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Poweo Presentation - Thibault Guillemette Remy Jonathan

This is our group presentation on Poweo Harvard Case. Enjoy!

Thibault Dussueil

on 16 April 2013

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Transcript of Poweo Presentation - Thibault Guillemette Remy Jonathan

Road to the Success What is POWEO ? Background-----Timeline: France Problems & Issues Global Financial Crisis- 2007 French energy market history

Intensive investment in nuclear power

Inflexibility to switch

Need to liberalize the energy market Poweo Not Making Profit Insufficient Production Capacity Possible solutions 1. Optimize Current Operations & Wait for Liberalization Reforms (less risky)

2. Build 2nd CCGT Power Plant (risky) Solution 1 : Optimization and Wait
Cut back investment activities

2 million Euro cuts thus far

Advantage: Increase profits due to lower cost of power

Lack of action (Verbund) solution 2 : Build second CCGT Plant Advantages:

1. Increase production capacity : expand customer base

2. Majority of legal work is completed and financing available

3. Ability to gain market shares quickly


1. Risk of law postponement

2. Economic risk What should POWEO do ? Cut costs and investment Build the second CCGT plant Lower cost Increase Revenue French electricity and gas operator created in 2002, owned in majority by an Austrian firm

Poweo decided to enter the market by building the first French combined cycle gas turbine (CCGT) in 2005, under the command of its president Beigbeder

Poweo activity organized around 3 steps
commercial EU Liberalization Movement 1946 1976 2006 2009 - Nationalization Law
- Monopolization of EDF - Oil crisis Nuclear Power Program Poweo Verbund EDF France's intensive investment in nuclear power - September 2011 : VERBUND sold its 46% interest in POWEO to Direct Energie : it paved the way for a merger of the operational activities of the two alternative operator.

- The merger has created the leading alternative multi-energy operator in France.
- 1 million residential and professional customers.
- Nearly 10 TWh of electricity and gas supplied
- Solid cash position Why have a regulated monopoly ?
1. Electricity cannot be stored in viable way
2. Electricity cannot not be distributed long distance
3. Economies of scale

Why reform ?
1. Comply with EU rules = create a single unified electricity market
2. Stimulate competition within EU '09 lowest electricity consumption since '03
2% decrease in French Demand French's Slow Liberalization Progress Not adapting to the EU policies
EDF dominated the market with subsidized prices
New entrants are unable to compete
Deregulation exists but is not efficient EDF is main competitor
94%market share Overall market produces 100 GW
Poweo can only produce .505 MW
Only .5 % of market POWEO Case study:
How to expand in a very regulated market? Presentation Steps 1) Poweo's context and history

2)The options it faces and its consequences Solutions implemented up to now to change this situation Creation of entities to help electricity providers work side by side Powernext
VPP Auction
TaRTAM system in 2007 Champsaur commission report in 2009 New law voted in 2010? Objective: Find a compromise between EU rules and the specific French energy market 1999 -EU rules Continue government lobbying Gain market shares What happened ? - Law was voted on November 24, 2011

- POWEO lost much money due to the delay POWEO had to sell its production branch in order to face cash problem due to this delay Merger with Direct Energie 2015 = end of regulated tariffs ?
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