LIBERALIZZAZIONE DELLA VENDITA DI ENERGIA ELETTRICA …

Transcript LIBERALIZZAZIONE DELLA VENDITA DI ENERGIA ELETTRICA …

LIBERALIZATION OF THE ELECTRICITY SECTOR: THE CASE OF ITALY Maggio 2009

The liberalization process (1)

 Liberalization/privatization of public utilities in Europe started almost 20 years ago. In Italy at the beginning of the ‘90s  Before: publicly owned vertically integrated monopolies  1992: Enel becomes a public company owned by the government (D.L. n. 333)  1995: an indipendent regulator gas) is set up (L. 481/95) (Autorità per l’energia elettrica e il  1996: first European Directive concerning common rules for the internal market in electricity (EU 96/92/CE)  1999: starts the restructuring os the electricity sector (DL 79/99 decree Bersani)

The liberalization process (2)

 1999 : Enel’s privatization starts: the first tranche is sold;  2003: second european Directive concerning common rules for the internal market in electricity (EU 2003/54/CE)  2004: the Italian Power EXchange (IPEX) begins operating  July 2007: all customers are free to choose their electricity supplier

The liberalization process (3)

Main objectives

increase productive efficiency; reduce transfers from public funds to public utilities;

A simple recepy

Competition when possible, regulation when necessary

But

….reality is not so easy

Outline

 Market structure: where is competition possible? Where is regulation necessary?

 Why is electricity different?  Wholesale markets  Dispatching  Transmission and distribution  Electricity retail  Future scenarios  energy and sustainability

Production Technology and different inputs: water, fuel oil, carbon, gas…

Market structure (1)

Distribution and metering Low voltage networks Transport and dispatching High voltage networks centrally controlled by TSO Retail supply to Industrial customers Retail supply to households

Market structure (2)

Where competition:

 Electricity production: wholesale markets;  Electricity retail to final customers;  Metering (possibly). In Italy it is done by the distributor.

Market structure (3)

Where regulation:

 transmission and dispatching;  distribution;  Metering (possibly)

Why electricity is different? (1)

Distinctive attributes:

 Electricity cannot be stored: need for a network operator continuously balancing physical supply and demand in the system by controlling the power flows in the netwok. Relevance of netwok congestions.

 Transport: what is usually called “transport” is actually the use of a shared infrastructure by all undertakings to balance aggregate supply and demand.

 Demand: demand is highly inelastic and has a seasonal pattern.

Moreover, because of limitations of the electricity meters and of the data processing systems, small customers cannot be charged a price equal to the actual costs of their supply (load profiling).

 Supply: capital intensive; long term investments to enter the market

Why electricity is different? (2)

Therefore:

 Wolesales markets are easly subject to market power exploitation:    High barriers to entry; Inelastic demand; Market splitting because of network congestion;  Coordination problems: need for a system operator and complicated information systems.

 High price volatility: wholesale prices are more volality than in other commodity markets. Therefore the risk management issue is really relevant  Investments: since electricity cannot be stored it is necessary to have a capacity reserve margin to supply peak demand.

Wholesale markets

Wholesale markets (1)

 Open to competition: many producers and many traders;  From 1 ° January 2003, no actor is allowed to produce or import more than 50% of the total amount of electric power produced and imported in Italy.

 Enel has been required to reduce its generating capacity by hiving off 15,000 MW. Three new Generation Companies were created: Elettrogen, Eurogen and Interpower.

 Bilateral contracts plus an organized market (Italian Power Exchange IPEX: www.mercatoelettrico.org

)

Wholesale markets (2)

 The “Power Exchange” is a non compulsory spot market where electricity transactions take place  It ensures the optimal management of the power plants belonging to several actors according to their offers;  It provides a signal of transparent price upon which both consumers and producers can take their decisions.

 The core of the transactions on the IPEX is the Day-Ahead Market (MGP) where wholesale trading of energy between producers and wholesale customers takes place for each hour of the following day, given the available transmission capacity.

Wholesale markets (3)

 Both sale (bid) and purchase (ask) offers can be submitted to the Day-Ahead Market (MGP), consisting in a pair of quantity (in Megawatthour-MWh) and unit-price (euro per MWh).  All offers refer to a specific hour and a specific geographic zone  All supply offers are ranked by increasing price order into an aggregate supply curve and all purchase bids are ranked by decreasing price order into an aggregate demand curve.

Wholesale markets (4)

Wholesale markets (5)

 If transmission constraints occur (the quantity Q* exceeds the transmission capacity of the grid) the market is segmented in different geographic markets (zonal markets) and prices are differentiated by area.  Buyers pay the Single National Purchasing Price (PUN): a weighted average of the zonal prices

Wholesale markets (6)

PUN Total Quantity Spot market Bilateral contracts Liquidity Italy 69,77 €/MWh 26,0 TWh 16,8 TWh 9,2 TWh 64,50%

Example: average equilibrium prices and quantities traded in February 2007 (GME, 2007).

Benefits from liberalization? Efficiency

Averge efficiency of the italian generation plants

41,0% 40,5% 40,0% 39,5% 39,0% 38,5% 38,0% 37,5% 37,0% 36,5% 1998 1999 2000 2001 2002 2003 2004

2002 - 2006

Benefits from liberalization? Investments in installed capacity

+ 11.080 MW 45% in the Nord

SOURCE: TERNA 2007

Benefits from liberalization? Market power

Gruppo Electrabel 99 1356 AEM Milano Tirreno Power 64 782 792 2433 Gruppo ENI 18 Endesa Italia 24 1017 Gruppo Edison 1120 281 Edipower 749 5466 5612

available capacity

6533 7737

2006

14379 Gruppo Enel 1019 26160 0 5000 10000 Termolettrica 15000 Rinnovabile 20000 25000 Idroelettrica Altri produttori Tirreno Power Edipower Endesa Italia Gruppo ENI Gruppo Edison Gruppo Enel 3.80% 4% 8% 8.30% 8.10% 8.70% 8.90% 9.20% 11.70% 13.10% 20.50% 21.90%

Production

34.80% 38.80% 0% 5% 10% 15% 20% 25% 30% 35% FONTE: Relazione annuale AEEG, 2007

2005 2006 40%

Dispatching

 Terna Spa: public company responsible for dispatching  Terna ownes the transmission grid  All the undertakings have to enter a contract with Terna for the dispatching service  A specific market is run by Terna to balance the system after the MGP market is closed  Prices in the balancing market are very high

Transmission and distribution

Transmission and distribution (1)

 These two services are natural monopolies: transmission is done by Terna; distribution is done by local distributors

General principles (Law 481/95 and 290/03):

  price cap regulation; price discrimination on geographic ground not allowed;     Price-cap applied only to opex; Revaluation of invested capital; Allowed return on invested capital based on long term risk-free rate; profit sharing set at 50%;

Transmission and distribution (2)

  Regulatory period of 4 years (2000-2003; 2004-2007) Adjustment rule within the regulatory period: Pt = Pt-1 * (infl –x + y + DSM+ Q)       Pt is the allowed price cap at time t; Inf is inflation; X is the productivity rate; Y is a measure of unexpected increase in costs due to exogenous factors; DSM is an adjustment factor to recover costs related to demand side management regulation; Q is an an adjustment factor to recover costs related to better quality

Transmission and distribution (3)

Necessary steps to implement price-cap regulation:

 un bundle the existing “all inclusive” tariff;   decide how much price flexibility to leave to each distributor; set the “price level” for the base period equal to average distribution costs;   define a compensation mechanism to take care of differences in costs among distributors; define the productivity parameter “X”

Transmission and distribution

1999 Transmission Distribution Commercial costs of distribution Commercial costs of supply Metering Fuel costs 2006 Transmission

Distribution

Distribution + Commercial costs of distribution Metering Supply + commercial cost of supply 28

National average tariff for electricity

I II III 2003 IV I II III 2004 IV I II III 2005 IV I II III 2006 IV I 2007 II Costi trasmiss. e distribuz.

Oneri generali Costi di generazione 14 12 10 8 6 4 2 0

Minutes of consumption lost by low voltage customers

200 180 160 140 120 100 80 60 40 20 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 Interruzioni di responsabilità del distributore Altre interruzioni NET OF 2003 BLACK-OUT

Electricity retail

 European Directive 2003/54/CE: by July the first, 2007 all European Countries have fully liberalized their retail market for electricity.

 The economic debate has mainly focused on two big questions: 1.

weather and how retail competition in the electricity sector could bring real benefits to European customers, expecially households, and 2.

weather and how customers should be protected by imposing universal service obligations on undertakings operating in the sector  The two questions are actually related: the desirable extent of public service obligations depends, up to a certain degree, on how competition is expected to work

Why retail competition? (1)

Joskow (2000)

Why do we need electricity retailers? Or can you get it cheaper wholesale?

 The peculiar attributes of electricity supply make many of the traditional services provided by retailers in other industries irrelevant in electricity.

 Retail competition brings additional costs into the system: advertising, promotion and customer service costs  A low-cost way for electricity consumers to buy directly would be the wholesale market (BES)  In this way, retail consumers can receive the benefits of competitive generation markets without incurring large increases in retailing costs.

Why retail competition? (2)

Littlechild (2000)

Why we need electricity retailers: A reply to Joskow on wholesale spot price pass-through

 Joskow underestimates the role of retailers with respect to price, as opposed to quality  For most residential customers and most products, the wholesale market is not the relevant alternative  Buying directly in the wholesale market does not avoid the costs and complexities (e.g. load profiling)

What do retailers do in other sectors? (1)

Retailers

usually add value

to what consumers would receive if they purchased directly in the wholesale market.

How:

By transporting the product and selling at convenient locations; By selling the product at convenient times of day and days of the week (e.g. 24 hours shops) By providing other services that offer consumers a more convenient way to shop (e.g. internet stores)

What do retailers do in other sectors? (2)

4. By reducing search costs (selling a range of complementary or subsitute products in the same location); 5.

By providing both pre-sale and post-sale information and assistance to the customers;

Why electricity is different? (3)

Which added values from retailers?

transporting the product and selling at convenient locations;

selling the product at convenient times of day and days of the week (e.g. 24 hours shops)

providing other services that offer consumers a more convenient way to shop (e.g. internet stores)

reducing search costs (selling a range of complementary or subsitute products in the same location);

By providing both pre-sale and post-sale information and assistance to the customers on the product;

NO 37

Why electricity is different? (2)

More general:

There is generally no direct

physical

relationship between a specific generating source and a specific retail customer; 2.

Electricity is automatically available every second over the distribution network and the supplier cannot be hold responsible for the physical delibery; 3.

the only operator responsible for the physical delivery of electricity is the transmission system operator.

The supply contract between a customer and her supplier can be seen primarily as a financial contract.

How can electricity retailers provide added value?

A possible story (Joskow)

Therefore:

The main added values by electricity retail suppliers could be a financial service of

risk hedging

but this is not a real issue because of poor metering 2.

They may provide new

power options

“products”, such as

green

Retail suppliers usually do the

billing

Depending on market design, retail suppliers can be responsible for other services, such as

metering and behind the meter services (eg energy management) 39

How can electricity retailers provide added value? The other side of the coin (Littlechild) (1)

According to Littlechild,

Joskow underestimates the role of retailers with respect to price, as opposed to quality/behind the meter services

What Littlechild calls price competition is actually

competition on risk hedging:

“The experience of Britain may be reasonably tipical.

For the first time, electricity retailers ( …) asked their customers what they wanted. Uniform fixed price, time of the day or time of the year prices, interruptible prices, Pool prices?”

How can electricity retailers provide added value? The other side of the coin (Littlechild) (2)

Plus, Littlechild underlines the impact of retail competition on demand elasticity:

“The customers meanwhile were equally active. (…) They needed to estimate their likely electricity consumption, ( …) to work out load factors and seasonal variations, and their scope for load management at times of high prices”

…. and on wholesale markets’ performance 41

How can electricity retailers provide added value? The other side of the coin (Littlechild) (3)

An active buying side brings to a more liquid and efficient wholesale market:

 competition will force retailers to be more careful in their purchasing decisions, and this active demand side will make the wholesale markets more competitive;  retailers can stimulate price responsiveness customers: increase demand elasticity by

What can retail competition do? (1)

First we have to define a benchmark: 1) DSOs supply final customers

1) 2) 3) 4) Local monopoly Need for price and quality regulation Possible regulation: BES plus premium if added values are demanded (eg. price hedging) “Regulator knows all” kind of model

2) Auction to choose the retail supplier

1) 2) Competition for the market Price and quality determined by the auction

What can retail competition do? (2)

EXPECTED BENEFITS - COMPETITION CAN:

1. Increase productive efficiency of retailing: 1.

by developing innovative retailing technologies that reduce commercial costs; by reducing the costs related to risk hedging 2.

Increase competition in the wholesale market: eg by easing entry into the market 3.

Increase allocative efficiency: 1.

By transferring all costs savings along to consumers;

What can retail competition do? (3)

EXPECTED COSTS - COMPETITION CAN:

1. Increase total costs: 1.

By loosing economies of scope between distribution and supply 2.

By increasing advertising and promotion costs By increasing retailers’ profits 2. Decrease allocative efficiency: 1.

Switching costs may give rise to market power 2.

While new entrants can have an advantage in competing for new customers it is very hard for them to compete for old customers who are already attached to an incumben …and any consumers who switch are likely to be less loyal, hence less valuable, ones

What can retail competition do? (4)

Common barriers to effective competition:

institutional barriers involving metering and data aggregation; 2.

limited unbundling of distribution and supply; 3.

limited access to reliable information on contracts and prices.

Universal service obligations (USOs) (1)

 the European Directive 2003/54/CE on the internal electricity market explicitly acknowledges the need for customer protection.

 Namely, the Directive requires that “Member States ensure that all households customers and, eventually, small firms enjoy

universal service

” (art. 3, point 3) 

Universal service

is defined as the right:  to be supplied with electricity of a specified quality;  at reasonable, easily and clearly comparable and transparent prices

Universal service obligations (USOs) (2)

 The interaction between universal service regulation and competition in these market segments is direct and very strong  USOs may determine the nature of competition that can be sustained in the market.

 Great attention must therefore be given to the definition of USOs and to their implementation 

ERGEG (European regulators’ group for electricity and gas), position paper on End Users Price Regulation:

“

End-user price regulation is one factor which prevents equal access of suppliers to all customers. This has a negative effect on the functioning of the competitive retail markets

”

Universal service obligations (USOs) (3)

 ERGEG, last June has published a Review on end-user price regulation in European Countries  According to this review in the electricity sector in 2006, 17 out of 28 countries surveyed had some form of retail price regulation for eligible customers (not households)  Moreover when regulated tariffs were available only a very small percentage of customers had switched to the competitive market: in most market segments more than 80% remained at regulated tariffs and in many segments this percentage was close to 100%.

 Finally, only in one country (Hungary) suppliers offering regulated tariffs were chosen on the base of an open tender. What can retail competition do?

Future scenarios: smart grids

“Smart Power System”

ICT System design Regulation “Smart” Metering “Smart” appliances and electronic devices Coordination DSOs and TSO Data management “Smart” grid devices Load profiling (settlement) Correct wholesale signals DSOs incentive regulation

Obiettivi di sviluppo delle rinnovabili al 2020 (1)

        

Quota di rinnovabili su consumo interno lordo di energia

20% media EU 17% Italia -

OBIETTIVO MOLTO SFIDANTE Di cui quota di biocombustibili nel trasporto

10% media EU 10% Italia

Riduzione gas climalteranti

- 20% rispetto a 1990 EU

Obiettivi di efficienza energetica non espliciti

Ragioni dell’intervento

    Le emissioni di gas serra generano un costo ambientale di cui gli operatori non tengono conto nelle proprie scelte  Soluzioni: 1) dare un prezzo al carbonio 2) sostenere lo sviluppo di tecnologie a basso contenuto di carbonio, tra queste le rinnovabili Sono due facce della stessa medaglia

Meccanismi di incentivo alle rinnovabili

 

Tre grandi famiglie

: Tariffe per l’energia elettrica prodotta (“feed in”)  Obbligo di acquisto di rinnovabili (“Quota”)  Contributi diretti all’investimento

Feed in tariff

  Riconoscimento di una tariffa commisurata ai costi di produzione per ogni kWh prodotto Per un periodo sufficientemente lungo di anni      Vantaggi: riduzione del rischio per l’investitore Svantaggi: Possibili errori nella definizione delle tariffe Necessità di rivedere frequentemente le tariffe se la tecnologia non è stabile

Quote e cv

   I produttori sono obbligati ad immettere una certa % di rinnovabili per ogni kWh prodotto; In alternativa l’obbligo è posto sui consumatori Spesso viene attivato un mercato organizzato per lo scambio di certificati di produzione rinnovabile (CV)     Vantaggi: È il mercato che seleziona dinamicamente le fonti rinnovabili da realizzare e la loro remunerazione Svantaggi: Mercato difficile da disegnare; rischio

Contributi ad investimento

 I contributi vengono erogati a copertura parziale dei costi di investimento;       Vantaggi: riduzione del rischio per l’investitore Promuovere tecnologie capital intensive Svantaggi: Difficile da monitorare per evitare frodi Possibili inefficienze nella selezione dei progetti da incentivare

Gli incentivi in Italia

Principali meccanismi di incentivo oggi operativi:

    Feed in per impianti CIP6 Feed in per fotovoltaico Feed in per altri impianti < 1MW Quota obbligata e Certificati Verdi (CV)

CIP 6/92

   Ambito di applicazione: Incentivi non disponibili per nuovi impianti Potevano essere ammesse sia rinnovabili che fonti assimilate (es. cogenerazione)     Principali norme di riferimento Legge n. 9/91 Provvedimento del Comitato Interministeriale Prezzi (CIP) n. 6/92 DM 25.9.92

Conto energia (1)

 Ambito di applicazione  Impianti fotovoltaici della potenza minima di 1 kW, collegati alla rete elettrica,

entrati in esercizio dopo il 30.9.2005

a seguito di nuova costruzione, potenziamento o rifacimento totale.

 Obiettivo almeno 1200 MW  Principali norme di riferimento   DM luglio 2005 (vecchio conto energia per anni 2005-2006) DM febbraio 2007 (nuovo conto energia dal 2007)

Conto energia (2)

 Tipo di incentivo: “feed in”  Tariffe incentivanti per 20 anni, che si sommano ai ricavi dell’energia immessa in rete in caso di cessione, oppure ai risparmi sulla bolletta in caso di autoconsumo (possibilità di fare lo “scambio sul posto” per gli impianti fino a 20 kW)  Tariffe che premiano il grado di integrazione architettonica e l’uso efficiente dell’energia  Richiesta di ammissione alle tariffe a valle dell’entrata in esercizio dell’impianto (entro 60 giorni)

Conto energia (3)

Tariffe ( €/kWh) per impianti in esercizio entro il 31 dicembre 2008 - DM feb 2007











Fonte: GSE

Conto energia (4) - risultati al 1

nov 2007

Numerosit impianti in esercizio

Totale Primo DM

50,0

4.380

4.228

45,0

2.533

2.873

3.381

3.736

3.191

3.363

40,0

3.590

3.548

35,0 30,0

2.806

2.517

25,0 20,0 15,0 10,0

16 67 190 373 680

0,0

Potenza impianti in esercizio

Nuovo DM Totale Primo DM Nuovo DM Totale Primo DM Nuovo DM

40,5 4 7 ,6 41,3 3 4 ,5 4 0 ,5 30,2 34,6 4 1,3 3 7 ,5 4 1,8 32,7 37,2 2 1,5 2 4 ,4 3 0 ,2 2 4 ,8 24,7 3 2 ,7 24,4 2 9 ,2 21,5 2 1,6 37,5 0 ,1 0 ,4 1,8 0,4 3 ,3 3 ,8 1,0 1,8 3,8

Impianti rinnovabili < 1MW (1)

   Ambito di applicazione: Impianti a fonti rinnovabili ex art. 2, comma 1, let. A) d.lgs 387/103 entrati in esercizio dopo 1 gennaio 2008 Scelta dal produttore in alternativa ai CV   Principali norme di riferimento Legge finanziaria 2008   Tipo di incentivo: feed in per 15 anni Energia ritirata dal GSE e venduta sul mercato

Impianti rinnovabili < 1MW (2)

        Eolico < 200 kW: 300 €/MWh Solare PV: già prevista da conto energia Geotermico: 200 €/MWh Moto ondoso e forza maremotrice: 340 €/MWh Idrico: 220 €/MWh Rifiuti e biomasse diverse da punto successivo: 220 €/MWh Biomasse e biogas da filiera corta (70 km): 30 €/MWh Gas di discarica: 180 €/MWh

Quota e Certificati verdi (1)

     Ambito di applicazione: Impianti a fonti rinnovabili ex art. 2, comma 1, let. A) d.lgs 387/103 entrati in esercizio dopo 1 aprile 1999 Rifiuti solo per la quota biodegradabile ex legge 296/06 entrati in esercizio dopo 1 aprile 1999 Cogenerazione abbinata a teleriscaldamento e impianti ad idrogeno (cosiddette ALTRE RINNOVABILI) se entrate in esercizio prima del 2009 Necessaria qualifica IAFR per tutti     Principali norme di riferimento Dlgs n. 79/99 e dlgs 387/03 I DM 25 ottobre 2005 Legge finanziaria 2008

Quota e Certificati verdi (2)

    Tipo di incentivo: quota con CV I produttori e gli importatori di energia elettrica non rinnovabile devono immettere in rete una quota di rinnovabile (% rispetto alla produzione e import convenzionale) la quota per la determinazione dell’obbligo 2008 è pari al 3,05% della produzione e import convenzionale del 2007. Questa percentuale viene aumentata dello 0,75% ogni anno a partire dal 2008 (ex L. finanziaria 2008) Il certificato che attesta che l’energia elettrica prodotta è rinnovabile acquista quindi un valore e può essere venduto nel mercato

Quota e Certificati verdi (3)

      Modalità operative: I CV sono titoli annuali attribuiti all’energia prodotta da impianti alimentati da fonte rinnovabile con qualifica IAFR Sono emessi per i primi 15 anni di piena produzione se l’impianto è entrato in esercizio dopo l’1 gen. 2008. Eccezione ALTRE RINNOVABILI (8 anni).

I soggetti obbligati adempiono all’obbligo annullando CV corrispondenti presso il GSE il GSE verifica annualmente l’adempimento degli obblighi; I titolari di CV hanno tre anni dall’anno di emissione per venderlo

Quota e Certificati verdi (4)

     Modalità operative: sono titoli al portatore; possono essere quindi negoziati liberamente e possono cambiare mano più volte prima dell’annullamento; sono negoziati sul mercato disgiuntamente dall’energia.

dal 2008 è riconosciuto all’impianto 1 CV per ogni MWh prodotto, moltiplicato per fattori K di aggiustamento per tecnologia questo equivale a modificare il valore della produzione: maggiore è K più alta è la quantità di CV che il produttore può vendere, a parità di produzione

CV: L.24/12/2007coefficienti K

Fonte Eolica per impianti di taglia superiore a 200 kW Eolica off-shore Geotermica Moto ondoso e maremotrice Idraulica Rifiuti biodegradabili, biomasse diverse da quelle di cui al punto successivo Biomasse e biogas derivanti da prodotti agricoli, di allevamento e forestali, ottenuti nell'ambito di intese di filiera o contratti quadro oppure di filiere corte (entro un raggio di 70 km).

coefficienti moltiplicativi per la determinazione del numero dei CV 1,00 1,10 0,90 1,80 1,00 1,10 1,80 Gas di discarica e gas residuati dai processi di depurazione e biogas diversi da quelli del punto precedente 0,80

I valori dei coefficienti possono essere aggiornati ogni 3 anni con DM da MSE

Quota e Certificati verdi (5)

     Modalità operative: Mercato organizzato gestito dal Gestore del mercato elettrico ( www.mercatoelettrico.org

), più bilaterali Se la domanda è maggiore dell’offerta il GSE vende certificati verdi per coprire la quota non soddisfatta dai terzi ad un prezzo di riferimento pari a 180 €/MWh, meno il prezzo AEEG (medio orario zonale dell’anno precedente, pari a 67,12 €/MWh nel 2007) Il prezzo di vendita praticato dal GSE opera di fatto come un tetto al prezzo di mercato quando vi è eccesso di domanda Se l’offerta eccede la domanda il GSE ritira i CV in scadenza ad un prezzo pari al prezzo GME dell’anno precedente (nel 2007 120,21 €/MWh; diventa il prezzo di ritiro nel 2009)

Contacts

Clara Poletti Director IEFE - Bocconi University www.iefe.unibocconi.it

Tel. + 39 02 58363820 e.mail [email protected]