Highlights of the annual report 2017 of the CREG
On this page, you can find a summary of a number of important developments and salient facts from the annual report 2017 of the CREG. The full PDF version of the annual report can be downloaded here.
Key national legislative developments
The most important developments in legislation which took place in the area of natural gas and electricity in Belgium in 2017 are:
- Establishing the legal framework for the Modular Offshore Grid
- Stimulating demand flexibility and electricity storage
- Access to the physical infrastructure of the system operators by electronic communication operators
- Amending the federal support mechanism for renewable offshore energy
- Amending the modalities concerning the impact of the federal electricity contribution
- Amending the federal technical regulations
- Collaboration between the CREG and the Belgian Competition Authority
The electricity market
An overview of the most important aspects of the electricity market in 2017:
- Total Belgian electricity consumption as measured by the TSO Elia was 77.4 TWh in 2017. Electricity offtake was more or less the same as 2016. Peak capacity demand was 12,867 MW, slightly higher than in 2016.
- Nuclear power plants generated 40.2 TWh. Gas-fired units produced 18.8 TWh. In 2017, no electricity was produced by large coal-fired power stations in Belgium for the first time. Market concentration on the production side increased slightly in 2017, and remains extremely high in Belgium, with Electrabel having by far the largest share, at 77% of total production.
- The annual figures for import and export in 2017 are almost identical to those for 2016. Gross imports to Belgium were 11.4 TWh and gross exports were 4.9 TWh. In 2016, this was 11.8 TWh and 5.2 TWh respectively. The result is a net import of 6.5 TWh in 2017, almost identical to the 6.6 TWh recorded in 2016.
- The electricity price on the short-term market was €44.7/MWh on average in 2017, an increase of around €8/MWh compared to 2016. The average price differences on the short-term market for electricity in Belgium, the Netherlands, France and Germany were €10.5/MWh in 2017, which was higher than in 2016, with the lowest prices in Germany and the highest prices in Belgium and France. The Netherlands was situated in the middle. During the summer period, average daily market prices in Belgium fell sharply, before rising sharply again from September 2017 onwards.
Average annual prices of the daily market for the supply of electricity in the countries of the CWE region for the period 2007-2017 (Sources: Belpex, EPEX Spot, CREG calculations)
- On the long-term market for electricity, the year-ahead price rose in 2017 to an average of €37.3/MWh, or almost €4/MWh higher than in 2016. In 2017, the average daily market price was higher than the average price of the year-ahead contract with delivery in 2017. This is exceptional. The last time the average daily market price was higher than the average price of the year-ahead contract was in 2008.
- In 2017, the CREG calculated the operational profitability of existing CCGT plants in Belgium. The results indicate that, despite the decrease in operational profitability since 2013, under the current Belgian market conditions, existing Belgian CCGTs can still be sufficiently competitive to generate an operating profit in an energy-only market.
- As was the case in 2016, imports and exports of electricity were significantly restricted in 2017 due to network restrictions imposed by the CWE transmission system operators. The data analysis carried out for 2016 showed that a significant proportion of congestion was located on internal transmission lines where hardly any capacity was available for cross-border trade. This observation remained the same in 2017. Especially the lines in the bidding zone Germany/Luxembourg/Austria made little capacity available for cross-border trade. The lines in the Belgian bidding zone had a higher capacity on average when they restricted cross-border trade.
- Convergence between the annual average daily market price and the average positive and negative imbalance prices was maintained in 2017, although price differences increased slightly.
Average unweighted imbalance tariff and Belpex DAM price during the period 2007-2017 (Sources: Elia and Belpex data)
The CREG continued to stress the consumer protection aspect of its work in 2017.
- The CREG launched a new online tool for private individuals, the self-employed and SMEs: the CREG Scan. This online tool is a first for Europe. With the CREG Scan, Belgium is the first country in which consumers can compare their energy contract with all existing contracts, even if they are no longer available on the market. The CREG Scan is easy to use and is complementary to existing price comparison websites, which only compare electricity and natural gas products offered on the market at that moment in time.
- In its 4th Annual Report on the safety net mechanism, the CREG concluded that it did not have any disruptive effect on the market. This mechanism has helped to provide clearer and more transparent information to the various market participants, for example by making it compulsory to use indexation parameters linked to stock exchange listings for electricity and natural gas.
- The CREG continued publishing the infographics and monthly dashboard for electricity and natural gas, to provide consumers with all the necessary information to make a reasoned decision.
The REMIT regulation (Regulation on wholesale Energy Market Integrity and Transparency) sets out a series of instructions aimed at preventing and punishing market abuse in the wholesale energy sector. In 2017, the CREG validated the various changes to the registration and helped market players with their registration or other questions concerning REMIT.
Finally, the CREG defined the objectives which Elia must achieve in 2018 as part of the stimulus referred to in the tariff methodology 2016-2019, to encourage market integration by means of a measured increase in the interconnection capacity made available to the market in the Belgian control area.
The natural gas market
An overview of the most important aspects of the natural gas market in 2017:
- In 2017, total natural gas consumption amounted to 182.00 TWh. This is an increase of 1.4% compared to consumption in 2016 (179.43 TWh). This increase in demand can be attributed entirely to industry (+5.1%) and natural gas-fired power plants (+3.4%). The recovery in demand from large-scale consumers is striking, all the more so as an average natural gas price of €17.3/MWh was recorded on the wholesale market in 2017, 25% higher than in 2016 (€13.8/MWh). The situation varies among small-scale consumers. The mild temperatures in 2017 compared to 2016 are thought to have reduced heating needs by 7.5%. This finding partly explains the 1.2% decrease in the natural gas demand on the distribution systems.
Distribution of Belgian H gas and L gas demand by consumer segment in 2016 and 2017 (Source: CREG)
- In September 2017, the CREG conducted a new study into natural gas supply to large industrial customers in Belgium. These customers, connected directly to the Fluxys Belgium network, represented 23% of consumption by Belgian end consumers in 2016. Compared with previous years, the CREG adjusted its list of industrial customers, firstly to take account of the classification of Fluxys Belgium, and secondly to ensure that the data were consistent with those published by Fluxys Belgium and Synergrid. As a result, the volumes and percentages in this study differ from the previous edition of the study. Analysis of the supply contracts shows that industrial customers mainly enter into short-term contracts (with a duration of 1 or 2 years). They also increasingly use natural gas prices, both upstream (supply contracts) and downstream (sales contracts). Furthermore, there are significant differences between the energy prices charged to large industrial customers. In 2016, contract prices were between €12 and €28/MWh. Between 12% and 19% of all industrial customers change suppliers at least once a year. In conclusion, we can state that the market of large industrial customers is a dynamic market which is highly competitive. Given that the switching rate fell in 2016, the trend in this respect needs to be monitored.
- The price curves show the annual average day-ahead (DAM) price of natural gas for the Belgian natural gas market ZTP (since 1 October 2015 ZTP also comprises the Luxembourg natural gas market), the Dutch TTF and both German markets Gaspool and NCG. These price curves converge, which indicates that smooth cross-border trade in natural gas is possible between these markets. The annual average year-ahead price of natural gas (Y+1) is also shown. Given the price convergence and correlation on the short-term market, the long-term price in the Netherlands and Germany can also be used as a reference price for the Belgian-Luxembourg market.
Average annual natural gas price on the day-ahead and year-ahead markets (Sources: CREG, data taken from icis.com, ice.com, eex.com and powernext.com)
In addition, the CREG published a study on the prices in force on the Belgian natural gas market in which it analysed market shares, price formation, price levels, price breakdown and billing in the various market segments in 2016.
It imposed specific obligations on the natural gas transmission system operators for the consultation and publication of tariff data. This decision was taken following the entry into force of the European Commission Regulation establishing a network code for harmonised transmission tariff structures for gas.
Finally, the CREG also continued to emphasise improving the functioning of the natural gas market in 2017, in order to protect the interests of consumers. These aspects are developed in the chapter on Electricity.
This chapter from the annual report describes, inter alia, the functioning of the CREG and the close relations it maintains with other national and international bodies.
It also contains a list of the acts which the Executive Committee approved in 2017.