HOUSEHOLDS 94 th th placeoutof31),whiletheelectricity and9 2012 th lowest for electricity) 13.82/GJ in2013,decreasing th Networks placeEU-wide,respectively. 2008 compared to74.1 DENMARK INDUSTRY nd and 3 16.47/GJ). The th Energy+Supply place).The 96 . 2012 rd highest 95 ),

45 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 46 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 97 from theGermanbordertoEgtved.Furthermore,first Egtved andloopingoftheexistingtransmissionpipeline includes establishmentofanewcompressorstationat of JutlandwascompletedinOctober2013.Theexpansion The expansionofthegasinfrastructureinSouthernpart access tonewgasresources. production intheNorthSea,Denmark(andSweden)require As a result of the gradual depletion of the Danish gas Gas dates foreseen for years2018–2022. Some oftheseprojectsarelong-termwithcommissioning and strengtheningorexpandingexistinginterconnectors. neighbouring countriesi.e.GermanyandtheNetherlands Denmark isenhancingitselectricityinterconnectionswith challenge totheelectricitytransmissionsystem.Hence, to meetallenergydemandby renewablesby 2050area The highly ambitious goals for the Danish energy policy Electricity assessment procedures. non-legislative measuresstreamliningtheenvironmental for projectpromoters,andtheadoptionoflegislative publication ofthemanualonpermitgrantingprocess other measuresforeseen for 2014and2015,includingthe of Common Interest, PCIs(dueby 16 including theestablishmentofone-stop-shopfor Projects 347/2013 onthetrans-Europeanenergyinfrastructure, adoption ofthemeasuresstemmingfromRegulation The Danish authorities should ensure a proper and timely Infrastructure 6. consumers inremoteareas. Denmark isoneofveryfew countriestoprotectenergy social legislation. consumers inenergylaw;insteadthisissueisdealtwith There arenospecificprovisions regardingvulnerable DENMARK

The EuropeanCommission VulnerableConsumerWorking Group Guidance Document onVulnerableConsumers,November 2013. 97 November 2013),and North Sea. stream in2016/2017andwillincreasetheproduction However, thenewHejregasfieldisexpectedtocomeon the productionisforeseen todecreaseinforthcoming years. to supplementgassuppliesfromtheDanishNorthSeaas ensure increaseinimportcapacityfromGermanyorder of thegastransmissionsystemtowards Germanywill Plan for theDanishgastransmissionsystem.Theexpansion (EU) No994/2010inOctober2012,includinganEmergency Denmark implementedtherequirementsofRegulation Gas an electricityinterconnectorbetweenDenmarkandtheUK. signed acooperationagreementtoconsiderthefeasibility of a singlecountry. In2013,Energinet.dkandNationalGrid countries toavoidbecomingdependentonthecapacityof extending itselectricityinfrastructurewiththesurrounding in thepast.To maintainthishighlevel,Energinet.dkis plants. Nevertheless,theDanishgridhasbeenveryreliable account thatGermanyisphasingoutitsnuclearpower energy. However ENTSO-E’s calculationsdonottake into mainly causedby theambitioustargetsfor renewable ENTSO-E predictspower imbalances fromwinter2016, Electricity Securityofsupply 7. of thelistPCIs. The Germanpartoftheexpansiongassystemis Sweden) ishighduetoneedfor gasfor heatingpurposes. during wintertime,wheregasconsumptioninDenmark(and during thesummertimeandimportgasfromGermany interconnection allows Denmark toexportgasGermany Danish NorthSeaproduction.Thebi-directionalflow onthis from Germanyinordertocompensatefor thedecreasing allow Denmark(andSweden) toincreaseimportsofgas 2015. Theexpansionofthecross-borderconnectionwill expansion is planned to come into operation in October part ofGermanyiscompletedandthenextphase phase ofexpansionthetransportcapacityin the Northern ( Sources: Eurostat,CEER,NationalRegulatoryAuthority, ECcalculations. ( DENMARK – KEYINDICATORS 2 1 ) ) HHI inelectricityretailmarket HHI inpower-generation market Regulated pricesfor non-households–electricity Regulated pricesfor households–electricity Switching rates(entireelectricityretailmarket) Number ofmainelectricityretailers Number ofelectricityretailers Market shareofthelargestpower-generation company Number ofmainpower-generation companies Number ofsmartmetersinstalled National instantaneouspeakload(MW) Installed generationcapacity(MW, 2011) Electricity market value( of netpower generation Number ofcompaniesrepresentingatleast95% ELECTRICITY and gasconsumptioninthehouseholdnon-householdsectors(average bands)andannualaverage retailprices. Market valueisanestimationofthesizeretailelectricityandgasmarkets. Itiscalculatedusingdataonelectricity DERA, figures for 2013(based on volumes). 2 ) (bn€)

N/A N/A partly partly 6.7% N/A 55 37% 2 N/A 6 13 ~1300 5.053 169 580

HHI ingasretailmarket HHI ingassupplymarket Regulated pricesfor non-households–gas Regulated pricesfor households–gas Switching ratesfor gas(entireretailmarket) Number ofmainnaturalgasretailers Number ofretailerssellingnaturalgastofinalcustomers Market shareofthelargestentitybringingnaturalgas Number ofmaingasentities into country Number ofentitiesbringingnaturalgas GAS Gas market value( 2 ) (bn€)

DENMARK 3 3 N/A partly partly 0.9% N/A 14 N/A N/A N/A 1.514 648 ( 1 )

47 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 48 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 10% 15% 20% 25% 30% 35% 40% 98 Source: Eurostat Gross inlandconsumptionmix2008-2012 1 FIGURES which decreasedover thesameperiodto8.0%. years andsurpassedtheshareofnuclearenergyin2011 consumption (10.3%)hasconstantlyincreasedover thelast of renewableenergysources(RES)inoverall energy solid fuels(25.2%),andnaturalgas(21.3%).Theshare based largelyoncrudeoilandpetroleumproducts(33.9%), Gross energy consumption in 2012 (319.5 Generaloverview 1. 0% 5%

Eurostat. 2008 Nuclear Solid fuels GERMANY AND 2 2009 Natural gas Renewables 2010 → → → Key issues and unscheduledflows towards the networks ofneighbouring countries. intermittent renewables expansion with grid development and avoid congestion infrastructure andcross-border interconnections areneededto better synchronise Network developmentisslower thanplanned.Furtherefforts onbothintra-German future policydevelopmentswithneighbouringcountriesareverywelcome. networks. Recentefforts oftheGermanadministrationtocoordinatereflectionson efforts to accelerate the expansion of the national and cross-border electricityand gas policy instrumentsdesignedtoachievetherenewableenergytargetsandby continuing system toaminimum,inparticularby reviewingthecost-effectiveness ofenergy further improve, also in order to keep the overall costs of transforming the energy In general,thecoordinationofenergypolicywithneighbouringcountriesshould electricity directlyinthemarket andwillbesubjecttobalancingobligations. thresholds allnewbeneficiariesoftheRESsupportschemewillhavetoselltheir Germany. Itis of central importance that the revised law ensures that as of certain strong impactonthefuturecosts,expansionandmarket integrationofrenewablesin underway andarevisedlawenteredintoforce on1 change oftheRenewableEnergySourcesAct(EEG).AmajorreviewEEGisnow operates. In2012directmarketing increased,inparticular in onshorewind,duetoa High volumesofrenewableshavechangedthewayelectricitymarket inGermany Crude oilandpetroleumproducts Other 2011 98 Mtoe) was 2012 10% 15% 20% 25% 30% 35% 40% 45% 50% 99 Sources: EU energyinfigures-“StatisticalPocketbooks 2012and2013”, Gross electricitygenerationmix2008-2012 gas (15.3%). technology (21.2%)followed by nuclear(17.7%)andnatural (43.1%). RESbecamethesecondmostimportantproduction biggest shareinthegenerationmixcamefromsolidfuels The grosselectricitygenerationin2011was608.9 in adefinedorderfrom2015onwards. down, whiletheremainingpower stationswillcloseby 2022 17 phase-out nuclearpower generationby 2022.Eightofthe 0% 5%

Eurostat. nuclear power generationunitshavealreadybeenshut 2008 European Commission Nuclear Solid fuels 99 In2011theGermanParliament decidedto 2009 August 2014.Itisexpectedtohave Natural gas Renewables 2010 Crude oilandpetroleumproducts Other 2011 TWh. The 2012 procedures. electricity networks, viaefficientplanning and approval so as to acceleratetheexpansion of theextra-highvoltage taken on additional duties relating to network development thereof for energyregulation). Since2011,theBNetzAhas and hadabudgetofEUR Energy. In2012BNetzAemployed 2 federal authority within the Federal Ministry of Economics and was setupin1998.Bundesnetzagenturisaseparatehigher Telecommunications, PostsandRailways(Bundesnetzagentur) The GermanFederalNetworkAgencyfor Electricity, Gas National EnergyRegulator amendments. the aid to be compatible, taking into account the recent state aidrules.On23 granted toenergy-intensiveindustriesiscompatiblewithEU support schemeandinparticularthesurchargereduction decision on the EEG to examine whether the German RES On 18 EU MemberStates. of whichwillalsobeopenfor operatorsestablishedinother 2017 ofcompetitive tenders for renewablesupport, a part A furtherimportantelementisthegradualintroductionuntil of different technologies for renewablegenerationcapacities. legislation foresees planningcorridors for the development lowered to 100 applies as of 500 electricity directlyonthemarket. From 1 RES producers covered by the support scheme to sell their EEG isthegradualintroductionofanobligationfor allnew by recentlegislation.Onemajorelementoftheamended solar PV, onshoreandoffshorewind)havebeenreviewed The support schemes for renewable energies (notably potentially necessaryreservecapacity. winter periodaswellthefive following years,andthe generation capacity, its development with a view to the next stability. TSOsarenow obligedtoanalysereliableavailable necessity oftheparticularplantintermsnetwork can intervenetothisshutdown incasethereisatechnical their shutdown oneyearin advance andelectricityTSOs of locationgeneration.Power plantsmustnow announce moratorium in2011andtheassociatedsubstantialchanges The Germanenergylawwasamendedfollowing thenuclear General Regulatoryframework 2. Energy ActionPlanexpectsashareof19.6%by 2020. points above thelevelof2012. TheNationalRenewable of energy, standsat18%by 2020whichis5.7 from renewable sources in total gross final consumption Directive 2009/28/EC,definedasthepercentageofenergy The GermanREStargetundertheRenewableEnergy December 2013theCommissionadoptedanopening kW on 1 kW generation capacity, which will be July 2014theCommissiondeclared 181.2 January 2016. Further, the new million (ca.EUR 324 August 2014,this employees (FTEs) percentage 24 million according totheRenewableEnergySourcesAct. into thegridsofpublicsupplyandthatwerenotremunerated only generationcapacitiesweretaken intoaccountthatfed supply resultedinamarket shareof78%.Inthiscalculation volume (426.2 companies (332.8 The aggregatednetgenerationvolumeofthefour biggest market shareof 76%ofinstalledcapacity(81.4 generation companies(E.ON,RWE, EnBWandVattenfall) hada under theRenewableEnergySourcesAct)four mainpower In thegenerationmarket (electricity not eligiblefor payments Electricity WholesaleMarkets 3. 100 increased toatotalof363(EPEX Spot194,andEEX169). The numberoftradersactiveon thedifferent markets further supplier reducing the EEG surcharge, or other direct marketing. premium, directmarketing for thepurposeofanelectricity Direct marketing for thepurposeofclaimingamarket operators tochooseamongthreeforms ofdirectmarketing: in 2012following anamendment oftheEEGallowing RES onshore wind,increasedby morethan400%(51 GWh) 163 Energy directlysoldfromrenewablesources,particularly (EUR load by 15% (EUR market increased by 10%in2012.Pricesdecreased for peak products. Thevolumetraded(245.3 day-ahead andintradaymarkets andEEXfor anyforward There aretwopower exchangesinGermany:EPEXSPOT for ”. and 95%ofthegasDSOsfallunderthis“deminimisrule”. 100 applies todistributionsystemoperators(DSO)withlessthan operational separation of network and retail businesses that an exemptionfromthestatutoryprovisions onlegaland Local networksarelargelystillintegratedonthebasisof had beenprovided by theTSO. Commission Opinion,refusedcertificationasnoinformation officio certification procedures and, in accordance with the offshore electricityTSO(theBalticCable),BNetzAopenedex resources, againsttheopinionofCommission.Foran was rejectedfor thetimebeing,duetoinsufficientfinancial TSOs havereceivedthecertificationwhileoneapplication certification requests.Threeofthe four onshoreelectricity operators (TSO)and15 There arefour onshoreelectricitytransmissionsystem Unbundling

BNetzA, Monitoring Report,2013. 000 42.6/MWh) atspotmarkets. connected customers.About90%oftheelectricity TWh) thatwasfed intothegridsofpublic TWh) inrelationtothenetgeneration 48.51/MWh) and for base load by 17% gas TSOswhichhavefiled TWh) atdayahead GERMANY 100 GW) in2012.

49 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 50 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 points inaccordancewithEUlaw of congestion management regimes on its interconnection effectiveneighbouring countriestoensure implementation therefore remainsimportantthatGermanycooperateswith at Germany’s borderconnectionswiththeNetherlands.It 102 101 on Congestion cancellation ofcontracts.AccordingtoACER’s AnnualReport past, butbookinglevelshaverecentlydecreasedduetothe Germany has suffered from contractual congestion in the (to 80.3%in2012). of thefivelargestcompanies fell by 11.1 share by 11.4 While thethreelargestimportersincreasedtheirmarket EUR was EUR up toEUR in thegassupplyFebruary2012,whenpricesincreased This increasewascausedpartlyby temporarybottlenecks 10% (NCG:EUR average reference priceover bothmarket areasroseby almost was 2 OTC andexchangemarkets, withOTC (tradingvolume2012 Exchange GmbH).Trading activitiesstrengthenedonboth There is oneGerman gas exchange EGEX (European Gas market areas: Net Connect Germany(NCG)andGasPool. more than20 While theGermangasmarket wasinitiallyfragmentedinto Switzerland. directed toCzechRepublic,France, theNetherlandsand Exports (667.3 (about 45%),theNetherlands(26.5%),andNorway(25.9%). in 2012.TheimportedvolumesprimarilycamefromRussia to 10.7 Gas productioninGermanyfurtherdeclined2012by 9.7% Gas earlier periods. of 2013,aftersignificantpricedivergencesobserved in coupled area,pricesstartedtorealigninthesecondquarter these markets plusAustriaandSwitzerland.Inthemarket- part ofthemarket couplingprojectfor intradaymarket of with otherNorthWest Europeanmarkets. Germanyisalso As ofFebruary2014Germanycoupleditsday-aheadmarket GERMANY

Commission Decision2012/490/EU of24 http://www.acer.europa.eu/Official_documents/Acts_of_ the naturalgastransmission networks, OJ (2012) L231. Parliament andoftheCouncilonconditionsfor accessto Annex ItoRegulation (EC)No715/2009oftheEuropean regarding congestionmanagement guidelinesonamending Congestion%20Report%202014.pdf the_Agency/Publication/ACER%20Gas%20Contractual%20 24.66/MWh (+4.8%)attheEEXin2012. 460 bcm andimportsincreasedby 8.78%to1 29/MWh (+12.6%)andthegasforward pricewas TWh) remainingthepreferred market. Thedaily 40/MWh. Thedailyaveragecrossborderprice 101 percentage points(to67.2%),thetotalshare TWh) increasedby 29.12%and weremainly market areas,therenow remainonlytwo contractualcongestionremainshigh,mainly 25.19/MWh andGasPoolEUR 102 . August 2012 percentage points 25.11/MWh). 535

TWh

charges the exemption by law of industrial users from network In responsetotheCommission’s procedurechallenging rate of10.4%thetotalvolume. customers switchedtheirsupplier, leadingtoaswitching volumes. In the entire retail market over 2.8 customers switchedsupplierintermsofconsumption 2012, 7.8%ofhouseholdcustomersand11.3%industrial to choosebetween72 large numberofsuppliers.Householdcustomerswereable In 2012,electricitycustomerswereabletochooseamonga EUR EEG-surcharge, thefinancingcostsamountedintotalto Despite somemeasurestaken tolimittheincreaseof add uptoashareof22.9%andtotalleviesaround26.1%. (electricity and VAT) havebeenstable for a long time and rational use of energy and internalise externalities. Taxes place taxesandfees onenergyconsumptiontoincentivise by finalconsumers.Ontheother hand,thelegislatorputin cost ofexpandingthesharerenewableenergyisborne On theonehand,thiscanbeattributedtofactthat retail pricesinGermanyrankamongthehighestEurope. significantly increasedonaverage(+12.3%)in2013.Electricity spot and forward markets, the retail prices for households Despite acleardownward drift ofwholesalepricesonthe points toabout45.5%(228.1 companies increasedtheirmarket shareby 3.3 reasonably competitiveeventhoughthefour largestsupply With anHHIof2 Electricity RetailMarkets 4. 103 during the very long and cold winter2012/13.Thethreeduring theverylongand driven by anincreaseinhouseholdconsumption(+10%) fired power plants)increased by 5%in2012(815.4 The emittedgasvolumetofinalconsumers(includinggas- Gas stable inthenextyears. tariffs intendstohelp keeping energyprices for consumers reduce thenumberofbeneficiaries.Arevisedlawon feed-in

A formal investigation procedureunderstateaidprovisions energy market legislation. the complianceof theexemptionprovisions withinternal with nationalauthorities have been established toanalyse was initiatedon6 19.4 103 billion in2013. , Germanyhasadoptedlegislativechangesto 021 theGermanelectricitymarket is March 2013.Inparallel,contacts suppliers onaverage(2011:65).In TWh). percentage

million TWh)

Electricity pricechangeby component2008-2013(in€cent/kWh) 3 FIGURES their provider ortariffwiththeexistingprovider inthepast around 6%ofelectricityandgas consumershaveswitched on comparabilityand4 trust inproviders andeaseofswitching,2 Electricity market scoreshighestamongEUcountrieson all thecomponentswithexceptionofactualswitching. comparability andchoice(5 services, GermanyscoresamongthebestEUcountriesfor incidence ofcomplaintsissecondlowest intheEU.Forgas 105 104 8 compared to72.0and74.1,respectively),ranking1 markets asabove theEUaverage(81.4and 77.4 German consumersconsidertheirelectricityandgasretail Consumers 5. decrease of18%comparedto2011 volumes-based supplierchangeratewas10.68%.Thisisa volumes. Intermsofallfinalconsumers,theconsumption customers switchedsupplierintermsofconsumption 7.92% of household customers and 13.38% of industrial supplier declined,especiallyfor smallconsumers.In2012, However, thenumberofcustomerswhoswitchedtheir 31 the networkareasconsumerscanchooseamongatleast Diversification improved furthersuchthatinalmost86%of largest companieshaveamarket shareofonly28.5%. Source: Eurostat 10 15 20 25 30 35 2010 2012 and2013,reversingthepositivetrendobservedsince market hasslightlydecreaseditsperformance between has seenaconsistentincreaseinscoresince2010,thegas 0 5 th

The electricitymarket increaseditsperformance by 2.2 BNetzA, Monitoring Report,2013. while gashasseen a1.6 among EUcountries.However, whiletheelectricitymarket different gassuppliers. 105 . Bothmarkets scorebetterthantheEUaverageon 2008 Taxes+Levies HOUSEHOLDS AND 4 2013 decrease between 2012and2013. th highestonchoicewhilethe th place).Atthesametime,only Networks 104 2008 . INDUSTRY Energy+Supply nd 2013 highest points points st and

natural gassuppliersaswelldistributionsystemoperators. extrajudicial resolutionwithregardtotheirelectricityand founded toprovide consumerswithadditionalcost-free arbitration body, the“Schlichtungsstelle Energie e.V.”, was on inconsistenciesintheenergybill.Furthermoreanew average. 12 Sources: EC,EPCRmetadata Natural gaspricechangeby component2008-2012(in€cent/kWh) 106 In 2012thefour TSOsspentEUR Electricity while for gas the designation has not yet been communicated. procedures for electricityProjectsofCommonInterest(PCI), BNetzA wasdesignatedasthe“onestopshop”for permitting Infrastructure 6. 19 BNetzA recordedatotalof22 against theirsupplier. In2012theconsumerserviceof Energy consumersnow havetherighttofilecomplaints the roleofcentralinformation centrefor energyconsumers. financial reporting by suppliers.BNetzAhasbeenassigned establishing newstandardsfor contracts,information and the shorteningofsupplierexchangeprocessandby consumer protectionrightshavebeenstrengthenedby In linewiththeprovisions oftheThirdEnergyPackage, than planned.ByJuly2014,about 416of1 electricity transmissionnetwork hasbeenadvancingslower 36% mostly due to the energy transition. The expansionofthe infrastructure which isan increase of investment volume of 0 1 2 3 4 5 6 7 8

771 andgas2 10 edition/index_en.htm consumers/consumer_evidence/consumer_scoreboards/10_ months, whichisinbothcasesaroundhalfoftheEU th ConsumerMarkets Scoreboard,http://ec.europa.eu/ 106 2008 Taxes+Levies HOUSEHOLDS 341) ofwhichasignificantportion focused 2012 Networks 112 1.15 2008 incidents (electricity INDUSTRY GERMANY billion onnetwork 877 Energy+Supply kilometres 2012

51 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 52 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 to Hgas. Netherlands, and identifies specific grid areas for conversion focuses ondecreasingLgasvolumes,inparticularthe points willbeenhanced.Forthefirsttime,NDPGasalso southern Germany. Furthermore,capacitiesatcross-border supply ofgasdown tothedistributionsystems,especiallyin are also importantto help torelieve critical situations in the important for thetransport of gas from North to South. They with atotalcapacityof344 a total lengthof 522 annual basis.ThecurrentNDPwillleadtonewpipelineswith prepare aNationalDevelopmentPlan(NDP)Gasonan The GermanEnergyActrequiresthegasTSOstojointly Gas valued. capacity and ensure that electricity flows where it is most with neighbouringcountrieswillincreaseinterconnection borders withGermany’s neighbours.Also,cross-borderlines unscheduled “loopflows” whicharecurrentlycongestingthe needed toeliminateinternalbottlenecksandhelpavoid urgently, linesfromtheNorthtoSouthofGermanyare In total20 particularly importantfromtheEuropeanperspective. also labelledasprojectsofcommoninteresttheyare Some projectsincludedintheBundesbedarfsplanare speed ofnetworkinfrastructureconstructionissufficient. increasingly doubtfulinviewofdelays,whethertheactual projects. Ithowever remains tobeseen,andbecomes crucial andurgentlyneededtransmissioninfrastructure been madetocommonlyagreeuponandrealisethemost (Bundesbedarfsplangesetz) in2013,furtherefforts have With theadoptionofFederal RequirementsPlanAct network enhancementsbeyondtheEnLAG. BNetzA approved about2 including on the level ofregional governments. In 2012, clearly behind schedule and subject to increasing resistance, 107 been expectedstillinearly2014. finish 40%oftheprojects by 2016, 10%lessthanwhathad Expansion Act(EnLAG) wererealised.TSOsnow expectto (22%) oftheprojectslistedsince2009inElectricityGrid GERMANY

http://www.netzausbau.de/cln_1422/DE/Vorhaben/EnLAG- Vorhaben/EnLAGVorhaben-node.html electricity PCIsarelocatedinGermany. Most km and neworextended compressors 800 MW. Mostofthesemeasuresare km newlinesand2 107 Networkdevelopmentis 900 km of were interruptedinthegasyear2011/2012. transported, only0.05%ofthenominatedquantitiesgas price increases. Given the total volume of 2.69 in paralleltosignificantsignoffsofbooked capacitiesafter 2011/2012 capacitieshavebeenshiftedfromentrytoexit on alow levelin2012(1.91 The averageinterruptionduration in gaswasconstantly Gas the importsfromFrance whichdroppedby almost onethird. Germany andtheNetherlandswhichmorethandoubled imported. Thebiggestchangeoccurredintheexportbetween in 2012,ofwhich50.7 of electricityincreasedfrom74 a netexporterofpower. Thecross-bordertradingvolume 35.5 increased significantly, by 700%to21.7 border increasedby 7.7%(79.7 whilst thetotal volume of traded electricity across the In 2012,totalelectricitydemandremainedalmostconstant therefore needtorelyonimportsincertainsituations. higher thanavailablegenerationcapacities.Germanymay indicates thatnationaldemandofelectricitycouldbe -0.6% for Germanyfor thewinterof2012/2013which supply, ENTSO-Ecalculatedanegativereservemarginof In respectofthenationalbalancebetweendemandand low levelof15.91 order tostabilizethesystem.Systeminterruptionisstillata Finally, TSOsmayinterveneintogenerationdispatchplansin capacity of668 now fiveofsuchnominatedgeneration unitswithatotalnet the unitavailableandgeneratingrequiredpower. Until reserve capacitiesisthencompensatedfor costsofkeeping units assystemicallyrelevantentities.Theowner ofsuch units nominatedfor decommissioningiftheydefinethese 2012/2013. Inadditiontothis,TSOscanusegeneration contracted 2.6 and conventionalplantshutdowns. Networkoperators a resultoftheincreaseinenergyfromrenewablesources when criticalsituationsariseinthetransmissionnetworkas aim ofmaintainingreservecapacityistoprovide relief the needfor reservecapacityduringthewinterperiod.The assessing securityofelectricitysupplyinordertoestablish Bundesnetzagentur haspreparedaseriesofreports Electricity Securityofsupply 7. 108

http://www.bundesnetzagentur.de/cln_1912/DE/Sachgebiete/ fallanalysen-node.html#doc266870bodyText3 Versorgungssicherheit/Berichte_Fallanalysen/berichte_ ElektrizitaetundGas/Unternehmen_Institutionen/ TWh andexports38.4 MW ofreservecapacitiesfor thewinterof MW weredefinedassystemicallyrelevant. minutes in2012. TWh wereexportedand29 TWh), sothatGermanybecame minutes). Duringgasyear TWh in2011to79.7 TWh). Thenetexport TWh (2011imports: billion TWh TWh kWh 108

( Sources: Eurostat,CEER,NationalRegulatoryAuthority, ECcalculations. ( ( GERMANY – KEYINDICATORS 3 2 1 ) ) ) Switching rates(entireelectricityretailmarket) Number ofmainelectricityretailers Electricity market value( Number ofelectricityretailers HHI inelectricityretailmarket Market shareofthelargestpower-generation company HHI inpower-generation market Number ofmainpower-generation companies Regulated pricesfor non-households–electricity Number ofsmartmetersinstalled National instantaneouspeakload(MW)(2012) Installed generationcapacity(MW) of Number ofcompaniesrepresentingatleast95% ELECTRICITY Regulated pricesfor households–electricity and gasconsumptioninthehouseholdnon-householdsectors(average bands)andannualaverage retailprices. Market valueisanestimationofthesizeretailelectricityandgasmarkets. Itiscalculatedusingdataonelectricity In termsofvolume oftheentire gasretailmarket 2012.Theswitchingrateintermsofmeteringpointsstoodat7.59%. In termsofvolume oftheentire electricityretailmarket 2012.Theswitchingrateintermsofmeteringpointswasat5.8%. net power generation 3 ) (bn€) 10.4% 4 >1 n/a N/A 2 2 4 No N/A 81 171 >450 No 74.906 021 000 858 681 ( 1

) Number ofmainnaturalgasretailers Number ofretailerssellingnaturalgastofinalcustomers HHI ingasretailmarket gas intocountry Market shareofthelargestentitybringingnatural HHI ingassupplymarket Number ofmaingasentities Regulated pricesfor non-households–gas into country Number ofentitiesbringingnaturalgas GAS Regulated pricesfor households–gas Gas market value( Switching ratesfor gas(entireretailmarket) 3 ) (bn€)

GERMANY 3 851 300 30.1% 1 1 3 No 38 No 27.511 10.68% 886 ( 2 )

53 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 54 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 12.3% Renewables andnaturalgastooksmallerparts,respectively significant partofitwas derived fromsolidfuels(81%). Cogeneration countries. Gazprom) isthesolesupplierofgastoallthreeBaltic connections withRussiaandLatviaonly, andRussia(OAO generation in2011 In 2012,thetotalpower generationwas1 Estonian renewablestargetfor 2020is25%. and 2012grewfrom19.0%to25.2%accordingly. The According toEurostat,therenewablessharebetween2008 0.545 consumption ofnaturalgasinEstoniaamountedto 111 110 109 was 6.13 The Estoniannationalgrossenergyconsumptionin2012 Generaloverview 1. final energyconsumptionin2012amountedto25.2% and naturalgas,whiletheshareofrenewablesingross (shale oil),lessnotablewascrudeoil,petroleumproducts the EUcountries–8.7%(incomparisonto2011level) Estonia’s electricitydemandwashigherthanintherestof and 2011).In2012,theincreasein(between 2008 12.3%

The shareofelectricity producedincombinedheat ACER/CEER, AnnualReporton theResultsofMonitoring Eurostat. and power plants(CHP). November 2013. the InternalElectricityandNaturalGas Markets in2012, 109 Mtoe and1.0%.Renewablesincreasedfrom2.1%to Mtoe

109 ESTONIA 111 . Estoniahascross-bordernaturalgas represented9.75%ofgrosselectricity 109 . It wasbased largely on solid fuels 109 . In 2012, the total import and → → Key issues and therelatedexemptionfrommarket opening. the lawtolegallylaydown the rulesapplicableaftertheendofthisisolation and theconstructionofBalticConnector. Preparations should alsobemadeto efforts todiversifyitsgassupplies,primarilythrougharegionalBalticLNGterminal Estonia’s gasmarket remainsisolatedfromtherestofEurope.Estoniashouldincrease the widerBalticarea. now beacceleratedwithaview toimprove electricitywholesalemarket functioningin through betteruseofexistingcapacityandby buildinganewinterconnector–must Latvia (andLithuania)onmakingavailableincreasedinterconnectioncapacity–both second electricity interconnection with Finland – in March 2014, cooperation with Following thesuccessful establishment ofthepower gridconnectionEstlink2−the 967

GWh 110 109 . 109 , a , . Gross inlandconsumptionmix2008-2012 1 FIGURES 70% 10% 20% 30% 40% 50% 60% Sources: EU energyinfigures-“StatisticalPocketbooks 2012and2013”, Gross electricitygenerationmix2008-2012 Source: Eurostat 100% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 0% 2008 European Commission Nuclear Solid fuels 2008 Renewables Solid fuels AND 2 2009 2009 Natural gas Renewables 2010 2010 Natural gas Crude oilandpetroleumproducts Crude oilandpetroleumproducts Other 2011 2011 2012 2012 production in2012 Energia AS,whichaccountedfor 88%ofthetotalelectricity competition islimitedby thedominantpositionofEesti in theEstonianelectricitysystemwas2 that areplannedtobefinished by 1January2015. fulfilment oftherequirements ownership unbundling operator EGVõrguteenus submittedtoECAthe planfor the ownership unbundling.On31 the exemptioninfuture,butselectedrouteofcomplete amendment totheNaturalGasMarket Actchosenottoapply unbundling ofthetransmissionsystem,on8 EC setsoutanexemptionfor Estoniaanddoesnotrequirethe company ASEestiGaas.Althoughart.49ofDirective2009/73/ services andbelongstotheverticallyintegratedgassupply Võrguteenus, whichprovidesdistribution transmissionand unbundling rules.Thereisasingleoperatoringas,ASEG the ECAinDecember2013ascompliantwithownership The electricityTSO,state-owned EleringAS,wascertified by Unbundling tasks. resources aresufficient forECAtocarryoutitsregulatory questions whethertheallocatedhumanandfinancial of almostEUR (of which21 regulator for severalsectors.Itemploys 61 The EstonianCompetitionAuthority(ECA)actsasthe National EnergyRegulator 114 113 112 1 The 2012loadintheEstonianelectricitysystempeaked at Electricity WholesaleMarkets 3. Estonian legislation arising from the transposition of the Third Package into the Natural GasMarket Act,whichharmoniseotherrequirements will beenforced bothintheElectricityMarket Actandinthe Directive inApril2014.In2014,additionalamendments Estonia transposedfullytheThirdEnergyPackage Gas General Regulatoryframework 2. 572

Eurostat. http://www.konkurentsiamet.ee/public/Aastaraamat/ECA_ On 9 Annual_Report_2012.pdf could now beconsidered fullytransposed. by theCommission inordertoverify whethertheDirective transposition oftheGasDirective whichisunderassessment MW (on6 April 2014Estonianotifiednewlegislation for the work onenergyissues)withanannualbudget February 2012), while the installed capacity 1.83 114 112 . . million in2012 December 2012,thesystem 113 . TheCommission 278 staff members July 2012the MW. Effective

EUR hourly pricewasEUR area in2013wasEUR An averagepriceintheNordPoolSpotEstonia completely openedandallcustomersareeligibleconsumers. From 1 EUR number ofelectricityretailerstofinalconsumerswas42 AS with13.0%and220EnergiaOÜ1.5%.In2012,the 2.7% andVKG ElektrivõrgudOÜwith2.6%.ElektrumEesti held by EestiEnergiaAS,followed by ImatraElekterASwith The largestshareof82.9%electricitysalesin2012was to 679 Gazprom tosupplyEstonia.In2012,gasimportsamounted winter, theInčukalnsgasstoragefacilityinLatviaisusedby Estonia importsnaturalgasexclusivelyfromGazprom.During Gas by almost10% was EUR price intheNordPoolSpotEstonianarea2012 bilateral contractsorfromthepower exchange.Anaverage customers inEstoniawhobuyelectricityeitherthrough Spot’s Estonianpriceareaandintotalthereare201eligible There are17 116 115 (total consumptionwithoutnetworklosses–7 which equalsto37.6%ofthefinalconsumptionelectricity In 2012,theshareofeligibleconsumptionwas2 Electricity RetailMarkets 4. into accounttheUSD/EURexchangerate. prices inUSD/tonproceedingtotheaccountingmonth,taking on thepreviousninemonthsheavyandlightfueloilaverage import priceofgasiscalculatedusingaformula based there isnoorganisedgashub.Accordingtothecontract, As thereisnocompetitionbetweenthesellersortraders, any materialgasimportssofar. needs, andtoBalticEnergyPartners OÜ,whichhasnotmade companies: ASNitrofert, whichobtainsgasonlyfor itsown AS EestiGaas. An import license hasbeenissuedtoothertwo 2012, therewasonlyonewholesaletraderonthemarket – http://www.nordpoolspot.com/ ECA, http://www.ceer.eu/portal/page/portal/EER_HOME/EER_ 2013/NR_En/C13_NR_Estonia-EN.pdf PUBLICATIONS/NATIONAL_REPORTS/National%20Reporting%20 5.08/MWh. 183.48/MWh, whilethelowest wasEUR mcm (100% of gross inland consumption) January 2013Estonia’s electricitymarket was 39.20/MWh, which is lower than the 2011 price traders thatoperatethroughtheNordPool 116 115 . In2012,thehighesthourlypricewas 210.01/MWh, whilethelowest was 43.14/MWh. In2013,thehighest ESTONIA -7.06/MWh. 407 785 GWh) 115 GWh, . In 114 115 . .

55 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 56 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 118 117 switching supplier, betweenyear2011and2012therewasnosupplier As non-eligiblecustomersdidnothaveanoptiontochange the averagesellingpricetonon-eligiblecustomers. According totheElectricityMarket Act,in2012ECAapproved were obligedtobuyelectricityfromregulatedsuppliers. electricity toeligibleconsumers.Non-eligibleconsumers In 2012,therewerefiveindependentsuppliers,whosold Source: Eurostat ESTONIA Electricity pricechangeby component2008-2013(in€cent/kWh) 3 FIGURES 10 12 14 16 customers. switched (1 of which41 of customersintheretailmarket isapproximately42 was soldby another27 share in2012was89.0%,whiletheremaining11.0% a dominantpositionintheretailmarket. Itsretailmarket Similar tothewholesalemarket, ASEestiGaasalsohas Gas analysis hasyetbeencarriedout. with a“remotereadingdevice”by 2017.Nocost-benefit grid codedeterminesthatallconsumersmustbeprovided next EnergySectorDevelopmentPlan2030.TheEstonian The roll-outofsmartmetersisduetobedealtwithinthe change supplier. opportunity tosellelectricityconsumerswhichnow can 0 2 4 6 8 http://mtr.mkm.ee/ ACER/CEER, AnnualReporton theResultsofMonitoring November 2013. the InternalElectricity andNaturalGasMarkets in2012, 2008 117 Taxes+Levies HOUSEHOLDS . In2013therewere15 810 000 arehouseholds.In2012,1 AND 4 of thesewerehouseholds),or 4.5% ofthe 2013 licensed gassellers.Thenumber Networks suppliers 2008 INDUSTRY 913 customers 118 Energy+Supply , whohadan 2013

000, meters innaturalgassystemhadbeenmadeby 2013 – 26% supply costs–51%;network22%;VAT andothertaxes In 2013,theaveragegasretailpriceconsistedof:energyand a regulatedprofitmargin. users paythe full import price,plustransportationcostand light fuel oil), which drive the fluctuation ofthe gas price. End changes intheaveragepriceofoilderivatives(heavyand The importpriceofgasiscalculatedaccordingtothe Sources: EC,EPCRmetadata 0 1 2 3 4 5 6 Natural gaspricechangeby component2008-2012(in€cent/kWh) 119 (23 retail electricitymarket isassessedbelow theEUaverage In contrasttothegasmarket, theperformance ofthe 2010). rates arethesecondlowest (andhavebeenfallingsince choice ofproviders isthelowest intheEU,andswitching decrease since2010.However, consumerassessmentofthe is secondlowest intheEU,following asmallbutsteady the overall consumersatisfaction.Theincidenceofproblems (79.3 The retail gas market is assessed fourth highest in the EU Consumers 5. performance ofthismarket hasseenthelargestdecrease the lowest among31

ACER/CEER AnnualReportontheResultsofMonitoring November 2013. the InternalElectricity andNaturalGasMarkets in2012, th positionwith66.2 points compared to 74.1), withthe fifth highestscore on 119 2008 . Noformal decisionandnoplantoroll-outsmart Taxes+Levies HOUSEHOLDS 2012 domestic servicesmarkets. The points comparedto72.0)and Networks 2008 INDUSTRY Energy+Supply 2012 119 .

pay thebill.Insummeritis7days. the consumerhasbeengiven45 when receiving subsistencebenefits)maybeinterruptedonly of naturalgastovulnerablecustomers(familyorindividual gas, theterm“vulnerableconsumer”isdefined.Thesupply to paythebill.Insummeritis15 days interrupted onlyaftertheconsumerhasbeengiven90 in fullorprimarilyby electricity)inthewinterperiodmaybe customers (householdcustomerwhoheatedresidentialspace the ElectricityMarket Act.Thesupplyofelectricitytohousehold interruption ofelectricitysupplyisverydetailedregulatedin “vulnerable consumer”intheelectricitysector In Estonia,during2013,therewasnodefinitionofa and gasretailmarket. There isnopricecomparisonsiteavailablefor theelectricity 122 121 120 the EUgasmarket. system aswelltoLatvia.Thereisnolinkwiththerestof Estonia’s gasgridisconnectedtotheRussianFederation Gas and otherBalticStates. have anadverseimpactontheelectricitymarkets ofEstonia Estonia andLatviacreatescross-borderbottlenecks,which However, thelimitedcapacityofconnectionbetween trading inthepower exchange. Estonia priceareafor theday-aheadmarket, intradayand has recentlyjoinedtheNordPoolSpotby creatingthe the Estlink1andEstlink2interconnectorswithFinland and Estonia isinterconnectedtotheEUelectricitymarket through Electricity Infrastructure 6. 19 and inquiriesconcerningtheelectricityretailmarket and In 2012,theCompetitionAuthorityreceived82 can alsocontacttheConsumerProtectionBoardofEstonia. ECA actsasanalternativedisputeresolutionbody. Consumers high onswitching(6 since 2012.Ontheotherhand,however, themarket scores and thelatterindicatorhasconsiderablydecreasedinscore Trust inproviders andcomparabilityareparticularlylow, and thelargestdecreaseamongdomesticservicesmarkets. of allelectricitymarkets intheEUbetween2012and2013

CEER, NationalIndicators Database,2013. ECA,http://www.ceer.eu/portal/page/portal/EER_HOME/EER_ 10 consumer_evidence/consumer_scoreboards/10_edition/index_en.htm 2013/NR_En/C13_NR_Estonia-EN.pdf PUBLICATIONS/NATIONAL_REPORTS/National%20Reporting%20 inquiries concerning the natural gasretail market th ConsumerMarkets Scoreboard, http://ec.europa.eu/consumers/ th placeoutof25). days inthewinterperiodto days. Asregardsnatural 120 122 . Nevertheless complaints 121 . supply deficitisensured coverage ofinfrastructuralpeakdemandorthecoverage of Estonian gasnetworkcriterionN-1equals104.5%,thusthe consumption ofenergyin2012wasonlycirca5%.Forthe Latvia (Karksi).However, naturalgasintheshareoffinal gas network(Värska andNarva)aninterconnection with Estonia hastwointerconnectionswiththeRussiannatural Gas towards synchronisationwithcontinentalEuropeangrids. on thede-synchronisationofBalticgridsandamove request oftheBalticStatespendingtheiranalysisastudy Agreement. Negotiationshavebeensuspendedatthe Commission withtheaimtoconcludeanIntergovernmental grids. In2012,negotiationswerelaunchedby theEuropean in synchronousmodewiththeRussianandByelorussian increased. However, theEstoniangridcontinuestooperate and Estonia’s independenceofRussiansupplieswas The Estlinkprojectsenhancedsecurityofelectricitysupply electricity demandandfor exporttoLatviaandLithuania. Estonia hassufficientproductioncapacityto cover domestic Electricity Securityofsupply 7. gas suppliesassoonpossible. order to start construction and introduce diversification of reach afinalagreementonthelocationofterminalin side oftheFinnish gulf. ItisimportantthattheBalticStates would bebestplacedoneithertheFinnish ortheEstonian In 2013,itwasdecidedthataregionalBalticLNGTerminal Finnish gasgrids. Finland andEstonia,whichwouldconnecttheBaltic BalticConnector is a proposed natural gas pipeline between and Poland,aplannedregionalLNGterminal.The projects includeaninterconnectionbetweenLithuania particular fromtheEuropeanmarket. Proposedinvestment isolation oftheBalticregioningeneralandEstonia The BEMIPinitiativeislaunchedwithaviewtoendthe 123 to exist. same supplier, thedefactoinsecurityofsupplycontinues the LatvianIncukalnsstoragefacilityiscontractedfrom

http://www.ceer.eu/portal/page/portal/EER_HOME/EER_ 2013/NR_En/C13_NR_Estonia-EN.pdf PUBLICATIONS/NATIONAL_REPORTS/National%20Reporting%20 123 . However, giventhatthegasfrom ESTONIA

57 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 58 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 ( Sources: Eurostat,CEER,NationalRegulatoryAuthority, ECcalculations. ESTONIA ESTONIA – KEYINDICATORS 1 ) Electricity market value( HHI inelectricityretailmarket HHI inpower-generation market Regulated pricesfor non-households–electricity Regulated pricesfor households–electricity Switching rates(entireelectricityretailmarket) Number ofmainelectricityretailers Number ofelectricityretailers Market shareofthelargestpower generationcompany Number ofmainpower generationcompanies Number ofsmartmetersinstalled Installed generationcapacity(MW, 2012) Peak demand(MW, 2012) of Number ofcompaniesrepresentingatleast95% ELECTRICITY and gasconsumptioninthehouseholdnon-householdsectors(average bands)andannualaverage retailprices. Market valueisanestimationofthesizeretailelectricityandgasmarkets. Itiscalculatedusingdataonelectricity net power generation 1 ) (bn€) 6 6 7 7 Yes Yes 0 1 42 87.0% 1 N/A 2 1 1 6 0.427 869 748 647 572 HHI ingasretailmarket HHI ingassupplymarket Regulated pricesfor non-households–gas Regulated pricesfor households–gas Switching ratesfor gas(entireretailmarket) Number ofmainnaturalgasretailers Number ofretailerssellingnaturalgastofinalcustomers Market shareofthelargestentitybringingnaturalgas Number ofmaingasentities GAS into country Number ofentitiesbringingnaturalgas Gas market value( 1 ) (bn€)

7 7 >8 No No 4.5 1 27 86.5% 2 1 0.093 943 500 10% 20% 30% 40% 50% 60% 125 124 Source: Eurostat Gross inlandconsumptionmix2008-2012 1 FIGURES energy mixat7.2%. renewable energy sources was less significant in the overall and toalesserextentsolidfuels.Thecontributionfrom on fossil fuels,notablypetroleumproducts,naturalgas, Energy consumptionin2012(14.0 Generaloverview 1. (20%). energy sector is 16%, which is lower than the EU-27 average 0%

http://epp.eurostat.ec.europa.eu/cache/ITY_PUBLIC/8- Directive 2009/72/EC concerningcommonrulesfor theinternal 10032014-AP/EN/8-10032014-AP-EN.PDF market in electricityandrepealingDirective 2003/54/EC. 2008 Nuclear Solid fuels IRELAND AND 2 2009 125 Natural gas Renewables The2020renewabletargetfor the 124 2010 → → → → and encouragecustomerstoswitch. high. Furtherefforts arerequiredtoimprove competitionintheretailsector retail pricederegulationwhileinelectricitytheincumbent’s market sharesremain Retail market competitioninthecaseofgasremainsbelow therequiredlevelfor proportion ofwindgeneration,whichisparticularlychallenginginasmall system. Ireland shouldcontinue developing networks and systemsto accommodate a large projects mayhelpensuretheycanbedevelopedmorerapidly. but developmentskeep beingdelayed.Arevisionofthepermittingprocessfor these Gas fielddevelopment,greaterstorageandLNGcapacityhaveallbeenproposed, of aliquidgaswholesalemarket (tradingisinthehighlyliquidUKmarket instead). outages inwinter2012/13.Thelimitedsourcingoptionshavealsoresultedthelack relies heavilyongasimports from the UK and both interconnectors experienced Efforts for thediversification ofitsgas supplies shouldcontinue as power generation Key issues needs tobecompletedensurecompliancewiththeElectricityDirective the SEMmarket designwiththeEuropeantargetmodel.TheTSOcertificationprocess Irish authorities and their Northern Irish counterparts should continue efforts to align Mtoe) wasbasedlargely Crude oilandpetroleumproducts Other 2011 2012 accounting for approximately20%ofthemixinIreland. fuel source,withrenewablegeneration(mostlywind)now in Ireland is as below – gas continues tobethebiggest For 2012theestimatedelectricityfuelproductionmix provided 7.1%ofthetotalelectricitygenerationin2011. 10% 20% 30% 40% 50% 60% 70% 127 126 Sources: EU energyinfigures-“StatisticalPocketbooks 2012and2013”, Gross electricitygenerationmix2008-2012 power generationincreasedto19.8%andcogeneration 54.2%) andsolidfuels(25.2%).Therenewableshareof dominated by power gas-fired (withashareof generation The power generationmixin2011(27.5 0%

Eurostat. The shareofelectricity producedincombinedheat and power plants(CHP). 2008 European Commission Renewables Solid fuels 2009 Natural gas Other 2010 Crude oilandpetroleumproducts 2011 142 TWh) remained .

2012 127 126

59 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 60 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 129 128 system operatorfor Ireland in2013.Thecertification EirGrid hasbeencertifiedasanindependenttransmission transmission system.ESBandEirgridarebothstate-owned. is responsible for the operation and development of the and owns andoperatesthedistributionnetwork.EirGrid ESB owns theelectricitytransmissionnetworkassets Unbundling of itsfunctions. expenditure in 2012 was EUR for exampleenergysafety andwater. TheCER’s actual many ofthesestaffworksinnon-energyeconomicareas, The numberofstaffatCERiscurrentlyabout90,though CER representatives,anindependentmemberandhisdeputy. Committee consists of three NIAUR representatives, three Regulator (NIAUR)aspartoftheSEMCommittee.The (SEM) with its counterpart in Northern Ireland, the Utility regulates theall-islandwholesaleSingleElectricityMarket and naturalgassectors.Aspartofthisrole,CERjointly responsibilities inenergyaretoregulatetheIrishelectricity as Ireland’s economicwaterregulator. TheCER’s economic customer functions.In2014theCERwasalsoappointed energy regulatorwitharangeofeconomic,safety and The Commissionfor EnergyRegulation(CER)isIreland’s National EnergyRegulator to unbundlingoftransmissionsystemoperators. February 2014. Ireland had failed to adoptprovisions related and hasbeenreferred totheCourtofJusticeEUin Third EnergyPackage ElectricityDirectiveisstillon-going An infringementprocedurefor partialtranspositionofthe sustainability criteriafor biofuelsandbioliquids. management ofgridaccessfor renewableelectricityand energy wouldcomefromrenewablesourcesby 2020,the transposed includethecommitmentthat10%ofalltransport energy directive.TheaspectsoftheEUdirectivenotyet of Justice for failing to fully transpose the EU’s renewable In January2014,Irelandwasreferred totheEuropeanCourt amended toincludeareverseflow. Interconnection Point and the South-North gas pipeline were access conditionstotheIrishgasnetworkatMoffat gas market rules.Thiswasresolvedin2012,whenthe to theEuropeanCourtofJusticefor failuretoadoptEU In January2012,theEuropeanCommissionreferred Ireland General Regulatoryframework 2. IRELAND http://europa.eu/rapid/press-release_IP-14-155_en.htm http://europa.eu/rapid/press-release_IP-14-44_en.htm 10.8 million acrosstherange 128 129 unbundled. the transaction,BordGáisÉireannwillbefullyownership gas network(bothtransmissionanddistribution).Following iCON Infrastructure consortium ofCentrica,BrookfieldRenewablePower and December 2013theyannouncedtheirpreferred bidder:a negotiations toselltheretailarmofbusiness,andin of outstandingworkitems. 2013, CERcertifiedBGEasanITO subjecttothecompletion Bord GáisNetworks,toform anewindependentsubsidiary. In Transmission Operatormodel”by amalgamatingGaslinkand In 2010,BGEconfirmeditsintentiontoadopt the “Independent independent subsidiaryofBordGáisÉireann. in productionactivities.ThesystemoperatorGaslinkisan and electricity(BordGáisEnergy),althoughithasnointerests infrastructure (BordGáisNetworks)andretailsupplyofgas company, withbothtransmissionanddistributiongas Bord GáisÉireannisaverticallyintegratedstateowned East-West interconnectorbetweenIrelandandBritain. Interconnector Ltd)induecoursefor certificationofthe CER expectstoreceiveanapplicationfromEIL(East-West CER now needstomonitorand assessthesearrangements. out inboththeEuropeanCommission’s andCER’s decisions, However, toensuretheireffective implementationandasset followed thedecisionofEuropeanCommission 134 133 132 131 130 in 2010andEUR for mostof2009,andthenincreasedtoover EUR from over EUR electricity generation.Inrecentyears,theaverageSMPfell SMP closelyfollows thegas price,sincegasisthekey fuelfor payments. payments throughacapacitymechanismandconstraint Generators receivetheSystemMarginalPrice(SMP), bought andsoldthroughamarket clearingmechanism. all-island grossmandatorypoolmarket. Allelectricityis Ireland andNorthernIreland.TheSEMincludesacentralised Since 2007,theSEMhasbeenelectricitymarket for Electricity WholesaleMarkets 3. would bethecaseunderotherunbundlingoptions guarantee moreeffective independenceoftheTSOthan the arrangementsinplace,ifeffectively implemented;clearly

CER, 2012 Ireland National Report to the European Commission, There wasnoupdate onprogressby 17 CER/13/161, CER’s ITO CertificationDecision. Set outinChapterVoftheElectricity Directive. Pursuant Article July 2013. 80/MWh inOctober2008tounderEUR 60/MWh in2011and2012. 9(9) oftheElectricityDirective. 133 . TheStatewillretainownership ofthe 132 TheIrishGovernment isin March 2014. 134 50/MWh 40/MWh 40/MWh 130 that 131 .

was adaptedfor gasstorageinOctober2001. fields, butitisdeclining.TheSouthwestKinsaleGas Field 137 136 135 2012/13. Great Britainprovided 91%ofIreland’s gasdemandin Ireland currentlysourcesmostofitsgasfromGreatBritain. Gas to sellDirectedContracts(2013) Contracts”. Currently, onlyESBPower Generationisrequired to independentlyinfluencemarket pricestoissue“Directed the power torequireanymarket participantdeemedable the RegulatoryAuthorities’Market ModellingGrouphas To helpensurethatthereisnoabuseofmarket power, arrangements. for moreactiveinvolvementofthedemandsideinmarket generation fromrenewableresourcesandthepotential interconnection withthe market inGreatBritain,increased the creationofSEMin2007.Theseincludeincreased in lightofthedevelopmentsthathaveoccurredsince development thatwillbringsignificantbenefits,especially views theimplementationofTarget Modelasapositive compliance withEUlegalrequirements.TheSEMCommittee the endof2016.Thiscommitmentisnotonlybasedon committed itselftoimplementingtheTarget Modelby Congestion Management (CACM). The SEMCommittee has period in theNetwork Code on Capacity Allocation and proposed toinclude for Ireland a two year transitional most otherMemberStates.ACER andENTSO-Etherefore the Target ModelwithSEMissubstantiallygreaterthanfor reflects this.Therefore thechangerequiredtoimplement trading with self-dispatch and the Target Model generally common Europeanmarket designisdecentralisedbilateral centralised poolmarkets like theSEMinmind.Themore for Ireland.TheEUTarget Modelwasnotdesignedwith European market integration creates some unique challenges capacity. auctions. “Use-it-or-sell-it”conditionsapplytolong-term available throughexplicitlong-term,dailyandintraday The Moyle andEast-West interconnectorsmake capacity exercise ofmarket power inSEM. input (gas)isanindicationthattherehasbeennosignificant The closerelationshipbetweenSMPandthebiggestfuel Contracts aresettoachieveaconcentrationlevelof1 spot market wouldbequitehighlyconcentrated;Directed 45% shareoftheSEMspotmarket. Without actionthe

http://www.gaslink.ie/media/ http://www.allislandproject.org/en/wholesale_overview.aspx http://www.allislandproject.org/en/market_decision_ GaslinkNetworkDevlopmentPlan20131.pdf 408ea8bd136b&mode=author documents.aspx?article=c9e3a4bc-f41e-463d-b247- 137 ThereisproductionattheKinsaleandsatellite 136 135 sincetheyhavecirca 150. Ireland tooperateonanall-islandbasis. allow thegastransmissionsystemsinIrelandandNorthern develop CommonArrangementsfor Gas(CAG). Thiswould island (CERandNIAUR)havebeenworkingtogetherto balancing regime,soimplementationhasbeendelayed. capacity limitations to the operation of a single physical have beenchallengingissuesraisedincludingphysical Mechanisms (CAM implemented), andthenetworkcodeonCapacityAllocation on 1 forecast toriseby 12%over theperiodto2021/22. UK market for theforeseeable future,andgasdemandis continue tobeheavilyreliantoninterconnectionwiththe In the10 142 141 140 139 138 November 2015. (CMP revised guidelinesonCongestionManagementProcedures (IBP), however theIBPisextremelyilliquid.Elementsof a notionalbalancingpointcalledtheIrishBalancingPoint high levelsofliquidity. Trades inIrelandcantake placeat National BalancingPoint(NBP)whichischaracterisedby Most gasfor IrelandissourcedfromGreatBritain’s High CourtinIrelandfound infavouroftheCER). levies thatShannonLNGshouldpay(onthislatterissue,the permission issueswiththeCorribfieldanddisputes over both projectshasbeensignificantlydelayedduetoplanning become operationalin2017.Unfortunately developmentof terminal (alsoa“ProjectofCommonInterest”),whichcould flows in 2015, and the Shannon Liquefied Natural Gas (LNG) gas field,whichiscurrentlyexpectedtobegincommercial Britain, potentialnewsourcesofsupplywillincludetheCorrib to Ireland.To decreaseIreland’s dependenceonimportfrom potential “ProjectofCommonInterest”inimproving supply EU has identified thisreinforcement projectin the UK as a reinforcements inScotlandtoimprove capacity, andthe Bord GáisNetworksandGaslinkhaverecommended 2014/15 andanysubsequentyearsthatCorribisdelayed. capacity limits of Moffat are expected to be approached in

http://www.niassembly.gov.uk/Documents/RaISe/ http://www.gaslink.ie/media/ http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2013: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2012: http://www.gaslink.ie/media/ Publications/2013/north_south/13213.pdf GaslinkNetworkDevlopmentPlan20131.pdf 273:0005:0017:EN:PDF 231:0016:0020:en:PDF GaslinkNetworkDevlopmentPlan20131.pdf 139 October 2013 (some other elements remain to be ) wereimplementedontheGB-Irishinterconnectors year forecast, theIrishgasmarket isexpectedto 141 140 Since2008,thetworegulatorson ) is required to be implemented by 142 IRELAND However, there 138 The

61 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 62 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 is expectedbetweencirca2016 and2019. formally initiatePhase2.While notyetdecided,theroll-out meters. Sincethen,CERhasworked withstakeholders to announced itsdecisiontoapprove therolloutofsmart 143 as partofthesmartmeteringtrial. 10 carried outfrom2008to2011.ESBNetworksinstalled out. Phase1 consisted oftrialsandcost benefit analysis CER isleadingtheimplementationofsmartmetersroll- that retailcompetitionisstilltoolow inIreland. to theselevels,ithasnotyetreachedthatpoint,suggesting the 55% without rebranding. Although the market is close market sharesfor deregulationare60%withrebrandingand still intoodominantaposition(January2014).Thethreshold not yetbeenpricederegulatedasCERjudgethatBordGáisis Energy, whoisthelargestsupplier. TheIrishgasmarket has The incumbentsupplierinthegasretailmarket isBordGáis Gas remain compatible with CAM rules when introduced in 2015. introduced in2013willrequirereviewtoensurethatthey at whichitwasderegulated60%,whileCMPmeasures share (MWh)ofElectricIrelandisjustunderthethreshold Large EnergyUser(LEU)markets. Thedomesticmarket terms ofenergy supplied in thedomestic (residential) and supplier in terms of customers across all segments and in In electricity, ElectricIrelandcontinuestobethelargest Electricity RetailMarkets 4. Source: Eurostat-*nodataavailable Electricity pricechangeby component2008-2013(in€cent/kWh) 3 FIGURE IRELAND 10 15 20 25 30 0 5

000 http://www.esb.ie/main/sustainability/smart-meters.jsp meters andprovided over 1000in-homedisplays 2008* Taxes+Levies HOUSEHOLDS 2013 Networks 2008 143 InJuly2012,CER INDUSTRY Energy+Supply 2013 from customers,anincreaseofalmost11%on2011. 2012 theEnergyCustomersTeam received3 gas. They also provide a free dispute resolution service. In providing consumerswithinformation onelectricityand gas providers/tariffs is5 for pricecomparisonwebsites. support switching, CER has set-up an accreditation process means alargenumberofcustomershaveneverswitched.To (electricity isinthe14 one seenfor theaverageofalldomesticservicesmarkets addition, bothmarkets show ascoreslightlyabove theIn required tooffer customersafree Pay-As-You-Go meter. are alastresort.Priortodisconnection,allsuppliers put obligationsonsupplierstoensurethatdisconnections suppliers mustprovide theircustomerswith.CERhasalso In 2012,CERsetout the minimum servicelevels that of theteam’s work. of thecustomercontactsin2012,theymadeupmajority complaints. Althoughcomplexcomplaintsmadeupjust10% straightforward requestsfor information tocomplex The reasonsthatcustomerscontacttheECTvary, from from 2011 levels). the electricitymarket in2012was252 in bothmarkets. Thetotalnumberofswitchescompletedin retail markets in2012andswitchingrateswereabove 10% Competition continued todevelop in the electricity andgas compared to72.0and74.6 the difference beingverysmall for thelatter(75.1 electricity and gasmarkets above the EU average with Irish consumersassesstheperformance oftheirretail Consumers 5. 150 149 148 147 146 145 144 CER’s EnergyCustomersTeam corresponds to13 (electricity 3 are assessedparticularlywellontheeaseofswitching market hasdecreaseditsscoreby 2.3 market hasstayedrelativelystablesince2012,thegas out of 31

CER, 2012 Ireland National Report to the European Commission, http://www.cer.ie/docs/000451/CER13288%20ECT%20 http://www.cer.ie/customer-care http://www.cer.ie/docs/000884/cer11144.pdf CER, 2013 Ireland National Report to the European Commission, 10 However thedifference isnotstatisticallysignificant. edition/index_en.htm consumers/consumer_evidence/consumer_scoreboards/10_ July 2013. Annual%20Report%202012.pdf July 2013. th ConsumerMarkets Scoreboard,http://ec.europa.eu/ markets). While the performance of electricity rd andgas5 146 th While good by EU standards,this still and14 th positionandgasinthe15 th th highestintheEU.

highest intheEU)andswitching 148 147 compared to74.1 th placeintheEUranking. actsassinglecontactpoint 056 (adeclineof25% points. Bothmarkets 145 067 144 th contacts position ), which points 150 149

with acapacityof500-1000 3 3 on renewable resources (wind, wave and tidal, connecting such asanoffshoreinterconnectedelectricitygridbased from renewableenergysources,bothinIrelandandtheUK, Another clusterofPCIswillfacilitateconnectinggeneration under PCIschemeinconnectiontothesedevelopments. Britain), andpossiblyFrance; HydroStorageisalsoaddressed further interconnectionswithUK(NorthernIrelandandGreat flexibility, severalPCIsareonthescope.Someregard 151 2015. electricity transmissionsystemover the years 2011to CER authorisedoverof investmentinthe abillioneuros renewable generatorstothegrid,postGate3. the connection and access policy for renewable and non- by 2020.TheCERiscommencingtheprocessofreviewing electricity consumptioncomingfromrenewablegeneration to meetanIrishGovernment targetof40%Ireland’s targets fromanelectricityperspective–inotherwords Gate 3whichisintendedtohelpmeetIreland’s 20:20:20 the nextroundtobedevelopedwillconnectedunder connecting thelargenumberofrenewablegenerators,and Ireland hasagroupingprocessor“Gate“for power aswellsystemsecurity andefficientdistribution. also beennecessary, for theconnectionofexpandingwind Initiative. Investmentintheonshoreelectricitynetworkhas received anEUfundingofEUR to theUKbeganfullcommercialoperationinMay2013.It The new500 Electricity Projects ofCommonInterest(PCI). shop (OSS)for thepermittingofenergyinfrastructure The Planning Board has been appointed as the one-stop- Infrastructure 6. 200

http://www.ceer.eu/portal/page/portal/EER_HOME/EER_ 2013/NR_En/C13_NR_Ireland-EN.pdf PUBLICATIONS/NATIONAL_REPORTS/National%20Reporting%20 151 MW) consistingof850 To facilitaterenewablesintegrationandimprove MW EirGridEast-West electricityinterconnector MW inthenorthernarea. km ofHVDCinterconnectors 110 million fromtheTEN-E highlighted elsewhereinthisreport. (through reinforcements inGB)andLNGinvestmentis LNG plantinShannon.Theneedfor greaterinterconnection in Moffat–,increasedstorageNorthernIrelandandthe implementing ofreverseflows betweenIrelandandUK–as a clusterofProjectCommonInterestwilladdress In ordertoprovide for moreflexibilitytothegassupply, reinforcement inthemid-tolongterm. the southern part of the network is anticipated to require sufficient capacitytomeet forecastgasdemand,although found thathighpressuretransmissionsystemcurrentlyhave the CERwhichwassubmittedtoENTSO-G.Thenetworkplan generators toholdfuelstocksfor between3and5 the significantrelianceonnaturalgas,CERrequiresgas to obligetheregulatedcompaniestake action.Given and cantake such measuresasitconsidersnecessary CER hasadutytomonitorthesecurityofsupplyelectricity Securityofsupply 7. TSO hassubmittedadraftNetworkDevelopmentPlan To meetThirdPackage requirements,in2013Gaslinkas Gas 152

http://www.gaslink.ie/media/ GaslinkNetworkDevlopmentPlan20131.pdf IRELAND days. 152 to to

63 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 64 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 ( Sources: Eurostat,CEER,NationalRegulatoryAuthority, ECcalculations. IRELAND ( IRELAND – KEYINDICATORS 2 1 ) ) Switching rates Electricity market value( Number ofmainelectricityretailers HHI inelectricityretailmarket Number ofelectricityretailers HHI inpower-generation market Market shareofthelargestpower-generation company Regulated pricesfor non-households–electricity Number ofmainpower-generation companies Number ofsmartmetersinstalled Peak demand(MW) Installed generationcapacity(MW, 2011) Regulated pricesfor households–electricity of Number ofcompaniesrepresentingatleast95% ELECTRICITY and gasconsumptioninthehouseholdnon-householdsectors(average bands)andannualaverage retailprices. Market valueisanestimationofthesizeretailelectricityandgasmarkets. Itiscalculatedusingdataonelectricity Domestic 10%acrossgasandelectricity. net power generation 2 ) (bn€) 10% 4 4 4 6 1 1 55% No 5 10 4 8 No 5 3.207 759 150 589 791 000 (

1 ) Number ofmainnaturalgasretailers HHI ingasretailmarket Number ofretailerssellingnaturalgastofinalcustomers HHI ingassupplymarket Market shareofthelargestentitybringingnaturalgas Regulated pricesfor non-households–gas Number ofmaingasentities Regulated pricesfor households–gas GAS into country Number ofentitiesbringingnaturalgas Switching ratesfor gas(entireretailmarket) Gas market value( 2 ) (bn€)

6 4 4 8 N/A 42% Yes 5 Yes 13 0.800 10% 780 ( 1 ) electricity generationin2011 Cogeneration year. was duetotheadditionalsolarphotovoltaics installedinthe increased itsshareby 23%comparedto2011levels.This generation in2012camemainlyfromrenewables,which oil andpetroleumproducts(10%).Theincreaseofelectricity by naturalgas(23.5%),renewableenergies(14%)andcrude represents 51% of the total electricity production, followed Electricity isgeneratedmainlyby indigenouslignite,which The grosselectricitygenerationin2011was59.4 156 155 154 153 energy consumptionreached15.1% consumption. In2012,therenewablesshareingrossfinal renewable energiesprovide 9.6%ofgrossinlandenergy fuels represent30.1%,naturalgasrepresents14.1%and oil andpetroleumproductsaccountfor 46.2%.Solid 27.04 The grossinlandenergyconsumptionin2012was Generaloverview 1. target of18% is showing goodprogresstowards achievingits2020RES

Eurostat. The shareofelectricity producedincombinedheat Greek MinistryofEnvironment,Energy &ClimaticChange, Eurostat. and power plants(CHP). http://ec.europa.eu/energy/renewables/action_plan_en.htm National RenewableEnergyAction Plan, Mtoe, adecreaseof2.9%comparedto2011.Crude

155 GREECE 154 ofheatandpower represents4.5%ofgross . 156 . → → Key Issues switch suppliersandreapbenefitsfromtheliberalisedmarket. exclusivity rightsofregionalgassuppliersandthusallowing consumersto gas market model,fostering competitionalsoontheretaillevel,ending draw a timeline and an action plan for facilitating the transition to a more mature needs tobeensuredby thenational regulatoryauthority. Greeceshouldfurthermore In gas,thecontinuedindependentoperationofgasTSODESFA afteritsprivatization while ensuringasmoothtransitionfor consumers. attract newpotentialsuppliersandeffectively openuptheretailmarket tocompetition should betaken towards thecreationofaninvestment-friendlyframeworkinorderto supplier asaresult.Electricitypricesshouldbecost-reflectiveandappropriatesteps market hastaken placeandthe incumbentelectricitycompanyremainsthedominant Electricity prices werefullyliberalisedinJuly2013butnoeffective entryintothe 153

, andthusGreece

TWh. Gross inlandconsumptionmix2008-2012 1 FIGURES 10% 20% 30% 40% 50% 10% 20% 30% 40% 50% 60% 60% Sources: EU energyinfigures-“StatisticalPocketbooks 2012and2013”, Gross electricitygenerationmix2008-2012 Source: Eurostat 0% 0% 2008 2008 European Commission Renewables Solid fuels Renewables Solid fuels AND 2 2009 2009 Natural gas Natural gas Other Other 2010 2010 Crude oilandpetroleumproducts Crude oilandpetroleumproducts 2011 2011 2012 2012

65 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 66 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 from PPC,whichshouldbecompletedstillduring2014 operator. Thegovernment decided to fullyseparateADMIE ADMIE SAastheindependentpower transmissionsystem In 2012,theRegulatoryAuthorityfor Energy(RAE)certified (ITO) model. system, accordingtotheIndependentTransmission operator ADMIE SA,whichowns andoperatesthetransmission integrated electricity company, established a 100% subsidiary, Corporation (PPC), which is the state owned vertically Following theEnergyLaw4001/2011,PublicPower Unbundling assigned toitby theThirdenergypackage. its abilitytocarryouttheincreasedpowers andduties cuts and,mostimportantly, ahiringfreeze,thathaslimited Regulator hasbeeninfluenced by severebudgetandsalary Since thetranspositionofThirdEnergyPackage, the by SOCARiscurrentlypending. the sharesinDEFSA.ThecertificationofDESFA ascontrolled Azeri State-owned companySOCARfor thesaleof66% 65%). In 2012, HP and HRADF signed an agreement with the the HellenicRepublicAssetsDevelopmentFund(“HRADF”, is currentlycontrolledby HellenicPetroleum(“HP”,35%)and In thegassector, theTSOofnationalgridisDESFA SA.It subsidiary ofPPC,DEDDIESA. although itsoperationwasassignedtoanother100% The distributionnetworkownership remainedwithPPC, 159 158 157 of 7 authority. TheBoardofCommissionersRAEiscomprised established inJuly2000,isanindependentadministrative The RegulatoryAuthorityfor Energy(RAE),whichwas National EnergyRegulator Regulatory Authority. entry-exit tariffmodelwasintroducedin2013by the legislation inAugust2011.Inthegassectoradecoupled The ThirdEnergyPackage wasimplementedinGreek General Regulatoryframework 2. GREECE 2012, adecreaseof11%comparedto2011

Greek Ministryof Environment, Energy&ClimaticChange. RAE’s BalanceSheet2012,http://www.rae.gr/site/file/system/ www.rae.gr docs/ActionReports/balance2012 members 157 . ThebudgetofRAEwasEUR 158 7.3 . million in 159 . from renewable energy installations in 2012 The HellenicParliament adoptedatemporarytaxonrevenues market players.However asharpdeclinewasobservedin 90% from thetotalnaturalgasimports48.1 companies have started importing natural gas. In 2012, Since 2010othercompaniesthanDEPA atotalofsix Petroleum SA. 65% of DEPA while the remainingshares are held by Hellenic Pending theprivatisationprocessofDEPA thestateowns DEPA istheincumbentnaturalgasimporter andsupplier. Gas the Greekelectricitysystemhavesignificantarrears payments toRESgenerators.Asaresult,themainactorsin revenues fromthemarket whichwasinsufficientto cover the the renewableenergysupportschemes,givenlevelof LAGIE SA,had accumulatedunsustainabledebtsdueto the cashpositionofPPC.Inparallel,market operator, deficiencies oftheGreekenergymarket havetightened liquidity tensionsintheGreekbankingsystemandstructural crisis. Severalfactors, such asunpaidelectricitybills, The Greekelectricitysectorwashitin2012by aliquidity be introducedin2014. Further reforms ofthecapacitymechanismareplannedto curve and wholesale pricesto better reflect marginal costs. fired power plantsto follow thefluctuationsofdemand dispatch algorithm,creatingstrongerincentivesfor gas- design, which,duetothetechnicalnatureof plant In July2013RAEdecidedtoreform aspectsofthemarket are foreseen tobesoldby thefirstquarterof2016. by theHellenicRepublicAssets DevelopmentFund(HRADF) in the first quarter of 2015. 17% of the PPC’s shares owned assets ofPPC.Thenewcompanyshouldbefullyoperational formed fromthetransfer ofapproximately30%the vertically integratedelectricitycompany, whichwillbe In May2013,thegovernment decidedtoestablishanew Electricity Wholesalemarkets 3. 161 160 of 2014 to eliminatethedebtinrenewablesaccountby theend committed tofurtheradjustmentseverysixmonthsinorder increase intherenewableslevyJuly2013,authorities

The EC,Second EconomicAdjustmentProgramme The EC,SecondEconomicAdjustment Programme for GreeceThirdReview, July2013. for GreeceFirst Review, December2012. were importedby DEPA SA,and10%by twoother 161 . TWh inGreece, 161 . Following an

160 . 163 162 Source: Eurostat Electricity pricechangeby component2009-2012(in€cent/kWh) 3 FIGURE recoverable taxrates In part these increaseswere due to theintroduction of non- although inbothcasestheyremainedbelow theEUaverage. increased significantly in 2012(29% and 37.3% respectively), Electricity prices for both industrial and domestic consumers Electricity Retailmarkets 4. gas by 15%,approachingtherespective averageEUprice agreed tothedecreaseofpriceimportednatural LNG Terminal. In March 2014, DEPA and GAZPROM EXPORT market stemmedfromthirdpartyaccesstotheRevythoussa price ofLNGworldwideasmostthecompetitionin the otherparties.Thisismainlyattributabletoincreased the yearof2013inpercentagesharegasimportsby 10 12 14 16 following figures. in householdsandindustrialconsumersispresentedthe on theconsumptioncategory. Theevolutionofretailprices incumbent (PPC)increasedby around11-34%,depending In 2012,domestictariffs(competitiveelementsonly)ofthe been completelyliberalisedsince1 interconnected islands.Low-voltage enduserpriceshave to recover thehighercostofpower generationinthenon- prices inGreecealsoincludeapublicserviceobligationlevy towards costrecovery andremoval ofcrosssubsidies.Retail 0 2 4 6 8

The EC,EnergyPrices andCostsreport,2014. DEPA. 2009 Taxes+Levies HOUSEHOLDS 163 2012 , butalsoduetothegradualmove Networks July 2013. 2009 INDUSTRY Energy+Supply 2012 162 . EUR was EUR for othertaxes).Thetariff for theindustrialsectorin2012 total taxeswereEUR Natural gaspriceinhouseholdswasEUR have beenissuedintheperiod2010-2013. customers. Atotaloftennaturalgassupplyauthorizations gas supplyandtoprogressivelyextendeligibilityallretail that seekstoabolishtheregionalmonopoliesofEPAs for A major reform of theGreek gas retail market is envisaged 100 those customerswithanannualconsumptionofgreaterthan to thesethreelocalmonopolydistributors.Ingeneral,only Attica, ThessalonikiandThessalia.DEPA suppliesnaturalgas is doneby threecompanies(called EPAs) for theregionsof Distribution andsupplyofnaturalgastoretailconsumers Gas announced, andisexpectedtobecompletedin2015. electricity meterswithsmartmeteringsystemswas pilot programmeinvolvingthereplacementof160 roll-out ofsmartmetersto80%consumersby 2020.A Greece isproceedingwith(andhasmandated)alarge-scale while theswitchingratewasconfinedtomerely0.27%. resort. In2013,electricitydemanddeclinedfurtherby 1.9%, and thetemporary(3-month)activationofsupplierlast 2012, mainlyduetotheexitoffour suppliersfromthemarket The switchingrateinGreecewas3.6%(volume-related) The concentration on the retail electricity market remains high. come fromelectricitygeneration. 2019, comparedto2009levels.Thisincreasewillmainly DESFA forecasts thatgasdemandwillalmostdoubleby Gas demand in 2012 decreased by 7.7% compared to 2011. was thehigh incidence ofconsumercomplaintsisthe2 2011. ThisdeclinewasveryclosetotheaverageEU-27rate Electricity demandin2012declinedby 0.2%comparedto 166 165 164 consumer satisfactionisthe2 to betheworstofall31 (65.2 with ascorewhichisalmost7 the retailelectricitymarket isassessedfourth lowest intheEU, Despite considerableimprovement since2012(of4.9 points), Consumers 5.

10 Eurostat. ACER/CEER –AnnualReporton theResultsofMonitoringInternal Electricity andNaturalGasMarkets in2012,November 2013. consumer_evidence/consumer_scoreboards/10_edition/index_en.htm 1.6/GJ GWh areeligibletoselecttheirsupplierofgasinGreece. th compared to72.0).Inaddition,themarket isconsidered ConsumerMarkets Scoreboard,http://ec.europa.eu/consumers/ 16.1/GJ, whilethenon-recoverable taxeswere 165 est amongEU-27. . ThePre-Tax Total Price(PTP)for gasinGreece 4.8/GJ (EUR domestic servicesmarkets. Overall nd points below theEUaverage 3.2/GJ for VAT andEUR lowest intheEUand 2.3/GJ in2012.The nd highest GREECE 166 000 . 1.6/GJ old 164 .

67 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 68 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 a socialtariff, toatotalof560 A totalof9.8%allresidentialcustomersbenefitfrom than 1%againstanaverageofalmost10%intheEU). provider inthepast12 have switchedtheirprovider or tariffplanwiththeexisting providers. However, thepercentageofGreekconsumerswho the is investing in the connection of islands to the grid and could playtheroleofanelectricityhubinregion.Greece Bulgaria, Turkey andtheWestern Balkans. Therefore,Greece Europe withtheexistingandfutureconnectionstoItaly, The GreeknetworkhasacentralpositioninSouth-East special needs” non-economic provisions for domesticcustomers“with distribution andsupplyofgasintheirareas,includesome under aregimeofexclusiverightfor boththeactivitiesof yet available.ThedistributionlicenseoftheEPAs, operating economic protectionschemesandtheSupplyCodeisnot Compliance with the categories of vulnerable groups and of Law4001/2011havenotbeenfullyadoptedby theEPAs. The provisions ofthedefinition ofvulnerablegasconsumers electricity consumerandtobeincludedintheregistry. the procedurefor aconsumertobeclassifiedasvulnerable Ministerial decisionwasissueddefiningcriteria,conditionsand includes provisions for consumerprotectionmeasuresanda In compared to2010levels generation capacityofphotovoltaic parksmorethantripled, capacity ofwindfarmsincreasedby 23%,whiletheelectricity generating unitswere1 power farmswere1 9 169 168 167 18 In 2012,thetotalinstalledgeneratingcapacitywas Electricity Interest (PCIs). a one-stop-shopfor thepermittingofProjectsCommon As required by the TEN-E Regulation, Greece has established Infrastructure 6. (78.5 which Greeceismorethan4 The assessmentismorefavourablefor thegasmarket for GREECE 16 Greek consumersshow the 3 624

2013, theElectricitySupplyCodewaspublished,whichalso th LAGIE, Monthly ReportDecember2012. RAE, 2012National ReporttoEuropeanCommission, 2014. DEDDIE SA. 879 positionintherankingof31 integration ofRES. vs. 74.1), which corresponds to 6 MW, hydroelectricpower plantswere3 MW 169 168 . Thermalpower plantsaccountedfor . 466 months isthelowest intheEU (less 126 169 MW andsolarphotovoltaic power . MW. Theelectricitygeneration points above theEUaverage rd highestleveloftrustin domestic servicesmarkets. 126 inFebruary2014 th position in EU and 017 MW, wind 167 . Turkey withtheupgradeofcompressorstationinKipi. Adriatic Pipelineand,potentially, withIGIPoseidonandfrom in Kula-SidirokastronandtheIGB,toItalywithTrans- ones, interconnectionswithBulgariathroughthereverseflow LNG terminal(Revithoussa)andthedevelopmentofnew is mostnotablythecasewithupgradeofexisting opportunities andconnectionswithitsdirectneighbors.This Several projectsarecurrentlyplannedtoenhancesupply (Albania) onthebasisofenergythirdpackage. and Italy)oneContractingParty oftheEnergyCommunity by theregulatoryauthoritiesoftwoMemberStates(Greece comprehensive assessmentofTAP AG’s exemptionapplication of TAP wasalsoconcludedinJune2013following the The regulatoryframeworkfor thedevelopmentandoperation Caspian sources. Gas Corridorallowing for thesupplyofEuropewithgasfrom Anatolian Pipeline,theTAP willform partoftheSouthern Together with the Southern Caucasus Pipeline and the Trans gas fromtheShah-DenizIIfieldinAzerbaijantoEurope. Deniz Consortium in June 2013 as the route to transport The Trans AdriaticPipeline(TAP) wasselectedby theShah- supply andmarket integrationintheRegion. of aliquidhub,providing price competition,securityof therefore allthecharacteristics needed for thedevelopment has accesstoLNGandgassuppliesfromRussia.It is locatedattheEUentrydoorofSouthernGasCorridor, Greece hasthepotentialtobecomearegionalgashubasit Gas interconnection betweenIsrael,CyprusandGreece and NeaSanta(inGreece)theDC600kVunderwater interconnection betweenMaritsaEast1(inBulgaria) labeled PCIsby theEuropean Commission:theAC 400kV In October2013,twoelectricityinterconnectionswere 171 170 particularly duetoexportsAlbania of electricityin2011increasedby 40.4%comparedto2010, production increasedby 3.54%comparedto2011.Exports a minordeclineof0.5%relativelyto2011,whileelectricity Electricity demandin2012remainedfairlystable,exhibiting Electricity Securityofsupply 7. of totalimports importers wereBulgariaandTurkey, accountingfor 75.4% decreased by 15.7% in2011,reaching 7

Eurostat. Greek Ministryof Environment, Energy&ClimaticChange. 171 . 171 . Importsofelectricity 180 GWh. Themain 170 . spot cargoeswerealsounloadedinRevithoussa. namely Gazprom,Sonatrach(LNG)andBOTAS, whileseveral existing long-termcontractsfromthreedifferent suppliers, Russia 2013, themajorityofwhich(66%totalimports)camefrom 174 173 172 ( Sources: Eurostat,CEER,NationalRegulatoryAuthority, ECcalculations. development plan for 2017.Accordingtothelastapproved 10-yearnetwork be completedby 2016while the secondphaseisplanned planned by ADMIE.Thefirstphase oftheinterconnectionwill underwater interconnectionoftheCycladesislandsis and facilitatefurtherdevelopmentofrenewableenergy, To enhancesecurityofsupplytotheAegeanislands sector which approximately66%wasfor thepower generation The demandfor naturalgasin2011was4.80 Gas to take placeduringtheperiod2017-2020. GREECE – KEYINDICATORS 1 )

been approved by RAE. of reverseflow ontheborder ofGreeceandBulgariahave of thetwoTSOs,GreeceandBulgaria,for theactivation emergency actionplan,andthejointreverseflow proposal risk assessmentstudy, thepreventiveactionplan, safeguard securityofgassupply. During 2011-2013 the Regulation (EU)No994/2010concerningmeasuresto Authority for theimplementationofprovisions of RAE hasbeenassignedby the Greek StateastheCompetent neighboring gassystems,namelyBulgariaandTurkey. infrastructure oftheGreektransmissionsystemwith During 2012, therewasnochange regarding interconnection HHI ingasretailmarket HHI ingassupplymarket Regulated pricesfor non-households–gas Regulated pricesfor households–gas Switching ratesfor gas(entireretailmarket) Number ofmainnaturalgasretailers Number ofretailerssellingnaturalgastofinalcustomers Market shareofthelargestentitybringingnaturalgas Number ofmaingasentities into country Number ofentitiesbringingnaturalgas GAS Gas market value( 1 ) (bn€)

GREECE N/A Yes Yes 0.0% 3 4 88.6% 3 3 0.753

69 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 70 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 target of20%. Spain iscurrentlyontracktoachieveitsnational2020RES above the country’s 2011/2012 interim trajectory. Thus, 10% 20% 30% 40% 50% 60% 175 Source: Eurostat Gross inlandconsumptionmix2008-2012 1 FIGURES gross finalenergyconsumptionreached14.3% other energysources.In2012,therenewablessharein renewable sources and solid fuel has grown and displaced from 2008.Despitetheoverall decrease,consumptionfrom 127.3 recent yearsinlinewitheconomicoutput.In2012ittotalled Total grossenergyconsumptionhascontinuedtofallin Generaloverview 1. 0%

Eurostat. Mtoe, 0.7%down frompreviousyearand10.2%down 2008 Nuclear Solid fuels SPAIN AND 2 2009 Natural gas Renewables 2010 → → Key issues vulnerable customergrouphasbeenidentified. segment ofthepopulationisidentifiedasvulnerablecustomers, for gasno challenge. Consumersatisfactionremainslow. Whereasfor electricityalarge in linewiththeSouthGasRegionalInitiativeandTarget Modelisakey with neighbouringcountries,particularlyFrance. ThecreationofanIberianGashub Spain shouldcontinueitsefforts tocompletetheelectricityandgasinterconnections meet its2020renewabletargets. on therenewableandcogenerationenergyproductiontoensurethatSpainisable intervention. Also,necessarystepsshouldbetaken tominimiseimpactofthisreform to reachfurtherregulatoryharmonizationwiththerestofEuropeandreduceState process toreduceperceivedregulatoryrisks.Themarket reform shouldbecompleted, therefore Spainshouldincreaseparticipationandtransparencyintheregulatory criticized for havingretrospectiveeffects andlimitedconsultationwithstakeholders, which wasfollowed by arangeofnewsecondaryregulationsin2014.Thereform was the tariffdeficit.The ParliamentpassedanewElectricitylawinDecember2013, In 2013,Spainbegananelectricitymarket reform, withthemainaimofeliminating Crude oilandpetroleumproducts 2011 175 , remaining 2012 10% 15% 20% 25% 30% 35% 40% 45% . Regulatoryframework 2. Sources: EU energyinfigures-“StatisticalPocketbooks 2012and2013”, Gross electricitygenerationmix2008-2012 increase orcostreduction. the electricpower systemwithoutanequivalentrevenue establishes thatnonewcostsshallbeintroducedinto e.g. fromadditionaltaxes.Thenewregulatoryframework costs allocatedtothesystemandincreasingrevenue, aimed ateliminatingthetariffdeficit byreducingregulated It ismainlypackage whichwasannouncedinearly2013. electricity law. Thelawispartofanelectricitymarket reform In December2013,theSpanishParliament passedanew General 0% 5% 2008 European Commission Nuclear Solid fuels 2009 Natural gas Renewables 2010 Crude oilandpetroleumproducts Other 2011 2012 effectively andindependently, especiallyontariffsetting. exercise itspowers andtasksundertheThirdenergypackage retains adequatehumanandfinancialresourcesthatitcan the numberofstaffis519 tasks –notjustenergyamountsto52.8 The currentannualbudgetofCNMCtocarryoutallits and fullpublicprivatecapacity. The CNMCisapubliclawentitywithitsown legalpersonality aspects oftherailwaysector). and naturalgasmarkets, postalsector, airportandcertain agencies (responsiblefor telecomandaudiovisual, electricity of thepreviousantitrustauthoritywithsixregulatory y laCompetencia,CNMC).TheCNMCistheresultofamerger Markets andCompetition (ComisiónNacionaldelosMercados was attributedtoanewagency, theNationalAuthorityfor In October2013,theroleofNationalEnergyRegulator National EnergyRegulator of themarket players. recourse tourgentmeasures,for thesake oflegalcertainty limit thenumberoflegislative acts in force and to reduce the the legislativeframeworkapplicabletoenergysector, to Spain couldmake useoftheon-goingreform tosimplify wholesale gasprices. 1 by particular, a new gas exchange is planned to start functioning A reform ofthegassectorhasalsobeenannounced.In of Europeintopicssuchasretailandrenewablesupport. could also benefit from greater harmonization with therest trust ofstakeholders andconsumers.RegulationinSpain process could contribute to reduce oppositionandregainthe Increased participationandtransparencyintheregulatory increase inelectricitycharges. increasing regulatory risks, and consumers criticise the that thereform undulyreducestheirremunerationwhile parties ondifferent grounds.Moststakeholders complain system operators,consumerassociationsandpolitical energy producers(renewableandconventional),distribution supply costs.Thenewmeasureshavebeenobjectedtoby micro-generation plants,createdtoreflectunavoidable customers andanewinjectionchargefor thoseuserswith changes intariffsincludeanewregulatedprice for small of networkactivitiesandchangesinfinalusers’tariffs.The new renewableandCHPplants,changesintheremuneration The reform includes a new support scheme for existing and

January of2015,inordertoincreasetransparencyfor people. It is important that CNMC people. ItisimportantthatCNMC million Euros and million Eurosand has continueddecreasingin2013, Conversely, congestionintheSpain-Portugalinterconnection interconnection isalreadyusedatnearlyfullcapacity. Spain andFrance tobeusedmoreefficiently, althoughthe 2007. Thecouplingprocesswillallow infrastructurebetween the market operator for bothSpainandPortugalsincemid- of aEurope-widemarket couplingprocess.OMIEhasbeen with theCentralandNorthernEuropeanmarkets, aspart In 2014,theIberianday-aheadmarket, OMIE,wascoupled while productionby renewablepower plantsincreased. Production fromgasfuelledCCGTs sawthebiggestreduction, electricity exports(whichwere37.9%lower thanin2012). continued fallinelectricityconsumptionandareduction after asmallrecovery inthe previousyear–driven by the Electricity production in Spain fell in 2013 to 274 Electricity Wholesalemarkets 3. 177 176 other companiesthatgeneratedmorethan5%. for a23.8%ofthetotalenergysoldandtherewerefive The largestgenerationcompanyinSpain2012accounted generating companies,hasremainedstableinrecentyears. of yearswiththeincreaseinsmallerrenewableenergy Market concentration,whichhadbeenfallingfor anumber transmission rights(FTR). European capacityallocationmechanismbasedonfinancial of Regulators(CRMIBEL).Thisauctionconstitutesthefirst transmission rights(FTR)establishedintheMIBELCouncil Portugal took place, under a mechanismbased on financial electricity interconnectioncapacitybetweenSpainand Also in2014,on25 renewable energyintegration. of Europe,whichisespeciallyrelevantintermsfacilitating be tofocus onintegratingtheintradaymarket withtherest increase intheinterconnectioncapacity. Thenextstepwill legally andfunctionallyunbundled. companies’ pipelines.TheelectricityandgasDSOsare than 95%ofgastransportpipelines)andasISOfor other an ownership unbundledTSO for itsown network(more in thesector. EnagasTransporte, S.A.U.wascertifiedas a certifiedTSO.REEisindependentofothercompanies owned andoperatedby RedEléctricadeEspaña(REE), Currently, theentireelectricitytransmissionnetworkis Unbundling

CNMC, Informe desupervisióndelmercado peninsular Since June2013,theGovernment hasliftedthebanonelectricity mayorista alcontadodeelectricidad, JulyandAugust2013. imports imposedto companiestaggedasdominantplayers. March, thefirstjointauctionof 177 partlyduetothe SPAIN TWh – 176

71 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 72 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 179 178 the dailyschedule. accounts for around30%ofthefinalenergydeliveredin 2012 (36.82 year increasing significantly(+95.1%)inyear2013comparedto house (OMIClear)andby BMEClearing) measured71.84 Portuguese andSpanishclearinghouses(i.e.OMIP Furthermore, theOTC volumesclearedandsettledby the increased 42.2%comparedtothesameperiodin2013. volume intheperioduptoMarch2014(109.85 the Spanishmarket recovered itsgrowth trend.Thetrading After ashort-livedreductionin2012, forward tradingin SPAIN companies injectinggasinthesystem(in2012). Nigeria (15.4%)andQatar(11.6%),uptoeighteen There arethreemainsuppliercountries:Algeria(42.4%), demand for gasin2013remainedconstant,at2012level. by renewablesources.Bycontrast,industryandhousehold the favourablecoalpricesandincreaseofgeneration reduction oftheusegasinpower generationdueto consumption decreasedby 8%in2013becauseofthe against 393 production isminimal(392 Spain importsmostofthegasitconsumes,sinceits Gas MWh in2013,fallingfrom47.232012and49.932011. The averagepriceintheday-aheadmarket wasEUR traded. falling, evenafteraccounting for thedecreaseinenergy during thepreviousyears.Balancingenergyhasalsobeen also droppedin2013to36 still 17%below the2008figure. Intradaytradingvolumes ahead OMIEmarket recovered in2013,to185 To date,tradingcantake placeateightbalancingpoints(six signed a MOU thatmay result ina merge ofboth projects. become aSpanishgashub.InMarch2014thetwoinitiatives At presenttherearetwodifferent initiativescompetingto Gas istradedbilaterally, mostlythroughOTC contracts. last few years,Spainhasbeenre-exportingLNG. the newlycommissionedinterconnectionwithAlgeria.In surpassed LNG,duetoadropindemand,highLNGpricesand compared to2012),andin2013importsthroughpipelines are decreasing(e.g.by 23%inthefirstquarterof2013 pipelines than throughLNGterminals. However, LNG imports only majormarket inEuropewhichimportedlessgasthrough the form ofLNG(60.6%thetotal).In2012,Spainwas diversification inEurope.In2012,mostimportswerestill fact, Spainhasoneofthehighestlevelsgassupplier

Including allcompanies whichproducenaturalgasdomestically Sources: Part oftheOTC physicaltradesisreversed as well asabroad. schedule. in theday-aheadmarket. Daily schedulerefers tothePBF Source: basedondatafrom REEandOMIE. GWh ofdomesticproduction).Naturalgas 178 TWh). OTC physicaltradingconsistently Trading intheSpanishpartofday- TWh afterasustainedincrease 599 GWh ofimportsin2012 TWh, butis

44.26/ 179 TWh) TWh, In In network costswas19.0%ofthefinalprice. after taxes.Forindustrialelectricityprices,theshareof accounted for 54.0%ofthepricewithouttaxesand42.5% annual increaserespectively).In2012networkcosts14.8% is duetoanincreaseinnetworkcostsandtaxes(26% . Retailmarkets 4. and allocatesystemcostsonanon-discriminatorybasis. regime inSpainwiththeaimtoenhancecross-bordertrade It would appear appropriate for CNMC to review the entry-exit slight decline(toEUR to oilpricedevelopments.During2013theimportisin July 2009andDecember2012(toEUR index shows that gas import prices nearly doubled between long termcontractssupplyingthe Spanish gas market. This has developedagasimportindexprice,reflectingthecostof single liquidtransparentgasreference priceinSpain.CNMC Due totheabsenceofanorganisedgashub,thereisno electricity market operator. and cushiongas).Theseauctionsarerunby OMIE,the regulated activities(for theLastResortsupplyandworking market iscomprisedof auctions at different horizons for LNG terminals.In addition toOTC trading,thegaswholesale the virtualstoragepoint).78.2%oftradesoccurredin LNG terminalsaswellthevirtualbalancingpointand 180 industrial customers. average 9.9%peryearfor domesticcustomersand3%for 2008 to2012,finalelectricitypriceshaveincreased by an prices haveincreasedconsiderablyinpreviousyears.From Despite thecompetitivemarket conditions,finalcustomers’ market shareof thewholefreemarket. largest retailerattheendof2012wasEndesawitha37% focus onthecommercialandindustrialsegments.The 5.2% in2009to12.1%2012).However, mostcompetitors significant andsteadyincreaseintheswitchingrate(from Competition inretailsupplycontinuestorise,witha regulated mechanismwhilein2011thissharewas76%. 2013, 60%ofthosecustomersweresuppliedunderthe regulated regime(93.8%ofallcustomers).Attheend below 10 under regulatedtariffs.Customerswithcontractedcapacity their electricitysupplier. However, mostarestillsupplied Since 2003,allelectricityconsumersareeligibletochoose Electricity

Eurostat. kW havetherighttobesuppliedunder 180 26.39/MWh inDecember2013). Theincreasefor domesticcustomers 27.10/MWh) linked sets withreference toperiodic gasauctions. households areeligiblefor thistariffthattheGovernment resort tariffs.Onlysmallcustomers,consistingmostlyof price, while30.93%remainedundertheregulatedlast 2012, 69.07%ofcustomersweresuppliedatafree 7.4 The totalnumberofgasconsumersinDecember2012was stronger signsofnewentrants’activity. almost 70%ofthesharenaturalgassupply, butthereare of 2 retail sector shows moderate concentration with a HHI The market concentration level of the Spanish natural gas Gas addressed toconsumersatlarge. be accompaniedwithintensiveinformation campaigns bring positivechangeswithregardtocompetition,itshould in 2009andplaceuntilnow. Whilstthisisexpectedto in electricitybillsfor householdersinSpainestablished seeks toremove theregulationofcommodityprices price to the wholesale market price. This new mechanism a newmechanismthatlinkstheretailmarket electricity Since 1 with lower thanaverageloadfactors,suchasholidayhomes. reflective andincreasedtheaveragesupplycost for customers consumed. Thechangeaimedtomake tariffsmorecost- contracted, and an energy component, per in theelectricitytariffs,acapacitycomponent,perkW In July 2013, the Government rebalanced the two components Source: Eurostat 10 15 20 25 Electricity pricechangeby component2008-2012(in€cent/kWh) 3 FIGURES 0 5 million, withgasdemandof362 250 in2012.Thethreelargestcompaniesstillcover April 2014,theSpanishGovernment hasputinplace 2008 Taxes+Levies HOUSEHOLDS AND 4 2012 Networks 2008 TWh. ByDecember INDUSTRY kWh of energy Energy+Supply 2012 handling, taking over responsibilityfor information andcomplaint New measureshavebeenintroduced,includingtheMinistry also ranks4 clients abouttheirrightsandestablishaprocedureinthe electricity pricecomparisontools.Suppliersneedtoinform protective functions,suchasoperatingweb-basedgasand Sources: EC,EPCRmetadata Natural gaspricechangeby component2008-2012(in€cent/kWh) 183 182 181 further decreased(by 1.4 (58.5 electricity market secondlowest ofall EUcountries Spanish consumersratetheperformance oftheirretail Consumers 5. 10 EU (69.4 highest. Theretailgasmarket isranked thirdlowest inthe EU respectivelywhiletheincidenceofproblemsissecond consumer satisfactionaresecondandthirdlowest inthe markets. The scores ontrustinproviders andoverall market (whichisslightlyabove theEUaverage). indicators, withtheexceptionofswitchinginelectricity third parties.Bothmarkets scorebelow theEUaverageonall for trust and highest incidence of consumer complaints to supplier tothefreemarket. and lessthan20%wasduetoamove fromthelastresort 80% oftheswitchingrateoccurredwithinfreemarket around the2011valueafterpreviousyear’s increases. Customers’ switchingrate,19.32%in2012,stabilised 0 1 2 3 4 5 6 7 8 9

Law 3/2013,ofcreation oftheNationalMarkets 10 However thedifference isnotstatistically significant. edition/index_en.htm consumers/consumer_evidence/consumer_scoreboards/10_ and CompetitionCommission. th points comparedto72.0)andtheassessmenthas ConsumerMarkets Scoreboard, http://ec.europa.eu/ 2008 183 points comparedto74.1),withthe3 Taxes+Levies althoughtheCNMCremainsinchargeofother HOUSEHOLDS th lowest intherankingof31 2012 points Networks 181 ) since2012.Themarket 2008 INDUSTRY domestic services rd Energy+Supply

lowest score SPAIN 182 2012

73 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 74 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 potentially due to intermittent generation. potentially duetointermittentgeneration. been anincreaseintransmissionconstraintsrecentyears, from 860 of newlinetothegrid(1.9%totalnetworklength),down Reinforcements tothetransmissionnetworkhaveadded747 against 2 Spain, 540 although atlower ratesthaninpreviousyears.Inmainland following Government measurestofreezesubsidycosts, renewable capacitycommissionedin2013hasdecreased, closure ofsomeoldcoal,fuel-oilanddieselplants.However, has beenreducedby 1 remuneration ofnetworks.Conventionalgenerationcapacity for newinfrastructureandledtoadjustmentsinthe The reductioninelectricitydemandhasdelayedtheneed Electricity environmental assessmentprocedures. legislative andnon-legislativemeasuresstreamliningthe granting processfor projectpromoters,andtheadoptionof including thepublicationofmanualonpermit 2013), andothermeasuresforeseen for 2014and2015, forNovember Projects of CommonInterest (PCIs) (due by 16 Regulation, including the establishment of the one-stop-shop adoption ofthemeasuresstemmingfromTEN-E The Spanishauthoritiesshouldensureaproperandtimely Infrastructure 6. 2 their tariffsattheJuly2009level.AsofDecember2012, tariffs arereduced by means of a“socialbonus”,whichsets a minimumlevelpension.Vulnerablecustomers’electricity than orequalto3 consumers (lessthan1 a familywhereallmembersareunemployed; below voltage fulfil atleastoneofthe following criteria:alargefamilyor so farfor electricitycustomers.Vulnerablecustomersshould The conceptofvulnerablecostumershasonlybeendefined under thelastresorttariffsuntiltheysignanewcontract. Resort Suppliers.Customerswhoseretailersfailaresupplied Spain maintainspublicserviceobligationsthroughLast of non-requestedswitches. desisting fromaswitchingrequestandproceduresincase for gasandelectricity, settingupclearprocedureswhen 27 must bemadeavailable.Additionally, anewlawadoptedon case ofcomplaints.Free customerinformation services SPAIN 544 March 2014hasintroducednewmeasuresinswitching 170 860 in2012. km in2012.Despitethesereinforcements, therehas customers weredefinedasvulnerable. MW ofnewcapacity was installedin 2013 kW; orapensionerolderthan60 kV) withcontracteddemandlower 600 MW since2010duetothe years with years with km km facing frequentcongestions. be requiredtoprovide betterintegrationfor thoseareas islands. However, newinvestmentsintransmission maystill Mainland system, enhancing the security of supply in the Balearic Islandselectricitysystemwasconnectedtothe high volumesofrenewableenergy. InAugust2012,the and France ishelpingSpaintomanagetheintegrationof The steady increase in interconnection capacity with Portugal capacity willberequiredinthecomingyears. and thereductioninelectricitydemand.Nosignificantnew to earlierstronginvestmentsinCCGTandrenewableplants Spain hasacomfortable generationcapacitymargin,due Electricity Securityofsupply 7. that willhelpincreaseinterconnectionlevelwithFrance. In thecontextofTEN-ERegulation,SpainhasonePCI because oflower thanexpecteddemand. revised anddelayed(excludinginternationalcommitments) Forthcoming plannedinvestmentsingasinfrastructurewere underground storagecapacitytoaround14%ofthedemand. local earthquakes. Theprojectwouldhaveincreasedthe has beendelayedaftergasinjectionworksledtointense storage projectexpectedtoenterintooperationin2013 facilities covering 9.1%of the demand.Anunderground interconnections. Therearefour undergroundstorage interconnection at Larrauwhich reinforced the North-South with France wasupgradedin2013providing reverseflow direct connectionwithAlgeria.Thetransmissioncapacity pipeline connectionswithMorocco,Portugal,France anda of demanddoesnotjustifyit.Spainhasinterconnection not inoperationatthecurrenttimeasstagnatedlevel plant inGijonwascompleted2012.Thenewis Spain hassixLNGterminalsandaseventhregasification Gas selected PCIs. Barcelona targetwillnotbereachedby 2020withthe contribute tointegrateRESintothegrid.However, the10% interconnection levelwithPortugalandFrance andwill of CommonInterest(PCI)thatwillhelptoincrease In thecontextofTEN-ERegulation,Spainhas5 Projects ( Sources: Eurostat,CEER,NationalRegulatoryAuthority, ECcalculations. winter season. certain volumeofstorednaturalgasatthebeginning gas suppliers.Inaddition,itrequiresshipperstomaintaina increasing thecapacityofLNGterminalsanddiversifyingits Spain has manageditsdependency on imported gas by Gas SPAIN – KEYINDICATORS 1 ) Installed generationcapacity(MW, 2011) Numbers ofsmartmetersinstalled Peak demand(MW) Electricity market value( HHI inelectricityretailmarket HHI inpower-generation market Regulated pricesfor non-households–electricity Regulated pricesfor households–electricity Switching rates(entireelectricityretailmarket) Number ofmainelectricityretailers Number ofelectricityretailers Market shareofthelargestpower-generation company Number ofmainpower-generation companies of Number ofcompaniesrepresentingatleast95% ELECTRICITY and gasconsumptioninthehouseholdnon-householdsectors(average bands)andannualaverage retailprices. Market valueisanestimationofthesizeretailelectricityandgasmarkets. Itiscalculatedusingdataonelectricity net power generation 1 ) (bn€) 102 7 910 569 43 2 2 1 Yes Yes 12.07% 4 225 23.8% 5 >15 27.199 240 329 527 804 GAS HHI for gasimports (excluding industryandelectricitygeneration) HHI for households (household/industry/electricity generation) HHI for retailmarket HHI ingasretailmarket HHI ingassupplymarket Regulated pricesfor non-households–gas Regulated pricesfor households–gas Switching ratesfor gas(entireretailmarket) Number ofmainnaturalgasretailers Number ofretailerssellingnaturalgastofinalcustomers Market shareofthelargestentitybringingnaturalgas Number ofmaingasentities into the Number ofentitiesbringingnaturalgas Gas market value( country 1 ) (bn€)

SPAIN 2 2 7.414 3 3 2 2 2 2 No Yes 19.32% 6 14 48% 4 18 710 800 250 264 399

75 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 76 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 184 According totheelectricityTSORTE hydroconcessions. horizon 2050.Italsoforesees thepublictenderingof at 2030 andfinalenergyconsumptiontobedivided by 2 by 2030,30%reductioninfossil fuelsconsumptionby of 32%renewablesinthetotalfinalenergyconsumption reduction ingreenhousegasemissions2030andatarget adopted early2015.Itsetsambitioustargetssuchasa40% will bedebatedintheFrench Parliament thisautumnand the CouncilofMinisteradraftlawonEnergy Transition. It On 18 which increasedasaresultofimproved useofbiomass. due tocontributionfromtheheatingandcoolingsector, showing apositivetrend(2012).Thisresultismainly nevertheless increasedfrom11.3%(2011)to13.4%thus interim target(12.8%),theshareofrenewableenergyhas that France has stayedsomewhatbelow its 2011/2012 gross final energy consumption by 2020. Despite thefact France hasan obligationtoreach23%ofRESsharein products (32%)andnaturalgas(14%). highest market share(approximately43%),followed by oil relatively stable.Nuclearenergycontinuestoholdthe The structureofthenationalenergymixhasremained Generaloverview 1. the residentialsector. daily temperatures,asaresultoftheincreasedusefrom Trends show thatdemandisbecomingmoresensitive to consumption levelregisteredinFebruary2012(102.1 near 2008levels(495 peakeddemand, in2010(513

http://www.rte-france.com/uploads/Mediatheque_docs/vie_systeme/ annuelles/Bilan_electrique/bilan_electrique_2013.PDF June 2014,theFrench EnergyMinisterpresentedto FRANCE TWh in2013),witharecordday TWh) andlaterreturnedto → → → Key issues between balancingzonesandincreasecross-borderflows. Gas infrastructure should also be developed to alleviate internal congestion development ofcompetitionandconstrainthesecuritysupply. capacity withneighbouringcountries(especiallySpain)continuestoinhibitthe Despite agooddegreeofmarket integration,limitedelectricityinterconnection in France. as anopportunitytofoster amorecompetitivelandscapefor electricitygeneration one ofthemostconcentratedinEU.Therenewalhydroconcessionsappears would benefitfromfurtherliberalisingthewholesaleelectricitymarket whichremains prevent alternativesuppliersfromenteringtheretailandwholesalemarkets. France concentrated. Despiteimprovements, especiallyfor gas,regulatedtariffscontinueto Both wholesaleandretailelectricitygasmarkets continuetobehighly 184 , grosselectricity GWh). Gross inlandconsumptionmix2008-2012 1 FIGURES 50% 10% 20% 30% 40% 50% 60% 70% 80% 90% 10% 15% 20% 25% 30% 35% 40% 45% Sources: EU energyinfigures-“StatisticalPocketbooks 2012and2013”, Gross electricitygenerationmix2008-2012 Source: Eurostat 0% 0% 5% 2008 2008 European Commission Nuclear Solid fuels Nuclear Solid fuels AND 2 2009 2009 Natural gas Natural gas Renewables Renewables 2010 2010 Crude oilandpetroleumproducts Crude oilandpetroleumproducts Other 2011 2011 2012 2012 full ownership unbundlingmodel. its shareholders,TIGFhasbeenrecertifiedin2014underthe 2012 asTSOsundertheITO model.Furthertoachangein and EDF (20%). All three operators were certified in January utility, 45%),GICPrivateLimited(Singaporeutility, 35%), since July2013isowned by aconsortiumofSnam(Italian CNP Assurances(25%).ThesecondoperatorisTIGF, which (75%) andby CaissedesDépôtsetConsignationsand first operatorisGRTgaz, whoisjointly owned by GDFSUEZ high pressuregasnetworkis owned by two operators. The and managestheelectricitytransmissionnetwork.The by EDF, thehistoricalnationalutilitycompany. RTEowns The RéseaudeTransport d’Electricité(RTE)isentirelyowned Unbundling situation asthisputsatriskthefulfilmentofitstasks. CRE hasexpressedoncemoreseriousconcernsaboutthe reinforcing thepressureonresourcesofregulator. 2014. The staff limit will decrease in 2014 to 130, thus have furtherdecreasedreaching18.9 the adoptionoflaw15 188 187 186 185 l’énergie –CRE) National RegulatoryAuthority(CommissiondeRégulation Despite thenewdutiesandpowers attributedtotheFrench National EnergyRegulator Package Directives. France hasnotifiedfulltranspositionoftheThirdEnergy General Regulatoryframework 2. the financialcrisisandareductioninincentives. rate ofbothwindandphotovoltaic productions,reflectingboth generation. However, therehasbeenaslowdown inthegrowth comparison to 14% in 2010), with a decline in oil and gas has progressivelyincreased,reaching19%in2013(in 74% of market supply, whilst the contribution of renewables The market shareofnucleargenerationisstableataround 2010 (new organisationof the electricity market)

The newcompetencesregardmainlyfour activityfields: http://www.assemblee-nationale.fr/14/budget/plf2014/b1428- This lawimplementstheREMITregulation n°1227/2011according Nouvelle Organisation duMarchédel’Électricité,7 to development, TSOs’ certificationandregulationoftheaccess network tariffsdefinition,investments innetwork infrastructure tIII-a19.asp and to whichnationalregulatorsshallensure thattheprohibitions nuclear power generationoftheincumbent. the obligationsetout inthisregulationareapplied. 185 withtheadoptionofNOMELawin April 2013 million euros 187 December 2010. , itsresources 186 and with 188 in in regulated tariffs for alternativesuppliers of nucleargeneration(maximum100 the ARENH price, which secures access to a limited volume to reducemarket concentrationthroughmeasuressuchas capacity andE.OnFrance 2.6% of installedcapacity, GDFSuezexploits5.1%oftheinstalled electricity generation. Next to EDF who still exploits 91.5% index asregardsinstalledcapacityisstillabove 8 The power generationmarket is highly concentrated. The HHI Electricity Wholesalemarkets 3. rules werediscovered in2012 andearly2013. unanswered and several breaches of DSOs independence its annualrequestsandrecommendationshaveremained the situationhasimproved, the NRAnoticedthatsomeof rules ofindependenceremainsmixed.Iffor someDSOs over 95%ofFrench consumers.DSOscompliancewiththe sector, oneDSO(ERDF, a 100% subsidiary ofEDF) serves that servemorethan100 There arethreeDSOsoperatinginthenaturalgassector 191 190 189 markets isalsounderconsideration. Europe regionison-going.Aprojectfor couplingwithspot the endof2014.Intradaymarket integrationoftheNorthwest and PortugalinMayshouldextendtoItalySlovenia at already coupled)wentlive.ItwasfurtherextendedtoSpain and the Central Western Europe region (with which France was the day-aheadmarkets fromtheNordicregion,GreatBritain (OTC). InFebruary2014theNorthwestEuropeancouplingof majority (87%in2012)oftradingtakingplaceover-the-counter The wholesale market in France has low liquidity; with the French electricity market inamorecompetitiveway. concessions appearsasauniqueopportunitytoreshapethe dates for currentoperatingcontracts.Therenewalofthese group themby valleyintoconcessionsandadjusttheexpiry by GDF Suez. Under the latestplan, the government may run by EDF(morethan80%),theremainingbeingoperated nation’s biggestsourceofpower afternuclearreactors,are market. Thevast majorityofFrance’s hydroplants,the in the first halfof nextyearto bring competitorsinto the France plansto starttendersfor hydroelectricconcessions continue topromotemarket accessfor alternativesuppliers. Plants. Thesemeasuresshouldbefurtherimproved to

Alternative suppliersaredefinedas non-incumbentsuppliers. CRE, AnnualReporttotheEuropean Commission,July2014. CRE, Respectdescodesdebonneconduite etindépendance and Incumbent suppliers areEDF, LocalDistributionCompanies September 2013. des gestionnairesderéseauxd’électricité etdegaznaturel, their subsidiaries. 000 customers. Intheelectricity 190 . Efforts arebeingmade 191 , orVirtual Power TWh/year) under FRANCE 189

000 for

77 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 78 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 which canonlybeoffered by incumbents between optingfor freemarket pricesandregulatedtariffs suppliers. Since2007,consumershavehadthechoice 193 192 as only 8% Market concentrationatretaillevelremainedhighin2012 Electricity Retailmarkets 4. as welllow CO Production costshavedecreasedduetolow coalprices to 2012, assuminganaverage value of EUR Baseload spotpricedecreasedby 7.8%in2013,withrespect FRANCE conditions duringwinters2011-2012and2012-2013. increased by 1.4%in2013,mainlyduetothecoldweather Despite astillsluggishindustrialdemand,totalconsumption the North-to-South link of GRTgaz’s transmission system. whereas PEG evolution reflectsthetrendofadjacentcontinentalhubs increased in2013by 8%and12%respectively. PEGNord liquidity. PEG Nord and Sud PEG day-ahead gasprice companies’ naturalgasmarket activities,increasingthe and EuropeanEnergyExchange(EEX).Itcombinesboth in 2013asacooperationagreementbetweenPowernext PEG Sud andPEG TIGF). The PEGASproject was launched In France there arethreevirtualtradingpoints(PEGNord, the priceformula oflong-termcontracts. French gasimportersresultedinmorehubindexationwithin (2010) to85%(2013).Inaddition,renegotiationefforts of these contractsdecreasedfrom92%ofoverall imports linked tooilproductprices.Despitehistoricaldominance, traditionally beendominatedby long-termimportcontracts decreased from35%(2011)to18%(2013).Themarket has share, reflectingthelow competitiveness ofLNGprices, of imports(40.4%)camefromNorway. LNGmarket France imports almost all its natural gas. Themajority Gas above normal. continued intothefirstquarterof2014withtemperatures wholesale prices.Thedeclineoftheday-aheadpricealso production of renewables in Germany influences the French residential customersremainedunderregulatedtariffs. end of2013,92%residentialcustomersand86%non-

Return totheregulated tariffispossible for consumersunder CRE, AnnualReport totheEuropeanCommission,July 2014. certain conditions. 192 Sud suffers fromthe physical congestion at of consumers were served by alternative 2 emissionsprices.Furthermore,thehigh 193 . However by the 43.24/MWh.

4.0% in2011,andreached5.0%2012. rates retailmarket increasedslightly, from3.5%in2010to the market for householdsandsmallbusinesses.Switching and are expected to increase again in 2014 a registeredincreaseinmarket opportunitiesawareness compared to2011).Itshouldbenotedthattherewasalso 2012 to3.4%innumberofsites(adecrease0.3 Switching rates in the retail electricity market decreased in 200 199 198 197 196 195 194 > metering goingahead: outcome. Therearecurrentlytwopilotprojectsonsmart gas sector, afterthecost-benefitanalysisreturnedapositive meters hasbeentaken for boththeelectricityandnatural A formal decision to proceedwiththe roll-out ofsmart- sites, remainedunderregulatedtariffs 2013, 77%ofresidentialsitesand50%non-residential opting for regulatedor non-regulated prices.However in by alternativesuppliers.Consumershavethechoicebetween 2012 withapproximately12%ofthefinalconsumerssupplied electricity, concentration in gas at retail level remainedhigh in from non-incumbents.Ontheothersegments,similarlyto consumption was on market offers in volume, including 51% the segmentofindustrialconsumers,in2013,99% Competition increasedduringthepastfew years.On Gas improved thecompetitiveness offreemarket pricedoffers. do notcover totallyEDFcosts. Nevertheless,theyslightly regulated gastariffsset by thegovernment supplier, GDF-Suez,whichistheexclusiveprovider ofthe modernisation ofitsnuclearfleet due to the financing needs of EDF and especially to the Regulated tariffswereraisedsignificantlyinJuly2013 35 construction andaimsfor afinalinstallationtargetof grid. Theprojectisatanearlystageofintelligentnetwork involves 300 Linky:startedin2010,theprojectconductedby ErDF

http://www.cre.fr/documents/publications/rapports-thematiques/ GDF istheonlyprovider ofregulatedgastariffs for customers CRE, AnnualReporttotheEuropean Commission,July2014. For moredetails,http://www.cre.fr/documents/publications/ http://www.cre.fr/operateurs/service-public-de-l-electricite-cspe/ http://legifrance.gouv.fr/affichTexte.do?cidTexte=JORFTEXT0000 http://www.cre.fr/documents/publications/rapports-thematiques/le- le-fonctionnement-des-marches-de-detail-francais-2012-2013 connected tothe distribution network (GrDF). commercialisation-d-edf rapports-thematiques/analyse-des-couts-de-production-et-de- montant 27778284&categorieLien=id fonctionnement-des-marches-de-detail-francais-2012-2013 million smartmeters. 000 customers connectedtothelow-voltage 197 . Theseincreasesstill 198 200 . Theprincipalgas 199 196 , stilldominates . This ismainly points 194 195 .

4.6 since 2012(4 Both markets haveseenaconsiderableincreaseinscore average ofalldomesticservicesmarkets (12 202 201 vs. 72.0,correspondingto4 electricity market wellabove theEUaverage (79.2 French consumers ratetheperformance oftheirretail Consumers 5. > Source: Eurostat 10 12 14 16 18 Electricity pricechangeby component2008-2013(in€cent/kWh) 3 FIGURES more towards third-parties (5 is thelowest intheEU,butconsumerstendtocomplain consumers complainingfor havingencounteredaproblem for switching,whichremainslow inFrance. The proportionof evaluated above EUaveragefor allitscomponentsexcept corresponds to7 above the EU average (77.6 the EUaverage.Theassessmentofretailgasmarket is component isinfacttheonlyevaluatedbelow EU. However, switchingremainslow inthismarket. This complaints andsecondhighestassessmentoftrustinthe of 31). The market has the third lowest percentage of 0 2 4 6 8 between 2017and2022 meters by 2016,tobeextended11 of GrDFandwillstartwithapilotproject150 launched inthesummerof2013.Theprojectisonbehalf Gazpar:themassroll-outofgassmartmeterswasofficially

10 http://www.developpement-durable.gouv.fr/spip. edition/index_en.htm consumers/consumer_evidence/consumer_scoreboards/10_ php?page=article&id_article=37166 points inthecaseofelectricity). th ConsumerMarkets Scoreboard,http://ec.europa.eu/ 2008 Taxes+Levies HOUSEHOLDS AND 4 points inthecaseofelectricitymarket and th placeintheEUranking.Themarket is 2013 201 points compared to 74.1), which th . th Networks place)aswellabove the highestproportionintheEU). 202 2008 INDUSTRY million meters Energy+Supply th placeout 000 2013 points smart From theendof 2013 available for both electricity and natural gas consumers. supplementary universalhealthcover. Thesetariffsare income below orequaltoathresholdofentitlement Special tariffsarereservedfor householdswithan 4.2 the socialtariffisexpectedtoincreasefrom1.9 2 than EUR fiscal incomeperunit(revenu fiscaldereference) lower extended tocover allhouseholdswithanannualreference calculation isalsoavailableonCRE’s website the 2012, 371 comparison toolfor electricityandgasretailprices.In information onthe opening-up of energy markets and a an information websiteonenergyissueswhichprovides CRE andtheEnergyOmbudsman(MNE)jointlymanage Sources: EC,EPCRmetadata Natural gaspricechangeby component2008-2012(in€cent/kWh) 205 204 203 including thepublicationofmanualonpermit 2013), andothermeasuresforeseen for 2014and2015, for ProjectsofCommonInterest(PCIs)(dueby 16 Regulation, includingtheestablishmentofone-stop-shop adoption ofthemeasuresstemmingfromTEN-E The French authoritiesshouldensureaproperandtimely Infrastructure 6. 0 1 2 3 4 5 6 7

Based onCREestimations. Décret no2013-1031du15 http://www.cre.fr/reseaux/reseaux-publics-d-electricite/ &categorieLien=id affichTexte.do?cidTexte=JORFTEXT000028200044&dateTexte= de l’électricité etdugaznaturel,http://www.legifrance.gouv.fr/ extension àdenouveaux bénéficiairesdestarifssociaux calculatrices-des-tarifs million, equivalentto8 energie-info platform. Anonlinetoolfor networktariff 2008 Taxes+Levies HOUSEHOLDS 175. Thenumberofhouseholdsbenefittingfrom 000 consumers receivedinformation through 2012 204 , thesesocialtariffswerefurther million people novembre 2013portant Networks 2008 INDUSTRY 205 . FRANCE 203 Energy+Supply . November 2012 million to

79 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 80 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 points, 15 Natural gasinfrastructureinFrance consistsof6 Gas exception ofSpain. target by 2020withalltheneighbouringcountries these PCISwillcontributetoreachthe10%Barcelona bottlenecks andintegrateREStothenetwork.Furthermore, United Kingdom, Ireland, Belgium, Italy and Spain, remove that willhelpincreaseinterconnectionlevelswiththe In the context of the TEN-E Regulation, France has 9 PCIs the EuropeanEnergyProgrammefor Recovery (EEPR). investment ofEUR be commissioned between France and Spain in 2015, for a total The firstdirectcurrentundergroundtrans-Europeanlinkshould investments of3 2013 RTE’s ten-yearnetworkdevelopmentplan,foresees its maximumlimit during 50%ofthehours in 2013.The 208 207 206 maximum consumption percentage representsbetween8%and10%oftheFrench 12 neighbouring countriesthroughexportcapacitiestotalling The French electricitynetworkisinterconnectedwithall Electricity environmental assessmentprocedures. legislative andnon-legislativemeasuresstreamliningthe granting processfor projectpromoters,andtheadoptionof FRANCE 2013). TheuseofimportcapacityfromGermany of electricityintheworldaccordingtoIEA(47.6 in Dunkirkisbeingdevelopedby EDF. France by GRTgaz areongoing,whileafourth LNGterminal the reinforcement oftheFrench networkintheNorthof South interconnections.InterconnectionwithBelgiumand both directionsin2013,whichfurtherreinforces theNorth- the Larrauinterconnection)wassuccessfullyupgradedin capacity betweenFrance andSpain(doublingthesizeof 2018 wasanimportantstepforward. Theinterconnection analysis toevaluatethecreationofasingleFrench hubby In thisrespect,thecommissioningby CREofa cost-benefit investments toeliminateinternalcongestions,isunderstudy. of asingleFrench hubby 2018,whichrequires important is limited by a division in three market zones. The creation progressively beenreduced.However, market development a fullentry-exitsystem. The numberofmarket zones has development hasbeenfacilitatedby theimplementationof

http://www.developpement-durable.gouv.fr/IMG/pdf/Panorama- Germany istheonly netexporterofelectricitytoFrance. CRE estimatesonaverage NetTransmission Capacities energies-climat_E2013.pdf thematiques/rapport-interconnexions-2012 in 2012,http://www.cre.fr/documents/publications/rapports- GW andimportcapacitiesof8 storage facilitiesand3 billion eurosininfrastructurebefore 2017. 700 million, includingEUR 206 . France isthelargestexporter LNG terminals GW. Thisexport/import 225 million from million from 207 208 entry/exit reached . Market

TWh in TWh in guaranteed until2015 assessment reportelaboratedby RTE.RTEconsidersit shortfall indicatoraddressedinthenationaladequacy System’s adequacyismeasuredthroughthecapacitymargin/ Electricity Securityofsupply 7. 209 interoperability limitationswithothercountriesinnorth- of newinterconnectioncapacityin2013atLarrau.Some flows toSpain grow significantly after thecommissioning South ofthecountry. Thisconstrainthasnotpreventedgas its internalinterconnectionbetweentheNorthand borders, itshouldbenotedthatFrance isconstrainedon Irrespective oflevels interconnection capacitiesatthe gas suppliersoperatingontheFrench market. the levelofmandatorystoragethatmustbebooked by all March 2014,theFrench authoritieshavedecidedtoincrease Consequently, throughagovernmental decreeadoptedin concerns aboutsecurityofsupplyincasecoldwinter. of gasinstorageshasbeentighteningup,raisingsome is heavilydependentonLNG.Atthesametime,volume has suffered fromhigherpricesintheSouthernregionwhich much higherthaninEurope.Asaresult,theFrench market cargoes towards the Asianmarket where prices have been decrease inLNGimports,duemainlytothereroutingof marketRecent developmentshave,however, ledtoa capacity levelsatentrypoints,LNGterminalsandstorages. In termsofinfrastructures,theFrench systemhasgood Gas wider involvementofbalanceserviceproviders. to foster competition,economicefficiencyandtofacilitate reserves (ancillaryservices,replacement)wereadapted mechanisms toensureshorttermoperationalsecurity In addition,themodalitiesofseveralreserveprocurement capacity market isanticipatedbetweenaround2017. in November 2013.Theexpected firstdeliveryyear for the mechanism. TheMinisterofEnergyapproved thefindings a consultationonthedesignandrulesgoverning thisnew and thesupplyside,wasapproved. In2013RTElaunched capacity obligationmechanism,involvingboththedemand At theendof2012adecreeintroducingdecentralised past few years,increasingby 18%between2006and2012. load of France has recordeda drastic growth rate over the Despite adropintotalelectricitydemand,thehourlypeak the risk of failure of the system is expected to increase.

Based onRTEindicationssystem adequacy, actualisation_2013_v2.pdf vie_systeme/annuelles/bilan_previsionnel/bilan_ http://www.rte-france.com/uploads/Mediatheque_docs/ 209 . However from2016

onwards, ( Sources: Eurostat,CEER,NationalRegulatoryAuthority, ECcalculations. of about100 Germany whichwouldallow flows from France toGermany and theimplementationofreverseflows attheborderwith zones ofGRTgaz andthede-odorisationofnaturalgas Burgundy artery between the PEG North and PEG South which couldbenefitsecurityofsupply. Thedoublingofthe of Germany and Belgium. Two projectsare under discussion capacity ofFrance tocontributethesecurityofsupply western Europecanbementioned,affecting thepotential ( FRANCE – KEYINDICATORS 2 1 ) ) Electricity market value( HHI inelectricityretailmarket HHI inpower-generation market Regulated pricesfor non-households–electricity Regulated pricesfor households–electricity Switching rates(entireelectricityretailmarket) Number ofmainelectricityretailers Number ofelectricityretailers Market shareofthelargestpower-generation company Number ofmainpower-generation companies Number ofsmartmetersinstalled Peak demand(MW) Installed generationcapacity(MW, 2011) ELECTRICITY of Number ofcompaniesrepresentingatleast95% and gasconsumptioninthehouseholdnon-householdsectors(average bands)andannualaverage retailprices. Market valueisanestimationofthesizeretailelectricityandgasmarkets. Itiscalculatedusingdataonelectricity HHI inpower-generation market isintermsofpower generation.HHIingassupplymarket isintermsofgrossimportnaturalgas. Table contains2012dataunlessstatedotherwise.Peakdemandistaken fromENTSOE,Yearly Statistics&AdequacyRetrospective 2012. net power generation GWh perday. ( 1 ) 2 ) (bn€) >4 >8 Yes Yes 5.7% 1 183 86% 1 270 102 131 34.259 >5 500 500 000 098 353 HHI ingasretailmarket HHI ingassupplymarket Regulated pricesfor non-households–gas Regulated pricesfor households–gas Switching ratesfor gas(entireretailmarket, 2011) Number ofmainnaturalgasretailers Number ofretailerssellingnaturalgastofinalcustomers Market shareofthelargestentitybringingnaturalgas Number ofmaingasentities Gas market value( into country Number ofentitiesbringingnaturalgas GAS 2 ) (bn€)

FRANCE 4 4 000-5 >3 Yes Yes 4.5% 3 77 59% 4 20 14.422 000 300

81 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 82 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 has beenstoredinundergroundfacilities increased significantlyandalargeamountofimportedgas the domesticproductionofnaturalgasdecreased.Imports covers over 70%ofitsannualdomesticdemand.In2012, Croatia hasalongtraditionofgasproductionby whichit hydro. 14.1 significant decreasecomparedto2010,whenitwas In 2012,totalpower generationreached10.5 natural gascontributedthelargestsharestoenergymix. 10% 20% 30% 40% 50% 60% 211 210 Source: Eurostat Gross inlandconsumptionmix2008-2012 1 FIGURES amounted to8.12 Croatian nationalgrossenergyconsumptionin2012 Generaloverview 1. 0% Eurostat. The Croatiangasstorageoperator is PodzemoSkladistePlina wpgas/23wpg_jan2013/NG_Croatia_Report_2012.pdf Gas Storagehttp://www.unece.org/fileadmin/DAM/energy/se/pp/ d.o.o (PSP)operating thestoragefacilityOkoli Underground TWh). Almosthalfofpower generationmixcomesfrom 2008 Renewables Solid fuels CROATIA AND 2 Mtoe 2009 Waste (non-renewable) Crude oilandpetroleumproducts 210 . Crudeoil,petroleumproductsand 2010 → → → Key Issues to regionalenergysecurity. Investment inLNGterminalontheCroatianislandofKrkisstrategicimportance removal ofbarrierstotheexport andimportofgas. effective enforcement ofEUlawincludingcompetitionandStateaidrulesthe users andcompletetheunbundlingprocess.Market liberalizationdependsonthe Croatia shouldstepupitsefforts toderegulatewholesalepricesand for end- to improve theinvestmentclimate andcreateincentivesfor newentrants. Competition in Croatia’s energy market is still verylimited. Market opening isneeded 2011 211 . Theshareof Natural gas Other TWh (a 2012 national targetof20%by 2020. interim trajectory, andisshowing goodprogresstowards its Act Croatian Parliament enactedtheStrategicInvestments Implementation hasnotyettaken place.In2013,the national interest,regardlessiftheyareprivateorpublic. 214 213 212 10% 20% 30% 40% 50% 60% 70% Third EnergyPackage intoCroatiannationallegislation The EnergyLawadoptedin2012aimsatincorporatingthe General Regulatoryframework 2. in 2012amountedto16.8% renewable energy sources in gross final energyconsumption Sources: EU energyinfigures-“StatisticalPocketbooks 2012and2013”, Gross electricitygenerationmix2008-2012 0%

214 Official Gazette Official Gazette Eurostat. . Itgivespreferential treatmenttoenergyprojectsof 2008 European Commission 133/1. 120/12. Renewables Solid fuels 2009 212 2010 , above Croatia’s 2011/2012 Oil &gasproducts Other 2011 2012 213 . the market isbasedonbilateralcontracts. 217 216 215 Plomin d.o.o.,co-owned by HEPandRWE Power significant twobeingHEPandtheindependentproducerTE so farissued24 power plantinSlovenia, neartheCroatianborder. HERAhas market in2012.Itowns a50%stake intheKrsko nuclear was thelargestelectricitygenerator, covering 82%ofthe The power generationsectorisalsodominatedby HEP. It Electricity Wholesalemarkets 3. distribution operations at alocallevel,ofwhich13 is stillpending.Gasdistributedby 36 from thecompanyINAfor morethanadecade,butitscertification The gastransmissionsystemoperatorPlinacrohasbeenseparated accounting, legalandmanagementsystems. energy market buttheTSOandDSOshaveindependent to theCommission.TheHEPGrouphasamonopolyon unbundling certification beenyetnotifiedby HERAhasnot HEP Group,includingadifferent visualidentity. However, amended toensurefunctionalunbundlingfromtherestof equity capitalofHOPSwasincreasedandfounding acts to CroatianTransmission SystemOperator(HOPS).The In mid-2013theCroatianTSO,HEP-OPSchangeditsname sectors suchasheatandnaturalgas. in manyothersupportingactivitiesincludingenergy transmission anddistribution,supplytrade,aswell electricity company, engagedinelectricityproduction, The HEPGroup(HrvatskaElektroprivreda)isastateowned The unbundlingprocessinCroatiaisnotyetcompleted. Unbundling activities (collectionofone-off fees andcompensations). the workofHERAaresecuredfromincomeitsown is notpartofthegovernment budget.Fundsfor financing established in2004.HERA’s annualbudgetof4.5m The CroatianEnergyRegulatoryAgency(HERA)was National EnergyRegulator operating a210 100 http://www.hera.hr/hr/html/dozvole_tab11.html

Croatia’s biggesttelecomoperator, T-HT (majorityowned by Deutsche RWE Energijaobjective istogaincontrolof10%thetotal households andcompanies aspartofadiversification plan. Telekom) announced itwould startdelivering electricity tolocal its electricityprovision servicestoincludegasprovision. entering theCroatiannaturalgasmarket: theaimistoexpand electricity market over thenextthreeyears. RWE Energijais 000 customers and are exempted from the unbundling rules. customers andareexemptedfromtheunbundlingrules. licenses for electricitygeneration,themost MW power plant 215 . The remaining DSOs serve less than . TheremainingDSOsservelessthan have unbundled their supply and have unbundledtheirsupplyand 217 . Atthewholesalelevel, companies which operate companies whichoperate 216 (50:50), EUR will remainregulated. accession negotiations. Duringthis period households prices market, whichcontradicts Croatia’s commitmentsunderthe year transitionalperiodbefore completeliberalisationofthe at aregulatedprice.Thismarked thebeginningofathree to HEP, whichpurchasesthenecessarygasfromINAalso From April 2014 until 2017, this functionwas transferred service obligationofgasprocurementatregulatedprices. INA) remainedthe“supplierofsuppliers”underpublic Until 31 suppliers toprimarilypurchasegasfromdomesticproducers. customers intheterritoryofCroatiaandobligingpublicservice domestic gasproducerstooffer theirgasprimarilytosuppliersof represent aseriousobstacletocrossbordergasflows, by obliging will beeasier. However, someprovisions intheGasMarket Act entry andexitcapacityseparatelyshippinggastoCroatia import. Bymoving tothenewmodel,traderswillbeablebook interest fromSlovenia andHungary, fromwhichshipperscan purchase all itsgasimportsonthespot market hassparked on domesticgasresourcesandspotmarkets. INA’s planto the CroatianoilandgasgroupINA-IndustrijaNafteisfocusing (the supplycontractwithItaly’s ENIendedinDecember2013), on 1 Croatian gasmarket beganitstransitiontoanentry/exitmodel and Hungarywhichbecameoperationalon3 construction oftheinterconnectinggaspipelinebetweenCroatia de facto a gas tradingisbasedonbilateralcontracts.Theconditionsfor There iscurrentlynocommodityexchangeorgashub.Wholesale Gas electricity systems,includingmodelsfor market coupling. striving toimprove furtherintegration withneighbouring auctions withSlovenian and Hungarian operators.HOPSis multilateral coordinated cross-border transmissioncapacity capacity isprogressing.In2012,HEPTSOcarriedoutitsfirst The Cross-border transmission and allocation of interconnection 15 energy billsof30%.Thoughthe Croatianregulatorissued launched advertisingcampaigns, promisingsavingson the competitionfor customersgainedmomentum.Operators for householdcustomersremainsfullyregulated.Recently unclear. This developmentissignificantgiventhattheprice at firstseemedhigh,althoughtheactualswitchingrateis network. Theresponseofsmallcustomersandhouseholds offering electricitytocustomersconnectedthedistribution In June2013,twonewpower retailersenteredthemarket Electricity Retailmarkets 4. rules areyetto be developed. GEN-I andGermany’s RWE. Inpractice,supplierswitching leading thecampaignfor swapping suppliersareSlovenia’s electrical energysupplylicences, thetwocompanies January 2014. Rather than seeking a new long-term deal January 2014.Ratherthanseekinganewlong-termdeal opening of the gas market have been met with the opening of the gas market have been met with the March 2014,thecompanyPrirodniPlin(owned by August 2011. The August 2011.The CROATIA

83 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 84 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 Croatian economy. Europe. Highpricesnegativelyimpactcompetitivenessofthe which ismorethanindustrypaysfor gasinNorthWest In 2013,industrialconsumerspaid12.9 has madehelpingcustomersapriorityfor thegovernment. switches ofsupplierin2012.Thesteeprisegasprices gas shippingrate.Althoughpermitted,therewerealmostno for both electricity and gas), and a major rise in the natural 218 the switching procedure andensure it takes no morethan in theprocessofpreparinga rulewhichshouldsimplify service andprotectionofvulnerable customers.HERAis strengthened, particularlyintermsofensuringquality to choosetheirsupplier. Protectionofcustomersis According tothelaw, allcustomersareeligibleandfree Consumers 5. respectively. 45% and94%for domesticandindustrialconsumers Between 2008and2012,Croatia’s gaspricesroseby Gas a valueofEUR106/MWh(withoutVAT andothertaxes). (without VAT) wasEUR 42% respectively. In2013,thepricefor industrialcustomers levies). Forindustrialconsumers,theshareswere58%and costs accountedfor 40%(shareinpricewithouttaxesand costs accountedfor 60%ofdomesticprices,whilenetwork network costspaidby industry. In2012,energyandsupply price rises were lower (4%), in part due to a decrease in the prices roseby 16.9%between2008and2012.Industrial Although below theEUaverage,Croatia’s domesticelectricity Source: Eurostat Electricity pricechangeby component2008-2013(in€cent/kWh) 3 FIGURES CROATIA 10 12 14 16 0 2 4 6 8 Eurostat. 2008 Taxes+Levies HOUSEHOLDS 218 AND 4 Thegrowth wasduetoaVAT increase(25% 91/MWh. Forhouseholds,pricereached 2013 Networks 2008 EUR/GJ onaverage, INDUSTRY Energy+Supply 2013 is thesupplyroute for Russian gas. border interconnector inRogatecbetweenCroatia andSlovenia gas withanannual pipelinecapacityof6.5 opening. Thisisthesecondsupply routefor importednatural Croatia and Hungary has created conditions for gas market The gas pipeline Donji-Miholjac – Dravaszerdahely between Gas Serbia. Investmentscenariosareoptimistic. which wouldhelpreduceimportsofelectricity, especiallyfrom that wouldenablethedeliveryofa500 Plomin, isunderway. Thegovernment istryingtofindinvestors ongoing transformation ofthesector. which makes recommendations andopinionstoassistthe 3 Sources: EC,EPCRmetadata 0 1 2 3 4 5 6 7 Natural gaspricechangeby component2008-2012(in€cent/kWh) 800 and Slovenia. Considerableinvestmentisexpected.An and ahighvoltagetransmissionlinebetweenCroatia,Hungary transmission linebetweenCroatiaandBosniaHerzegovina in Croatia,includingtwoelectricityclusters,ahighvoltage guidelines for trans-Europeanenergyinfrastructureplanned There areseveralProjectsofCommonInterestunderthe Electricity environmental assessmentprocedures. legislative andnon-legislativemeasuresstreamliningthe granting processfor projectpromoters,andtheadoptionof including thepublicationofmanualonpermit 2013), andothermeasuresforeseen for 2014and2015, for ProjectsofCommonInterest(PCIs)(dueby 16 Regulation, includingtheestablishmentofone-stop-shop adoption ofthemeasuresstemmingfromTEN-E The Croatianauthoritiesshouldensureaproperandtimely Infrastructure 6. weeks. Ithasappointedacouncilfor customerprotection, million 2008 Taxes+Levies EUR investmentina500 HOUSEHOLDS 2012 Networks MW coal-firedpower plant Plinacro has finalised the 2008 MW gas plant in Osijek, MW gasplantinOsijek, INDUSTRY bcm. Thecross- Energy+Supply November 2012 creates anewenergycorridorfor theregion. solution for Croatia)istheIonian-AdriaticPipelinetoAlbaniawhich Croatia by 2016.Astrategicallyimportant PCI(aleastcostlyN-1 adopted anactionplantoimplementtheSouthStreamprojectin signals arebeingconveyed.InJanuary2013,GazpromandPlinarco should encourageinvestorsbutfor thetimebeingcontradictory European North-South corridor. To deliver the project, the government The LNGterminalonKrk,thelistofPCIs,wouldopenacross 220 219 ( Sources: Eurostat,CEER,NationalRegulatoryAuthority, ECcalculations. 15 Europe. It has 4 The Croatianpower system is one ofthe smallest in Electricity Securityofsupply 7. putting intooperationthetransmissionpipelineBenkovac-Split implementation ofitspreviousNetwork Development Planby CROATIA – KEYINDICATORS 1 ) MVA isameasurementthatalsotakes intoaccountthe Electricity market value( HHI inelectricityretailmarket HHI inpower-generation market Regulated pricesfor non-households–electricity Regulated pricesfor households–electricity Switching rates (entire electricity retail market) Switching rates(entireelectricityretailmarket) Number ofmainelectricityretailers Total Numberofelectricityretailers Market shareofthelargestpower-generation company Number ofmainpower-generation companies Number ofsmartmetersinstalled Peak demand(MW) Installed generationcapacity(MW) of Number ofcompaniesrepresentingatleast95% ELECTRICITY and gasconsumptioninthehouseholdnon-householdsectors(average bands)andannualaverage retailprices. Market valueis anestimationofthesizeretailelectricityandgasmarkets. Itiscalculatedusingdata onelectricity MVA 000 http://www.energy-community.org/pls/portal/docs/2304177.PDF power inthepower load. net power generation 220 ofgrossinstalledinterconnectioncapacity. GW of installed generation capacity and 1 ) (bn€) 4 4 7 7 Yes Yes Yes Yes N/A 2 9 82% 2 N/A 3 4 4 2 1.197 reactive 516 738 193 000 219 . systems of neighboring countries of systems strengthened by interconnectinginfrastructurewiththe supply security. Krk isquickest waytoimprove thewholeregion’s naturalgas and southernAdriatic.DeliveryofaPCIinLNGterminal existence ofpromisingdepositsgasandoilinthecentral regional securityofgassupply. Arecentsurveyrevealedthe rule application. Croatia is strategicallylocated in terms of the RiskAssessmentandnoofficialobligationfor aN-1 is nobi-directionalflow obligation; noobligationtoperform Action andEmergencyPlanhavenotyetbeenadopted;there Preventive fully aligned with Regulation (EU) No 994/2010. The Croatian RegulationonSecurityofNaturalGasSupplyisnot Gas towards theeast the southtonorthandviceversa,from plants, electricityistransportedfor mostoftheyearfrom Due toitsgeographicalpositionandlocationofgenerating 222 221 HHI ingasretailmarket HHI ingassupplymarket Regulated pricesfor non-households–gas Regulated pricesfor households–gas Switching ratesfor gas(entireretailmarket) Number ofmainnaturalgasretailers Number ofretailerssellingnaturalgastofinalcustomers Market shareofthelargestentitybringingnaturalgas Number ofmaingasentities into country Number ofentitiesbringingnaturalgas GAS Gas market value(

Together withtheSlovenian power systemandthepower In 2012,thetotalcross-borderElectricity Exchangeby Borders(GWh) within theUCTEgrid. Operator HEPOPS constitutesthecontrolblockSLO –HRBIH system ofBosnia and Herzegovina, the Transmission System was: power flows toCroatia,13 1 ) (bn€) 221 . Croatiansecurityofpower supply is 191; power flows fromCroatia,5 222

. CROATIA 1 1 4 4 Yes Yes Yes N/A 3 36 60.8% 2 5 0.505 588 833 568.

85 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 86 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 10% 15% 20% 25% 30% 35% 40% 45% Source: Eurostat Gross inlandconsumptionmix2008-2012 1 FIGURES achieving the2020renewablestargetof17%. renewables (13.5%)increased,thusmoving Italycloserto (38%) for thefirsttime,whileshareofsolidfueland consumption (37%)fell below theshareofnaturalgas reached 163 In 2012,aftera5%decrease,grossenergyconsumption Generaloverview 1. 0% 5% 2008 Renewables Solid fuels ITALY Mtoe. Theshareofoilproductsover thetotal AND 2 2009 Natural gas Other 2010 → → → Key issues to avoidcontractualcongestions. flexibility. Accessrulestointerconnectioncapacityshouldbefurtherdeveloped market liquidityisstilllow. Securityofsupplyatpeakperiodsislimitedduetolow TSO andtheimplementationofnewcapacityallocationrules.Nevertheless,spot Competition withinthegassectorhasimproved duetosuccessful unbundling ofthe capacity shouldbeincreasedtotackletheNorth-Southdisparitieswithin thecountry. renewables andbetterpricealignmentwithadjacentcountries.Nationalinfrastructure with neighbouring markets should be encouraged to allow the secure integration of congestion managementrulesIncreasing interconnectioncapacityanddeveloping other EUmemberstates. in renewables.Despiteallthis,power pricesinItalyaregenerallystillhigherthan electricity networkandtheexcessofsupplycausedby demandreductionandgrowth Competition intheelectricitymarket hasbeenenhancedby thedevelopmentof Crude oilandpetroleumproducts 2011 2012 the primaryhubinsouthernEurope. European gas market, with the final aim of Italy becoming focused oncontinuousdevelopmentandintegrationintothe for the electricitysector. Meanwhile, the natural gas sector the Europeansinglemarket areamongtheprimarygoals development, importreduction and further integrationinto confirmed by thelatestItalianGovernment. Infrastructure 10% 20% 30% 40% 50% 60% nazionale, SEN)wasapproved atthebeginningof2013 A newnationalenergystrategy(Strategiaenergetica General Regulatoryframework 2. 223 Sources: EU energyinfigures-“StatisticalPocketbooks 2012and2013”, Gross electricitygenerationmix2008-2012 0%

Interministerial decree of8 gov.it/images/stories/normativa/decreto-8marzo2013-sen.pdf http://www.sviluppoeconomico.gov.it/, http://www.sviluppoeconomico. 2008 European Commission Renewables Solid fuels 2009 Natural gas Other March 2013, 2010 Crude oilandpetroleumproducts

2011 2012 223 and in consumption droppedfrom328.2 225 224 collective shares rose to 30.2% Further progresswasmadeby small-sizedoperatorswhose followed by ENI(9%),Edison(7.2%)andE.On(4.4%). market operatorholding25%ofthemarket (26%in2011), by 5%, compared to 2011 (49%). ENEL remains the main the market share of the four largest operators decreased Competition onthewholesalemarket continuestoimprove: Electricity Wholesalemarkets 3. to 177 coming years,thenumberofgasdistributorswillbereduced than 5%,withSnamproviding almost23%ofmarket. Inthe 2013, therewerefivedistributorswithmarket sharehigher 2012, of which 35 transmission operator. Therewere232 Infrastrutture Trasporto Gaswascertifiedasindependent as anownership unbundledTSO.InSeptember2013 company (Eni)hasbeenconcludedanditisnow certified Snam ReteGas’s unbundlingprocessfromitsformer parent of totalvolumedistributed. in distribution,remainedstableat86%dominant operator each. In2012,themarket shareofEnelDistribuzione,the distributors, 10 unbundling regime.Thereis a total of 138 the maintransmissionsystemoperator, undertheownership In thefirsthalfof2013ItalianRegulatorcertified Terna, Unbundling service stakeholders tocover thisbudget. Authority collectsleviesfromenergymarket andwater in 2012withanannualbudgetofEUR both energyandwaterservicesregulationhad172 idrico), whichhasbeeninoperationsince1997,working Authority (Autorità per l’Energia Elettrica, il Gas ed il sistema The ItalianNationalEnergyandWater ServiceRegulatory National EnergyRegulator are plannedfor largerplants. expenditure andtoincentivisecapacity. Auctionprocedures was replaced by feed-in tariffs, with caps to limit overall incentives for renewables:theGreenCertificatesmechanism In 2012,Legislativedecree28/11cameintoforce, reshaping Assoelettrica, 2013. AEEG, 2013National reporttotheEuropeanCommission. http://www.staffettaonline.com/articolo.aspx?ID=123738 and eachconcessionwillbeauctioned. 225

of whichservemorethan100 000 customers

served more than 100 224 . Global national electricity TWh in2012to317.1 gas distributorsin 000 58.5 customers. In million. The electricity staff against 74.9 lowest levelsincesector’s liberalisation(70 Final gasconsumptioncontinuedtodecrease,reachingthe Gas gas firedplants(see Fig. 2). generation parkcompositionby farledby combinedcycles electricity wasstillabove the rest oftheEuropedueto interconnected Europeancountries,theaveragepriceof the endof2012.EventhoughItalyremainsonebest prices, adeclineoftheday-aheadpriceswasobservedfrom allocation. Asaresultofthisanddecreaseinnaturalgas efficiency incross-bordercapacitytransmissionrights brought abouttangiblebenefits,mainlyby improving introduction ofmarket couplingbetweenItalyandSlovenia Congestion managementruleswereimproved asthe 226 two companieshavingamarket sharegreater than5%. market wasatmediumlevel(HHIjustabove 1800)withonly accounted for 20.3%.Thecompetition ontheoverall retail and Eni)at34.3%,ofwhichtheleadingoperator(Enelgroup) combined share of the three main operators(Enel, Edison by Enel.Thefreemarket waslessconcentratedwitha concentrated, as85.4%ofthetotalsupplywasprovided suppliers (about140),thestandardoffer market remained to 2011,reaching264 of theretailmarket in2012decreasedby 4.2%compared Due toasignificantdownturn inpower demandthesize Electricity Retailmarkets 4. main supplier (35.2%) followed by Algeria (32.2%). imports remains high (90%). In 2012, Russia was Italy’s fell consequentlyaswell,butItaly’s dependencyongas forward market wasactivatedin2013). available atthegasexchangeareincreasing(theorganised reduced spreadinrespectofmainEuropeanhubs.Products 2012, remainedlargelystableataroundEUR on theOTC spotmarket atPSV, aftera21%increase in of congestionmanagementrulesattheNorthborder. Prices level ofcompetitivenesswasenhancedby earlyintroduction Italian PSVremainedstableatthe2011levelof2.6) Despite ratherlow market liquidity(thechurn rateofthe 2012 below 500). (74.3% in2011)buttheconcentrationremainslow (HHIin increasing theirsharetoacombinedamountof78.2% Eni, EdisonandEnelcontinuedtodominategassupply, purchased onEuropeanexchanges. on long-termcontracts,withjust4.6%ofthetotalimport is importedmainlyfromQatar. Mostimportedgasisbased

AEEG, 2013National reporttotheEuropeanCommission. Gm 3 in2012).Netvolumesofimportedgas TWh. Despitethenumerousactive Gm 28/MWh with ITALY 3 in2013 226 LNG

87 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 88 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 switching processhasbeenlaunchedin2013. gas consumption.Anindependentdatahubtosupportthe supplier in2012,representing45.2%ofthetotalvolume ‘standard offer’. 4.7% of overall gascustomerschanged households andSMEsarestillservedonthebaseofthis since January2003.Nevertheless,themajority(84%)of Consumers havebeenabletochoosetheirown supplier 47.5% in2012)themarket remainedconcentrated. Enel andEdison)decreasedslightly(from49%in2011to to theendmarket. Astheshareoftopthreesellers(Eni, 9% compared to 2011, with64.2 In 2012,domesticdemandsinthegassectordecreasedby Gas switching processhasbeenlaunchedin2013. 7.0% in2011).Anindependentdatahubtosupportthe withdrawal pointschangedsupplierin2012(comparedto active inswitchingsuppliers:7.6%ofthetotalnumber through anopenauction.Customersremainedrelatively electricity issuppliedby aLastResortSupplier, selected to findasupplier, butiftheycannotfindasuitable offer, consumers (i.e.otherthanhouseholdsandSMEs)areobliged are stillservedonthebaseofthis‘standardoffer’. Other price. Today themajority(80%)ofhouseholdsandSMEs buy electricityfromtheSingleBuyeratwholesalemarket according toa‘standardoffer’. Inthiscase,thelocalDSOs a defaultsupplier, thelocalDSO,whichprovides electricity In Italy, consumersthatdonotchooseasupplierremainwith Source: Eurostat ITALY Electricity pricechangeby component2008-2012(in€cent/kWh) 3 FIGURES 10 15 20 25 0 5 2008 Taxes+Levies HOUSEHOLDS AND 4 2012 Networks Gcm of natural gas sold 2008 INDUSTRY Energy+Supply 2012 Desk In 2012,thenumberofcasesprocessedby theEnergyHelp- to theexistingjointdisputeresolutionprocedureprotocols. Sources: EC,EPCRmetadata-*nodataavailable Natural gaspricechangeby component2008-2012(in€cent/kWh) 228 227 set upanewEnergyCustomerConciliationService institutional communicationcampaigns.In2013,theNRA online pricecomparabilitytool.Italyhasundertaken specific consumers throughtheConsumers’Atlasaswellan as singlepointofcontactproviding onlineinformation to consumers andpromoteinformed choices.TheNRAacts Italy hasimplementedseveralinstrumentstoprotect Consumers 5. the presenceofalastresortsupplierandsocialtariffs the transparencyofbilling.Otherforms ofprotectionare customers. TheNRAhasalsoadoptedaResolutionon numbering almost36 10 offer for domesticconsumers). the economictermsfor the“servizioditutelagas”(standard spot commoditypricestoconsumersthroughareform of The aimwastopassonthebenefitsderivingfromwholesale prices moreinlinewiththoseofotherEuropeanmarkets. has incentivisedthewholesalespotmarket andhasbrought led toarenegotiationofpricesandquantities.Thisreform 2011, decoupledthepricefrompetroleumproducts,which has beenredefined.Thenewbalancingmarket, introducedin In 2013thegasretailmarket regulatoryframeworkinItaly 0 1 2 3 4 5 6 7 8 9

A helptoolmanagedincollaboration withtheSingleBuyer This serviceisprovided completelyonline,andprovides of complaints. and fact-finding activities andensuringtheeffective processing (Acquirente Unico) thatisconductingmaterial,informational two for athird-partyconciliator whoisindependentofthe 228

parties withexpertiseinmediation and energy. decreasedby 6%whencomparedwith2011and 2008 Taxes+Levies HOUSEHOLDS 000, submittedmostlyby residential 2012 Networks 2008* INDUSTRY Energy+Supply 227 2012* parallel

in Italy is the 5 The assessmentofbothretailelectricityandgasmarkets of complaints). switching provider ortariffplan(withthe4 EU averageonallthecomponentswithexceptionof highest intheEU).Likewise gasservicesareassessedbelow 231 230 229 assessment procedures. non-legislative measuresstreamliningtheenvironmental for projectpromoters,andtheadoptionoflegislative publication ofthemanualonpermitgrantingprocess other measuresforeseen for 2014and2015,includingthe of CommonInterest(PCIs)(dueby 16November 2013),and including theestablishmentofone-stop-shopfor Projects 347/2013 onthetrans-Europeanenergyinfrastructure, adoption ofthemeasuresstemmingfromRegulation The Italianauthoritiesshouldensureaproperandtimely Infrastructure 6. hardship orserioushealthconditions available for vulnerable customers who suffer from financial provider ortariffplanwiththe existingprovider (whichis4 score ontrustinproviders) with theexceptionofswitching the EUaverageonallindicators(withthirdlowest (4.2) decreaseinscore.Theelectricitymarket scoresbelow since 2012,the electricity market hasseena considerable the performance ofgasmarket hasstayedrelativelystable for theelectricitysectorand609 families whohavebenefitedfromsocialtariffsis957 on overall consumersatisfactionand4 for gas),with30 markets (almost 8 well below theaverageobserved for 31 respectively). Inaddition,thescoreofbothmarkets is average (65.7and71.0

Resolution 2 10 Resolution 72/2014/E/comof27 edition/index_en.htm consumers/consumer_evidence/consumer_scoreboards/10_ 28 and pursuanttotheprovisions ofMinisterialDecreedated required tokeep peoplewith serioushealthconditionsalive”, of medical-therapeuticequipmentpowered by electricity of HealthDecreedated13January2011entitled“Identification (http://www.autorita.energia.it/it/docs/14/072-14.htm). th December 2007. ConsumerMarkets Scoreboard,http://ec.europa.eu/ August 2012,350/2012/R/eelpursuanttoMinistry 231 th lowest in the EU and well below the EU th and21 points for electricity andover 2 points comparedto72.0and74.1, st position in theranking.While February 2014 301 for thegassector 229 th highestincidence domestic services . Thenumberof th lowest EUscore

points 230 192 . th

meters inthegassector, delayingitby 2018. The AEEGhasproposedupdating planned pipelinefor AlgeriangasthroughSardinia. flow capacitytowards thenorthwesternmarkets and a Albania willstartin2015.Italsohas a PCIensuring reverse Turkish bordertotheSouthofItalythrough Greeceand of Trans AdriaticPipelinetransportingAzerigasfromthe from theSouthernGasCorridorproject,construction within theNorth-SouthEastCorridortoallow futureflows Snam ReteGasisdevelopingaProjectofCommonInterest started constructionactivitiesin2013. regulated system.AnotheroneinPortoEmpedocle,Sicily, exemption obtained, the terminal asked for admission to the completed attheendof2013.Despitethirdpartyaccess The newoffshoreLNGregasificationterminalinLivornowas Gas 32 smart metersisalmostcomplete,ENELhasinstalledover renewable generation.Theelectricitysectorroll-outofthe projects onalargescaletomanagecongestioncausedby that havedecidedtoimplementelectricitystoragepilot Italian TSOisamongasmallnumberofentitiesworldwide construction; entryintooperationisexpectedin2015.The Sicily (“Sorgente-Rizziconi”)andthecontinentisstillunder issues inthatarea.Asub-seatransmissioncablebetween the Italianmainlandthuscontributingtoresolvingcongestion the existinginterconnectioncapacitybetweenSardiniaand differences betweenpricezones.TheSAPEIprojectdoubled such investmentswilleasethegridconstraintsandreduce and thenecessaryinternalreinforcements. Altogether interconnecting Italy withFrance, SwitzerlandandAustria guidelines for trans-Europeanenergyinfrastructure,mainly include 19 critical South-Central-Southsection.Futureinvestments and improving thetransit of electricitythroughoutthe 2012 allowing betterintegration ofdifferent market zones Various upgrades of theinternalgridwerecompletedin Electricity 233 232 established

Resolution ARG/gas 155/08,http://www.autorita.energia.it/ Resolution 575/2012/R/gas, allegati/docs/08/del.ARG-gas155-08.pdf http://www.autorita.energia.it/allegati/docs/12/575-12.pdf million smartmeters. 233 Projects ofCommonInterestunderthe timeframefor themassroll-outofsmart

232 thepreviously ITALY

89 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 90 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 ( * AEEGupdatesandpublishesevery 3monthsstandardconditionsfor householdsandsmallenterprisesbasedonwholesalemarket conditions Sources: Eurostat,CEER,NationalRegulatoryAuthority, ECcalculations. approval. adequacy, however, implementationisstillawaitingfinal call options)for theamountsrequiredtoensuresystem options fromthegenerationcompanies(physicallybacked to theproposedscheme,TSOwillpurchaseguaranteed existing temporaryschemeofcapacitypayment.According A generation capacitycommissionedinthelasttwoyears. been enhancedby averylarge amountofnewrenewable twice thepeakload.Theexcessofavailablecapacityhas of generationcapacitywhichcurrentlystandsatover The Italiansystemischaracterisedby substantialsurplus Electricity Securityofsupply 7. ITALY ( ( ITALY – KEYINDICATORS 1 3 2 ) ) ) capacity market mechanismisexpectedtosubstitutethe Electricity market value( HHI inelectricityretailmarket HHI inpower-generation market Regulated pricesfor non-households–electricity Regulated pricesfor households–electricity Switching rates (entire electricity retail market) Switching rates(entireelectricityretailmarket) Number ofmainelectricityretailers Number ofelectricityretailers Market shareofthelargestpower-generation company Number ofmainpower-generation companies Number ofsmartmetersinstalled Peak demand(MW) Installed generationcapacity(MW) ELECTRICITY of Number ofcompaniesrepresentingatleast95% http://www.enel.com/en-GB/innovation/project_technology/zero_emission_life/smart_networks/smart_meters.aspx and gasconsumptioninthehouseholdnon-householdsectors(average bands)andannualaverage retailprices. Market valueis anestimationofthesizeretailelectricityandgasmarkets. Itiscalculatedusingdata onelectricity see http://www.enel.com/en-GB/innovation/project_technology/zero_emission_life/smart_networks/smart_meters.aspx For thenumberofsmartmetersinstalled, Table contains2012dataunlessstatedotherwise.Peakdemandistaken from ENTSOE,Yearly Statistics&AdequacyRetrospective 2012. net power generation ( 1 ) 2 ) (bn€) 1 1 884 No No 7.6% 2 412 25% 3 32 54 124 39.410 291 865 113 mln 224 ( 3 ) disconnection ofindustrialcustomers. is basedonreactivationofcoldreserveoilplantsand for thegassystem,inlinewithRegulation(EU)No994/2010 flow problemsintheelectricity sector. Theemergencyplan gas firedgenerationcapacityashortageofmaycreate Resources plc)wascancelled.Becauseofthehighshare been delayedandtheconcessionfor Rivara(Independent Stoccaggio) andCornegliano(ItalgasStorage)siteshave the constructionofSanPotitoeCotignola(Edison completed andexpectedtogoononlinein2015,meanwhile temperatures. ThenewstoragesiteofBordolano(Stogit)is demand (around30%),thedailyisverysensitiveto increasing) share of residential consumption over the total at peakdailydemandarerathertight.Giventhehigh(and Despite theexcessofoverall import capacityItaly’s reserves Gas HHI ingasretailmarket HHI ingassupplymarket Regulated pricesfor non-households–gas Regulated pricesfor households–gas Switching rates(entireretailmarket) Number ofmainnaturalgasretailers Number ofretailerssellingnaturalgastofinalcustomers Market shareofthelargestentitybringingnaturalgas Number ofmaingasentities Gas market value( GAS into country Number ofentitiesbringingnaturalgas 2 ) (bn€)

1 1 <500 No No 4.7% 4 465 44.6% 3 85 23.110 275 by 2020 and isontracktoreachitsnational2020REStargetof16% Cyprus remainedabove its2011/2012interimtrajectory graphically theperiod2008-2011 172 400 capacity fromrenewableenergysourceswouldreach Action Planprojectedthatby 2018theelectricitygeneration of windpower generation.TheNationalRenewableEnergy tripled comparedto2010levels,mainlyduetheincrease 2012, electricitygenerationfromrenewablesmorethan are increasingtheircontributioninelectricitygeneration.In remarkable potentialinsolarandwind.However, renewables electricity isgeneratedby renewables,despiteCyprus’ mainly by crudeoilandpetroleumproducts.Only3.6%of of 4.3%comparedto2011.Electricityin Cyprus isgenerated The grosselectricitygenerationin2012was4.72 235 234 and therenewablessharehasreached6.8% energy consumptionhassteadilyincreasedover recentyears The contributionofrenewableenergytothegrossinland represent 94.9%ofthegrossenergyconsumptionin2012. to bedominatedby oilandpetroleumproducts,which a dropof6.3%from2011.Theenergymixpatterncontinues The grossinlandenergyconsumptionin2012was2.51 Mtoe, Generaloverview 1.

CERA, 2013National ReporttotheEuropeanCommission, 2013. Eurostat. MW. In2012,theinstalledrenewableshavereached MW. The grosselectricitygenerationispresented 235 . CYPRUS → → → 234 Key issues promoted. Renewable energycouldplayavitalroleinsecurityofsupplyandshouldbe smooth transitionfor consumers. investment-friendly frameworkinordertoattractalternativesuppliersandensurea renewables, energy efficiency and GHG emissions. There is a need to create an Liberalisation shouldbeplannedindetail,takingintoaccounttheEUtargetsfor sole supplier. Consequently, thereisnoscopeyetfor consumerswitching. but itis not yetimplemented in practice, as EAC, a semi-public body, iscurrentlythe The fullliberalisationoftheelectricitymarket wasformally achievedon1January2014, . 234 TWh, adrop in2012. Gross inlandconsumptionmix2008-2012 1 FIGURES Sources: EU energyinfigures-“StatisticalPocketbooks 2012and2013”, Gross electricitygenerationmix2008-2012 Source: Eurostat 100% 120% 100% 120% 20% 40% 60% 80% 20% 40% 60% 80% 0% 0% European Commission Nuclear Solid fuels 2008 2008 Crude oilandpetroleumproducts AND 2 2009 2009 Natural gas Renewables 2010 2010 Crude oilandpetroleumproducts Other 2011 2011 Renewables 2012 2012

91 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 92 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 has unbundledtheaccountsofDSO. distribution networkandequaltreatmentfor allusers.EAC and developingthenetwork,safeguarding accesstothe Directive. TheDSOisresponsiblefor managing,operating obtained a derogation from Article unbundling oftheTSOdoesnotapply, sinceCyprushas its staff is seconded from EAC. The obligation of ownership is legallybutnotfunctionallyunbundledfromEAC, sinceall both thetransmissionanddistributionsystem.TheTSO The incumbentElectricityAuthorityofCyprus(EAC) owns Unbundling year withanetsurplusofEUR increase ofapproximately14%from2011.CERAclosedthe revenue ofCERAfor theyear2012wasEUR sector; CERA’s lackofresourcesisasourceconcern.The as a result of government decisions for the wider public employs 11 and monitortheElectricityNaturalGasMarkets. CERA established in2003. The objective of CERAistoregulate The CyprusEnergyRegulatoryAuthority(CERA)was National EnergyRegulator 237 236 and competitiveenergymarkets. the EuropeanCentralBank)Cyprusengagedtodevelopopen European Commission,theInternationalMonetaryFundand the MemorandumofUnderstandingwith“Troika” (the No wholesalemarket iscurrentlyoperatinginCyprus; interconnected withanyneighbouringpower systems. isolated systemexpired,Cyprusisnotintegratedand Second EnergyPackage pursuanttoitsstatusofsmall on 1 January 2014 when a derogation granted under the Whilst full liberalisationofthe market was legally achieved Electricity Wholesalemarkets 3. came intoforce inlate2012 implementing legislationoftheThirdEnergyPackage, which An importantregulatorydevelopmentfor 2012wasthe General Regulatoryframework 2. CYPRUS

Annual Reportof the CyprusEnergyRegulatoryAuthority CERA, 2013National ReporttotheEuropeanCommission, 2013. for the year 2012,October2013. people. Furtherrecruitmenthasbeenpostponed 236 . 0.97 million 9 of the 2009/72/EC 237 1.96 . million, an 2014 withadeadlineof24 was accepted.AsecondinvitationissuedinJanuary to Cyprus.Seventeenapplicationsweresubmitted,butnone for theExpressionofInterestfor thesupplyofnaturalgas On 27 until theindigenousnaturalgasreservesaremadeavailable. supply oftheelectricitygenerationsectorwithnaturalgas State. Inaddition,aninterimsolutionwasplannedfor the the legalform ofprivatecompanies100%owned by the focus onthedevelopmentofdomesticmarket. Bothhave charge ofupstreamandexportissues,whileDEFA should defined: inprincipleEYK(formerly KRETYK)shouldbein whose respectivetasksandfunctionsarecurrentlybeing have establishedtwoNationalHydrocarbonsCompanies within theEasternMediterraneanSea.TheCypriotauthorities December 2011,significantgasresourceswerediscovered Currently, naturalgasisnotsuppliedtoCyprus.However in Gas data wasavailable L/V. Thisrepresentsanincreaseover theyearsfor which 41 minutes lost pervoltagelevelyear are estimated at Based onthesupplyinterruptiondatafor 2012theoverall was 9.4 The installedcapacityofcogenerationheatandpower 172 out ofwhich1 The installedgeneratingcapacityin2012was1 240 239 238 price the totalbill,whileinindustryitrepresented11%ofend The networkcomponentinhouseholdsrepresented15%of do notexist.Electricitypricesarewellabove theEUaverage. electricity supplierinCyprusandthusswitchingprocedures suppliers on1January2014.However, EAC isstillthesole Domestic consumersbecamelegallyeligibletoswitch Retailmarkets 4. extended to14

Eurostat. Annual Reportof the CyprusEnergyRegulatoryAuthority CERA, 2013NationalReporttotheEuropean Commission,2013. for theyear 2012,October 2013. minutes for H/V, 157 240 MW wasrenewablecapacitymainlyfromwindparks. September 2012,DEFA andEAC issuedaninvitation . MW in2012 April 2014. 374 238 237 . MW wasthermalpower stations and . minutes for M/Vand8 March 2014 239 , subsequently minutes for 546

MW, MW, and ranks18 a pilotprojectof3 prepare for thismedium-termgoal,theEAC isimplementing customer premisesby 2020wherepositively assessed. To subject toacost-benefitanalysis,on80%ofelectricity the deployment ofsmartmeteringsystems,whichmaybe According to EU law, MemberStatesareobliged to ensure have not been asked giventhat the market is a monopoly). (The questionsonswitching,easeofswitchingandchoice encountering problemsinthismarket isthelowest intheEU. 245 244 243 242 241 below theEUaverage(70.7 The retailelectricitymarket inCyprusisperforming just Consumers 5. States 2011, whichwasthelargestdropamongstallEUMember Electricity demandin2012decreasedby 4.6%comparedto Source: Eurostat Electricity pricechangeby component2010 3 FIGURE 10 15 20 25 30 0 5

V. Efthimiou,“DigitalAgenda for Europe&Cyprus – ACER/CEER –AnnualReportontheResultsofMonitoring 10 However thedifference isnotstatistically significant. European MonitoringCentreonChange, EuropeanMonitoring edition/index_en.htm consumers/consumer_evidence/consumer_scoreboards/10_ Smart MeterAgendafor Cyprus”,November 2011. November 2013. the InternalElectricityandNaturalGasMarkets in2012, Centre onChange,http://www.eurofound.europa.eu/emcc/ th 241 ConsumerMarkets Scoreboard,http://ec.europa.eu/ . 2010 Taxes+Levies HOUSEHOLDS th EU-wide.Theproportionofconsumers 000 2013 smart meters Networks points comparedto72.0 242 2010

243 – 2013(in€cent/kWh) INDUSTRY . Energy+Supply

2013

244 245 ) 2 2 is inthefeasibility phase.Theprojectwillhaveacapacityof A futureinterconnectionprojectcalled“EuroasiaInterconnector” European EnergyNetwork. PCIs under the Regulation on the Guidelines for the Trans- of thedecade.Theseinfrastructureshavebeenidentifiedas being assessed and should allow for gasexport by the end for theexportofgas.PipelineandLNGprojectsarecurrently With therecentdiscoveries, infrastructuresarealsoplanned to aEUR European EnergyProgramfor Recovery (EEPR)andentitled The constructionofthepipelinesissupportedunder and Dhekelia were plannedby theCypriot Authorities. pipelines tothethreepower stationsinVasilikos, Moni the constructionofanLNGregasificationterminaland Prior tothediscovery ofgasresourcesintheEEZCyprus, permitting ofProjectsCommonInterest(PCIs). Cyprus authoritieshaveestablishedaonestopshopfor the In accordancewiththerequirementinTEN-ERegulation, Infrastructure 6. consumers withspecialneeds. In 2012,3%ofallhouseholdconsumersweredefinedas a capacityofupto3kWwiththenet-meteringmethod. for settingupaPhotovoltaic systemattheirhouse,with tariffs andfinancialincentives for participating in a Plan includes measuressuchasreducedpricesonelectricity to protectthemweredefinedinaMinisterialDecree, which poverty, vulnerableconsumers’categoriesandmeasures is stillonlyonesupplier, andnoscopefor switching.Energy electricity market istechnicallyfullyliberalised,butthere respectively. Asstatedearlier, from1January2014the N.219(I)/2013 onRegulatingtheElectricityandGasMarkets, effective andenforced throughtheLawsN.211(I)/2012and in AnnexIofthedirectives2009/72/ECand2009/73/EC,are The consumerprotectionmeasures,includingthosesetout energy infrastructure. as PCIsinaccordancewiththeguidelinesfor Trans-European In totalfour projectsinvolvingCyprushavebeenidentified transmission networks. 000 MW andinterconnecttheCypriot,IsraeliGreek 10 million grant. CYPRUS

93 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 94 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 since 2004 a reserveof38%,whichwasthelargestrecorded the maximumgenerationdemandwas997 on naturalgas. heavy fueloilordieseloil,andsomecanbeconvertedtorun 248 247 246 ( Sources: Eurostat,CEER,NationalRegulatoryAuthority, ECcalculations. 2011 in 2012was1 Although theinstalledcapacityofthermalpower stations Vassilikos Power Stationandtoareductionindemand. both theadequacyandswiftrepairachievedinrestoring ended earlierthanoriginallyestimated.Thiswasdueto which damagedtheVassilikos Power StationinJuly2011, The consequencesoftheenergycrisisafterexplosion Securityofsupply 7. CYPRUS CYPRUS – KEYINDICATORS 1 )

248 374 . Allexistingfossil fuelgeneratorsrun on MW (adecreaseof13.6%comparedto 1 MW oftemporarygeneratingunits, ) (bn€) MW, achieving 10 10 Yes Yes Yes N/A 1 1 100% 1 N/A 997 1 1 1 1.2 742

000 000 HHI ingasretailmarket HHI ingassupplymarket Regulated pricesfor non-households–gas Regulated pricesfor households–gas Switching ratesfor gas(entireretailmarket) Number ofmainnaturalgasretailers Number ofretailerssellingnaturalgastofinalcustomers Market shareofthelargestentitybringingnaturalgas Number ofmaingasentities GAS into country Number ofentitiesbringingnaturalgas Gas market value( 1 ) (bn€)

N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A electricity productioncamefromrenewables most derivedfromnaturalgas(55.1%).Theremaining In 2012,totalpower generationreached6.17 Baltic States has thehighestrenewablesshare(35.8%)inallthree amounted to4.538 Latvian nationalgrossfinalenergyconsumptionin2012 Generaloverview 1. 250 249 output in2012 electricity, whichconstitutes53%ofthetotalelectricity of threelargeHPPsandintotalgenerated3.63 the Daugava hydropower plants cascade, which consists majority ofelectricityproducedfromREStodaycomes 30% and27%respectively(Figure role ingrossenergyconsumption2012withashareof gas, oilandpetroleumproductsalsoplayedanimportant of 20%andLatviaiscurrentlyontracktoachieveit.Natural for 2020is40%,whichtwiceashightheEUaverage hydropower andbiomass.Thecountry’s renewablestarget http://latvenergo.lv/eng/about_us/generation/hpps/ Eurostat.

249 LATVIA 250 . The main renewable sources in Latvia are . Mtoe 249 . Theenergyconsumptionmix → → Key issues party accesstotheIncukalnsstorage. systems. Latviashouldurgentlydevelopandimplementclearrulesfor third transition asLatvia’s gasinfrastructureisintegratedintotheBalticandEU in thegasmarkets defactocontinues.UnbundlingofDSOswouldsupportthe However, itsenforcement waspostponeduntil2017,meaningthatthemonopoly adopted theamendmentstoendemergentmarket derogationson13 for thediversificationofsupplyneedtobeputinplace.TheLatvian Parliament For gas,thefocus needstobeoncreatingafunctioningmarket. Crucialinfrastructures the phasingoutofregulatedtariffsisone key measurestobeimplemented. Nord Pool Spot market is necessary. The electricity retail market is not developing and functioning oftheregionalelectricitymarket. ActiveparticipationofLatvenergoto connections toEstoniaareinadequateandchallengesremainasregardssmooth power sector, alongwiththenecessaryrenewalofoutdatedinfrastructure.Electricity Improper functioningofthewholesaleelectricitymarket isthekey issuefor the 1) 249 . 249 TWh . Thevast TWh of 249 with Gross inlandconsumptionmix2008-2012 1 FIGURES 10% 20% 30% 40% 50% 60% 10% 15% 20% 25% 30% 35% 40% 70% Sources: EU energy infigures-“StatisticalPocketbooks 2012and2013”, Gross electricitygenerationmix2008-2012 Source: Eurostat 0% 0% 5% 2008 2008 European Commission Nuclear Solid fuels AND 2 2009 2009 Natural gas Natural gas Renewables 2010 2010 Crude oilandpetroleumproducts Other Renewables 2011 2011 March 2014. 2012 2012

95 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 96 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 251 electricity generated 17 with market shareexceeding5%.Intotaltherewere 89% ofallpower in2012anditwastheonlycompany The dominantelectricityproducer, LatvenergoAS,produced Electricity Wholesalemarkets 3. not taken place yet. (Article from theGasDirectiveexemptingitunbundlingrules the majorityofitsshares.Latviahasanexplicitderogation The gas TSO is Latvijas Gāze with E.ON and Gazprom owning smaller localelectricitydistributioncompanies. main DSOisSadalestīklsJSCandthereareanotherten JSC asanindependenttransmissionsystemoperator. The in January2012.ThePUChascertifiedAugstspriegumatīkls unbundled since 2005, it became an independent company The electricityTSOisAugstspriegumatīklsJSC.Legally Unbundling had abudgetofaroundEUR members (21 (PUC), isamulti-sectorregulator. PUCemployed 120 The Latviannationalregulator, the PublicUtilitiesCommission National EnergyRegulator since November 2012. 2015. Themarket for industrialusersisfullyliberalised envisaged for 1 4 gas market isimplementedinseveralstagesstartingfrom opened before April2017,butagradualliberalisationofthe and finalreading.Thegasmarket inLatviawillnotbe amendments totheEnergyLawwereadoptedinthird Package as an emergent gas market. In March 2014 Latvia wasgrantedaderogationfromtheThirdEnergy General Regulatoryframework 2. LATVIA April 2014.Theliberalisationoftheelectricityretailmarket Eurostat. companies in2012,representingatleast95%of 49). ThecertificationofthisgasTSOhastherefore of themresponsiblefor energy) in 2013and April 2014waspostponeduntil1 251 . 4.7 million. January staff a a Inčukalns UGS,whichisalsousedtosupplyEstoniaand the winterLatviasatisfiesallitsnaturalgasneedsfrom Inčukalns undergroundgasstorage(UGS)facility. During Gas importedfromRussiaduringthesummerisstoredat greater useofbiomass. due tolower heatingdemand(includingcogeneration)and to 7 a decreaseof6%,comparedto2011 Total consumptionofgasinLatvia2012was1 (19.7%) generation (80.3%)andtheremainderwasimported In 2013themajorityofdemandwasmetby domestic activity onthespotmarket. Latvenergo ASdidnotparticipate,whichresultedinlow Lithuanian pricearea.Thelargestelectricityproducer often congested,contributingtopricespikes intheLatvian/ good as anticipated. The interconnector with Estonia was contracting in June 2013. However, performance was not as Scandinavian –BalticNordPoolSpotmarket for electricity users wasfullyliberalised.Latviajoinedtheregional In November 2012,theelectricity market for industrial market withamarket shareof100% Latvijas GāzeJSCistheonlyplayerinwholesalegas gas consumedisimportedfromtheRussianFederation. Latvia doesnothaveitsown naturalgasresourcesandall Gas 1 1 fuels power plantscontributed 964 had aninstalledcapacityof1 Latvia was2 In 2012,thetotalinstalledcapacityofpower plantsin 257 256 255 254 253 252 price ofimportedgaswasEUR 368 lesser extentLithuania.

Statistics Latvia,2013, http://www.csb.gov.lv/en/notikumi/2012- EC, QuarterlyReport onEuropeanGasMarkets, 2012. http://epp.eurostat.ec.europa.eu/statistics_explained/images/ar Statistics Latvia,2013,http://www.csb.gov.lv/en/statistikas- Statistics Latvia,2013.http://www.csb.gov.lv/en/notikumi/2012- ENTSOE, YS&ARreport,2012. export-energy-resources-has-grown-109-36464.html share%2C_2009.png bringing_gas_into_the_country_and_their_cumulative_market_ chive/1/19/20110407081503%21Number_of_main_entities_ temas/energy-key-indicators-30736.html export-energy-resources-has-grown-109-36464.html 459 MW 254 TWh 252 . and electricityconsumptionincreasedby 1.6%, 253 576 . MW. Ofthistotal,hydropower plants 31.7/MWh 576 MW. Thepeakloadwas MW, whilecombustible 255 257 . In2012theaverage . Thereductionwas 256 . 508 mcm, Electricity pricechangeby component2008-2013(in€cent/kWh) 3 FIGURES market participants was 15%. and in2013theswitchingratefor non-householdcustomers It ispossibletoswitchsuppliersfor industrialconsumers, commodity prices. been increasinginrecentyears,mostlyduetoanincrease Power pricesfor householdsandindustrialconsumershave 260 259 258 Latvian consumers trader. Latvenergosupplied6 fulfils thefunctionsofsupplierlastresortasapublic Latvenergo, whichimportsandexportselectricity, andalso In 2012, most customers (90%) bought electricity from Electricity Retailmarkets 4. Source: Eurostat 10 12 14 16 plan toroll-outsmartmetersinthenaturalgassystem. Until theendof2013therewasnoformal decisionandno therefore notanoption.Thepriceisindexedtooilderivatives. player inthegasretailmarket inLatvia.Switchingsupplieris As inthewholesalemarket, LatvijasGāzeJSCistheonly Gas metering and a cost-benefit analysis hasnot been conducted. 0 2 4 6 8

ACER/CEER AnnualReportontheResultsofMonitoring the Eurostat. Latvenergo data,http://www.latvenergo.lv/eng/about_us/sales/ 2013. Internal Electricity andNaturalGasMarkets in 2012,November 2008 260 Taxes+Levies HOUSEHOLDS Therearenolegalprovisions inplacefor smart AND 4 258 259 , whiletheotherfiveelectricityretail suppliedtheremaining10%. 2013 Networks 708 2008 GWh ofelectricityto INDUSTRY Energy+Supply 2013 the 5 while, onthepositiveside,incidenceofproblems is of providers, incidenceofswitchingandease the 4 (provider or tariff plan). As for gas services, the country is in above theEUaverage(75.4 31 average for domesticservicesmarkets (secondworstamong EU-wide. Themarket isalsoaround10 place EU-wide,buthasseenadecreaseof2.2 the lowest intheEUoncomparability, 2 2012. Fortheretailelectricitymarket, thecountryscores the EUaverage(68.6 retail electricitymarket in2013ismorethan3 Latvian consumers’assessmentoftheperformance oftheir Consumers 5. Sources: EC,EPCRmetadata Natural gaspricechangeby component2008-2012(in€cent/kWh) 262 261 consumers. introduce severalmeasurestoinform andsupportvulnerable definition ofvulnerableconsumersyet,butplansexistto or theirrightshavebeentaken recently. Thereisnoclear consumer accesstoinformation about the market and/ court dispute settlement. No particular actions to improve approach theConsumerRightsProtectionCentrefor out-of- PUC dealswithcustomercomplaints.Consumerscanalso According totheLawonRegulatorsofPublicUtilities, 0 1 2 3 4 5 6 second lowest. switching andchoice5

10 However thedifference isnotstatistically significant. edition/index_en.htm consumers/consumer_evidence/consumer_scoreboards/10_ markets). Theretail gasmarket isassessedsomewhat th last positionsoftheEUrankingoncomparability, choice th lowest intheEUandincidenceofcomplaintsis ConsumerMarkets Scoreboard,http://ec.europa.eu/ 2008 Taxes+Levies HOUSEHOLDS 262 2012 vs. 72.0),correspondingto21 th vs. 74.1),correspondingto13 lowest incidenceofswitching Networks 2008 nd INDUSTRY lowest oneaseof points below the points Energy+Supply LATVIA points below 2012 261 th place since th

97 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 98 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 Latvia shouldassesswaystoaccelerateitsconstruction. biggest beneficialimpactonwholesalemarket functioning by 2020, butasthis is the project that is expected the entire Balticregion.Theprojectisscheduledtobecompleted of operationandcompetitivenessenergymarkets inthe infrastructure, willenhancesecurityofsupply, effectiveness Common Interestunder the guidelinesfor Trans-European interconnector betweenLatviaand Estonia, aProjectof is expected to be completed by the end of 2018.The third improving thesupplyreliabilityinregion.Theproject transmission networkinLatviaandLithuaniaarereinforced, interconnector between As partoftheNordBaltproject,fundedby theEEPR, Baltic electricitymarkets. agreement contributestoasuccessfulintegrationofthe within theBalticStatesandwiththirdcountries.The calculation andallocationofthecross-bordercapacity (Estonia) –signedanagreementontheprinciplesof (Latvia)andElering (Lithuania), AugstspriegumaTīkls In March2013,thethreeBalticStates’TSOs–Litgrid networks ofBelarus,Russia,EstoniaandLithuania. Latvian electricitysystemisheavilyinterconnectedwiththe Estonia isregularlycongested.Forhistoricalreasons,the Lithuania. However, theinterconnectorbetweenLatviaand There arecurrentlynobottlenecksbetweenLatviaand Electricity environmental assessmentprocedures. legislative andnon-legislativemeasuresstreamliningthe granting processfor projectpromoters,andtheadoptionof including thepublicationofmanualonpermit 2013), andothermeasuresforeseen for 2014and2015, for ProjectsofCommonInterest(PCIs)(dueby 16 Regulation, includingtheestablishmentofone-stop-shop adoption ofthemeasuresstemmingfromTEN-E The Latvianauthoritiesshouldensureaproperandtimely Infrastructure 6. LATVIA Lithuania andSwedenthe November can beincreasedto3.2 or regularlyextracted).ThecapacityoftheInčukalnsUGS 4.47 Gas supplyismainlysecuredby theInčukalnsUGS,where deficit isensuredfromaninfrastructureperspective. 188.6%, implyingthatcoverage ofpeakdemandorsupply consumers. Accordingto2012data,theN-1criterionequals loaded andcanensureastablesupplyofnaturalgastoall gas deliverysystemisneverover-means thenatural represented about43%oftransmissioncapacity, which In 2012, the total consumption of natural gas in Latvia Gas voltage andstabilitylevelunderstressednetworkconditions. particular, theinvestmentswillhaveapositiveeffect onthe supply, inparticularthethirdinterconnectortoEstonia.In under constructionwillsignificantlyincreasesecurityof Region couldbeindanger. Theinfrastructureinvestments Latvia andLithuania,securityof supply for theentire Baltic Currently, intheeventoffailurelargegeneratingunits Electricity Securityofsupply 7. part ofthefirstPCIlist. enhancement oftheEstonia-Latviainterconnectionisalso trans-European energyinfrastructure.Atthesametime, and hasbeengrantedPCI status underthe guidelines for section betweenDaugmaleandIecavaiscurrentlyplanned a furtherenhancementto12 capacity tomorethan6 was realizedinearly2013by increasingcross-border The enhancementoftheLatvian-Lithuanianinterconnection Estonia. of theEUandonlyhasinterconnectionwithLithuania routes. TheLatviangasmarket isisolatedfromtherest its gasconsumptionwithnoalternativesuppliersorsupply Latvia isdependentongasimportsfromRussiafor allof Gas bcm ofgascanbestored(ofwhich2.32 mcm/day inbothdirections.Moreover, bcm ofactivegas. mcm/day ona40-kilometer bcm isactive ( Sources: Eurostat,CEER,NationalRegulatoryAuthority, ECcalculations. ( LATVIA – KEYINDICATORS 2 1 ) ) Switching rates(entireelectricityretailmarket) Electricity market value( Number ofmainelectricityretailers HHI inelectricityretailmarket Number ofelectricityretailers HHI inpower generationmarket Market shareofthelargestpower generationcompany Regulated pricesfor non-households–electricity Number ofmainpower generationcompanies Number ofsmartmetersinstalled Installed generationcapacity(MW, 2011) Peak demand(MW) Regulated pricesfor households–electricity of Number ofcompaniesrepresentingatleast95% ELECTRICITY and gasconsumptioninthehouseholdnon-householdsectors(average bands)andannualaverage retailprices. Market valueisanestimationofthesizeretailelectricityandgasmarkets. Itiscalculatedusingdataonelectricity Households, 15%non-households. net power generation 2 ) (bn€) 0% 2 8 8 6 7 7 89% No 1 N/A 3 1 1 Yes 17 0.512 196 932 691 885 ( 1 ) Number ofmainnaturalgasretailers HHI ingasretailmarket Number ofretailerssellingnaturalgastofinalcustomers HHI ingassupplymarket Market shareofthelargestentitybringingnaturalgas Regulated pricesfor non-households–gas Number ofmaingasentities Regulated pricesfor households–gas into country Number ofentitiesbringingnaturalgas GAS Gas market value( Switching ratesfor gas(entireretailmarket) 2 ) (bn€)

LATVIA 1 10 1 10 100% No 1 Yes 1 0.165 0 000 000

99 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 100 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 Cogeneration In 2012,thetotalpower generationwas5 inland production) (in 2012electricityimportwas169.8%higherthangross a resultLithuaniabecamedependentonelectricityimports and power generation in the country dropped by 63%. As when IgnalinaNuclearPower Plantwasdecommissioned The majorchangeinpower generationoccurredin2010, the largestpartofitwasderivedfromnaturalgas(63%). natural gasinLithuaniawas2.65 renewable energytargetof23% country iscurrentlyveryclosetoreachingthe2020national from 18.0% to 21.7% between 2008 and 2012, and the gas (37%)andoil(35%).Therenewablesshareincreased 269 268 267 266 265 264 263 2012 was7 The Lithuaniannationalgrossfinalenergyconsumptionin Generaloverview 1. generation in 2011 increased by 5.9%incomparisontothe2011level

Eurostat. The shareofelectricity producedincombinedheat ACER/CEER AnnualReporton theResultsofMonitoring Statistics Lithuania,EnergyBalance 2011,2012. Eurostat. Renewable EnergyDirective 2009/28/EC. Eurostat. and power plants(CHP). November 2013. the InternalElectricityandNatural Gas Markets in2012,

084 LITHUANIA 268 represented37.5%ofgrosselectricity 266 Mtoe 269 . In2012Lithuania’s electricitydemand . In 2012 gross inlandconsumption of 263 . Itwasbasedlargelyonnatural 264 → → Mtoe Key issues the countryandlargerBalticregion. Poland (GIPL)isalsoconstructedinordertofurtherdiversifygassupplies operating inDecember2014.Itisimportantthattheplannedinterconnectorwith gas supply willbeintroduced by an LNG terminal in Klaipeda, expected to start Lithuania relies on Gazprom as its single source of gas supplies. Diversification of integration oftheBalticenergymarkets. market functioning.Lithuaniashouldcontinuetopromotecompetitionthroughbetter so astodecreasethegenerationdeficitand foster securityofsupplyandwholesale Russian Federation.InterconnectorswithSwedenandPolandhavetobecompleted Lithuania remainshighlydependentonelectricityimports,particularlyfromthe . 269 . 043

267

TWh . 265 , Gross inlandconsumptionmix2008-2012 1 FIGURES 45% 10% 20% 30% 40% 50% 60% 70% 80% 10% 15% 20% 25% 30% 35% 40% Sources: EU energyinfigures-“StatisticalPocketbooks 2012and2013”, Gross electricitygenerationmix2008-2012 Source: Eurostat 0% 0% 5% 2008 2008 European Commission Nuclear Solid fuels Nuclear Crude oilandpetroleumproducts AND 2 2009 2009 Natural gas Renewables Renewables 2010 2010 Crude oilandpetroleumproducts Other 2011 2011 Natural gas Other 2012 2012 plants and renewables by 1.2%upto40 The totalinstalledcapacityofthepower plantsin2013increased by 0.13%,from9.659 272 271 270 electricity generation companies representingatleast95%ofthenationalnet six mainelectricitygeneratingcompanieswith24 being replacedby importsfromRussia.In2013,therewere for new suppliers on themarket with thebulk of theshortfall The closure of Ignalina NPP in 2009 created opportunities Electricity Wholesalemarkets 3. small gasDSOswerealsoactiveinthemarket. Lietuvos DujosABhadamarket shareofover 99%.Five other is currently in arbitration. In 2013, in the gas distribution sector shareholder ofLietuvosDujosABandAmberGrid)thecase of ownership unbundlinghasbeenchallengedby Gazprom(co- to take placeby 31 to follow afterimplementingfull ownership unbundlingwhichis Amber GridAB,commencedoperationsasaTSO.Certificationis 1 submitted itsunbundlingplanto the NCC on31 The verticallyintegratedgascompanyLietuvosDujosAB and sixothersmallerelectricityDSOs. August 2013.In2013,therewasonemajorDSO(LESTO AB) Litgrid ABreceiveditsfinalcertificationdecision byNCC in model by meansofseparate public bodieswithintheState. Electricity Directive to implement the ownership unbundling making useofthepossibilityprovided for inArticle was chosenfor unbundlingthestate-owned TSOLitgridAB, In theelectricitysector, theownership unbundlingmodel Unbundling and anannualbudgetofalmostEUR Energy ControlandPrices(NCC),employed 83 In 2013,theLithuanianRegulator, theNationalCommissionfor National EnergyRegulator Third EnergyPackage. Lithuania hasby now fullytransposedtheprovisions ofthe General Regulatoryframework 2. August 2013anewlyestablished,legallyunbundledcompany,

NCC, http://www.regula.lt/en/SiteAssets/ncc-reports/NCC- ENTSOE, YS&ARreport, 2012. Eurostat. report-2012.pdf 304 October 2014. The planned implementation October 2014.Theplannedimplementation MW, includinganincreaseinthermalpower 271 270 TWh to9.646 . Final electricity consumption decreased . Final electricity consumption decreased . TWh 2.78 272 million in 2013. million in2013. . staff members staff members May 2012. On May 2012. On generating 9(6) companies amounting to 37 in Latviastoresgasreservesfor Lithuaniangassupply Inčukalns undergroundgasstoragefacilityAs aresult, in casesforeseen inArt.8(1)ofRegulation(EU)No994/2010. sufficient forvulnerableconsumerstomeettheirgasdemand obligation toaccumulateandstorethenaturalgasreserves market player. Naturalgassupplyundertakingshavean Belarus. Ontheupstreamgasmarket Gazpromistheonly All itsgasisimportedfromRussiaviaasinglepipeline Lithuania doesnothavenaturalgasresourcesofitsown. Gas Sweden isessentialfor bettermarket functioning. border capacities.Inthemidterminterconnectorwith Baltic TSOsisnecessarytobettercalculateavailablecross- autumn of2013.In the shortrun,cooperationbetween region havecausedpricespikes tooccurinthesummerand Low liquidityandlimitedinterconnection capacityinthe EUR market wascirca7.983 volume ofelectricitytradedontheLithuanian between producers,importersandsuppliers.In2013,the the Norwegian energy regulator, with bilateral exchanges Nordic andBalticcountries–NordPoolSpotASlicensedby has beentransferred tothepower exchangeoperatorfor when theadministrationofLithuanianPower Exchange is based on the Nord Pool Spot model since June 2012 commenced operationinLithuaniaJanuary2010.Trade The LithuanianPower Exchange operatedby Baltpool 274 273 from OAO GazpromviaGasStreamAG LT). Plant andDujotekanaUAB(theonlyonethatpurchasesgas Lietuvos DujosAB,AchemaHaupasUAB,KaunasCHP players inthegasmarket remainedunchanged and included which was18.6%lessthanin2012 In 2013,Lithuaniaimported2 grid isexpanded,notablyontheborderwithLatvia. as aregionalsupplieritisnecessarythatthetransmission as well.FortheKlaipedaLNGTerminal tofullyexploititsrole not immediatelyconsumedarelikely tobestoredinLatvia which couldbeexpandedto4 security ofsupply. Itwillhaveaninitialcapacityof2 by December2014,isintendedtoincreasecompetitionand The newLNGterminal,whichisplannedtostartitsoperation

Energy inLithuania 2012,http://www.lei.lt/_img/_up/File/atvir/ NCC, http://www.regula.lt/en/SiteAssets/ncc-reports/NCC- leidiniai/2013/Lietuvos_energetika-2012.pdf report-2012.pdf 0.0489/kWh 273 . TWh withanaveragepriceof mcm on 1 bcma. LNGsuppliesthatare 701.5 274 . During2013,themain LITHUANIA mcm ofnaturalgas September 2013. bcma

101 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 102 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 analysis addressingsmartmetershasbeencarriedout,but price ofEUR traded volumeina176 exchange since the beginning of 2013 resulted in a total license for UABGETBaltic.Trade ontheUABGETBaltic November 2012,NCCissuedsecondgasexchangeoperator gas, operatedby Baltpool,waslaunchedon1 A newgasexchangetoorganizesecondarytradeinnatural but during2013noswitchesweremade Changing electricitysupplierinLithuaniawaspermitted from 42.6%to35.2%. share ofABLESTO intheretailsupplymarket decreased eligible customers.When2013,iscomparedto2012,the regulated customersand478.1 AB LESTO supplied2 277 276 275 5 In 2013,theindependentelectricitysupplierssupplied Electricity Retailmarkets 4. price oftheimportedgasin2012wasEUR lower than in 2012and made EUR In 2013,the price of the imported gas was on average 5.4% Source: Eurostat LITHUANIA Electricity pricechangeby component2008-2013(in€cent/kWh) 3 FIGURES 10 12 14 16 0 2 4 6 8 646.0

ACER/CEER AnnualReportontheResultsofMonitoring UAB GETBaltic,https://www.getbaltic.lt/en/news/news_1/ NCC, http://www.regula.lt/en/SiteAssets/ncc-reports/NCC- November 2013. the InternalElectricity andNaturalGasMarkets in2012, hasbeenannounced reportoftradeonnaturalgasexchangeoffourthquarterof2013 report-2012.pdf GWh ofelectricitytocustomers;thepublicsupplier 2008 Taxes+Levies HOUSEHOLDS 334.91/tcm AND 4 2013 582.7 276 deals realizedagainstanaverage . Networks GWh ofelectricitytothe GWh ofelectricitytothe 359.5/tcm (the average 2008 INDUSTRY 277 . Acost-benefit March 2012.In 380.2/tcm) Energy+Supply 2013

275 . by 11.4% As comparedwith2012,thesaleofnaturalgasdecreased companies andin2013gassalestotalled1 Natural gaswassuppliedtocustomersby eightsupply interest inswitchingwasobserved. among gassuppliers,however during2013onlymodest market is100%liberalisedandcustomersarefreetochoose by thesituationonwholesalemarket. Theoretically, the The functioningofthenaturalgasretailmarket isdetermined Gas strategic importance. promotion ofrenewables;andfinancinginfrastructure gamyba” AB,operatingasreservecapacity;supporttoCHPs; to electricitygenerationcompany“Lietuvosenergijos This componentinelectricitypriceincludes:compensation public serviceobligation’s componentduring2012-2013. transmission andcommodityprices,butalsobecauseof kept increasing duringtherecentyears,mostlydueto Power pricesfor householdsandindustrialconsumershave removed atthebeginningof2013. of 2015.Forindustrialconsumers,priceregulationwasfully consumers. Fullliberalizationisscheduledfor thebeginning Today, end-userpriceregulationstillexistsfor household been madesofar. no formal decisionorplansaboutsmartmetersroll-outhas Sources: EC,EPCRmetadata 0 1 2 3 4 5 6 7 Natural gaspricechangeby component2008-2012(in€cent/kWh) 278 natural gassupplymarket (LietuvosDujosAB –69%and which togetherwithUABDujotekana holds98.1%of is dominatedby onesupplier(LietuvosDujosAB),

NCC data,April2014. 2008 278 Taxes+Levies HOUSEHOLDS . Retailgas supply aswellthe wholesale 2012 Networks 2008 INDUSTRY Energy+Supply 430 2012 mcm.

market by theNCCthat30 highest and2 gas and7.5inthecaseofelectricity, whichrepresentsthe their performance since2012(by 4.6 respectively). Bothmarkets haveconsiderablyimproved plans aboutsmartmetersroll-outhasbeenmadesofar gas isbeingcarriedoutby NCC, butnoformal decisionor A cost-benefitanalysisaddressingsmartmetersinnatural trajectory tothatofelectricityprices. market. Gaspricesfor finalconsumers followed asimilar companies’ jointmarket shareisaslow as2%oftheretail socially vulnerablecustomers. have notchosenindependentelectricitysupplier, alsoto of electricityatthepublicpricetoconsumerswho Electricity, suppliershavetoconcludeagreementsfor supply less than20 000 customers andnon-household—whichconsume to thosegroupsofvulnerableconsumers—household The supply of natural gas is guaranteed as a matter of priority 282 281 280 279 almost two times higher than in 2011 thousand inhabitantsin2012wasmorethanthreeand consumer complaints.Thenumberofcomplaintsper Consumer RightsProtectionAuthorityinvestigateindividual The NCC,theStateEnergyInspectorateand placing thecountryhighinEUranking(6 markets inLithuaniaiswellabove theEUaveragethus The assessmentofboththeelectricityandgasretail Consumers 5. UAB Dujotekana–29%accordingly) on comparabilityandthe2 market isconcerned, LithuaniahasthesecondEUscore choice of providers are below EU average. As far as the gas EU andthescoresonswitching,easeofswitching side the incidence of problemsis the fourth highest in the as farcomparabilityisconcernedwhileonthenegative market inthecountryshows thehighestscoreinEU satisfaction withrespecttoexpectations.

Eurostat, http://epp.eurostat.ec.europa.eu/statistics_explained/ NCC, 2013data. 10 ACER/CEER AnnualReporton theResultsofMonitoring edition/index_en.htm consumers/consumer_evidence/consumer_scoreboards/10_ index.php/Electricity_market_indicators November 2013. the InternalElectricityandNatural Gas Markets in2012, th ConsumerMarkets Scoreboard, http://ec.europa.eu/ 282 werereceivedduring2013. nd highestincreaseEU-wide).Theelectricity cm ofgasperyear. AccordingtotheLawon complaints concerningnaturalgas nd highestonoverall consumer 280 279 points inthecaseof . It was documented . Othergassupply 281 th and2

nd place, 280 . interconnection withLatvia. 4 – Kursenai pipeline that is necessary to achieve the full Lithuania shouldmake efforts toupgradetheKlaipeda and theprojectcouldbefinalisedby 2018.Furthermore, top priorityproject.In2013,itsfeasibility study was started Lithuania andotherBalticStatesshouldbeconsidereda is necessarytoendpipeline-basedtheenergyisolationof The Lithuania-Polandgasinterconnection(“GIPL”) which Klaipeda thatistobecomeoperationalinDecember2014. also ensuretheefficientsend-outfromLNGterminal in for loopingthenationalgastransmissionsystemanditwill was constructedandmadeoperationalin2013.Itallows directions. Secondly, thenewKlaipeda–Jurbarkaspipeline cross-border capacity to more than 6 was successfullyfinalisedinearly2013 by increasingthe Enhancement oftheLatvian-Lithuanianinterconnection Latvian andRussianFederation(Kaliningrad)gassystems. The LithuaniangasnetworkisconnectedtotheBelarusian, Gas the securityofelectricitysupplyinLithuania. create preconditionsfor electricitytrade,andwillenhance systems oftheBalticStatesandContinentalEuropewill Elk (Poland).Theinterconnectorwilllinktheelectricpower circuit electricitytransmissionlinefromAlytus(Lithuania)to Link”, aPCIproject,isthe500 Secondly, thecross-borderelectricitytransmissionline“LitPol markets. full integrationoftheBalticandNorthEuropeanelectricity electricity trade,andby December 2015anditwillallow (Sweden). Thislinkisexpectedtoincreasepossibilitiesfor capacity (400 border electricitytransmissionline“NordBalt”isthe700 MW Two electricityprojectsareofkey importance.Thecross- Baltic regionalelectricitymarket. therefore is working in BEMIP towards the creation of the Lithuania isnotdirectlyconnectedtotheEuropeangridand Electricity by theTEN-ERegulation. stop shopfor ProjectsofCommonInterest(PCI)as required The Lithuanianauthoritieshavealreadyestablishedtheone Infrastructure 6. bcma operationoftheLNGterminalandfor enhancingits kV) cablefromKlaipeda(Lithuania)toNybro MW capacity(400 LITHUANIA mcm/day in both kV) double

103 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 104 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 ( Sources: Eurostat,CEER,NationalRegulatoryAuthority, ECcalculations. EUR into thenetworkinfrastructurewereincreasedby 9.59%to As regardsthelocalsupplysecurity, thetotalinvestments synchronisation withcontinentalEuropeangrids. synchronisation oftheBalticgridsandamove towards Baltic Statespendingtheiranalysisofastudyonthede- Negotiations havebeensuspendedattherequestof with theaimtoconcludeanIntergovernmental Agreement. negotiations werelaunchedby theEuropeanCommission mode withtheRussianandBelorussiangrids.In2012, At present, the Lithuanian grid is operated in synchronous enhanced competitionontheLithuanianmarket. a morereliableelectricitysupply, morestablepricesand common Europeanelectricitymarket, thuscontributingto and LitPolLinkarenecessarytointegrateLithuaniaintoa an importerofelectricity. Theabovementioned NordBaltlink After theshutdown oftheIgnalina NPP, Lithuaniahasbecome Electricity Securityofsupply 7. LITHUANIA LITHUANIA – KEYINDICATORS 1 ) Electricity market value( HHI inelectricityretailmarket HHI inpower-generation market Regulated pricesfor non-households–electricity Regulated pricesfor households–electricity Switching rates(entireretailmarket) Number ofmainelectricityretailers Number ofelectricityretailers Market shareofthelargestpower generationcompany Number ofmainpower generationcompanies Number ofsmartmetersinstalled Peak demand(MW) Installed generationcapacity(2013, of Number ofcompaniesrepresentingatleast95% ELECTRICITY and gasconsumptioninthehouseholdnon-householdsectors(average bands)andannualaverage retailprices. Market valueis anestimationofthesizeretailelectricityandgasmarkets. Itiscalculatedusingdata onelectricity 148.1 net power generation million in2012. 1 ) (bn€) MW) 2 2 1 1 No Yes N/A 5 27 25% 6 N/A 1 1 4 4 30 0.733 124.4 162.6 686 304

to haveasecurenetwork. of regulationstatesthatN-1mustbeabove 100%inorder rule showed aresultequalto 31.4% whiletherequirement the Regulation(EU)No994/2010.TheanalysesofN-1 network failedtofulfiltheEUrequirementsprescribed by has revealed that the present status of the Lithuanian gas consumers of Lithuania in case of emergency. Analysis (Latvia) is used for the supply security for vulnerable Kursenai). TheundergroundstoragefacilityinInčukalns part ofLithuaniaandalsoconnectingLatvia(Klaipeda– the outdatedgastransmissionlineextendinginnorthern Making theLNGTerminal operationalrequiresinvestmentin access totheEU-widenaturalgassystem. interconnection withthegasnetworkofPolandtoenable has determinedthenecessityfor theLNGTerminal and National EnergyIndependenceStrategyof2012,Lithuania To diversify the supply of gas, as perthe approved Gas HHI ingasretailmarket HHI ingassupplymarket Regulated pricesfor non-households–gas Regulated pricesfor households–gas Switching ratesfor gas(entireretailmarket) Number ofmainnaturalgasretailers Number ofretailerssellingnaturalgastofinalcustomers Market shareofthelargestentitybringingnaturalgas Number ofmaingasentities GAS into country Number ofentitiesbringingnaturalgas Gas market value( 1 ) (bn€)

>5 >5 No Yes N/A 2 8 69% 4 5 0.274 000 000 renewable energy (35%with most coming from hydro power). generation (62%oftotalelectricitygenerated),followed by 10% 20% 30% 40% 50% 60% 70% 283 Source: Eurostat Gross inlandconsumptionmix2008-2012 1 FIGURES reduced availability 2010 levels due to one of the combined cycles operating on 20% ininternalproduction(mainlythermalgeneration)from target for 2020.In2011,power generationsawadeclineof 3.1%. However, thisfigure continues to fall short of the 11% The contributionofrenewablesourcesalsoincreased,reaching share ofnaturalgasincreasedto24%(compared2011). Luxembourgian gross inland consumption in 2012,whilethe Oil productsfor energyproductionprovided 63%of Generaloverview 1. 0%

ILR, http://www.ilr.public.lu/electricite/documents_NEW/rapport/ VERSION_FINALE_rapport_benchmark_2012_20130906.pdf 2008 Renewables Solid fuels LUXEMBOURG AND 2 2009 283 Natural gas Other . Gasistheprimaryfuelfor electricity 2010 → → Theshareofrenewableenergylevelsremainsfarfromthetarget11%. → → Key issues for domesticcustomers. More should be done to encourage competition in the retail market, especially would helptoaddressthisissue. entry capacityinLuxembourgremainslimited,andabettercongestionmechanism interconnections withneighbouringcountrieswouldalleviatecurrentconcerns.Firm The naturalgassectorisalmost100%dependentonimports.Reinforcing the flexibility totheelectricitysystem. with neighbouring countries, and in additional generation capacity capableofproviding To improve securityofsupply, furtherinvestmentsarerequiredinnewinterconnectors Crude oilandpetroleumproducts 2011 2012 10% 20% 30% 40% 50% 60% 70% 80% Two laws General Regulatoryframework 2. 285 284 Sources: EU energyinfigures-“StatisticalPocketbooks 2012and2013”, Gross electricitygenerationmix2008-2012 2014 andison-going Third EnergyPackage DirectiveswaslaunchedinMarch infringement procedurefor incorrecttranspositionofthe rules for the internal market in electricity and gas. An Directives 2009/72/ECand2009/73/EC,concerningcommon 0%

Information ontheletterofformal noticeissuedisavailable at Law of7 http://ec.europa.eu/eu_law/eulaw/decisions/dec_20140328.htm public.lu/leg/a/archives/2012/0179/a179.pdf#page=2 of 7 public.lu/leg/a/archives/2012/0178/a178.pdf#page=2, andLaw 2008 European Commission August 2012onnaturalgasmarket, http://www.legilux. 284 August 2012onelectricitymarket, http://www.legilux. cameintoforce inAugust2012transposing Natural gas 2009 285 . 2010 Renewables 2011 Other 2012

105 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 106 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 exchanges. means wholesaleoperatorscanparticipateonotherpower electricity, buttheabsenceofcongestiononinterconnectors There iscurrentlynopower exchangeorspotmarket for 286 consumption (57%) countries, mainlyGermany, for themajorityofitsdomestic year). Luxembourgrelies on imports from neighbouring 2012 amountedto6.93 The volumeofelectricitytradedonthewholesalemarket in Enovos, Soler)provided 89%ofpower generationvolume. At generationlevel,thethreelargestproducers(GdFSuez, Electricity Wholesalemarkets 3. is alsomanagedby twootherDSOs. main distribution system operator. The gas distribution grid (ISO). InthegassectorCreosistransmissionand system operators(DSOs)andoneindustrialoperator and distributionsystemoperatorlicense),five Creos LuxembourgS.A(whohasbeengrantedtransmission requirements. Theelectricitygridisjointlymanagedby system operatorsthroughlegal,functionalandfinancial however, guaranteesarelativedegreeofindependence 49(6) oftheGasDirective.Thelegislativeframework, basis ofArticle unbundling provisions of theThirdenergy package on the Luxembourg has beengranteda derogation fromthe Unbundling and transparencyoftheenergymarkets. monitoring investmentplansandthefunction in networkaccessandpricing,cross-bordercooperation, markets, newresponsibilitieswereassignedtotheILR To promotecompetitionintheelectricityandnaturalgas the telecomsandpostalsectors. ILR isalsoresponsiblefor regulatingothersectorssuchas 51 the In 2012,theLuxembourgnationalregulatoryauthority, National EnergyRegulator LUXEMBOURG

All figuresonelectricityandgas markets, includingthose VERSION_FINALE_rapport_benchmark_2012_20130906.pdf http://www.ilr.public.lu/electricite/documents_NEW/rapport/ report onenergymarkets in2012,unlessotherwise specified, of thefollowing paragraphs,areextractedfromILR’s latest employees andanannualbudget ofalmostEUR 7 million. Institut LuxembourgeoisdeRégulation(ILR),had 44(2) oftheElectricityDirectiveandArticle 286 . TWh (17%lessthantheprevious

EU despiteLuxembourgbeing 6 with theexceptionofswitching (whichisthirdlowest inthe the lowest incidenceofconsumercomplaintsintheEU) scores betterthantheEUaverage onallcomponents(with 72.0 and79.7 in bothcaseswellabove theEUaverage(80.3 above theEUaverage. Comparability, ease of switchingand with allthecomponents –exceptfor switching –assessed ease ofswitching). Asimilarpictureisseenfor gasservices, less than0.1%. gas sectorremainedverylow withsupplierswitchingrates and power producershasbeencreated.Theopeningofthe players amonopolywithinsegmentsofindustrialconsumers the different segments.Asaresultof the smallnumberof 94% ofthemarket. Competitiondiffers significantlywithin served finalconsumers,withjustthreesuppliersholding the electricitysector. In2012,atotalofeightsuppliers The naturalgassectorwasmuchmoreconcentratedthan Gas were moreactiveinswitchingsuppliers. consumption volumes,demonstratingthatindustrialusers rate in2012was0.22%by customernumberand9.7%by with 55% of the total consumption. The supplier switching for allthreesegments(residential,businessandindustrial) amount ofenergysupplied.Enovos dominatedthemarket the four biggestdistributorsaccountedfor 93%ofthetotal to finalconsumers.Theretailmarket wasconcentratedas 2012 saw11 Electricity Retailmarkets 4. access totransmissioncapacityhasbeenmadeavailable. despite thefactthattransparentandnon-discriminatory dominant company (Enovos) consolidated its market share market has a quasi monopolistic structure. In 2012, the There isnowholesalemarket inLuxembourgandthegas available whichhasresolvedcongestionissues. and 2014,additionalfirmentrycapacityhasbeenmade limited availabilityoffirmentrycapacity. However, in2013 plants. TheLuxembourgmarket hasbeenisimpededby the France, withonlyasmallpartlocallyproducedby biogas imported fromBelgium,Germanyand(toalesserextent) in thebeginningofyear. Thevastmajorityofgasis particularly highpeakdemandduetoextremetemperatures slightly higherthan2011.2012wascharacterisedby a The nationalconsumptionofnaturalgaswas13.6 Gas retail markets inLuxembourgisthe3 The consumers’assessmentofboththeelectricityandgas Consumers 5. suppliers provide around6.4 vs. 74.1 respectively). Theelectricitymarket th intheEUrankingon rd highestintheEUand TWh ofelectricity points vs. TWh, tool regulated market. Anautomatedon-linepricecomparison and rightsresponsibilitiesinthecontextofnon- on suppliers,products,switchingprocedures,opportunities 2009 onsocialaid. default payment are alsocovered by thelawof18 December individuals inaprecarioussocialsituation.Situationsof payment andtheinstallationofprepaymentmetersfor determine disconnectionconditionsincaseofdefault of customersindefaultpaymenttheirbill.Clearrules gas legislations foresee provisions governing thesituation vulnerable inLuxembourg.Boththeelectricityand All customersaredefactoconsideredaspotentially impact dependingontypeofenergysourcesused. to provide customerswithinformation onenvironmental the ILRisresponsiblefor theelectricitylabellingsystem the alternativedisputeresolutionprocedure.Inaddition 2011. In2012,twodisputeresolutionswereregisteredunder which hasbeenavailabletoresidentialcustomerssince services includethealternativedisputeresolutionprocedure 289 288 287 point information onservicesandtheirrights.Anonlineinformation Various servicesarenow availabletoconsumersprovide complaints isthethirdlowest intheEU. choice arewithinthe3 Source: Eurostat Electricity pricechangeby component2008-2012(in€cent/kWh) 3 FIGURES 10 12 14 16 18 0 2 4 6 8 http://www.calculix.lu/web/tk/tk http://www.ilr.public.lu/electricite/stroumagas/index.html or 10 edition/index_en.htm consumers/consumer_evidence/consumer_scoreboards/10_ http://www.STROUMaGAS.lu 289 288 th isnow availabletoresidentialcustomers.Additional ConsumerMarkets Scoreboard, http://ec.europa.eu/ provides extensive support to customers with details 2008 Taxes+Levies HOUSEHOLDS AND 4 2012 best EUratingsandtheincidenceof Networks 2008 287 INDUSTRY Energy+Supply 2012

Phase Shift Transformers for betterloadmanagement. capacity attheBelgian/Luxembourg border, alsoincluding infrastructure havebeenidentifiedinordertoincreasethe PCIs undertheguidelinesfor trans-Europeanenergy transmission network. whilst theindustrialgridofSotelisconnectedtoBelgian network isconnectedwithGermanyby twointerconnectors contingence oninternallines.Luxembourg’s transmission to ensurecontinuedn-1there areplannedinvestments Upgrade oftheexistinginternalgridisunderwayand on importsfromneighbouringcountries. to cover thenationaldemandofLuxembourg,whichrelies available arenotsufficienttoprovide therequiredelectricity German transmissiongrid.Thegenerationassetscurrently of capacityinstalled)whichisdirectlyconnectedtothe including theVianden pumpstoragepower plant(1 The totalgenerationcapacityamountedto1 Electricity environmental assessmentprocedures. legislative andnon-legislativemeasuresstreamliningthe granting processfor projectpromoters,andtheadoptionof including thepublicationofmanualonpermit 2013), andothermeasuresforeseen for 2014and2015, for ProjectsofCommonInterest(PCIs)(dueby 16 Regulation, including the establishment of the one-stop-shop timely adoptionofthemeasuresstemmingfromTEN-E The Luxemburgishauthoritiesshouldensurea proper and Infrastructure 6. Sources: EC,EPCRmetadata Natural gaspricechangeby component2008-2012(in€cent/kWh) 0 1 2 3 4 5 6 7 2009 Taxes+Levies HOUSEHOLDS 2012 Networks LUXEMBOURG 2009 INDUSTRY Energy+Supply November 2012 785 MW MW 096 MW, MW,

107 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 108 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 ( Sources: Eurostat,CEER,NationalRegulatoryAuthority, ECcalculations. their use. infrastructure ofelectricvehiclesweremadetopromote gas consumersby 2020.Provisions for thepubliccharging 95% ofelectricityconsumers by 2018,and95% of natural mass roll-outofsmartmeters.Thisisexpectedtoreach Two newLawsinAugust2012provide theopportunityfor Belgium. increase oftheexistinginterconnectionwithFrance and storage capacityofneighbouringcountries.PCIsforesee Luxemburg hasnostorageinfrastructure;itreliesuponthe border andoneontheFrench border. are combined in one virtual entry point, one for the German There arefour entrypoints:twoontheBelgianborder, which and Belgium and medium pressure pipelines from France. countries through high pressure pipelines from Germany all gasfor consumptionisimportedfromneighbouring plants beingconnectedtothegasnetworkin2013.Almost Internal productionofnaturalgasisonlyfromthreebiogas Gas LUXEMBOURG LUXEMBOURG – KEYINDICATORS 1 ) Electricity market value( HHI inelectricityretailmarket HHI inpower-generation market Regulated pricesfor non-households–electricity Regulated pricesfor households–electricity Switching rates(entireelectricityretailmarket) Number ofmainelectricityretailers Number ofelectricityretailers Market shareofthelargestpower-generation company Number ofmainpower-generation companies Number ofsmartmetersinstalled Peak demand(MW) Installed generationcapacity(MW, 2012) of Number ofcompaniesrepresentingatleast95% ELECTRICITY and gasconsumptioninthehousehold andnon-householdsectors(average bands)andannualaverage retailprices. Market valueis anestimationofthesizeretailelectricityandgasmarkets. Itiscalculatedusingdata onelectricity net power generation 1 ) (bn€) High 2 2 No No 0.22% 4 11 82% 2 N/A 1 1 1 4 0.425 311 009 785 derogation underRegulation(EU)No994/2010. does notcomplywiththeN-1rule.However, itobtaineda supplied throughtheGermanentrypoint,Luxembourg has neverbeenusedtillnow. With abouthalfofthegas shedding canbeusedincaseofemergencies.However, it Due to the absenceof storage facilities in the country, load Creos inordertomanagecasesofmissingfirmcapacity. capacity andflexibilitymechanismsarecurrentlyused by made availableresolvingcongestionissues.Interruptible In 2013and2014,additionalfirmentrycapacityhasbeen Gas the onlyviableemergencyresponsetool generation reservesinLuxembourg,loadsheddingmightbe security ofsupply.insufficient emergency Asthereare upgrades oftheinternalgridisbeinganalysedtoimprove Belgium andFrance, innewgenerationcapacityand for investment innewcross-border interconnections with covered by existing German interconnections.The need According tothelatestevaluations,n-1criterionis Electricity Securityofsupply 7. 290 HHI ingasretailmarket HHI ingassupplymarket Regulated pricesfor non-households–gas Regulated pricesfor households–gas Switching ratesfor gas(entireretailmarket) Number ofmainnaturalgasretailers Number ofretailerssellingnaturalgastofinalcustomers Market shareofthelargestentitybringingnaturalgas Number ofmaingasentities GAS into country Number ofentitiesbringingnaturalgas Gas market value( http://www.creos-net.lu/index.php?id=556 1 ) (bn€)

290 . High High No No 0.1% 3 8 N/A 1 5 0.282 and naturalgas(to35.24%). years, althoughdemanddroppedfurtherfor oil(to25.22%) primary energymixremainedlargelythesameasinprevious Consumption decreasedby 12.1%comparedto2008.The 10% 20% 30% 40% 50% 291 Source: Eurostat Gross inlandconsumptionmix2008-2012 1 FIGURES Gross energyconsumptionin2012amountedto23 Generaloverview 1. 0%

Eurostat. 2008 Nuclear Solid fuels HUNGARY AND 2 2009 Natural gas Renewables 2010 → → → Key issues competition intheelectricityandgasmarkets. a regulatoryframeworkwhichisstableandconducivetoinvestment state owned energy sector. Overall,thecountry would benefit from adhering to businesses totheHungarianState,Hungaryisontrajectoryhavealargely result ofchangesintheregulatoryframework.Asforeign utilitiesaresellingtheir suppliers now suffer financiallosses.Theinvestmentclimatehasdeterioratedasa measures (e.g.specialtaxes),andmarket interventionsnetworkoperatorsandenergy are occurringin2014for bothelectricityandgas.Incombinationwithotherregulatory Regulated energypriceswerecutby 20%in2013andfurthercutstheregulatedprice be strengthened. challenged effectively. Theindependenceofthenationalregulatoryauthorityshould appeal proceduresappeartobeunsuitedensurethatregulatorydecisionscan effective powers tosetnetworktariffsindependentlyfromthe government. Inaddition, limit theNRA’s abilitytoset network tariffs autonomously. TheNRA shouldhave Key parametersfor calculatingnetworktariffsareset by theMinistryandseriously markets shouldbecontinued. neighbours andsuccessivelycouplewithNorth-Western andSouth-Western European spreads onthenationalmarket. Efforts toextendmarket couplingtosouthern liquidity ontheHungarianpower exchange,decreasedpricevolatilityandnarrowed resulting inanincreasedpriceconvergencetowards regionalmarkets. Italsoincreased In September 2012, the Czech-Slovak-Hungarian market coupling became operational, Crude oilandpetroleumproducts Other 2011 569 Mtoe 2012 291 . 10% 15% 20% 25% 30% 35% 40% 45% 50% Sources: EU energyinfigures-“StatisticalPocketbooks 2012and2013”, Gross electricitygenerationmix2008-2012 share oftotalrenewableenergyinthegrossfinal energy productionremainedstablein2012(7.52%).The minimum target.Thelevelofrenewablesintheoverall National Reform Programmeto14.65%;above thebinding by 2020.However, thistargetwasraisedinHungary’s renewables sharewithinthetotalgrossenergyconsumption Directive 2009/28/ECrequiresfromHungarya13% 0% 5% 2008 European Commission Nuclear Solid fuels 2009 Natural gas Renewables 2010 Crude oilandpetroleumproducts Other 2011 2012

109 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 110 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 occurred inthedirectionofSerbia,RomaniaandCroatia by E.ONfor Russianimports.Smallscalegastransithas A while in2013importsfromtheEastwerehigheragain. exceeded imports from the East (from Ukraine, Beregdaróc) In 2012importsfromtheWest (fromAustria, HAG-pipeline) in 2013)hasalong-termgassupplycontractwithGazprom. Földgáz Trade (purchasedby thestateowned companyMVM production accountedfor 20.32%oftotaldemand.E.ON it hasinprioryears,reaching8.3 Natural gas consumption continues to sharply decrease, as represented 16.6%ofgrosselectricitygenerationin2011. around 40% prior to the economiccrisis. Cogeneration constituted only27.12%oftotalgenerationcomparedto to market trends –anddecreasedprofitability, naturalgas Electricity generationfromfossil fuelsisdecreasing.Due 294 293 292 approved apriceadjustmentequaltoannualinflationat household consumers.TheMinisterofNationalDevelopment sector taxes andsinceDecember 2012 onpricecutsfor continued tofocus onthepricemoratorium,specialutility The political and regulatory debate during 2012 and 2013 General Regulatoryframework 2. (41.3 demand in2012was39.95 in 2012,upfrom3.90 imports havebeengrowing significantly, reaching7.97 significantly lessthanin2008(40.02 In 2012,totalpower generation amountedto34.6 support for renewableenergysources. efficient andreliablelegalregulatoryframework forthe progress hasbeenmadeondevelopmentofastable, renewable energyin2012wasbelow 2009level).Limited in 2011and2012(Intheelectricitysectorshareof sectors inwhichtheshareofrenewableenergydecreased national actionplantrajectoryintheelectricityandtransport in heatingsector. However, in2012Hungarywasbehindits of renewableenergyinthefinalconsumptionand track ofits national actionplan trajectory for overall share consumption was9.57%in2012.In2012,Hungaryon HUNGARY large shareofthewesternentrycapacitywascontracted

FGSZ Zrt, Foldgazszallito, EnergikusCsapat21. Szazadi The shareofelectricityproducedin combinedheat HEA andMAVIR, StatisticalDataoftheHungarianPower fgsz_eves_jelentes_2012_magyar.pdf Teljesitmeny, 2012, http://fgsz.hu/sites/default/files/documents/ and power plants(CHP). MEKH_VER_statisztika_2012.pdf System 2012,http://www.mekh.hu/gcpdocs/86/MAVIR_ TWh) 292 . TWh in2008.Total grosselectricity TWh, slightlylessthanin2008 Mtoe in2012.Domestic TWh). Inparallel,net

TWh, TWh 294 293 .

Plc.), alistedcompany, andisalsocertifiedasanITO. (Magyar Olaj-ésGázipariNyrt,MOLHungarianOilandGas operator (ITO). ThegasTSOFGSZ Zrt.isowned by MOL in March2012asanindependenttransmissionsystem wholesale markets. Mavirwascertifiedby theRegulator Ltd., MVM),amajorplayerbothingenerationandonthe company MagyarVillamos MűvekZrt.(HungarianElectricity The electricityTSO,MAVIR Zrt.,isowned by thestate-owned Unbundling only before theConstitutionalcourt. regulation whichcannotbeappealedinregularcourts,but prices andsystemusecharges)aremadeintheform ofHEA of theregulatorydecisions(namelyonconnection in the publicutilityrealm. This new law foresees that some Parliament adopted anewlawincreasingHEA’s competence using themethodologyimposedby theMinistry. Since 1January2012,HEAisobligedtocalculategastariffs responsibilities. Attheendof2013,HEAstaffwas235. Recently itsstaffandbudgetincreasedduetowidening employed 122 an independentbodyoftheadministration.In2012,HEO HEA, calleduntil2013theHungarianEnergyOffice,HEO– is (“Magyar EnergetikaiésKözmű-szabályozási Hivatal”)– The HungarianEnergyandPublicUtilityRegulatoryAuthority National EnergyRegulator gas by 6.5%). decreases wereannouncedfor 2014(electricityby 5.7%and gas andelectricitysectorwerecutby 20%andfurther In 2013,regulatedpricesfor householdconsumersinthe distribution linesandpipelines. infrastructure, setby thelength oftransmissionand the government atthesame time imposedanewtaxon taxable revenueandwasduetoexpirein2013.However, was seton(generationandsupply)energycompanies’ differentiated profittaxandacrisistax.The The energysectorissubjecttoantax,a retail pricesandthewholesaleimportprice. imports createdamismatchbetweenthelevelofregulated the beginningof2012.Nevertheless,priceriseingas Central Europe. ImportscomefromSlovakia, Austriaand transit countryconnecting markets betweentheBalkansand of grossdemand in2012.Hungaryisalso an important Net importshavebeengrowing steadilyreaching19.95% hands ofstate-owned MVM. The generationmarket isrelativelyconcentrated withinthe Electricity Wholesalemarkets 3. staff andhadaEUR 12.68 million budget. 9.07 subsidiary ofMAVIR. Day-aheadturnover was3.78,6.32and increase ofHUPX,theHungarianpower exchange,a The market coupling was an essential factor in the liquidity price volatility, narrowing spreads on the national market. price convergence towards regionalmarkets and decreased coupling becameoperational.Thisresultedinanincreased In September2012,theCzech-Slovak-Hungarian market highest towards CroatiaandSerbia(73.74%) Ukraine (76.77%shareoftotalimports),exportsarethe Source: Eurostat 296 295 10 12 14 16 18 Electricity pricechangeby component2008-2012(in€cent/kWh) 3 FIGURES market, inparticularimportspreviouslydominatedby 2013, MVMincreasedfurtheritspresenceonthewholesale their increasedshareinthereduceddomesticdemand.In for acoupleofyearsprimarilyduetodiversifiedimportsand Gas wholesale market concentration has beendecreasing in October2013. wholesale market. Itwaspurchasedby state-owned MVM Russia. E.ONFöldgázTrade isamajorplayeronthe domestic sources,therestbeingmainlyimportedfrom In 2012,20.32%ofgasconsumptionwassuppliedby Gas also seensteadygrowth. 2013. Trade inphysicalfutures,launchedonly2011,has fell fromEUR 0 2 4 6 8

HUPX, HUPXYear 2012inDetail.,2012,https://www.hupx.hu/hu/ HEA, http://www.mekh.hu/statisztika/energia-statisztika/adatok- public%20annual%20report%20of%202013.pdf data/Public%20reports/DAM/2013%20Annual/DAM%20 Annual Report2013, 2013.https://www.hupx.hu/en/Market%20 Kommunikacio/Documents/item_339.pdf andHUPX,HUPXDAM es-tablazatok/villamosenergia-ipari-tarsasagok-adatai.html TWh, in2011,2012and2013respectively 2008 Taxes+Levies HOUSEHOLDS AND 4 55.81/MWh in2011toEUR 2012 Networks 2008 INDUSTRY 295 42.33/MWh in Energy+Supply . 296 2012 . Prices end of2012,withgasflows startinginApril2013. about reverseflow toUkrainewereactivelyconductedatthe smaller scaleexportstoRomaniaandCroatia.Negotiations flowing towards SerbiaandBosnia-Herzegovina Transit throughHungarycomesfromRussiaviaUkraine owned by MVM,becameoperationalinearly2013. E.ON, GdFandMOL Sources: EC,EPCRmetadata Natural gaspricechangeby component2008-2012(in€cent/kWh) 298 297 and costsmake uptheremaining22%oftotalprice. costs for 43%,networkcostsfor 35%.VAT andotherfees Household priceswerecomposedofelectricityandsupply from 9.7%in2011. 13.3% ofthosecustomersswitchingsupplierin2012,up Non-household consumers had higher switchingrates with consumers remainedlow i.e1.6%,upfrom0.3%in2011. of theretailmarket. Theswitchingratefor household regulated priceregimewithfour companiescovering 67.93% regulated prices.Almostallhouseholdsremainunderthe In 2012,12.19 Electricity Retailmarkets 4. 0 1 2 3 4 5 6 7 8

Data isnotavailablefor thistransittoSerbiaandBosnia- MVM Csoport,CsoportEves Jelentes2012, documents/fgsz_eves_jelentes_2012_magyar.pdf Eves would bearound2 Herzegovina, from otherdocumentsaneducatedestimate in favor ofMVMby theMinistry’s decisionin2011. Import capacityatHAG (Austria) interconnectorwasreallocated eves-jelentes/Documents/MVM_EVES_2013_09_végleges.pdf http://www.mvm.hu/hu/szakmai-informaciok/szakmai_kiadvanyok/ Jelentes 2012,2012. http://fgsz.hu/sites/default/files/ 2008 Taxes+Levies HOUSEHOLDS TWh ofelectricitywaspurchasedunder 297 bcma. FGSZ Zrt.“Foldgazszallito, 2012 . Thegasexchangemarket, CEEGEX, Networks 2008 INDUSTRY HUNGARY Energy+Supply 2012 298

, with

111 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 112 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 consumer problemsisthe5 within the5 ease ofswitchingandoverall consumersatisfactionare consumers withgasmetersbelowm 20 and 31.5%).Non-householdpricesareonlyregulatedfor settlement opportunities. their complaints.Theseinstitutionsalsoprovide dispute Hungarian Authorityfor ConsumerProtection(HACP) with 299 position intheEUranking(17 compared to72).Thisisalsoreflectedinthecountry’s in Hungaryisslightlybelow theEUaverage(71.5 The overall assessmentoftheretailelectricitymarket Consumers 5. m with meteringdevicesabove 20 switch morefrequently(ratiosfor consumersequipped the market. Industrialconsumersonthewholesalemarkets books. Data for 2012 is likely to bemuchmore typical for of EMFESZ,asupplycompanywithconsiderableretail figure for 2010-2011wasprobablyduetotheliquidation consumers was1.5%,down from 10.4%in2011.Thehigh retail market (83.79%).Theswitchingratefor household concentrated withsixcompaniescovering almosttheentire regulated pricesregime.Theretailmarket isrelatively consumers. Almostall households remain under the regulated prices,88%ofwhichweresoldtohousehold In 2012,3.66 Gas wholesale andretailmarkets. distortions andincreasedthepricedivergencebetween until 2012. In 2013,the20% utility rate cut ledto some price moratoriumin2010didnothavesignificanteffects Due to a decrease in the European wholesale prices, the HUNGARY of 31 to theEUaverageof74.1)and28 ranks lowest intheEU(withascoreof65.9 in providers isabove theEUaverage.Theretailgasmarket average slightly in2012,withgasservicessteeplybelow EU-27 Consumer satisfaction with electricity services wasdown of problemsisthehighestinEU. and 2 lowest intheEUtermsofoverall consumersatisfaction, its scoresince2012(highestintheEU).Themarket scores service markets. Ithasalsoseena4.9

10 scoreboards/10_edition/index_en.htm http://ec.europa.eu/consumers/consumer_evidence/consumer_ th nd ConsumerMarkets Scoreboard, domestic servicesmarkets (20 lowest oncomparabilityofoffers whiletheincidence 299 . Consumers can turn to both HEA and the lowest ratingsintheEU,andincidenceof bcm ofnaturalgaswaspurchasedunder th highestintheEU.Yet, trust th position)andtheranking

3 /h varybetween18.2% th th among31 position).Switching, 3 /h. point decreasein points compared domestic points

Slovakia areplannedfor 2018anda3 infrastructure: Twonew400kVinterconnectionswith five PCIsundertheguidelinesfor trans-Europeanenergy between Central-EuropeandtheBalkans.Itisinvolvedin The HungariannetworkfacilitatesNorth-Southtransitflows domestic installedcapacity)withtheneighbouringcountries. containing robustinterconnections(equalto30%of Hungarian electricityinfrastructureisrelativelystrong, Electricity assessment procedures. non-legislative measuresstreamliningtheenvironmental for projectpromoters,andtheadoptionoflegislative publication ofthemanualonpermitgrantingprocess other measuresforeseen for 2014and2015,includingthe of CommonInterest(PCIs)(dueby 16November 2013),and including theestablishmentofone-stop-shopfor Projects 347/2013 onthetrans-Europeanenergyinfrastructure, timely adoptionofthemeasuresstemmingfromRegulation The Hungarianauthoritiesshouldensureaproperand support fromEUfunds. to state-owned actors(primarilyMVM)mainlywiththe mothballed. Developmentofinfrastructurehasbeenlimited have decreased,andsomenon-essentialassetsbeen Investment levelswithintheelectricity and gassectors companies are dissuadedfrom making further investments. 2013 and extraordinary taxation on energy infrastructure, natural gassectors.Duetoimportantutilityratecutsin Hungary has a robust infrastructure bothinelectricity and Infrastructure 6. or non-paymentofcharges,etc. in service,maynotbedisconnectedcaseoflatepayment from theelectricitysupplysystem,includinganydisruption whose life orhealthisdirectlyjeopardizedifdisconnected consumers understandtheirbills,withdisabilities payment, prepaymentoptions,individualassistancetohelp category vulnerableconsumersmaybenefitfromdeferred on a socialand on a health-related basis. Depending on their Since 2008,thelegislationrecognisesvulnerableconsumers section ofthe South Streampipelineisin the planning from anamount ofuptoEUR funding from the European Energy Programme for Recovery Slovakia pipelineisalsounderway(PCI)andhasreceived towards Austria)areunderway. ConstructionoftheHungary- Hungary, PCI),aswellonthe HAG pipeline (fromHungary about reverse flow in the former case (from Romania to It isinvolvedinsevenPCIson the2013list.Negotiations Romania andCroatiawerecommissionedin20102011. programme launchedin2009.Interconnectionswith Hungary hasalmostfinisheditsmajorinterconnectivity Gas under wayandplannedtobecommissionedin2016. Negotiations onasimilarinterconnectionwithSlovenia are 30 million. TheHungarian rd onefor 2021. ( Sources: Eurostat,CEER,NationalRegulatoryAuthority, ECcalculations. price volatilityonthedomesticmarket. price convergence towards regionalmarkets and decreased market coupling inautumn2012,whichresultedincreased achievements werefostered by theCzech-Slovak-Hungarian North-South transittowards theWestern Balkans. These Cross-border capacitiesareadequatebothfor importsand due to the phasing-out of domestic gas power generation. Electricity importsfromEuropeanmarkets aregrowing Electricity regional economicprocessesandarticulatedpolicyefforts. electricity andgassectors.Bothtrendsrelyonfavourable Efforts indiversification of supplycontinue in both the Securityofsupply 7. investment climate. significantly postponedorcancelledduetothedeteriorating facilitate bettermanagementofinternalflows havebeen 2017 (altogetherfive)andsomeminorimprovements to phase. OtherPCIswithplannedcommissioningdatesafter HUNGARY – KEYINDICATORS 1 ) Electricity market value( HHI inelectricityretailmarket HHI inpower-generation market Regulated pricesfor non-households–electricity Regulated pricesfor households–electricity Switching rates(households) Number ofmainelectricityretailers Number ofelectricityretailers Market shareofthelargestpower-generation company Number ofmainpower-generation companies Number ofsmartmetersinstalled Peak demand(2012, Installed generationcapacity(MW) of Number ofcompaniesrepresentingatleast95% ELECTRICITY and gasconsumptioninthehouseholdnon-householdsectors(average bands)andannualaverage retailprices. Market valueis anestimationofthesizeretailelectricityandgasmarkets. Itiscalculatedusingdata onelectricity net power generation MW) 1 ) (bn€) 1 1 2 2 Yes Yes 1.6% 4 43 47.10% 4 N/A 6 9 9 32 2.758 584.38 296.85 016 551 diversify transportationroutes. interconnector (max.capacity5 (4.6 from Austria were constrained by scarce pipeline capacity but remainedunderutilised.Atthesametimeimports and Croatianinterconnectorswerebuiltpriorto2012, reiterated by theNational Energy Strategy. Romanian Increasing interconnectivityisoneofthepolicygoals, or-Pay clausesinthelong-termcontractwithGazprom. price conditions,puttingconsiderablepressureonTake- Natural gasimportsfromAustriagrewduetofavourable Gas HHI ingasretailmarket HHI ingassupplymarket Regulated pricesfor non-households–gas Regulated pricesfor households–gas Switching ratesfor gas(households) Number ofmainnaturalgasretailers Number ofretailerssellingnaturalgastofinalcustomers Market shareofthelargestentitybringingnaturalgas Number ofmaingasentities into country Number ofentitiesbringingnaturalgas GAS Gas market value( bcma) in2012.TheconstructionofHungarian-Slovak 1 ) (bn€) bcma) in2015willfurther

HUNGARY 1 1 1 1 Yes Yes 1.5% 6 30 32.91% 4 20 2.327 245.89 494.26

113 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 114 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 301 300 2012 budgetfor 2 MRAwasapproximately EUR members and39 and waterresources.MRAiscomposedofsevenBoard 2002 andisresponsiblefor theregulationofenergy, mineral The MaltaResourcesAuthority(MRA)wasestablishedin National EnergyRegulator however provides for amplederogations. The ThirdEnergyPackage hasbeentransposedin2011,it General Regulatoryframework 2. and power remainednegligibleduring2012(only0.4%) appears tolagbehindits2020obligation.Cogenerationofheat 2011-2012 indicativetrajectoryandthecountrytherefore in grossfinalenergyconsumption for 2012isbelow Malta’s present reportingdataavailableinEurostat,theRESshare in the gross energy consumption by 2020.According to the Malta hasanobligationtoreach10%ofrenewableenergy by photovoltaic systems,increasingto13 2011, asmallamountofelectricity(8 Malta isdominatedby crudeoilandpetroleumproducts.In increase of4.4%comparedto2011.Electricitygenerationin The grosselectricitygenerationin2012was2.29 energy consumption.Thereisnosupplyofnaturalgas. Renewable energyaccountedfor only1.1%ofgrossinland was 0.91 products. Thegrossinlandenergyconsumptionin2012 Malta isalmost100%dependentonoilandpetroleum Generaloverview 1.

MRA, AnnualReport 2012. Eurostat.

Mtoe, adecreaseof2.5%comparedto2011. MALTA employees withintheorganisation.The → → → Key issues restrictions. of renewableenergypost2020maybechallengingduetogeophysical has improved recentlythanks to theincreaseduseofsolarenergy. Development Currently progresstowards European targetsfor renewableshasbeenslow but by developingrenewableenergy andby creatingaccesstonaturalgas. Malta shouldstepupitsefforts todiversifytheenergymixandsources,notably supply andreducethevulnerabilityofsector. connection withItalyshouldbeseenasahighpriorityprojecttosecureelectricity Given thecurrentphysicalisolationofMalta’s electricitysector, thehighvoltage GWh) was generated GWh in2012. million TWh, an 300 301 . . party accessandArticle of TSOs,Article to Malta,whichhasderogationsfromArticle system operatorsanddistributiondonotapply The out by theEnemaltaPLC, averticallyintegratedpower utility. function ofthedistribution system operator (DSO) iscarried distribution systemservesallelectricityconsumers.The There isnoelectricitytransmissionsysteminMalta.Asingle Unbundling component. Theelectricityprices for domesticconsumers in 2010duetotheincreaseofenergyandsupplycost at thesamelevelfor thelastfour years,afteranincrease Malta’s electricityprices,for industrialconsumers,havebeen All the methodologiesusedtodeterminetariffsduring2012. switching isnotpossibleinMalta.Therewerenochanges which isnotopentocompetitionandtherefore customer Enemalta PLC hasa100%shareoftheelectricityretailmarket, Retailmarkets 4. generation anddemandiscarriedoutby EnemaltaPLC. wholesale market is not inplace and thebalancingbetween the absenceoflargeindependentelectricityproducersa for theirown consumptionortosellEnemaltaPLC. In generate electricityfromrenewableenergysourceseither The existingindependentelectricityproducersaresmalland and iscurrentlythemainproducerofelectricityinMalta. Enemalta PLC enjoys legalmonopolyinelectricitysupply Wholesalemarkets 3. consumers ofelectricityareonregulatedretailtariffs. requirements regardingtheunbundlingoftransmission 26 ontheunbundlingofDSOs,Article 33 on market opening. 33 onmarket opening. 9 on the unbundling 9 ontheunbundling 32 on third 32 onthird 2011, whichwasthe4 Electricity demandin2012increasedby 5%comparedto respectively 13% and12%ofthetotalbillfor householdsandindustry, component was88%.Thenetworkrepresented electricity pricewhilefor industrialconsumerstheenergy The energy component accounted for 82% of the household overall generationefficiency, isplanned for2015. generation awayfromfueloilandsignificantlyincreasethe and regasificationunit,whichwouldshiftMalta’s electricity Turbine (CCGT)planttogetherwithafloatingLNGstorage these twofuels.Anew215MWgas-firedCombinedCycleGas susceptible tochangesintheinternationalmarket priceof and gasoil,thusmakingthecostofelectricityinMaltahighly Electricity generationremaineddependentonheavyfueloil 303 302 Source: Eurostat Electricity pricechangeby component2008-2013(in€cent/kWh) 1 FIGURE the retailpricesfor householdswerebelow EUaverage prices for Malta’s industrywereabove theEUaveragewhile the industryareexpectedtobereducedduring2015.The have beenreviseddownwards in2014,whereasthosefor 10 12 14 16 18 20 for heatingandairconditioning the weatherconditions,sinceelectricityismainsource increase. InMalta,theincreaseinconsumptionwasdueto four MemberStateswhichdidnotwitnessarespectiveGDP Member States.However, Maltawastheonlyoneofthese support isfinancedthroughtaxesinthenationalbudget renewables isnotincludedintheelectricitytariff, asthis 0 2 4 6 8

ACER/CEER, AnnualReportontheResultsofMonitoring Eurostat. November 2013. the InternalElectricity andNaturalGasMarkets in2012, 2008 Taxes+Levies HOUSEHOLDS 302 . InMalta,achargefor thesupportof 2013 th largestpercentageamongallEU Networks 303 . 2008 INDUSTRY Energy+Supply 2013

303 302 . . of of Maltaagreedtotheconstruction,by privateinvestors, to becompletedby theendof2014.In2013,government and Sicily, whichiscurrentlyunderconstruction,expected completed by theendof2014 electricity meterswithsmartisexpectedtobe installed was170 underway. Bytheendof2012numbersmartmeters The replacementofelectricitymeterswithsmartis is the5 special needs household consumersweredefinedaswith 24 may benefitfromenergybilldiscounts.During2012, benefit, personswithanagepensionoracareer’s pension, and familiesonsocialassistanceorspecialunemployment persons withadisabilityandotherhumanitariancases Vulnerable consumers,includingfamilieswithlow income, 72.0 consumers iswellabove the EUaverage(76.1 The assessmentoftheretailelectricityexpressedby Maltese Consumers 5. 307 306 305 304 A the twopower stationsofMaltaincreasedto620 of operation andthusthenominalgenerationcapacity In December2012,anewgenerationplantcameinto Electricity streamlining theenvironmentalassessmentprocedures. the adoptionoflegislativeandnon-legislativemeasures on thepermitgrantingprocessfor projectpromoters,and 2014 and2015,includingthepublicationofmanual Common Interest(PCIs),andothermeasuresforeseen for the establishmentofone-stop-shopfor Projectsof measures stemmingfromtheTEN-ERegulation,including The Malteseauthoritieshaveensuredtheadoptionof Infrastructure 6. market isamonopoly). switching andchoicehavenotbeenasked giventhatthe is the4 EU ranking.Theincidenceofbothproblemsandcomplaints

225 a new215 142 http://ieeexplore.ieee.org/xpl/articleDetails. MRA, Malta’s Report totheEuropeanCommission 10 However thedifference isnotstatisticallysignificant. jsp?arnumber=6347769 2009/73/EC andDirective 2005/89/EC, July2013. on theImplementationofDirective 2009/72/EC,Directive scoreboards/10_edition/index_en.htm http://ec.europa.eu/consumers/consumer_evidence/consumer_ 304 th 307 ConsumerMarkets Scoreboard, ) withthecountryoccupying the 10 th th consumers received energy benefits consumers received

lowest amongEUcountries,and trustinproviders MW highvoltageinterconnectionbetweenMalta highest.(Thequestionsonswitching,easeof 303 MW CCGTpower plantusinggassuppliedby an . 346 (62%).Thefullreplacementofthe 305 306 .

th positioninthe 306

MALTA . 12%of points vs. MW. MW.

115 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 116 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 study whichiscurrentlybeingcarriedout. depend ontheoutcomeofcost-benefitand feasibility 308 ( Sources: Eurostat,CEER,NationalRegulatoryAuthority, ECcalculations. Interest (PCI). Common interconnection MaltatoItaly,wasselectedasaProjectof Gas, entitled:FloatingLNGTerminal inMaltaandnew (Sicily) (150kmapproximately)for transmissionofNatural it tobothDelimara(Malta)(12kmapproximately)andGela A projectconsistingoftheFSUandapipelineconnecting once theinfrastructureisavailable. Delimara Power Stationwithan onshorere-gasificationunit LNG FloatingStorageUnit(FSU)permanentlyberthedat natural gas for electricity generation will be provided by an Natural gasisnotavailableinMalta.Foraninterimperiod, Gas operated onheavyfueloilwillbeconvertedtonaturalgas. An existing149 LNG FloatingStorageUnitpermanentlyberthedatDelimara. MALTA MALTA – KEYINDICATORS 1 )

Electricity market value( HHI inelectricityretailmarket HHI inpower-generation market Regulated pricesfor non-households–electricity Regulated pricesfor households–electricity Switching rates(entireelectricityretailmarket) Number ofmainelectricityretailers Number ofelectricityretailers Market shareofthelargestpower-generation company Number ofmainpower-generation companies Number ofsmartmetersinstalled Peak demand(MW) Installed generationcapacity(2012, of Number ofcompaniesrepresentingatleast95% ELECTRICITY and gasconsumptioninthehouseholdnon-householdsectors(average bands)andannualaverage retailprices. Market valueis anestimationofthesizeretailelectricityandgasmarkets. Itiscalculatedusingdata onelectricity http://ec.europa.eu/energy/infrastructure/pci/doc/2013_pci_ projects_country.pdf net power generation MW CombinedDieselEnginecurrently 308 1 The final design of the project will ) (bn€) MW) 10 10 Yes Yes Yes N/A 1 1 100% 1 244 429 620 1 0.350 000 000 000 grid asaprojectofCommonEuropeanInterest(PCI). has submittedaprojecttoconnectMaltatheEuropeangas To increasethediversificationofprimaryenergysources,Malta Gas ensure securityofsupply. Additional electricitygenerationcapacityisrequiredto power plantswas571 The installedelectricitygenerationcapacityby thermal Electricity Securityofsupply 7. 310 309 available whenthepeakdemandoccurredwas505 2012. Thetotalfossil fuelelectricitygenerationcapacity peak demandwas429 generation capacitywasincreasedto620 HHI ingasretailmarket HHI ingassupplymarket Regulated pricesfor non-households–gas Regulated pricesfor households–gas Switching ratesfor gas(entireretailmarket) Number ofmainnaturalgasretailers Number ofretailerssellingnaturalgastofinalcustomers Market shareofthelargestentitybringingnaturalgas Number ofmaingasentities GAS into country Number ofentitiesbringingnaturalgas Gas market value(

MRA, Malta’s ReporttotheEuropean Commission Eurostat. Directive 2009/73/ECandDirective 2005/89/EC,July2013. on theImplementation ofDirective 2009/72/EC, 1 ) (bn€) MW, in2011 MW andwasrecordedon9 309

. In2012,thenominal MW. Themaximum

N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A August MW 310 . Cogeneration target willnotbereached. decline canbeattributabletotheeconomicrecession. 314 313 312 311 between 2008and2012. 4.5% gross finalenergyconsumptiongrewslowly from3.4%to lower thantheEUaverage(20%).Therenewablesharein The Netherland’s 2020renewablestargetis14%,which less important. 10.9% andothersourcessuchasnuclearpower (3.6%)were 63.5%) andby solidfuels(18.9%);renewablesrepresented dominated by power gas-fired (withashareof generation The power generationmixin2011(113.0 mix (withsharesof4.3%and1.2%,respectively). energy andnuclearwerelessimportantinthe products, andtoalesserextentsolidfuels.Renewable on fossil fuels,notablynaturalgas,crudeoilandpetroleum Energy consumptionin2012(82.0 Generaloverview 1. decreased by 1.5%incomparisontothe2011level several years.In2012electricitydemandintheNetherlands generation in2011,andithasbeenatacomparablelevelfor

The shareofelectricityproducedin combinedheat Eurostat. Ministerie vanEconomische Zaken, Landbouw enInnovatie, ACER/CEER, AnnualReporton theResultsofMonitoring and power plants(CHP). Elektriciteit enGas 2012,July2012. Monitoringsrapportage Leverings- en Voorzieningszekerheid November 2013. the InternalElectricityandNatural Gas Markets in2012, THE NETHERLANDS 312 provided for 32.5%ofthe total electricity 311 → → Key issues Netherlands needsnow todetermine itsgasproductionpolicyfrom2017onwards. gas production.Following the recentdecisiontodecreaseproductionby 2016,the The increaseinearthquake activityhasrenewedconcernsaboutthedeclineinDutch does notrespond. in Germanybecauseofhighrenewablesproduction,butthepriceNetherlands development. Theproblemofinsufficientinterconnectionisseenwhenthepricedrops Energy Agreementfor SustainableGrowth (‘Energieakkoord’) shouldspeedupthe miss its2020targetfor renewables.Implementingtherecentlyestablishednational For electricity, atthecurrentpaceofdevelopment,Netherlandsseemslikely to Atthispace,the2020 Mtoe) wasbasedmainly

TWh) was

313 314 , this Gross inlandconsumptionmix2008-2012 1 FIGURES 10% 15% 20% 25% 30% 35% 40% 45% 50% Sources: EU energy infigures-“StatisticalPocketbooks 2012and2013”, Gross electricitygenerationmix2008-2012 Source: Eurostat 0% 10% 20% 30% 40% 50% 60% 70% 0% 5% 2008 2008 European Commission Nuclear Solid fuels Nuclear Solid fuels AND 2 2009 2009 Natural gas Natural gas Renewables Renewables 2010 2010 Crude oilandpetroleumproducts Crude oilandpetroleumproducts Other Other 2011 2011 2012 2012

117 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 118 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 316 315 new interconnectors. Both interconnectorshavebeengrantedanexemptionfor BritNed, wasreceivedby theCommissioninMarch2014. BBL wascertifiedinAugust2013andthedraftdecision for the interconnectorsBritNedandBBLwillalsobecertified. under the ownership unbundling model. The TSOs operating perspective. InDecember2013,ACM certified bothTSOs which isacommendableapproachfromaninternalmarket TSOs toseekclosercooperationwithcertifiedabroad, the timebeing,however thegovernment encouragesboth October 2013thatprivatisationwillnotbeconsideredfor are fullyowned by theDutchstate.Itwasannouncedin and Gas Transport Services (GTS) istheTSO for gas. Both TenneT isthenationalTSOfor thetransmissionofelectricity Unbundling EUR approximately 88.5 In 2012,theDutchOfficeofEnergyRegulationemployed (OPTA) andtheNetherlandsCompetitionAuthority(NMa). Independent PostandTelecommunication Authority Netherlands ConsumerAuthority(CA),the market authority created through the consolidation of the ACM was established on 1 Netherlands Authorityfor Consumers&Markets (ACM). The DutchOfficeofEnergyRegulationispartthe National EnergyRegulator whole economy. goal of an 80 to 95% reduction on greenhouse gases for the Beyond 2020,theEnergyAgreementincludeslong-term 2017 ofthe5 16% in2023).Italsoinvolvestheshuttingdown by 2016- arrangements (andafurtherincreaseinthatproportionto renewable sourcesto14%in2020,accordancewithEU an increaseintheproportionofenergygeneratedfrom in finalenergyconsumptionaveraging1.5%annually, and The partiestotheEnergyAgreementaimachieveasaving have endorsedtheEnergyAgreementfor SustainableGrowth. other civil-societyorganisationsandfinancialinstitutions – nature conservationandenvironmentalorganisations, central, regionalandlocalgovernment, employers andunions, In September2013morethan40socialorganisations, General Regulatoryframework 2. THE NETHERLANDS

In 2012,theenergy andtransportregulationwascombined http://www.energieakkoordser.nl/ of thatdirectorate. in onedepartment. Theprovided data istheenergyshare 8.2 million. oldest coalfiredpower plants from the1980s. 316 315 staff andhadanannualbudgetof April 2013, and is the new

including

. Wholesalemarkets 3. as undistortedcompetition). justified by overriding reasonsinthepublicinterest(such on thefree movement of capital ifsuchmeasuresare Third packagerequirements)thatconstituterestrictions adopt stricterDSOunbundlingmeasures(comparingtothe Justice ruledinOctober2013thattheNetherlandscould request for apreliminaryrulingtheEuropeanCourtof of theNetherlandsandadecisionispending.Following a Ministry ofEconomicAffairsappealedtotheSupremeCourt the final two integrated companies to delay unbundling. The the lawonownership unbundling ofDSOsexpired,whichled that distributesgasonly. Duetoacourtdecision,partof eight DSOsthatdistributebothgasandelectricityone owned by Dutch municipalities and provinces. There are unbundled from the integrated company and are mostly Since theendof2010,allbuttwoDSOsarefullyownership 317 company GasTerra. In2012, theaveragedayaheadgas is soldexclusivelyonthewholesale market by thetrading Aardolie Maatschappij(NAM).Thegasisproducedby NAM large Groningenfield by asingleproducer, theNederlandse are highlyconcentratedduetotheexploitationof The productionandwholesalegasmarkets intheNetherlands Gas wholesale day-aheadpower in2013was47 EUR power pricesontheAPXmarket wasEUR In 2013,theannualaverageofwholesaleday-ahead allocation methodsfor intradaytrading. and NorNed(withNorway)successfullyimplementednew In 2012,thetwointerconnectorsBritNed(withUK) with Germanydeclinedto55%,comingfrom88%in2011. the pricedifference. Hence,thepriceconvergencein2012 Netherlands and Germany is no longer sufficient to absorb the pointwherecross-bordercapacitybetween led toanincreaseinexportstheNetherlandsup shares oflow marginalcostrenewablesinGermanyhave convergence, 2012and2013sawadecline.Increasing in North-Western Europe,withyearsofincreasing price Following severalsuccessfulmarket coupling projects The Dutchpower generationmarket ismoderately concentrated. Electricity to attainthoseobjectives. objectives pursuedanddonotgobeyondwhatisnecessary that therestrictionsatissueneedtobeappropriate measures passedthattesttakingintoaccountthecriteria the DutchSupremeCourttodecideifgovernment’s

http://curia.europa.eu/jcms/upload/docs/application/pdf/2013- 10/cp130137en.pdf 48/MWh in2012.Theannualtradedvolumeof 317 TheCourtsaiditwasupto 52/MWh, upfrom TWh.

arrangement. increase by meansofanoversubscription andbuy-back points, thesurrenderofbooked capacity, andcapacity account rulesonauctioningcapacityatinterconnection were implementedby 1 rules oncapacityallocationandcongestionmanagement Following adecisionby ACM inDecember2013,European 319 318 1 of day-aheadgasontheTTF hub increasedsteeply to on theothermajorWest Europeanhubs.The traded volume has beenunprecedentedlyconvergentwithaverageprices EUR around EUR price atthevirtualtradingpoint(theTTFhub)oscillated Source: Eurostat Electricity pricechangeby component2008-2013(in€cent/kWh) 3 FIGURES over thenextcoupleofyears. production willdevelopfrom2017onwardsbedetermined by about10 of Groningen.Throughto2016productionwillbereduced short termduetotheincreaseofearthquakes intheprovince also decidedinJanuary2014todecreaseproductionthe In additiontothislongtermdevelopment,thegovernment gas productionisforecasted todeclinesignificantly by 2020. was 57.4 EU-28 According to Eurostat data, thecountryaccountedfor 43.2%of The NetherlandsisthebiggestnaturalgasproducerinEU. 10 15 20 25 0 5 818

Minister ofEconomic Affairs,Lettertoparliament“Gaswinning DG Energy, QuarterlyreportonEuropeanGasMarkets, Market download/publicatie/?id=11897 market seeACM’s LiquidityReport2014,https://www.acm.nl/nl/ For amorein-depthassessmentof theliquidityonDutch in Groningen”,17 Observatory for Energy, vol. 5 23/MWh inautumnandwinter. The2012averageprice TWh in2012. gas productionin2012.Thecountry’s annualproduction 2008 Mtoe in2012,down from57.7 Taxes+Levies HOUSEHOLDS Mtoe ayearfromrecentproductionlevels.How 20/MWh inspringand summer months and AND 4 January 2014. 318

2013 January 2014.Thistakes into 319 issue 4,4 Networks

2008 th quarter2012,p.15. Mtoe in 2011. Dutch Mtoe in2011.Dutch INDUSTRY Energy+Supply 2013 in 458 smart meterscametoanend.Thisprogrammeresulted In 2013thetwoyearsmall-scaleroll-outprogrammefor rates over time. and contributestothetrendofincreasingannualswitching supplier. Thisimpliesanincreasecomparedtopreviousyears In 2012,12.6%ofsmall-scaleelectricityusersswitched pending Parliamentary approval. to beconfirmed).Relevantlegislation for smartmeteringis smart meteringroll-outtostartin2015(exacttimetable programmes since2012andhavemandatedalarge-scale for gasby 2020.TheNetherlands havelaunchedpilot 100% of consumersfor electricity and 80% of consumers metering –theexpecteddiffusionratefor electricityis are proceedingwiththelargedeployment ofsmart Following a positivecost-benefit analysis, theNetherlands compared topreviousyears. Germany and Belgium can therefore be expected in 2014 A higherutilisationofthecross-bordercapacitywith Sources: EC,EPCRmetadata Natural gaspricechangeby component2008-2012(in€cent/kWh) 321 320 this impliesaslightdecreasecomparedto2011. end of 2012, while the HHI index was 2 largest companiescovered 83%oftheretailmarket atthe Market concentration atretaillevelwashigh,asthethree Electricity Retailmarkets 4. 0 1 2 3 4 5 6 7 8 9

ACM, Monitoringrapportage KleinschaligeAanbieding ACM, Nationalreportonenergy regulationin2012, Slimme Meter, 7 17 September 2013. 182 2008 Taxes+Levies HOUSEHOLDS smart metersbeinginstalledby July2013. November 2013. 2012 THE NETHERLANDS Networks 2008 338. For both indices INDUSTRY Energy+Supply 320 2012

321

119 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 120 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 one party(highestpercentageintheEU). experienced aproblemhavecomplainedaboutittoatleast fewer problemsthantheEU-28average;yetvirtuallyallwho EU average.Especiallyinthegasmarket, consumersface existing provider inthepast12 gas consumers have switchedtheir provider or tariff with overall consumersatisfaction.Around19%ofelectricityand time. a partoftrendincreasingannualswitchingratesover in 2012(12.3%)increasedcomparedtopreviousyears,as The numberofsmall-scalegasusersthatswitchedsupplier 324 323 322 from socialsupportschemes. applies toallhouseholds.Low-income householdsbenefit disconnection period’runningfrom1 health consequences–canneverbedisconnected.A‘no- disconnected fromelectricityorgaswouldhaveveryserious consumers –defined by lawasconsumers for whombeing run by ACM. ACM alsohandlescomplaints.Vulnerable direct requestsfor information andcomplaintstoConsuwijzer, of the national point of contact,Consuwijzer. Consumers can monitors thesetools and publishestheresultson the website available andoperatedby privatecompanies.ACM regularly Online pricecomparisontoolsfor electricityandgasare 72.0 and74.1 above theEUaverage(76.3 and 75.8 Dutch consumers rate their electricity and gas retail markets Consumers 5. and theHHIindexwas2 three largestcompaniescovered 81%oftheretailmarket market concentrationatretaillevelremainshigh,asthe Even thoughthemarket isfullyliberalisedintheNetherlands, Gas THE NETHERLANDS EU, respectively),switchingrates(2 above averageonchoice(2 markets (13 is alsoslightlyabove theaverage of31 EU-wide, respectively. Theassessmentofthetwomarkets

10 However thedifference isnotstatistically significant. ACM, Nationalreportonenergy regulationin2012, edition/index_en.htm consumers/consumer_evidence/consumer_scoreboards/10_ 17 th September 2013. ConsumerMarkets Scoreboard,http://ec.europa.eu/ th and15 323 ), whichcorrespondsto9 th respectively).Bothmarkets rankwell 258 attheendof2012. nd and1 months, almostdoublethe nd st October to1 and3 highestscoreinthe points comparedto 324 domestic services th and10 rd highest)and 322 April also

th place been identifiedinthegassector. January 2014onwards.OneProject ofCommonInteresthas entry andexittariffs for gas storagestobeapplicablefrom gas demand.InDecember2013,ACM introducedspecific can delivertheflexibilitytomeetseasonalresidential TAQA isdueto becomeoperationalin2014.Seasonal storage The seasonalstoragesystemthatisbeingdevelopedby congestion levels. low prices observedattheNorthwestEuropeanhubsand experience isconsistentwiththeconvergingwholesale accommodate demandfor transportationcapacity. This showed thatnoexpansioninvestmentsarerequiredto The mostrecent“OpenSeason”organisedby GTSin2012, Gas governments. simultaneously incoordinationbetweennationalandlocal regulation. Decisionsonpermitsandexemptionsaretaken Economic Affairsaccordingtothe‘Rijkscoördinatieregeling’ national importancearebeingcoordinatedby theMinisterof Energy infrastructureinvestmentsthatarejudgedtobeof 2016 andwillincreaseinterconnectioncapacityby 1.5GW. The fourth AC interconnectorwithGermanyisplannedfor available betweenBelgiumandtheNetherlandsin2012/2013. an additional300 As aresultofpreviousinvestmentsandimproved coordination, South oftheNetherlands(‘South-West 380 West 380 under constructionintheNorthofNetherlands(‘North- completed in2018.Furtherexpansionofthe380 in September2013andtheNorthringisexpectedtobe The Southringwascompleteddevelopment since2002. the Netherlands(‘Randstad380 to beexpanded.Expansionofthe380 keeping re-dispatchingcostsdown) the380 (and to reduce the need for congestion management and To accommodatetheriseingenerationcapacitysince2008 Electricity streamlining theenvironmentalassessmentprocedures. the adoption of legislative and non-legislative measures on thepermitgrantingprocessfor projectpromoters,and for 2014and2015,includingthepublicationofmanual (due by 16 including theestablishmentofone-stop-shopfor PCIs 347/2013 onthetrans-Europeanenergyinfrastructure, adoption ofthemeasuresstemmingfromRegulation The Dutchauthoritiesshouldensureaproperandtimely Infrastructure 6. kV project’, PCI project) and planned for in the November 2013),andothermeasures foreseen MW ofinterconnectioncapacitybecame kV project’)hasbeenunder kV gridintheWest of kV project’). kV gridneeds kV gridis below minus9 additional demandofgasduringdayswithatemperature reserving sufficienttransportcapacityandgasfor the Dutch legislationprescribesthatGTSisresponsiblefor Belgium andFrance. demand oflow-calorific gas intheNetherlands,Germany, Groningen fieldwillbereducedbutstillmeetthepeak (LNG, countriesoforigin).Asmentioned,productionfromthe Europe’s ‘gasroundabout’,anddiversifysupplysources imports will be necessary with a strategy to become The Dutchgovernment ispreparing itselffor whenmore Gas for thecomingyears. 325 ( Sources: Eurostat,CEER,NationalRegulatoryAuthority, ECcalculations. 2020. capacity. This surplus is expected to increase to 11.7 The Dutchmarket hassurplusavailable(firm)production Electricity Securityofsupply 7. THENETHERLANDS – KEYINDICATORS 1 )

Electricity market value( HHI inelectricityretailmarket HHI inpower-generation market Regulated pricesfor non-households–electricity Regulated pricesfor households–electricity Switching rates(entireelectricityretailmarket) Number ofmainelectricityretailers Number ofelectricityretailers Market shareofthelargestpower-generation company Number ofmainpower-generation companies Number ofsmartmetersinstalled(July2013) Peak demand(MW) Installed generationcapacity(MW, 2011) of Number ofcompaniesrepresentingatleast95% ELECTRICITY and gasconsumptioninthehouseholdnon-householdsectors(average bands)andannualaverage retailprices. Market valueis anestimationofthesizeretailelectricityandgasmarkets. Itiscalculatedusingdata onelectricity Ministerie vanEconomische Zaken, Monitoringsrapportage July 2013. Leverings- enVoorzieningszekerheid Elektriciteit enGas2013, net power generation 325 Generationadequacytherefore seemsguaranteed degrees Celsius. 1 ) (bn€) 2 2 1 1 No No 12.6% 3 35 N/A 4 458 18 28 800 8.706 338 492 GW in 438 049 182 HHI ingasretailmarket HHI ingassupplymarket Regulated pricesfor non-households–gas Regulated pricesfor households–gas Switching ratesfor gas(entireretailmarket) Number ofmainnaturalgasretailers Number ofretailerssellingnaturalgastofinalcustomers Market shareofthelargestentitybringingnaturalgas Number ofmaingasentities into country Number ofentitiesbringingnaturalgas GAS Gas market value( 1 ) (bn€) THE NETHERLANDS

2 2 6 6 No No 12.3% 3 32 N/A N/A N/A 9.474 258 455

121 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 122 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 European targetastheRESsharein2012was32.1% by 2020.Thecountryisshowing goodprogresstowards its to reach 34.2% ofRES share in gross final energy consumption generation in2011,whichislinewiththelastfew years reduced by 17.9%in2012(1859hours,2011:2265hours). tides anddryperiods.Fullloadhoursofgasfiredpower plants generation from hydro power stations reduced due to high peak spread)decreasedby 10.5%(EUR The relevantindicatorfor pumpstoragegeneration(base/ Cogeneration (67.5%) wasprovided by renewablesand21.8%by naturalgas. In 2011,approximatelytwothirdsoftheelectricitygenerated well above its2011/2012indicativetrajectory. 10% 15% 20% 25% 30% 35% 40% 45% 327 326 Source: Eurostat Gross inlandconsumptionmix2008-2012 1 FIGURES (30.05%) and natural gas (22.8%) on crudeoilandpetroleumproducts(35.54%),renewables Energy consumptionin2012(33.7 Generaloverview 1. 0% 5%

The shareofelectricity producedincombinedheat Eurostat. and power plants(CHP). 2008 Renewables Solid fuels

327 AUSTRIA AND 2 accountedfor 15.7%ofthetotalelectricity 2009 Natural gas Other 2010 → → 326 Key issues level playingfieldontheretailmarket. The efficiencyofthegasbalancingregimeshouldbeimproved inordertocreatea to enableinjectionsandwithdrawalsonafirmbasisfromthegasstoragecapacities. market model.Anextensionofthegasnetworkbasedonmarket demandisneeded In gas, the numberofsystemoperators could bereduced in viewof the newgas- countries wouldbebeneficial. In theelectricitysector, market couplingwithSouthernandEasternneighbouring Mtoe) wasbasedlargely Crude oilandpetroleumproducts . Austria has committed 11.5/MWh) andthe 2011

2012 326 326 , . 10% 20% 30% 40% 50% 60% 70% 80% at a centralisedvirtual trading point (Central European Gas any gastransportedthroughtheAustriannetworkistraded in theEasternmarket area.Thenewregimeforesees that Approximately 95%ofAustriangasconsumptiontakes place area NetConnectGermany(NCG)sinceOctober2013. they havebeenpartlyintegratedintotheGermanmarket but suppliedviathemarket areaNetConnectGermany, Voralberg areneitherconnectedwithEastor eachother (East, Tirol and Voralberg). Asthe market areas ofTirol and paths. Austria has three market areas and entry-exit zone previous systembasedoncontractuallyagreedtransport an entry-exitsystemingasJanuary2013,replacingthe An importantdevelopmenthasbeentheintroductionof into nationallawin2010for electricityandin2012for gas. The DirectivesoftheThirdEnergyPackage weretransposed General Regulatoryframework 2. Sources: EU energyinfigures-“StatisticalPocketbooks 2012and2013”, Gross electricitygenerationmix2008-2012 0% 2008 European Commission Renewables Solid fuels 2009 Natural gas Other 2010 Crude oilandpetroleumproducts 2011 2012 Gasleitungsgesellschaft mbH(BOG). until September2014operatedby Baumgarten-Oberkappel as ITO covering theoperationofWAG pipelinewhichwas July 2012 and received in July 2014 an updated certification Austria GmbH(GCA)wasfor thefirsttimecertifiedasan in ITO Unbundled TSOinJune2012.ThegasTSO,GasConnect federal stateVorarlberg (51%),wascertifiedasanOwnership Übertragungsnetz GmbH(VÜN),whosemainshareholderisthe (ITO). ThesecondelectricityTSOinAustria,Vorarlberger APG wascertifiedasanIndependent Transmission Operator whose mainshareholderistheAustrianGovernment (51%). unbundled inMarch2012fromitsshareholderVerbund AG, The electricityTSOAustrianPower Grid(APG)waslegally Unbundling 329 328 not yetcoupledwithitsEasternandSouthernneighbours. coupled withtheNorthWest Europeanelectricitymarket. Itis Austria/Germany. Hence,throughGermany, Austriaisindirectly situated inLeipzig,suchasPhelixFuturescanbetradedfor Similarly, derivativesatEEX(EuropeanEnergyExchange) and Day-Aheadbasisfor theAustrian/Germandeliveryzone. can alsobetradedatEPEXSpotsituatedinParis onanIntraday Germany andforms asinglepricezone.Therefore electricity the wholesalemarket for electricityisfullycoupledwith delivery inAustriaorGermany. Intheabsenceofcongestion, Exchange Austria),electricityistradedonaday-aheadbasisfor On theAustrianenergyexchangefor electricity(EXAA,Energy Electricity Wholesalemarkets 3. of aroundEUR (E-Control) hadanaverageof113 für die Regulierung der Elektrizitäts- und Erdgaswirtschaft” In 2012theAustrianEnergyRegulator“Energie-ControlAustria National EnergyRegulator administrative burdenfor market participants. agent, Operatorofthevirtualtradingpoint)whichleadsto Manager, Market AreaManager, Clearingandsettlement operators beyondtheTSOsandDSOs(DistributionArea delegates system-relevanttaskstoanumberofsystem- the efficiencyis however not proven. Thenewmarket model The new regime also foresees new balancing rules of which Hub –CEGH)bothbilateralandexchangetradesarepossible. Gasleitung GmbH(TAG) wasinJuly2014certifiedasITO. application tobecertifiedasISOinMarch2013 Trans Austria

By endof2013the former shareholders ofBOGE.ONandGRT E-Control, Annualfinancialreport, 2012. become, by wayofmerger, the universal legal successor toBOG. Gaz soldtheirshares toOMV. As of30 20 million 328 . 329 employees andabudget September 2014 GCA will September 2014GCA will After the rejection of the After the rejectionofthe the short-termspotmarket. better actualmarket conditions,i.e.adjustingtheirpricesto suppliers adaptedtheircontractswithimporterstoreflect a largerspectrumofratesavailable.Ontheotherhand, gas market (includinghouseholdconsumers),whichledto of theopportunitytoenterrelativelyhigh-pricedretail developments. Ontheonehand,newsuppliersmadeuse significant pricechanges,whichbroughtaboutmajor The (Herfindahl-Hirschmann Index –HHI of 3 The wholesalegasmarket inAustriawasstillveryconcentrated Gas supplies fromotherMemberStates. further whether this new obligation restricts imports of of origintheenergysupplied.Itwillneedtobeassessed supplying Austrianendconsumerstoprovide acertificate Austria has introduced an obligation for electricity suppliers price zoneandableakeconomicoutlook.Insummer2013 generation ofsubsidisedRESinthejointGerman-Austrian worldwide prices for coal and emissioncertificates, increasing in 2011butdecreased2012,causedmainlyby thelow The averagewholesaleelectricitypricewasEUR 330 between EUR a smallincreasefrom2011.In2012,thepricevaried In 2012,theaveragepricefor26/MWh, naturalgaswasEUR improved significantly. the allocationofcapacityingaspipelines,thissituationhas management proceduresandtheEuropeannetworkcodeon the implementationofEuropeanguidelineoncongestion therefore onlyhadlimitedaccesstotransportcapacity. With transmission system at the border with Germany and in the Austrian gas market faced congestions in the traders. Inthepastyears,newentrantswantingtotrade to havecross-bordertransportcapacityavailablegas Being dependenton gas imports,itis essential for Austria the normalexchange3.06 average churnratewas3.53in2012 and 3.38in 2011. On significant increasecomparedto38.9 volume of48.9 quarter of2012thisspreadwasreversed.AtCEGHatotal are above theGermanNCGprices,however inthefourth and lower importsfromRussia.UsuallyspotpricesatCEGH significant increasewasduetoextraordinarytemperatures were recorded,whichisthehighestpriceseenatCEGH.This and February2012whenpricesofuptoEUR

ACER/CEER AnnualReportontheResultsofMonitoring November 2013. the InternalElectricity andNaturalGasMarkets in2012, wholesale gasmarket inparticularwasaffected by 25/MWh andEUR bcm wastradedOTC in2012,whichisa TWh wastradedintotal. 330 27/MWh, exceptinJanuary bcm in2011.The AUSTRIA 371) in 2011. 51.9/MWh 39.5/MWh 330

123 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 124 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 to GermanyandItaly. came fromRussia(52%).Austriaalsoexportednaturalgas 333 332 331 4.5% for largeindustrialcustomers. since 2010andin2012thereductionwasaboutdecreased taxes and levies (34%). Prices for industrial customers have consisted of energy costs (41%), network costs (25%) and price inthe EU (EUR (EUR The householdenergypriceincreasedby 3%in2012 still haveastrongmarket power. gained somemarket sharerelativetothelocalsupplierswho about 56% across all consumer groups. Alternative suppliers retailers (for householdsand SMEs) remainedata level of (2011: 1 customers (2011: 1 remains atahighlevelgiventheHHIof1 Market concentration hasnotchangedconsiderablyand between 12different suppliers. changed, givingindustrialcustomersachancetochoose special contractconsumersthenumberofsuppliershasnot implies thatthereareregionallyoperatingsuppliers.For the remainder-wide,othersareregionalsuppliers.This and SMEs,ofwhich15areoperatingatanationallevel market consistsjustofdomesticsuppliersfor households some smallersuppliersweretaken over by biggerones.The 2011 andfor smallbusinesscompaniesfrom142to137as suppliers for householdsdecreasedfrom143to139in consumers withspecialcontracts.Thenumberofactive households, smallbusinesscompaniesandlargescale The retailmarket canbedividedintothreedifferent sections: Electricity Retailmarkets 4. production of whichapproximately one third came fromnational The totalAustriangasdemandwas4 AUSTRIA contracts ifacertainamount(10-20 or foreign suppliers.Normally, foreign suppliersonlyoffer

ACER/CEER AnnualReportontheResultsofMonitoring http://ec.europa.eu/energy/gas_electricity/doc/at_energy_ Eurostat. November 2013. the InternalElectricity andNaturalGasMarkets in2012, market_2011_en.pdf 0.2224/kWh), whichishigherthantheaverageelectricity 696). Theoverall market shareofthethreelargest 331 . In2011,thelargestshareofimportedgas 764) and 1 0.2061/kWh). In2013,householdprices 332 685 for commercial customers 333 , whichareeitherdomestic GWh) issupplied. 391 769 for household Mtoe in2011

333 Electricity pricechangeby component2008-2013(in€cent/kWh) 3 FIGURE increase of68%incomparisonwith2012. and businessesswitchedsupplier. Thisrepresentsan and electricitysupplier. During2013,148 the numberofconsumerswhosubsequentlyswitchedgas 1 almost 50%(to6.8%)Newrules,whichcameintoforce on switching rateofspeciallymeteredcustomersincreasedby rate droppedfrom1.5%to1.1%in2012.Incontrast,the Regarding switchingofenergysupplierthe the wishtotheirsuppliernothaveasmartmeterinstalled. 2010 makes provision for upto5%ofconsumersexpress to theElektrizitätswirtschafts-und-organisationsgesetzesof specific timetable for implementation.Amodification,in2013, electricity customersby theendof2019atlatestwitha A in favourofsmartmetersfor bothelectricityandgas. Regarding smart meters, a cost-benefit analysis came out through tothehouseholdcustomersby thesuppliers. developments onthewholesalemarket hasnotbeenpassed by law. Additionalpricereductionduetothepositive transparent andunderstandableastheyaredetermined energy (ÖSG), the costs for renewable energy became Following the renewal of the law in respect of renewable prices for themandatoryacquisitionofrenewableenergy. beginning of2012mainlybecausethereductiontransfer Most ofthesuppliersslightlyreducedtheirpricesat Source: Eurostat 10 15 20 25 0 5 Ministerial Decreemandatedtheroll-outofsmartmetersfor January 2013,haveprobablycontributedtoanincreasein 2008 Taxes+Levies HOUSEHOLDS 2013 Networks 2008 INDUSTRY 000 Energy+Supply consumers 2013

every yearsince2010,itremains4 on comparabilityhasbeenincreasing(althoughslowly) markets (15 assessed justabove theaverageof31 since 2012(respectivelyby 2.8and2.2. electricity andgasmarkets haveimproved theirperformance on switching and energy bills. In addition, E-Control offers a main reasonsfor callingthehotlinewererelatedtoquestions on 2011whenthepricecomparisontoolwasintroduced.The the hotlinerecorded6 range ofinformation onelectricityandgasmarkets. In2012, 31 336 335 334 electricity customers E-Control haslaunchedaservicehotlinefor allgasand corresponding to8 is above theEUaverage(77.0 Overall consumerassessmentoftheretailelectricitymarket Consumers 5. within threeweeks. that theswitchingprocesscanbesuccessfullycompleted January 2013theprocesshasbeenfurthersimplified,so supplier (about1.7%ofallfinalcustomersinAustria).Since In 2012,about23 Burgenland AG. retail companies:Wien Energie GmbH,EVNAG andEnergie share of60%.EnergieAllianzAustriaGmbHincludesthe market playerisEnergieAllianzAustriaGmbHwithamarket gas supplierswas72%in2012.Thelargestindividual in 2012.Thecumulatedmarket shareofthethreelargest still veryhigh(HHI:3 Market concentrationfor thesmallconsumergroupis the remaining29%. costs accountedfor 22%andVAT andenergytaxesmadeup 49% ofhouseholdpriceswerefor theenergyitself, network prices and conditions are negotiated individually. In 2012, For largecustomerswithconsumptionabove 400 with aconsumptionoflessthan400 for small consumers (households, smaller consumers etc.) The Austrian gas market is divided into two segments. Prices Gas 74.1 gas market is just below theEUaverage(74.0 indicator. However, consumerassessmentoftheretail highest scoreintheEUon‘overall consumersatisfaction’

The hotlinenumber is:0810 10 However thedifference isnotstatistically significant. scoreboards/10_edition/index_en.htm http://ec.europa.eu/consumers/consumer_evidence/consumer_ domestic servicesmarkets (ranked 21 334 th ConsumerMarkets Scoreboard, , ranked 17 th place).Theelectricitymarket hasthesecond th ) aswellbelow theaverageof th 400 373 placeEU-wide.Themarket isalso 336 726) eventhoughitreducedby 8% wherecustomerscanfindawide calls, which is a reduction of 33.4% calls, which is areductionof33.4% final customerschangedtheir 10 25 points comparedto72.0), 54 (tariffEUR

th lowest intheEU.Both MWh arepublished. points). st domestic services ). Whilethescore 0.044/minute). 335 points vs. MWh, the the cheapest petrolstation. used theso-called“Spritpreisrechner”calculatortoidentify wide rangeofonlineapplications.About500 337 three hydro-pumpstorages. include fiveinternallines,threeinterconnectorstoItalyand (380 like thenewconstructionof174 European energyinfrastructure,includinglargescaleprojects of commoninterest(PCI)undertheguidelinesfor trans- are required.Therefore Austriaisinvolvedin13 extensive networkreinforcements andnetworkexpansion Germany enhanced.To addressthesementionedchallenges and cross-bordercapacitiestoItaly, Slovenia, Switzerlandand high-tension 380-kVringinAustriaremainstobecompleted the integrationofEuropeanenergymarkets. Thehighcapacity to theproposedincreaseofelectricityfromrenewablesand The Austrianenergymarket facessubstantialchallengesdue Electricity (“one-stop-shop”). the ProjectsofCommonInterest(PCIs)ingasandelectricity facilitating andcoordinatingthepermitgrantingprocessfor designated onenationalcompetentauthorityresponsiblefor In accordancewiththeTEN-ERegulation,Austriahas Infrastructure 6. of bothelectricityandgasmarkets between2012and2013. had apositiveimpactontheoverall consumers’assessment operators towards consumers.Thesemeasuresseemtohave defining the format ofconsumptioninformation by system New regulatoryguidance(ordinance)hasbeenputinplace precise definitionoftheconceptvulnerablecustomers. does exist in Austria, the authorities have still to make a Whilst aprotectionmechanismfor vulnerablecustomers customers aresupplied(universalserviceobligation). costumers thatmaynotexceedtheratesatwhichmostoftheir in force and at rates for universal service to vulnerable claim theirrespectiveright,atgeneraltermsandconditions deliver naturalgasorelectricitytovulnerablecostumerswho threatening disconnection.Moreover, suppliersareobligedto switch offsupplyafterrepeatedlysendingreminders,including If consumersfailtopaytheirbills,thenthesuppliermayonly In 2012, the rights of vulnerable customers were strengthened. of energyintheirhouseholds. number ofcustomerschecked theiropportunitiesfor saving www.spritpreisrechner.at x 2400 x kV) withacapacityof2 337 Furthermore, a significant km longSalzburgline MVA. RemainingPCIs AUSTRIA 000 customers projects

125 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 126 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 common interestinthegassectorarecarriedoutby Austria. capacity viaPrismainMarch2014.Atotalofsixprojects in thecourse of theauction the respective incremental 338 ( Sources: Eurostat,CEER,NationalRegulatoryAuthority, ECcalculations. the entry-exitpointÜberackern capacities for theuseofstorageandincrementalcapacityat on a non-binding basis for Penta West to offer guaranteed Mosonmagyaróvár. Eventhoughextensionwasrequested Überackern SUDAandABG,7 bottle-necks havebeen identified attheentry-exit points Plan (KNEP)for theAustrianMarket Area.Potential established thesecondCoordinatedNetworkDevelopment Gas ConnectAustria(initsroleasMarket AreaManager) Caspian Region. regard tothedevelopmentofnewgassourcesfrom coordinated withneighbouringcountriesespecially In gas,thenetworkdevelopmentneedstobeclosely Gas AUSTRIA AUSTRIA – KEYINDICATORS 1 )

~1 N/A No No 1.1 6 152 56.6% 4 590 11 22 145 7.265 800 617 787 demand (91.2 capacities (67.8 (EU) No994/2010.Oneimportantelementisthestorage Austrian suppliersfulfiltherequirementsofRegulation Given thelatestsurveyregardingsecurityofgassupply Gas measures. maintaining security of supplymayneed complementary dry periodsandgasfiredstationsarenolongerrunning, capacities are not able to generate due tohightides or adequacy. However, inperiodswhenhydrogeneration what impliesthatthereshouldbenoissuesofgeneration 2020. Theoverall generation capacity willthenbe29.6 Generation capacitiesareexpectedtoriseby 6.7 Electricity Securityofsupply 7. HHI ingasretailmarket HHI ingassupplymarket Regulated pricesfor non-households–gas Regulated pricesfor households–gas Switching ratesfor gas(entireretailmarket) Number ofmainnaturalgasretailers Number ofretailerssellingnaturalgastofinalcustomers Market shareofthelargestentitybringingnaturalgas Number ofmaingasentities GAS into country Number ofentitiesbringingnaturalgas Gas market value( GWh). GWh) whichcover about90% of annualgas 1 ) (bn€)

~2 3 3 No No 1.7 N/A 41 N/A 3 6 2.658 371 GW until 200 GW, GW, binding targetfor renewablesof15%. trajectory andiscurrentlyontracktoachieveitsnational in 2008.Polandremainedabove its2011/2012interim consumption amountedto11%,increasingfrom7.8% 341 340 339 (11%) fuels: hardcoal(41%),oil(26%),gas(13%),andlignite amounted to97.97 Polish nationalgrossfinalenergyconsumptionin2012 Generaloverview 1.

Eurostat andPolish CentralStatisticalOffice,Energy 2013, In someinstance,theRegulatorhas released entitiestradingin Gaz-System AuctionsPlatform. 2 2 natural gasfromthe obligationtosubmittariffs for hisapproval. September 2013. 341 . In2012,shareofrenewablesingrossfinalenergy POLAND Mtoe. Itwasbasedmostlyonfossil 339

340 → → → → → at Mallnow). interconnection pointandtheintroductionofphysicalreverseflow on Yamal Poland hasimproved considerablyitsinterconnectionswithGermany(Lasow as developmentofnewinfrastructuretosupporttheNorth-Southgascorridor. to becommissionedin2015(toenterintocommercialoperationmid-2015)aswell Security ofgassupplyisexpectedtoimprove thankstothecountry’s firstLNGterminal Barriers totrade(includingtheimportdiversificationrequirements)shouldberevised. interconnections andexpansionoftheexistingoneswithneighbouringcountries. Key issues bundled capacities,capacityauctioningplatform Network Codeswiththeintroductionofvirtualtradingpoint,pilotprojects conditions haveimproved. Progress sofarincludesimplementationoftheEuropean The gassectorinPolandhasyettocompleteitsliberalisationprocess.Market resulting fromunscheduledflows properlyaddressed. Obstacles inelectricity cross borderexchangeshouldbeeliminatedandtheproblems Poland shouldstepupitsefforts andextendthedevelopmentofelectricitygrid. instrumental for electricitygeneration. heavy relianceoncoal,ofwhichithasthebiggestreservesinEUandis beyond 2020.Thisseemstobedueitsconcernsaboutenergy security andits last two of renewableenergysources.Despitesignificantemissionreductionsrealised over the of energy, reducetheshareofcarbon-intensiveplantsandincreaseexploitation infrastructure, significantinvestmentsarestillneededtoensureasustainablesupply Although importantimprovements havebeenmadetomodernisePolishenergy help toreinforce competition initiated, Polandstillneedstophaseoutregulatedpricesinthegassector, what would the market and changethecurrentmarket structure.Althoughaprocesshasbeen wholesale gasmarket haveproven tobeinsufficient sofartoboostcompetitionon However, thesemeasureswhichhaveimproved Polishchancestodevelopacompetitive obligation wasputinplace. at Mallnow. Inaddition,agas exchange (PolPx)wasestablished and anexchangetrade launching ofbothvirtualandsubsequentphysicalreverseflow onthe Yamal pipeline decades, PolandisreluctanttosupportambitiousEUclimatepolicytargets 380 342 electricity, mainlytotheCzechRepublicandSlovakia power generation.Polandmaintainedtraditionalexportof of lignitewascausedby decreasedprofitabilityofhardcoal Renewables accountedforIn 2012,ariseinshare 10.7%. (88.6%) comingfromfossil fuels,principallycoalandlignite. In 2012,totalpower generationreached162 . Effort shouldbemadetofurtheracceleratenewgas

Eurostat. 379 , market-based balancing,and TWh withmost 342 .

127 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 128 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 60% 10% 20% 30% 40% 50% 345 344 343 the Court. and theThirdEnergyPackage GasDirectiveisongoingbefore procedure onregulatedgaspricesfor non-householdcustomers and theircomplianceiscurrentlyunderreview. Aninfringement The ThirdPackage Directivesweretransposedonlyin2013 General Regulatoryframework 2. Source: Eurostat POLAND Gross inlandconsumptionmix2008-2012 1 FIGURES renewables directive Poland totheCourtofJusticefor non-transpositionofthe adopted in2013. on certificationofindependentsystemoperatorswereonly (on thenetworkstheyown) inthecourseof2014.Therules Both companieswerecertifiedas ownership unbundledTSOs The TSOinelectricityisPSES.A.andfor gas,Gaz-SystemS.A. Unbundling possibility ofonereappointment. introduced a5-yeartermfor PresidentofUREwitha of thegovernment budget.AmendmentstoEnergyLaw reached EUR annual revenuestotalledEUR since 1997.In2012,UREemployed about300 body for governmental administrationandhasbeeninoperation The PresidentofEnergyRegulatoryOffice(URE)isacentral National EnergyRegulator design ofthesupportschemefor renewables. hampered for manyyears.Argumentsarisemainlyaboutthe 0%

URE, AnnualReport ofthePresidentURE,March2013. C-320/13, See IP/13/259. C-36/14, See IP/13/580. 2008 Nuclear Solid fuels 343 InMarch2013,theEuropeanCommissionreferred AND 2 8.8 million 2009 Natural gas Renewables 344 , whichhasbeencontroversial and 345 . Thesurplusofincomeispart 23.8 2010 million whileexpenditures Crude oilandpetroleumproducts Other 2011 staff. Its 2012

further in2013basedontherecentlypublisheddata. to thegridthisindexreached2096.TheHHIdecreased capacity was1587.9in2012.Fortheamountofpower introduced and in2013.Themarket concentrationHHIindexfor installed TAURON, andEDFremainedthebiggestpower generatorsin2012 market shallno more beconsidered as highly concentrated. PGE, electricity production droppedtolessthan2000, meaning that the concentrated. However, initialdatafor 2013show thatHHIfor The Polishwholesalepower generationmarket still remainsrather Electricity Wholesalemarkets 3. within the“bigfive”islegallyunbundled only fiveservemorethan100 There were 158 Sources: EU energyinfigures-“StatisticalPocketbooks 2012and2013”, Gross electricitygenerationmix2008-2012 348 347 346 that thevolumestradedonexchangedecreasedin2013. around 33%ofwholesaletradein2012.Ithastobenoted (up from58.8%in2011).Bilateralcontractsrepresented for 61.8% of electricity soldby generationcompanies in 2012 power exchange.Electricitysoldthroughtheexchangeaccounted percentage ofproducedelectricityby generatorsthroughthe following theintroduction in 2010ofobligationto sell certain In 2012, the power exchange’s role became well established, 100% incumbent systemoperator of gas was performed by 40 controlled by thePolishStateTreasury. In2013distribution 10% 20% 30% 40% 50% 60% 70% 80% 90% 0%

URE, NationalReport, 2014. Mid-2013, sixunbundled DSOsmergedintoone. URE, NationalReport 2013. European Commission Renewables Solid fuels 2008 electricity DSO’s at the end of 2013, but 2009 Natural gas Other 347 system operators including one subjecttolegalunbundling 000 2010 customers. Eachcompany Crude oilandpetroleumproducts 346 2011 and4 of themare 348 2012 346 348 . initiative FBMC (CentralEastEuropeFlow-Based Market Coupling) borders inimplicitauctionslaterthecontextofCEE in the arrangement of capacity allocation on the common intends tojointheCzechRepublic,Slovakia, andHungary way market couplingprojectknown as“5M”.Poland Poland participates,currentlyasanobserver, inafive- 352 351 350 349 gas tradedontheexchangeisnow increasing. up. However, in2014,thesituationchanged –thevolumeof and theoverall demandfor gaswasinsufficienttodrivesales were temporarilylower thanpricesoffered ontheexchange few buyers.Thepricesavailableunderbilateralagreements mandatory 30%share on theexchangeas there weretoo the Polishgasmarket, butin2013PGNiGfailedtotradethe exchange obligationhas provided grounds for competition in sales weresuppliedby othertraders.Since2013thegas by PGNiGin2012(ca95%).Theremaining5%oftotal The wholesale gas market in Poland was still dominated gas shipperstousethereverseflow on Yamal. under thePolishlawremainsanobstaclelimitingabilitiesof via Mallnow. However, the import diversificationrequirement thanks tophysicalconnectionviaLasow andthereverseflow It shouldbenotedthatimportsfromGermanyincreased ahead transactionsin2012was19.1 in 2011(12%decrease).Theannualtradedvolumeday- 179.45/MWh, whichisadecreasefromPLN205.19/MWh annual averagewholesaleday-aheadpower pricewasPLN According tothePolishPower Exchange (POLPX),in2012the 1.7 79.8% ofallimports.ImportsfromGermanyamountedto corresponding to57.6%ofgrossinlandconsumptionand from RussiaandCentralAsiancountrieswere9.2 Poland in2012amountedto11.6 approximately 15.9 Annual naturalgasinlandconsumptionin2012amountedto Gas North-Western EuropeanMarket viatheSwePolLink. annual demandedofallconsumers. natural gas) which accounted for approximately 28% of the production in2012was4.46

Memorandum ofUnderstandingw sprawie przyłączeniaPolski POLPX data–AnnualSummaryfor 2012,http://www.polpx. Report on the result of monitoring the security of gaseous fuels Report ontheresult ofmonitoringthesecuritygaseous fuels Report onmonitoringofsecurity supply(2012),Ministry na rynkudnianastępnego,11 i towarowej-gieldzie-energii pl/pl/27/aktualnosci/307/podsumowanie-roku-2012-na- supply for theperiodfrom01 PL_MG_DRO_Sprawozdanie%20za%202012.pdf of bcm andfromCzechRepublic0.55 Rumunii dozintegrowanego mechanizmumarket coupling Economy ofPolandhttp://www.mg.gov.pl/files/upload/8356/ 350 . Poland also participates in the coupling of the bcm. Thetotalimportsofnaturalgasto January 2012to31 bcm (intermsofmethane-rich July 2013. bcm, outofwhichimports 352 TWh bcm 349 351 . December 2012. . Domesticgas bcm,

tested until September 2014 capacity productsbetweenPolandandGermanywhichare with thoseofneighbouringcountries. (BAL), improving theinteroperabilityofpolishgassystem (CMP), CapacityAllocationMechanisms(CAM)andBalancing Network CodeonCongestionManagementProcedures which enteredintoforce inAugust2014,implemented for gas allocation. Thecodealsointroducedavirtualtradingpoint Package aswellsystemoperationrulesfor capacity Grid Code.Thecodeincludesprovisions oftheThirdEnergy adoption and the subsequent changes in the Transmission change concerningthestructureofincumbentand amendments oftheEnergyLawin2013,animportant gas market liberalisation,includingalreadymentioned The latestlegaldevelopmentsarepositivefor natural prices for RussiangasintheEU. after thecorrection,Polandstillpaysoneofhighest price disputebetweenPGNiGanditsRussianpartner. Even natural gasdeliveriestoPoland.Theagreementendedthe supply contractwithPGNiG,Gazpromlowered thepriceof In 2012,asaresultoftherenegotiationlong-term 355 354 353 market opening,covered 80%ofthemarket which used to be part of distribution companies before the sale anddistributionservices.In2012themainfiveretailers, vertically integratedindustrialpower companiesconducting trade amounted to around 360, but these were mainly the electricity market. Thetotalnumberofentitieslicensedto in 2012. In 2012, 82 detain thelargestshareinsaleofelectricitytoend-users to thepreviousyears,“incumbent”supplierscontinued consumers whodidnotswitchedtothefreemarket. Similarly regulation ofelectricitypricesfor householdsappliedtoall President ofEROremainsfor households.In2012the households. Theapproval oftheelectricitypricesby the prices forPoland continuestoregulateretailelectricity Electricity Retailmarkets 4.

Eurostat. Produkt powiązany wLasowie, http://www.gaz-system.pl/ Transmission Network Code,President ofEnergyRegulatory centrum-prasowe/aktualnosci/informacja/artykul/201643/ DRR-4322-6(5)/2-13/2-14/KG01 from3 Jamal Pipeline,PresidentofEnergy RegulatoryOfficeDecision 2013; Transmission Network CodeofPolish Sectionofthe Office DecisionDRR-4322-5(9)/2013/JBu from22 353 andallowed for earlyintroductionofbundled active suppliers were operating on the 353 354 . Subsequent changes, February 2014. 355 POLAND . November

129 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 130 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 now pendingbefore theCourt ofJustice. the PresidentofERO.Thisissubjecttoacourtcasewhich household customersandderogationsarestilldecidedby not translateintothederegulationofgaspricestonon- household consumersapriority making the deregulation of prices for commercial and published the“RoadmapofNaturalGasPricesLiberalisation” In February2013,thePresidentofEnergyRegulatoryOffice expected tobederegulatedatlaterstage. Prices for householdsandsmallcommercialconsumersare way pricesfor non-householdcustomersaredetermined. customers, Polanddecidedtointroducesomechangesinthe Court ofJusticeonregulatedgaspricesfor non-household regulated. Nevertheless, following Poland’s referral to the In 2012, gas prices for households and industry were Gas business consumerssegment. probably fromthedecreaseinelectricitydemand an increasedadvertisingactivityofthesuppliers,resulting 357 356 the endof2011to66 from 21 household consumerswhoswitchedthesupplierincreased switch supplierthanin2011.Intotalthenumberofnon- In 2012 four times more consumers exercised their right to Source: Eurostat Electricity pricechangeby component2008-2013(in€cent/kWh) 3 FIGURES POLAND 10 12 14 16 14 households suppliedundertheTPA ruleincreased from 0 2 4 6 8

341 to77 URE, MAPA DROGOWA uwolnienia cengazuziemnego, URE, AnnualReport ofthePresidentURE,March2013. Warszawa, January2013. 2008 716 (cumulativenumbersfor 2007-2011)at Taxes+Levies HOUSEHOLDS 284 AND 4 consumers 2013 019 in2012 356 Networks . Thiswaspartiallycausedby 357 2008 . This,however, did 356 INDUSTRY . Thenumberof Energy+Supply 2013 210 2011, onlyafew switcheswerenoted.In2012there significantly inthepastyearsbutisstillrelativelylow. In number ofconsumersswitchinggassupplierhasincreased under regulated prices (in 2011 this share was 99.9%). The In 2012,99.5%ofhouseholdsweresuppliedwithgas there were120 market position ishighlyfragmented.Attheendof2013 retailers, independentfromPGNiG,isgrowing, buttheir all PGNiGCapitalGroup’s consumers.Thenumberofgas households constitutedthelargestgroup(96.9%)among strengthening theirpositiononthemarket. In2012,the supplied by severaldozenofotherentitiesstrivingfor in 20122013.Theremaining5%ofthegasmarket is Group holding95%ofthewholesaleandretailmarkets concentration levelswiththegasincumbent,PGNiGCapital The Polishgasmarket isstillcharacterizedbyhigh very Sources: EC,EPCRmetadata Natural gaspricechangeby component2008-2012(in€cent/kWh) of activityfirstfullyearfunctioning2 established inSeptember2011,receivedduringitsfirstyear The Information Pointfor ElectricityandGasConsumers, Consumers 5. as tochangesingaseousfuelpricesandinvoicing. frequent problemswererelatedtothesettlementsaswell switching procedure.Incaseofgasconsumersthemost total. Almostahalfofthecasesconcernedsupplier 0 1 2 3 4 5 6 7 cases and402by theendofSeptember2013. 2008 Taxes+Levies HOUSEHOLDS gas retailers. 2012 Networks 2008 INDUSTRY 636 Energy+Supply questions in 2012 with financialdifficultiesmayapply. energy allowances wereintroducedfor whichconsumers which provides consumerswithnewrights.Inaddition, An amendmenttothe Energy lawwasadoptedin2013 ease ofswitchingandchoice components (exceptfor switchingrates),inparticularthe domestically). Thisisduetoimprovements inallthe 2.9 overall assessmentsince2012, withincreasesof4.4and Both markets haveseenaconsiderableimprovement in 72.0, whichcorrespondsto19 is slightlybelow theEUaverage (70.6 Consumers’ overall assessment ofretailelectricitymarket prices (tariffcalculator). the 3 among 31 359 358 administrative level. legal act,whichpurposeistofacilitateprocessonthe of majorimportancearenow streamlinedby specifica assessment procedures.However, gasinfrastructure projects non-legislative measuresstreamliningtheenvironmental for project promoters, and the adoptionof legislative and the publicationofmanualonpermitgrantingprocess and other measures foreseen for 2014 and 2015, including Projects ofCommonInterest(dueby 16 including theestablishmentofone-stop-shopfor 347/2013 onthetrans-Europeanenergyinfrastructure, adoption ofthemeasuresstemmingfromRegulation The Polishauthoritiesshouldensureaproperandtimely Infrastructure 6. choice”) website. Thereisaspecialsectioninplace(“You havea and onhow toswitchsupplier isprovided intheregulator’s motive ofthiscampaign.Information onconsumers’rights of electricity. Therighttoswitchthesupplierwasaleading campaign promotinganeffective andeconomicalmanagement To addressthoseissues,theUREorganizedanationwide the averageof 31 (75.5 Retail gasmarket isranked slightly above theEUaverage

10 http://www.maszwybor.ure.gov.pl/ edition/index_en.htm consumers/consumer_evidence/consumer_scoreboards/10_ points, respectively(firstandsecondhighestincrease rd th points comparedto74.1),ranking12 ConsumerMarkets Scoreboard,http://ec.europa.eu/ lowest incidenceofconsumer problemsintheEU. 358 . URE alsooffers aninternettool that compares domestic servicesmarkets. Themarket records domestic servicesmarkets (24 359 . th placeEU-wide)andbelow points comparedto November 2013), th EU-wideand th place). stage oftheprocedurephysicalreverseallocation. auction onabundledcapacityatMallnow whichisthefirst February 2014PolishandGermanTSOscarriedoutapilot of physicalreverseflow ofgasfromGermanytoPoland.In investment (completedonApril1,2014)enabledprovision of Polish-GermaninterconnectionpointatMallnow. The of themostsignificantinvestmentswasamodernisation Moreover, fromthesecurityofsupplypointview, one the CzechRepublic(asapartofNorth-Southgascorridor). capacity at the southern border withSlovakia and with priority by Poland.Therearealsoplanstodevelopimport isolation oftheBalticcountriesshouldbeconsideredatop and Lithuania(“GIPL”) thatisnecessarytoendtheenergy Construction of the gas interconnector between Poland the newUGSfacility(Kosakowo) shouldalso be noted. UGS facilities(e.g.inWierzchowice) andtheconstructionof was completed.Furthermore,theexpansionofexisting physical reverse flow at the border with Germany (in Mallnow) with Germany(inLasow). In2014,theinvestmentenabling in 2015. In 2012 Poland enhanced its gas interconnection have a5 to theconstructionofLNGterminalinSwinolujscie.Itwill The majoron-goinginvestmentingasinfrastructureislinked Gas System andincreaseenergysecurityintheregion. the Baltic countries with the Western European Electricity link) isexpectedtobeoperationalinlate2015.Itwillconnect The interconnectorbetweenPolandandLithuania(LitPol Cohesion Fund will take place,withhalfthefinancingcomingfromEU’s At distributionlevel,halftheextensivegridreplacement power plants,expectedtobecommissioned by 2025. future investmentplansincludeconstructionoftwonuclear sector areinprogress,mostlybasedonfossil fuels,while in needofreplacement.Significantinvestmentsenergy A largepartofPolishenergyinfrastructureisageingand Electricity 361 360 installed andarecurrentlytested

Energa operator. http://www.pgedystrybucja.pl bcm capacityandisscheduledtobeoperational 360 . 400 000 smart metershavealreadybeen 361 . POLAND

131 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 132 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 requires longtermsolutions. 363 362 ( Sources: Eurostat,CEER,NationalRegulatoryAuthority, ECcalculations. instantaneous peakloadwasalmost24 for electricityincreasesabove 26 in 2014.AccordingtothePolishTSO,ifpeakdemand Polish generationcapacityreservesmayreacharecordlow Electricity Securityofsupply 7. POLAND ( transformers tobettermanagetheflows reached anagreementontheoperationofphaseshifting very oftentozero cross-border capacityavailabletomarket participants Germany resultinunscheduledflows toPolandlimiting Limited grid connections between the North and South of developing capacitymarket measures. users to develop system management. Poland is considering side response.TheTSOalreadyworkwithlargeindustrial countries. Therefore, thereisaneedfor enhanceddemand will failtodeliverwithoutsupportfromneighbouring POLAND – KEYINDICATORS 1 2 ) )

Switching rates(entireelectricityretailmarket) Electricity market value( Number ofmainelectricityretailers HHI inelectricityretailmarket Number ofelectricityretailers of power fed intoagrid HHI inpower-generation market by volume Market shareofthelargestpower-generation company Regulated pricesfor non-households–electricity Number ofmainpower-generation companies Number ofsmartmetersinstalled Peak demand(MW) Installed generationcapacity(MW, 2011) Regulated pricesfor households–electricity of Number ofcompaniesrepresentingatleast95% ELECTRICITY and gasconsumptioninthehouseholdnon-householdsectors(average bands)andannualaverage retailprices. Market valueis anestimationofthesizeretailelectricityandgasmarkets. Itiscalculatedusingdata onelectricity 0.86% for households PSE operator, pressrelease,http://www.pse-operator.pl/index. ENTSO-E, YS&AR Report, 2012. php?dzid=32&did=1669 net power generation MW. In2014,PolishandGermanTSOs 2 ) (bn€) 000 000)

MW (in2012the 363 , buttheissue 362 , thesystem 0.6% 5 2 2 82 2 2 39.3% No 6 400 23 34 Yes 32 9.376 099 096 970 554 000 ( 1 ) TSO openedupthepossibilityoftransportinggastoUkraine. Germany andCzechRepublic from the East have fallen in favour of purchases from sufficient scale.Thegasimporttrendis upward, butimports commissioned andifshalegascouldbeexploitedona is expectedwhentheLNGterminalinŚwinoujście with domesticgasproduction.Furtherdiversification Heavy dependenceongasimportedfromRussiaisbalanced safeguard security ofgassupply safeguard Regulation (EU)No994/2010concerningmeasuresto and Emergency Plan meeting the requirement set in the security ofgassupply, adoptedthePreventiveActionPlan In 2013,theMinistryofEconomy, responsiblefor the Gas 365 364 Number ofmainnaturalgasretailers HHI ingasretailmarket Number ofretailerssellingnaturalgastofinalcustomers HHI ingassupplymarket Market shareofthelargestentitybringingnaturalgas Regulated pricesfor non-households–gas Number ofmaingasentities Regulated pricesfor households–gas GAS into country Number ofentitiesbringingnaturalgas Gas market value( Switching ratesfor gas(entireretailmarket)

Ministry ofEconomy, Reportontheresultsofmonitoring Ministry ofEconomy, PlanDziałańZapobiegawczych, Warsaw 2013. 01 the securityofgaseous fuelsupplyfor theperiodfrom January 2012to 31 2 ) (bn€) December 2012,Warsaw 2013. 365 . InOctober2012thePolish 364 .

1 9 9 120 N/A 96.9% Yes 1 Yes 40 3.658 0.8% 073

367 366 46.2% from renewable resources was madeupby 53.8%fromhydro,coalandCCGT The domesticpower generationmixin2013(47.8 two years. generation hashowever decreasedconsiderablyinthelast total electricitydemandof49.2 and solidfuels(18.7%).Netimportswere2.7 by renewables (47.0%), gas-fired power generation(28.4%) The power generationmixin2011(52.5 remains themainsourceofenergy. demand hasreducedfossil fuelconsumption,althoughit 5.9%, to22.2 Portuguese energydemanddecreasedagainin2012by Generaloverview 1. Portugal’s 2020renewablestarget energy variesyearlyduetohydrologicalandwindconditions. obligation. the countryisshowing goodprogress towards its2020RES energy consumptionincreasedfrom22.8%to24.6%and between 2008and2012,therenewablesshareingrossfinal higher thantheEU-27average.AccordingtoEurostatdata,

Share ofRESinGross Final EnergyConsumption. http://www.ren.pt/ PORTUGAL Mtoe, following a2.9%dropin2011.Falling TWh. Theshareofgas-fired 366 → → Key issues South GasRegionalInitiativeandtheTarget Model. management procedures and the creation of an Iberian Gas hub in line with the use ofplatform PRISMAtoallocatecapacity, theharmonizationofcongestion through the harmonisation of entry-exit tariffs inbothtransmissionsystems, the integration withthe Spanish market. Integration should be promotednotably In thegassector, wholesalemarket developmentisstillconstrainedduetoslow customer switching. retail markets arestillconcentrated.However, deregulationhasledtoanincreasein State-controlled companieswillbeprivatised.Atpresent,boththewholesaleand Program. Regulatedtariffsarebeingphasedoutgraduallyuntil2015andsome Electricity andgassectorshaveundergonereforms aspartoftheFinancial Assistance . The share of renewable 367 TWh) wasdominated is31%,which TWh, toa TWh) Gross inlandconsumptionmix2008-2012 1 FIGURES 10% 20% 30% 40% 50% 10% 20% 30% 40% 50% 60% 60% Sources: EU energyinfigures-“StatisticalPocketbooks 2012and2013”, Gross electricitygenerationmix2008-2012 Source: Eurostat 0% 0% 2008 2008 European Commission Renewables Solid fuels Nuclear Solid fuels AND 2 2009 2009 Natural gas Natural gas Renewables Other 2010 2010 Crude oilandpetroleumproducts Crude oilandpetroleumproducts Other 2011 2011 2012 2012

133 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 134 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 conditions. 370 369 368 have alicense. distribution units(four ofthembelongingtoGALP)which concession contractsandfiveautonomousnaturalgas distributors (four ofthembelongtoGALP)thatworkunder distributors. Thedistributionofnaturalgasisprovided by six distribution network.Thereareafew othersmallerelectricity most municipalconcessionstooperateinthelow voltage distribution networkinhighandmediumvoltage, in 2013.Itholdstheconcessiontooperatenational EDP isthemainelectricitydistributorandwasprivatized 2014 model, aftertheopinionofCommissionissuedinMay both been certified in2014 under the ownership unbundling not holdsharesinthecapitalofRENSGPS.TheseTSOshave continued andcurrentlythePortuguesegovernment does of a40%sharecapitalRENSGPSin2012,theprocess Energéticas NacionaisSGPS).Afterthere-privatisation electricity andgasTSOs.BotharepartofRENSGPS(Redes REN (RedeElétricaNacional)andGasodutosarethe Unbundling 75 9 almost EUR (ERSE) hasbeeninoperationsince1997.Ithadabudgetof Authority, The independentPortugueseEnergyServicesRegulatory National EnergyRegulator discussed laterinthisreport. out. In thiscontext, Portugal is undertakingother measures, regulated gasandelectricityretailtariffsarebeingphased SGPS and Energias de Portugal (EDP) was accelerated and deficit. TheprivatisationofRedesEnergéticasNacionais Program. Thesereforms aimtoreducetheenergytariff driven by reforms as part of the Financial Assistance The evolutionoftheenergysectorinPortugalhasbeen General Regulatoryframework 2. PORTUGAL

http://www.erse.pt/pt/imprensa/comunicados/2014/ http://ec.europa.eu/energy/gas_electricity/interpretative_notes/ Employment of80 Comunicados/CertORT%20Decisao_Comunicado_vfinal.pdf doc/certification/certifications_decisions.pdf people. 369 andsubjectto the fulfilmentof a numberof 368 370 Entidade ReguladoradosServiçosEnergéticos million in2012andemployed astaff force of people in2010.

in ancillaryservicerelatedpayments. energy regulatorandtheantitrust authority advisedofflaws retrospective reductioninpreviousyearspaymentsafterthe the discountrateappliedinCMECs,butitisstudyinga process, arestillpending.Portugalhasalreadyreduced compensate for strandedcostsarisingfromtheliberalization contracts for difference known asCMECsthataimto Changes tooneofthemostcontentiousissues,regulated with Spain. is ahighlevelofmarket integrationandpriceconvergence buyer. Importsaccountfor 6%ofenergysupplyandthere tariff, arerepresentedinthemarket by aregulatedsingle The renewableandCHPgenerators,whichearnafeed-in- acts as a regulated market agent for the two historical PPAs. accounts for 7.6%ofthedomesticpower generationmix, which arenotexposedtomarket risks. in 2013),a42%shareissuppliedthroughregulatedagents remains thelargestgenerationentity(43%ofelectricitysold structure. WhileEDP, theformer State-owned company, Electricity generationinPortugalhasanunconventional and coalproduction. increase wascompensatedby areductioninimports,CCGT production 16.4%whencomparedwith2012data.This doubled comparedto2012.Renewablesalsoincreasedtheir rainfall. Generationfromhydroplantsin2013morethan production was12.4%higher, drivenby higherthanaverage at 49.1 Total electricityconsumptioninPortugalstabilised2013 Electricity Wholesalemarkets 3. 372 371 in thePortuguesepartofOMIEday-aheadmarket. Northern Europeanmarkets. In2013,54.5 In February2014,OMIEwascoupledwiththeCentraland 2013, day-ahead prices were the same in both countries. a forward market operator, OMIP, launched in July2006. In has beenoperatinginbothcountriessinceJuly2007,and They shareacommonspotmarket operator, OMIE,which markets into a singleIberianElectricityMarket, MIBEL. Portugal andSpainhavebeenintegratingtheirelectricity allowed continuoustradingofthatproductinits auctioned FTRfor theSpain-Portugalinterconnectionand EUR average priceintheday-aheadmarket inPortugalwas

Own estimation.OMIEquotestrading inPortugalbased Share over totalproductionplusnetExchange.Source:REN, Thus, itisunderestimating therealmarket size. report salesinPortugal thataresoldinSpain). on purchasesfor Portuguesecustomers (i.e.itdoesnot Sistema eletroprodutor. Informação mensal,Dezembro 2013. 43.65/MWh in2013.SinceMarch2014,OMIPhas TWh after a two-year period of decline. Electricity 372 371 RENTrading, which TWh weretraded

372 The

energy efficiencymeasures. activities inordertodecreasethetariffdeficitandpromote energy production,transmission,storageanddistribution Portuguese Government announced anextraordinarytaxon new generationtaxesinSpain.Attheendof2013, of externalevents,specificallytheincreaseinpricesfrom approved a new measureaimedatcancellingouttheeffects of the income of the CO in order topromotethesustainabilityof the system,80% based naturalgaspricereference. Portuguese market does not have a transparent market- as LNG)andsignedbefore liberalisation.Atpresent,the GALP withAlgeria(throughSpain)andNigeria(imported still comesmainlyfromafew longtermcontractsheldby connect PortugalwithSpain(27.9 daily schedulein2013. financially, sincenobilateralenergywasdeliveredinthe under feed-in-tariffs. Allforward contractsaresettled contracts onenergyproducedby renewableandCHPplants plants duringtheFinancial AssistanceProgram. mechanisms werereducedandlimitedtohydropower In 2012,CHPfeed-in tariffswerereviewedandcapacity been somechangesinthePortuguesewholesalemarket. platform. 376 375 374 373 LNG imports(23.9 natural gas,itcovered itsconsumptionin2012through generation (allCCGT).SincePortugaldoesnotproduce 2012, mainlyduetoa44%reductionofgas-firedpower Portuguese naturalgasconsumptiondroppedby 12.7%in Gas 378 377 in tariffs. compensate for theover-costs duetotherenewablefeed- operation regulation

This regulationresultsfromthemerger oftwo previous Although anewOrdinanceapproved inAugust2012setsan Bilateral contractsintheday-aheadschedulearecancelledout OMIE hasauctionedinterconnectioncontractfor difference since Nigeria presentsover 80%ofallLNGimports,whileother imports The proposalstill has tobeapproved intheparliament. responsible parties. secondary reserve, settlementprocessesandretailersbalancing areas, registrationofmarket agents,anadditionalmarket for regulations andincludessomechanges regardingbalance the Financial AssistanceProgramme,initiallyin2015. incentive togenerationcapacitythatwillapplyafterthe endof is added. though participationintheday-aheadmarket, sononetenergy –they have valueonlyifpricesinSpainishigher, orviceversa. difference regardlessthesign–,whileOMIP’s FTRsisone-sided 2009, butitisaforward contract–itissettledagainst theprice are alsoreceived fromQatar, EgyptandTrinidad yTobago. 373 375 In2012Portugalstartedauctioningforward InApril2012,ERSE approved anewsystem TWh 376 andinJune2013theGovernment 374 378 2 Inthelasttwoyearstherehave allowance auctions are used to ) andthroughtwopipelinesthat 377 TWh). Portuguesesupply 375 Moreover, payments offeed-in tariffs for renewableandCHP. for strandedcostsduetotheliberalizationprocessand subsidies toordinaryproducers,namelythecompensation 16% and19%,respectively. Thisisinfluencedby asetof customers and6.2%for industrialcustomers. increased annuallyonaverageby 7.8%for domestic years. From 2008 to2012,finalelectricitypriceshave Customers’ priceshaveincreasedconsiderablyinprevious household consumers:26.8%comparedto13.2%in2012. In 2013Portugalhaditshighestswitchingratesofarof companies intheliberalisedmarket was85%in2013. respectively. Themarket shareofthethreebiggest and industrialconsumersamountedto6 concentrated. InDecember2013,theHHIfor domestic structure andpriceregulation,theretailmarket remains As aconsequenceofthepreviousmonopolisticsupply Electricity this tariffonaquarterlybasis. switching) willbeinplacefor threeyears.ERSEwillreview includes anaggravationfactorwithaviewtopromoting elimination ofregulatedtariffs.Atransitorytariff(that In August2012,thegovernment announcedthecomplete Retailmarkets 4. infrastructures, for periodsofuptooneyear. in transmission,undergroundstorageandLNGterminal the regulatorallows theallocation ofbindingcapacityrights As partofthereviewgasregulationsfinalisedin2013, 2013 andfor thesecondtimeinMarch2014. between both countries was auctioned for the first time in Portugal) inthecrossbordertariffs.Interconnectioncapacity in June2012andSpainreducedtheexitprice(towards transmission exitfees intheinterconnectionwithSpain market openingandintegrationwithSpain.Portugalabolished ongoing. InrecentyearsPortugalhastaken stepstowards Gas Market, MIBGASandpromisingdevelopmentsarenow systems. IncreasedintegrationwouldcreatetheIberian border entry-exitchargesbetweenbothgastransmission integration withtheSpanishmarket, partiallyduetocross constrained by its limited size and the slow progress of So far, Portugal´sgasmarket developmenthasbeen 380 379 due toanaverageannualincreaseintaxesandlevies increase for bothdomesticandindustrialcustomerswas

Includes concession fees, stranded costs and other taxes linked Includes concession fees,linked strandedcosts andothertaxes EuroStat. isolated islands,being someofthesechargedintheAccess Tariff. to theenergysector, RESandCHPthecompensation for PORTUGAL 778 and2 379 Theprice 380 239 of of

135 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 136 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 Electricity pricechangeby component2008-2012(in€cent/kWh) 3 FIGURES Lisbon) charges for householdconsumersrepresentedupto42%in share of network costs in the final price (in 2012, network 383 382 381 of newretailers positive signsfor theliberalisationprocess,suchasentry of 16.5%andGasNaturalwith10%.Neverthelessthereare 68.8% oftotalconsumption,followed by EDPwithashare wholesale imports.Attheendof2012,GALPstillsupplied as liberalisation is recent and there remain some barriers to The gas retail market in Portugal remains highly concentrated provisions. and modificationsincapacityallocationpricing provisions, adjustmentstothesupplierswitchingprocedure the qualityofservicetoallretailers,reinforcing unbundling protection andenhancingcompetition,includedextending modifications, whichwereaimedatstrengtheningconsumer relationships following theremoval ofregulatedtariffs.The for naturalgastosupportthechangesincommercial In April2013,ERSEapproved anewregulatoryframework Gas Source: Eurostat PORTUGAL 10 15 20 25 in thefirstpartof2013. prices for industry(EUR (EUR Portuguese gasretailpricesfor householdconsumers supplier. 0 5

ACER/CEER, AnnualReportontheResultsof Monitoring Eurostat. In 2012,6.1%oftheconsumersswitched toGoldenergy. November 2013. the InternalElectricity andNaturalGasMarket in2012, 0.0836/kWh) areoneofthehighestinEurope,while 383 2008 . Taxes+Levies HOUSEHOLDS AND 4 381 andtheabilityfor consumerstoswitch 2012 0.055/kWh) areaveragerespectively 382 Thisispartlyduetothehigh Networks 2008 INDUSTRY Energy+Supply 2012

31 to 16 below theEUaverage(22 Consumers’ overall assessmentofretailelectricitymarket is Consumers 5. Sources: EC,EPCRmetadata Natural gaspricechangeby component2008-2012(in€cent/kWh) 385 384 2012 to3 0 1 2 3 4 5 6 7 8 9 EU average(74.0 fourth lowest. Retailgasmarket isranked justbelow the problems isthirdhighestintheEUandtrustproviders is between 2012 and 2013.Theincidenceofconsumer market hasseen aconsiderableimprovement (of3 lowest amongdomesticservicesmarkets. However, the consumer organisation. electricity sectortookplace,organisedby aPortuguese telephone information service.Acollectiveswitchinginthe for electricityandnaturalgascustomersoperatesa network. ERSEoffers apricesimulationtoolontheirwebsite related totariffs,switchingofsupplierandconnectionthe 20% relatetothegassector. Thesecomplaintsaremostly are concernedwiththeelectricitysector, whiletheremaining Around 80%ofcomplaints(7 to 72.0, corresponding to 22 has translated to a change from 3 of over 10 switched theirprovider ortariffinthepastyearsawincreases The proportionsofgasandelectricityconsumerswhohave actual switching have improved considerably since 2012. both markets the scoresonchoice,easeofswitchingand

10 However thedifference isnotstatistically significant. edition/index_en.htm consumers/consumer_evidence/consumer_scoreboards/10_ domestic servicesmarkets (14 th th ConsumerMarkets Scoreboard,http://ec.europa.eu/ placeEU-wide)andjustabove theaverageof 2008 rd Taxes+Levies HOUSEHOLDS highestin2013). percentage points(intheelectricitymarket, this points compared to 74.1 2012 nd placeand66.3 053 in2012)dealtwithby ERSE 385 nd Networks place EU-wide) and second

rd lowest place in the EU in 2008 th place).However, in INDUSTRY 384 points compared , corresponding Energy+Supply 2012 points) 386 ERSE asked RENtoreviewthegasinvestmentplansfor intended toexpandthegasnetworkinNorthernPortugal. plan for 2014-2023thathadtobeanalysedby ERSEthat In May2013,theTSOpresentedaproposalinvestment Carriço. work ontheexpansionofundergroundstoragecapacityat underground storagecapacity. In2012,Portugalcommenced of construction. Additionally, Portugal has 2 integration oftheIberianGasMarket, isintheinitialphase interconnection pipelinewithSpain,aimedatincreasingthe with Spain(CampoMaiorandValença doMinho). Athird expanded by 943 an LNGterminalatSines(whosestoragecapacitywas The Portuguesenaturalgassystemhasthreeentrypoints: Gas with Spainandreachthe10%Barcelonatarget. interest (PCI)thatwillhelptoincreaseinterconnectionlevel the TEN-ERegulation,Portugalhas4 lines withtheSpanishTransmission Grid.Inthecontextof Portuguese transmissionnetworkhaseightinterconnection growing inrecentyears,2013reached8 The lengthofthetransmissionnetwork,whichhadbeen Investments inelectricitytransmissionhaveslowed down. Electricity environmental assessmentprocedures. legislative andnon-legislativemeasuresstreamliningthe granting processfor projectpromoters,andtheadoptionof including thepublicationofmanualonpermit 2013), andothermeasuresforeseen for 2014and2015, for ProjectsofCommonInterest(PCIs)(dueby 16 Regulation, includingtheestablishmentofone-stop-shop timely adoptionofthemeasuresstemmingfromTEN-E The Portugueseauthoritiesshouldensureaproperand Infrastructure 6. beneficiaries ofgovernment social supportplans. concept of vulnerable customers,defined as thosewhoare Portugal maintainspublicserviceobligationsthroughthe with theThirdEnergyPackage. the newprovisions for customers’protectioninaccordance eligible for thissocialtariff. During2012,Portugalapproved 665 established by theGovernment for eachyear. In2012, keep therighttoaregulatedtariffwithlimitedincrease

These schemesare:solidaritysupplement for elderly, Source: DiáriodaRepública, 1.ªsérie,N.º189. disability pension andsocialincomesupplements. unemployment assistance,1 695 electricity and17 GWh in2012)andtwointerconnections 000 st stepofchildbenefit, social natural gasconsumerswere projects ofcommon 519 115

386 November Theywill km. The GWh of

the entrycapacityoffered inSNGN. average dailypeakinconsumptionrepresented36.5%of gas peakconsumptioninthenextfew years.In2012,the interconnection capacity)isexpectedtoremainabove The entrycapacityinthesystem(re-gasificationplus of securitysupply. help meet the standard requiredby the European regulation to furtherimprove thediversificationofsupplysourcesand infrastructure, includingtheLNGstoragetank,isexpected diversification intheSpanishmarket. The expansion of gas its supplysources,aswelltotake advantageofsupply The LNGTerminal atSineshasallowed Portugaltodiversify Gas of thecountry(worthEUR a plantoupgradetheelectricitynetworkinWestern part At thebeginningof2013,SecretaryStateannounced plants. the Government hasgrantedpermissiontofour newCCGT underway assomehydropower plantsarebeingbuiltand 8 regime generationcapacityfrom6 for RenewableEnergyforesees atotalincreaseofspecial dependence hasbeendeclining.TheNationalActionPlan renewable energyinthegenerationmix,total historically high.Yet, duetoanincreasingamountof Portugal’s dependenceonimportedenergyhasbeen Electricity Securityofsupply 7. Portugal toreinforce itssecurityofgassupply. level withSpain(andfurtheronFrance) andwillhelp of common interest (PCI) that will increase interconnection In thecontextofTEN-ERegulation,Portugalhas1 government isresponsiblefor thefinalapproval oftheplan. increase inconsumerbills.AfterERSE’s opinion,the 2014-2023, worthEUR 780 MW by 2020.Additionnewcapacityisplannedor 524 135 million, duetotheanticipated million). 610 PORTUGAL MW in2012to project

137 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 138 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 ( Sources: Eurostat,CEER,NationalRegulatoryAuthority, ECcalculations. PORTUGAL PORTUGAL – KEYINDICATORS 1 ) Electricity market value( HHI inelectricityretailmarket (industrialconsumers) HHI inelectricityretailmarket (domesticconsumers) HHI inpower-generation market Regulated pricesfor non-households–electricity Regulated pricesfor households–electricity Switching rates(onlyfor electricityhouseholdconsumers) Number ofmainelectricityretailers Number ofelectricityretailers Market shareofthelargestpower-generation company Number ofmainpower-generation companies Number ofsmartmetersinstalled Peak demand(MW) Installed generationcapacity(MW, 2011) of Number ofcompaniesrepresentingatleast95% ELECTRICITY and gasconsumptioninthehouseholdnon-householdsectors(average bands)andannualaverage retailprices. Market valueisanestimationofthesizeretailelectricityandgasmarkets. Itiscalculatedusingdataonelectricity net power generation 1 ) (bn€) 2 2 6 6 3 3 No No 13.2% 4 10 44.9% 4 N/A 8 19 104 4.856 815 918 567 554 938 HHI ingasretailmarket (industrialconsumers) HHI ingasretailmarket HHI ingassupplymarket Regulated pricesfor non-households–gas Regulated pricesfor households–gas Switching ratesfor gas(entireretailmarket) Number ofmainnaturalgasretailers Number ofretailerssellingnaturalgastofinalcustomers Market shareofthelargestentitybringingnaturalgas Number ofmaingasentities GAS into country Number ofentitiesbringingnaturalgas Gas market value( 1 ) (bn€)

5 5 4 4 3 3 No No N/A 3 20 85.3% 1 5 0.897 509 484 883 its reached 22.9% The renewables share in gross final energy consumption energy sourcesamountedto4 389 388 387 35 109 In 2012,domesticnaturalgasconsumptionamountedto 24% nationaltargetfor 2020. the overall renewablescontributionwas22.9%,closetothe consumption whichhasrecovered slightlysince2011.In2012, In 2009,theeconomicdownturn ledtoadecreasein Generaloverview 1. thermal, 25.9%hydroand19.9%nuclear In 2013,thebreakdown ofelectricitygeneration was46.2% remained at2012levels. to a 58% reduction in import while domestic production

national 2020targetof24%. Eurostat. National Institute ofStatistics,PressReleaseno.37, ANRE, NationalReport2012,31 11.02.2014. TWh TWh (75.68%oftotalconsumption)whileimportswere 387 . In 2013, the 8.4%decreasein consumption led ROMANIA 389 in2012andthusRomaniaisalmostat 348 August 2013. → Furtherelectricityinterconnectionisneededtoexploitthehighgeneration capacity. → → → → Key Issues network wouldhelpintegratemorerenewables. Romania isontracktomeetits2020renewabletargetbutupgradesthe security ofsupplyandtoenableincreasedexploitationdomesticgasresources. linking theRomaniangassystemwithtransitpipelines,arenecessarytostrengthen The completionofgasinterconnectionsandreverseflow projects,includingphysically electricity market couplingshouldbefinalised following thetargetmodel. retail competitionandenergyefficiencyneedstobefullyimplemented.Theprocessof Romania’s roadmapfor phasing out regulatedgasandelectricitypricesimproving market legislation. reform ofstate-owned enterprisesintheenergysectorlinewithinternal application needstocontinue.Romaniashouldcompletethecorporategovernance Correct andcompletetranspositionoftheThirdEnergyPackage anditspractical MW installedcapacity. 388 . Renewable Gross inlandconsumptionmix2008-2012 1 FIGURES 10% 15% 20% 25% 30% 35% 40% 10% 15% 20% 25% 30% 45% 35% Sources: EU energy infigures-“StatisticalPocketbooks 2012and2013”, Gross electricitygenerationmix2008-2012 Source: Eurostat 0% 5% 0% 5% 2008 2008 European Commission Solid fuels Nuclear Solid fuels Nuclear AND 2 2009 2009 Natural gas Natural gas Renewables Renewables 2010 2010 Crude oilandpetroleumproducts Crude oilandpetroleumproducts Other 2011 2011 2012 2012

139 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 140 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 with to fulfillingcertainadditionalrequirementsbecomplied independent systemoperatorsby ANREin2013 TSO. Bothcompaniesarestate-owned andwerecertifiedas TSO. SNTGN Transgaz SAMediaswasappointedasthegas when CNTEETranselectrica SAwasappointedastheelectricity 395 394 393 392 391 390 70.01% are thethreelargestgeneratorswithatotalmarket shareof Energy ComplexOltenia,HidroelectricaandNuclearelectrica Electricity Wholesalemarkets 3. Energy Package ElectricityandGasDirectives. legislation intendedtoensurefulltranspositionoftheThird In September 2014 Romaniaadopted amendments to its energy General Regulatoryframework 2. ROMANIA under theTFEUandGasDirective,ison-going procedure onrestrictionstheexportofgas,initiatedin2012 Electricity sectorunbundlinghasbeenongoingsince2000 Unbundling Its totalbudgetin2013wasEUR 1998. Bylaw, ANREmayemploy amaximumof300 persons. The NationalEnergyRegulator, ANRE,wasestablishedin National EnergyRegulator and gas distributionoperatorshas been ongoing since 2007. requirements weresatisfied.Legalunbundlingofelectricity certification decisionsafteritdeemedthattheseadditional wholesale markets organisedby OpcomSA(theoperatorof transactions performed onthecentralisedcompetitive generation. Due to significant changes in primary legislation, demand, normalhydrologyandalargeamountofwind price in2013decreasedtoEUR spot baseloadpriceofEUR very highpricesinthewholesaleelectricitymarket, anda is 1

CEER datafor 2012. Decisions EC6891 /14.10.2013and8485/25.11.2013, ANRE Orderno.90/11.12.2013and ANREOrder Government Decisionno.627/13.07.2000regardingthe http://europa.eu/rapid/press-release_MEMO-14-470_en.htm The Commissionisexaminingwhetherthenationallegislation respectively. no.3/22.01.2014, respectively. restructuring oftheNationalElectricity Company. accordingly (CasesC-405/13 andC-406/13, IP/13/260). respective infringementproceduresfor partialtransposition now fullytransposestheDirectives and willdecideonthe 914 (1 394 . Ithasmeanwhilebeenablein2014toissuefinal 395 (69.7%in2013).TheHHIthewholesalemarket 759 in2013).2012wasadryyear, leadingto 48.8/MWh. Thespotbaseload 15.8 35.3/MWh, duetolower million. 390 An infringement Aninfringement 391 . 393 , subject 392

and reverseflow projectswithneighbouringcountries. development shouldbefostered by completionoftheinterconnection licensed by ANREtoorganisegascentralisedtrading.Themarket OPCOM capacity allocationona“first-comefirst-served”basis.InJuly2013, In 2012,tradingwasthroughlongtermbilateralcontractsand OMV Petromandgas)is78.4%. of thethreemainsuppliersinwholesalemarket (Romgaz, market ishighly concentratedandthesumofmarket shares and OMVPetrom,provided 97.5% ofdomesticproduction.The producers. Thetwoleadinggasproducingcompanies,Romgaz In 2012,demandwasmetby importsandsixdomestic Gas Europe by includingRomaniaand Poland. extend theexistingmarket couplinginCentralEastern and PolandsignedaMemorandumofUnderstandingto In July2013,theCzechRepublic,Slovakia, Hungary, Romania Bulgaria and,sinceDecember2012,ontheborderwithSerbia. cross-border capacityallocationontheborderswithHungaryand auctions for longandshorttermwereorganisedasof2012for and cross-bordercapacitymarkets. Bilaterallycoordinated The TSOdevelopsandadministratesbalancing,ancillaryservices and represents71%ofinternalconsumption. on OpcomSAplatforms isalmostdoublethanthatof2012, wholesale market) significantlyincreased.Thevolumesold 397 396 transferred toend-consumers. share fromthewholesalecompetitive market, withthecosts resort arerequiredtoprocureaprogressivelyincreasing To ensureuniversalservice,fiveappointedsuppliersoflast therefore consumerchoiceisinrealityoftenverylimited. discouraged frommakingoffers outsidetheirsupplyareas, or slimmarginsallowed by priceregulation,suppliersare from 55%in2012to57%2013.Duethenegative degree ofrealmarket openinghasonlyslightlyincreased in 2012).62 rate intheretailelectricitymarket isstillverylow (0.03% in December2013itwascloseto19 have chosen to change suppliers) has constantly increased; number ofconsumerssuppliedonacompetitivebasis(which households itshouldbecompletedby December2017.The in December2013for non-householdconsumers,whilstfor The gradualphasing-outofregulatedpriceswascompleted Electricity Retailmarkets 4.

License no.1797/ ANREDecision2119/2013. Licence no.1798/ ANREDecision2120/2013. 396 andtheRomanianCommodityExchangeBRM suppliers operateintheretailmarket whilethe 200. Theswitching 397 were were 27/2013. Theroadmapsfor phasing outregulatedelectricity with low incomewithinthelimitslaiddown intheOrdinance Vulnerable customersaredefinedashouseholdconsumers and 15 relatively high(3 the EU).Inaddition,incidenceofconsumerproblemsis gas market thelatterthreerankamonglowest in of switching,choiceandoverall consumersatisfaction(for However, bothmarkets scorelow onactualswitching,ease 2012 and2013(secondhighestincreasedomestically). seen a considerable improvement (of 3.4. to 72.0and74.4 markets isjust above theEUaverage(72.7 Consumers’ overall assessmentoftheretailelectricityandgas Consumers 5. For households,theprocesslastsuntilDecember2018. European importpricethatcouldendangermarket stability). significant difference betweenthedomesticgaspriceand completed inDecember2014(orend2015ifthereisa Phasing outofregulatedpricesfor non-householdswillbe prices willhaveanimpactonfor bothcategories. to increase.However, theon-goingphasingoutofregulated constant, whilethepricefor industrialusershascontinued household pricesincludingtaxesandlevieshaveremained consumption was20%.Duringtheperiod2010–2012, In 2012,gasconsumptionwas145 Gas Source: Eurostat 398 Electricity pricechangeby component2008-2013(in€cent/kWh) 3 FIGURES 10 12 14 0 2 4 6 8

10 scoreboards/10_edition/index_en.htm http://ec.europa.eu/consumers/consumer_evidence/consumer_ th ConsumerMarkets Scoreboard, th placeEU-wide,respectively. Thegasmarket has 2008 Taxes+Levies HOUSEHOLDS AND 4 rd compared to74.1),corresponding16 highestinthegasmarket) 2013 Networks

TWh ofwhichhousehold 2008 INDUSTRY points compared points) between 398 Energy+Supply . 2013 th

Programme 2013” included in“MainCommitmentsfor theNationalReform of electricity distribution systems is one of the measures the DSOs.Thepromotionofpilotprojectsonsmartmetering installation willbeoptionalandthedecisionleftto is feasible for electricityconsumers,whilefor gasconsumers’ A study and electricity. commissions willbeestablishedwithinANREfor bothgas the decision is pending. Independent dispute settlement Developing apricecomparisontoolhasbeendebated,but season isinplace. gas bills.Financial aidfor socialprotectionduringthecold process for changingsuppliersanddetailingelectricity about the process of market liberalisation, reviewing the consumers by providing directsubsidies,informing consumers and gas prices includes social measures for vulnerable Sources: EC,EPCRmetadata Natural gaspricechangeby component2008-2012(in€cent/kWh) 400 399 (“one-stop shop”). accordance withtheprovisions oftheTEN-ERegulation granting processfor projectsofcommoninterestin responsible for facilitating and coordinatingthe permit has beendesignatedasNationalCompetentAuthority The DepartmentofEnergywithintheMinistryEconomy Infrastructure 6. 0 0 1 1 2 2 3 3 4

Romania, Ministry ofForeignAffairs,“Maincommitments A.T. Kearney, “Smart metering inRomania”,3September 2012. for the NationalReform Programme2013”. 399 2008 has concluded that implementing smart metering Taxes+Levies HOUSEHOLDS 400 . 2012 Networks 2008 INDUSTRY ROMANIA Energy+Supply 2012

141 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 142 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 401 ( Sources: Eurostat,CEER,NationalRegulatoryAuthority, ECcalculations. of Moldova interconnector capacitywithSerbia,BulgariaandRepublic the integrationofRES.Theprojectsarefocused onenhancing border exchangeofelectricity, reliefcongestionandimprove with neighbouringpower systems toimprove thecross- Transelectrica isinvolvedinseveralinfrastructureprojects Electricity ROMANIA ( provides atransmissioncorridorfromtheBlackSeaand lead tofullcapacityof4.4 interconnector withHungary, commissionedin2010,will expected by theendof2016.Furtherdevelopment gas flow for emergencysupply, withbi-directionalflows The interconnectionwithBulgariawillensureminimum high pressurepipelinesandrehabilitationofexistingassets. perspective andtheSouthernCorridor. Theplanincludesnew European flows, includingoff-shore gasreserves,theshale transmission routesinlinewithenvisagednationaland Transgaz hasplannedthe redefinition ofdomesticgas Gas interconnectivity targetsetby the BarcelonaCouncilin2002. with new400 focus ontheupgradeofinternalelectricitysystem trans-European energy infrastructure on Romanian territory (PCI) which have been identified under the guidelines for ROMANIA – KEYINDICATORS 2 1 ) )

Regulated pricesfor non-households –electricity Regulated pricesfor households–electricity Switching rates(entireelectricityretailmarket) Number ofmainelectricityretailers Number ofelectricityretailers Electricity market value( Market shareofthelargestpower-generation company HHI inelectricityretailmarket Number ofmainpower-generation companies Number ofsmartmetersinstalled Peak demand(MW) Installed generationcapacity(MW) HHI inpower-generation market of Number ofcompaniesrepresentingatleast95% ELECTRICITY and gasconsumptioninthehousehold andnon-householdsectors(average bands)andannualaverage retailprices. Market valueisanestimationofthesizeretail electricityandgasmarkets. Itiscalculatedusingdataonelectricity These regulatedpriceswere totallyremoved since1January 2014. ANRE, NationalReport 2012,2013. net power generation 401 . SixoutofsevenProjectsCommonInterest kV overhead lines.Romaniameets the10% 2 ) (bn€) bcm/year in2016.Theproject No Yes 0.033 5 54 26.7% 1 1 5 N/A 8 18 1 1 11 3.471 472 627 914 756 ( 1 ) maintain theminimumlevelaresetby ANRE. underground storage.Theobligationsoflicensedsuppliersto safety ofgassupplyby ensuringaminimumstockofgasin Special care isgiventoensuring conditions for continuity and the 41 In thegassectorsecurityofsupplyisjointly ensured by theTSO, Gas this capacitywillrequireimprovements inexportconditions. existing capacityislargelymeetingdemand,butmaintaining overcapacity incombinationwith limitedexportcapacity. The A peculiarity of theRomanian electricity system is its current Electricity Securityofsupply 7. to diversifythecountry’s supplyportfolio. The constructionofaLNGterminalinConstantacouldhelp gas ProjectsofCommonInterestwithRomanianparticipation. The above mentionedissuesare covered throughtheseven are madeonbothsidesoftheinterconnectors. will onlyachieveitsfullpotentialifadditionalinvestments development ofinterconnectionwithMoldova andSerbia Bulgaria tothemarkets inCentralandEasternEurope.The Regulated pricesfor households–gas Switching ratesfor gas(entireretail market) Number ofmainnaturalgasretailers Number ofretailerssellingnaturalgastofinalcustomers Market shareofthelargestproductionandimportgascompany HHI ingasretailmarket Number ofmaingasentities HHI ingassupplymarket GAS into country Number ofentitiesbringingnaturalgas Gas market value( Regulated pricesfor non-households –gas DSOs andthetwooperatorsofundergroundstorage. 2 ) (bn€)

Yes N/A 5 65 41.7% N/A 2 N/A 18 1.786 Yes energy generationat36%,withsolidfuelsaccountingfor Nuclear fuelremainstheprimarysourceofoverall inland generation mixchangedslightlycomparedto2011levels. In 2012,themarket shareofdifferent fuelsintheelectricity 10% 15% 20% 25% 30% 35% 40% 45% 402 Source: Eurostat Gross inlandconsumptionmix2008-2012 1 FIGURES heating technologies increased mainlyduetogreatercontribution(+1.9%)of renewables targetof25%.Theshare energy consumption,showing goodprogresstothe2020 In 2012, renewables increased to 20.2% of gross final (15%) by nuclearenergyandsolidfuels(20%)renewables was accountedfor by oilandpetroleumproducts,followed 35% ofgrossinlandenergyconsumptionin2012(7.00 Mtoe) Generaloverview 1. 0% 5% http://ec.europa.eu/energy/renewables/reports/2013_en.htm 2008 Solid fuels Nuclear SLOVENIA AND 2 2009 402 Natural gas Renewables . 2010 → → Key issues in thegenerationmarket. security of gas supply. Finally, more should be done to encourage competition national legislationtocomplywiththeprovisions ofRegulation(EC)No.994on Stream) tendtoextendtheroleofcurrentsuppliers.Slovenia stillhastoadaptits help todiversifytheSlovenian energysupply, butcurrentprojects(notablySouth need for the reinforcement of existing capacity. Investments in new gas pipelines could Contractual congestionofgasinterconnectioncapacityfrequentlyoccurs,implyingthe TSO ELESneedstobecertifiedurgently. would improve supplydiversification andintegrationintheIEM. Finally, theelectricity energy market. Investments in more flexible sources with lower environmental impact border capacityareneededtoimprove competitionandintegrationintheinternal operation ofthenationalelectricitysystem.Plannedinvestmentsinadditionalcross- Further strengtheningofthepower gridisneededtoensurethereliableandsafe Crude oilandpetroleumproducts 2011 2012 10% 15% 20% 25% 30% 35% 40% 45% . Regulatoryframework 2. contribution ofgasremainednegligibleat3%. 32%. Renewablesrisedfrom25%in2011to29%whilethe Sources: EU energyinfigures-“StatisticalPocketbooks 2012and2013”, Gross electricitygenerationmix2008-2012 since 2000.In2013ithadabudgetofEUR the RepublicofSlovenia (AGEN-RS) hasbeen inoperation The Slovenian nationalregulator, theEnergyAgencyof National EnergyRegulator was approved by Parliament inFebruary2014. Slovenia’s legislationtransposingtheThirdEnergyPackage General 46 0% 5% employees. 2008 European Commission Solid fuels Nuclear 2009 Natural gas Renewables 2010 Crude oilandpetroleumproducts 2011 2.8 million and 2012

143 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 144 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 404 403 and production(91.4%cumulativeshare) in termsofinstalledcapacity(84.8%cumulativeshare) dominant (state-owned)the three market players,both concentrated in 2012. HSE, Gen energija and TE-TOL were The Slovenian electricitywholesale market remainedhighly Electricity Wholesalemarkets 3. following therecentapproval ofthenewEnergyAct. system operator(ITO) in2012. ELES’s certificationispending Plinovodi wascertifiedas an independenttransmission unbundling isrequired. less than100 infrastructure, togetherwith16 The gas TSO Plinovodi is responsible for natural gas and oneDSO(SODO),whicharebothstate-owned. Electricity infrastructureismanagedby oneTSO(ELES) Unbundling SLOVENIA In 2012theday-aheadmarket liquidity. cross-border capacity utilization and increase market enabled Sloveniastill limited.Implicitauctions toimprove much largermarket, eventhoughcross-bordercapacityis Following market couplingwithItaly, Slovenia ispartofa size doesnotfacilitatethedevelopmentofmanygenerators. indicating ahighlevelofconcentration.Themodestmarket of market concentration (HHI)was4 together withthedailyexchangecapacity. was observed in 2012asthenumberof contracts increased Significant developmentofthesecondarycapacitymarket the principalimporter, supplyingover 90% ofdemand. 16% fromAlgeria,and7%Italy. Geoplinremained 42% ofgasimportssuppliedfromRussia,35%Austria, to 2011(-4%,reaching0.87 demand for gas.Demandin2012declinedfurthercompared Slovenia dependsentirelyonimportstomeetitsdomestic Gas a than 2011figures.InOctober2012,anintradaymarket and average baseloadspotpricewasEUR traded energy, threetimeslargerthan2011results.The balancing market wereintroduced.

Organised by BSPRegionalEnergyExchange. The overall installedcapacityandpower generationwere taken into account. networks. Only50%ofKrško nuclearpower planhasbeen producers connectedtothetransmission anddistribution considered inmarket shares’ calculation,includingsmall 000 customers intotal,andtherefore nolegal bcm) duetotheeconomiccrisis. 404 DSOs. TheseDSOsservice registered4.4 53.15/MWh, 7%lower 738 403 for generation, . Themeasure TWh of amounted to0.87 The quantitiesofgasconsumedby endcustomers consumed by industryandothernon-householdconsumers. 2013, priceshavebeendeclining tolessthan40 marketing strate taking into account seasonal elements and changing their started modifying their own offers to consumption patterns, place), leadtoafastresponsefromincumbentsuppliers,that lower thanthelargestplayer’s pricebefore thenewentrytook existing pricesby around10 of 2012.GEN-Ipricestrategythatincludedpriceslower than gas pricesinSlovenia starteddeclininginthefourth quarter As aresultofGEN-I’s entryinthemarket in2012,natural point ofthegastransmissionnetworkwereintroduced. Germany. In 2013, uniform tariffsfor eachentryandexit a levelsimilartothoseobservedintheNetherlandsand (reflecting GEN-Ienteredthemarket) placingSlovenia at rate risingfrom0.07%in2011to8.6%by theendof2012 market wererecorded. Thiswasconfirmed by theswitching 4 the retailgasmarket wasconcentrated,withan HHI of EnergetikaLjubljana (7.8%)andAdriaplin(7.2%).Asaresult, Geoplin, increaseditsmarket shareto63%,followed by per year the EU-28,totallingaroundonebillionstandardcubicmetres The Slovenian naturalgasmarket isoneofthe smallestin Gas market segment, gaining12.5%ofthefinalconsumers. following theentranceofGEN-IandPetrolintohousehold customers (48 The vastmajorityofswitcheswereundertaken by household The switching rate grew to 5.9% (+1.7% compared to 2011). suppliers, eachofthemdominantinaspecificarea. misleading astheretailmarket issuppliedby manylocal level, withanHHIof1 concentration oftheretailmarket remainedatamedium suppliers increased slightly from 57% in 2011 to 59%. The market segment.Themarket shareofthethreelargest increased duetoanewentrant,GEN-Iinthehousehold market liberalisation(1 final customers.In2012, morethanfive years since full whose market shareincreasedto26.2%oftheoverall a sharehigherthan5%.ThelargestsupplierwasGEN-I, to 12.4 Electricity demandremainedunchangedin2012,amounting Electricity Retailmarkets 4. 405 186. Significantimprovements inopeninguptheretailgas

ACER/CEER AnnualReportontheResultsofMonitoring November 2013. the InternalElectricity andNaturalGasMarkets in2012, TWh. Eight out of thirteen active suppliers provided 405 . Mostnaturalgassoldintheretailmarket is 794 gies. SinceOctober2012andwellinto consumers) whochangedtheirsupplier Gm 3 July 2007),retailcompetitionfinally in2012.Thedominantsupplier, 575. Thisindicatorishowever cents percubicmetre(21.7% cents per

compared to74.1and81.0 and secondhighestintheEUrespectively(84.4 of retailgasandelectricitymarkets whichscoresthehighest This situationisalsoreflectedinconsumers’ overall assessment facilitating switching. an assetinpromotingenergymarkets’ transparencyandin comparability websitemaintainedby AGEN-RS wascertainly to modifytheirpricestrategies.Theexistenceofthe of theexistingplayersandobligingincumbentsuppliers with apricingandsourcingstrategyverydifferent fromthat of priceregulationallowed thenewplayertoentermarket entry ofanewplayerintheliberalisedmarket. Theabsence initiated the mass rollout of smart meters Slovenia isamong the Member States thathavenotyet between 17%and28%for householdcustomers(Figure varies between15%and19%for industrialcustomers,and The percentageofnetworkchargesinthefinalpricegas a a decision ontherollout,togetherwithestablishmentof 407 406 2012 (especiallyinthe4 Slovenia hadaverysignificantincreaseinswitchingduring Consumers 5. incumbent suppliers,aswellseasonalfactors cubic metreduetothecontinuedcompetitiveresponsefrom Source: Eurostat 10 12 14 16 18 Electricity pricechangeby component2008-2013(in€cent/kWh) 3 FIGURES 0 2 4 6 8 rollout percentagetargethasyettobeconfirmed.

CEER, StatusReview ofRegulatoryAspectsSmart metering, ACER/CEER AnnualReporton theResultsofMonitoring September 2013. November 2013. the InternalElectricityandNatural Gas Markets in2012, 2008 Taxes+Levies HOUSEHOLDS AND 4 2013 th quarteroftheyear)dueto compared to72.0).Bothmarkets Networks 2008 INDUSTRY Energy+Supply 407 406 . Aformal 2013 .

points 4). 2013-2022 publishedby ELES.Thisplanforesees anincrease with thelatesttransmissionnetworkdevelopmentplanfor TEŠ) andhydropower plantsareexpectedinaccordance improved since2012(by 1.3 lowest. Theassessmentofthegasmarket has alsoslightly 3 switching andoverall consumersatisfactionrateamongthe is slightly below the EU average). Comparability, ease of indicators, withtheexceptionofactualswitching(which electricity market isassessedabove theEU averageon all services markets (2 are alsoassessedverywellintherankingof31 Sources: EC,EPCRmetadata Natural gaspricechangeby component2008-2012(in€cent/kWh) 410 409 408 (including thecontroversial In themedium term, significantinvestmentsinthermal In 2012, installed generationcapacityamountedto3.3 Electricity infrastructure. in accordancewiththeRegulationonTrans-European permit grantingprocessfor ProjectsofCommonInterest, stop shopisresponsiblefor facilitatingandcoordinatingthe all permitgrantingprocesses(‘one-stopshop’).Theone- Spatial planningasthecompetentauthoritycoordinating Slovenia hasnominatedtheMinistryofInfrastructureand Infrastructure 6. 0 1 2 3 4 5 6 7 8 assessed above theEUaverage

highest intheEUandincidenceofproblemsisthird http://www.sloveniatimes.com/thermo-plant-tes-6-showcase-of- 10 However thedifference isnotstatistically significant. catastrophic-corporate-governance consumer_evidence/consumer_scoreboards/10_edition/index_en.htm consumer_evidence/consumer_scoreboards/10_edition/index_en.htm th ConsumerMarkets Scoreboard, http://ec.europa.eu/consumers/ 2008 Taxes+Levies HOUSEHOLDS nd 2012 and9 410 th Networks Šoštanjlignitepower plant, highest,respectively).The points 409 . 2008 408 ). Allindicatorsare SLOVENIA INDUSTRY Energy+Supply 2012 domestic GW. GW.

145 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 146 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 and Hungary. well asseveralgaspipelineprojectsinvolvingItaly, Croatia, (HR), whichisasecurityof supply assetfor the region as Slovenia isinvolvedin,includingtheLNGterminalinKrk There areseveralgasProjectsofCommonInterest,which station isongoing. in 2013.Work onstrengtheningtheKidričevo compressor Slatina−Trojane andM2/1cTrojane–Vodice, werecompleted upgrades ofthetransmissionnetwork,M2/1bRogaška Ceršak –KidricevosectionofthegaspipelineM1/1.Two amounted toEUR Programme for Recovery (totalcontributionfor thisproject granted by theEuropeanUnionwithinEnergy 9 50% lessthanin2011),ofwhichEUR investments in2012amountedtoEUR congested andcommerciallyattractivein2012.Network Croatia. Ofthese,theAustrianborderpointwasmost with thegastransmissionnetworksofAustria,Italyand The Slovenian gastransmissionnetworkisinterconnected Gas expected tobecompletedbefore 2022. HVDC linebetweenSlovenia andItaly(PCI3.20.1)isnot Slovenia andItaly. The Okroglo-Udine interconnection and and Hungaryahighvoltagetransmissionlinebetween a highvoltagetransmissionlinebetweenSlovenia, Croatia planned inSlovenia including twoelectricityclusterswith under the guidelines for trans-European energy infrastructure There are several electricity Projects of Common Interest with Hungaryisexpectedtobecomeoperationalin2016. In termsofinfrastructuredevelopment,theinterconnector coupling mechanismofSlovenia andItaly. is carriedoutdailyby implicit auctionswithinthemarket are heldeveryday. Allocationof cross-border capacity also introducedfor theItalianborder, twoexplicitauctions Since June2012,whenintradayallocationmechanismwas Krško. including the commissioning of a new nuclear reactor in plan alsooutlinesarangeofdifferent investmentoptions, in installedgenerationcapacityby 2.4 SLOVENIA 37 million) for theconstructionof 38 GW in2022.The million (almost million was highlighted asthecriticalperiod depending onseasonalpeaks,withthewinterperiod The adequacyofSlovenia’s networkvariessignificantly capacities tomeetinternalconsumptiondemands. criterion. Networksecurityisdependentonitsimport electricity distributionnetworksmustadheretotheN-1 To ensurenetworksecurity, thetransmissiongridand Electricity Securityofsupply 7. 411 regulations forsecurity ofgassupply. regulations legislation are needed to complete the new rules and Regulation (EU)No994/2010,amendmentsinthenational Despite efforts inimplementingtheprovisions mentionedin service requirementswerefulfilled. weather conditionsatthebeginningof2012,allcustomer no gasstoragefacilities.Nonetheless,inspiteofextreme interconnections withneighbouringcountriesasthereare Gas supplyinSlovenia is entirelydependentonits Gas are expectedtodecreasefrom10%in20133%2020.

Considerations basedonENTSO-E’s Adequacyforecast report & & the ReliableAvailable Capacity. ENTSO-E,ScenarioOutlook Remaining Capacity, netofAdequacyReserve Maring,and a reserve marginindicator calculatedastheratiobetween 2013-2030, ScenarioB.System’s adequacyisevaluatedthrough Adequacy Forecast (SO&AF)2013-2030,April2013. 411 . Summerreservemargins ( Sources: Eurostat,CEER,NationalRegulatoryAuthority, ECcalculations. SLOVENIA – KEYINDICATORS 1 ) Electricity market value( HHI inelectricityretailmarket HHI inpower-generation market Regulated pricesfor non-households–electricity Regulated pricesfor households–electricity Switching rates(entireelectricityretailmarket) Number ofmainelectricityretailers Number ofelectricityretailers Market shareofthelargestpower-generation company Number ofmainpower-generation companies Number ofsmartmetersinstalled Peak demand(MW) Installed generationcapacity(2011, of Number ofcompaniesrepresentingatleast95% ELECTRICITY and gasconsumptioninthehouseholdnon-householdsectors(average bands)andannualaverage retailprices. Market valueisanestimationofthesizeretailelectricityandgasmarkets. Itiscalculatedusingdataonelectricity net power generation 1 ) (bn€) MW) 1 1 4 4 No No 5.9% 8 13 55.2% 2 N/A 2 2 3 3 3 1.161 575 100 268 738 HHI ingasretailmarket HHI ingassupplymarket Regulated pricesfor non-households–gas Regulated pricesfor households–gas Switching ratesfor gas(entireretailmarket) Number ofmainnaturalgasretailers Number ofretailerssellingnaturalgastofinalcustomers Market shareofthelargestentitybringingnaturalgas Number ofmaingasentities into country Number ofentitiesbringingnaturalgas GAS Gas market value( 1 ) (bn€)

SLOVENIA 4 4 5 5 No No 8.6% 4 21 90% 2 5 0.432 186 868

147 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 148 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 prices inSlovakia. economic crisisboostedenergyefficiencyandreduced power gas by finalconsumersdeclinedin2012to54.2 decreased comparedto2010.Theconsumptionofnatural Final consumption ofelectricityin2011was10.8 in 2011,increasingconsiderablyfrom2010. 414 413 412 10.4%. share ofrenewablesingrossfinalenergyconsumptionwas on natural gas, crude oil and petroleum products. The Energy consumptionin2012(16.7 Generaloverview 1. Cogeneration from solidfuelsandoilpower remainedunchanged. compared to2010whilethevolumeofpower generated mostly hydro).Theshareofnaturalgasincreasedin2011 (28.66 The biggestshareinthepower generationmixin2011 renewables targetof14%. trajectory andiscurrentlyontracktoachieveits2020

Eurostat. The shareofelectricity producedincombinedheatand power Eurostat and plants (CHP). http://ec.europa.eu/energy/publications/doc/2014_pocketbook.pdf 412 TWh) wasnuclear(53.8%)andrenewables(18.7%– Slovakia remainedabove its2011/2012interim

413 SLOVAKIA provided 24.5%ofgrosselectricitygeneration

→ → → Key issues market. security ofsupplyandinordertoaddresstheconcentrationonwholesale Slovakia shouldcontinueitsefforts todiversifygasimportsinorder foster and suchefforts shouldbecontinued. the HungarianandCzechday-aheadelectricitymarkets isapositivedevelopment with neighbouring countries in both gas and electricity networks. Market coupling with Slovakia shouldfacilitategreater regionalintegrationandstrengtheninterconnections distribution andtransmissionchargesinSlovakia areamongthehighestinEU. the impactofpriceregulationandchangesinnetworkcharges.Currently investment inandintegrationoftheelectricitygasmarkets, includingby reviewing its accountability. Slovakia shouldpromotearegulatoryframeworkconduciveto Slovakia should enhance the independence of nationalregulatory authority andensure Mtoe) wasbasedlargely 414

Mtoe and TWh. The Gross inlandconsumptionmix2008-2012 1 FIGURES 30% 10% 15% 20% 25% Sources: EU energyinfigures-“StatisticalPocketbooks 2012and2013”, Gross electricitygenerationmix2008-2012 Source: Eurostat 0% 10% 20% 30% 40% 50% 60% 70% 0% 5% 2008 2008 European Commission Nuclear Solid fuels Nuclear Solid fuels AND 2 2009 2009 Natural gas Natural gas Renewables Renewables 2010 2010 Crude oilandpetroleumproducts Crude oilandpetroleumproducts Other Other 2011 2011 2012 2012 Operator (ITO) in2013. Slovakia wascertifiedasIndependent Transmission System Eustream theonlygastransmissionsystemoperatorin 416 415 model by meansofseparatepublicbodieswithintheState. operator, was certified under the ownership unbundling 2013 SEPS,theSlovakian electricitytransmissionsystem electricity distribution,supplyandservices.In vertically integratedcompanieswereformed toprovide SEPS unbundledin2001andasaresultofunbundling,three Unbundling justified. that decisionstaken beURSOhavetofullyreasonedand from theMinistryandStateInspectiondonotforesee that URSOcantake autonomousdecisionindependently Directives oftheThirdEnergyPackage donotfullyensure reached almost EUR employed 100 odvetví” –URSO)whichwasestablishedin2001.URSO Office forNetworkIndustries(“Úradprereguláciusieťových Energy regulation in Slovakia is undertaken by the Regulatory National EnergyRegulator Slovakia areamongthehighest intheEU. may have.Networkdistributionandtransmissionchargesin and the integration with neighbouring markets this decision analysis onthedeteriorationinvestmentclimate analysis underpinningthedecisions,inparticularwithout introduced withoutsoundconsultationsandpropereconomic decisions tosubstantiallychangenetworkchargeshavebeen regulatory authority. Inparticularconcernswereraisedthat independence, transparencyandaccountabilityofthenational Some stakeholders haveraisedconcernswithregardtothe compliance withtheprovisions ofthethirdenergypackage. governing thefunctioningof energymarket andensuring the furtherliberalisationandharmonisationofrules The main purposeoftheadoption of thatlegislationwas Directives oftheThirdEnergyPackage intoitsnationallaw. In July2012,Slovakia adopted lawstotransposethe General Regulatoryframework 2. SPP in2006. of thegasdistributionsystem,waslegallyunbundledfrom

After theEuropean Commissionhasissueditsopinion The EC,Energypricesandcostsreport of17.3.2014, (EC) of SWD(2014) 20 09.8.2013 pursuant toArticle No 715/2009 andArticle staff membersin2012anditsannualbudget final/2. 2.95 416 SPP-distribúcia,theonlyoperator million. The lawstransposingthe 10(6) ofDirective 2009/73/EC. 3(1) ofRegulation 415 416

traded onshorttermday-aheadexchangeplatforms. 10% of total annual power production in Slovakia has been Trading takes placemostlythroughbilateralcontracts. had amarket shareofalmost78%in2011 largest power generatingcompany (Slovenské elektrárne) The power generationmarket ishighlyconcentrated.The Electricity Wholesalemarkets 3. 419 418 417 after market couplinginSeptember2012 Czech Republic,andHungaryincreasedfrom11%to82% regional market. ThepriceconvergencebetweenSlovakia, Europe (PXE).Slovakia ispart of the Central EasternEurope main power exchangeinSlovakia isPower ExchangeCentral to thelaunchofNordStream.Inmeantime,gashasbeen flows to Europe a few years agoto about 54% in 2013 due EU throughSlovakia droppedfrom80%oftotalRussian 90 5.2 In 2012transitvolumesreached56.5 the Slovak virtualtradingpointandthedomesticpoints. sporadic over-the-counter dealstake placeonborderpoints, market nomajortradingactivitytakes placehowever some Slovakia comes fromRussia the lower pricesonspotmarkets. 98%ofgas consumedin re-negotiated andlowered in2014ordertobetterreflect The contractualpriceSPPhastopayGazprombeen it importsgaswithinalong-termcontractwithGazprom. high in2012.SPPwithholdsalmost70%ofgassupplyand Concentration ofthegaswholesalemarket remainedvery Gas Industries. level determinedby theOffice fortheRegulationofNetwork corresponding electricitypriceshouldbemaintainedatthe domestic consumptionofelectricityinSlovakia in2012.The from indigenouscoal.Theseobligationscover 6.7%oftotal production andsupplyofacertainamountelectricity electricity distributorsandsuppliersinordertoensurethe elektrárne, onthetransmissionsystemoperatorand has imposedobligationsontheelectricityproducerSlovenké Furthermore forof EconomyMinistry 2013and2014,the network charge,so-calledG-componentwasintroduced. In 2013anobligationfor electricityproducerstopaya indicating poorcompetitiononthewholesalemarket. liquidity ofSlovakian intraday market wasjust0.04

ACER/CEER, AnnualReport.ontheResultsof Monitoring URSO, Annualreport,2013. Eurostat. November 2013. the InternalElectricity andNaturalGasMarkets in2012, bcma. Transit volumesofnatural gasfromRussiatothe bcm ofdomesticconsumptionandtransitcapacity 418 . On the Slovak wholesale gas SLOVAKIA bcm comparedto 417 . 419 . In2012,

418 TWh, The

149 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 150 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 4 a “RoadMaptowards theregionalgasmarket amongVisegrad In 2013, Slovakia, Hungary, Czech Republic and Poland adopted compared totariffsin force in2012. Czech Republicincreasedby 300%andfromAustriaby 50% for enteringtheSlovak gastransmissionsystemfromthe decreased comparedto2012 In 2013, electricity prices for household and industrial consumers for smallandmediumundertakings. revert topreviousregulationdueincreaseinpower prices sector in2012wasonlytemporaryandURSOdecidedto prices forremain regulated.Deregulationof the commercial for householdconsumersandsmallmediumcompanies number ofcompetitorsinthepower supplymarket, prices 424 423 422 421 420 consumers attheendof2012 the end of 2012. 19 market hasbeen constantlygrowing anditreached 407at The numberoflicencedpower retailersinthewholeretail Electricity Retailmarkets 4. Lanzhot cross-borderpoint. entering Slovakia inreverseflow fromtheCzechRepublicvia Source: Eurostat SLOVAKIA Electricity pricechangeby component2008-2013(in€cent/kWh) 3 FIGURES 10 12 14 16 18 highest inalloftheEUmemberstates. 0 2 4 6 8 countries”

The EC,EnergyPrices andCostsReport,2014. Eurostat. CEER database. Road Maptowards theregionalgasmarket among ICIS Heren,EuropeanGasMarkets, March2014. Visegrad 4 2008 Taxes+Levies 421 HOUSEHOLDS countries, June2013. . AND 4 retailers provide electricitytohousehold 2013 423 420 . Network charges are among the . Networkchargesareamongthe Networks In2013thenetworkcharge 422 424 . Despitethegrowing 2008

INDUSTRY Energy+Supply

2013 (18.7%). (70% shareofgasmarket), followed by RWE GasSlovensko dominant supplierisSlovenský plynárenskýpriemysel,SPP 23 Retail market concentrationishigh.In2012therewere barrier for market playerstoentertheretailmarket. from thetransmissionsystemwhichcreatesapotential In Slovakia thedistributionsystemisbalancedseparately electricity production. demand displacedby theincreasinguseofrenewablesin gas In 2012,74%ofallinhabitantsinSlovakia had access to Gas voluntary basis,usuallyfor energy-intensivecustomers. Distribution systemoperatorsinstallsmartmetersona A rolloutofsmartmeteringinSlovakia isstillbeingdiscussed. and mediumcommercialusers. result, in2013URSOreturnedtoregulatingpricesfor small manner. Irregularitiesrelatedmostlytoinvoicingissues.Asa as somepower suppliersfailedtosetpricesinatransparent According toURSO,switchingwasnotbeneficialineverycase, in 2011,butthetotalnumberofswitchesremainsrelativelylow. liberalisation. 57 increasing every year, which is a good sign for energy market The numbers of consumers switching power providers are Sources: EC,EPCRmetadata Natural gaspricechangeby component2008-2012(in€cent/kWh) 426 425 0 1 2 3 4 5 6 5% between2012and2011 gasified countryoftheEU.Thedemand for gasdropped by

CEER database. ACER’s Market Monitoring Report. gas retailers 425 . Slovakia, aftertheNetherlands,issecondmost 2008 Taxes+Levies HOUSEHOLDS 307 426 intheentireretailmarket, ofwhichthe consumers switchedin2012against39 2012 Networks 425 duetodecreasingpower 2008 INDUSTRY Energy+Supply 2012 762 762 above theaverageof31 and 10 number ofswitchesisstillrelativelylow. households) andwassixtimesbiggerthanin2011.The suppliers in2012reachedover 131 The numberofhouseholdconsumerswhoswitchedgas 429 428 427 tool andenergypricecalculatorontheirwebsite consumer empowerment, URSOhasapower pricecomparison majority ofcomplaintsrelatedtoswitching.Forbetter infringements ofelectricityandgasmarket rulesandthe only occasionally. Customersreportedover 200 standards for energyserviceswereintroduced,butused automatic compensationpaymentsfor theviolationofquality the gasandelectricityentitiesincreasedfourfold. In2012, In 2012, the number of complaints submitted to URSO by cases to5 to 72.0 and 79.2 gas markets isabove theEUaverage(78.1 Consumers’ overall assessment oftheretailelectricityand Consumers 5. almost 20%. same periodbecausetheirenergycomponentdecreasedby and 2012.Gas prices for industrial users decreasedover the Gas pricesfor householdconsumersincreasedbetween2008 and consumersinenergypoverty. specific supportmeasuresavailable for vulnerablecustomers “vulnerable consumers”and“energypoverty”, thereareno small businesses.EventhoughSlovakia hasdefined including onlyhouseholds,toabroaderonealsocovering 2012. Itsscopewasextendedfromthepreviousdefinition A definitionof“vulnerableconsumer”wasintroducedin rates arealsoslightlylower thantheEUaverage. countries) andinthecaseofelectricitymarket switching complaints (whicharemorenumerousthaninotherEU average onallindicators,withtheexceptionofconsumer

http://www.urso.gov.sk:8088/CISRES/Agenda.nsf/ 10 The EC,EnergyPricesandCostsreport, 2014. edition/index_en.htm consumers/consumer_evidence/consumer_scoreboards/10_ KalkulackaElektrinaNewWeb th ConsumerMarkets Scoreboard, http://ec.europa.eu/ th place,respectively).TheyscorebetterthantheEU th placeEU-wide.Bothmarkets arealsoassessed 427 Pricesfor householdsremainedregulated. compared to 74.1), corresponding in both domestic servicesmarkets (13 000 (9.25%ofallthe points compared 429 . 428 potential th

Croatia. countries, andconnecttwoLNGterminalsinPoland of gas supply pipelines, running across Visegrad group being developed.Theseprojectswilldiversifytheroutes The Polish–Slovak interconnection,alsoaPCI,iscurrently Programme for Recovery andhasalsoacquiredPCIstatus. The projectisco-financedthroughtheEuropeanEnergy constructed andisexpectedtostartoperatingverysoon. the gassystemsofHungaryandSlovakia hasbeen A bi-directionalhighpressuregaspipelineinterconnecting Gas plant wasstartedin2008. The construction of twoadditionalunits at Mochovce power on the2020+timehorizon. as Hungary, increasingfrom15-30%tovaluesabove 30% impact isevenmorevisiblefor neighbouringcountries,such nowadays to54%aftertheirimplementation.Moreover, the level (importcapacity/netgeneration capacity) from 37% reflected intheincreaseof theelectricityinterconnection PCI status.TheimportanceofthePCIsimplementationis construction oftwointernallinesprojectsthatalsohave reinforcement ofthenationalgridisenvisagedthrough European Energy Infrastructure. Adding to these, the of CommonInterest(PCIs)undertheguidelinesfor Trans- are planned,threeprojectshavingbeenselectedasProjects Hungarian border. FurtherinterconnectionswithHungary Slovakia. Significant congestions also occur on the Slovak- and arepassedthroughPolandintoCzechRepublic loop flows whichoriginate most frequentlyfromGermany Poland. TheSlovak transmission system is affected by the Slovakia isinterconnectedto Czech Republic,Hungaryand renewable energyprojects associations for implementationofenergyefficiencyand has been made available to private companies and housing Decommissioning SupportFund).AlmostEUR Slovakia involvesfundsfromBIDSF (BohuniceInternational An importantpartofenergyinfrastructureinvestmentin Electricity Infrastructure 6. 430

IEA, EnergyPolicy Highlights,2013. 430 . SLOVAKIA 150 million

151 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 152 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 ( Sources: Eurostat,CEER,NationalRegulatoryAuthority, ECcalculations. be alleviatedby increasedinterconnecting capacity. installing phaseshifttransformers. Thisproblemcouldalso losses inthetransmissionsystem.Slovakia hasconsidered to restore the N-1 security principle, butalso increased Slovakia reconfiguratedits border substations.Ithelped cross-border wholesaletrade.To mitigatetheloopflows from Germany, threateningthesecuregridoperationand Slovakia suffers fromunscheduledelectricityloopflows commissioned. nuclear power plant,eachof440 considerably afterthetwoadditionalunitsatMochovce Security ofsupplyinSlovakia is expectedtobestrengthened Electricity Securityofsupply 7. SLOVAKIA SLOVAKIA – KEYINDICATORS 1 ) of Number ofcompaniesrepresentingatleast95% ELECTRICITY Electricity market value( HHI inelectricityretailmarket (domestic) HHI inpower-generation market Regulated pricesfor non-households–electricity Regulated pricesfor households–electricity Switching rate Number ofmainelectricityretailers Number ofelectricityretailers Market shareofthelargestpower-generation company Number ofmainpower-generation companies Number ofsmartmetersinstalled Peak demand(MW) Installed generationcapacity(MW, 2011) and gasconsumptioninthehouseholdnon-householdsectors(average bands)andannualaverage retailprices. Market valueis anestimationofthesizeretailelectricityandgasmarkets. Itiscalculatedusingdata onelectricity net power generation 1 ) (bn€) MW installedcapacity, are N/A N/A Yes Yes 5% 4 71 78.9% 1 11 2.662 N/A 4 8 8 395 056

Natural Gas for gasimporttoSlovakia. gas interconnectinginfrastructurewillopennewdirections interconnectors hasbeenenabled.Ongoinginvestmentin have beenincreasedandreverseflow atthe Western border diversifying itsenergyportfolio. Gasstoragecapacities was animportantlessonthatSlovakia needstoconsider SPP and Gazprom. The gas supply disruption of 2009 is covered by importunderthelong-termcontractsbetween in Slovakia androughly98% of domesticgasconsumption GAS HHI ingasretailmarket (domestic) HHI ingassupplymarket (domestic) Regulated pricesfor non-households–gas Regulated pricesfor households–gas Switching ratefor gas(householdconsumers) Number ofmainnaturalgasretailers Number ofretailerssellingnaturalgastofinalcustomers Market shareofthelargestentitybringingnaturalgas Number ofmaingasentities into country Number ofentitiesbringingnaturalgas Gas market value( gas is currently 1 ) (bn€) the most significant

energy source N/A Yes 11.56% 2 22 61.8% 3 8 N/A Yes for SMEs 1.135 The Finnish power productionmixisillustrated inFigure 2. capacity that represented 36.2% of gross generation in 2011. a relativelyhighshareofcombinedheatandpower (CHP) hydropower importsfromNorwayandSweden.Finland has mild weather, thewaninggrowth ofmanufacturingandhigher in electricitygenerationfrom2010.Thiswasmainlydueto for roughlyonethird.Therewasasignificantdeclineof9% which renewables,nuclearandfossil fuelseachaccounted Finland’s electricitygenerationwas73.5 towards therenewableenergytargetof38%for 2020. 10% 15% 20% 25% 30% 35% 431 Source: Eurostat Gross inlandconsumptionmix2008-2012 1 FIGURES and hydropower) provided 34.3% to 34.1 Finnish national grossenergyconsumptionin2012amounted Generaloverview 1. 0% 5%

Eurostat. 2008 Nuclear Solid fuels Mtoe ofwhichrenewablesources(mostlybiomass FINLAND AND 2 2009 Natural gas Renewables 2010 431 → → → Key issues improve market functioning.Currently, Finland isonlyconnectedtoRussia. BalticConnector shouldbetaken urgentlytoimprove gassecurityofsupplyand of theBalticenergymarkets. AdecisiononthelocationofLNGterminaland supply sourcesandcontinuetopromotecompetitionthroughbetterintegration Finland shouldstepupthedevelopmentofcross-bordergasconnectiontodiversify common electricityretailmarket withSweden,NorwayandDenmark. to domesticlevel.Plansareinplacefor greaterdemandresponseby consumersanda Finland reached97%smartmeteringattheendof2013,withhourlysettlementdown medium term. It isexpectedthatthedemandfor reserveandbalancingpower willincreaseinthe continue tobereliantuntilthe1 600 Currently, Finland isreliantonelectricityimportsduringpeakdemandperiods.Itwill , showing good progress Crude oilandpetroleumproducts Other 2011 TWh in2011,of 2012 year was14 10% 15% 20% 25% 30% 35% 40% 45% 16 Installed electricitygenerationcapacityinFinland was 432 Sources: EU energyinfigures-“StatisticalPocketbooks 2012and2013”, Gross electricitygenerationmix2008-2012 EUR Authority employed 66 energy labelling.Bytheendof2012,EnergyMarket counselling andcommunication,ecologicaldesign introduction of new roles in promoting energy efficiency, Authority inthebeginningof2014.Thismarked the The EnergyMarket AuthoritywasrenamedtheEnergy National EnergyRegulator Regulatoryframework 2. 0% 5%

947 http://www.nordicenergyregulators.org/wp-content/ uploads/2013/02/Nordic_Market-report_2013.pdf 6.3 MW nuclearpower plant,Olkiluoto 3,iscomplete. 2008 European Commission Nuclear Solid fuels MW million. 432 433 attheendof2012.Thepeakdemandinthat MW andoccurredinearlyFebruary. 2009 Natural gas Renewables people andhadanannualbudgetof 2010 Crude oilandpetroleumproducts Other 2011 2012

153 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 154 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 435 434 433 Source: Eurostat Electricity pricechangeby component2008-2013(in€cent/kWh) 3 FIGURE intraday trading takes place in the Nord Pool Spot with theNordicandBalticcountries.Physicalday-ahead Finland forms anintegratedwholesaleelectricitymarket 120 from thesecompanies,in2012,therewereapproximately owned 50.5%oftheproductioncapacityin2012.Apart Fortum andPohjolanVoima. Together thesecompanies The generationmarket isdominatedby twocompanies: Electricity Wholesalemarkets 3. connected totheEuropeangasnetwork country onlyhasonemainsupplierofnaturalgasandisnot the obligationtoliberaliseitsnaturalgasmarket, aslongthe unbundled inJuly2013.Finland wasgrantedaderogationfrom State. 52ofthe83DSOoperatorsinFinland werelegallydeclared Power andHeat within thestatein2014following thesaleofsharesby Fortum certified inaccordancewiththemodelof ownership unbundling The electricitytransmissionsystemoperatorFingrid Oyjwas Unbundling FINLAND 10 12 14 16 18 change once a regionalBaltic LNG Terminal becomes operational. Western andNorthWestern Europeanmarket. Since 4 Pool Spotin2012andtherestviabilateralagreements. 62% oftheFinnish consumptionwastradedthroughNord 0 2 4 6 8

http://www.nordpoolspot.com/How-does-it-work/European- Nord PoolSpotisthecommonpower market for theNordic http://www.tem.fi/en/energy/natural_gas_market Integration/NWE/ and Balticcountries, http://www.nordpoolspot.com companies producingelectricityfrom550 February 2014themarket iscoupledtotheCentral 2008 Taxes+Levies HOUSEHOLDS Oy andPohjolanVoima Oy(PVO) totheFinnish 2013 Networks 2008 433 INDUSTRY . This situation will . Thissituationwill 435 Energy+Supply power plants. 434 2013 market.

prices arereflectedintheretailprices. with notableincreasesintaxes2011.Wholesaleenergy Retail priceshavesustainedasteadygrowth since2006 networks increasedin2012(+10%comparedto2011). with reliabilityrequirements.Investmentsindistribution grid andtheincreasedneedfor networkinvestmentstocomply Distribution tariffsareontheriseduetoagingelectricity to increaseinthefollowing years. applications whichencouragedemandresponseisexpected level. Implementationofsupplycontractsandend-user end of2013.Balanceissettledhourlydown todomestic metering One ofthestrengthsFinnish retailmarket issmart largest retailsuppliershasbeenaround35-40%. a market share above 5%.Themarket shareofthethree level wasmoderate as therewerefour retail suppliers with products nation-widein2012.Market concentrationatretail approximately 74 rate of suppliers has settled at a level of 7-8%. There were can selecttheirretailsupplierfreely. Theannualswitching There isnoretailpriceregulationinFinland. Consumers Electricity Retailmarkets 4. secondary market wherelargeconsumerscanmake offers. natural gasexchange,for shorttermproductsandabilateral supply contracts.GasumOyalsooperatesKaasupörssiOy, a and transmission system operator on the basis of long term exclusively fromRussia.GasumOyactsasthesoleimporter Finland doesnotproducenaturalgas,butimportsgas Gas a capacitychargeonthepriceofexportedelectricity. decreased since2011whentheRussianmarket introduced consumption in2012.However, importsfromRussiahave Net importsaccountedfor 20.5%ofthetotal electricity to thegoodhydrosituationandreducedconsumption. price fell fromEUR diverged 53%ofthetimein2012.Averagewholesaleelectricity differences. Forexample,pricesbetween Finland andSweden transmission capacitiesbetweencountrieshaveledtoprice There hasbeenlittlecongestionwithinFinland, butinsufficient 436

http://www.epsi-finland.org/images/stories/reports/Energy/ electricity_2013_finland_press_release.pdf 436 . Therateofsmartmeteringreached97%by the retail suppliersofwhich44 49.30 in2011toEUR 36.64 in 2012due offered their

trust since2010. show asmallbutsteadyyearonincreaseinscore consumer satisfaction,choiceofproviders andtrust.Results assessed particularlywell(3 with theexceptionofcomparabilityandcomplaintsis and 2013.ItscoresbetterthanEUaverageonallindicators market hasseenanincreaseof2.8 which includeelectricityandheatingbills in Finland. Itis basedontheclient’s essentialexpenses, Social assistanceisalast-resortform ofincomesecurity rights totheirown consumptiondatafreeofcharge. There isnochargetochangesupplierandcustomershave provided by theEnergyAuthorityhasbeenusedactively to customersfor power outages.Apricecomparisontool reading andstipulatesastandardcompensationpayable switching, information oncustomerbills,metering,meter The EnergyMarket Act(588/2013)specifiesrules for supplier which theycanswitchsupplierandtheclarityofbilling Electricity retailcustomersaresatisfiedwiththeease by compared to72.0),corresponding7 electricity market above theEUaverage(77.5 Finnish consumersratetheperformance oftheirretail Consumers 5. natural gashasincreasedduringthelastfew years. Figure Natural gasretailpricesfor industrialusersareshown in retail suppliers,mostofwhomonlyhadadozencustomers. their own distributionnetwork. Therewere23 of 2012,asgasretailersinFinland haveamonopolywithin Market concentrationattheretaillevelwashighend Gas 437 440 439 438 and itswrittendecisionisarecommendation. Consumer DisputesBoard.TheBoarddoesnotchargefees be taken toageneralcourtoflaworsolvedthroughthe Disputes betweenconsumersandenterprisescaneither during thewinter. for socialassistancefor householdsheatedby electricity reasonable noticetoallow themtimewithbillswhilewaiting Market Act(588/2013, §103)guaranteescustomerswitha

10 http://www.stm.fi/en/income_security/social_assistance Energy Market Authority, Nationalreport2013totheAgency http://www.epsi-finland.org/images/stories/reports/Energy/ edition/index_en.htm consumers/consumer_evidence/consumer_scoreboards/10_ Commission: Finland, 12 for theCooperationofEnergyRegulators andtotheEuropean electricity_2013_finland_press_release.pdf th ConsumerMarkets Scoreboard,http://ec.europa.eu/ 4, whereitisalsopossibletoseethatthepriceof 437 July 2013. rd highestintheEU)onoverall points between2012 th placeEU-wide.The 440 . TheElectricity natural gas points 439 438 . . guidelines for trans-Europeanenergyinfrastructure. which isidentifiedasaProjectofCommonInterestunderthe endeavours to develop the gas interconnector the BalticConnector Finland incooperationwithEstoniashouldmake itsbest the ofLNGfacilitiestogetherwithnecessaryinterconnectors. of points outthatthemostefficientoptionisdevelopment the options of diversifying gas supplies inthe region. The plan Plan (BEMIP),launchedby theCommissionin2008,examines connected toRussia.TheBalticEnergyMarket Interconnection The Finnish natural gasmarket isisolated,asitonly Gas in ruralareas. This willresultinsignificantfutureinvestmentrequirements Market Act(588/2013) includesnewreliabilityrequirements. improved connectionwiththeBalticStates.TheElectricity new cabletriplestheinterconnectioncapacityandhas Estlink2, startedoperationatthebeginningof2014.The for 2015.Furthermore,anew650 mainland Finland throughÅlandtoSweden,isplanned and Swedenis80%full.Another100 in 2011,butoverall connectioncapacitybetweenFinland Fenno-Skan 2,withcapacityof800 A secondsubmarinecablebetweenFinland andSweden, become technicallypossibleduringthefirsthalfof2014. importing ispossible,butexporting(upto350 capacity. OntheFinnish-Russian connectioncurrentlyonly was 4 The totalimportcapacityofelectricityattheend2012 Finland isconnectedtoSweden,Norway, EstoniaandRussia. Electricity environmental assessmentprocedures. legislative andnon-legislativemeasuresstreamliningthe granting processfor projectpromoters,andtheadoptionof including thepublicationofmanualonpermit 2013), andothermeasuresforeseen for 2014and2015, for ProjectsofCommonInterest(PCIs)(dueby 16 Regulation, including the establishment of the one-stop-shop adoption ofthemeasuresstemmingfromTEN-E The Finnish authoritiesshouldensureaproperandtimely Infrastructure 6. 650 MW, whichisabout27.4%oftheproduction MW wascommissioned MW cabletoEstonia, MW, thatconnects FINLAND November MW) has

155 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 156 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 441 ( Sources: Eurostat,CEER,NationalRegulatoryAuthority, ECcalculations. not beabletocover winterpeak demand Until 2016theavailabledomesticproductioncapacitywill Electricity Securityofsupply 7. FINLAND commercial market, havebeendefined. reserves whicharenotallowed toparticipateandbidonthe ensure thebalancebetweensupplyanddemand.Strategic The CapacityReservesAct(117/2011)isdesignedto and remove mostofthecapacity deficit. 1 Olkiluoto 3 by Teollisuuden Voima, with a capacity of deficit mustbemet by imports. Anewnuclearpower plant, FINLAND – KEYINDICATORS 1 ) 600

Electricity market value( HHI inelectricityretailmarket HHI inwholesalemarket Regulated pricesfor non-households–electricity Regulated pricesfor households–electricity Switching rates(entireelectricityretailmarket) Number ofmainelectricityretailers Number ofelectricityretailers Market shareofthelargestpower-generation company Number ofmainpower-generation companies Number ofsmartmetersinstalled(December2013) Peak demand(MW) Installed generationcapacity(MW) of Number ofcompaniesrepresentingatleast95% ELECTRICITY and gasconsumptioninthehouseholdnon-householdsectors(average bands)andannualaverage retailprices. Market valueis anestimationofthesizeretailelectricityandgasmarkets. Itiscalculatedusingdata onelectricity Energy Market Authority, Nationalreport2013 totheAgency Commission: Finland, 12 for theCooperationofEnergyRegulators andtotheEuropean net power generation MW isduetobecommissionedbetween2016-2020 1 July 2013. ) (bn€) 441 . Theresulting N/A 1 1 No No 7.7% 3 ~70 25.6% 4 97% 14 16 30 6.979 102 433 947

to safeguard securityof gas supply Agency actsastheresponsibleauthorityindefiningmeasures with alternativefuels A substantialpartofthegasconsumptioncanbesubstituted In 2012therewerenointerruptionsingassupplytoFinland. Gas 442 secure anddiversifythegassupply. terminals intheregionandBalticConnectorwouldhelp HHI ingasretailmarket HHI ingassupplymarket Regulated pricesfor non-households–gas Regulated pricesfor households–gas Switching ratesfor gas(entireretailmarket) Number ofmainnaturalgasretailers Number ofretailerssellingnaturalgastofinalcustomers Market shareofthelargestentitybringingnaturalgas Number ofmaingasentities GAS into country Number ofentitiesbringingnaturalgas Gas market value( http://www.nesa.fi/ 1 ) (bn€) 441 . TheNationalEmergencySupply 442

. Investments into LNG N/A N/A Yes No N/A 1 23 100% 1 1 N/A in 2012 renewables shareimproved from42.4%in2006to51.0% has alreadyachieveditsnational2020REStargetasthe of renewablesingrossfinalenergyconsumption.Thecountry 10% 15% 20% 25% 30% 35% 40% 445 444 443 Source: Eurostat Gross inlandconsumptionmix2008-2012 1 FIGURES products and wassatisfied mostly by solidfuels,nuclear, and oil In 2012,thetotalenergyconsumptionreached49.8 Generaloverview 1. 0% 5%

http://epp.eurostat.ec.europa.eu/cache/ITY_OFFPUB/KS- http://www.energimyndigheten.se/Global/Engelska/Facts%20 Eurostat. DK-13-001/EN/KS-DK-13-001-EN.PDF and%20figures/Energy_in_sweden_2012.pdf 2008 Nuclear Solid fuels 443 443 444445 ; thiscallsfor ahighergoalfor 2020. SWEDEN AND 2 . Sweden’s targetfor 2020istohave49% 2009 Natural gas Renewables 2010 → → → Key issues Sweden includingoneofstrategicimportancefor theBalticmarket. Sweden’s energysecurity. SeveralnewLNG-stationsaretherefore plannedin Diversifying gassupplysourceswouldencouragemorecompetitionandimprove roll-out ofsmartmeters. households andhourlyreadingstoindustrialcustomers.Thishasresultedinafull Since 2009,theSwedishDSOsareobligedtoprovide monthlymeterreadingsto an increasedshareofrenewableelectricity. intensified the investments in the grid to further develop themarket and prepare for exchanges giverisetosomeconcerns.TheSwedishTSO,SvenskaKraftnät,has However, congestionmanagementandtransparencyprovisions for cross-border The Swedish electricity market is integrated in the Nordic market and works well. Crude oilandpetroleumproducts 2011 2012 Mtoe

of cogeneration in electricity production was 10% in2011 of cogenerationinelectricityproductionwas in 2005 showing asignificantincreasecomparedtothelevelof6.7% 10% 20% 30% 40% 50% 60% 70% dominated by renewableandnuclearsources The power generationmixin2011(166.6 446 Sources: EU energyinfigures-“StatisticalPocketbooks 2012and2013”, Gross electricitygenerationmix2008-2012 0%

ACER, http://www.acer.europa.eu/Official_documents/Acts_of_ Report%202013.pdf the_Agency/Publication/ACER%20Market%20Monitoring%20 2008 European Commission Nuclear Solid fuels 446 . 2009 Natural gas Renewables 2010 Crude oilandpetroleumproducts Other 2011 443 . Theshare TWh) was 2012 443 ,

157 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 158 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 unbundled, andingas,five. 171 of thiscablewiththeunbundlingrequirements.Inelectricity, Germany regulatorBundesnetzagenturtoensurecompliance has sofarnotbeencertified.EIshouldcooperatewiththe certified underthe ownership unbundling model.BalticCable for electricity, andSwedegasfor gas.BothTSOshavebeen Svenska Kraftnät is the Transmission System Operator (TSO) Unbundling regulatory authority. Enterprise, EnergyandCommunication,itisanindependent an agencyadministrativelyattachedtotheMinistryof 448 447 together controlling 79% of the generation dominated by threecompanies,Vattenfall, FortumandE.ON, Nordic power market. In2012,electricityproduction was The Swedishwholesalepower market ispartof theintegrated Electricity Wholesalemarkets 3. annual budgetofaroundEUR been in operation since2008,employing 100 The Swedishregulator, EnergyMarket Inspectorate(Ei),has National EnergyRegulator Regulatoryframework 2. SWEDEN Europe widemarket integration.Theaveragewholesale Pool systemprice.Thisisseenasthefirststeptowards Link) arelikely toincreasecontinentalinfluenceontheNord Continent andNordiccountries(BalticCableSwePol traded. Newmarket couplinginterconnectionsbetweenthe integrated andwherethree-quartersofNordicelectricityis place with which the Swedishwholesale power market is necessary. NordPoolSpotisthecommonNordicmarket should continuetomonitorthesituation,interveningwhen major competing producers still remain and the Authority ethical rules.However, therisksarisingfromlinksamong the owners ofnuclearpower stationstoagreeoncommon has beenaddressedby theenergyregulator, whichforced diminishing confidenceinafunctioningmarket. Thisproblem inherent riskofinformation being shared between sites, and theSwedishCompetitionAuthorityisconcernedby the incumbents havejointownership ofnuclearpower plants, players activeonthewholesalemarket ishigher. Thethree due totheconnectionwithNordPool,actualnumberof

Ei, NationalReportontheSwedish electricityandnaturalgas http://ei.se/sv/nyhetsrum/nyheter/nyhetsarkiv/nyhetsarkiv-2012/ Reporting%202013/NR_En/C13_NR_Sweden-EN.pdf EER_HOME/EER_PUBLICATIONS/NATIONAL_REPORTS/National%20 markets 2012, June2013,http://www.ceer.eu/portal/page/portal/ extra-pengar-till-ei-i-regeringens-budget/ Distribution SystemOperators (DSO) are functionally 11 million 447 . Despitebeing 448 staff withan . However, provide hourlymeterreadingstohouseholdsrequestingthem. response services.SinceOctober2012,DSOsareobligedto readings withoutadditionalinvestment,preventingdemand readings. However, somemetersare not suitable for hourly practically afullroll-outofsmartmeters,enablingremote to commercialandindustrialcustomers.Thisresultedin meter readingstohouseholdcustomersandhourly By 2009,SwedishDSOswereobligedtoprovide monthly retail price,neitheronebeingregulated. 2012. Thewholesalepricehadasignificantinfluenceonthe customers tookanactivepartintheretailmarket during contract withtheircurrentsupplier. Thus,37%ofdomestic supplier in2012andafurther27%re-negotiatedtheir Around 10%ofdomesticcustomersswitchedtheirelectricity enter themarket though smallerplayershaveoccasionallyfound itdifficult to scope. In2012,therewere121 the wholesalepower market theretailmarket isnationalin the wholesalemarket hold42%oftheretailmarket. Unlike The samethreeincumbents,Vattenfall, Fortum andE.ON,in Electricity Retailmarkets 4. from Denmark. congestion on the grid, either nationally or inthe import link capacity ontheDanishinterconnector. Thereiscurrentlyno Swedish market, asupplierneedstoacquiretransmission market hubasallgas is imported.To gain access to the active, E.ONSverigeandDongEnergy. Thereisnowholesale remainder domestic.Atwholesalelevel,twooperatorsare whom approximately3 from Denmark.Swedenhasaround37 all ofitsrequirements,about1.5 Sweden doesnotproducenaturalgas.In2012,itimported Gas reached 131 the highestonEuropeanpower exchanges.Swedishvolumes In termsofliquidity, volumestradedonNordPoolSpotare Sweden’s biddingareasin2012wasaroundEUR price onNordPoolSpot’s dayaheadbiddingmarket infour 449

Ei, NationalReport ontheSwedish electricity and naturalgasmarkets 2012,June2013. TWh, 94%ofnationalelectricityconsumption. 449 . Switchingofsuppliersisrelativelyhigh. 600 arebusinesscustomersandthe retail electricitysuppliers, bcm, through the pipeline 000

end-users, of 32.5/MWh. Electricity pricechangeby component2008-2013(in€cent/kWh) 3 FIGURES the averageof 31 retail price. and industrypayhightaxes,amountingtoalmosthalfthe moved inlinewithglobalgasandoilprices.Bothhouseholds user pricesarenotregulated.Gasfor finalconsumers the gasmarket, whichdoesnotincentivisecompetition.End- 72.0 is slightlyabove theEUaverage(73.5 Consumers’ overall assessmentofretailelectricitymarket Consumers 5. In 2012,thereweresixnaturalgassuppliers Gas Source: Eurostat 451 450 10 15 20 25 domestic customers 44% fewer thaninthepreviousyear, andabout0.5%of of thesehouseholdsswitchedsuppliers,During 2012,157 South-Western Sweden. It has been a freemarket since 2007. market consists ofaround33 held around85%ofthemarket. TheSwedishgasretail largest companies,E.ON,DongEnergyandGoteborgEnergi, 4 (7.4 The market has seen a considerable increase in score comparability of offers isassessedaspoor. The incidence and switchingratesarewellabove theaverage;yet The choiceofproviders recordsthehighestEUscore 0 5 th

highestincreasedomesticallyandEU-wide,respectively). However thedifference isnotstatisticallysignificant. Ei, NationalReport onTheSwedisch electricity and naturalgasmarkets 2012,June2013. 451 points) since 2012 (whichrepresents the highest and , correspondingto14 2008 Taxes+Levies HOUSEHOLDS AND 4 domestic servicesmarkets (18 450 2013 . Thismaybeduetothesmallsizeof th placeEU-wide),andequalto Networks 400 domestic customersin 2008 points comparedto INDUSTRY

Energy+Supply 450 . Thethree 2013 th place). natural gassupplies. receive assistancewiththeirpaymentofelectricityand by sociallegislationinthattheconsumerhasrightto is protectedintheSwedishelectricityandgasmarkets within thenationallegislation.Thiscategoryofconsumer Since 2011,thereisadefinitionofvulnerableconsumers adjudicates indisputesbetweencustomersandcompanies. reklamationsnämnden, ARN).ARNisapublicauthoritywhich National Boardfor ConsumerDisputes(namedAllmänna gas consumersmayreportdisputeswithcompaniestothe is nosinglepricecomparisonsite.Electricityandnatural and conditionsfor allSwedishsuppliers.Forgas,there site, whichenablesconsumerstocompareprices,terms, In 2008,Eilaunchedanonlineelectricitypricecomparison more likely tocomplain. than theEUaveragebutthosewhoencounteraproblemare of problems reported intheelectricity retail market islower Sources: EC,EPCRmetadata Natural gaspricechangeby component2008-2012(in€cent/kWh) 452 provisions oftheTEN-ERegulation(‘one-stopshop’). for projectsofcommoninterestinaccordancewiththe for facilitatingandcoordinatingthepermitgrantingprocess designated asNationalCompetentAuthorityresponsible The SwedishEnergyMarkets Inspectoratehasbeen Infrastructure 6. 10 12 14 0 2 4 6 8

10 edition/index_en.htm consumers/consumer_evidence/consumer_scoreboards/10_ th ConsumerMarkets Scoreboard,http://ec.europa.eu/ 2008 Taxes+Levies HOUSEHOLDS 2012 452

Networks 2008 INDUSTRY SWEDEN Energy+Supply 2012

159 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 160 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 when theenergyonlymarket isexpectedtoberestored winter. Themechanism willbegraduallyreduceduntil2020 capacity reservesin2003tomeetpeaksdemandduring the congestionongrid.Swedenintroducedstrategic of Swedenwheretheconsumptionishighanddecreasing one wayofshiftingtheproductionareastosouthernparts is investingheavilyinwindpower generation.Wind power is To ensurethesecurityofsupplyinlongerterm,Sweden 454 453 between each network meet the required quality standards maintaining theirnetworkstoensurethattheconnections to thecustomers.Localdistributorsareresponsiblefor balancing thegridandensuringdeliveryofelectricity short andlongterms.SvenskaKraftnätisresponsible for Sweden is working to ensure the power of supply both in Electricity 7. security ofsupplyandflexibility for theSwedishmarket. the Balticenergymarket andwouldcontributetoincreased commissioned in2015–whichisofstrategicimportancefor in GothenburglabeledasaPCI(8.6)andplannedtobe Several newLNG terminals are planned,includingone Gas and Nybro/HemsjöontheSwedishterritory(PCI4.4.2). through theconstructionofnewOHLbetweenEkhyddan for operationoftheinterconnectionarebeingaddressed the gridtransfer capacityandensuringthen-1criterion Lithuania throughaHVDCsubmarinecable.Maintaining funding undertheEEPRandwillinterconnectSweden progressing ontheNordbalt01 This ispartoftheThirdEnergyPackage. Currently, workis while increasingtheamountofvariableenergyongrid. grid to ensurenetworkstability and increase the capacity Swedish TSO,hasanextensiveplantodevelopthenational Poland through undersea DC cables. Svenska Kraftnät, the through AC linesandtoFinland, Denmark,Germanyand Sweden isinterconnectedtoNorwayandeasternDenmark At times,thiscreatescongestionwithinthenationalgrid. and mostof the consumption isconcentratedtothesouth. the electricityproductionoccursintwonorthernareas Sweden is divided into four different bidding areas. Most of Electricity SWEDEN

CREG, Studyoncapacity remunerationmechanisms,October 2012. http://www.energimarknadsinspektionen.se/Documents/ R2013_10.pdf Publikationer/rapporter_och_pm/Rapporter%202013/Ei_ project, whichhasreceived 454 453 . . demand. and dividestheresponsibilityfor meetingthenaturalgas to minimise thepossiblenegativeeffects onseveralscales of natural gas of requirements ofRegulation(EU)No994/2010onthesecurity and aNationalEmergencyPlan,inaccordancewiththe In 2012,EipublishedaNationalPreventativeActionPlan balance seasonalswingsindemand. to storage facilities,andreliesonstorage,mainlyinDenmark, safeguard security ofgas supply. Sweden hasno significant Regulation (EU)No994/2010concerningmeasuresto is currentlyexemptedfromtheN-1obligationsetoutby are currently no plans to implement this pipeline. Sweden through theSkanledpipelinerunningfromNorway, butthere One possibleroutefor diversificationwasinvestigated Denmark, Swedenisvulnerabletogassupplydisruption. is completelydependentonimport.Interconnectedonlyto Since Sweden has nonationalproductionofnaturalgas, it Gas 453 . Theplansincludemarket basedmethods

( Sources: Eurostat,CEER,NationalRegulatoryAuthority, ECcalculations. SWEDEN – KEYINDICATORS 1 ) Electricity market value( HHI inelectricityretailmarket HHI inpower-generation market Regulated pricesfor non-households–electricity Regulated pricesfor households–electricity Switching rates(entireelectricityretailmarket) Number ofmainelectricityretailers Number ofelectricityretailers Market shareofthelargestpower-generation company Number ofmainpower-generation companies Number ofsmartmetersinstalled Peak demand(MW) Installed generationcapacity(MW) of Number ofcompaniesrepresentingatleast95% ELECTRICITY and gasconsumptioninthehouseholdnon-householdsectors(average bands)andannualaverage retailprices. Market valueisanestimationofthesizeretailelectricityandgasmarkets. Itiscalculatedusingdataonelectricity net power generation 1 ) (bn€) N/A ~2 No No 9.9% 3 120 44% 3 100% 26 37 74 13.349 650 200 353 HHI ingasretailmarket HHI ingassupplymarket Regulated pricesfor non-households–gas Regulated pricesfor households–gas Switching ratesfor gas(entireretailmarket) Number ofmainnaturalgasretailers Number ofretailerssellingnaturalgastofinalcustomers Market shareofthelargestentitybringingnaturalgas Number ofmaingasentities into country Number ofentitiesbringingnaturalgas GAS Gas market value( 1 ) (bn€)

SWEDEN N/A ~5 No No 1.4% N/A 7 100% 1 1 0.456 000

161 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 162 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 to The UKhasalsointroducedacarbonpricefloorinaddition preventing newunabatedcoalplantsandacapacitymarket. Emissions Performance Standardsetat450gCO Contracts for Difference –a form of feed inpremium–,an elements includesupportfor low carbongenerationthrough of theElectricityMarket Reform (EMR)programme.Thekey In December2013theUKadoptedEnergyActaspart 10.1%. The renewableshareofgenerationin2012increasedto generation (withashareof40.2%)andsolidfuels(29.5%). 2011 (363.8 457 456 455 broadly unchangedon2011. EU average. Final consumptionof electricity in 2012 was The UK’s 2020renewabletargetis15%,lower thanthe the overall energymixthaninotherMemberStates(4.1%). energy. Renewableenergysourceswerelessimportantin based onfossil fuelsandtoalesserextentonnuclear Energy consumption in 2012(202.3 Generaloverview 1.

the existingEUEmissionTrading System(ETS). The CarbonPrice Floor isataxonfossil fuelsused Digest ofUKenergystatistics(DUKES), Chapter5. On 18 carbon price, whichcameinto effect on1 on ayearly basistoensureacertain minimumeffective to generateelectricity withlevels designed andadapted Hinkley PointinSomersetareline withEUstateaidrules. construction andoperationofanew nuclearpower plantat investigation toexamine whetherUKplanstosubsidisethe

December 2013theCommissionopened anin-depth THE UNITED KINGDOM TWh) remaineddominatedby gas-firedpower 455 456 Thepower generationmixin → → → Key issues rules need toensurethattheinterventionsareinlinewithInternalMarket andStateAid UK market, andmaybeofconcerngiventhelevelinvestmentrequired.Thereisa Successive legislativeandregulatorychangesareincreasingthecomplexityof needed for deliveryof2020targets.Inparticular, greaterinterconnectionisneeded. Further investmentintheUKelectricitynetworkinfrastructureandgenerationis consumers isappropriatelytargeted. Another key issueistoensurethatsupportfor fuel-poorandothervulnerable wholesale andretailmarkets areopentonewentrantsby removing barrierstoentry. wholesale andretailpriceformation andtransparency. TheUKshouldalsoensureboth Consumer confidenceinthesectorisrelativelylow. Furtheractionisneededtoaddress to aminimum. keeping costsoftheenergytransitiontowards adecarbonisedelectricitygeneration future support schemes should provide a stable framework for investments whilst 510 April 2013. Mtoe) waslargely andsupporttheintegrationintowiderinternalenergy market. Existingand

457 2 /kWh –

Gross inlandconsumptionmix2008-2012 1 FIGURES 10% 15% 20% 25% 30% 35% 40% 45% 10% 15% 20% 25% 30% 35% 40% 45% 50% Sources: EU energy infigures-“StatisticalPocketbooks 2012and2013”, Gross electricitygenerationmix2008-2012 Source: Eurostat 0% 5% 0% 5% 2008 2008 European Commission Nuclear Solid fuels Nuclear Solid fuels AND 2 2009 2009 Natural gas Natural gas Renewables Renewables 2010 2010 Crude oilandpetroleum products Crude oilandpetroleumproducts Other Other 2011 2011 2012 2012 459 458 models inlimitedcircumstances. To date,Ofgem hasalso allows alternativearrangementstothestandardunbundling certified underArticle its roleasSystemOperator. TheScottishTSOshavebeen and offshoretransmissionnetworkisoperated by NGETin and ScottishHydroElectricTransmission plc.TheGBonshore which areowned by ScottishPower Transmission Limited In Scotlandtherearetwoonshoretransmissionnetworks Wales andhasbeencertifiedasfully ownership unbundled. onshore electricitytransmissionnetworkinEnglandand National GridElectricityTransmission (NGET)owns the Unbundling projects andpricereviewsunderway. and budgethasincreasedinrecentyearsasitmajor Ofgem employed 729 by 2002following theintroductionofretailcompetition. for networks,butretailtariffregulationwasphasedout Irish utilityregulatorisUREGNI.Ofgem regulatesprices The energy regulator inGreatBritainisOfgem. The Northern National EnergyRegulator national law. The ThirdPackage Directiveshavebeentransposedinto General Regulatoryframework 2. renewables by 2012. positive that theUKhadachieveditsinterimtarget for The DepartmentofEnergyandClimateChange(DECC)was security ofsupply. market isalsoplannedtoensureenoughinvestmentfor that the runningof thermal plant wouldchange,so a capacity Difference. Theexpectedchangestotheenergymixmean promote renewablesandnewnuclearthroughContractsfor towards alow carbonenergysystemby 2050.Thesereforms EMR is intended to deliver the first step of a transition competition investigate whethertherearefurtherbarrierstoeffective to theUKCompetitionandMarkets Authority(CMA)to On 27 has improved thissituation. of theproposedsupportlevelfor renewabletechnologies delays indevelopinggridinfrastructure.Recentpublication schemes, lackofclarityaboutthemarket framework,and criticised alackofcertaintycausedby changestosupport

https://www.ofgem.gov.uk/press-releases/ofgem-proposes- DECC, UKRenewableEnergyRoadmap: 2013Update, reference-cma-investigate-energy-market 5 November 2013. March 2014 Ofgem proposed to refer the market 459 . 458 9(9) oftheElectricityDirective,which However, somewithinindustryhave staff in2012/13.Thenumber in 2012.Inresponsetoconcerns aboutliquidity, Ofgem has largest threegeneratedalmost45%ofelectricityconsumed Seven companieshadmarket sharesexceeding5%andthe The power generationmarket ismoderatelyconcentrated. ahead market couplingandintradaytrading. participating intheNorthWest Europeanprojectonday- France Interconnector(IFA) andBritNedinterconnectorsare the GreaterBelfastarea. from thegasdistributioncompany(PhoenixNaturalGas)in June 2012resultedinunbundlingofthegassupplycompany certified asTSOs.The sale ofPhoenix Supply to Airtricity in transmission assetsinNorthernIrelandandhavebeen Market. BordGáis ÉireannandMutualEnergyown thegas- the IrishTSO,Eirgrid,underallIslandSingleElectricity Electricity (NIE)andoperatedby thecertifiedTSO,SONI,with applied. Theelectricitygridisowned by NorthernIreland In NorthernIreland,asinScotland,Article been certified. and Britainoperatedby EirGrid, theIrishTSO,hasnotyet ownership unbundled.Theinterconnector betweenIreland (iv) theMoyle andIFA electricityinterconnectorsasfully SNIP gasinterconnectorsasfullyownershipunbundled; and, ownership unbundlingtestsat thattime);(iii)theBBLand unbundling provided thatitdemonstrates thatitpassesthe Exemption and thereafter on the ground offull ownership position tosomeonebenefitingfromaSecondPackage 2015 onthegroundofbeinginasubstantiallysimilar Exemption”); (ii)theIUKgasinterconnector(until3 with Article on thegroundofanexemptiongrantedinaccordance Ofgem has certified: (i) the BritNed electricity interconnector certified asfully ownership unbundled. is owned andoperatedby NationalGridGasplc,whichis The high-pressuregastransmissionnetworkinBritain two preferred bidders,asownership unbundled. certified nineOffshore TransmissionOwners (OFTOs) and 461 460 was GBP44.54 (EUR 5%). Theaverageday-aheadpower priceontheAPXmarket in 2011)andaround15%wasexchangetraded(upfrom 2012, around85%ofpower wasOTC traded(down from95% also available on the Intercontinental Exchange (ICE). In and N2EX.UKpower futuresexchangetradedcontractsare There aretwomainpower exchangesinGreatBritain:APX Electricity Wholesalemarkets 3.

http://www.apxgroup.com/uncategorized/apx-endex-2012- Ofgem, 2013Great BritainandNorthernIrelandNational volumes-up-by-12/ Reports totheEuropean Commission,22 22 ofDirective2003/55/EC(“SecondPackage THE UNITEDKINGDOM 53.89)/MWh in2012. 460 August 2013. 461 9(9) hasbeen The England- March

163 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 164 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 usually active on a daily basis of 222licensedshippers,whichbetween110and120are 20. Thenumberofpartiestrading at NBPis high withatotal trading pointinEurope,withachurnratebetween10and trading locationfor UKnaturalgas.Itisthemostliquidgas Endex). TheNationalBalancingPoint(NBP)isthevirtual includes bothOTC andexchangebasedtrading(ICEICE Interconnection orLNGterminals.Thewholesalegasmarket supplies arenow imported,eitherfromNorway, Continental 463 462 down 14% on 2011 to 452 UK naturalgasproductionisdecreasing,andin2012was Gas in Market (SEM) with Ireland.This is discussedin more detail Northern Irelandispartoftheall-islandSingleElectricity trading withsmallindependentsuppliers. the eightlargestgeneratingcompaniestofollow ruleswhen power products(amarket makingobligation). Italsorequires prices atwhichtheywillbuyandsellarangeofforward This obligessixlargevertically-integratedsupplierstopost introduced anewlicenceconditionfrom31 Source: Eurostat Electricity pricechangeby component2008-2013(in€cent/kWh) 3 FIGURES THE UNITEDKINGDOM 10.0 12.0 14.0 16.0 18.0 20.0 activity below 8% low, withthelargestmarket shareofphysical andtraded 0.0 2.0 4.0 6.0 8.0

the separatereportcovering theRepublicofIreland. Ofgem, 2013GreatBritainandNorthern IrelandNational https://www.gov.uk/government/uploads/system/uploads/ Reports totheEuropean Commission,22 attachment_data/file/65800/DUKES_2013_Chapter_4.pdf 2008 Taxes+Levies HOUSEHOLDS AND 4 463 . 2013 TWh. Networks 463 . Market concentration in is 462 The majority of the UK’s 2008 August 2013. INDUSTRY Energy+Supply March 2014. 2013 Gas remainstheleadingsupplier, withamarket shareof40%. 2 an HHIof2 concentration atthedomesticretaillevelremainedhighwith domestic market, with a market share of around 40%. Market British Gas(Centrica)isstillthelargestpartyactiveon approx. 95%ofthe22.3 active in the market. The so-called ‘Big 6’ suppliers supplied 2012, 13 The Britishretailgasmarket isfullyliberalised.Attheendof Gas with acombinedmarket shareofjust2%,up1%from2011. There were 12 at domesticretaillevelremainedhighwithanHHIof1 have amarket shareofabove 10%.Market concentration Energy (SSE),andScottishPower. AlloftheBig6 E.ON UK,EDFEnergy, RWE npower, ScottishandSouthern a dropof4%since2011.TheseareBritishGas(Centrica), 6’), whichaccountedfor approx.95%ofthemarket in2013, existence ofsixlarge,verticallyintegratedsuppliers(the‘Big market. Thedomestic retailmarket ischaracterisedby the 12 since thelate1990s.Atendof2012,therewere The retailelectricitymarket hasbeenopentocompetition Electricity Retailmarkets 4. Sources: EC,EPCRmetadata-*nodataavailable Natural gaspricechangeby component2008-2012(in€cent/kWh) 0.0 1.0 2.0 3.0 4.0 5.0 6.0 189 andfor largernon-domesticcustomers1 domestic and24 2008 domestic and30 Taxes+Levies HOUSEHOLDS 373 for smallernon-domesticcustomers;itwas small suppliersactive in the market in 2012, non-domestic suppliersactiveinthe 2012 million domesticconsumersin2013. non-domestic gassupplierswere Networks 2008* INDUSTRY Energy+Supply 153. British suppliers 2012 720. 2013. Themarket alsoranks3 a considerabledecrease(of3 is 4 services markets. Theassessmentoftheretailgasmarket actual switchingranksecondandfourth highestintheEU. providers andactualswitching.Inthegasmarket, choiceand time, bothmarkets haveabove-average scores for choiceof the highestshareofcomplaintstothirdparties.Atsame highest shareofoverall consumercomplaintsintheEUand of consumercomplaints.Theelectricitymarket hasthethird overall consumersatisfaction, and above-average number markets haveparticularly poorscoresontrustinproviders and continuing thedownward trendobservedsince2010.Both prices in themarket suppliers andtypicallypayingabove themostcompetitive are likely to be on standard tariffs with former incumbent (62%) claimedtheyhaveneverswitched,meaning Ofgem found thatmorethanthreeoutoffiveconsumers and choosethemostappropriatetariffhasbeenaconcern. is high.However thecapacityofconsumerstounderstand that manyconsumersfeel theyareinactiveinthemarket. have ‘neverswitched’isprobablylower, butitdoessuggest 468 467 466 465 464 of gasusersswitchedsupplier In 2012,12%ofelectricityusersswitchedsupplierand11% to 72.0,corresponding20 is slightlybelow theEUaverage (69.3 Consumer overall assessment ofretailelectricitymarket Switching andtrust Consumers 5. metering roll-out 53 The Britishgovernment hasdecided toreplaceallofthenation’s 5 score has slightly decreased between 2012 and 2013 (0.2%) aswell520 larger suppliersareoperating89 planned from2015.Inbothgasandelectricitymarkets the th

https://www.ofgem.gov.uk/ofgem-publications/39350/retail- https://www.ofgem.gov.uk/ofgem-publications/74756/customer- 10 However thedifference isnotstatistically significant. Smart Meters,GreatBritain,QuarterlyreporttoendJune2013. market-review-final-domestic-proposals.pdf engagement-energy-market-tracking-survey-2013.pdf scoreboards/10_edition/index_en.htm http://ec.europa.eu/consumers/consumer_evidence/consumer_ million gas and electricity meters with smart meters. Smart million gasandelectricitymeterswithsmartmeters.Smart lowest amongdomesticservices markets. Theoverall th lowest intheEU(70.5 th ConsumerMarkets Scoreboard, 464 is at an early stage, with mass roll-out 467 000 . The true proportion of those who in smallernon-domesticsites. points comparedto74.1)and 467 th rd placeEU-wide . ByEuropeanstandardsthis lowest among31 points) between2012and 400

domestic smart meters domestic smartmeters points compared 465 ) andsaw domestic 465 466 468 ,

signed upto has a Confidence Code for switchingservices,which manyhave comparability toolsfor electricityandgasareavailable.Ofgem and complexityoftariffsoffered bysuppliers.Onlineprice a result,newruleshavebeenintroducedtolimitthenumber Ofgem hasaConsumerVulnerabilityStrategy the companysaysit can dono more toresolve the complaint. Domestic consumersandmicrobusinessescangosoonerif power tomake afinancialawardofuptoGBP10 Ombudsman, whohasthethe can seekredressthrough If complaintsareunresolvedaftereightweeks,customers Complaints andvulnerablecustomers (the firstwasorganised by Which? and38 reports onfuelpoverty period 2013-2021.Ofgem approves largeinfrastructure electricity transmissionnetworksinGreatBritainover the take-up ofservices canbeimproved. these servicesislow, however, andOfgem isreviewinghow and inothersituationsAwarenessamongstconsumersof vulnerable customersaremetintheeventofpower cuts companies and suppliers, which ensures the needs of There isa“priorityservicesregister”managedby network of complaintsabouttheimpactonbills. Energy CompanyObligationhasbeenscaledbackasaresult in winter. Plannedfundingfor energyefficiencyunderthe Vulnerable customersareprotectedfromdisconnection through suppliersfor thoseinreceiptofcertainbenefits. for olderpeopleandlow-cost energy-efficiencymeasures and fuelpayment.Measuresincludeauniversalbenefit targeted atvulnerablecustomersthroughthebenefitssystem number oftariffsonoffer andtheirdiffering structures Also, manyconsumershavereportedbeingconfusedby the 473 472 471 470 469 around GBP22 The recenttransmissionpricecontrol(RIIO-T1)authorised Infrastructure 6.

https://www.ofgem.gov.uk/ofgem-publications/64003/ DECC, AnnualReport onFuelPoverty Statistics2013,May 2013. https://www.ofgem.gov.uk/ofgem-publications/75550/consumer- https://www.ofgem.gov.uk/ofgem-publications/74615/ https://www.ofgem.gov.uk/ofgem-publications/39452/ pricecontrolexplainedmarch13web.pdf vulnerability-strategy.pdf confidence-code.pdf perceptions-ofgem.pdf consumer-engagement-energy-market-information-needs-and- 470 . Arecentinnovation hasbeen“collective switching” THE UNITEDKINGDOM billion 472 473 . Thereareanumberofmeasures ofinvestmentinthegasand Degrees in 2012). Degrees in2012). 471 andDECC 469 000. . As . As

165 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 166 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014 one longrangestoragefacility(Rough). terminals (IsleofGrain,SouthHookandDragonLNG) at Moffatis11.0 but does not allow physicalreverse flow. Theexitcapacity the Netherlandshasanimportcapacityof19.3 and export20.1 (IUK) canflow gasinbothdirections(import27 to thewest(exportonly).TheinterconnectorwithBelgium Netherlands, aswellwithNorthernIrelandand The BritishgassystemisinterconnectedwithBelgium,the Gas selected intheUK. electricity infrastructureprojectsofcommoninterestwere guidelines for trans-Europeanenergyinfrastructure,17 to 6 around 10 However, theinterconnectivitylevelisstilllow. Asaresult, from 3.5 interconnection betweenBritainandneighbouringcountries 500 interconnector withNorthernIreland.Thecompletionofthe IFA interconnectorwithFrance, andthe500 interconnector with the Netherlands, the 2 Existing interconnectionincludesthe1 Electricity capacity provisions (gas). 477 476 475 474 has deliveredinvestmentofover GBP1.4 electricity transmissionconnectionsoffshore.Theregime A competitivetenderprocessisusedtograntlicencesfor and lowering bills’inDecember2013. document ‘Moreinterconnection:improving energysecurity planning ofinterconnection.TheDECCalsopublishedthe from thecurrentdeveloper-ledapproachtomorecentralised Regulation project,Ofgem isreviewingwhethertomove As part ofitsIntegratedTransmission Planningand through StrategicWider Works investments astheyarisethroughoutits8-yearperiod THE UNITEDKINGDOM

https://www.ofgem.gov.uk/publications-and-updates/offshore- Regulation (EU)No 347/2013;OJ L115,25.4.2013,p.39–75. http://ec.europa.eu/energy/infrastructure/pci/doc/2013_pci_ https://www.ofgem.gov.uk/electricity/transmission-networks/ transmission-factsheet projects_country.pdf critical-investments/strategic-wider-works MW EirGridEast-West Interconnectorin2012increased different markets havebeen proposed. Under the GW to4 GW ofpotentialnewinterconnectionprojects bcm/year). TheBBLinterconnectorwith GW. 476 bcm/year. There arethreeLNGimport 474 (electricity) and incremental (electricity)andincremental billion todate 000 MW BritNed MW Moyle MW MW 000 bcm/year bcm/year 477 475 .

pressures inthewintersof2009/10and2010/11. of themarket in respondingtorecorddemandandsupply severe infrastructureandsupplyshocks’giventhesuccess is resilientto ‘all butthemostunlikely combinationsof decade. will decreasetohistoricallylow levelsinthemiddleof There isageneralexpectationthatgeneratingmargins Electricity Market Reform isinresponsetotheseconcerns. the mid-term.Theintroductionofacapacitymarket under There areconcernsaboutpower generationadequacyin Electricity Securityofsupply 7. assessment proceduresareadoptedtimely. non-legislative measuresstreamliningtheenvironmental for projectpromoters,andtheadoptionoflegislative the publicationofmanualonpermitgrantingprocess that othermeasuresforeseen for 2014and2015,including the one-stopshopisfunctioningwithoutanyhurdlesand projects ofcommoninterest.TheUKhastoensurenow that facilitating andcoordinatingthepermitgrantingprocessfor 18 by aWritten MinisterialStatementtotheUKParliament on (so calledone-stopshopfor ProjectsofCommonInterest) and ClimateChangeastheNationalCompetentAuthority The UKhasdesignatedtheSecretaryofStatefor Energy flows betweenGreatBritain, Northern IrelandandIreland. infrastructure. Theseincludeprojectstoallow bidirectional identified undertheguidelinesfor trans-Europeanenergy A numberofgasprojectscommoninterestwere 480 479 478 assessment published the National Emergency Plan. DECC’s risk Under the EU Gas Security of Supply Regulation, DECC Gas margins maydecreaseinNorthernIrelandpost2020.

DECC, Riskassessment for thepurpose ofRegulation(EU) http://www.eirgrid.com/media/Generation%20Capacity%20 https://www.ofgem.gov.uk/ofgem-publications/75232/electricity- No 994/2010onsecurity ofgassupply, November 2011. Statement%202014.pdf capacity-assessment-report-2013.pdf November 2013.Theone-stop shopisresponsiblefor 478 Thereisalsoanexpectationthatgenerating 480 reported that UK gas supply infrastructure 479

475 ( Sources: Eurostat,CEER,NationalRegulatoryAuthority, ECcalculations. ( THE UNITED KINGDOM – 2 1 ) ) Switching rates(domestic) Electricity market value( Number ofmainelectricityretailers HHI inelectricityretailmarket Number ofelectricityretailers HHI inpower-generation market Market shareofthelargestpower-generation company Regulated pricesfor non-households–electricity Number ofmainpower-generation companies Number ofsmartmetersinstalled(June2013) Peak demand(MW) Installed generationcapacity(MW) Regulated pricesfor households–electricity of Number ofcompaniesrepresentingatleast95% ELECTRICITY and gasconsumptioninthehouseholdnon-householdsectors(average bands)andannualaverage retailprices. Market valueisanestimationofthesizeretailelectricityandgasmarkets. Itiscalculatedusingdataonelectricity Domestic 12%acrossgasandelectricity. net power generation 2 ) (bn€) KEY INDICATORS 12% 6 1 1 32 1 1 25% No 7 609 56 84 No 17 33.670 720 483 200 900 400 ( 1 ) Number ofmainnaturalgasretailers HHI ingasretailmarket Number ofretailerssellingnaturalgastofinalcustomers HHI ingassupplymarket Market shareofthelargestentitybringingnaturalgas Regulated pricesfor non-households–gas Number ofmaingasentities Regulated pricesfor households–gas into country Number ofentitiesbringingnaturalgas GAS Gas market value( Switching ratesfor gas(domestic) THE UNITEDKINGDOM 2 ) (bn€)

7 2 2 36 N/A 17% No 6 No 23 20.696 11% 373

167 / ENERGY MARKETS IN THE EUROPEAN UNION IN 2014

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