In phase 2 the electricity and gas prices for each of the three regions in Belgium were gathered. As the objective in this phase is to analyse the competitiveness of these prices for the top 5 most important sectors, developing a method that uses these regional prices and express them on a sector level is needed.
This is done by combining the regional electricity and gas prices with the distribution of consumer profiles per sector (see Table 2 and Table 3), which were retrieved in the first phase. They are based on data provided by the CREG and show how consumer profiles are distributed per sector, which consumer profile is the most predominant within each sector and therefore has the largest impact on the electricity and gas prices for that sector.
The relative frequency of each consumer profile per sector (retrieved by multiplying the absolute number of profiles with the consumption of each profile8586and dividing by the total consumption per sector87) are presented in the tables below. As one can see from Table 2, E2 is the predominant profile in the food and beverages sector (NACE 10-12), while it is E3 for the NACE 20, 21 and 23 sectors and E4 in the NACE 24 sector. The prices of those predominant consumer profiles will have the largest effect on the electricity prices for each of the top 5 sectors within each region. From Table 3 it is apparent that in all sectors, profile G1 is the predominant one, except for the NACE 20 sector.
As an example, the absolute frequencies for the chemicals and chemical products (NACE 20) sector is 20 or 20 consumers with a quantity of invoiced electricity similar to the consumption of profile E1, 25 consumers for E2, 16 consumers for E3 and 2 consumers for E4. Multiplying these numbers by their respective consumption and summing them, results in a theoretical total electricity consumption on the sector level of 3425 GWh92. Expressed in relative frequencies, 6% of the total consumption is represented by profile E1, 18% by E2, 47% by E3 and 29% by E493. For this sector, the prices for E3 will have a predominant effect on the calculation of the weighted electricity price for that sector, as it simply represents the largest share in the total electricity consumption for that sector. For gas, there are 71 consumers of profile G1 and 5 of G2. Multiplying these numbers by their consumption and summing both up, results in a theoretical total consumption for the sector of 19600 GWh. This reflects a relative frequency of 36% for G1 and 64% for G2.
Along the same logic the relative frequencies of the consumer profiles for the other sectors have been calculated and are presented again in Figure 39 and Figure 40. As is clear from Figure 39, profile E3 is the predominant profile in most of the sectors (NACE 20, 21 and 23), while for NACE 24 profile E4 is predominant (very large users) and for the food and beverages sector (NACE 10-12) it is profile E2. From Figure 40 it is observed that for all sectors, except for NACE 20, G1 is the profile with the highest relative frequency. Although there are just a few G2 consumer profiles represented in the different sectors, they can have a substantial relative frequency, caused by their high volume of gas consumption (2.500 GWh). Of course this is not the case for the pharmaceutical (NACE 21) and the food & beverages (NACE 10-12) sectors, as no consumers of G2 are represented within those sectors.
As stated before, these relative frequencies can be used together with the electricity and gas prices for each region to calculate sector and region specific electricity and gas prices (in €/MWh). This is done by summing the multiplications of the prices retrieved for each consumer profile and their relative frequencies according to the formulas below. When comparing those region and sector specific prices to the European average94 they can be expressed as price differences with the European average. We have calculated the average prices of electricity and gas in the neighbouring countries according to the following formulas95.
The electricity and gas price differences (in %’s) measure the price difference for a certain sector i in a certain region j with the European average. These sector and region specific electricity and gas price differences when compared with the average of Belgium’s neighbouring countries can be found below and are presented in Figure 41 (for the non-electro-intensive consumers) and Figure 42 (for electro- intensive consumers).
One can observe in Figure 41 and Figure 42 that electricity price differences differ substantially from sector to sector and from region to region, but are always higher, except for NACE 24 in Flanders when comparing for electro-intensive consumers (lack of competitiveness) and lower when comparing for non-electro-intensive consumers (competitive prices). The gas prices are more competitive in Belgium than in the neighbouring countries, for all sectors and in all regions.
The competitiveness problem on total energy cost that we observe in this report applies to electro-intensive industrial consumers across all sectors and across all regions. As we have shown in section 7 and 8 of this report, its origin lies in the electricity cost, and in the three components of the electricity cost: commodity prices, grid fees (mainly due to reductions granted in Germany and the Netherlands) and taxes/surcharges/green certificate schemes.
In terms of policy recommendations, the most direct and palpable impact can be exerted on the third component: taxes/surcharges/green certificate schemes. At this moment, in the three regions, important efforts are done in terms of mitigating the impact of taxes, surcharges on competitiveness. As opposed to France, Germany and the Netherlands, this is generally done without taking into account the electrointensity of the industrial consumers. As shown in annex A to this report, the quantity of off taken electricity is the only important criteria – apart from the energy efficiency agreement - that is used on the federal level (federal contribution, offshore) and on the regional level (green certificate quota, public service obligations) to protect the competitiveness of electricity cost for industrial consumers.
In other words, from a fiscal point of view, Belgian federal and regional authorities mainly grant reductions and/or exemptions to taxes, levies and certificate schemes based on the level of electricity offtake, and not on the level of electro-intensity of an industrial consumer.
This leads to important competitive advantages for companies that compete with non-electro intensive consumers in France and certainly Germany, while at the same time these reductions cannot sufficiently impact the total energy cost to protect electro-intensive industrial consumers from the competition of their electrointensive counterparts in France, the Netherlands and Germany.
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