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The relative share of non-market elements in retail prices is growing Network costs and charges up by 18-30% (2008-2012) Taxes and levies up by 36-127% (2008-2012) Energy component of end-user price relatively stable
The majority of end consumers are still under non-competitive offers of incumbents
EUROPE IS A PRICE TAKER AT GLOBAL MARKETS FOR OIL AND COAL. CONCLUSION: Growing gap between regional wholesale gas prices, regional differences in wholesale electricity prices less pronounced
EU industry pays more than 2 times as much for electricity as companies in the US and Russia + +20% on China, +65% on India
EU industry pays for gas 3 to 4 times as much as industrial consumers in the US, Canada, India and Russia + 12% on China
But benefit from better quality of electricity supply. EU countries in 5 of the top 10 positions in a ranking of 144 countries on quality of electricity supply 15 EU Member States in the top 30 Ranking of the World Economic Forum 2013
International gas prices showed a marked convergence in 2014 and early 2015; during 2015, the ratio of international wholesale prices was relatively stable.
The ratio of EU gas prices to US gas prices have evolved in a favourable way to the EU over the last two years. EU gas prices were on average two times and a half the US gas prices in 2015 while the ratio in 2012 was much higher, i.e. between 3 to 5 times (The average NBP/Henry Hub ratio was 2.5 in January-November 2015, while in 2012 it was in the 3-5 range)
The ratio between EU gas prices and Asian gas prices has come back to pre-Fukushima times, where Asian prices were a little bit higher than the European ones. Asian LNG prices decreased significantly in 2014 and by early 2015 were more or less on a par with the European prices (at NBP, the UK gas hub). In January-November 2015, Japanese spot prices were on average 14% more expensive than the European ones (at the UK NBP gas hub), while in previous years they had arrived to be the double (+100% more).
The international comparison of EU wholesale electricity prices can help to estimate the competitiveness of the EU economy, especially in the case of those products and industrial activities where energy costs make a significant part of total production cost (in the so-called energy intensive industries). Energy intensive industries are normally large energy consumers and the wholesale market price is a good proxy for the price these industries purchase their electricity needs.
Wholesale electricity prices in the US were generally below the European power benchmark, the PEP index over the last few years. However, as in last two years wholesale electricity prices in Europe became lower, the difference between EU and US price benchmarks significantly decreased. In Q3 2015 the PEP was around 1.7 times as high as the average US electricity price, while a few years before the ratio between the two was 2.5-3. US price benchmarks highly depend on the price of natural gas, and depending on weather conditions (increasing heating needs during low winter temperatures or cooling needs during summer heat waves) can result in extremely high short term gas price volatility, almost immediately impacting wholesale electricity prices.
In Japan wholesale electricity prices in Q3 2015 practically returned to the low ranges last seen before the Fukushima nuclear accident (March 2011). The average wholesale electricity price in September 2015 was about one and a half times higher than the PEP index in Europe.
In Australia the average wholesale electricity price level was slightly higher than in the US in Q3 2015.
The energy import bill has been decreasing over the last two years (11% in 2014 with respect to 2013 and an estimated 26% in 2015 with to 2014). The fall in the import bill is explained by the decrease in the oil import bill which has mainly been prompted rapidly decreasing oil prices over the last year. The oil import bill is estimated to have fallen for about 33% in 2015 with respect to 2016.
Main assumptions made in calculations
OIL 2013 and 2014 data are facts, based on MS monthly reports to DG ENER published on our website: http://ec.europa.eu/energy/en/statistics/eu-crude-oil-imports) 2015 Volume: Imports are assumed to increase by 5% because of falling indigenous production and increasing consumption helped by low prices EUR/USD exchange rate is assumed to stay at the current level (1.099) for the rest of the year which would result in a 2015 average exchange rate of 1.1098 The Brent oil price (which reflects the average EU import price) is expected to remain at the current level ($36.80/bl) for the rest of the year which would result in a 2015 average price of 52.34 USD/bl (NB in its latest monthly report the EIA forecasts a 53 USD/bd average Brent price)
GAS Volume: 2013 and 2014 imports based on ENTSO-G data; 2015 imports estimated based on Q1-Q3 data (imports increase because of increasing consumption and falling production) Prices: for each supplier, an average €/MWh price was established based on customs data and other sources (ThomsonReuters for LNG, German border price reported by BAFA); for 2015, this average price was estimated based on price developments in the first nine months of the year
COAL Volume: 2013 and 2014 imports based on Eurostat data; 2015 imports estimated to fall by nearly 10% (in line with the decrease seen in 2014) Prices: CIF ARA spot price; for 2015, the price was estimated based on price developments in the first nine months of the year
These six countries are only examples, we will do this analysis for all 28 EU Member States, Norway and Turkey
Tom Howes Refining Forum
Tom Howes, DG Energy
Energy prices and the
What was driving electricity prices 2008-2012?
Source: Eurostat. Includes taxes in the case of households; excludes VAT and other recoverable taxes in the
case of industry but other industry exemptions are not included (not available).
2014 report …EU…
EU electricity and gas prices
compared with major trading
Electricity end-use prices for industry, 2012
Gas end-use prices for industry, 2012
Sources and notes: see p. 177 and 179 of SWD (2014) 20
2014 June Energy Council: Member States requested follow-up report by
Confirmed in Commission's 2015 Energy Union Strategy:
Initiative status: report to be adopted in 2Q 2016
• Discussions with Eurostat, Eurelectric, others on data issues (details,
quality, sources…) -> Commission (Eurostat) legislative proposal
• Ad hoc data gathering exercise with Member States
• Sluggish economic growth/subdued demand; increased supplies (oil,
gas, LNG; lower commodity prices generally)
Update… ..since January 2014..
• 2nd report on energy prices & costs
Study started in October 2015
+econometric analysis of drivers
detail on price components
Electricity, gas petroleum products included
more detail on sectors and households; EU & international
Other Commission work under way (esp. on energy intensive
industries, with further work by DGs CLIMA and GROW)
Feedback from stakeholders: Industry Conference, contacts
with institutional actors (Jan/Feb/March)
Final report of study (end of March)
Commission internal work on documents April-May
Adoption Summer 2016
NL DK DE ES IT PL
and excise tax
Security of Supply
RES & CHP
NL DK DE ES IT PL
Environmental taxes and
Security of Supply
Energy efficiency support
RES & CHP
Different industry consumption bands
Close up look at energy intensive industries