strategy update final 15-11-2005
TRANSCRIPT
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BG Group WIP
Gas and power in Italy: a market primer
and business development opportunities
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Contents
Work plan
Italian market European benchmarking
Italian market analysis
Gas market value chain margins
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Work plan
Italian market European benchmarking
Italian market analysis
Gas market value chain margins
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The first days has been spent on understanding market
structure and public data availability, afterwards we have
focused on margins quantitative analysis
Weeks 17-21 24-28 31-4 7-11
Italian market international
benchmarking: market size,
liberalization and cost prices
Italian market assessment:
supply/demand projections, market
structures and recent trends
Value chain quantitative analysis:
Data gathering
Value chain prices identification
Value chain margins identification
Kick-off
14-11 meeting: Italian market European
benchmarking
Italian market assessment Italian gas market value chain
margins definition
14-19
Final presentation hand in
Work plan
1
2
3
28-11 meeting: First evidences on:
Italian market European benchmarking Italian market assessment Data availability
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To assess the Italian Gas & Power market, we have used a
three steps approach
Analysis scheme
Identification of Italian market
potentials with respect to main
European Countries
Identification of Italian market
structure, trends and main players
role
Identification of main players
margins for importers, wholesalers
and retailers
9 1%
82 %8 0%
64 %
10 %
91 %
65 %
50 %40 %
25 %
9%
35 %
50 %60 %
75 %
166,3
80,6
102,0
24,05
19,71
17,23
14,85
19,39
17,23
4,34
2,16
2,38
Gas value chainmargins definition:
main players bottom-up analysis
Italian market analysis:supply/demand projections, market
structures and recent trends
Italian market Europeanbenchmarking: market size, liberalization
and cost prices
321
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Contents
Work plan
Italian market European benchmarking
Italian market analysis
Gas market value chain margins
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Italy is one of the largest European gas & power markets, with a substantial weight in gas. Market growth is expected
to be higher than Western European average, being the second most growing market just after Spain. LNG Focus: Italian gas market highly depends on imports LNG has still a small share of voice with respect to
pipelines. The Spanish market already imports over 95% of total imported gas by LNG.
Market concentration: on the upstream - both in the gas and the power market - former monopolists still enjoy some of the highest
market shares in Europe (ENI 65% - ENEL 50%) being the most concentrated market after France.
on the downstream Italian power and gas market shows higher competition with respect to European
counterparts, especially on the gas market. Main national and international players are entering in the market.
Market prices: Gas market: Italy shows the highest households prices and some of the higher for industrial customers (both
Germany and France have higher prices).
Power market: Italian market shows the highest price for both households and industrial users .
Considering consumer trends, there are evidences of a lower switching rates (~ 15% in the power market) of Italiancustomers with respect to other European countries.
Legal framework: Italy has some of the more strict unbundling requirements in both gas and power market, ensuringa clear and developed legal framework.
Logistic: a natural born hub, Italy - and especially Brindisi benefits from lower distance with respect to main African,North African and Middle East harbors.
Executive summary
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513
477
280
234215
Italy is one of the largest European gas & power markets,
with some of the most interesting growing rates
Gas & power domestic consumption (2004)
Power [TWh]Gas [Bcm]
98
8679
45
27
UK Germany Italy France Spain UKItalyFrance SpainGermany
2004-2000
CAGR (%) 0,3% 2,0% 3,1% 3,0% 12,7%2004-2000
CAGR (%) 1,8% 1,4% 2,1% 1,5% 5,5%
Source:AEEG, UCTE, BP, EIA
Average Western Europe expected CAGR till 2010: ~ 1,8%
Average Italian expected CAGR till 2010: 2.6%
Average Western Europe expected CAGR till 2010: ~ 1,1%
Average Italian expected CAGR till 2010: 2.1%
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Italian gas market highly depends on imports LNG has
still a small share of voice with respect to pipelines
Gas market structure- imports (2004)
LNG share on total imports [%]Imports on total consumption [%]
Source:AEEG, IEA
100%95%
89%85%
15%
UK2)Germany1) ItalyFranceSpain
95,0%
10,5% 9,0%
0,0% 0,0%
UKItalyFranceSpain Germany
1) Also exports gas for 10% of total consumption
2) Also exports gas for 13% of total consumption
Total
consump-
tion (BCM)27 45 86 79 98
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On the upstream, Italian power market is still highly
concentrated, whereas on the downstream shows higher
competition
Power market concentration (2004)
Retail supply: # of players with market share> 5%Market share on generation [%]
85%
50%40%
30%20%
10%
27%40%
40%
20%
5%
23%20%
30%
60%
Source: DG TREN 2004
UKGermanyItalyFrance Spain
6
5
4
3
1
UK Italy FranceSpain Germany
Largest producer 2nd and 3rd producers Others
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The Italian gas market shows a similar structure to power:
high concentration on the upstream, lower on the
downstream
Market structure- gas
Retail supply: top 3 players market share1) [%]Shipping: % of gas controlled by the largest
company [%]
Source: DG TREN 2004
1) On both eligible and non eligible markets
UKGermanyItalyFrance Spain
91%
82% 80%
64%
10%
UK ItalyFrance Spain Germany
# of companies
with market
share >5%1 3 12 4 5
# of companies
with market
share >5%2 6 4 3 0
91%
65%
50%
40%25%
9%
35%
50%60%
75%
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On the price side, the Italian market shows some the
highest gas prices
Gas prices [Euro without taxes per 1.000m3
]
Industrial users1)[2005] Households2) [2005]
Source: Eurostat, AEEG
1) Annual consumption of 41.860 GJ and load factor of 200 days (1600 hours)
2) Annual consumption of 83,7 GJ
221
203189
182166
UKGermany ItalyFrance Spain UKGermanyItaly Spain
331
270267
237
201
France
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Power prices in Italy are the highest in both industrial and
households segments
Power prices [Euro without taxes per MWh]
Industrial users1)[2005] Households2) [2005]
Source: Eurostat
1) Annual consumption of 2.000 Mwh, maximum demand of 500 kW and annual load of 4.000 hours
2) Annual consumption of 3.500 KWh of which 1.300 KWh is overnight (standard dwelling of 90m2)
84
78
69
5753
UKGermanyItaly France Spain
144
133
102
91 90
UKGermanyItaly SpainFrance
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Italian customers seems not very attracted by today new
entrants power offers: treat or opportunity?
Switching estimates since market opening - Power
1) Annual consumption greater than 1Gwh per year
Source: Eurostat
Switching rate among large eligible industrial users1)
50%
35%
22%
18%15%
UK Germany ItalyFrance Spain
Start of the
liberalization
process1999 199919981991 1998
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Italy, together with Spain and the UK requires strict
unbundling requirements
Market accessibility Power (2004)
Source: DG Tren 2005
UK
Germany
Italy
France
Spain
Market opening Size of open market
(Twh)Eligibility threshold
Unbundling
Transmission Distribution
100% 500 - Accounting Management Legal
Accounting
70% 275
Non Households
Accounting Management Legal
Accounting Management
79% 225
Accounting Management Legal Ownership
Accounting Management Legal
100% 210
Accounting
Management Legal Ownership
Accounting
Management Legal
-
100% 335
Accounting Management Legal Ownership
Accounting Management Legal
-
Non Households
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Even on the gas side, Italian market is one of the countries
with the strictest unbundling regulation
Market accessibility Gas (2004)
Source: DG Tren 2005
UK
Germany
Italy
France
Spain
Market opening Size of open market
(Bcm)Eligibility threshold
Unbundling
Transmission Distribution
100% 82 - Accounting Accounting
70% 28 Accounting Management Legal
Accounting
100% 80
Accounting Management Legal
Accounting Management Legal
100% 20
Accounting
Management Legal
Accounting
Management Legal
-
100% 95
Accounting Management Legal Ownership
-
Non Households
-
Accounting Management Legal Ownership
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On a logistic point of view, Italy benefits from shorter
average distance to main gas harbors
Brindisi
4,693
555550
8864,206
825
4,686
BioKo Island
(Guinea)
16.401
22.158
18.991
17.794
Damietta
(Egypt)
Bauny Island
(Nigeria)ELNG 1 Trinidad and
Tobago
Greenstream
(Tripoli)Tunisi
(Transmed)
Mildford Heaven4,181
1,9032,1832,999
3,7562,907
4,229
Rovigo
5,063
925920
1,2564,576
1,195
5,056
Panigaglia
4,280
4111,200
1,5363,556
1,475
5,336
Total
32.8181,690
4,5054,870
5,603
5,350
5,597
5,203
38.815
2.2005.4995.779
6.505
6.131
6.503
6.198
Lake Charles
Elba Island
Source: Internet
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Contents
Work plan
Italian market European benchmarking
Italian market analysis: Supply/Demand Projections Actual market liberalization consumer trends
Market structures
Gas market value chain margins
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Over the next five years Italian gas demand is expected to
be mainly driven by power generation
Gas market ENI/Ministry of Industry: domestic consumption by segment (Bcm)
SUPPLY/DEMAND PROJECTIONS
Residential and otherPower generation Industrial*
28 29 28 30 28 31 2932 29
3430
34 31 34
23 23 2323
2323
2323
23
2323
2424
24
29 28 3130 33
33 3434
35
3536
3536
35
82 84
8987
+3,4%
+1,1%
+2,1%
80
8691
2004-2010 CAGR
Power generation is
expected to increase in
the light of:
growth of theservices area (a
heavy electricity
user) in the ItalianEconomy
the increasing shareof voice that gas will
have in power
generation
Industrial and
Residential gas
demands are expected
to increase due to a
larger share of voice ofgas with respect to
other energy sources
(such as petroleum and
coal)
+2,3%
2004 2005 2006 2007 2008 2009 2010
8387
9392
80
8993
ENI Min.
Ind.
ENI Min.
Ind.
ENI Min.
Ind.
ENI Min.
Ind.
ENI Min.
Ind.
ENI Min.
Ind.
ENI Min.
Ind.
+3,6%
+1,1%
+2,5%
+2,6%
ENI Min. Ind.
Source: AEEG, SRG, ENI, MAP
* Includes consumption for transport and other chemical uses
ENI Min.
Ind.
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Even if the majority of total gas generation is provided by
efficient plants, less efficient machines still accounts for
some 35% of total production
Main gas plant fleet operating in 2004
Source: Enel, MAP
Italian gas plant fleet efficiency and generation [TWh]
Efficiency
less than
30%
Efficiency
between 30%
and 40%
124,5
6,2
6,3
31,4
80,6
Efficiency
between 40%
and 50%
Efficiency
greater than
50%
Main gas
plant fleet
total capacity
Total gas plant feetproduction accounted for
some 127 GWh in 2004
Total gas demand by the
entire gas plant fleet
accounted for some 28 Bcmin 2004
SUPPLY/DEMAND PROJECTIONS
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CCGT power plant capacity is expected to grow
substantially over the next five years
Expected CCGT capacity (Greenfield and Repowering)
SUPPLY/DEMAND PROJECTIONS
21.1 21.1 21.1
14.514.514.5
12.6
10.0
6.3
13.9
10.1
6.3
2005 2006 2007 2008 2009 2010
Source: Enel, DKW
Expected total CCGT capacity [TW]
Considering only plants under construction the
new, additional capacity is expected to reach
some 14,5 GW (accounting for some 102 Twh) by
2008, of which: ~ 5,2 Greenfield ~ 9,3 repowering
Considering plants under construction and
planned plants the new, additional capacity is
expected to reach 21,1 GW (accounting for some
147 Twh) by 2008, of which:
~ 8,8 Greenfield ~ 12,3 repowering
Considering only plants
in construction
Considering also planned plants
Comments
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Considering only under construction projects, Edison, Enel
and Endesa are going to be the major players
18901890
380
390
780
900
1050
1140
16206260
ACEA
Electrabel
Endesa Edison Enipower TOT
380
750
760
800
11703860
Edison Energia ACEA
Electrabel
EnipowerTOT
80
780
800
9512611
TOT Edison Endesa
Italia
Enel TOT Enel
Share on 2005 new CCGT capacity
2005 new capacity: ~6.250 GW 2006 new capacity: ~3.900 GW
2007 new capacity: ~2.600 GW 2008 new capacity: ~1.900 GW
Share on 2006 new CCGT capacity
Share on 2007 new CCGT capacity Share on 2008 new CCGT capacity
Tirreno
Power1)
Tirreno
Power1)
EdipowerEdipower AEM
Torino
SUPPLY/DEMAND PROJECTIONS: Plant under construction (Greenfield and Repowering)
Source: Enel, DKW
1) Tirreno Power shareholders: 50% Energia Italia, 30% Electrabel. 15% ACEA
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but also considering planned plants, the main players
will remain the same
380
760
800
750
11703860
EdisonEnergia ACEA
Electrabel
EnipowerTOT
160
390
760
780
800
9513841
TOT Edison Endesa
Italia
Enel
Share on 2005 new CCGT capacity
2006 new capacity: ~3.900 GW
2007 new capacity: ~3.850 GW 2008 new capacity: ~7.200 GW
Share on 2006 new CCGT capacity
Share on 2007 new CCGT capacity Share on 2008 new CCGT capacity
Tirreno
Power1)
Edipower
SUPPLY/DEMAND PROJECTIONS: Planned and under construction plants (Greenfield and rep.)
Source: Enel, DKW
1) Tirreno Power shareholders: 50% Energia Italia, 30% Electrabel. 15% ACEA
Abruzzo
Energia
Ascopiave
250400
400
800
800
44907140
TOT Enel Calenia
Energia
E.ON
Italia
Prod.
Endesa
Italia
ASM
Brescia
Edison
380
390
780
900
1050
1140
16206260
ACEA
Electrabel
Endesa Edison Enipower TOT
2005 new capacity: ~6.250 GW
Tirreno
Power1)Edipower AEM
Torino
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Considering the expected demand and capacity, most of
the gas plants in operation in 2004 could be out of the
market by 2010
Gas demand for power generation and Italian plant fleet (2010)
Source: MAP
Gas demand for power generation: expected
supply/demand balance [TWh]
166,3
80,6
102,0
Efficient plants
oparting in 2004
capacity
New plants under
construction
expected capacity
by 2010
Expected 2010
power produced
by gas
The expected gas demand forpower generation could be
lower than expected CCGT
plants capacity by 2010,
considering:
the most efficient plants as
of 2004
the expected under
construction plants by 2010
Exceeding
capacity for
16,3 TWh
SUPPLY/DEMAND PROJECTIONS
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Power demand is expected to be mostly driven by the
service segment
Power market -domestic consumption by segment (TWh)
SUPPLY/DEMAND PROJECTIONS
Source: ENEL
5 5 5 5 5 6 6 6
164 164 164 167 170 173176 179
74 82 8386 90
93 97101
6870 70
7172
7374
75
2002 2003 2004 2005 2006 2007 2008 2009Agriculture
Services
Industry
Households
321311 322329 337
345353 362
2002-2009CAGR
+1,14%
+1,26%
+4,74%
+1,43%
+2,18%
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A part from Spain, there is an evident correlation between
economic structure and power consumption
Economy structure and power consumption (2003)
SUPPLY/DEMAND PROJECTIONS
Share of service on GDP [%] Share of service segment on total power demand [%]
Source: World Bank , International Energy Agency
UK Italy Spain
31%30%
29%
26%25%
UK ItalySpainGermanyFrance
73%
72%
70%
69%
67%
GermanyFrance
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On gas supply side the main incumbent has still a dominant
role, mainly due to a strong control on market imports
ACTUAL MARKET LIBERALIZATION- CONSUMER TRENDS
Source: EC, Eurostat, annual reports, DG Tren 2004, press articles
Customer trends
10% of churn among
industrial customers
No switch among
residential ones
According to Antitrust
limited competition is due
to the strict control by Eni
on import capacity
No standardized
distribution network
codes/tariffs mentioned
as another reason for no
switch at residential level
Competitive intensity
In October 2001 Eni carried out a first gas release
program of ~5 Bcma for 10 years to 4 Italian players :
Edison, Energia, Dalmine Energie, Plurigas (Milan,
Brescia and Genova municipalities as main
shareholders) In September 2004 Eni was obliged by Antitrust to a
second gas release for ~2 Bcma for 4 years to ~30
players By 2007 Eni should to sell 20% of its pipelines Eni still enjoys -directly or indirectly- control on Italian
imports Edison is the only other incumbent with access to
domestic production Enel has access to direct import not via Eni, some
foreign entrants have direct access to import such as
Gaz de France and Gas Natural Major international utilities such as Enel, GDF, Gas
Natural and E.ON are buying distribution companies to
get access to their customer base British Gas, Exxon Mobil, Gas Natural and BP have
projects for LNG terminals Shell and ERG are projecting a new LNG plant in Sicily
which is supposed to be ready by 2010 Amga is involved in the realization of a LNG offshore in
the Tyrrhenian Sea (realized by the SPV OLT Offshore)
Liberalization effectiveness
100% of the market is liberalized
(domestic consumption)
85% of import (as percentage of
total demand) with Eni as major
shipper (65%)
Regulator's role
Dispute settlement Network access conditions
establishment (incl.
transmission and distribution
fees)
Unbundling of the network
AccountingManagement
Legal
ownership
AccountingManagement
Legal
ownership
Transmission Distribution
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While in electricity the incumbent shared its market power
with few new entrants well-connected to national players
Customer trends ~15% of churn among industrial
customers
According to Enel switch rate is
driven by dual fuel offer and
quality of service
Competitive intensity Entrants Generation/Supply:
2001: Edison/Italenergia - JV ofEDF, FIAT and financial institutions
2001 Elettrogen: Endesa (E) 2002: Edipower/Eurogen - JV of
Edison, Atel, municipal utilities and
banks
2003 Interpower now Tirreno Power
JV of Electrabel and ACEA, plusEnergia (CIR) and Verbund plus
some municipal utilities In April 2004 the power exchange
started operations Projects, Trading/Wholesale:
EGL, E.ON, BKW Industrial entrants:
CIR, Dalmine EDF and AEM Milano close the Edison
takeover
Liberalization effectiveness ~80% of the market is liberalized
(domestic consumption)
~18% of import capacity (as
percentage of domestic production)
Regulator's role
Dispute settlement
Network access conditionsestablishment (incl. transmission
and distribution fees)
Unbundling of the network
Accounting
Management
Legal
ownership
Accounting
Management
Legal
ownership
Transmission Distribution
* Including customers having effectively changed of supplier
Source: EC, Eurostat, DG Tren report, annual reports
ACTUAL MARKET LIBERALIZATION- CONSUMER TRENDS
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ENI still enjoys large market shares in all phases
ENDESA
Energia
HERA
Edison
Enel
Eni
Gas [Bcm] Power [GWh]
9.394
56.00
22.9034.00
56.90
9.376.90
9.35
16.25
34.556
8.104.90
6.70
11.60
37.306
0,26 0,32
1,762,08
2.022
7.395
11.515
Import/Production Wholesales Retail Total (retail +wholesales)
1,60
0,80 0,83
1,62
MARKET STRUCTURE: Incumbents
N.A. N.A. N.A. N.A.
Source: AEEG
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Eni is fully balanced between own gas supply and demand,
whereas
Eni gas supply/sales portfolio 2004 (bcm)
Supplypo
rtfolio
Gassales
Direct import Production Storage changes
56,9 Bcm
45.2010.80
-0.90
Wholesalers Final Gas users ~ 34,0 bcm
Thermoelectric Industrial
15.2
11.5
7.30
Residential
22,90
Own supply - sales
Total own supply
56,9 BcmTotal demand
Source: Company Annual Reports
0
Balancing
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Enel is a net buyer in the Italian wholesalers gas
market and
Enel gas supply/sales portfolio 2004 (bcm)
Supplypo
rtfolio
Gassales
Direct import Production Storage changes
9,37
0,00 0,15
Wholesalers Final Gas users ~ 9,3 bcm
Thermoelectric Industrial
4.12
2.402.78
Residential
6,90
Own supply - sales
-6,70
9,2 BcmTotal own supply
16,2 BcmTotal demand
Source: Company Annual Reports
Balancing
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also Edison is a net buyer in the Italian wholesalers
gas market
Edison gas supply/sales portfolio 2004 (bcm)
Supplypo
rtfolio
Gassales
Direct import Production Storage changes
6,80
1,300,24
Wholesalers Final Gas users ~ 6,7 bcm
Thermoelectric Industrial
5,07
1,360,28
Residential
4,90
Own supply - sales
-3 ,26
~7.9 BcmTotal own supply
~11,6 BcmTotal demand
Source: Company Annual Reports
Balancing
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Among new entrants, Gaz de France is the unique fully
integrated on the gas chain
BP
Tractabel/ACEA
E.On (Thuga)
Gas natural
Gaz de France
Gas [Bcm] Power [GWh]
Import/Production Wholesales Retail Total (retail +wholesales)
0,75 0,76
0,08
0,83
1,46
0,70
1,74
2,44
0,46 0,530,05
0,57
0,17 0,30 0,000,30
0,08 0,080,01
0,09
1.347,00
5.569,00
MARKET STRUCTURE New Entrants
N.A.
N.A.
N.A.
Source: AEEG
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Former monopolists still enjoys both large market share
and market power on the upstream phases
December 2004 data
MARKET STRUCTURE
1) Tirreno Power shareholders: 50% Energia Italia, 30% Electrabel. 15% ACEA
Source:Autorit per lenergia elettrica e per il Gas, Annual report 2004
Power Gas
Market share on shipping %Market share on generation %
Tirreno Power1)
50
Others
Endesa
Enel
65
Eni
Enel
Edison gas
Plurigas
Others
12
10
56
Edison
18
9
3
13
Eni Power
7
Energia
2
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Power generation is mainly provided by using natural gas:
its share of voice is expected to further increase
Power generation by source (2003 )
MARKET STRUCTURE BACKUP
Fonte:Autorit per lenergia elettrica e per il Gas, Annual report 2004, Antitrust
1) Includes Eolic, Geothermic, Waste and other combustibles
Power generation
Share on power generation %
40
Others1)
Hydro
Natural
Gas
Oil22
13
12
Solid
13 Natural Gas is expected to furtherincrease its share of voice in
power generation:
A total capacity of over 14.5
GW is expected by 2008
Additional project accounting
for 6,6 GW are planned by
2008
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whereas on downstream competition is increasing
Final customers sales, December 2004 data
MARKET STRUCTURE
Source :Authority per lenergia elettrica e per il Gas, Annual report 2004
2) Plurigas, Energia, Blumet, GDF, Italcogim, Ascotrade, Energia e Servizi, ASMEA, Napoletana Gas Clienti
1) Tirreno Power shareholders: 50% Energia Italia, 30% Electrabel. 15% ACEA
Enel
Power Gas
Market share %Market share %
Main competitors
56
Other minor
players
Enel 8
Eni
43
Edison
Hera
Other Minor Players
2
26
32
3 GENCOs
(Ex Enel) Edipower Tirreno Power1)
Endesa
99 Players2) with ~1%
market share
12
12
F l t l th t h f b th k t
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Few players control the upstream phase of both markets,
whereas after the liberalization a new layer of intermediates
has developed
Italian Gas and Power structure (2004)
MARKET STRUCTURE
1) Tirreno Power shareholders: 50% Energia Italia, 30% Electrabel. 15% ACEA
Source :Autorit per lenergia elettrica e per il Gas, Annual report 2004
Gas Power
Gas
storage
0,1
Grid
losses
(1)
Market
size
80,2
=
-0,9
79,3Residential and
Commercial
27,5
Industrial
22,6
Power
generation
29,2
Network losses
22,7 TWh
Residential
+ SOHO
150,7 TWh
Eligible Market
(Industry and Services)
129,1 TWh
Market
size
333,2
=
-22,7
279,8
29,7 TWh
pumping, self-
consumption
Eni
65%
Enel
12%
Edison
10%
Plurigas
5%
Others
8%
Enel
50%
Edipower
18%
ENI
7%
Endesa
9%Others
16%
Domestic
Production
13,0
Imports
67,2
Net imports
45,6 TWh
Generation, net of internal
usage 286,6 TWh
Wholesalers, LDC's sales companies
79,3 (110,4 including intra-trades)
Wholesalers, Traders
129,1 * TWh
Acquirente Unico
150,7 TWh
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On the gas market, over the last year players shifted
towards a fully integrated model
MARKET STRUCTURE
1) Acquisitions group of three municipalities (AEM Milano, ASM Brescia and AMGA Genova) 2) Including intra-wholesalers trades
Source: Autorit per lenergia elettrica e per il Gas, Annual report 2004
113,9
7,6
12,3
76,7
17,3
Whole market Minor
w holesalers
Fully
integrated
Up stream
integrated
Dow n stream
integrated
Eni
70%
Enel
21%
Gas wholesalers volumes2 (Bcm, 2004)
67%
6%
11%
16%
GDF 3%
Gas wholesalers volumes2 (Bcm, 2003)
Plurigas 5%
Gas Natural
1%
Over the last year, players are shifting towards a fully integrated model:
Gas Natural by moving upstream
110,8
7,1
14,7
71,8
17,2
Whole market Minor
w holesalers
Fully
integrated
Up stream
integrated
Dow n stream
integrated
GDF 2%
Eni
67%
Enel
31%
6%
13%
16%
65%
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MarketingWholesalesNetwork +
LDCImport
In 2003 13 wholesalers enjoyed sales > of 0,5 bcm and just
3 of them were fully integrated, whereas
MARKET STRUCTURE BACKUP
1) Acquisitions group of three municipalities (AEM Milano, ASM Brescia and AMGA Genova) 2) Including intra-wholesalers trades
Source: Autorit per lenergia elettrica e per il Gas, Annual report 2004
110,8
7,1
14,7
71,8
17,2
Whole
market
Minor
wholesalers
Fully
integrated
Up stream
integrated
Down
stream
integrated
GDF 2%
Eni
67%
Enel
31%
Gas wholesalers volumes2 (Bcm, 2003)
Fully integrated: Eni (including Italgas and Fiorentina
Gas Clienti) Enel and GDF(including Italcogim)
Up stream integrated: Edison, Dalmine
Energia, Energia, Plurigas1
Down stream integrated: Asmea,Hera, AEM Trading, AEM Energia,
Blu Gas, Estgas, Blumet
Gas wholesalers with sales >0,5 Bcm (2003)
3
3
7
65%
6%
13%
16%
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in 2004 17 wholesalers had sales > of 0,5 bcm and five of
them are now fully integrated
MARKET STRUCTURE BACKUPSource: Autorit per lenergia elettrica e per il Gas, Annual report 2004
1) Acquisitions group of three municipalities (AEM Milano, ASM Brescia and AMGA Genova) 2) Including intra-wholesalers trades
113,9
7.6
12.3
76.7
17.3
Wholemarket
Minorwholesalers
Fullyintegrated
Up streamintegrated
Down streamintegrated
Eni
70%
Enel
21%
Gas wholesalers volumes2 (Bcm, 2004)
67%
7%
11%
16%
GDF 3%
Plurigas 5%
Gas Natural
1%
Fully integrated: Eni (including Italgas and Fiorentina Gas
Clienti) Enel, GDF(including Italcogim and Italtrading), Gas
Natural and Plurigas
Up stream integrated: Edison,
Dalmine Energia, Energia and Energas
Down stream integrated: Asmea,
Hera, Amga Commerciale,
Ascotrade, AEM Energia, Blu Gas,Estgas, Blumet
Gas wholesalers with sales >0,5 Bcm (2004)
5
4
8
MarketingWholesalesNetwork +
LDCImport
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Between 2003 and 2004, the number of wholesalers with
sales > 2 TWh increased from 16 to 23
MARKET STRUCTURESource: Autorit per lenergia elettrica e per il Gas, Annual report 2004
1) Total sales 2004 > 1TWh
2) Sales < 2 TWh
3) Sales > 2 TWh
Fully integrated: Enel, Acea, AEM Milano, AEM Roma,
AEM Torino, ASM Brescia and ACEA
Up stream integrated :Edison,
Energia, Eni, Endesa
Wholesalers:EGL, EDF, Dalmine,
Energetic Source,
Electra Italia, ...
220,2
48,2
59,9
60,7
47,9
Top
wholesales
Minor
wholesalers
Fully
integrated
Up stream
integrated
Pure
wholesalers
25 minor wholesalers with 1 TWh < sales < 2 TWh
7
4
12
Power wholesalers with sales >2TWh (2004) Power wholesalers volumes (TWh, 2004)
28%
28%
22%
17%
1) 2) 3)
MarketingWholesalesNetwork +
LDCImport
G di t ib ti t k i hi hl f t d b t
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Gas distribution network is highly fragmented but on a
consolidation path, whereas on power Enel has still a
dominant role
MARKET STRUCTURE
Source: AEEG, IEA Natural Gas information 2005, press articles
1) In September 2004 Edison sold its TSO to the private equity fund Clessidra for 168 Mio
2) Future merge in 2005
Transmission SnamReteGas + Edison T&S1
Stogit (Eni) ~ 96% + Edison ~ 4%
480 Players
Main player:
Italgas (Eni) ~ 27%(Major minor players: Enel, GDF-Italcogim,
AEM Milano, HERA)
GRTN / Terna2
and Minor Players
54 Players
Main player
Enel ~ 83%(Major minor players: ACEA Roma,
AEM Milano, AEM Torino)
Gas Power
Storage
Distribution
Before liberalization
in 1999 there were
~ 750 operators
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Contents
Work plan
Italian market European benchmarking
Italian market analysis
Gas market value chain margins
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In order to identify gas chain margins, we have used a three
steps process
Margin identification scheme
Margins identification: Gross margin:
selling- purchasing price Storage margin;
gross margin storage cost Working margin:
storage margin- structure costs
Sample clustarization: Import (4 players) Wholesalers (12 players) Retailers (20 players)
Bottom-up analysis of the most important
players1) in the Italian gas market (~ 30
players)
321
ENI
Equity
Equity/Total assets (k)
Equity/ Total assets GAS(k)
Revenues
Total revenues (k)
Gas revenues (K)
Gas selliengprice (c/mc)
Costs
Purchasinggas price(K)
Purchasinggas price(c /mc)
Gross margin(sellingprice- purchasingprice) (c/mc)
Storage cost (c/mc)
Secondmargin(gross marginstorage cost) (c/mc)
Structurecosts (c/mc)
Operational margin(sec ondmargin- structure costs ) (c/mc)
Operational margin(% ons ellinggas price)
P&LEBITDA
EBITDA/TOTAL REVENUES
EBITDA/GASREVENUES
EBITDA GAS(c/mc)
PlurigasHera
Trading
Dalmine
Trading
Edison
Energia
piccolee
medieimprese
Enel
Trade
Operationaldata
Sellinggas volumes (bcm)
58%
Na
47468000
8321000
15,51
6717000
12,74
2,78
0,32
2,46
Na
Na
Na
0,00%
0,00%
0,00%
41,95
17,7%
17,7%
659200
587635
16,49
516147
14,84
1,66
0,26
1,39
0,76
0,63
3,9%
4,17%
4,17%
0,69
3,56
7,4%
7,4%
55455
50165
16,35
60215
14,76
1,58
0,67
0,92
0,10
0,81
5,0%
11,80%
13,05%
2,13
0,31
31,8%
Na
452.773
Na
Na
Na
Na
Na
Na
Na
Na
Na
Na
2,14%
10,09%
1,60
0,40
30,1%
Na
1363190
110817
19,54
102661
18,11
1,44
0,31
1,13
0,09
1,03
5,3%
5,09%
Na
Na
0,57
12,3%
Na
7185331
3054400
18,78
2970439
18,26
0,52
0,30
0,22
Na
Na
Na
1,90%
4,17%
0,78
16,27
Model Margins
7
1,56
2,36
0,42
2,6619,39
0,83
0,86
0,47
17,23
24,05
19,71
17,23
14,85
19,39
17,23
4,34
2,16
2,38
RETAILERSWHOLESALERSIMPORT
Selling
price
Purchasing
price
Storage costsStructure
costs
Operational
margin
100% 89% 2,4% 4,4% 4,27%
Selling
price
Purchasing
price
Storage costsStructure
costs
Operational
margin
% on selling price
100% 82% 1,7% 9,8% 6,48%
Wholesalers margins (c/m3) Retailers margins (c/m3)
1) Players with 2004 gas sales greater than 0,240 bcm accordingly to AEEG 2004 Reports
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Considering the entire gas market, average gross margins
are allocated mostly in the downstream part
Import
purchase
price
Import
gross
margin
Import
selling
price
Wholesalers
purchasing
price
Wholesalers
gross
margin
Wholesalers
selling price
Retailers
purchasing
price
Retailers
margin
Final
consumer
average price
24.05
19.71
12.7
17.23
14.72
2.16
2.51
2.02
4.34
RETAILERSWHOLESALERSIMPORT
Average prices by segment (c/m3)
Extra
border
price
Extra
border
import
margin
Source: Company Annual Reports
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24,05 19,71
0.42
2.36
1.56
Even taking into account operational costs, retailers still
enjoy larger average margins
19,39
0,83
0,86
0,47
17,23
Wholesalers margins (c/m3)
Selling
price
Purchasing
price
Storage
costs
Structure
costs
Operational
margin
Selling
price
Purchasing
price
Storage
costs
Structure
costs
Operational
margin
Retailers margins (c/m3)
% on
selling
price
100% 89% 2,4% 4,4% 4,27%% on
selling
price
100% 82% 1,7% 9,8% 6,48%
Average prices (c/m3)Source: Company Annual Reports
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Main wholesalers details
ENI
Equity
Equity/Total assets (k)
Equity/ Total assets GAS (k)
Revenues
Total revenues (k)
Gas revenues (K)
Gas selling price (c/mc)
Costs
Purchasing gas price (K)
Purchasing gas price (c/mc)
Gross margin (selling price- purchasing price) (c/mc)
Storage cost (c/mc)
Second margin (gross margin storage cost) (c/mc)
Structure costs (c/mc)
Operational margin (second margin- structure costs ) (c/mc)
Operational margin (% on selling gas price)
P&L EBITDA
EBITDA/TOTAL REVENUES
EBITDA/GAS REVENUES
EBITDA GAS (c/mc)
PlurigasHera
Trading
Dalmine
Trading
Edison
Energia
Enel
Trade
Operational data
Selling gas volumes (bcm)
58%
Na
47 468 000
8 321 000
15,51
6 717 000
12,74
2,78
0,32
2,46
Na
Na
Na
0,00%
0,00%
0,00%
41,95
17,7%
17,7%
659 200
587 635
16,49
516 147
14,84
1,66
0,26
1,39
0,76
0,63
3,9%
4,17%
4,17%
0,69
3,56
7,4%
7,4%
55 455
50 165
16,35
60 215
14,76
1,58
0,67
0,92
0,10
0,81
5,0%
11,80%
13,05%
2,13
0,31
31,8%
Na
452.773
Na
Na
Na
Na
Na
Na
Na
Na
Na
Na
2,14%
10,09%
1,60
0,40
30,1%
Na
1 363 190
110 817
19,54
102 661
18,11
1,44
0,31
1,13
0,09
1,03
5,3%
5,09%
Na
Na
0,57
12,3%
Na
7 185 331
3 054 400
18,78
2 970 439
18,26
0,52
0,30
0,22
Na
Na
Na
1,90%
4,17%
0,78
16,27
Model Margins
Source: Company Annual Reports
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ENEL
Enel Gas
EDISON
Edison PerVoi
mass market
Hera
Commerciale
Napoletana
gasclienti
(Italgas)
AMGA
Commerciale
2,8%
Na
1 390 615
1 150 801
22,22
953 726
18,42
3,81
0,36
3,45
1,68
1,77
7,9%
7,12%
8,60%
1,91
5,18
13,6%
13,6%
131 761
92 675
28,38
63 447
19,43
8,95
0,45
8,50
7,64
0,86
3,0%
3,10%
Na
Na
0,33
1,72%
1,72%
370 862
370 862
22,3
312 492
19,38
2,89
0,08
2,81
Na
Na
Na
0,82%
1,55%
0,35
1,67
11,9%
11,9%
192 634
111 217
24,28
89 999
19,65
4,63
0,39
4,24
3,56
0,78
3,2%
5,79%
10,03%
2,43
0,46
30,2%
Na
253 580
145 575
22,85
126 206
19,78
3,06
0,37
2,70
1,21
1,48
6,5%
5,75%
11,02%
2,52
0,64
Equity
Equity/Total assets (k)
Equity/ Total assets GAS (k)
Revenues
Total revenues (k)
Gas revenues (K)
Gas selling price (c/mc)
Costs
Purchasing gas price (K)
Purchasing gas price (c/mc)
Gross margin (selling price- purchasing price) (c/mc)
Storage cost (c/mc)
Second margin(gross margin storage cost) (c/mc)
Structure costs (c/mc)
Operational margin (second margin- structure costs ) (c/mc)
Operational margin (% on selling gas price)
P&L EBITDA
EBITDA/TOTAL REVENUES
EBITDA/GAS REVENUES
EBITDA GAS (c/mc)
Operational data
Selling gas volumes (bcm)
Model Margins
Gas Natural
Vendita
9,0%
9,0%
156 197
135 163
16,23
121 350
14,06
2,16
0,39
1,77
0,44
1,33
8,2%
5,04%
5,83%
0,95
0,83