balancing market

Balancing costs still elevated, suppliers insist on full returns

Posted on by admin

Balancing market costs remained elevated last week despite the introduction of a first round of balancing market restrictions decided on by RAE, the Regulatory Authority for Energy.

The total balancing cost was 9.82 euros per MWh between January 25 and 31, slightly lower than the level of 10.82 euros per MWh registered between January 18 and 24, according to data provided by IPTO, the power grid operator.

Non-vertically integrated electricity suppliers, impacted by wholesale electricity price increases resulting from higher balancing costs since November’s launch of new target model markets, insist that decisions eventual taken by RAE for returns to suppliers of excessive balancing costs need to be retroactively enforced.

RAE has promised to examine this demand but the decision it could take remains unclear.

It should be pointed out that the recently appointed energy minister Kostas Skrekas generally does not favor retroactive enforcement of energy-sector decisions.

At least one non-vertically integrated supplier appears to have taken extrajudicial action against IPTO, overseeing the balancing market, making note of this market’s distortions and the operator’s responsibility.

 

PPC to hold back on CO2 cost clause until at least March 31

Posted on by admin

Power utility PPC, facing rising CO2 emission costs, will not activate a related clause included in low-voltage supply agreements for protection until at least March 31, energypress sources have informed.

Otherwise, the overwhelming majority of the country’s households would soon be subject to significant electricity cost increases as CO2 emission costs have been on the rise over the past four months or so.

State-controlled PPC’s low-voltage supply agreements have included a CO2 emission clause since November 1, 2019.

Yesterday, carbon emission futures were priced at 32.78 euros per ton, slightly below a level of 35.14 euros per ton in mid-January.

CO2 emission costs have risen consistently since first hitting levels of 29 euros per ton in November, 2020.

According to recent forecasts by ICIS, specializing in commodity pricing, the upward trajectory of carbon emission costs will continue over the next three years, averaging 39.24 euros per ton in 2021, before skyrocketing to levels of 46 euros per ton in 2022 and 50 euros per ton in 2023.

PPC’s CO2-cost clause has already been activated for its medium and high-voltage supply.

The corporation plans to reexamine its CO2 clause freeze for low-voltage consumers beyond March 31.

Contrary to PPC, independent suppliers have incorporated wholesale market price clauses, not CO2 emission cost clauses, into their supply agreements.

Independent suppliers have activated their clauses as a result of higher balancing market costs. Their low-voltage consumers have consequently faced electricity bill increases ranging from 7 to 30 percent.

Balancing market measures this week, cost restraint at €10/MWh

Posted on by admin

Measures prepared by RAE, the Regulatory Authority for Energy, with the aim of restricting offers in the balancing market following sharp price rises since November’s launch of new target model markets, are expected to be implemented this week as soon as the authority’s related decision is published in the government gazette.

To check the effectiveness of the new measures, electricity suppliers, hit hard by higher wholesale prices, have conducted simulated testing by applying the interventions to a considerable number of randomly selected 24-hour periods since the target model’s launch.

According to sources at some electricity supply firms, the testing has shown these measures can contain surcharge cost increases to single-digit figures.

The measures to be implemented any day now will combine to effectively create an upper limit for balancing market prices at levels of approximately 10 euros per MWh, as long as producers continue to exercise restraint when submitting offers, the sources added.

However, levels of approximately 10 euros per MWh remain unsatisfactory as they are many times over the balancing cost’s mandatory pool, ranging between 2 to 3 euros per MWh, the sources stressed.

Consumers paying the price for balancing market turbulence

Posted on by admin

Low and medium-voltage consumers – households, businesses, small-scale producers and industrial producers – are paying the price for the target model’s persisting market turbulence that has led to higher wholesale prices, especially in the balancing market, nearly three months after the launch of new markets.

Interventions made by authorities have yet to fully resolve issues and offer market stability.

Additional costs have been passed on to consumers despite no official price-hike announcements by electricity suppliers.

In the medium-voltage category, prices have risen to levels of between 67 and 69 euros per MWh from 59 to 61 euros per MWh prior to November’s launch of target model markets, introduced as a step towards harmonizing Greece’s market with EU markets.

The market turbulence has also overwhelmed consumers in the low-voltage category, where prices have risen consistently.

With the exception of the power utility PPC, whose prices have remained steady as the company’s supply contracts do not include wholesale market-related clauses, independent suppliers have passed on their elevated electricity purchasing costs to consumers through higher tariff rates. Most independent suppliers include wholesale market clauses in their supply agreements.

Making matters more troubling and confusing for consumers, independent suppliers each employ different wholesale market clause-activation levels and resulting pricing formulas, meaning it is difficult to tell whether their supply terms are being adhered to or not.

Price hikes by independent suppliers have ranged from 7 to 35 percent, electricity bills sent to energypress by frustrated consumers show.

At present, there is no sign of any price de-escalation. The cost of wholesale electricity in the balancing market has remained on an upward trajectory. Last week (January 18-24), price levels averaged 10.82 euros per MWh, up from 7.77 euros per MWh in the previous week.

The wholesale market clauses of independent suppliers are expected to keep producing price hikes for some time even if possible additional measures by RAE, the Regulatory Authority for Energy, lead to an overall price de-escalation. This is due to a latency between the wholesale clearing procedure and clause activation.

 

Retroactive enforcement of balancing market rules sought

Posted on by admin

Non-vertically integrated electricity suppliers are seeking retroactive implementation of measures introduced recently by RAE, the Regulatory Authority for Energy, to contain balancing market prices at rational levels.

Balancing market costs rose sharply in the weeks following November’s launch of new target model markets, prompting an escalation of wholesale electricity prices that severely increased the purchasing costs of non-vertically integrated electricity suppliers.

These suppliers are now determined to seek returns from RAE and power grid operator IPTO for additional outlays prompted by flaws in balancing market rules that were not detected until after the launch of new markets.

A set of new rules just introduced by RAE constitute recognition by the authority of the abusive behavior practiced by producers prior to the intervention, the suppliers contend.

Non-vertically integrated electricity suppliers are pushing for even stronger measures. They believe the new rules rely too much on the goodwill and cooperation of producers, still able to return to irrational behavior and consequently threaten the sustainability of firms and financially pressure consumers.

On the same wavelength, EVIKEN, the Association of Industrial Energy Consumers, has criticized RAE for backing away from its own proposals, noting industrial energy costs currently depend on whether balancing market participants will exercise pricing restraint.

Key issues in new minister’s first session with EC officials

Posted on by admin

Today’s first meeting, via teleconference, between Greece’s recently appointed energy minister Kostas Skrekas and European Commission authorities, as part of Brussels’ ninth post-bailout review, will focus on four key issues: power utility PPC’s lignite monopoly; the proper functioning of target model markets; energy-sector privatizations, and the decarbonization plan for west Macedonia, a lignite-dependent area in the country’s north.

The four issues were addressed in preliminary talks last week between Alexandra Sdoukou, secretary-general of Greece’s environment and energy ministry and Brussels technocrats.

It remains to be seen if the European Commission will again commend Athens, and to what extent, for the target model’s functioning, as Brussels had done last November, when the model’s new markets in Greece were launched as a step to harmonize EU energy markets.

However, weeks into the launch, balancing market costs skyrocketed, leading to sharply increased wholesale electricity prices. RAE, the Regulatory Authority for Energy, is now considering to introduce an adjustable price-containing measure to be set as a percentage of day-ahead market prices.

The European Commission, in the latest talks, can also be expected to push for the launch of a market test concerning an agreement offering independent players access to PPC’s lignite-based electricity production.

Though the interest of independent players for lignite-based electricity may have diminished given its increased cost, this antitrust case, unresolved for years, remains a big concern for the government as Brussels could associate it with pending Greek issues.

The complexity of PPC’s lignite monopoly case was deepened following a decision by the previous energy minister, Costis Hatzidakis, to bundle the matter with a Greek compensation request based on the utility’s need to keep running lignite-fired power stations for energy sufficiency. According to reports, his successor, Skrekas, will not sway from this policy.

As for energy-sector privatizations, a sale plan for gas supplier DEPA Commercial has attracted considerable interest but officials are concerned as parent company DEPA is embroiled in an ongoing lawsuit with ELFE (Hellenic Fertilizers and Chemicals).

DEPA has appealed a verdict awarding the producer a compensation amount of 60 million euros following overcharging claims. The case could be deferred until September, meaning binding bids by possible DEPA Commercial buyers may need to be delayed.

Greece’s decarbonization master plan features 16 key investment proposals that are expected to create over 8,000 jobs, directly and indirectly, in lignite-dependent areas. However, numerous complex matters need to be resolved, including the transfer of related property controlled by PPC, Brussels’ approval of a series of incentives for new investments, and scores of licensing issues.

RAE upper limit on balancing market offers still possible

Posted on by admin

A decision by RAE, the Regulatory Authority for Energy, on whether to intervene further following yesterday’s decisions to suspend negative prices for balancing energy market offers and limit them in accordance with minimum production levels that are technically possible will depend on how balancing market prices unfold, authority officials have pointed out.

The possibility of an upper limit for balancing energy market offers cannot be ruled out, the RAE officials explained.

Commenting on yesterday’s initiatives by RAE, electricity producers, on the one hand, and non-vertically integrated suppliers, traders and major-scale consumers, on the other, offered conflicting opinions.

The imposition of a zero-level threshold for offers was not necessary as extreme prices, or behavior, no longer exist in the balancing market to justify the measure, electricity producers contended, warning that it could prompt new market distortions.

The producers also expressed concern over RAE’s preference to not set a specific time period for the negative-price suspension’s validity.

At the other end, Antonis Kontoleon, the head official of EVIKEN, Greece’s Association of Industrial Energy Consumers, noted that RAE has taken a step back from its own proposal for an upper limit on balancing energy market offers as well as upper and lower limits for balancing capacity market offers.

Industrial energy consumers will remain dependent on whether balancing market participants exercise restraint, the EVIKEN chief underlined.

Suppliers and traders described the two RAE measures implemented yesterday as a first step in the right direction.

The impact of the measure limiting offers in accordance with minimum production levels that are technically possible cannot be quantified, they noted, adding the zero-level threshold measure will prevent sharp price rises but would prove insufficient if, for any reason, self-restraint stops being observed in the balancing market.

One trader noted that the zero-level threshold, to prove effective, must be maintained until power grid operator IPTO completes the “western corridor” grid in the Peloponnese.

Preliminary talks for 9th post-bailout review begin today

Posted on by admin

Power utility PPC’s lignite monopoly ordeal, the effort to ensure proper functioning of target model markets, the progress of privatization plans, and Greece’s decarbonization master plan for the lignite-dependent local economies of west Macedonia, in the country’s north, and Megalopoli, Peloponnese, are the key issues on the agenda of the ninth post-bailout review set to be conducted by the European Commission.

Preliminary review talks are scheduled to commence today between energy ministry officials and Brussels technocrats. These will be followed by higher-level talks involving technocrat chiefs and Greece’s newly appointed energy minister Kostas Skrekas.

Though his predecessors faced plenty of pressure, especially over PPC’s dominance, the new minister could be in for a hard time if pending energy-sector issues are not directly dealt with.

RAE, the Regulatory Authority for Energy, and power grid operator IPTO are still seeking solutions to tackle problems faced by the target model’s new markets. They got off to a problem-laden start in November, prompting a sharp rise in balancing market costs during the first few weeks.

As for energy-sector privatizations, the plan to offer a 49 percent stake in distribution network operator DEDDIE/HEDNO appears to be making sound progress and attracting strong interest, as exemplified by the participation of 19 participants in December’s market test.

On the contrary, the privatization plan for gas supplier DEPA Commercial could be destabilized by the company’s ongoing legal battle with ELFE (Hellenic Fertilizers and Chemicals) over an overcharging claim made by the latter. This battle could delay and affect the DEPA Commercial sale.

The Just Transition Plan for Greece’s decarbonization effort is now beginning to make some progress, but this unprecedented endeavor’s degree of complexity cannot be overlooked. Vast amounts of land controlled by PPC need to be repurposed, Brussels must approve investment incentives, and licensing matters need to be resolved, amongst other matters.

Balancing market costs subdued for second consecutive week

Posted on by admin

Balancing market costs remained subdued for a second consecutive week, the total cost of three uplift accounts, according to official data provided by power grid operator IPTO, registering 5.87 euros per MWh in the tenth week since the November 1 launch of the target model. Its introduction prompted sharp balancing cost increases in the first few weeks.

More specifically, the uplift 1 account reached €1.39 per MWh, uplift 2 was €0.79 per MWh, and uplift 3 registered €3.69 per MWh.

According to IPTO data on the three uplift accounts during the first ten weeks of the target model, their total cost was €8.37 per MWh in the first week, climbed to €15.68, €19.45 and €20.06 per MWh in the second, third and fourth weeks, respectively, before peaking at €43.37 per MWh in the fifth week. The uplift total then plunged to €8.08 per MWh in the sixth week, before eventually falling further to levels of €5.74 and €5.87 per MWh in the ninth and tenth weeks, respectively.

Day-ahead market prices have also been low over the past two weeks of subdued balancing market costs, meaning the overall cost in the wholesale market has dropped.

Low electricity demand as a result of the mild winter weather, so far; the lockdown measures, even if not absolute; more accurate electricity demand forecasts by power grid operator IPTO; as well as increased output by RES and hydropower units, have all been cited as factors in the reduced cost of wholesale electricity.

In addition, more rational offers by producers have also contributed to the normalization of balancing market prices.

Balancing market prices down for third successive week

Posted on by admin

Balancing market price levels have fallen considerably for a third consecutive week, between December 21 and 27, latest figures published by power grid operator IPTO have shown.

According to this data, the balancing market price averaged 7.18 euros per MWh for the seven-day period, considerably lower than levels of about 10.5 euros per MWh registered a week earlier.

RAE, the Regulatory Authority for Energy, is making an effort to normalize the target model’s new markets, launched two months ago.

Balancing market prices rose sharply during the first few weeks of the launch, especially troubling non-vertically integrated suppliers and forcing the authority to prepare a price ceiling for producer offers.

The recent downward trajectory in balancing market prices has been interpreted as an effort for price restraint by producers.

RAE now considers that it should wait before imposing tough restrictions on producer offers.

 

 

Zenith, Fysiko Aerio, Watt+Volt want lower price ceiling for producers

Posted on by admin

Three non-vertically integrated electricity suppliers, Zenith, Fysiko Aerio (Attiki GSC) and Watt+Volt, have called for a further reduction to an upper limit proposed by RAE, the Regulatory Authority for Energy, for producer offers in the balancing market.

The three suppliers expressed their common view through a joint letter forwarded to a public consultation procedure staged by RAE on the matter.

Balancing market costs have soared since the launch of the target model’s new markets several weeks ago, placing non-vertically integrated suppliers under great pressure.

In other proposals, Zenith, Fysiko Aerio and Watt+Volts also called for retroactive implementation of the price ceiling proposal, from November 1.

The trio described the balancing cost surge of the past few weeks as a “brutal transfer of wealth”, warning that retroactive enforcement of the measures proposed for the restoration of a smooth-operating balancing market, from its very first day, represents the last resort to avoid legal disputes between parties involved.

 

IPTO to cover balancing costs if its discrepancies are hefty

Posted on by admin

The projection of required system reserves has been identified as one of the problems increasing balancing market costs, RAE, the Regulatory Authority for Energy, seeking to resolve the issue for properly functioning target model markets, and power grid operator IPTO, responsible for the balancing market, have both determined.

The reserve amount is directly linked to IPTO forecasts on the grid’s needs, at high and low levels. Either way, producers are compensated for adding or removing energy from the system.

Responding to the sharp rise in balancing costs since the target model launch of new markets several weeks ago, RAE, the Regulatory Authority for Energy, is preparing to make a change to the current framework by adopting a formula that would offer IPTO an incentive for forecasts that are as accurate as possible so as to avoid large discrepancies.

The authority is looking to impose a discrepancy limit, which, if exceeded, either at low or high levels, will require IPTO, not electricity suppliers, to cover resulting costs.

RAE has also forwarded for public consultation another revision entailing special discrepancy charges for the Peloponnesian grid until a 400-KV transmission line begins operating in the area.

 

 

Suppliers want lower price limits for producers, retroactive returns

Posted on by admin

Electricity suppliers are demanding a further reduction to a price ceiling proposed by RAE, the Regulatory Authority for Energy, for balancing market offers by gas-fueled producers, and, in addition, also want an upper limit of 3.5 euros per MWh imposed on compensation for this service.

This 3.5-euro compensation rate per MWh, which reaches approximately 5 euros per MWh when system-loss charges are added, is one of the highest in Europe, suppliers contend.

Suppliers also want electricity and balancing market cost limits to apply retroactively as of November 1, 2020 with returns of resulting amounts owed by the end of this accounting year.

Non-vertically integrated electricity suppliers have reacted strongly against sharply increased balancing market costs and far higher wholesale electricity prices since the launch of the target model’s new markets several weeks ago.

Three of the country’s non-vertically integrated electricity suppliers took part in public consultation staged by RAE, the Regulatory Authority for Energy, to present their objections and proposals, energypress sources informed. The procedure ended yesterday.

 

EVIKEN requests balancing market restrictions for at least 6 months

Posted on by admin

EVIKEN, the Association of Industrial Energy Consumers, wants a price ceiling imposed for at least six months in the balancing market, warning producers are seeking to elevate industrial electricity tariffs despite the absence of any corresponding production cost increases.

Restrictive measures for a three-month duration, as proposed by RAE, the Regulatory Authority for Energy, in its related public consultation procedure would not suffice, EVIKEN warned.

The association, in a letter submitted to the public consultation procedure, also requested retroactive implementation of a price ceiling in the balancing market, beginning November 1, 2020.

Balancing market costs have risen sharply since the launch of new target model markets six weeks ago, pushing up wholesale and retail electricity prices.

The electricity market’s current structure enables oligopolistic practices that are not subject to monitoring, EVIKEN noted in its letter.

RAE consultation on balancing market restrictions ends today

Posted on by admin

RAE, the Regulatory Authority for Energy, will need to make decisions following today’s conclusion of its public consultation on a price ceiling proposed by the authority for electricity producer offers in the balancing market.

The authority held a series of meetings yesterday with all producers operating gas-fueled power stations and will now need to decide on whether to incorporate observations made by producers into its plan as part of the effort to resolve issues that have become apparent during the first six weeks of the target model’s new markets, including the balancing market. Wholesale electricity prices have risen sharply.

Producers have tabled a number of varying, even conflicting, proposals. Some producers insist that the imposition of any restrictive measure runs contrary to the free-market principles promised by the target model. Others believe any restrictions should be set at low levels, but not as low as levels proposed by RAE.

Producers believe the balancing market’s problem is linked to energy quantities not price restrictions, warning that supply sufficiency problems could result during periods of high demand if levels as low as those proposed by RAE are eventually set.

Balancing market restrictions have applied until recently in more mature markets such as those of Belgium and the Netherlands. Balancing market conditions differ from country to country as respective levels of flexibility vary.

 

 

RAE discusses balancing market ceiling with producers

Posted on by admin

RAE, the Regulatory Authority for Energy, is staging a series of meetings today with major-scale electricity producers to discuss its proposal, forwarded for public consultation last Thursday, for the imposition of a price ceiling on offers made by producers in the balancing market. Its price levels have risen sharply since a launch several weeks ago as part of the target model’s new markets.

Representatives of three electricity producers, power utility PPC, Protergia and Elpedison, all vertically integrated, have been invited by the authority to separately present their views on its price-ceiling proposal before they submit their official views to the matter’s public consultation procedure by tomorrow morning’s 11am deadline.

Producers operating gas-fueled power stations are generally believed to oppose the prospect of a price ceiling on their offers, as they consider the balancing market to be a useful tool measuring supply and demand in the electricity market, as is the case around Europe.

RAE has attached a three-month limit on the duration of its price-ceiling proposal. Restrictive measures such as the authority’s proposal are generally not embraced by the European Commission, as RAE chief executive Thanassis Dagoumas has admitted.

Non vertically integrated electricity suppliers, hit hard by price rises in the wholesale electricity market, of which the balancing market is a component, have called for the restrictive measure to take retroactive effect. This is considered an unlikely prospect by market officials.

Many critics of the target model preparation procedure had warned that its new markets should not begin operating unless a RAE monitoring mechanism is in full working order.

Latest market data published by power grid operator IPTO showed a mild de-escalation of balancing market price levels to between 12 and 13 euros per MWh for December 7 to 13, the new target model’s sixth week, but these levels are still regarded as being excessive.

Market restrictions on the way for electricity cost reduction

Posted on by admin

Energy minister Costis Hatzidakis’ recommendations to gas-fueled electricity producers for price restraint in the market have proven to be just partially effective, prompting RAE, the Regulatory Authority for Energy, to forward for public consultation restrictive measures, which, when legislated, will limit the levels of offers by producers in the balancing market.

Balancing market costs have risen sharply over the past six weeks, since the launch of target model markets, leading to elevated wholesale electricity prices that are now being passed on to the retail market, affecting consumers in the mid and low-voltage categories – households and businesses.

Sixth week target model market data made briefly available yesterday by power grid operator IPTO before being swiftly removed from the company website admittedly showed a de-escalation of price levels compared to unrealistically high levels reached in recent weeks, but, on average, these latest levels remained considerably high.

Taking this latest data into consideration, along with sharp price hikes recorded in the day-ahead market, the energy ministry is fully aware of the fact that electricity market prices could spin out of control if action is not taken.

The package of measures forwarded by RAE for public consultation is intended to restore market rationalization. It remains to be seen if these measures will prove effective.

Non vertically integrated electricity suppliers, hit hard by the increase in wholesale prices, are pushing for retroactive implementation of these upcoming restrictions.

 

Suppliers, alarmed by higher balancing market cost, respond

Posted on by admin

Non-vertically integrated electricity suppliers, badly hit by sharply increased balancing market prices, as much as five times higher than pre-target model levels, will hold a virtual meeting today with officials at the European Commission’s Directorate-General for Competition to point out the target model’s negative impact on electricity market competition.

Power grid operator IPTO and RAE, the Regulatory Authority for Energy, have taken action and market officials are awaiting results.

Last Friday, RAE’s leadership held a series of meetings with supply company representatives.

Some non-vertically integrated suppliers have already taken legal action while others are expected to follow suit.

RAE had initially received requests by suppliers for temporary measures entailing an immediate suspension of their balancing market financial obligations. The authority did not respond, prompting suppliers to lodge a complaint with RAE against IPTO for a breach of obligations.

Suppliers, through their complaint, are demanding revisions from IPTO, with retroactive effect, as well as the imposition of a fine on the operator that corresponds to the losses incurred by non-vertically integrated suppliers since the target model’s launch of new markets over a month ago.

 

Target model balancing cost skyrockets, suppliers on edge

Posted on by admin

Balancing costs in the electricity market have exceeded rational limits, skyrocketing to 57 million euros in the fifth week of the target model after totaling 71 million euros during the model’s first four weeks of operation.

Stubbornly high price levels in the wholesale electricity market have created perilous conditions that could lead non-vertically integrated suppliers to bankruptcy, while consumers, beginning with the mid-voltage category, now face tariff hikes as a consequence.

Balancing market costs between November 30 and December 6 doubled compared to a week earlier.

Despite energy minister Costis Hatzidakis’ warning of intervention to producers, whose overinflated offers have prompted this ascent, balancing market costs on December 5 and 6 exceeded 20 euros per MWh, well over levels of between 3 and 4 euros per MWh prior to the target model.

The target model, designed to ultimately homogenize EU energy markets into a single unified market, has been pitched by the Greek government as a price-reducing tool.

Though authorities have played down the price ascent of recent weeks, describing it as a nascent target model abnormality that will settle into place and not prompt consumer tariff hikes, suppliers, under severe pressure as a result of sharp cost increases, have called for immediate measures.

Suppliers have warned they will take legal action against all responsible parties in letters forwarded to the RAE, the Regulatory Authority for Energy, the energy ministry and power grid operator IPTO.

RAE held a meeting yesterday with major-scale producers, who defended their actions, according to sources. The authority limited its reaction to proposals, the sources added.

Greek-Italian market coupling, soon, target model’s next step

Posted on by admin

Domestic market players and officials are eagerly awaiting to see how the target model’s next stage, Greek and Italian day-ahead market coupling, scheduled for December 15, will influence wholesale electricity prices.

Wholesale electricity prices in the day-ahead market and, especially, the balancing market, have escalated since the target model launch in Greece a month and a half ago.

Greece’s market coupling with Italy will be a crucial step as it promises to take Greece to the essence of the target model effort, namely gradual unification of national energy markets – electricity and gas – into one common European market.

Once market coupling is established between Greece and Italy, energy will flow from the country with lower energy prices to the higher-cost country – to the extent permitted by grid interconnection capacities – until price discrepancies have evened out.

All preliminary work for next week’s Greek-Italian market coupling launch has been successfully completed. An ongoing dry-run procedure involving simulated trading will continue until December 12.

The market coupling launch, three days later, is on schedule, the Greek energy exchange has informed RAE, the Regulatory Authority for Energy.

Market coupling of Greece and Italy’s balancing markets will take place at a latter date, while Greek-Bulgarian market coupling is planned for early in 2021.

Target model markets showing signs of price de-escalation

Posted on by admin

Price levels in new target model markets – the day-ahead market and the balancing market – are showing signs of de-escalation following sharp wholesale electricity price rises over the past month that have caused major unrest among suppliers.

Though balancing market prices over the weekend were at levels of around 20 euros per MWh, even higher than last Friday’s price level of 19 euros, market data indicates these levels will drop tomorrow.

Electricity producers have changed their pricing policy, lowering price offers submitted, which indicates that price reductions should be on the way.

The next few hours of trading will be pivotal in illustrating whether the balancing market price problem is a persisting one or not.

A reassessment of the situation will be made as of today before decisions are made, the energy ministry has announced. Last week, the ministry made clear it would not hesitate to intervene if wholesale prices remained elevated.

“The wholesale market price issue is a very significant one for the Greek economy and, under no circumstances, would we leave it unchecked,” a ministry official told energypress. “RAE [Regulatory Authority for Energy] is examining all available data and the government, too, has tools which it is prepared to use if the situation does not normalize,” the official added.

During the target model’s first month, the balancing market’s cost reached 36 percent of the equivalent cost for all of 2019, which had totaled approximately 200 million euros.

Balancing market cost hefty for suppliers, €27m in first 2 weeks

Posted on by admin

Contrary to the satisfaction being expressed by natural gas-fueled electricity producers over the target model’s new markets launched three weeks ago, electricity suppliers, especially those not vertically integrated, find themselves having to pay considerably higher prices for their electricity purchases, which has raised sustainability concerns and could also lead to higher electricity costs for consumers.

Balancing market prices have more than quadrupled, reaching levels of as high as 15 euros per MWh, compared to approximately 3 euros per MWh in the market system used prior to the launch of the target model markets.

This drastic increase has raised concerns among suppliers, who fear the higher cost will eventually need to be rolled out to consumers.

The balancing market’s additional cost for suppliers totaled 27 million euros in the first fortnight of November.

The effort to balance the system is costing consumers millions more, overall, suppliers have warned, noting that, contrary to other European markets, initiatives taken to further liberalize the electricity market are raising rather than lowering price levels for consumers in Greece.

RAE, the Regulatory Authority for Energy, is closely monitoring the situation. The authority believes it is still too early to reach any safe conclusions on the balancing market. If, however, the current situation stabilizes into a permanent condition, RAE will intervene with corrective action, it has informed.

 

Producers content with target model markets, suppliers edgy

Posted on by admin

Any nervousness felt by producers over the target model’s new markets ahead of their November 1 launch are swiftly being quelled by rational trading results. On the contrary, non-vertically integrated suppliers have experienced cost increases and, as a result, are concerned about their company prospects.

Although it still too early to tell, electricity producers believe day-ahead market prices are reflecting actual conditions, rising with shortages and falling with any oversupply.

Day-ahead market prices began at 60.44 euros per MWh on November 11, fell as low as 41.11 euros per MWh on Saturday and rose to 68.36 euros per MWh for today.

These price levels for the day-ahead market, known as the System Marginal Price under the previous system, are regarded as being at rational levels.

Producers have also expressed satisfaction over the balancing market, a largely unknown entity prior to the target model’s launch. Prices have been high, enabling units with flexibility to ensure solid earnings.

Day-ahead market prices are projected to fall, which would subsequently limit electricity imports and require domestic power stations to operate for longer hours.

Higher earnings for producers mean greater costs for suppliers. Non-integrated suppliers are concerned about their prospects under such conditions.

Higher gas prices, projected to rise further, not impacting demand

Posted on by admin

Higher LNG and pipeline gas prices resulting from new market conditions have not impacted gas demand in the Greek market, a key driver being opportunities presented to electricity producers by the target model’s new trading markets.

Latest data has shown a significant price increase in futures contracts at central European hubs, compared to levels recorded just a few weeks ago.

This price rise is seen as somewhat of a paradox given the pandemic’s second wave, now in progress, and its wider impact on demand.

Officials believe the current upward price trajectory heralds an upcoming new round of higher gas prices following extremely low prices in recent times. They sunk to a low in spring.

In Greece, LNG prices are currently rising at a steeper rate compared to those for pipeline gas. Despite this ascent, demand has so far remained strong and no cancellations have been reported for LNG orders to the Revythoussa islet terminal just off Athens.

Pundits have attributed the absence of any LNG order cancellations to the need of electricity producers to be stocked up on gas quantities in readiness for grid entry and utilization of opportunities offered by the target model’s new balancing market.

Wholesale prices up on first 2 days of target model trading

Posted on by admin

The target model’s launch over the weekend was successfully staged with a full field of 45 participating players, but wholesale electricity prices were pushed slightly higher.

Saturday’s day-ahead price for yesterday’s opening day ended at 53 euros per MWh before rising considerably to 61 euros per MWh yesterday for today.

This increase may be the result of a lack of confidence felt by players as they adjust to new market ways. In addition, the entry into the grid of high-cost lignite-fired power stations to cover telethermal systems is another factor.

Though producers, suppliers, traders and renewable energy players all actively traded for the target model’s launch, they have yet to fully come to terms with the new market conditions.

It is a matter of time before the model’s new markets – day-ahead, intraday, balancing – find their rhythm and price levels are normalized, energy sector authorities have noted.

No major issues concerning procedural or technical matters have been reported.

The intraday market launch was smooth. Prices ended at levels set by the day-ahead market as corrections were not made.

As for the balancing market, a brand new tool for the entire system, price levels ended as anticipated, at levels set during dry-run testing in the lead-up to the target model’s launch.

The target model, representing the Greek electricity market’s most significant reform, will enable market coupling with equivalent European markets, a development ultimately expected to reinforce energy security; offer consumers greater financial benefits through transboundary competition; prompt competitive pricing in the wholesale market; facilitate further RES penetration; and, by extension, hasten greenhouse gas emission reductions and the decarbonization effort.

IPTO, handling target model’s balancing market, set for launch

Posted on by admin

Power grid operator IPTO has declared being fully prepared for its imminent target model role of managing the balancing market, one of the new market systems to come into effect this coming Monday, when the target model is set to be launched.

Besides being tasked with managing the target model’s balancing market, IPTO, in a widely unknown role, will also be responsible for measuring overall operations of the target model.

The balancing market, an extremely complex market system requiring fundamental changes compared to current practices, will perform real-time balancing of demand against available offers.

The energy exchange will be responsible for the target model’s day-ahead and intraday markets.

In the lead-up to the forthcoming launch, IPTO, challenged by pandemic-related obstacles such as travel and staff restrictions, needed to make a series of coordinated efforts. These have included development of information systems and corresponding interface systems with the energy exchange (BMMS, MSS, XBMS and MODESTO), plus staff training.

The target model, representing the Greek electricity market’s most significant reform, is essential for market coupling with equivalent European markets.

The target model promises to reinforce the country’s energy security, offer consumers greater financial benefits through transboundary competition, lead to fair and competitive pricing in the wholesale market, while also facilitating further RES penetration, and, by extension, hastening greenhouse gas emission reductions and the decarbonization effort.

Minister urges target model readiness for smooth launch

Posted on by admin

Energy minister Costis Hatzidakis has urged all target model officials – including RAE, the Regulatory Authority for Energy; power grid operator IPTO; the energy exchange and EnExClear – to have resolved any pending issues so that a smooth launch of the model may be achieved on November 1.

Describing the upcoming date as historic for Greece’s energy sector, the minister was essentially conveying concerns of energy producers, traders and suppliers, not yet fully convinced that all market systems will be in full working order for the imminent launch.

The balancing market, in particular, remains a concern. The energy exchange is overseeing the day-ahead and intraday markets and IPTO will manage the balancing market.

Simulated dry-run testing of these markets, conducted for a period of over two months to test their limits and operating ability ahead of the target model launch, was completed about a fortnight ago.

Greece’s lead-up to the EU target model has been affected by a series of delays. Hatzidakis, the energy minister, is clearly determined to see the target model procedure through, not only because it is an EU commitment but also because of its prospective market and consumer benefits.

The target model will result in market coupling, or harmonization of EU wholesale markets, the intention being to eliminate market distortions and intensify competition.

A final full-scale test of all market systems is scheduled for October 27 while all is anticipated to be ready on October 30 ahead of the November 1 launch.