Paatz Scholz van der Laan GmbH Unternehmensberatung

Transcription

1 Young Energy Professionals Value in the European Gas Market Rotterdam, 20 th May 2016

3 PSvdL - International business and management consultancy specialised in European energy markets Sicco van der Laan Presenters Business Excellence 16 years of consulting experience in the energy sector. Expert on European gas markets, business process optimisation, organisational development and gas market liberalisation Current Clients (2015/2016): Paatz Scholz van der Laan Management and support of high profile projects at numerous major European wholesale, trading, transport and storage companies Expertise in strategic realignment and operational optimisation following changes in legal framework and market consolidation Detailed knowledge of industry specific processes, legal frameworks and prevalent software solutions Authors of expert opinions to be used in arbitration proceedings Experience gained through multiple projects in Germany, the Netherlands, Austria, Latvia, France, Belgium, Denmark, Italy, Romania and Great Britain 2016 PSvdL. All rights reserved. 3

5 Market News Another record loss for E.ON in 2015 ( 7 bn) (Reuters, ) Dong looking to sell German Wholesale business (Energate, ) OMV integrates gas and power business segment into refining and marketing (Wsj.com ) Wintershall sells ist storage business (FAZ, ) VNG enters the retail business (FT, ) Future of Energy Companies E.ON und E.OFF (Süddeutsche Zeitung ) RWE places emphasis on digitalisation (Energate, ) E.ON s competitor is called Google (J. Teyssen, CEO E.ON ) 2016 PSvdL. All rights reserved. 5

6 Key Market Parameters Largest gas demand in Europe 2015: 854 TWh Ca. 800 municipal utilities Declining volumes for use gas-fired power plants due to legislation and CO 2 prices Increasing liquidity of hubs provides new sourcing opportunities and creates challenges to classic wholesale business model Improvement of gas in energy mix expected (EU policies, phasing out coal/nuclear) 9 years liberalisation has settled the market - limited dominance of main retailers: Power Plants Comm. /SME Households Industry Large LDC (> 5 TWh/a) Segment Large, national suppliers Typical Segment Suppliers Large Industry (> 0,1 TWh/a) > 15% energy costs Small LDC (< 5 TWh/a) Regional suppliers, some national Large Industry (> 0,1 TWh/a) < 15% energy costs Small/Medium Industry (< 0,1 TWh/a) Regional Suppliers 2016 PSvdL. All rights reserved. 6

8 German Sales Margins 2016 Expectations PSvdL There are no stand-out segment/product combinations margins are staying low Product Complexity LDC Industry Commodity Products (hub) > 1 TWh/a < 1 TWh/a Ø margin potential 0.03 /MWh > 0,1 TWh/a < 0,1 TWh/a Power Plants Structured Products 0.1 /MWh 0.1 /MWh 0.1 /MWh /MWh 0.1 /MWh Full Supply 0.2 /MWh 0.5 /MWh 0.2 /MWh 0.5 /MWh 0.1 /MWh Portfolio Management (Service without commodity) /MWh Not applicable There is no reason to expect a positive change over the coming years Market consolidation will not lead to improved margins ( Two suppliers = competition ) In a transparent market with educated customers, there is no acceptance of increasing prices 2016 PSvdL. All rights reserved. 8

9 Value of the German Wholesale Market Zum leben zu wenig, zum sterben zu viel German annual demand 2016 Average wholesale sales margin (Contribution Margin II) Gas Wholesale Market Value 900 TWh 1 0,2 /MWh Million This represents an unsustainable situation for the large number of active wholesale companies Deducting OPEX of all operations involved leads to a negative result This begs the following questions Will the basis of this calculation change over the coming years? snapshot vs. trend How are the market players dealing with the situation? paralysis vs. proactivity How are market players shifting their focus? repositioning vs. reorientation 1 Calculation basis PSvdL 2016 PSvdL. All rights reserved. 9

10 Ratings Overview in Energy Sector Financial Analysts ratings remain bearish Positive AA- / Aa3 Negative Positive A+ / A1 Negative Positive A / A2 Negative Positive A- / A3 Negative Positive BBB+ / Baa1 Negative Positive BBB / Baa2 Negative EDF GSZ E.ON EnBW RWE Enel Iberdrola Rating Jan 1, 2010 Rating Jan 1, 2010 Source: E.ON Rating Jun 4, 2013 Rating Jun 4, PSvdL. All rights reserved. 10

11 Value of the German Retail Market Genug zum leben Retail Gas Price 53% 60/MWh Commodity & Sales 32 /MWh 1 Tax Transport Price Components 24% 14 /MWh 1 18% 11 /MWh 1 Procurement Costs Contribution Margin II 13/MWh 1 19/MWh 1 Concession Levy Meter Services 4% 2 /MWh 1 2% 1 /MWh 1 Household Customers Consumption Small/Med Industrial Consumption Gas Retail Market Value 200 TWh/a TWh/a 6,65 billion 1 Calculation PSvdL 2016 PSvdL. All rights reserved. 11

12 Value of the Dutch Retail Market B2B Gas Price 37% 51/MWh Commodity & Sales 19 /MWh 1 Tax Network Price Components 50% 26 /MWh 1 13% 6 /MWh 1 Procurement Costs Contribution Margin II 12/MWh 1 7/MWh 1 B2C Gas Price 41% 64/MWh Commodity & Sales 26 /MWh 1 Tax Network 1 Calculation PSvdL based on price quotes from the market and a TTF procurement price Price Components 41% 26 /MWh 1 18% 12 /MWh 1 Procurement Costs Contribution Margin II 12/MWh 1 14/MWh PSvdL. All rights reserved. 12

14 Reactions of Wholesalers on changed Market Conditions Players react to market change in three typical ways, varying in focus, effort and intensity A B C C Restructuring Programs Operational Excellence Initiatives Business Modell Reassessment Measures Reorganisation Cost cutting Divestments Write-offs Best-in-class Efficient operations Lean processes Market exit strategy Customer refocus Digitalisation Examples E.ON 2.0 RWE DEA Divest GVS, Gas-Union, Gelsenwasser, etc. Optimisation centered approach Transfer pricing Performance measurement per unit Market exit (DONG Energy/ GazProm) VNG acquires Goldgas (retail) E.ON (E.ON / E.OFF ) 2016 PSvdL. All rights reserved. 14

15 A Restructuring Programs Debt Ratios and Divestment Programs CAPEX reductions and large-scale divestments as result of the changed market conditions and to improve capital management Divestment Programs (Examples) Upstream: RWE DEA (UK,D) 5 bln TSO: Net4gas (CZ) 1.6 bln Storage: Storage (D) 0.4 bln Power and others (UK, D): 1.1 bln CAPEX reductions / EBITDA 2013 vs CAPEX -33 % EBITDA (2013): 8.8 bln (-6%) Upstream: E.ON E&P (UK,D,N) 3.4 bln TSO: OpenGridEurope (D) 3.2 bln Storage: Flödzgáz (HU) 0.9 bln Power (D): E.ON Mitte, E.ON Thüringer Energie 1.6 bln 2013 vs CAPEX -40 % EBITDA (2013): 9.3 bln (-13%) 2016 PSvdL. All rights reserved. 15

16 Back Office Core Business Supervision B Operational Excellence Initiatives Fine-tuning to achieve Operational Excellence 1 Core Business Processes Strategy & Planning Typical Areas of Improvement (Examples) Align the current asset portfolio with the demands of the profitable customers Risk management & Controlling Commodity Sourcing / Purchasing Capacity Management Measure the performance per unit (Sales, Optimisation, etc.) and segment (LDC, industry country, etc.) ex ante and ex post Define risk appetite of diverging price formulas in Purchase and Sales On-demand/short-term capacity booking (e.g. utilisation PRISMA) 5 6 Product Development & Sales Optimisation Optimisation-centered organisation with clearly defined goals Planning and Forecasting improvement 7 Dispatching & Balance Group Mgmt. 8 Billing & Invoicing 2016 PSvdL. All rights reserved. 16

17 C C Business Modell Reassessment Quo Vadis Gas Wholesalers Gas Wholesalers are rethinking their strategy and business models Diverse developments can be identified: 1 Hub Seller: Sell all volumes on the hub exit wholesale activities 2 Lean Wholesaler: Keep selected portion of wholesale business (remaining volumes via hub) 3 Strategic Wholesaler: Retains wholesalers market position for strategic / political reasons 4 Radical Strategy Change: Exit wholesale market / focus on retail market / digitalisation 2016 PSvdL. All rights reserved. 17

18 Value Creation in the Energy Retail Market Energy companies have been slow to capitalize on additional value creators 1 Retail margin 2 Customer data 3 1-click to client Security ehealth Media Appliances Comfort Energy Managem. Fleet Managem. Meter Meter 2016 PSvdL. All rights reserved. 18

19 Contact Sicco van der Laan M E W +49 (0) [email protected] Office Munich Paatz Scholz van der Laan GmbH Zeppelinstrasse Munich Germany T +49 (0) F +49 (0) Office Dusseldorf Paatz Scholz van der Laan GmbH Speditionstrasse Dusseldorf Germany T +49 (0) F +49 (0) Office Groningen Paatz Scholz van der Laan B.V. Energy Business Plaza Laan Corpus den Hoorn JT Groningen The Netherlands T +31 (0) PSvdL. All rights reserved. 19