Energy sector well prepared for interim government

The ruling center-right New Democracy party, widely expected to seek a majority vote in a second round of voting seen taking place between one-and-a-half and two months from now, has left the energy sector in an orderly state with no significant pending issues requiring any immediate political decisions during the interim period, when a caretaker administration will govern the country.

Indicatively, the interim government’s energy ministry will assume stable operating frameworks, valid until the end of September, for the wholesale and retail electricity markets following pre-election extensions, by a few months, to emergency measures introduced to counter energy crisis effects.

This means that, until a new government is sworn in, a price adjustment clause for electricity tariffs will remain suspended, electricity subsidies will most likely be continued, and price caps on the wholesale market’s day-ahead and intraday markets will remain intact.

Also, the Energy Transition Fund will continue being supported by an extended mechanism recovering windfall profits earned by electricity producers.

Electricity producers disagree with the current windfall profit recovery system, implemented universally for all electricity generation technologies, an approach causing a series of distortions, noting an alternative way should be considered. The Energy Transition Fund is currently being exclusively financed by RES producers.

However, Greece, in one important pending issue, needs to renegotiate with the European Commission for a more realistic gas storage requirement. The current requirement, a 7.5 TWh quantity, planned to be stored away at Bulgarian and Italian facilities ahead of next winter, is excessive and costly.