Description
a comprehensive report on the German Electricity market, the major utilities and their market share and the road map to enter in to german market
CONTENTS 1. Introduction/Executive summary 2. Limitations 3. Aim . 4. Goals a. Short term b. Long term 5. Over view of German electricity market a. Growth in electricity generation b. Growth in consumption of electricity c. Demand-Supply gap d. Installed transformer capacity and forecasted capacity e. Estimated price structure f. Government initiatives 6. Major utilities a. RWE b. E.ON c. EnBW d. Vattenfall 7. Strategies/Action plan (2010-2015) 8. Conclusion 9. Bibliography
Executive summary
This energy market report offers and incisive and reliable overview of the power sector scenario of Germany. The report provides a complete picture of the power sector situation of the country, the energy generation and consumption pattern, the source mix of energy generation, the price structure, and the government initiatives. This report also highlights the future demand of power requirement and the gap between demand and supply and gives a comprehensive picture of the potential for the transformer market in terms of replacement and new demand. The report also highlights the major utilities operating in Germany and their market share in terms of electricity generation and transmission. This gives a clear idea of the market scenario of the utilities. The report also sums up the major steps taken in the past to enter in to the German market and the challenges faced by us, the resources and the extent of investment needed. With the help of the forecasted market potential of distribution transformer the strategies to enter in to the German market and to tap the market share is framed.
Limitations: For calculation of future distribution transformer demand 1. Growth rate for distribution transformer is considered to be constant and is taken as 0.5% 2. Replacement market due to ageing is taken as 3% 3. Replacement market due to transformer failure is taken as 1% 4. Average transformer rating in Germany is taken as 400kVA 5. Market share of utilities is taken as constant over the years 6. The concept of energy efficiency and carbon emissions is not taken into consideration in this report. 7. Forecasted data is based on the information collected from various utilities annual reports as other websites.
Aim To be among the top 3 suppliers of Distribution Transformers / Energy Efficient Transformers in major German utilities RWE, EnBW, E.ON and Vattenfall Goal Short term To qualify our products with all the major utilities in Germany by 2011 and to get at least one trial order from each utility by 2012. Long term To get a market share of 25% in each utility by 2013 in the segment of distribution transformers and to grow at a rate of 7.5% thereof.
Germany Country profile
Germany, located in the Central Europe, bordering the Baltic Sea and the North Sea, between the Netherlands and Poland, south of Denmark, is one of the Europe’s largest economy and second most popular nation in Europe. Its population is over 82 million people, compared with about 60 million each in the next largest European countries of France and the United Kingdom. Its economy is also the largest in Europe, the third-largest in the OECD and the fifth-largest in the world. In terms of geography, Germany is the fourth-largest country in the European Union (after France, Spain and Sweden), the country has almost 2 400 km of coastline along the Baltic and North Seas. Its GDP (PPP) is $2.811 trillion (2009 est.), which is 6th in the world and its real growth rate is -5% (2009 est.). GDP grew just over 1% in 2008 and contracted roughly 5% in 2009. Germany crept out of recession in the second and third quarters of 2009, thanks largely to rebounding manufacturing orders and exports - primarily outside the Euro Zone - and relatively steady consumer demand. The German economy probably will recover to about 1.5% growth for the year 2010. Structure of German Electricity market (as of 2007)
Four companies dominate the electricity market, E.ON, RWE, EnBW and Vattenfall (the Big Four). Combined, they have 70% of capacity and produce three-quarters of the electricity. There is no independent system operator. Rather, the Big Four each operate their own transmission systems and are obliged to provide third-party access5 (TPA) to their networks. The Big Four also dominate retail supply and distribution, in part through cross-ownership of municipal utilities, or Stadtwerke. Together RWE and E.ON control 70% of the high-voltage network and 50% of the medium- and low-voltage networks. These vertically integrated companies are required to have legally unbundled their supply and trading arms from the monopoly sides of their businesses, namely transmission and distribution.
German Transmission system
The Big Four each own and operate their own transmission systems via legally unbundled companies, E.ON Netz, RWE Transportnetz, EnBW Tranportnetze and Vattenfall Europe Transmission, with the country divided into four large zones, plus two small zones, one covering the Hamburg metropolitan area managed by Vattenfall and one in southern Germany managed by RWE The four grid operators co-ordinate their operations under the terms of the Union for the Co-ordination of Transmission of Electricity (UCTE), an association of transmission system operators from countries in western and central Europe. In addition, the four transmission system operators have formal agreements between one another governing their interactions. There are over 400 distribution network operators in Germany. While transmission is legally unbundled from other activities, full legal unbundling of large distribution network operators (more than 100 000 customers) from retail activities will not come into effect until 1 July 2007. Small distribution networks must only have functional and account unbundling, which was phased in for both large and small distribution networks on 13 July 2005.
Generation and consumption details.
GWh production 454116 458645 449286 450085 483127 554790 553975 561414 521065 533964 540045 536054 559947 569289 574072 587812 583989 587283 548371 604694.14 GWh consumption 452466 451750 448128 450871 482126 543764 546122 555629 516998 531314 532613 530766 544026 552673 556371 559078 555899 557162 526865 578365.807
year 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
The generation has grown by 1.64% over the year and the consumption has grown by 1.4%.
Installed transformer capacity
As of 2007 the transformer installed capacity in Europe is
Installed Transformer Capacity (Total MVA 19912010)
35000 30000 25000 MVA 20000 15000 10000 5000 0 1 3 5 7 9 11 13 15 17 19 years Series1
Installed transformer capacity for Germany, in terms of number of pieces of transformers and the market potential is
Based on the above data the demand for distribution transformers and the market potential in Germany is arrived as shown below.
Replaceme nt market Number of due to new transformers ageing market(0. year (pcs) (3%) 5%) 2004 432800 12984 2164 2005 2006 2007 2008 2009 2010 2011 434964 437138.82 439324.5141 441521.1367 443728.7424 445947.3861 448177.123 13048.92 13114.164 6 13179.735 42 13245.634 1 13311.862 27 13378.421 58 13445.313 2174.82 2185.6941 2196.6225 7 2207.6056 8 2218.6437 1 2229.7369 3 2240.8856 replacemen t market due to total failure of T/F t/f(1%) market 4328 19476 19573. 4349.64 38 19671. 4371.3882 25 4393.24514 19769. 1 6 4415.21136 19868. 7 45 4437.28742 19967. 4 79 4459.47386 20067. 1 63 4481.77123 20167.
market potenti al in crores 681.66 685.06 83 688.49 36 691.93 61 695.39 58 698.87 28 702.36 71 705.87
2012 2013 2014 2015
450418.0086 452670.0987 454933.4491 457208.1164
69 13512.540 26 13580.102 96 13648.003 47 13716.243 49
1 2252.0900 4 2263.3504 9 2274.6672 5 2286.0405 8
4504.18008 6 4526.70098 7 4549.33449 1 4572.08116 4
97 20268. 81 20370. 15 20472. 01 20574. 37
9 709.40 84 712.95 54 716.52 02 720.10 28
The above table indicates that there is a huge potential for the distribution transformers in Germany. This is arrived by not taking into consideration the concept of Energy efficiency and carbon emissions. By the fact that Germany is moving towards energy efficient distribution transformers the scope for amorphous transformers increases much more. Market potential of the utilities in Germany.
market potenti al in crores 691.93 61 695.39 58 698.87 28 702.36 71 705.87 9 709.40 84 712.95 54 716.52 02 720.10 28 RWE(30 %) In Crores 207.580 83 208.618 74 209.661 83 210.710 14 211.763 69 212.822 51 213.886 62 214.956 05 216.030 83 E.ON(21 %) EnBW(12 Vattenfall(1 Others(25 In %) 2%) %) Crores In Crores In Crores In Crores 145.306 83.03233 83.0323331 172.9840 58 32 6 274 146.033 83.44749 83.4474948 173.8489 12 48 3 476 146.763 83.86473 174.7181 28 23 83.8647323 923 147.497 1 148.234 58 148.975 76 149.720 64 150.469 24 151.221 58 84.28405 6 84.70547 62 85.12900 36 85.55464 86 85.98242 19 86.41233 4 84.2840559 7 84.7054762 5 85.1290036 3 85.5546486 5 85.9824218 9 86.412334 175.5917 833 176.4697 422 177.3520 909 178.2388 513 179.1300 456 180.0256 958
Based on the projected market potential of distribution transformers in Germany the market share of the top utilities in Germany over the years is estimated. Here it is assumed that the market share would remain the same over the years.
The projected demand for replacement market and new market doesn’t take in to consideration the concept of Energy efficient and cleaner environment, which the European countries are implementing these days. This energy efficient and cleaner environment (in terms of less carbon emission) concept gives a huge scope for the Amorphous Metal Core Distribution Transformers. Thus there would be more demand, in terms of MVA, than the projected one. This could be one of the major tools for Vijai Electricals Limited, the leading producers of Amorphous Metal Core Distribution Transformers to enter in to German market.
Electricity prices over the years
The graph above illustrates price components of a typical German electricity tariff including all applicable taxes. The final price represents the cost the average German pays per kWh. Prices fell steeply after the market was liberalized in 1998, but have since more than regained the pre-liberalization level. Both energy costs and taxes have risen. A new tax, the Stromsteuer or electricity tax, was introduced by the government in 2000. Germany is now the 3rd most expensive country in Europe in which to buy domestic power. Taxation (excluding VAT) accounts for around 25% of energy prices,
transmission and distribution costs account for 25-30% and energy costs (and supplier margin) around 45-50% of total pre-VAT prices.
Government initiatives(Report adopted by the Federal Government on 5
November 2008) The German Government’s Integrated Energy and Climate Program (IEKP) has put important policies in place for a state-of-the-art, secure and climate-compatible supply of energy in Germany. Germany can restrict its level of dependency on imported oil and gas if it uses a broad range of energy sources (including domestically available lignite), increases energy efficiency, promotes energy conservation and strongly expands renewable. The expansion of renewable forms of energy can substitute fossil fuels. The aim of the revision of the statutory provisions regarding the use of renewable in the power sector is to raise the proportion of power generated from renewable to at least 30 percent by 2020 and to keep increasing it thereafter. The German Government is aware of the situation facing consumers due to the rising energy costs. In the short term, people on low incomes are being helped by targeted welfare policy measures, such as the adjustment in the housing allowance by the Federal Government, backdated to 1 October 2008. The revision of the housing allowance rules means that the allowance will in future be based on the cost of renting the apartment including heating; in the past, heating costs were excluded. As a result, housing allowance is to be increased by an average of approx. 60 percent for the existing recipients. So the state is alleviating the impact of rising energy costs on low earners. Recipients of Unemployment Benefit II will be reimbursed with their rental and heating costs as well as incidental costs.
The German Government has launched a package of measures to intensify competition on the electricity and gas markets; in particular, this should help to restrict the increases in electricity and gas prices in the medium term. Also, the Federal Government is working at EU level for a more effective unbundling of energy utilities and for better regulation on the internal market. In this way, competition is to be intensified, since only competition can serve as a guarantor for fair and favorable prices. Germany is the international market leader and top innovator in energy efficiency technologies. The efforts by other industrial countries and by emerging and developing countries to boost energy efficiency are creating a substantial market potential for German firms, and thus make sense both in commercial terms and from the point of view of energy security. Via its Energy Efficiency Export Initiative and via bilateral cooperation, the German Government aims to make an additional contribution towards boosting energy efficiency in other major consumer countries through German technology.
Major utilities RWE
Structure of RWE energy
Market position of RWE
Market/product Germany UK Central-eastern Europe Electricity No.2 No. 3 No. 2 in Hungary, no.3 in Slovakia, starting position in Poland Among top 5 Gas No.3 No. 3 No. 1 in Czech republic, leading position in Hungary. No. 6
Europe
Strategic steps by RWE in Germany
1. Generation: maintain market share (output) of > 30% 2. Supply: defend 16% market share (direct sales), improve 3. margin to average EU level 4. Networks: exceed regulatory targets in new incentive regulation 5. Renewable: become one of the leading players Share holder structure of RWE 84% of RWE shares are held by institutional investors The regional breakdown is as shown • • Germany— Usa/Canada 41% 16%
• • •
UK/Ireland Continental Europe Rest of world
13% 13% 1%
Market share of RWE in electricity generation in Germany with respect to its competitors as of 2007 is
German electricity grid of RWE as of 2007 is
RWE electricity customers by core region (2007)
RWE electricity sales by customer group as of 2007
RWE Energy Industrial & corporate customers Distributors Private and commercial customers RWE Power Energy trading Distributors Private and commercial customers 82% 17% 1% 39% 39% 22%
RWE npower Industrial & corporate customers Private and commercial customers 59% 41%
EnBW
EnBW group structure Electricity generation & trading • Generation o EnBW Kraftwerke AG o EnBW Kernkraft GmbH o EnBW Erneuerbare Energien GmbH • Trading /procurement o EnBW Trading GmbH
Electricity grid & sales ? Transmission and distribution o EnBW Transportnetze AG o EnBW Regional AG ? Sales o EnBW Vertriebs-und Servicegesellschaft mbH o Yello Strom GmbH o Watt Deutschland GmbH
Electrical output generated by EnBW group in 2009 15771 MW which is an increase of 771 MW in comparison to 2008.
Competitive position of EnBW
Electricity generation: In the area of electricity generation EnBW is one of the ten largest companies in Europe. In terms of the installed generation capacity as of the end of the fiscal year 2008, it was in eighth place. With regard to Germany, EnBW is number three in electricity generation, after E.ON and RWE. EnBW is one of the four transmission system operators in Germany and operates various grids in BadenWürttemberg.
Electricity sales: In terms of the number of customers and unit sales, the EnBW group is the third largest electricity supplier in Germany.
Vattenfall
Europe’s 5th largest generator of electricity. It operates in all markets of electricity right from generation to transmission, distribution and sales. The parent company Vattenfall AB is 100% owned by Swedish sales. Vattenfall, which is Europe’s fifth-largest generator of electricity with a market share of 19% in the Nordic countries and 12% in Germany, is today positioned between these two groups Vattenfalls market position in different locations of Europe as of 2009. Swede Electricity Generation Electricity Trading Electricity Distribution Electricity sales n 1 Top 3 2 1 Finland 1 Top 3 2 3 Denm ark 1 Top 3 German y 3 Top 3 4 4 Poland Belgiu 7 Top 3 5 5 m Top 3 3 Netherl ands 3 Top 3 2
E.ON
The central Europe market is led by E.ON Energie which is a wholly owned by E.ON. It is one of the largest non-states owned Power Company in terms of electric sales. The majority of its revenue comes from German customers. The core business consists of operation of power generation facilities, transmission and distribution grid and sales of electricity, and to lesser extent gas and heat in Germany and continental Europe. It is one of the four international electric utilities in Germany. The electricity market of E.ON in Germany is • Power supplied (as of 2008 end) 304 Billion kWh
•
Power generation capacity (MW) 2006—26003 2007--26251 2008—24851
Distribution system of E.ON in German electricity market E.ON Hanse AG E.ON west fallen weser AG E.ON Mitte AG E.ON Edis AG E.ON Avacon AG TEN GmbH E.ON Bayern AG 73.8% 62.8% 73.3% 70.2% 65.8% 53% 100%
Bibliography • • • • • • • • http://www.verivox.net/German_Market_History.pdf http://seedt.ntua.gr/ SEEDT: Strategies for development and diffusion of Energy Efficient Distribution Transformers - EIE-05-056 https://www.entsoe.eu/index.php?id=123 RWE annual report Vattenfall Annual report E.ON annual report EnBW annual report
•
Report adopted by the Federal Government on 5 November 2008
doc_622026692.doc
a comprehensive report on the German Electricity market, the major utilities and their market share and the road map to enter in to german market
CONTENTS 1. Introduction/Executive summary 2. Limitations 3. Aim . 4. Goals a. Short term b. Long term 5. Over view of German electricity market a. Growth in electricity generation b. Growth in consumption of electricity c. Demand-Supply gap d. Installed transformer capacity and forecasted capacity e. Estimated price structure f. Government initiatives 6. Major utilities a. RWE b. E.ON c. EnBW d. Vattenfall 7. Strategies/Action plan (2010-2015) 8. Conclusion 9. Bibliography
Executive summary
This energy market report offers and incisive and reliable overview of the power sector scenario of Germany. The report provides a complete picture of the power sector situation of the country, the energy generation and consumption pattern, the source mix of energy generation, the price structure, and the government initiatives. This report also highlights the future demand of power requirement and the gap between demand and supply and gives a comprehensive picture of the potential for the transformer market in terms of replacement and new demand. The report also highlights the major utilities operating in Germany and their market share in terms of electricity generation and transmission. This gives a clear idea of the market scenario of the utilities. The report also sums up the major steps taken in the past to enter in to the German market and the challenges faced by us, the resources and the extent of investment needed. With the help of the forecasted market potential of distribution transformer the strategies to enter in to the German market and to tap the market share is framed.
Limitations: For calculation of future distribution transformer demand 1. Growth rate for distribution transformer is considered to be constant and is taken as 0.5% 2. Replacement market due to ageing is taken as 3% 3. Replacement market due to transformer failure is taken as 1% 4. Average transformer rating in Germany is taken as 400kVA 5. Market share of utilities is taken as constant over the years 6. The concept of energy efficiency and carbon emissions is not taken into consideration in this report. 7. Forecasted data is based on the information collected from various utilities annual reports as other websites.
Aim To be among the top 3 suppliers of Distribution Transformers / Energy Efficient Transformers in major German utilities RWE, EnBW, E.ON and Vattenfall Goal Short term To qualify our products with all the major utilities in Germany by 2011 and to get at least one trial order from each utility by 2012. Long term To get a market share of 25% in each utility by 2013 in the segment of distribution transformers and to grow at a rate of 7.5% thereof.
Germany Country profile
Germany, located in the Central Europe, bordering the Baltic Sea and the North Sea, between the Netherlands and Poland, south of Denmark, is one of the Europe’s largest economy and second most popular nation in Europe. Its population is over 82 million people, compared with about 60 million each in the next largest European countries of France and the United Kingdom. Its economy is also the largest in Europe, the third-largest in the OECD and the fifth-largest in the world. In terms of geography, Germany is the fourth-largest country in the European Union (after France, Spain and Sweden), the country has almost 2 400 km of coastline along the Baltic and North Seas. Its GDP (PPP) is $2.811 trillion (2009 est.), which is 6th in the world and its real growth rate is -5% (2009 est.). GDP grew just over 1% in 2008 and contracted roughly 5% in 2009. Germany crept out of recession in the second and third quarters of 2009, thanks largely to rebounding manufacturing orders and exports - primarily outside the Euro Zone - and relatively steady consumer demand. The German economy probably will recover to about 1.5% growth for the year 2010. Structure of German Electricity market (as of 2007)
Four companies dominate the electricity market, E.ON, RWE, EnBW and Vattenfall (the Big Four). Combined, they have 70% of capacity and produce three-quarters of the electricity. There is no independent system operator. Rather, the Big Four each operate their own transmission systems and are obliged to provide third-party access5 (TPA) to their networks. The Big Four also dominate retail supply and distribution, in part through cross-ownership of municipal utilities, or Stadtwerke. Together RWE and E.ON control 70% of the high-voltage network and 50% of the medium- and low-voltage networks. These vertically integrated companies are required to have legally unbundled their supply and trading arms from the monopoly sides of their businesses, namely transmission and distribution.
German Transmission system
The Big Four each own and operate their own transmission systems via legally unbundled companies, E.ON Netz, RWE Transportnetz, EnBW Tranportnetze and Vattenfall Europe Transmission, with the country divided into four large zones, plus two small zones, one covering the Hamburg metropolitan area managed by Vattenfall and one in southern Germany managed by RWE The four grid operators co-ordinate their operations under the terms of the Union for the Co-ordination of Transmission of Electricity (UCTE), an association of transmission system operators from countries in western and central Europe. In addition, the four transmission system operators have formal agreements between one another governing their interactions. There are over 400 distribution network operators in Germany. While transmission is legally unbundled from other activities, full legal unbundling of large distribution network operators (more than 100 000 customers) from retail activities will not come into effect until 1 July 2007. Small distribution networks must only have functional and account unbundling, which was phased in for both large and small distribution networks on 13 July 2005.
Generation and consumption details.
GWh production 454116 458645 449286 450085 483127 554790 553975 561414 521065 533964 540045 536054 559947 569289 574072 587812 583989 587283 548371 604694.14 GWh consumption 452466 451750 448128 450871 482126 543764 546122 555629 516998 531314 532613 530766 544026 552673 556371 559078 555899 557162 526865 578365.807
year 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
The generation has grown by 1.64% over the year and the consumption has grown by 1.4%.
Installed transformer capacity
As of 2007 the transformer installed capacity in Europe is
Installed Transformer Capacity (Total MVA 19912010)
35000 30000 25000 MVA 20000 15000 10000 5000 0 1 3 5 7 9 11 13 15 17 19 years Series1
Installed transformer capacity for Germany, in terms of number of pieces of transformers and the market potential is
Based on the above data the demand for distribution transformers and the market potential in Germany is arrived as shown below.
Replaceme nt market Number of due to new transformers ageing market(0. year (pcs) (3%) 5%) 2004 432800 12984 2164 2005 2006 2007 2008 2009 2010 2011 434964 437138.82 439324.5141 441521.1367 443728.7424 445947.3861 448177.123 13048.92 13114.164 6 13179.735 42 13245.634 1 13311.862 27 13378.421 58 13445.313 2174.82 2185.6941 2196.6225 7 2207.6056 8 2218.6437 1 2229.7369 3 2240.8856 replacemen t market due to total failure of T/F t/f(1%) market 4328 19476 19573. 4349.64 38 19671. 4371.3882 25 4393.24514 19769. 1 6 4415.21136 19868. 7 45 4437.28742 19967. 4 79 4459.47386 20067. 1 63 4481.77123 20167.
market potenti al in crores 681.66 685.06 83 688.49 36 691.93 61 695.39 58 698.87 28 702.36 71 705.87
2012 2013 2014 2015
450418.0086 452670.0987 454933.4491 457208.1164
69 13512.540 26 13580.102 96 13648.003 47 13716.243 49
1 2252.0900 4 2263.3504 9 2274.6672 5 2286.0405 8
4504.18008 6 4526.70098 7 4549.33449 1 4572.08116 4
97 20268. 81 20370. 15 20472. 01 20574. 37
9 709.40 84 712.95 54 716.52 02 720.10 28
The above table indicates that there is a huge potential for the distribution transformers in Germany. This is arrived by not taking into consideration the concept of Energy efficiency and carbon emissions. By the fact that Germany is moving towards energy efficient distribution transformers the scope for amorphous transformers increases much more. Market potential of the utilities in Germany.
market potenti al in crores 691.93 61 695.39 58 698.87 28 702.36 71 705.87 9 709.40 84 712.95 54 716.52 02 720.10 28 RWE(30 %) In Crores 207.580 83 208.618 74 209.661 83 210.710 14 211.763 69 212.822 51 213.886 62 214.956 05 216.030 83 E.ON(21 %) EnBW(12 Vattenfall(1 Others(25 In %) 2%) %) Crores In Crores In Crores In Crores 145.306 83.03233 83.0323331 172.9840 58 32 6 274 146.033 83.44749 83.4474948 173.8489 12 48 3 476 146.763 83.86473 174.7181 28 23 83.8647323 923 147.497 1 148.234 58 148.975 76 149.720 64 150.469 24 151.221 58 84.28405 6 84.70547 62 85.12900 36 85.55464 86 85.98242 19 86.41233 4 84.2840559 7 84.7054762 5 85.1290036 3 85.5546486 5 85.9824218 9 86.412334 175.5917 833 176.4697 422 177.3520 909 178.2388 513 179.1300 456 180.0256 958
Based on the projected market potential of distribution transformers in Germany the market share of the top utilities in Germany over the years is estimated. Here it is assumed that the market share would remain the same over the years.
The projected demand for replacement market and new market doesn’t take in to consideration the concept of Energy efficient and cleaner environment, which the European countries are implementing these days. This energy efficient and cleaner environment (in terms of less carbon emission) concept gives a huge scope for the Amorphous Metal Core Distribution Transformers. Thus there would be more demand, in terms of MVA, than the projected one. This could be one of the major tools for Vijai Electricals Limited, the leading producers of Amorphous Metal Core Distribution Transformers to enter in to German market.
Electricity prices over the years
The graph above illustrates price components of a typical German electricity tariff including all applicable taxes. The final price represents the cost the average German pays per kWh. Prices fell steeply after the market was liberalized in 1998, but have since more than regained the pre-liberalization level. Both energy costs and taxes have risen. A new tax, the Stromsteuer or electricity tax, was introduced by the government in 2000. Germany is now the 3rd most expensive country in Europe in which to buy domestic power. Taxation (excluding VAT) accounts for around 25% of energy prices,
transmission and distribution costs account for 25-30% and energy costs (and supplier margin) around 45-50% of total pre-VAT prices.
Government initiatives(Report adopted by the Federal Government on 5
November 2008) The German Government’s Integrated Energy and Climate Program (IEKP) has put important policies in place for a state-of-the-art, secure and climate-compatible supply of energy in Germany. Germany can restrict its level of dependency on imported oil and gas if it uses a broad range of energy sources (including domestically available lignite), increases energy efficiency, promotes energy conservation and strongly expands renewable. The expansion of renewable forms of energy can substitute fossil fuels. The aim of the revision of the statutory provisions regarding the use of renewable in the power sector is to raise the proportion of power generated from renewable to at least 30 percent by 2020 and to keep increasing it thereafter. The German Government is aware of the situation facing consumers due to the rising energy costs. In the short term, people on low incomes are being helped by targeted welfare policy measures, such as the adjustment in the housing allowance by the Federal Government, backdated to 1 October 2008. The revision of the housing allowance rules means that the allowance will in future be based on the cost of renting the apartment including heating; in the past, heating costs were excluded. As a result, housing allowance is to be increased by an average of approx. 60 percent for the existing recipients. So the state is alleviating the impact of rising energy costs on low earners. Recipients of Unemployment Benefit II will be reimbursed with their rental and heating costs as well as incidental costs.
The German Government has launched a package of measures to intensify competition on the electricity and gas markets; in particular, this should help to restrict the increases in electricity and gas prices in the medium term. Also, the Federal Government is working at EU level for a more effective unbundling of energy utilities and for better regulation on the internal market. In this way, competition is to be intensified, since only competition can serve as a guarantor for fair and favorable prices. Germany is the international market leader and top innovator in energy efficiency technologies. The efforts by other industrial countries and by emerging and developing countries to boost energy efficiency are creating a substantial market potential for German firms, and thus make sense both in commercial terms and from the point of view of energy security. Via its Energy Efficiency Export Initiative and via bilateral cooperation, the German Government aims to make an additional contribution towards boosting energy efficiency in other major consumer countries through German technology.
Major utilities RWE
Structure of RWE energy
Market position of RWE
Market/product Germany UK Central-eastern Europe Electricity No.2 No. 3 No. 2 in Hungary, no.3 in Slovakia, starting position in Poland Among top 5 Gas No.3 No. 3 No. 1 in Czech republic, leading position in Hungary. No. 6
Europe
Strategic steps by RWE in Germany
1. Generation: maintain market share (output) of > 30% 2. Supply: defend 16% market share (direct sales), improve 3. margin to average EU level 4. Networks: exceed regulatory targets in new incentive regulation 5. Renewable: become one of the leading players Share holder structure of RWE 84% of RWE shares are held by institutional investors The regional breakdown is as shown • • Germany— Usa/Canada 41% 16%
• • •
UK/Ireland Continental Europe Rest of world
13% 13% 1%
Market share of RWE in electricity generation in Germany with respect to its competitors as of 2007 is
German electricity grid of RWE as of 2007 is
RWE electricity customers by core region (2007)
RWE electricity sales by customer group as of 2007
RWE Energy Industrial & corporate customers Distributors Private and commercial customers RWE Power Energy trading Distributors Private and commercial customers 82% 17% 1% 39% 39% 22%
RWE npower Industrial & corporate customers Private and commercial customers 59% 41%
EnBW
EnBW group structure Electricity generation & trading • Generation o EnBW Kraftwerke AG o EnBW Kernkraft GmbH o EnBW Erneuerbare Energien GmbH • Trading /procurement o EnBW Trading GmbH
Electricity grid & sales ? Transmission and distribution o EnBW Transportnetze AG o EnBW Regional AG ? Sales o EnBW Vertriebs-und Servicegesellschaft mbH o Yello Strom GmbH o Watt Deutschland GmbH
Electrical output generated by EnBW group in 2009 15771 MW which is an increase of 771 MW in comparison to 2008.
Competitive position of EnBW
Electricity generation: In the area of electricity generation EnBW is one of the ten largest companies in Europe. In terms of the installed generation capacity as of the end of the fiscal year 2008, it was in eighth place. With regard to Germany, EnBW is number three in electricity generation, after E.ON and RWE. EnBW is one of the four transmission system operators in Germany and operates various grids in BadenWürttemberg.
Electricity sales: In terms of the number of customers and unit sales, the EnBW group is the third largest electricity supplier in Germany.
Vattenfall
Europe’s 5th largest generator of electricity. It operates in all markets of electricity right from generation to transmission, distribution and sales. The parent company Vattenfall AB is 100% owned by Swedish sales. Vattenfall, which is Europe’s fifth-largest generator of electricity with a market share of 19% in the Nordic countries and 12% in Germany, is today positioned between these two groups Vattenfalls market position in different locations of Europe as of 2009. Swede Electricity Generation Electricity Trading Electricity Distribution Electricity sales n 1 Top 3 2 1 Finland 1 Top 3 2 3 Denm ark 1 Top 3 German y 3 Top 3 4 4 Poland Belgiu 7 Top 3 5 5 m Top 3 3 Netherl ands 3 Top 3 2
E.ON
The central Europe market is led by E.ON Energie which is a wholly owned by E.ON. It is one of the largest non-states owned Power Company in terms of electric sales. The majority of its revenue comes from German customers. The core business consists of operation of power generation facilities, transmission and distribution grid and sales of electricity, and to lesser extent gas and heat in Germany and continental Europe. It is one of the four international electric utilities in Germany. The electricity market of E.ON in Germany is • Power supplied (as of 2008 end) 304 Billion kWh
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Power generation capacity (MW) 2006—26003 2007--26251 2008—24851
Distribution system of E.ON in German electricity market E.ON Hanse AG E.ON west fallen weser AG E.ON Mitte AG E.ON Edis AG E.ON Avacon AG TEN GmbH E.ON Bayern AG 73.8% 62.8% 73.3% 70.2% 65.8% 53% 100%
Bibliography • • • • • • • • http://www.verivox.net/German_Market_History.pdf http://seedt.ntua.gr/ SEEDT: Strategies for development and diffusion of Energy Efficient Distribution Transformers - EIE-05-056 https://www.entsoe.eu/index.php?id=123 RWE annual report Vattenfall Annual report E.ON annual report EnBW annual report
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Report adopted by the Federal Government on 5 November 2008
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