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SURVEY

Competition in CEE electricity markets? Lessons learned from the Czech and Austrian point-of-view Reinhard Haas 1) Christian Redl 1) Jaroslav Knapek 2) 1) EEG, Vienna University of Technology, Austria 2) Czech Technical University in Prague, Czech Republic. SURVEY. 1. Introduction.

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SURVEY

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  1. Competition in CEE electricity markets? Lessons learnedfrom the Czech and Austrian point-of-view Reinhard Haas 1)Christian Redl 1) Jaroslav Knapek 2) 1) EEG, Vienna University of Technology, Austria 2) Czech Technical University in Prague, Czech Republic

  2. SURVEY 1. Introduction 2. European electricity sub-markets 3. Background: electricity consumption 4. How market prices come about 5. Market power and market extention 6. Future perspectives 7. How many generators are required for competition ? 8. Conclusions

  3. 1. INTRODUCTION • Intentions of the EC directive: Competitive markets Free choice of supplier lower electricity prices

  4. 2.EUROPEAN ELECTRICITY SUB-MARKETS 1. UK & Ireland2. Nordic countries3. Iberian peninsula 4. Italy 5. Western Europe 6. Eastern Europe 7. South-Eastern Europe 6 5 7

  5. PREISUNTERSCHIEDE UND NETZENGPÄSSE IN EUROPA Average wholesale electricity price 2006 [€/MWh] Netzengpässe Markttrennung 47 62 30 58 50 31 51 51 34 75 58

  6. NET EXPORTS (To be updated to 2006)

  7. NET IMPORTS (To be updated to 2006)

  8. 3. BACKGROUND ELECTRICITY CONSUMPTION

  9. ELECTRICTY CONSUMPTION

  10. COMPARISON CZ-AT

  11. 4 HOW PRICES COME ABOUT (SOME THEORY) Strategic or monopoly prices ? Long term marginal costs? Average costs Price, costs (EURO/MWh) Short term marginal costs? time

  12. BASIC PRINCIPLE OF COMPETITION: PRICE = MARGINAL COSTS Demand D1 Demand D2 Costs,Price D (e.g. Coal old) Price = „System“-marginal costs C (e.g. Coal new) Supply curve B (e.g. Nuclear) A (e.g. Hydro) MWh

  13. PRICES UNDER COMPETITION costs, price Demand Price = system marginal costs PRODUCER SURPLUS Supply curve MWh

  14. Germany, France and Austria: one market

  15. Do prices convergence? Czech Republic

  16. 5. ANALYZING MARKET POWER AND THE EFFECT OF MARKET EXTENTION

  17. BASEPRICE VS SRMC (EEX)

  18. PEAK-PRICE VS SRMC (EEX)

  19. PRICE IN AREA A (DE+FR+CH+AT) Price = MC-A Coal or Natural gas

  20. ADDING A „SHORT“ COUNTRY (e.g. Hungary) PRICE INCREASES! Price = MC-B Price = MC-A

  21. POWER PLANT CAPACITIES

  22. GENERATION AT+CH+FR+DE

  23. GENERATION AT+CH+FR+DE+CZ+PL

  24. METHOD OF APPROACH:

  25. METHOD OF APPROACH:

  26. METHOD OF APPROACH:

  27. SRMC MEU/MEEU

  28. 8. CONCLUSIONS • General lack of competition: in generation and supply in every country and sub-market • In wholesale markets: strong suspictions regarding exertion of market power in every sub-market

  29. 8. CONCLUSIONS To bring about effective competition it is necessary to … • conduct European-wide correct unbundling to avoid market power over the grid • to ensure prevailance of excess capacities resp. demand-side measures • avoid further mergers and cartelisation, divest capacities, provide incentives for new generators? • harmonise (transboundary) conditions for access to the grid; • Enhance transparency;

  30. 8. CONCLUSIONS • The absolute litmus test for the liberalised CE market will come when excess capacities in transmission and generation has disappeared;

  31. LESSONS LEARNED FROM THE AUSTRIAN POINT-OF-VIEW • Austria is well-connected to CH, DE, CZ • Austrian generators cannot influence the market prices in this market currently. Competition must be triggered on a superior level in Europe • Decrease in plant capacity and increase in consumption led to the change from a net electricity exporter in the 1990s to a net import country in recent years.

  32. FURTHER INFORMATION: • Homepage: eeg . tuwien . ac . at • E-Mail : Reinhard.Haas @ tuwien . ac . at

  33. APPENDIX

  34. (To be updated to 2006)

  35. (To be updated to 2006)

  36. Network issues /Cross-border trade

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