Athens, Brussels working on two-type flexibility mechanism

A proposal by local authorities for Greece’s transitional flexibility mechanism, currently being focused on by officials in Brussels and Athens, is aiming to deliver two competitive-based systems for electricity producers.

Greek officials are hoping the European Commission will finish its processing of the plan as soon as possible as the previous mechanism expired in April. IPTO, Greece’s power grid operator, which prepared a related study identifying the system’s needs, has also been called into action.

Capacity mechanisms must be auction-based according to new European Commission regulations. As part of its bailout agreement, Greece had committed itself to launching a transitional mechanism and delivering pre-notification of a permanent mechanism by the end of June.

According to a related study prepared by IPTO, Greece’s total system flexibility needs amount to approximately 4,000 MW per year for the next year or two.

It appears that RAE, the Regulatory Authority for Energy, and IPTO have settled for two flexibility products to share this 4,000 MW capacity. The first of these is designed to operate with three hours notice and manage a capacity of approximately 1,600 MW, while the other would give producers a one-hour notice for a capacity of between 2,500 and 2,600 MW.

Authorities are currently looking to determine which units will have the right to participate in the auctions for these two products, their order of entry and other details.

It is believed that natural gas-powered electricity generation units will be able to qualify for both categories.

The procedure determining the level of compensation for units offering flexibility to the system will be tendered. Two pre-determined upper limits are expected to be set for the two aforementioned products. The upper limit will be higher for product giving producers a one-hour notice.

Greece’s demand response mechanism (interruptability) plan is not included in the current transitional flexibility mechanism. The interruptability plan is being carried out as a separate procedure initiated by the energy ministry with support from IPTO.

The permanent flexibility mechanism will need to incorporate the demand response mechanism (interruptability).

RAE is currently working in conjunction with the European Commission and striving to deliver a final draft within the next three to four weeks.