McKinnon

1
McKinnon Clarke International Utilities
Specialists Group Managing Director Simon
Northrop
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Utilities costs in the Czech Republic Threats
and Opportunities
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What are the threats to businesses resulting from
the rising Energy market in the Czech Republic?

• Putting business at risk of being forced to
  reduce output or increase costs to the end user
• Reduces competitiveness in comparison to
  businesses in other countries

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Electricity Costs - Central Europe
90
80
70
60
50
Euros
40
30
20
10
0
Czech Republic
Poland
Slovakia
Hungary
Country
Wholesale Prices in /MWh
End User Costs in /MWh
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Indicative Electricity End User Cost Comparison
140.00
120.00
100.00
80.00
/MWh
60.00
40.00
20.00
0.00
India
Thailand
Germany
UK
France
Italy
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Annual Gross Wage - Manufacturing
45,000
40,000
35,000
30,000
25,000
Euros
20,000
15,000
10,000
5,000
0
UK
Italy
Spain
Latvia
Poland
Ireland
Austria
Finland
France
Cyprus
Greece
Estonia
Norway
Holland
Belgium
Portugal
Hungary
Slovakia
Bulgaria
Sweden
Slovenia
Lithuania
Romania
Denmark
Germany
Luxemburg
EU Average
Czech Republic
Average
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EU Gas Pricing Curve
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• What is causing the surge in worldwide energy
  costs?
• Scarcity of resources
• Political issues
• Demand levels

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Market information resources
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What are the opportunities for businesses
resulting from the rising Energy market in the
Czech Republic?

• 2 main areas of opportunity
• Pricing
• Consumption

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Pricing

• Electricity There are currently 2 major players
  in the Czech Electricity market
• CEZ Group
• Eon Bohemia
• Gas There are 8 suppliers in the Czech
  Republic, the most dominant being RWE.
• There are changes within both of these markets
  and where there are changes, there are
  opportunities

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Czech market Energy prices

• Electricity 2005-2006 Increase of 20
• Gas since QIV 2005 prices up 20 then 10 in QI
  2006

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Czech market liberalisation status

• Since January 2006
• Electricity all customers (since 2005 for
  commercial)
• Gas Commercial (domestic in 2007) 140,000
  eligible businesses
• Regulator The Energy Regulator Office (ERO)

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If someone said you could save up to 50 on
energy use in some areas, you would want to do it
.. Wouldnt you? What if you could also cut
your costs, reduce your CO2 emissions and help
the environment at the same time?

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How is it done?

• Detailed engineering survey with specific
  measurement and logging of energy consumption.
• Physical implementation not just a report on
  possible savings.
• On-going monitoring to prove savings - making it
  simpler to demonstrate success, as you would with
  any strategy

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An example of electricity consumption before and
after energy management
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Some common areas of excessive energy consumption
in manufacturing

• Compressed air
• Heating, ventilation and air conditioning systems
• Steam boiler plant
• Refrigeration

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Some measures used to identify areas of excess
consumption levels

• Desktop analysis of consumption trends and
  patterns
• Detailed site survey
• Out of hours survey
• Regressional analysis
• Detailed electrical monitoring
• Electrical baseload analysis

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The way forward
Currently the system in the Czech Republic
revolves around reportage. To make any real
progress we must move towards a total solution,
implementing changes that have already been shown
to cut costs.