New PPC boss backs flexibility for much-delayed CAT system

The newly appointed chief official at PPC, the Public Power Corporation, Manolis Panagiotakis, has expressed his support for a new CAT (Capacity Availablity Tickets) system that would reward power stations offering flexibility to the grid, such as natural gas-fueled and hydropower stations.

The new PPC chief’s approach, expressed during a parliamentary committee, could help push ahead the new CAT system, one of the local electricity market’s biggest pending issues.

The latest payment model decided on by RAE, the Regulatory Authority for Energy, following public consultation procedures, as well as following an agreement between the previous administration’s energy ministry and European Commission energy-sector officials, foresees an annual cost reduction of over fifty percent and compensation for power stations offering flexibility to the grid, not sufficiency.

The local electricity market’s previous mechanism, whose validity expired at the end of 2014, rewarded power stations based on sufficiency, or assurance of power supply to the grid even during the most challenging of circumstances, such as in cases of drought, cloudy weather, windless conditions, and technical faults. This system compensated PPC’s lignite-fired, hydropower, and natural gas-fueled stations, as well as natural gas-fueled stations operated by independent electricity producers. Its cost reached 570 million euros, annually, with PPC receiving 400 million euros and independent producers the other 170 million euros.

The need to support flexibity in power production has emerged as a result of the increased penetration of renewable energy source (RES) supply, especially photovoltaic and wind-park facilities, and the subsequent need to cover considerable inconsistencies in production as a result of unpredictable weather patterns. Flexibility offers overall production the ability to increase or decrease production depending on the grid’s requirements.

An informal agreement between Greece’s previous administration and the European Commission allowed for a ten-month transitional period for the new CAT system, from January 1 to October 31, 2015, and 187 million euros in payments for stations providing flexibility. Based on this model, PPC’s natural gas fueled and hydropower stations, as well as independent natural gas fueled stations, would have received a total of 187 million euros – PPC entitled to 104 million euros and the independent producers the other 83 million euros. According to the plan, an auction system would replace the transitional period as a permanent mechanism, beginning November 1.

However, now well into the month of April, procedures leading to the ten-month transitional period’s implementation have yet to be completed.