The main power utility PPC can add between 420 and 550 million euros to last year’s operating profit performance of 805 million euros by 2022 if it makes improvements in seven areas, consulting firm McKinsey, hired by the power utility to assist in its reshaping, has advised.
Further penetration of the renewable energy sector, improved utilization of mines and power stations, grid sufficiency compensation, less generous pricing policy adjustments, the development of a more effective distribution network, an improved collections record, and supplementary operations would lead PPC to higher operating profit figures, the consulting firm noted in its business plan proposal, obtained by energypress.
However, such initiatives would require PPC to make considerable investments worth between 1.15 billion and 1.45 billion euros, according to the McKinsey plan.
The consulting firm proposes a more aggressive RES policy from PPC as a top strategic priority so that its portfolio of installed renewable energy projects can reach 6,000 MW by 2022. This would demand investment capital of about 700 million euros.
As a secondary move, the McKinsey report recommends a more aggressive utilization policy by PPC at its power stations and mines. The investment costs here are estimated to be lower and should not require more than 21 million euros, but this move could provide PPC with an additional 220 million euros of annual operating profit by 2022, half the overall objective, the McKinsey report estimates.
CAT remuneration for lignite units, as compensation for grid sufficiency, could add a further 50 million euros to PPC’s annual EBITDA figure, according to the McKinsey proposal.
Distribution network investments of between 424 million and 728 million euros can add between 35 million and 81 million euros, annually, to the power utility’s operating profit, the consulting firm noted as a fourth move.
Listed as a fifth priority, pricing policy adjustments by the state-controlled power utility, which requires no capital but would carry considerable political cost, could improve PPC’s annual operating profit by amounts between 75 and 97 million euros.
Though the power utility’s CEO Manolis Panagiotakis has denied rumors of a prospective reduction to a 15 percent discount offered to customers meeting electricity bill deadlines, the McKinsey report believes this policy needs to be revised to bolster the company’s profit performance. Electricity bill revenues could be boosted by as much as 100 million euros, the consulting firm believes.
An improved electricity bills collection record could add between 690 million and one billion euros to PPC’s annual operating profit by 2022, while supplementary operations could add a further 18 million euros to the EBITDA figure, the reported added.