Trading Europe's Energy Transformation:E.ON vs RWE

In this research report we examine the technical, fundamental and market factors which may drive the share price of EON AG and RWE AG in the future. We conclude that EON AG is better positioned to benefit from future market changes than RWE AG.

This report was first published on Thomson Reuters and Capital IQ research platforms.

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Impact of Temelin on CEZ's bottom line

In our earlier study, Temelinomics, we challenged the stated costs of the project. We reviewed CEZ’s financial condition and concluded that the company cannot afford to build Temelin 3&4. We demonstrated that the project will fail to break even. 

In this further study, Temelinomics II, we examine the impact of the project on CEZ's dividend, cost of financing and income tax liability. In addition, we challenge the concept of the multiplier effect and its contribution to economic growth and employment.

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Wartsila equity research report

In this research report we examine the technical, fundamental and market factors which may drive the share price of Finland-listed Wartsila Corporation in the future. We conclude that the shares are fairly priced as of the middle of May, 2013.

This report was first published on Thomson Reuters and Capital IQ research platforms.

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Measuring the probability of collusion in the Czech wholesale mobile market

In this presentation, Candole analyst Martin Bebiak examines the relevant market for the Czech wholesale market for mobile phone calls, SMS and data transfer, and concludes that the probability of collusion is high. The presentation was made to the annual conference of the Czech competition authority in November 2012.

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Why CEZ’s asset divestment commitment to the European Commission is inadequate

In this study, we respond to the European Commission’s invitation to third parties to submit their observations on the commitment of CEZ to divest up to 1000 MW of generation assets as a way to address the Commission’s concerns that CEZ is abusing its dominant market power. We conclude that none of the divestments proposed would adequately reduce market concentration. Furthermore, we find that CEZ is promising to divest only those assets which it would in any case like to sell, regardless of the Commission’s investigation, either because of lignite supply disputes or the bad economics of the assets in question. 

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Can CEZ afford Temelin 3&4?

In Temelinomics, we explore the economics of building two new reactors at NPP Temelin. In the first part, we re-examine the stated costs of the project and consider what costs might have been overlooked. Then we review CEZ’s financial condition to identify reasons why the company cannot afford to build Temelin 3&4. Finally, we do a simple valuation of the project and, using a Monte Carlo simulation, we show that the project will fail to break even.

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The relevance of market coupling to CEZ's relevant market

In this study, we show that market coupling of two national electricity markets does not guarantee the existence of one relevant market. To determine the relevant market, it is equally important to compare both electricity prices and the costs of electricity generation between the different countries. In order to prove this hypothesis, we expand upon our earlier study, Power Abuse, by comparing the merit order curves of the Czech Republic and its neighbours. 

 

 

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CEZ and the abuse of dominant market power

Our analysis of electricity price evolution and interconnector capacity usage demonstrates that CEZ’s relevant market is Czech, not European. We apply standardised methods of measuring market concentration to show that the Czech electricity market is one of the most concentrated in Europe. And we show that CEZ is able if it wishes to abuse its dominant market position by pricing the inputs of its production at Czech levels and its electricity at European levels.

 

 

 

 

 

ČEZ’s response to Power Abuse

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Why Romania should drop plans to create two CEZs

In this latest report from Candole Research, we consider Romania's plan to reorganize its state-owned energy sector into two vertically integrated firms. We examine the impact of this on the upstream and downstream electricity markets, arguing that competitiveness will be harmed and the functioning of the wholesale market undermined. We argue that market concentration will discourage foreign investment in Romania’s obsolete gas and coal fired generation fleet.

Our analysis is based upon models of western European markets and primary source data.

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Why Bulgaria should abandon NPP Belene

A project with a value equal to one quarter of Bulgaria’s GDP, the proposed Belene nuclear power plant pays scant regard to the most basic economic reasoning. In this short paper, Candole analyst Ivan Kotev seeks to dispel five myths about NPP Belene: that it will produce cheap electricity; that it will satisfy Bulgaria’s growing energy needs; that it will boost electricity exports; that it will guarantee Bulgaria’s energy security; and perhaps the weakest of them all, that Bulgaria has already spent 600mn euros on the project and cannot abandon it now.

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Retail in central and southeast Europe

This report forecasts retail sales for 2010 in central and southeast Europe. We forecast other variables impacting retail as well, such as unemployment and real GDP. It is aimed at senior management of retail companies and investors.

We examine the market as a whole, and not individual companies. We have excluded information with little explanatory power for predicting retail sales. Our data was obtained from public and primary sources. Our conclusions and forecasts are based on mosaic theory and advanced non-linear econometric modeling.

In combination with POS data analysis, this report is all you need to understand how retail sales are affected by broader economic developments.

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Good, bad and ugly sides to the Czech energy giant

Claims that CEZ abuses its market power are not new. The author examines the theoretical underpinnings and empirical evidence for market abuse in the Czech energy sector, demonstrating that the potential for abuse is real. The report sets CEZ in its regional and domestic market context, identifying five structural variables that determine CEZ's profitability. It argues that successful renewal of the Czech generation fleet is critical for maintaining such profitability, whereas foreign acquisitions are not. It concludes that future value depends on efficient execution of capital spending programs and that the risk of government failure to challenge value dilutive decisions of a management it appoints remains high.

This 30 page study is based upon models of western European electricity markets and our own analysis of primary source data.

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