Negotiations ‘constructive’ for new payment mechanism

Negotiating sides maneuvering on the details of a prospective new payment mechanism to the electricity market are tabling differing proposals, but the overall climate is described as being constructive. Negotiations on such sector issues have tended to be uncooperative in the past.

According to sources, the crucial point in the negotiations, primarily involving the Hellenic Association of Independent Power Producers, HAIPP – locally referred to as ESAI – and PPC, the Public Power Corporation, concerns whether the new mechanism should reward producers for provision of adequacy, flexibility, or both.

HAIPP, as has been previously reported by energypress, is in favor of the continuation of a payment mechanism that rewards producers for providing capacity adequacy, combined with a mechanism to reward provision of flexibility. The association supports its position citing the anticipated increased presence of renewable energy sources (RES) in the country’s electricity market by 2020, combined with a reduction of lignite-based electricity production, and increased consumer demand. Subsequently, the fluctuating nature of power levels generated by RES units will increase the need for producers offering flexibility to the system as a means of covering fluctuations during high-demand periods. HAIPP is supporting that flexible thermal producers should be the main beneficiaries of the new payment mechanism because they provide both adequacy and flexibility to the electricity market.

From its perspective, PPC has reportedly provided information that suggests the electricity market faces no power adequacy concerns until 2020. The greater flexibility that will be needed as a result of the increased market penetration of RES producers can be covered by existing units, PPC supports. The corporation contends that a mechanism rewarding flexibility is not necessary, adding that if eventually adopted, then it should reward hydropower plants and lignite-based power producers.

The new Capacity Assurance Mechanism is expected to replace the existing Capacity Availability Tickets, CATs. The market’s reshaping will bring the country in line with European standards, while also meeting terms set by creditors in the bail-out agreement.

RAE, the Regulatory Authority for Energy, will need to forward a full proposal by the end of October for a second round of public consultation. The first round ended last week.