PPC market test respondents want clarity for at least 15 years

Local and foreign investors taking part in a market test staged by the European Commission’s Directorate-General for Competition for the main power utility PPC’s bailout-required sell-off of lignite units are demanding clarity in Greece’s electricity market conditions for a period covering at least 15 years if they are to submit binding offers to the sale, according to energypress sources.

“We made clear to the DG Comp that what matters most is not the individual character of each unit but the very functioning of the Greek market, which remains problematic,” a highly-ranked official at one Greek energy firm told energypress. “The ambiguity regarding the conditions to be encountered by investors who could possibly seek acquiring lignite assets will need to be clarified for a period covering at least the next 15 years,” the official added.

A number of factors continue to trouble prospective investors. The main concerns expressed by respondents in the ongoing market test include lignite’s level of participation in Greece’s energy mix in the years to come; whether lignite units will be entitled to CATs via the permanent flexibility remuneration mechanism; the future course of CO2 emission right costs; the timing of the target model’s implementation; the future of the Vevi mine, currently closed, as well as the futures of other mines in northern Greece’s Florina area.

The majority of comments were provided by Greek, east European and Asian firms, the energypress sources noted.

Concern was also expressed over the impact on the electricity market of a lifespan extension plan being prepared by PPC for its Amynteo lignite-fired power station through an environmental upgrade. The DG Comp rejected the unit’s inclusion on the sale list as a result of its limited lifespan.

Market test respondents were asked whether they believe investing in the sale procedure’s packages – one grouping units in Greece’s north (Meliti I, licence for Meliti II) and, the other, units in the south (Megalopoli III and IV) – promise sustainability, both in the short and long terms.

Responses to this question were both favorable and negative. Critics primarily cited future CO2 emission right costs as a concern. Others expressed concern as a result of a drastic reduction being planned for the role of lignite in Greece’s energy mix. PPC believes lignite’s energy mix presence should be maintained at the current level of around 25 to 27 percent.

Certain respondents noted that Megalopoli units barely offer worthwhile investment prospects as regional lignite deposits feeding these facilities are limited. The deposit supplying Megalopoli III is due to run out in 2025, while the deposit supporting Megalopoli IV should be depleted by 2032.