Unicen Press Conference Handout

Competitiveness of the
Greek electricity
intensive industry
Roland Berger Study
Executive Summary
Athens, November 2014
STRICTLY CONFIDENTIAL
Contents
Page
A. Current situation and project objectives
B. Analysis of the market prices
C. Analysis and comparison of the electricity markets
12
D. Recommendations
14
This document shall be treated as confidential. It has been compiled for the exclusive, internal use by our client and is not complete without the underlying detail analyses and the oral presentation. It may
not be passed on and/or may not be made available to third parties without prior written consent from Roland Berger Strategy Consultants. RBSC does not assume any responsibility for the completeness
and accuracy of the statements made in this document.
Roland Berger Strategy Consultants
20141110_Unicen_Press_Conference_Handout.pptx
A. Current situation and

project objectives
A CURRENT SITUATION AND PROJECT OBJECTIVES
Analysis about the competitiveness of the Greek electricity intensive

industry and possible measures for improvement
Current situation and main project objectives

Current situation
Project objectives
> Strong GDP decline of Greek economy, has

critically affected the production system of the
country
> The Greek electricity intensive industry suffers in
the last years from increasing taxes, regulated
fees and continuous increasing electricity prices
> Production costs, which strongly depend on
electricity price, are perceived by the Greek
market players in comparison to other EU
countries as not competitive and as endangering
the Greek productivity and economy
> Need for policies and governmental measures
that will lead to immediate and sustained
recovery of the economy is more urgent than
ever
> Analyzing the current pricing models (e.g.

regulated RES fees, public sector fees, grid fees,
excise duty etc.) and identify the final price paid by
the electricity intensive industries in the benchmark
countries
> Analyzing and benchmarking the electricity
markets in the three selected countries Germany,
Italy and Spain
> Validation of the results of analysis by interviewing
Greek, German, Italian and Spain industrial
consumers
> Elaboration of possible adaption and adjustments
of the electricity system/pricing in Greece based
upon above findings.
Source: Unicen, Roland Berger
B. Analysis of the
market prices
B MARKET PRICE ANALYSIS
Starting point: Eurostat shows good competitive situation for Greek

industries verification through Roland Berger necessary
Electricity prices for industrial consumers (70 GWh 150 GWh per anno)1)
Prices2) in 2013-S2 [/MWh]
Electricity price evolution year end [/MWh]

140
116,2
120
97,1
100
100
75,8
80
120
80
66,0
60
60
40
40
20
20
0
Germany
Taxes & Levies
Greece
Network costs
Spain
Italy
Energy & Supply
2009-S2
Greece
2010-S2
2011-S2
Germany
2012-S2
2013-S2
Italy
Spain
1) Eurostat data for a consumption higher than 150 GWh is not available
2) UNICEN: In case of Greece the price in 2013-S2 was 74 /MWh, 62 /MWH is the price for 2014-S1,
Source: Eurostat
B MARKET PRICE ANALYSIS
Price components in selected countries comparable

Example Germany
Annual consumption < 20 GWh (Medium-Voltage: 100kW/1.600h - 4.000kW/5.000h)
Generation & supply

CHP Cogeneration
Interruptible services
Source: VEA, BDEW; Stand: 05/2014
Concession
19 StromNEV
Excise duty
RES (Renewables)
Offshore liabilities
B MARKET PRICE ANALYSIS CLASSICAL DISCOUNTS
Price discount of more than 50% in the classical price components

Executive summary for classical discount in selected countries prices 2014 [/MWh]
Small industrial consumers
Electricity intensive consumers with discounts1)
161,2
146,2
149.12)
140,6
124,5
54%
48%
40%
20%
74,8
5%
53,7
8%
46%
52%
60%
Germany
Italy
Spain
Price without taxes and levies
80%
61,9
15%
83%
85%
Spain
Greece
62.72)
95%
92%
Greece
59,5
17%
Germany
Italy
Non refundable levies
1) industrial consumer with a consumption profile not flexible, annual consumption higher than 150 GWh; 2) Average of 3 countries - excl. Greece
Source: Roland Berger analysis
B MARKET PRICE ANALYSIS CLASSICAL DISCOUNTS (Backup)
Greek electricity intensive Industries are paying between

98 and 62 /MWh RES discount with the highest impact
Electricity prices for Greek electricity intensive Industries [/MWh]

Price Structure 2014
Components
Prices in /MWh
customers connected to 20KV

0,5 GWh < C 13 GWh
13 GWh < C 50 GWh
150KV level normal tariff

50GWh < C 1000GWh
150KV level tarif discount

50GWh < C 1000GWh
Energy & supply

CO2
Grid fees
Sum (1)
83,20
4,90
11,20
99,30
69,70
4,90
11,20
85,80
58,00
4,60
3,50
66,10
46,00
3,40
3,50
52,90
RES (Renewables)
PSO( Public services)
Excise duty
Sum (2)
12,80
6,90
5,53
25,23
2,30
4,14
5,45
11,89
2,20
4,14
2,80
9,14
2,20
4,14
2,70
9,04
124,53
97,69
75,24
61,94
Total
Source: Roland Berger analysis, UNICEN
B MARKET PRICE ANALYSIS ADDITIONAL COMPENSATION
High additional compensation like interruptible services and special

TSO-agreements in Italy and Spain
Executive summary for additional compensation in selected countries - prices [/MWh]
Prices after classical discounts1)
Possible additional compensation (Interruptible etc.)
74,8
5%
61,9
59,5
53,7
8%
61,9
62.72)
15%
17%
47,7
9%
52,0
8%
15%
47,5
49.12)
22%
95%
Germany
85%
83%
92%
Italy
Spain
91%
Greece
Germany
85%
92%
78%
Italy
Spain
Greece
1) industrial consumer with a consumption profile not flexible, annual consumption higher than 150 GWh; 2) Average of 3 countries - excl. Greece
B MARKET PRICE ANALYSIS FURTHER POSSIBLE REDUCTION (Backup)
Average pool prices of approx. 50/MWh High price volatility up to

50 /MWh between peak and offpeak time in Italy
Italian pool prices Examples
August 18th 2014
> Average price: 49,18 /MWh

> Min price:
26,00 /MWh
> Max price:
79,30 /MWh
> Average price: 48,20 /MWh

> Min price:
39,83 /MWh
> Max price:
63,13 /MWh
March 3rd 2014
=53/MWh
=23/MWh
10
B MARKET PRICE ANALYSIS SUMMARY
After taking discounts and compensations into account, Greek

industry has competitive disadvantage regarding electricity price
Average electricity price1) for electricity intensive industries2) [/MWh]

116
120
100
97
40
76
75
80
60
Comments
54
52
48
38
66
60
62 62
48
45
35
20
0
Germany
Eurostat 2013-S2
Italy
Spain
Greece
3)
Electricity price after discounts (2014)

Electricity price after additional compensation (2014)
Further possible price reduction (e.g. offpeak arangements) - Estimation
> Highest classical discount for electricity

intensive industries in Germany
> Additional compensation e.g. interruptible
services in Italy and Spain with high price
impact for the local industry, in Germany with less
impact
> Further price reduction possible, Greece with
price compensation by special night tariffs
> Greek electricity prices represents temporary
discounts for 2014, uncertainness about further
support in 2015
> Eurostat data are inadequate and misleading
for policy making purposes
> To create competitiveness in the European
market, governmental actions should be taken
under consideration
1) Offpeak prices during 24 hours are noticeable lower than average prices
2) Industrial consumer with an annual consumption higher than 150 GWh; 3) Industrial consumer with an annual consumption higher than 70 GWh up to 150 GWh
11
C. Analysis and
comparison of the
electricity markets
12
C ELECTRICITY MARKET ANALYSIS - SUMMARY
German market with a fully liberalized market model and highest

compensation rate - Greek market still lacking behind
Flexibilities and key market factors

Key market factors
Impact
GREECE
GERMANY
SPAIN
ITALY
1. Efficient market
structure
2. Interruptible services
3. Imports for self
consumption
4. Bilateral contracts1)
5. Capacity payments
6. Overall discounts
compensations for
Electricity Intensive
Industries2) [/MWh]
123)
47
274)
23
1) Bilateral contracts outside the pool between generators and consumers; 2) Estimation for 2014; 3) Uncertainness about further support in 2015 4) Estimation for 2013
Source: Euroconsultants; Roland Berger
13
D. Recommendations
14
D RECOMMENDATIONS
Short term governmental actions can be taken immediately
What are
major recommendations?
Result
of the discussion
about possible governmental actions
High
5
1
IMPACT ON
COMPETITIVENESS
IMPROVEMENT
2 Implementation of interruptible services
2
3
1 Maintain PPC discounts to HV electricity tariffs
3 Adjustment of the non-energy costs to EU levels

4 Allow virtual imports
5 Market opening by replacement of mandatory pool
Low
Short
term
Source: Roland Berger, Interview with Unicen
TIMELINE
Long
term
15
Let's think:
act!
16

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What is the current situation of the Greek electricity intensive industry?

What is the current situation of the Greek electricity intensive industry?

What are the major differences between the electricity markets in Greece, Germany, Italy and Spain?

What are the major differences between the electricity markets in Greece, Germany, Italy and Spain?

Competitiveness of the

Athens, November 2014

A. Current situation and project objectives

B. Analysis of the market prices

C. Analysis and comparison of the electricity markets

A. Current situation and

A CURRENT SITUATION AND PROJECT OBJECTIVES

Analysis about the competitiveness of the Greek electricity intensive

Current situation and main project objectives

> Strong GDP decline of Greek economy, has

> Analyzing the current pricing models (e.g.

Source: Unicen, Roland Berger

B MARKET PRICE ANALYSIS

Starting point: Eurostat shows good competitive situation for Greek

Prices2) in 2013-S2 [/MWh]

Electricity price evolution year end [/MWh]

Energy & Supply

B MARKET PRICE ANALYSIS

Price components in selected countries comparable

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

Generation & supply

B MARKET PRICE ANALYSIS CLASSICAL DISCOUNTS

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

Small industrial consumers

Electricity intensive consumers with discounts1)

Price without taxes and levies

Non refundable levies

B MARKET PRICE ANALYSIS CLASSICAL DISCOUNTS (Backup)

Greek electricity intensive Industries are paying between

Electricity prices for Greek electricity intensive Industries [/MWh]

customers connected to 20KV

150KV level normal tariff

150KV level tarif discount

Price without taxes and levies

Energy & supply

Non refundable levies

Source: Roland Berger analysis, UNICEN

B MARKET PRICE ANALYSIS ADDITIONAL COMPENSATION

High additional compensation like interruptible services and special

Prices after classical discounts1)

Possible additional compensation (Interruptible etc.)

Price without taxes and levies

Non refundable levies

B MARKET PRICE ANALYSIS FURTHER POSSIBLE REDUCTION (Backup)

Average pool prices of approx. 50/MWh High price volatility up to

> Average price: 49,18 /MWh

> Average price: 48,20 /MWh

March 3rd 2014

Source: Roland Berger analysis

B MARKET PRICE ANALYSIS SUMMARY

After taking discounts and compensations into account, Greek

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

Electricity price after discounts (2014)

> Highest classical discount for electricity

C ELECTRICITY MARKET ANALYSIS - SUMMARY