Power grid operator IPTO is close to completing its updated grid Adequacy Report, expected to be ready within December for delivery to the European Commission. The report is needed to determine the shape of Greece’s proposals for a Strategic Reserve Mechanism and a Capacity Remuneration Mechanism (CRM).
The way towards completing the Adequacy Report was paved by the recent establishment of three required indices – CONE (Cost of New Entry), VOLL (Value of Lost Load) and Reliability Standard – by RAE, the Regulatory Authority for Energy, and the energy ministry. These indices need to be factored into calculations before the Adequacy Report can be completed.
Plans for two new gas-fueled power stations, one by a TERNA-Motor Oil partnership, the other by the Copelouzos group, have emerged since assumptions made for IPTO’s study, which had been put to public consultation.
The launch of the two new units over the next few years is expected to greatly contribute to the grid’s reliability.
Energy ministry officials are engaged in ongoing talks with the European Commission’s Directorate-General for Competition and ACER, Europe’s Agency for the Cooperation of Energy Regulators, to determine the shape of Greece’s proposals for a Strategic Reserve Mechanism and a Capacity Remuneration Mechanism (CRM) before their plans are officially submitted to Brussels for approval.
Greece still needs to deliver an Adequacy Report before the two mechanism plans can be pushed forward. Three indices – CONE (Cost of New Entry), VOLL (Value of Lost Load) and Reliability Standard – need to be factored into calculations before the Adequacy Report can be completed.
According to energypress sources, RAE, the Regulatory Authority for Energy, has already completed work on the VOLL calculations and expects to have all required data needed for the Reliability Standard calculations during the week. RAE will then forward a related report to the energy ministry.
The Greek mechanism requests are expected to be submitted soon so as to enable the European Commission to respond by late November or early December.
The Strategic Reserve Mechanism, planned to remunerate power-generating units made available by electricity producers for grid back-up services is expected to be launched early in 2022 for a duration until 2023 before it is succeeded by the CRM.
The European Commission has uploaded, for public consultation, a Market Reform Plan submitted by Greece proposing electricity market revisions.
The public consultation procedure’s feedback will assist Brussels’ assessment of the Greek reform plan. Participants have until September 6 to deliver their responses.
Brussels’ endorsement of the Market Reform Plan is one of two prerequisites needed before Greece can submit an application for a capacity mechanism – either a Strategic Reserve or Capacity Remuneration Mechanism (CRM).
The second prerequisite entails Brussels’ approval of an Adequacy Report, currently being prepared by power grid operator IPTO. The operator initially planned to deliver this report by the end of July but a few more weeks are still needed for its completion.
Greece will be able to apply for a capacity mechanism once the two prerequisites have been satisfied.
The energy ministry and European Commission have agreed on a schedule for the approval of a capacity mechanism by the end of this year and its launch early in 2022.
However, maintenance of this schedule will be difficult given the European Commission’s demands, complex and time-consuming, when examining member-state capacity mechanism plans, officials monitoring the Greek effort have noted.
The energy ministry is striving to offer a swift response to a set of European Commission queries concerning Greece’s updated Market Reform Plan, forwarded for public consultation by RAE, the Regulatory Authority for Energy.
The energy ministry is aiming to submit a finalized plan to Brussels by the end of July, so that the European Commission can process and approve the plan before its officials take off for their summer breaks in August.
The queries forwarded by the European Commission primarily seek clarification and do not raise any fundamental issues, which has given Greek officials hope of the plan’s imminent finalization.
Brussels’ approval of the Market Reform Plan is crucial as it is one of two prerequisites faced by Athens before the government can submit an application for a support mechanism, either a Strategic Reserve, which would compensate power utility PPC for maintaining its lignite-fired power stations on emergency stand-by, or a Capacity Remuneration Mechanism.
The second requirement is Brussels’ approval of an Adequacy Report being prepared by IPTO, Greece’s power grid operator. Its finalization was originally planned for the end of July but this aim now seems set to be delayed by a week or two.
A draft of the country’s Market Reform Plan, whose finalized version will carry target model market revisions for Greece, has been forwarded, by the energy ministry, to the European Commission for consultation between the two sides, expected to begin without delay.
The energy ministry and Brussels have also agreed on a timeline concerning Athens’ submission and examination of a proposal for a Strategic Reserve Mechanism, needed to ensure electricity supply security through the market’s transition and reforms.
Based on this schedule, the two sides will strive to have finalized the Strategic Reserve Mechanism by the end of the year, so that it may be launched in early 2022.
Brussels’ Directorate-General for Competition plans to begin its consultation for the Market Reform Plan in July. The procedure is expected to last four months, before target model market revisions are implemented.
As part of the overall effort, Pantelis Kapros, Professor of Energy Economics at the National Technical University of Athens, conducted a study – commissioned by RAE, the Regulatory Authority for Energy – serving as a road map for the Greek wholesale electricity market’s revisions, the objective being to fine-tune the target model.
Power grid operator IPTO will concurrently conduct a new adequacy report, including reliability standards, to accompany the Greek plan.
IPTO is taking into account current and potential grid capacities of neighboring Balkan markets for its preparation of an updated adequacy report, a study to serve as a base for various new plans, including the shaping of Greece’s requests for a Capacity Remuneration Mechanism (CRM) and Strategic Reserve, an updated National Energy and Climate Plan (NECP), and private-sector investment decisions for new natural gas-fired power stations.
IPTO is also factoring into its adequacy report calculations the heightened investment interest and activity in Greece’s RES sector, energy storage, now that this domain appears set for initiation, as well as the introduction of new elements to mechanisms and energy exchange markets, including the demand response system, remunerating major-scale electricity consumers when the operator asks them to shift their energy usage or stop consumption during high-demand peak hours, so as to balance the electricity system’s needs.
Electricity grids in the Balkans are being revamped, creating unprecedented electricity export opportunities for Greek exporters. The EU’s intention to impose a carbon border tax on electricity imports from non-EU countries adds to Greece’s export potential to the Balkans, as well as more new natural gas-fired power stations than the quantity included in the current NECP.
Given the developments, Greece now probably needs four new natural gas-fired power stations, including power utility PPC’s Ptolemaida V.
Private-sector firms are pushing ahead their plans for the development of such units, as was highlighted by a related joint announcement last Friday from GEK Terna and Motor Oil.