electricity in southeast europe

Copyright All rights reserved. Downloads and print extracts of SeeNews – Research & Profiles content are allowed for personal and non-commercial use only. Re-publication or re-distribution of content, including by framing, is strictly prohibited without the prior written consent of SeeNews – Research & Profiles. SeeNews - Research & Profiles and its logo are registered trademarks of AII Data Processing Ltd. SeeNews 2009

SEE INDUSTRY AT A GLANCE

Electricity in Southeast Europe

August 2009


The undisputable leader in the ranking of the largest electricity companies in SEE is the region’s largest economy, Romania, with nine representatives, followed by Croatia with four and Bulgaria with three. However, Serbia’s state-controlled company JP Elektroprivreda Srbija, which operates the entire chain of energy generation, transmission and distribution, heads the ranking with total revenue of 1.76 billion euro in 2008, followed by another state-run mammoth, Croatia’s Hrvatska Elektroprivreda d.d. with 1.56 billion euro. Bosnia’s biggest power utility JP Elektroprivreda BiH ranked 14th. The company operates in the Muslim-Croat Federation, one of Bosnia's two post-war autonomous parts (the other is the Serb Republic).

Only three of the top 20 power generation and distribution companies ended 2008 with a net loss: the leaders JP Elektroprivreda Srbija and Hrvatska Elektroprivreda, and Romanian power producer Electrocentrale Bucuresti SA.

This industry overview is an integral part of SEE TOP 100, Edition 2009 – a comprehensive, in-depth guide to the transition economies of Southeast Europe, published be SeeNews. SEE TOP 100 is a unique ranking of the biggest companies in the region of Southeast Europe. This annual publication comprises:

• SEE TOP 100 • SEE TOP 50 Banks • SEE Top 50 Per Capita • SEE Industrial • SEE IPOs • SEE Corporate Management • SEE TOP 100 CEOs List • SEE Country Profiles • SEE Best Employers • Analyses & Interviews

If you are interested in obtaining a hard copy of the SEE TOP 100, Edition 2009, please e- mail us at [email protected] or call at +359 2 8012 610. The SEE TOP 100 ranking is also available on www.top100.seenews.com.


The aggregate revenues of the 20 companies in the sector totalled 14.7 billion euro in 2008, up from 12.6 billion euro in 2007.

Company name CountryTotal revenue

2008Total revenue

2007Net Profit/Loss 2008

Net Profit/Loss 2007

1 JP Elektroprivreda Srbije Serbia 1,760.87 1,691.53 -26.96 -36.912 Hrvatska Elektroprivreda d.d. Croatia 1,557.60 1,403.51 -1.78 61.683 Natsionalna Elektricheska Kompania EAD Bulgaria 1,521.43 1,275.46 23.95 21.214 GDF SUEZ Energy Romania SA Romania 997.24 934.24 32.26 50.515 Holding Slovenske Elektrarne d.o.o. Slovenia 856.65 943.96 53.76 12.416 E.ON Gaz Romania SA Romania 782.85 349.05 10.96 20.717 C.N.T.E.E. Transelectrica SA Romania 752.31 659.49 10.52 14.428 Electrica SA Romania 713.51 232.39 306.14 0.2719 Hidroelectrica SA Romania 669.10 590.09 16.34 14.5610 Electrocentrale Bucuresti SA Romania 576.75 678.63 -86.71 -26.3711 CEZ Elektro Bulgaria AD Bulgaria 550.56 465.53 7.36 7.2612 HEP-proizvodnja d.o.o. Croatia 527.48 488.72 3.37 -15.0313 HEP-Operator Distribucijskog Sustava d.o.o. Croatia 479.22 423.43 18.10 -13.4114 JP Elektroprivreda BiH d.d. B and H 463.74 391.27 23.64 11.6915 Complexul Energetic Turceni SA Romania 455.07 412.14 5.01 21.7016 Enel Distributie Muntenia SA Romania 449.20 492.22 55.36 12.0717 AETs Kozloduy EAD Bulgaria 427.22 324.24 35.85 1.7718 Nuclearelectrica SA Romania 400.43 306.45 25.86 24.5619 SODO d.o.o. Slovenia 348.97 169.23 0.198 0.06520 Complexul Energetic Rovinari SA Romania 346.51 328.39 0.261 21.96

Power demand rose by 2.5% in Southeastern Europe (SEE) last year mainly due to growing household consumption, figures from the Paris-based International Energy Agency indicate.

Electricity output in some SEE countries rose as high as 5.78% last year but producers’ profits dwindled or disappeared altogether as production costs also increased. Although electricity prices in most of the SEE countries went up last year, the rise could not

Methodology

SEE Industry at a Glance represents a series of sub-rankings of the 20 biggest companies by total revenue within the top five industries in SEE TOP 100: Petroleum/Natural Gas, Electricity, Wholesale/Retail, Telecommunications and Metals. In order to make the ranking more comprehensive, we have looked beyond the 100 companies in our flagship ranking and expanded the scope to the entire pool of over 1,000 enterprises.

in millions of euro


compensate for the increase in the prices of coal and natural gas used by power plants to generate electricity.

Bound together by the Energy Treaty, which established the Energy Community of South East Europe (ECSEE) in 2005, European Union newcomers from the SEE and EU-aspiring countries are all committed to ensuring market liberalisation, uninterrupted power supply and modernisation of outdated capacities. Modernisation is especially needed for electricity distribution networks and substations in the region. Projects in the SEE electricity sector are often financially backed by the World Bank, the European Bank of Reconstruction and Development and international development agencies. Major Western European utilities like E.ON AG, Enel SpA and EVN AG recognized the development potential of the SEE electricity sector and entered the region in recent years.

Generation and Consumption R ising

Electricity consumption rose to 203.7 terawatthours (TWh) in SEE last year, while generation increased to 204.4 TWh. Romania, Bulgaria, Slovenia and Serbia generate more electricity than they consume, while the rest of the SEE countries are net electricity importers. Romania generated over 64.01 TWh of electricity in 2008, up 5.78% from a year earlier, Bulgaria produced nearly 45 TWh, up 4.17%, and Serbia generated 35 TWh, a 2.10% increase from 2007. Demand for electricity grew so rapidly in Albania last year that the government introduced power rationing due to supply constraints imposed by insufficient domestic generation and the limited capacity for imports of the country’s transmission system. The power plants located in SEE have a combined inst alled capacity of some 76 gigawatts. The region imported around 13.35 TWh in 2008, equivalent to 6.70% of its power consumption. Consultancy firm KPMG and German research institute European Stability Initiative say that unless SEE countries invest in new power plants, the region will become increasingly dependent on electricity imports in the following years.


Bulgaria's dominant state-run power utility NEK forecasts a power deficit of 8.0-10 TWh in the region in the following years. Electricity demand in SEE will increase by an average 2.0% to 3.0% per year, analysts say.

Power Generation and Consumption in SEE

4.00

64.01

44.93

35.04

14.3414.04 12.16

5.62 4.50 3.85 3.832.04

40.00

54.61

33.70

19.57 13.41 11.62

10.104.94

6.61 5.15

0

10

20

30

40

50

60

70

Romania Bulgaria Serbia Croatia Slovenia Bosnia andHerzegovina

Macedonia Kosovo Albania Moldova Montenegro

Country

TW

h

Generation Consumption

Investment Goes on

In 2008, power producers and distributors in SEE both continued with their scheduled investments. Outdated distribution networks and generation facilities in SEE, some dating back to the 1960s, are gradually being replaced altogether or upgraded in order to secure reliable power supplies needed to back the region’s economic growth.

Bulgaria’s NEK and Romania’s nuclear power plant operator Nuclearelectrica have secured financing for ambitious nuclear energy projects, while smaller electricity companies from Bosnia, Macedonia, Montenegro and Slovenia have opted for hydro power projects, relying on their countries’ abundant hydrological potential. An increasing number of companies from the region and have started to channel investments into renewable energy projects, aiming to diversify their electricity mix and meet EU directives on increasing the share of renewable sources in electricity production.

Source: SeeNews


Selected Investment Projects of Power Companies

Company Project EUR mlnKorporata Energjitike Shqiptare (KESH) Sh.a. Power grid rehabilitation 6.26

JP Elektroprivreda BIH d.d.Building of new generation capacities and modernisation of existing ones 60.85

JP Elektroprivreda hrvatske zajednice Herceg-Bosne d.d.

Investment in rehabilitation of facilities and equipment 37.15

Natsionalna Elektricheska Kompania AD

Construction of the Belene nuclear power plant (NPP) 171.80

EVN Bulgaria ADNetwork expansions and maintenance and construction of new power facilities 71.58

Hrvatska Elektroprivreda (HEP) d.d.

Construction of six power plants, an liquified natural gas terminal and a transmission line by 2015 2,100

Elektrani na Makedonija (ELEM) ADBuilding of Sveta Petka hydro power plant (HPP) 64.24

EVN Macedonia AD Distribution system modernisation 35.00

RED Nord SAUpgrade and expansion of distribution network 5.30

Elekroprivreda Crne Gore AD NiksicGeneration and distribution capacity upgrades over 5 years 260.00

Societatea Nationala Nuclearelectrica SA

Construction of units 3 and 4 at Cernavoda NPP 2,000

?.ON Moldova Distributie SRL Modernisation of distribution installations 1.26

JP Elektoprivreda SrbijeCapacity upgrades, development and revamp of distribution network 51.09

Holding Slovenske Elektrarne (HSE) d.o.o.

Building of three HPPs. With a combined production capacity of 720 GWh by 2018 405.00

Termoelektrarna Sostanj (TES) d.o.o.

Construction of the 600 MW generator with a steam turbine 350.00

Source: SeeNews


In State Hands

After the EU required energy market liberalisation and unbundling of former vertically integrated companies across Europe in 2003, SEE countries started considering the privatisation of parts of their electricity sector. SEE countries invited foreign majors to take over some power generation and distribution facilities in the last three years and Germany’s E.ON AG, Austria’s EVN AG, Italy’s Enel SpA and Czech CEZ a.s. entered the region’s electricity market.

While in EU members Bulgaria and Romania, and in Macedonia, former power monopolies were split into separate companies, operating respectively distribution, transmission and generation facilities, in other SEE countries mammoth state-run companies continue to manage all the three activities, for example JP Elektroprivreda Srbija, Hrvatska Elektroprivreda (HEP) d.d. and Holding Slovenske Elektrarne (HSE) d.o.o.

State Ownership in SEE Power Utilities

Company Country Share (%)Korporata Energjitike Shqiptare (KESH) Sh.a. Albania 100.00JP Elektroprivreda BIH d.d. Federation Bosnia and Herzegovina 90.00AETs Kozloduy AD Bulgaria 100.00Natsionalna Elektricheska Kompania AD Bulgaria 100.00Hrvatska Elektroprivreda (HEP) d.d. Croatia 100.00Elektrani na Makedonija (ELEM) AD Macedonia 100.00Elekroprivreda Crne Gore AD Niksic Montenegro 70.59Societatea Nationala Nuclearelectrica SA Romania 100.00

Coal Dominates Generation Coal still dominates electricity generation in Southeastern Europe with an average share of 47.5%. Years of intensive exploitation, however, have exhausted some mines and imports of coal are increasingly needed. Hydropower generation comes second with an average share of 34.4% in the region’s electricity output. Albania depends almost entirely on its water resources to generate electricity, while Moldova relies almost completely on natural gas imports from Russia to generate electricity.

Source: Company websites


EU members Romania, Bulgaria and Slovenia are the only countries in SEE that operate nuclear power plants. Slowly, the region is turning to renewables (wind, solar energy, biomass and waste) to generate electricity. The share of renewables in Bulgaria should rise to at least 16% by 2020 from 1.0% in 2005 under EU directives. The target for Romania is 24%, while Slovenia should cover 25% of its gross domestic energy consumption from renewable energy sources by 2020.

SEE Electricity Production by Type of Generation

SEE Electricity Generation Mix

Share (%)

Albaniahydro 98.17oil 1.83

BosniaandHerzegovinacoal 54.92

oil 1.19hydro 43.89Bulgaria

coal 41.90oil 0.83

gas 4.71waste 0.02nuclear 42.52

hydro 9.99wind 0.04

Croatiacoal 18.16oil 15.78

gas 16.56biomass 0.09

hydro 49.27wind 0.15

Macedoniacoal 72.91oil 3.54

hydro 23.55

SEE Electricity Generation Mix

Share (%)

Moldova

oil 0.50

gas 97.49

hydro 2.01

Romania

coal 40.30oil 2.56

gas 18.87

biomass 0.01

nuclear 8.98

hydro 29.28Serbia

coal 68.73

oil 0.89

gas 0.32

hydro 30.06

Sloveniacoal 35.96

oil 0.34

gas 2.45

biomass 0.74

waste 0.03

nuclear 36.71hydro 23.76

*Data for 2006 Source: International Energy Agency


Foreign Power Majors in SEE

CEZ, Enel, E.ON and EVN operate generation and distribution facilities in Bulgaria, Romania and Macedonia. CEZ is also considering entering the markets of Bosnia, Kosovo and Serbia.

Foreign-based Power Producers and Distributors in SEE

Company Presence

CEZ a.s (the Czech Republic) Bulgaria, Romania

Enel SpA (Italy) Bulgaria, Romania

E.On AG (Germany) Bulgaria, Romania

EVN AG (Austria) Bulgaria, Macedonia

Source: Company websites

electricity in southeast europe

Documents