Friday, November 30, 2012

Slovak energy market opens step by step

If the market in Czech republic serves as an example to Slovak market with electricity and natural gas, it's only an example. In a view of the numbers, intensity of competition in both countries is incomparable. It goes approximately like this: what happens in the electricity and natural gas market in Czech republic for a month, about the same will happen in the Slovak market for a year. We're talking here about rough figures of supplier changes. What's more, Slovak household consumers are seemingly not sure if the open market can bring them noticable price advantage.

Electricity and natural gas market in Slovakia gradually deregulates. Even though very easy so far.  For example in the household market that was deregulated as the last one the consumers for the past 5 years have by law the right to choose their supplier of natural gas. The problem is that up until the start of 2011 there had been no supllier willing to appeal households specifically and broadly.


The main goal of this analysis is brief description of the process and the background of Slovak market deregulation. Text primarily focuses on the natural gas market and mainly concerns household consumers. This segment is at the moment intensively discussed at the professional forums. Households are also the main target of the marketing effort by the new suppliers.

First alternative suppliers of natural gas

ČEZ Slovensko was the first company to start the full scale offering for Slovak household consumers in Januray 2011. The company is subsidiary of the Czech enterprise. Shortly afterwards RWE Gas Slovensko entered the market. Approximately at the same also Magna E.A started to test the market  – the company years known as the competitive alternative supplier of electricity for households. Many other small companies entered the market in the following months. One of them became more visible than the others – Energetické centrum. The reason was not „the offer you can't refuse“ though. Many clients of Energetické centrum considered the acting of its sales representatives as unfair and insistent.

The start of competition in natural gas market in the segment of corporate clients have been much more convincing. Approximately one year after RWE Gas Slovensko entered the market in the segment of corporate clients, SPP as the predominant player and former gas monopoly lost its biggest customer – Duslo Šala. It happened in 2009 - a year of January gas crises. New market players had to face state of emergency right in the first days of physical suplies. This moment in the Slovak market was also well documented in short video documentary by Shell Slovakia. One of Shell's first customers was the company producing brewers malt. Besides Duslo Šala, RWE Gas Slovensko acquired also other big companies like Tepláreň Košice, Mondi SCP Ružomberok, Heineken Slovensko, Vetropack Nemšová or SHP Harmanec.


It has to be reminded that RWE Gas Slovensko is subsidiary of RWE – a company with commercial and ownership connection to Východoslovenská energetika (VSE). VSE is one of three traditional suppliers of electricity in Slovakia. It's also the first traditional supplier that became alternative supplier in the second commodity using its subsidiary. On the other hand, ZSE Energia was the first traditional supplier that became alternative natural gas supplier under the same brand. ZSE Energia is part of the Západoslovenská energetika group. Lastly, in 2012 Stredoslovenská energetika (SSE) and SPP entered the market of second commodity as an alternative suppliers. SSE is traditional supplier of electricity and SPP is traditional supllier of natural gas.

Electricity market, both corporate clients or household consumers has been developing a little bit faster and sooner than natural gas market. The description of natural gas market is therefore much more authoritative considering examination of deregulation and the level of competition in the energy market.

What figures say

Energy market in Slovakia suffers from lack of publicly available figures and information. New suppliers from time to time publish number of their contracts but mostly for household consumers. This segment is not insignificant but considering lower consumption it also represents smaller business opportunity. As for the availability of natural gas for public use, Slovakia is number two country of EU 27. Better distribution network can be found only in Netherlands. According to the latest data of International Energy Agency (IEA)  energy mix of Slovakia consists of natural gas (30 %), nuclear energy (22 %) and crude oil (21 %). Occasionaly published figures usually give evidence of delivery points and not the shares of supplied volumes in particular segment.

Regulatory Office for Network Industries (ÚRSO) once a year publishes annual report. It has two major weak points: it's published once a year and for the previous year with a couple of months distance. Secondly, the article concerning energy market competition deals with biggest competitors of traditional suppliers but says nothing about ther market shares. ÚRSO informs only about figures of delivery points with changed supplier but not about market shares in particular segment.

So what are the figures for 2011? Let's start a little comparison with Czech republic. OTE is the Czech electricity and natural gas market operator. These are the published annual figures of changed suppliers for 2011:
  • 448.860 delivery points in electricity (twice as much as in 2010)
  • 361.941 delivery points in natural gas (four times as much as in 2010)

ÚRSO published the figures of supplier changes in Slovakia in 2011: 
  • 42.784 delivery points in electricity (twice as much as in 2010)
  • 27.012 delivery points in natural gas (8,5 as much as in 2010).

More detailed figures of supplier changes in electricity or natural gas show charts number 1 and number 2. If we look at the proportional annual changes it looks like the competition in the Slovak market is dynamically growing. However if we look closely to the figures of the previous year we'll realise that the competiton was growing only very slowly.


Chart number. 1: Figures of delivery points that changed supplier - electricity









Source: 2011 annual report of ÚRSO, energia.sk

 Chart number 2: Figures of delivery points that changed supplier – natural gas












Source: 2011 annual report of ÚRSO, energia.sk

Motivation of households to change their supplier

Web portal „energia.sk“ carried out from 13th until 31st August of 2012 its own online reader's survey. Ther main goal was to monitor motivation or demotivation of households to change their supplier of electricity or natural gas. The intial ambition of the survey was also to report the preferences of small and medium sized companies. However as many as 95,7 % of online respondents expressed their views as members of households so we finally decided to eliminate the opinions of companies. Online survey was voluntarily completed by 282 respondents. During the time of survey web portal „energia.sk“ had been viewed by 9.918 unique visitors. It has to be noticed that it's solely readers surveys and readers of „energia.sk“ can't be taken as representative sample of Slovak population. At the same time optionality of completing the survey didn't reflected the principle of randomness choice of the sample. Regardless the final results revelead the consumer behaviour of households or its members who as readers of „energia.sk“ show deeper interest in energy.

Here are the basic findings of the survey: Consumers (readers of energia.sk) know (95 %) their right by law to change their supplier of electricity or natural gas. Despite this fact almost 70 % of them didn't change their supplier. Only one third of those 70 % readers admitted that they can actually reconsider this in the future and change their supplier. As the main reason of not changing the supplier they checked „price savings is insignificant or none“. Almost 40 % of respondents who changed their supplier couldn't estimate their exact annual price savings. Respondents who changed their supplier and were able to estimate their annual savings most frequently stated:

  • the annual savings between 51-100 euros of the bill for natural gas (16,7 %)
  • the annual savings between 16-20 and 21-30 euros of the bill for electricity (in both cases 11,4 %)

Final results show that most of the respondents (59,3 %) checked as the main motivation of changing the supllier „the actual saving of total energy bill (euros/year)“. As the secondary reasons readers most frequently checked the options of „the credibility of supllier“ (37,4 %) and „complementary services of supplying energies“ (28,5 %). The other reasons are for respondents insignificant. In the open answer some of the respondents claimed as the motivation „ecological aspect“of the suplier i.e. renewable energies supllies.

Lower rate of market dynamics in the household segment especially if we compare Czech and Slovak market is most of all the consequence of conservative behaviour of consumer. One of the key findings of „energia.sk“ reader's survey is that household consumers don't have much trust to sales representatives. However if they decide to change supplier they prefer first-hand contact with particular supplier. Most preferred selling channel appeared to be „personal visit at the customer's centre of supplier“ (37,4 %), then „online website of supplier“ (24,4%) and the third preferred option is „beforehand arranged appointment of sales representative“ (15,4 %).  The choice of „random door-to-door sale“ checked as the most preferred selling channel less than 1 % of respondents. On the other hand (28,3 %) of respondents who changed their supplier realized this change using „random door-to-door“ sale. Finally, „door-to-door“ sale regard suplliers as their key selling channel. The view of consumers is different though. Households usually don't regard „door-to-door“ sale as their most preffered selling channel.

Validity of energy prices
 

Deregulation of the market and broadening competition of products for consumers to choose from should most of all result in lower price range. Although analysts stand for more pessimisstic position according to European Commission (EC) this approach proved to be as very successful in the field telecommunication. Therefore there shouldn't be an objective reason to not replicate this approach in energy sector as well. The Third Energy Package of the European Union (expecially directives 2009/72/ES and 2009/73/ES) contains  a special institution called „Energy poverty“. Every member country of the EU will have to deal with it. The most developed model of „Energy poverty“ has so far Great Britain. British household that spends tenth of its total income on energy expenses belongs to the group „Energy poverty“.

Suppliers are primarily competing each other with the price: price of the unit or the final energy bill in case of more developed market. In every case the issue of market deregulation is very closely linked with the social aspect as the energy expenses of the households are significant.

Slovakia will shortly afterwards have to deal with „Energy poverty“ as well. According to Energy regulation act ÚRSO will have to develope the concept in cooperation with relevant ministries until the end of 2013. Statistics of Eurostat states that the average Slovak household spends roughly 8,8 % of monthly income on electricity and natrual gas bills. Percentage share could be higher using other methodology though.

Statistical Office of the Slovak republic annualy release report “Incomes, expenses and consumption of private households in Slovakia“. The average expenses on electricity, natural gas and othe fuels (including heat) calculated on a single member of Slovak household was recently developing as we can see on chart number 3 below. The percentage share for the recent period didn't fall under 10 %. For a country like Slovakia that has not yet defined its criteria of „Energy poverty“ this can be viewed as a warning sign.

Chart number 3: The share of energy expenses of the incomes calculated on a single member of Slovak household





 





Source: Statistical Office of the Slovak republic, energia.sk 


Readers's survey of „energia.sk“ was therefore focused on household perception of energy prices and the final energy bill in deregulated market. In other words if deregulated market could really bring the price benefit that consumer expects.

Finally these are the findings of the survey about subjective perception of energy prices by households. Survey asked the readers if they are satisfied or unsatisfied with their present supplier. Almost 46 % of respondents checked their dissatisfaction with „monthly energy bill“. More than two thirds of respondents also marked that electricity and gas prices are „high and could be lower“. Approximately the same amount of respondents didn't consider energy prices as appropriate or couldn't judge if they are appropriate or not. Last but one question of survey asked about positives of deregulated market. Beside open question there were options as „price reduction“, „more competition“, "own choice of supplier“ and „customer's care“. Respondents most frequently ticked „own choice of supplier“ (75,7 %), then „more competition“ (54,8 %) and „price reduction“ (37,4 %).

Notice: Analysis was also published in PRO-ENERY magazine number 3/2012

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Parliament approved new emission law, revenues distribution outlined



On Tuesday (November 28) new law on the on the auctioning of greenhouse gas emission quotas has passed through the National Council of the Slovak Republic.

From 2013 onwards the system will change significantly as to reflect new EU harmonized rules. So far the industry sector has received emissions allowances free of charge. Based on the new EU rules some companies, especially thosse in the energy sector, will be obliged to purchase EU emission allowances (EUA). Manufacturing companies should receive a portion of them free of charge while purchasing another portion.

The environment minister Peter Ziga estimated that in 2013 revenues obtained from auction of EUAs might be approx. € 105 million. Total of 32,2 Mt CO2 have been allocated for Slovak companies next year, half of it will be purchased.

Cutting pie

The new law does not specify concrete projects or funds via which the revenues will be chanelled. Every year in September ministries of environment and of finance will decide on their specific use. However, some portions have been decided.


  • 50 % of the auction revenues will be used on big infrastructure projects with value over €200.000. They will require notification from the European Commission first. The money will be used as loans or grants for purchase of new or renovation of existing technologies and equipment with the purpose to decrease the CO2 emissions. 
  • 10 % will be used as compensation in sectors with the risk of so-called carbon leakage. According to the minister it might apply to 5 or 6 companies. 
  • 20 % should be used to mitigate negative impacts of climate change, e.g. projects of flood control.
  • Last 20 % will be used for de minimis projects, such as insulation of building or various energy efficiency programs. 


Eco displeasure

Environmental groups expressed their discontent with the approved law since they were urging politicians to us the revenues for climate projects and creation of green jobs. (See more here)

“Although the law contains proposal of revenues´ distribution it allows to minister of finance and minister of environment to agree every September that most or all of these revenues will end up as coverage of the budget deficit,” coordinator of Greenpeace climate campaign Pavol Siroky said. “The law also counts on further support for polluters, thus companies who are paying these fees themselves.”

He added: “We don’t see a logical reason why to give them further support from the state budget since they will not purchase all their emission allowances. They will receive them free of charge and the rest might be covered by transferring the over-allocation from previous periods.”

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EU could support pipeline projects in Slovakia

Week in Slovakia (November 26 - December 2, 2012)


Monday - 26th November 2012


According to the Minister of Economy of the Slovak Republic Tomáš Malatinský Slovakia has enough gas for the upcoming winter season. (more information)

Projects of interconnection of pipeline Bratislava to Schwechat and modernization of the Adria pipeline between the Slovak Republic and Hungary would be able to achieve the status "projects of common interest of the EU." (more information - automatic translation via Google Translate)

According to the Minister of Economy of the Slovak Republic Tomáš Malatinský Slovakia and neighboring countries do not worry about the safety of Slovak nuclear power plants. (more information - automatic translation via Google Translate)

The investment group Penta reportedly is interested in 49-percent share of the company Stredoslovenská energetika (SSE). (more information - automatic translation via Google Translate)

The company Slovenské elektrárne would like to complete the reconstruction of heating power plant Vojany. (more information - automatic translation via Google Translate)

In comparison with Bulgaria and Lithuania, Slovakia has got the most money for the decommissioning of the Bohunice from tje EU budget, said Slovak Prime Minister Robert Fico at the end of an extraordinary EU summit in Brussels. (more information - automatic translation via Google Translate)

Wednesday - 28th November 2012


The financial resources of disposal of nuclear will be managed by the Ministry of Economy. The department will make a payment monthly to the account of the National Nuclear Fund. (more information - automatic translation via Google Translate)

Slovak National Party wants to go with the sale of SPP to the General prosecution of the Slovak Republic. (more information - automatic translation via Google Translate)

The sale of emission allowances for industrial companies, which from next year Slovakia plans to introduce in accord with the new rules of the European Union, could generate an estimated revenue in amount 105 mil. euro. (more information - automatic translation via Google Translate)

The government will debate about the sale of the gas transmission network, Eustream. (more information - automatic translation via Google Translate)

Thursday - 29th November 2012


The Ministry of Economy debates these days withEPH - the potential new minority shareholders of SPP about the definite form of the documents which are necessary for closing the transaction. (more information - automatic translation via Google Translate)

The cabinet approved the proposal not to separate Eustream from SPP. (more information - autoamtic translation via Google Translate)

Heat prices for the households will increase by 2%. (more information - automatic translation via Google Translate)

Friday - 30th November 2012


Preparations for the construction of the Hungary-Slovakia gas line connections have started. The planned two-way pipeline with an annual capacity of 5 mil. m3 will have a length of about 115 km, 94 km in Hungary and 21 kilometers in Slovakia. (more information - automatic translation via Google Translate)

Opposition of the Parliament is unfavourable to the idea of next year's projected earnings in the chapter of the State Material Reserves of Slovak Republic (more information - automatic translation via Google Translate)

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Thursday, November 29, 2012

Study: Shale Gas in the Czech Republic and Poland - Regulation, Infrastructure and Perspectives of Cooperation

The rise of shale gas is probably the most important event of the world energy industry in the last decade. The story of how only within the course of several of years it changed the potentially largest import market in the world to nearly exporting producer is already notorious. A lot has been written on the implications which this originally purely domestic American phenomenon had on the global markets with natural gas, as well as with other energy commodities, and more broadly about its effects in the field of energy and climate policies set by a vast number of countries which take part in these markets. Attention is currently devoted to the matter whether it will be possible to develop the extraction of unconventional gas resources in other areas of the world as well. Europe has ideal conditions in this sense – the growing market, developed infrastructure, nearly liberalized market and the willingness to pay high prices. However, even if the geological conditions prove favourable, the development of shale gas in Europe is far from being granted. NIMBY issues, controversial environmental impact of the extraction process at the peak of its development, a number of national markets being tied by long-term contracts and/or by the protectionist tendencies, and a strong lobby of the competing branches of the energy industry or within the gas sector itself present a considerable challenge for shale gas.

The International Institute of Political Science (IIPS) has recently released a new study named  "Shale Gas in Poland and the Czech Republic: Regulation, Infrastructure and Perspectives of Cooperation". This study focuses on the current development of the events associated with shale gas in the Czech Republic and Poland with regard to their possible mutual cooperation. The foundation of the research consists of the two case studies on regulatory frameworks in these countries. Given the fact that both countries are at different stages of the shale gas developing process, further attention is paid to country-specific aspects, which form the core of the current internal national debate. The reference to the regulation and internal affairs at the level of national states is then supplemented by the analysis of the current discussion on shale gas regulation at the level of the European Union.

The study was conducted within cooperation between the Energy Security Program at the Faculty of Social Studies, Masaryk University, and Warsaw-based university Collegium Civitas. The study was supported by the Czech-Polish Forum.

This study focuses on the current development of the events associated with shale gas in the Czech Republic and Poland with regard to their possible mutual cooperation. The foundation of the research consists of the two case studies on regulatory frameworks in these countries. Given the fact that both countries are at different stages of the shale gas developing process, further attention is paid to countryspecific aspects, which form the core of the current internal national debate. In the Czech Republic, the discussion is led over a two-year moratorium on exploration, which the Ministry of the Environment has proposed most likely under the influence of a strongly polarized debate over shale gas and public opposition to hydraulic fracturing. In Poland, the debate primarily addresses the burden of taxation, infrastructure requirements and, to some extent, the physical security. The reference to the regulation and internal affairs at the level of national states is then supplemented by the analysis of the current discussion on shale gas regulation at the level of the European Union. Because of the highly competitive nature of the energy industry, researchers studying it face a series of problems. Many state bureaus and private companies are unwilling to share precise data, making it difficult to identify the long-term strategies of individual energy players. Furthermore, available data is not often completely conclusive or credible, whether due to its providers' limited reliability or because accurate data is missing. 

For that reason, we paid special attention to verifying all information by checking it against several sources. However, in some cases even very reliable and respected sources diverged considerably. In cases where data could not be fully verified, we considered the information to be unverified. We used dozens of open resources, including frequent reference of IEA materials, as well as interviews, discussions, and fieldwork.

Data collection took place in the Czech Republic, Poland, and Brussels, from January
2012 to October 2012.

The study is available here.

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Energy Law in 2012

Year 2012 brought significant changes in legal norms in Slovakia. On 1 September 2012 new Energy Act became into force with main focus on implementation of the Third Energy Package by EU, aiming to achieve internal energy market in Europe with specific focus on strengthening customer rights as well supporting market competition.

Customer rights

According to the new Energy Act final customers shall have the right to switch their energy supplier within three weeks without any further costs. Contracts can be cancelled up to 14 days after signing it and in case of price change or general business terms change, consumers have the right to withdraw from a contract at least 15 days prior to the change validity.

Customers will have the right to settle accounts with their previous supplier within four weeks after changing and also the right to comprehensible data on their energy consumption and the prices of electricity and natural gas.

New definition of vulnerable customers was introduced (i.e. a person whose life depends on supply of electricity and natural gas or is seriously disabled and uses energy for heating purposes) with offer of special social tariffs.

The new Energy Act also specifies the required contents of electricity and gas supply agreements to give customers the best information about what they are actually paying for. Also the concept of universal service is introduced as required by the Third Energy Package. Under this service, electricity and/or gas customers in households and in small companies have the right to be supplied with electricity or gas of a specified quality within their territory at reasonable, easily and clearly comparable, transparent and non-discriminatory prices. Also the right to be supplied by a supplier of last resort, already reflected in the Slovak energy law before, is included.

Unbundling

The new Energy Act states the obligation to unbundle energy generation and supply from transmission services in the electricity and gas sectors. Electricity transmission in Slovakia is provided by the transmission system operator SEPS (Slovenská elektrizačná prenosová sústava, a.s.) which is fully state-owned and already legally unbundled from electricity production and distribution. The new Energy Act also provides for full ownership unbundling of SEPS.

Another requirement is to unbundle distribution services in a vertically integrated company meaning independence of legal entity, form, organization and decision making process not related to energy distribution.

In the case of the gas sector, in which the gas transmission system operator (TSO) Eustream, a.s. is a 100%-subsidiary of SPP (Slovenský plynárenský priemysel, a.s.), a dominant vertically integrated player in the gas sector, the ownership structure is not yet in line with the requirements of the Third Energy Package. The new Energy Act determined that the gas TSO may either be (i) fully ownership unbundled; (ii) organized as an Independent System Operator (ISO); or (iii) organized as an Independent Transmission Network Operator (ITO). While the full ownership unbundling mode is considered the default model for the gas sector, the government also had the option of changing the regime to ISO or ITO until 1 December 2012.

The government was finally advised by the Ministry of Economy to implement the ITO regime. The proposal was supported by analysis of individual options, legal background and experience from the Slovak gas market. In case it does not meet the targets set by the european directive, there is still the option to pursue ownership unbundling.

Other areas included in the new Energy Act
  • Execution of state administration in the energy sector via the ministry of economy, the regulatory office and the state energy inspection
  • The new law builds the basis for introducing and promotion of smart metering in specific categories of consumers
  • The scope of business activities subject to licensing has been changed
  • New rules on the cross-border provision of services were introduced
  • New provisions on the promotion of renewables were proposed

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Slovakia has for the upcoming winter season enough gas reserves

According to the Minister of Economy of the Slovak Republic Tomáš Malatinský Slovakia has enough gas for the upcoming winter season. "Slovakia currently has sufficient capacity gas storage facilities, which together with interconnections with neighboring countries allows a reliable and safe supply of gas," said Malatinský at The 6th Annual Energy Conference - The Common EU Energy Policy and the Energy Security of Slovakia. The possible interruption of gas supplies from the Russian Federation through Ukraine would not surprised Slovakia.

New pipeline links with neighboring countries would set the tranquil winter to Slovak consumers. The technical measures were implemented under the terms of connection Slovak and Czech transmission system. They will allow reverse flow from the Czech Republic to Slovakia with a capacity of 15 million m3 per day, which can be extended, if necessary, to 25 million. m3 per day. "The company Eustream, which is the transmission system operator is able to run a reverse flow in the fully automatic mode and thus transported gas that exceeds the daily consumption of Slovakia in the winter months," said Malatinský. Slovakia has launched to reverse flow also with Austria. The capacity is 17 million. m3 per day. These days Slovakia is already working on projects of gas pipeline links with Poland and Hungary.

In the potential crisis Slovak consumers will have enough gas thanks reservoir of natural gas, which are operated by Nafta, Pozagas, and SPP Storage. The total storage capacity is 3.5 billion m3 of gas. In August of this year 2.9 billion m3 of gas, i.e., approximately 83 % of the total capacity was held. For the purposes of Slovakia is also used underground storage Bojanovice in the Czech Republic, operated by SPP Storage. The capacity is 0.57 billion m3.

 Slovakia, when necessary, will rely on additional diversification of the gas supply, which concluded Slovenský plynárenský priemysel (SPP) with E.ON Ruhrgas and GDF SUEZ. On the basis of agreements, the auxiliary gas supply can be ensured for the Slovak market additional approximately 3 million. m3 of gas per day during the crisis.

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Tuesday, November 27, 2012

Renewable energy in Slovakia

The national target of Slovakia on field of exploiting renewable energy sources (RES) is to reach the 14 % share in general energy mix by 2020. It means the 14 % share of RES in so called TPES - total primary energy sources – consumption.

The EU’s legal base and national target

The legal base for nation RES target stems from the Directive 2009/28/EC on the promotion of use of energy from RES. It was endorsed by EU institutions in April 2009. This directive sets:
  • mandatory national targets for the overall share of RES among TPES as well as the target in transport sector,
  • rules related to statistical transfers between EU member states,
  • bio fuels and Bio liquids standards.
The national targets were set as + 5,5 % increased share of RES among TPES in comparison with the state in 2005. In addition, the secondary criteria became the GDP per capita. Therefore, mandatory national target for Slovakia is following:
  • 14 % share of RES among TPES (total final energy consumption),
  • 10 % share of RES in transport sector.
The most important legislation of Slovakia

The general strategy of support, promotion and exploitation of RES stems from various governmental documents, which represent subordinated legislation to basis created by Energy Act (adopted in 2012), Regulation Act (adopted in 2012) and mainly Act 209/2009 on support of RES: and Act 657/2004 on thermal energy sector:

To introduce the National Action Plan for energy from RES by 2010 was the obligation of each EU member state. Due to the early election and the change of government, Slovakia sent this Plan to European Commission just at the end of summer that year, a few months after the initial deadline. However, concrete national targets for 2020, set in Plan are:
  • 15,3 % share of energy from RES in TPES,
  • 24,0 % share of RES in electricity production,
  • 14,6 % share of RES in heat produced in Slovakia,
  • 10,0 % share of energy from RES in transport.
The estimated progress and higher use of RES is described in this graph:

Source of graph: Slovak Innovation and Energy Agency (SIEA)

When it comes to heat, the prognosis is following:

 
Source: Slovak Innovation and Energy Agency (SIEA)

On field of electricity production, National Action Plan estimates this scenario:

Source: Slovak Innovation and Energy Agency (SIEA)

Plan versus reality

Source: Slovak Innovation and Energy Agency (SIEA)

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Changing electricity and gas supplier: A survey of households behaviour

The portal energia.sk in the period from 13th to 31st August 2012 carried out an electronic readership survey. Its aim was to monitor motivation, respectively disincentives of households to change their supplier of electricity and/or natural gas.

Methodics


Online electronic questionnaire was completed by 282 respondents and in the data collection period came to webo portal energia.sk 9.918 "unique" visitors. It should be emphasized that this is a readership survey, readers of the website do not constitute a representative sample of the population of Slovakia and the voluntary completion of the questionnaire does not statistically replace replace the principle of random sampling.

Nevertheless the results reveal the consumer behavior of households; respectively its members as readers of energia.sk which are interested in energy, power engineering and liberalization of the market. The sample description of readers is based on the measured data on current attendance of the portal. In Google Analytics, as well as from the analysis data on registered subscribers of daily e-mail information service, readers of the portal energia.sk are divided into three groups:
  • portal users who are professionally active in the energy sector (representatives and employees of energy companies, representatives of state and government - the Ministry of Economy, The Regulatory Office for Network Industries, etc..)
  • portal users who come into direct or indirect contact with power and energy issues (journalists devoted to the energy sector, government officials, people active on campus in research and development - Slovak Academy of Sciences and etc...)
  • finally, the portal users representing a kind of informed consumer community - energy end-users and the wider public with a deeper interest in the issue.

The original ambition of the readership survey was to monitor the positions of two groups of respondents: representatives of households and representatives of small and medium-sized businesses. The vast majority of respondents (95.7%) marked at the beginning of the electronic questionnaire that they answer it as a representative of household. Therefore, the respondents who responded to the questionnaire as representatives of small and medium-sized firms were filtered from the database answers and the evaluation of the questionnaire focused on the answers of households.

The vast majority of respondents (84.3%) marked at the beginning that they are the purchaser of electricity and natural gas at the same time. Only 15.7% said that use only electricity without gas. Regarding buyers of commodities, generally they have a direct contractual relationship with its suppliers. In the case of electricity and gas a direct relationship has 94.5% of respondents. Other respondents declared that they buy individual commodities vicariously, for example through the owner of the property in which the household resides. These features suggest the relevance of research findings.

The main findings


The main finding of the survey can be formulated as: The vast majority (95.0%) of the consumers (energia.sk readers) are aware of the change of the supplier of electricity and gas but 68.8% of them do not changed the supplier and the third (33.0%) of this group admitted that they will consider the change to the end of 2012. Approximately another third marked the option "do not know" (32.1%) and the final third will not intend to this issues (34.8%).

Those who changed their supplier:
  • the largest part changed the electricity and gas supplier (42.5%),
  • change of natural gas supplier only 31.9%
  • change of the electricity supplier only 25.6%.

Just for completion, if it comes in a future of the first or repeated change equal 39.0% of respondents answered "do not know". As in the second order (37.4%) respondents ticked 'yes'. Thirdly, 23.6% answered "no."

Reasons for passive consumer behaviour


The main reason of no action the majority of respondents identified "the price advantage is negligible or none" (33.3%). In this question respondents could indicate only one reason to consider the "main". In addition to already mentioned, most respondents indicated these following main reasons:
  • "Price advantage is negligible or none" (33.3%),
  • "Supply contractors are not transparent" (17.6%),
  • "I do not want to deal with it" (16.6%),
  • "I do not trust the information that is presented in the advertisement (14.7%),
  • "Change of the supplier is difficult" (4.9%);
  • "All suppliers are the same in the products they offer are not differences" (2.9%);
  • "I am afraid that a change could lead to failure of electricity or gas" (1.0%);
  • the rest indicated the chance "other."

In the next question consumers could identify a number of "other" reasons for which they changed the supplier. Offered possibilities were the same. The order was similar as in the determination of the main reason, but the percentage rate was different:
  • "Price advantage is negligible or none" (32,7 %),
  • "Supply contractors are not transparent" (26,7 %),
  • "I do not trust the information that is presented in the advertisement (25,7 %),
  • "I do not want to deal with it" (23,8 %),
  • "All suppliers are the same in the products they offer are not differences" (8,9 %);
  • "Change of the supplier is difficult" (7,9%);
  • "I am afraid that a change could lead to failure of electricity or gas" (5,0 %);
  • the rest indicated the chance "other."

Estimated financial saving in supplier change


Among respondents who have changed the supplier, nearly one in four could not estimate the real annual savings of this step. This applies to both commodities - electricity (38.6%) and natural gas (39.6%).

The respondents who changed the supplier and knew to estimate the achieved financial savings, most often mentioned:
  • annual savings in the range of "51 to 100"  euro per account for natural gas (16.7%),
  • annual saving in ranges of "16-20" and "21-30" euro per account for electricity (or both 11.4%).

 Table. 1: Estimated saving

It should be noted that the answer to this question answered only respondents who indicated at the beginning that they changed the commodity at least once. So 31.2% of respondents answered the question. In practice this means that there could raise space for the statistical deviation.

Motivation for change and satisfaction with current suppliers


The results are all the more interesting that the majority of respondents (59.3%) identified the main motivations for change, respectively thinking about change "a specific savings from the total account for the energy (€/year)." The second-most common reason was the "credibility of the supplier" (37.4%) and "additional services to the energy supply" (28.5%). Respondents enclose to the other reasons minor importance. In the open-emerged question the major motivation was an "ecological site" of the supplier (2%), thus the supply of renewable energy.

When respondents were asked to mark only one main reason, the following chart was:
  • "specific savings from the total account for the energy (€/year )" (59.3%),
  • "credibility of the supplier" (16.3%);
  • "saving in the unit price (€/year)" (13.0%),
  • "additional services to the energy supply” (4.1%);
  • "the time of the contractual linkage” (3.3%);
  • "brand name of the supplier" (1.6%);
  • the rest indicated the chance "other." (2.4%)

When respondents were asked to indicate also other reasons (they should mark more answers), the results were:
  • "credibility of the supplier" (37.4%),
  • "specific savings from the total account for the energy (€/year )" and at the same time as the "additional services to the energy supply " (both consistently over 28.5%),
  • "saving in the unit price (€/year)" (25.2%),
  • "the time of the contractual linkage " (22.0%),
  • "brand name of the supplier" (17.1%),
  • the chance "other" marked 4.1% of respondents,
  • respondents who ticked at the beginning that they have changed the supplier could to indicate the possibility "dissatisfaction with the approach of the original supplier." This option marked 12.5% of those who have changed supplier.

Without regard to fact, whether the respondent has changed or has not changed the supplier, the survey also looked at satisfaction with current suppliers.  They answered at the question "with your current supplier you are":
  • "satisfied" (59.8%),
  • "dissatisfied (11.5%);
  • "I cannot judge (28.7%).

Subsequently several possibilities were in the online questionnaire and respondents were asked to indicate the main reason for satisfaction, and the main reason for dissatisfaction with the current supplier. Respondents could mark one possibility for satisfaction and dissatisfaction.


Table. 2: Preferences in satisfaction and dissatisfaction with the supplier

Conservative consumer behaviour


The survey showed that households do not have much confidence to the brokers, but in the decision of changing the supplier they prefer the direct contact with the selected supplier. It is also clear that although the practice of doorstep selling in the key business channel for suppliers, it is not preferred channel for consumers.

Preferred sales channel according to the survey is a personal visit of customer service. Full ranking of preferred sales channels:
  • "personal visit in customer service of the supplier" (37.4%),
  • "online tool - web site of the supplier" (24.4%),
  • "prearranged visit with the supplier's representative" (15.4%),
  • "online tool - an independent trading platform" (12.2%),
  • "telephone hotline of the supplier" (8.9%);
  • "'random' doorstep selling" (0.8%);
  • the "other" marked 0.8%.

The online questionnaire asked about any "other ways of change of energy supplier arrangements that they actually use." Respondent should indicate more options at the same time:
  • "online tool - web site of the supplier" (38.3%),
  • "personal visit in customer service of supplier" (28.7%),
  • "prearranged visit with the supplier's representative" (27.0%),
  • "online tool - an independent trading platform" (24.3%),
  • "telephone hotline of the supplier' (20.0%),
  • "'random' doorstep selling '(0.0%);
  • the "other" marked 0.9%.

Consumer preferences with reality were confronted by the question for those who has changed the supplier at least once. The question asked at the way of change. Complete ranking:
  • "'random' doorstep selling '(28.3%),
  • "personal visit in customer service of the supplier" and - "online tool - the website of the supplier" (both consistently 22.6%),
  • "prearranged visit with the supplier's representative" (11.3%),
  • "telephone hotline of the supplier" (7.5%);
  • "online tool - an independent trading platform" (1.9%);
  • the "other" marked 5.8%.

Subjective perception of energy prices and opinions on open market


Finally, the survey asked respondents to rate agreement or disagreement with the proposed claims. The agreement with the statements in here:


Table.3: Agreement with the statements – electricity


Table. 4: Agreement with the statements - gas

Most respondents perceived the opening of the energy market positively. At the question what predominated at the open (liberalized) market, respondents said:
  • "more positives than negatives" (51.3%),
  • "as many positive as negative" (12.2%),
  • "more negatives than positives (17.4%),
  • "I cannot judge" (19.1%).

When respondents were asked to think about positives, the preferences were (they had the opportunity to indicate more options):
  • "the possibility of choice" (75.7%),
  • "more competition" (54.8%),
  • "lower prices" (37.4%),
  • "the care of customer " (29.6%),
  • the "other" marked 3.5% of respondents.

When respondents were asked to think about negatives, preferences are as (they had the opportunity to indicate more options):
  • "unfair competition - unfair communication on the doorstep selling" (80.0%),
  • "unfair competition - ads that do suit to the reality" (53.9%),
  • "elude the law" (41.7%),
  • the "other" marked 5.2% of respondents.

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Jozef Holjenčík will be the Chairman of the Regulatory Office for Network Industries for next 6 years

Slovak President Ivan Gašparovič appointed Jozef Holjenčík to a post of the Chairman of the Regulatory Office for Network Industries.

"He will be in this post of the Chairman of the Regulatory Office for Network Industries for six years," said spokesman of the Office Miroslav Lupták. Until 2007 he was a member of the Regulation Board of the Regulatory Office for Network Industries ,"  "Newly appointed Chairman of the Office carried out his duties, "said Lupták.

Basic information about Jozef Holjenčík
Education: Slovak Technical University, Faculty of Electrical Engineering and Information Technology,
specialization generation, distribution and usage of electricity
Practical experience: Entrepreneur in energy field, heat generation, distribution and sales
JHS s. r. o., Martin –general manager
assistant manager of the Expert Institute of Electricity Engineering and Information Technology of the Faculty of Electrical Engineering and Information Technology
JHS Ltd., Martin – expertise manager, officially appointed judicial expert for energy sector and electricity and lector in the field of expertise
Chairman of the Organizational Committee of Conferences of Industrial Energy Experts, energy audits

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Friday, November 23, 2012

The company Slovenské elektrárne analyzes the project of hyproelectric power station Ipeľ

Week in Slovakia (November 19 - November 25, 2012)


Monday - 19th November 2012


The customers of the supplier Vaša Energia
in the region ZSE Distribúcia could choose a new supplier. The reason is the loss of the supply electricity to distribution contract terminated by ZSE Distribúcia, according to the law and the disappearance of existing contracts between the comapany Vaša Energia and the customers. The affected customers will not automatically go to the supplier Energie2 as Vaša Energia encourages in the press release - they may choose any new supplier. (more information - autoamtic translation via Google Translate)

The company Slovenské elektrárne analyzes the project of construction of the hydroelektric power plant. According to the Ministry of Economy it would get some benefits for the Slovak power engineering. (more information - automatic translation via Google Translate)
 

Tuesday - 20th November 2012


Private investor wants to build new cogeneration units in Snina. The company plans to invest 2.2 mil. euros in the construction of two cogeneration units with an installed capacity of 3 MW. (more information - automatic translation via Google Translate)

Fico spoke with the management of the company Slovnaft also about planned investments. (more information - automatic translation via Google Translate)


Thursday - 22nd November 2012


Slovakia has not reckoned
for the privatization of the company Slovenské elektrárne with the Italian energy group Enel, yet. (more information - automatic translation via Google Translate)

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Thursday, November 22, 2012

Unconventional Gas: Potential Energy Market Impacts in the European Union

Executive summary / Background

This report investigates the potential impact of unconventional gas, most notably shale gas, on European Union (EU) energy markets.

It should be noted that Commission services are currently examining whether the environmental challenges of unconventional gas production can be effectively managed through existing regulation, monitoring and the application of industry best practices. In this vein, the Joint Research Centre (JRC) has prepared a report reviewing the literature on environmental impacts. The present report examines only the potential benefits of shale gas exploitation and should be seen together with the associated JRC report addressing environmental issues.

In February 2011, the European Council stated that: “In order to further enhance its security of supply, Europe's potential for sustainable extraction and use of conventional and unconventional (shale gas and oil shale) fossil fuel resources should be assessed.” This report is a preliminary attempt to respond in part to this call by providing reliable facts for EU policy‐makers.

Fossil fuels, such as oil, natural gas and coal are by far the largest sources of energy in the EU and are widely projected to dominate the European energy mix through to at least 2030. The European Commissions Energy Roadmap 2050 identifies gas as a critical fuel for the transformation of the energy system. The substitution of coal and oil with gas in the short to medium term could help to reduce emissions with existing technologies until at least 2030‐2035.

Conventional gas currently dominates worldwide natural gas production, accounting for over 85% of total marketed output today. In recent years, however, two key developments have shifted the focus to so‐called 'unconventionals'. The first has been mounting concern that growing demand for energy worldwide would outstrip supply. The second factor has been a dramatic increase in unconventional gas production in North America, to roughly 50% of domestic production.

The International Energy Agency (IEA) has estimated that ‐ under the right conditions ‐ unconventional gas may meet more than 40% of the increased global demand for gas by the year 2035. However, many questions still remain about how easily unconventional gas resources can be developed outside North America.

Unconventional gas resources are thought to be, geographically, broadly distributed across all continents, including Europe. Their potential development may therefore offer a number of security‐of‐supply benefits for the Union: lower natural gas prices; more readily available gas on the European market; easing tightness in global energy markets; and adding diversity to the EU's gas supplies.

However, the growing focus on unconventional gas has not come without controversy. Notably, it has been argued that there may be several negative environmental and climatic aspects to its production. In addition, more and cheaper (unconventional) gas may challenge investment in coal, nuclear and renewables, as well as the established gas business model. And, of course, questions have been raised about the size of the recoverable resource base.

Full report published by Joint Research Centre (European Commission)  you would download here.

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Wednesday, November 21, 2012

European Photovoltaic Actions and Programmes-2012

Introduction

More than 29 GW of PV systems were newly connected to the grid worldwide in 2011, up from about 17 GW in 2010. In the same year, Europe was confirmed as the predominant area of global PV demand, hosting 75% of the overall new capacity. Italy was the largest market for the year with 9,3 GW newly connected to the grid, followed by Germany (7,5 GW) and France (1,6 GW). The cumulated photovoltaic capacity installed in Europe by end of the year 2011 is estimated at more than 51 GW, from about 30 GW the year before. In 2011, China was the most active market outside Europe, with 2,2 GW installed, followed by USA with 1,9 GW. The significant EU domestic imbalance between demand and supply of photovoltaic modules persisted in 2011, with less than 30% of the demand satisfied domestically. The imbalance is much lower for inverters of PV systems and almost invisible for the EPC/installation services, which are supplied almost entirely by EU companies. These considerations are important because, with falling module prices, balance of system costs become increasingly relevant. For instance, balance of system costs are now more than module costs in some commercial and ground-mount systems.

The feed-in tariffs support schemes for photovoltaics, first introduced in Europe, have permitted the  industry to grow and step up to become a mainstream power generation technology. During the last few years, we have recorded substantial changes to the industry structure and, especially, an accelerated price reduction of the technology. This has led to continued rushes on installations, as investors have tried to make the most of the difference between feed-in tariffs and the cost of photovoltaic electricity. The growth of the photovoltaic market was unanticipated by National authorities, despite the application of a number of complex schemes, which were intended to take market dynamics into account. It appears now that the combined effect of reductions of the support schemes, the introduction of caps, and restricted access to finance will limit the growth of the photovoltaic installations in Europe. In the coming years, Asia (in particular China and Japan) and USA are likely to assume an increasing share of the photovoltaic demand.

The predictability and consistency of the current prices with the scale of the sector justify further consideration, particularly with regard to whether the center of gravity of the photovoltaic industry has already moved from technology development and demonstration to market deployment. The shaping of future national support instruments might benefit from the conclusions of such considerations.

In this paper, we first describe the European policy framework and envisage its development for preparing the right regulatory, industrial and technological configuration and legal instruments for the post 2020 environment. In particular, we discuss the new Commission Communication  Renewable Energy: a major player in the European energy market”. The Commission wishes renewable energy to be developed as cost effectively as possible and will continue to work with Member States on the implementation of the RES Directive  to facilitate the convergence of national support schemes. The best conditions for the development of renewable energy should be ensured, with schemes following best practice, avoiding overcompensation and retroactive changes. It seems to us that a strong sense of direction towards 2030 is needed soon, to support long-term investment decisions and to enable markets to integrate higher shares of renewables.

Second, we present the results of the 7th Framework programme (FP7), highlighting the newly selected projects and breakthroughs, and we discuss the investments operated in the various strands of photovoltaic activities. It is worth recalling that FP7 is ending and the last calls of the programme have been already published. The next framework programme for research and innovation for the 2014-2020 period, Horizon 2020, is already in an advanced phase of preparation.

Third, we discuss the activities carried out under the second Intelligent Energy Europe (IEE) Programme aiming at transforming the PV market. We also provide an update on the status of the NER300 initiative, which represents another funding opportunity for European PV projects.

Finally, we describe the implementation of the Solar European Industrial Initiative of the SET-Plan.

Full report published by DG Energy (European Commission) you would find on this link.

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Friday, November 16, 2012

The future of biofuels is allegedly endangered

Week in Slovakia (November 12 - November 18, 2012)


Tuesday - 13th November 2012


Slovak Association for the production and use of biofuels do not like the proposal of the European Commission, according to the half production will be from waste materials since 2020. (more information - automatic translation via Google Translate)

The biofuel production is not for Slovakia and eventually even Europe threat to food security, said the spokeman Stanislav Nemec from Slovak Agricultural and Food Chamber. (more information - automatic translation via Google Translate)

National Nuclear Fund will have 49 mil. euro for disposal of nuclear core. (more information - automatic translation via Google Translate)

Wednesday - 14th November 2012


Slovnaft makes a profit 50 mil. euro the end of September. Net receipts of the Slovnaft Group for the first nine months of this year declined to 3,36 bil. euro (- 6%). (more information - automatic translation via Google Translate)

According to CEO of Vemex Energo Štefan Koman, Slovakia is not in danger of lack of gas because of  the construction of new gas pipeline transmission network in the north and south of Europe. (more information - automatic translation via Google Translate)

Thursday - 15th November 2012


The ministry has recommended to Slovak government to use the option offered by new Act on energy (251/2012 Coll.) and decide not to use ownership unbundling (OU) in case of gas market infrastructure. Rather the ITO model – set up of an independent transmission operator – should be preferred. (more information)

Friday - 16th November 2012


Eustream is prepared to implement any model of unbundling. (more information - automatic translation via Google Translate)

Czech newspaper Mlada fronta Dnes informed that energy giant CEZ is considering to sell their shares in Nuclear Energy Company of Slovakia (JESS), a joint venture created together with Slovak company JAVYS with the purpose to construct a new power plant in Jaslovske Bohunice. According to original plans of JESS the construction in Jaslovske Bohunice should start in 2014. (more information)

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Directory of key players in Slovak energy


Energy in Slovakia brings you directory of key players in Slovak energy sector with links to their webpage (if available), contact addresses and acronyms commonly used in the Slovak environment.

The document is sorted out to various categories, such as state level institutions, budgetary and state-funded organizations, companies with state ownership involvement, regulation and supervision bodies, industry associations, major individual players as well as associations protecting consumer’s rights

You may download the file here.

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