Grid put to the test, soaring temperatures to raise prices

The country’s electricity system faces a severe test today and tomorrow as summer temperatres rise to extreme levels exceeding 40 degrees Celsius. Networks will be working on overload as consumers turn up air conditoners, which will test the grid’s limits.

The power grid operator is expecting electricity demand to reach as high as 9,500 MW. At such a level, main power utility PPC’s Amynteo lignite-fired units, currently shut as a result of a recent landslide at a regional mine, will be forced to resume operations to preserve, as much as possible, water levels at the country’s hydropower units as plenty of hot summer weather still lies ahead, meteorologists have forecast.

Besides PPC’s lignite-fired units, the grid will also rely on privately operated gas-fueled power units, as well as electricity imports from neighboring countries, a high-cost option, to get the country through this hot spell.

HEDNO, the Hellenic Electricity Distribution Network Operator, is on alert to deal with technical problems, a prospect that appears inevitable at this stage. Certain islolated incidents needed to be dealt with yesterday, prompting a three-hour power outage in Paleo Faliro, southern Athens.

Besides the grid, the pockets of consumers will also be placed under strain for the second time within a few months. Last winter, a very cold one in Greece, the increased use of heating systems and distorted Public Service Compensation (YKO) calculations led to bloated electricity bills for consumers. This could be repeated this summer if the YKO formula is not swiftly revised.

A third, less obvious, negative factor is also at play. Increased temperatures will increase the likelihood of wholesale electricity price increases around Europe this summer. Extremely hot weather has been forecast throughout the continent, which will increase demand for electricity. A mild economic rebound presently being experienced in Europe is also increasing demand for electricity, especially in the industrial sector. Higher demand means higher prices in Europe. This will also impact Greece, as the country’s electricity import needs will cost more. On the other hand, such conditions will be favorable for traders engaged in electricity export activity.