Flexibility mechanism’s public consultation a further delay

A decision by RAE, the Regulatory Authority for Energy, to launch a public consultation procedure this week addressing the fundamentals of Greece’s forthcoming flexibility remuneration mechanism for gas-fired power units adds further delay to the mechanism’s re-establishment, needed to reward the output of gas-fired electricity producers who have been left without a flexibility mechanism since April, when the previous model’s validity expired.

RAE is also currently engaged in discussion with European Commission authorities over the new flexibility mechanism, expected as an extension of the previous temporary CAT plan before a fixed system is eventually adopted.

RAE’s public consultation procedure, based on a flexibility study conducted by IPTO, Greece’s power grid operator, is expected to last a fortnight. A finalized proposal will then be forwarded to the European Commission for approval.

According to sources, the RAE plan is expected to leave certain issues open, including an option for one or two flexibility products to be remunerated through the temporary CAT system, as well as the terms defining which technologies provide flexibility to the grid.

One thing for certain is that the new flexibility mechanism will be offered to producers through auction procedures. An upper limit will also be set at the auctions at a level well below the current level of 45,000 euros per MWh.

Sources have also infomed that RAE’s proposal will not include terms satisfying the European Commission’s insistence for the inclusion of a demand response feature in the temporary mechanism.

RAE attributes this decision to two main factors. Firstly, the authority believes that, in practical terms, a mechanism with a demand response feature will not be able to be implemented. The other reason is that the incorporation of a demand response feature to the mechanism will further delay its arrival and ultimately deprive the temporary CAT system of ever getting off the ground.