2 Retail electricity and gas markets
2.2 Main trends and benefits of retail market integration
2.2.1 Final consumer demand
2 Retail electricity and gas markets
2.1 Introduction
5 This 3rd edition of the MMR reports on retail markets in a different way compared to the previous two editions. First, the structure is different, as gas and electricity are reported in a single chapter.
Second, on substance, in addition to developments, the chapter addresses certain retail issues in questions, the chapter analyses price and non-price indicators; in addition, it contains an in-depth functioning, such as consumer behaviour, end-user price regulation and barriers to cross-border entry into retail energy markets.
6 In Section 2.2, this chapter presents the main trends in energy (i.e. electricity and gas) prices and demand in 2013. Section 2.3 assesses the level of competition in retail energy markets, including indicators on market structure, competition performance and consumer behaviour. The focus of Sec-tion 2.4 is on barriers to retail market entry, including cross-border entry and retail price regulaSec-tion.
-tion. Section 2.5 ends this chapter with conclusions.
2.2 Main trends and benefits of retail market integration
2.2.1 Final consumer demand
7 In 2013, against a background of low economic growth, electricity demand in Europe remained vir-tually unchanged for the third consecutive year (0.2%, -0.1% and -0.2% year-on-year variations in consumers4 was 2,966 TWh.
8 The demand for natural gas5 reached 4,964 TWh in 2013. Compared to the year before, natural gas demand fell by 1.2% per cent, continuing the trend of a falling year-on-year gas demand in Europe (-10.5% in 2011 and -2.2% in 2012). Since most of the natural gas supplied in Europe is consumed by the industrial and commercial sector and for power generation6, the reduced rate of demand con-traction could be interpreted as a sign of industrial economic recovery. However, it is also relevant to consider that colder than average temperatures in Northern Europe during February and March 2013 contributed to higher than expected household demand during this period.
9
-crease since 20097. This has affected the demand for electricity and natural gas in Europe.
4 Based on the Eurostat supply category of ‘electricity available for the internal market’, i.e. the amount of electricity to be sold and supplied to the domestic market, including all losses that occur during transportation and distribution, and the amount of electricity consumed in the energy sector for commercial needs.
‘gross inland consumption’ as of 19 May 2013 is presented. In this category, supply is equal to the sum of production, net imports and stock change. Eurostat data are provisional for some countries.
6 In 2012, 2,049.8 TWh of gas were consumed by the residential and commercial sector, followed by industry (1,575 TWh) and power generation (1,241 TWh). Eurogas, Statistical Report 2013, http://www.eurogas.org/statistics/.
7 In 2013, European public debt increased by three per cent compared to 2012, which is the lowest increase since 2009 (by 13%, 12%, 6%, 5% and 3% for the year 2012-2013).
year change (%)
Source: Eurostat (10/7/2014) and ACER calculations
Note: Electricity availability for the internal market and Gross inland gas consumption.
10 However, the European electricity and gas market trends presented above are not consistent across all MSs. Consumption dynamics in different MSs have varied. This is partly dependent on the eco-consumption. However, other reasons, such as the trend towards cheap coal as the fuel of choice for
-ments and the weather all affected electricity and gas demand in 2013 (see the Wholesale chapter section 4.2).
11 As Figure 2 demonstrates, for a large majority of European countries, electricity demand fell
com-8 period, during which almost all MSs witnessed modest demand growth.
12 Cyprus, Estonia, Greece, Latvia and Romania exhibited the sharpest drop in electricity demand by end consumers in 2013 compared to the previous year. In Cyprus and in Greece, the decline in elec-year-on-year demand, coinciding with the fall in both countries’ GDP (-6.9% and -5.8%, respectively).
In Latvia, electricity demand was affected (-8.6% compared to 2012) by the closure of one of Latvia’s largest energy-intensive businesses in the metal industry, whilst in Estonia the demand reduction was probably affected by the unusually mild end of the year.
8 Measured by the Compound Average Growth Rate (CAGR). CAGR is calculated by taking the nth root of the percentage of the year-on-year demand growth rate for the period analysed, where n is the number of years in the period being considered (in this
TWh %
6,000 4,000 2,000
-4,000 -2,000
-6,000 0
6 4
-2 0 2
-4 -6
Electricity Demand GDP % Growth Gas Demand
2008 2009 2010 2011 2012 2013
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13 Compared to 2012, the demand for electricity in 2013 increased in eight MSs, the greatest increase being in Lithuania (3.0%). All countries in which there was an increase in electricity demand also experienced a rise in GDP in 2013 compared to 2012, with the exception of Ireland, which showed no year-on-year GDP change.
Source: Eurostat (10/7/2014) and ACER calculations
Note: Electricity available for the internal market. The information is based on Eurostat estimates for electricity demand, although it represents the supply of electricity to end users in the EU. Data for Portugal were revised based on information provided by ERSE (3/7/2014). According to CREG and RAE, Belgian and Greek electricity demand in 2013 declined by 1.3% and 2.2% respectively compared to 2012. According to ANRE, compound electricity demand growth from 2009 to 2012 was 1.7%, i.e. higher than presented.
%
5
0
-5
-10 CY LV RO GR EE IT NL SE BG HR MT SK FI ES LU DE UK DK CZ EU28 PT SI HU AT IE PL FR BE LT
-9% -9% -6% -3% -3% -2% -2% -2% -2% n.a. -2% -2% -1% -1% -1% -1% -1% -1% -0% -0% 0% 0% 0% 1% 1% 1% 1% 2% 3%
-3% 2% 1% -0% 3% 1% 1% 1% 1% -2% 2% 2% 2% 0% 1% 0% -0% -1% 1% 1% -1% 3% 1% 2% -1% 2% -0% -0% 3%
Demand 2009-2013 Demand 2013/2012
Source: Eurostat (10/7/2014) and ACER calculations
Note: Gross inland consumption. The information presents the sum of production, net imports and stock change. Eurostat data are provisional for some countries.
14 In 11 out of the 269 MSs where gas is supplied, demand for natural gas in 2013 fell by more than 5% compared to 2012 (see Figure 3). This decline was most pronounced in Lithuania, Luxembourg, Greece, Slovakia and Hungary.
15 In Lithuania, in 2013, gas demand decreased compared to 2012 due to an increase in the consump-tion of bio-fuel and use of alternative-fuel boilers by household and non-household consumers. Gas demand in Lithuania was further affected by reduced electricity production quotas10.
16 In Greece, the decline in gas consumption correlates with the fall in GDP (-5.8%). In Luxembourg, the decline in gas demand was mainly due to the reduced activity of a combined-cycle gas turbine plant11.
17 In Germany and Slovenia, the gas demand growth in 2012-2013 was not only the highest, but also in gas demand was due to increased industrial output and a colder winter12. In Slovenia, the 6.9%
increase in gas demand corresponds to the increased output of thermal electricity power plants13.
9 No gas supply in Cyprus and Malta.
10 Electricity production quotas in Lithuania are supported through the Public Service Obligation (PSO) component which is power plant, which is needed to support the security of electricity supply and reserves for the functioning of the system. In 2013,
was reduced from 0.93 TWh in 2012 to 0.8 TWh in 2013. As a result of this, 2013 gas consumption fell by almost 100 million cubic metres compared to 2012.
11 In total, a reduction of apprximately 2 TWh for all electricity producers and cogenerations. Source: ILR, Luxembourg.
12 According to DWD, the German meteorological service, the temperature was 0.7 °C lower in 2012/2013 winter compared to 2011/2012.
%
10 5
0 -5
-20 -15 -10
LT LU GR SK HU ES RO IT FI AT SE HR PT IE EU28 LV BE UK DK PL EE NL CZ FR BG DE SI
-19% -15% -12% -11% -11% -8% -8% -6% -5% -5% -5% n.a. -4% -3% -1% -1% -1% -1% 1% 1% 2% 2% 3% 3% 4% 6% 7%-7% -2% 7% 0% -2% -3% 2% -1% -5% 1% -3% 0% -1% -2% -2% -0% 0% -5% -5% 4% 6% -2% 0% -2% 2% -4% -7%
Demand 2009-2013 Demand 2013/2012
26
18 Estonia’s two-percent year-on-year gas demand growth in 2013 is relatively low compared to previ-(AS Nitrofert)14.
19 Despite the high 8.1% GDP growth in 2013 compared to 2012, Romania experienced a decline in electricity and gas demand in 2013. The rise in Romanian GDP was mainly due to the non-energy-intensive automobile, textile and food industry. Furthermore, the rising Romanian prices and the an-ticipation of their continued rise are making household consumers increasingly aware of the savings
have affected demand.
20 The stagnating 2013 electricity consumption and the declining gas consumption were further affect-ed by an increase in electricity and gas prices for the most representative household and industrial consumer bands, as shown in Section 2.2.2.