Rising CO2 right prices an issue for PPC lignite units sale

Spot market prices for CO2 emission rights at the European Energy Exchange in Germany exceeded the 20-euro level yesterday to peak at 20.05 euros per ton. This increase represents an 11.2 percent rise compared to the 18.03-euro level registered on August 14.

CO2 emission right prices for December 2018 futures also rose higher, by 3.036 percent, on the European Climate Exchange’s (ECX) ICE Futures Europe platform, to exceed 20 euros per ton and reach 20.42 euros per ton. This level is five times over the price of 3.98 euros per ton in October, 2016, and nearly triple the price of 7 euros per ton registered in December, 2017.

The higher CO2 emission rights prices, fueled by significantly higher demand, are directly impacting wholesale electricity prices in Europe, including the Greek market, where the System Marginal Price (SMP) appears to be rising significantly, according to latest data.

This development is expected to negatively impact the main power utility PPC’s bailout-required sale of lignite units as investors will factor in higher operational costs and lower profit prospects resulting from elevated CO2 emission rights prices.

It is becoming increasingly clear that lignite-fired units are acquiring a greater need for support mechanisms if they are to remain sustainable. Without such backing, the upcoming developments for the PPC sale, representing 40 percent of the utility’s lignite capacity, could be unfavorable.