Transcript Slajd 1 - lsta.lt

Witold Cherubin
Adviser to the President
of the Energy Regulatory Office
HEAT SUPPLY AND COGENERATION IN CEE
COUNTRIES – PRESENT STATUS AND
PERSPECTIVE OF DEVELOPMENT
 Present situation in DH sector
 Pricing regulation and taxation
 Energy and environmental policy and perspective of
DH sector development
Witold Cherubin
PRESENT SITUATION IN DH SECTOR
Country
DHeat supply [GWh]
DH share [%]
Bulgaria
Czech Rep.
Estonia
Hungary
8 777
40 562
10 200
16 024
18
44
40
16
Latvia
Lithuania
Poland
9 180
10 572
105 000
70
50
54
Romania
Slovakia
23 010
7 870
24
40
Witold Cherubin
PRESENT SITUATION IN DH SECTOR
DH networks  heat carrier distribution system
 heat production  different technologies and fuels
Different structure of primary energy in CEE countries
 coal  major fuel for DH systems  about 50 %
 natural gas  intensively used  approx. 35 %
 dependency on single gas supplier  security of supply
 oil share  about 9 %
 renewables  increasing share (from 1.5 to 5 %)
 wastes & industrial surplus heat  about 1 %
Witold Cherubin
PRESENT SITUATION IN DH SECTOR
Heat demands reduction during last 10 – 15 years
 different reasons  DSM & industrial production
Energy policies and regulations in several countries
 Increasing number of connected customers
 Heat production stabilisation (except BG and RO)
DH systems modernisation
 reduction of heat losses (still in range 10 - 20 %)
 beginning of District Cooling implementation
 general improvement of DH systems effectiveness
Witold Cherubin
PRESENT SITUATION IN DH SECTOR
CHP production  in some countries 1 – 2 % increase
Energy policy  support schemes (micro & small CHP)
 New CHP plants & existing plants modernisation
 HOB plants replacement by CHP units
 Hungary  highest increase of CHP production
 favouring small size CHP over a long period
 weighted average CHP share in CEE countries = 55 %
 from 35 % in Baltic States to 72 % in Hungary
Witold Cherubin
PRESENT SITUATION IN DH SECTOR
Different organisational and legal forms of DH Comp.
 State owned enterprises  not transformed
 Municipal budgetary units
 Ltd. Companies owned by municipality
 Joint stock companies owned by municipality
 Private companies  different type
 Various forms of Public – Private Partnership
Witold Cherubin
PRESENT SITUATION IN DH SECTOR
Country
Organisation
Ownership
Bulgaria
Czech Republic
Estonia
Hungary
Centralised
Decentralised
Decentralised
Decentralised
Differentiated
Differentiated
Differentiated
Differentiated
Latvia
Lithuania
Poland
Decentralised
Decentralised
Decentralised
Differentiated
Differentiated
Differentiated
Romania
Slovakia
Decentralised
Decentralised
Differentiated
Differentiated
Witold Cherubin
PRESENT SITUATION IN DH SECTOR
Movement to a vertical integration  production & distribution
 DHC operating one DH system in a single city  decentralised
 Some DHC operate DH system in different cities  centralised
Horizontal integration with other energy services
CHP and DH companies privatisation
 Sale of DH shares or DH system as a whole
 Leasing of DH plants and/or networks
Witold Cherubin
PRESENT SITUATION IN DH SECTOR
Ownership/Organisation changes  start of DHC restructuring
 Economic transformation  related technical activities
 energy use effectiveness
 decrease of environment pollution
 increase of quality and reliability of heat supply
 improvement of customer’s services
 Existence of DH schemes  opportunities for :
 CHP production development
 integrated supply plans  incineration plants, waste heat use etc.
 DH systems modernisation & buildings thermo-modernisation
 heat losses reduction  heat production/demand decrease
Witold Cherubin
PRESENT SITUATION IN DH SECTOR
Similar trends in DH sector restructuring
 improvement of DH schemes efficiency and profitability
 change of fuels structure  growth of gas and renewable share
 CHP development  small plants especially
 investments on supplies and demand (DSM) sides
Different financial sources
 own national funds
 loans from national and foreign banks
 private investors  direct foreign investments
Different financial mechanisms
 preferential taxes
CHP encouragement
 financing by third party
Witold Cherubin
PRESENT SITUATION IN DH SECTOR
Country
Bulgaria
Czech Rep.
Estonia
Hungary
Investment Funds/Type of investments
WB and EBRD loans  mainly DH networks
Mainly own funds & EU funds & commercial banks
Own funds & EU funds  mainly RES
Own funds & EU funds  mainly CHP
Latvia
Lithuania
Poland
Own funds (public & municipal) & EU funds
Own funds & EU funds & WB, EBRD loans
Own funds & EU funds & WB, EBRD loans and other
Romania
Slovakia
Own funds & EU funds & WB, EBRD, EIB loans
Self - financing
Witold Cherubin
PRICING REGULATION AND TAXATION
Pricing  crucial parameter of economic transformation
 Extremely low heat prices in the past
 DH sector subsidising in CEE countries
 consumer payments  small lump sum (per m2 , per person)
 Recently DH prices moved to cost reflection
 two component tariff structure started to become standard
 measurement implementation  great effort in some countries
 individual heat costs allocation & room temperature control
 Lack of measurements in some countries  lump sum use
Witold Cherubin
PRICING REGULATION AND TAXATION
No
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
Country
Bulgaria
Czech Republic
Estonia
Hungary
Latvia
Lithuania
Poland
Romania
Slovakia
Austria
Denmark
Finland
Germany
Netherlands
Norway
Sweden
Heat price (exc.. VAT)  [€/MWh]
22 (average)
from 25 to 75
30 (average)
from 25 to 50
from 18 to 33
32.75 (average)
36 (average)
19 (average)
47.40 (average)
53.84 (average)
from 40 to 50
42.20 (average)
54.86 (average)
53.45 (average)
51 (average)
48 (average)
Witold Cherubin
PRICING REGULATION AND TAXATION
DSM & reduction of industrial activity in CEE countries
 heat demand decrease  systematic rise of heat prices
 DH sector subsidising in CEE countries
 Low real income of the population  ability to pay heat bills
 heat costs  60 % accommodation related payments
 Disconnecting problem  industrial and residential consumers
 in some countries (H) industrial customers only
 serious situation in RO  21 % households disconnected
 small DH units closed down in many towns
 40 DH companies collapsed during last 2 years
 recently  program for DH sector rehabilitation
Witold Cherubin
PRICING REGULATION AND TAXATION
Heat tariffs  set or approved by regulatory bodies
 national level (BG, CZ, EST, LT, PL and RO)
 municipal level (H, LV, SK)  not guaranteed independence
 national regulator  more effective option
 Regulation  supplier and customer interest balancing
 covering reasonable (justified) costs of heat supply
 consumers protection against supplier’s market power
 cross – subsidies elimination
 Mainly „cost plus” regulation
 incentive regulation in some countries (CZ, EST, LT)
 trend toward „price cap” regulation (CZ, EST)
Witold Cherubin
PRICING REGULATION AND TAXATION
Alternative energy sources  heat supply availability
 pricing policy adjusted to market conditions (competitive heat prices)
 main competitors  individual gas heating; rarely oil & electricity
Lack of real competition in heat supply





artificially low gas and electricity prices for some customers
tariff structure favors small consumers  social & political reasons
cross subsidies between different categories of customers
direct competition between NG and DH networks (CZ, EST, H, LV, LT, RO, SK)
buildings connected to NG & DH networks  disconnection problems in DH sector
Municipal (local) energy planning
 in some countries optimisation of energy supply  Local Energy Planning (EST)
 Local Energy Plan  “zoning” of the city area between NG and DH networks
 compulsory connection to the DH or NG networks in defined city area
Witold Cherubin
PRICING REGULATION AND TAXATION
Specific problem common for CHP production  e.g. Hungary
 electricity market liberalization influence on heat prices level
 electricity market liberalized in 2004  open for all consumers except dwelling
 CHP plants often not belong to the DH Company
 CHP owners interested in competitive (low) electricity price
 large CHP plants sell electricity at low prices and heat at high prices
Favourable legislation for CHP plants < 50 MW
 obligatory purchase and guaranteed electricity price
 significant reduction of heat prices
Witold Cherubin
PRICING REGULATION AND TAXATION
Country
VAT level [%]
Czech Rep. DH  5; others  22
Estonia
DH  5; others  19
Hungary
DH and NG  15
Electricity  25
Latvia
Under discussion
Lithuania
DH households  5
DH others  18
Poland
All products  22
Slovakia
All products  19
Fuel taxes
Fuel taxes for heating from 2007
Shale oil use in DH  exemption until 2013
Energy and environmental taxes from 2004 
reclaimed for CHP and DH; Till 2010  transition
period for coal, electricity, NG & DH
Heavy oil use in DH  excise tax
Transition period till 2010
Coal, coke, lignite, NG  exemption till 2010
Oil and LPG use in DH  excise tax
Transition period 2010  coal; 2014  NG
Electricity & NG  transition period till 2010
Witold Cherubin
ENERGY & ENVIRONMENTAL POLICY and
DH SECTOR DEVELOPMENT PERSPECTIVE
 National energy policy and legislative framework
 direct or indirect influence on CHP/DH sector
 driven mainly by EU Directives
 EU legislation  different national implementation
 more or less positive results in CHP/DH development
 EU energy & environmental policy  EU Directives
 new EU legislative initiatives
Witold Cherubin
ENERGY & ENVIRONMENTAL POLICY and
DH SECTOR DEVELOPMENT PERSPECTIVE
 Directive 2003/53/EC  electricity internal market
 Directive 2003/55/EC  gas internal market
 Directive 2001/77/EC  promotion of electricity produced in RES
 Directive 2002/91/EC  energy performance of buildings
 Directive 2003/87/EC  greenhouse gas emission trading scheme
 Directive 2004/8/EC  promotion of cogeneration  useful heat
 Draft Directive on energy end-use efficiency & energy services
Witold Cherubin
ENERGY & ENVIRONMENTAL POLICY and
DH SECTOR DEVELOPMENT PERSPECTIVE
Legislative framework
Country
Energy
Electricity
Bulgaria
Czech Rep.
Estonia
Hungary
Latvia
Lithuania
Poland
Romania
Slovakia
YES
YES
no
no
YES
YES
YES
no
YES
no
no
YES
YES
YES
YES
no
YES
no
Natural
Gas
no
no
YES
YES
no
YES
no
YES
no
DH/heat
supply
no
no
YES
YES
no
YES
no
draft
no
CHP
no
no
no
no
no
no
no
no
no
Energy
Efficiency
YES
YES
no
YES
no
no
no
YES
not yet
Witold Cherubin
ENERGY & ENVIRONMENTAL POLICY and
DH SECTOR DEVELOPMENT PERSPECTIVE
Energy policy  sustainable development & security of supply
Different legislative framework for energy sector
several countries  single Energy Law covers all different sectors
some countries  sectoral Laws for different energy sectors
EU policy concerning CHP/DH sector  CEEC implementation
before Directive 2004/8/EC  CHP development schemes
after Directive 2003/87/EC  National Allocation Plans till 2007
competition with individual heaters  CHP/DH “penalized”
 individual installations not covered by Directive
 CHP/DH development  allowances purchase  costs increase
Witold Cherubin
ENERGY & ENVIRONMENTAL POLICY and
DH SECTOR DEVELOPMENT PERSPECTIVE
CHP support mechanisms
Purchasing Tariff
obligation support
Bulgaria
YES
YES
Czech. Rep.
YES
YES
Estonia
YES
Hungary
YES
YES
Latvia
YES
YES
Lithuania
Poland
YES
Romania
Slovakia
YES
Country
Capital
incentives
YES
Comments
Preferential price for units < 50 MW
Bonus for decentralised system
Guaranted price for 7 years
Guaranted price for units < 50 MW
Preferential price for units < 4 MW & local fuel
Not really  1/3 investments for CHP
Electricity obligatory purchase from RES & CHP
Not really  least costs analysis
Electricity obligatory purchase from RES & CHP
Witold Cherubin
ENERGY & ENVIRONMENTAL POLICY and
DH SECTOR DEVELOPMENT PERSPECTIVE
Limited possibilities to build up new DH systems
Existing DH systems modernization  costs optimization
improvement of energy efficiency on supply side  lower costs
 production  fuel use decrease & fuels basket optimization
 transmission & distribution  heat & water losses decrease
improvement of energy efficiency on demand side  lower heat use
 improvement of heat supply control in substations and buildings
 heat supply measurements  buildings  cost allocation  flats
maximizing of existing capacity use  customers connecting
 local HOB plants liquidation  different fuels
 new buildings  different customers  commercial; residential
Witold Cherubin
ENERGY & ENVIRONMENTAL POLICY and
DH SECTOR DEVELOPMENT PERSPECTIVE
Custome’s payments  according to heat use (measurements)
operational costs optimization  fuel costs  50 - 70 %
maintenance costs reduction
Subsidies elimination  cross and direct - subsidizing
institutional support for poor households  removed from DHC
Gradual heat prices increase  heat supply costs covering
Pricing evolution  two-part tariffs & new elements in future
environmental or fuel element
rational CHP electricity purchase procedures
EU environmental policy  CHP/DH sector “penalized”
competitive individual heaters not covered by Directive
DH development  allowances purchase  supply costs increase