Profile G2 (Gas)

Total invoice analysis

The next chart, Figure 16, depicts the total yearly invoice charged to the consumer characterised by the reference profile (G2). As a reminder, we assume profile G2 can be a feedstock consumer using natural gas as a raw material in the industrial process (bottom range) but we also depict the possibility that he is not such a consumer (top range).

Figure 16 – Total yearly invoice in kEUR/year (profile G2)

For an extensive legend for all figures, see page 98.

For the purpose of facilitating the comparisons, in Figure 17, the same results are compared to the reference situation which relates to the average of the three Belgian regions (Belgian average 2018 = 100%).

Figure 17 – Total yearly invoice comparison in % (profile G2)

For an extensive legend for all figures, see page 98.

In terms of natural gas for very large industrial consumers (profile G2), Belgium generally offers very competitive prices.

For very large industrial feedstock consumers using natural gas as a raw material (bottom range of the figures), cost differences between the countries under review are relatively small, except for the UK and the South and South West of France that offer a substantially higher cost. For these consumers, the Netherlands is the most competitive countries under review, followed very closely by Northern France and Belgium.

For very large industrial consumers that do not use natural gas as a raw material, but rather for heating and other purposes (top range of the figures), cost differences between the countries under review are much more important. Belgium is generally very well positioned, joined by the Netherlands. Consumers in the UK, Germany and France can pay up to 11 – 55% more than comparable consumers in Belgium. Southern France represents an outlier due to the higher commodity cost.

Breakdown by component

The previous results are further detailed for the profile G2 in the following chart, Figure 18, which provides a closer look on the components’ breakdown.

Figure 18 – Average gas price by component in EUR/MWh (profile G2)

For an extensive legend for all figures, see page 98.

As is the case for profile G1, the commodity cost is by far the largest part of the total gas price. Apart from the TRS market¹⁰³ region (South and South West France), market prices in all countries under review converge at a level about 3 EUR/MWh above the January 2017 level. Where last year the lowest commodity cost was to be found in Germany and the Netherlands, in 2018 prices in Belgium and the Netherlands were the lowest of the analysed countries for the considered month (January 2018). The South and South West of France have to deal with a considerably higher gas market price, which constitutes a substantial competitive disadvantage.¹⁰⁴

Network costs only make up a limited amount of the total cost and show very little evolution compared to 2017. We observe the lowest values in Netherlands followed by Belgium and France (both TSO), and slightly higher values in Germany. Tariffs in the UK are markedly higher than in the other countries under review.

As to taxes and levies, all countries under review give exemptions for large baseload industrial consumers. All volume based exemptions have already been taken into account in the maximum option in Figure 18. For these top range results, that only apply to consumers that do not use gas as raw material, we observe the highest tax levels in France (where the TICGN¹⁰⁵ increases compared to last year) and Germany, and the lowest in the Flemish and Walloon regions.

For consumers that use natural gas as a raw material (feedstock), all countries under review apply important tax exemptions on top of some existing volume reductions. This is the case for Belgium (energy contribution), Germany (Energiesteuer), France (TICGN), Netherlands (Energiebelasting) and the UK (Climate Change Levy). The general level of taxes and levies for these feedstock consumers, reflected by the minimum option in Figure 18, is hence very low for all regions under review.¹⁰⁶ Nevertheless, Belgium offers the highest level of taxes for these feedstock consumers, because no exemption exist on the federal contribution, although capping and digressiveness apply.

103 Trading Region South market

104 The difference between the South and the North of France was 2 EUR/MWh

105 Taxe intérieure sur la consommation de gaz naturel

106 With the exception of the hypothetical Brussels case (see Footnote 71).

KEY FINDINGS

The very large industrial gas consumer profile (G2) suggests the following findings:

• Belgium is generally very competitive for the total invoice of natural gas prices for very large industrial consumers of natural gas. For feedstock consumers, the Netherlands offer a lower total cost than Belgium that shows a cost roughly similar to Northern France. For all other very large industrial consumers, Belgium offers the lowest total cost.

• Together with the important share of commodity cost in the total cost, price convergence on the commodity market in the UK, Northern France, Germany and the Netherlands makes for relatively small differences between the zones under review. Price levels for gas consumed in January 2018 have increased compared to those for January 2017.

• Even though rather limited in absolute numbers, the impact of network costs is important in determining the positioning of a country and a consumer in terms of competitiveness. Network cost for clients directly connected to the transport grid are lowest in the Netherlands, and highest in Germany and the UK.

• When considering taxes and levies without taking into account the exemptions for feedstock consumers, Belgium is the country with the lowest cost for this component. France and also Germany clearly offer the highest potential cost.

• When considering taxes and levies after taking into account the exemptions for feedstock consumers and the other applicable reductions, taxes and levies are almost negligible in most countries. Although the cost of this component is relatively low when compared to the total cost, Belgium is the country with the highest cost for this component.