Energy ministry officials in Sofia for EU’s first regional energy platform

A first regional taskforce for cooperation between EU member states on energy matters, as part of the EU’s Energy Purchase Platform, is scheduled to meet in Sofia tomorrow, as announced earlier this week by European Commissioner for Energy Kadri Simson.

The regional taskforce will concentrate on the year ahead and provide specific regional expertise and know-how to develop and implement the REPowerEU action plan to reduce dependency on Russian fossil fuels, fill storage ahead of next winter and further accelerate the decarbonization of the energy sector.

This meeting comes following Russia’s recent decision to disrupt natural gas supply to Bulgaria as well as Poland.

The Bulgarian government has also organized a coinciding meeting of regional ministers. Greece’s energy minister Kostas Skrekas (photo) and the ministry’s secretary-general Alexandra Sdoukou will participate.

The two Greek government officials will be visiting Sofia on the heels of yesterday’s official launch of work on the Alexandroupoli FSRU, an LNG terminal project intended to diversify the energy sources of Greece and the wider region. Yesterday’s official ceremony was attended by heads of state representing Greece, Bulgaria, North Macedonia and Serbia.

During their visit to Sofia, the Greek energy ministry’s two officials are also expected to take part in a bilateral meeting with Bulgarian energy minister Alexander Nikolov.

This session’s agenda will examine the progress of the IGB gas pipeline, set to be completed and launched in July, and an electricity grid interconnection upgrade between the two countries, whose completion is expected by the end of this year.

The IGB gas pipeline, promising to contribute to the EU’s effort for drastically reduced dependency on Russian energy sources, will offer a second interconnection between Greece and Bulgaria, in addition to the nearby Sidirokastro link.

 

 

Alexandroupoli FSRU development launch today, pivotal project

Development of the Alexandroupoli FSRU in Greece’s northeast, a project promising to boost energy security by broadening energy source diversification for Greece and the wider Balkan region, is scheduled to officially commence today.

The prime ministers of Greece and Bulgaria, as well as Serbia’s president, will attend today’s official ceremony. The leaders will highlight the need for energy source diversification in the Balkans and reduced reliance on Russian natural gas.

The Alexandroupoli FSRU promises to establish Greece as a gas hub for transportation of LNG into the EU.

Natural gas consumption in southeast Europe totals between 10 and 11 bcm annually, half this amount provided by Russia.

The Alexandroupoli FSRU, expected to be ready to operate by the end of 2023, is planned to offer a capacity of approximately 5.5 bcm, greatly diversifying gas supply to southeast Europe.

The project is budgeted at 380 million euros, of which 166.7 million euros will be provided through the National Strategic Reference Framework (NSRF).

The Alexandroupoli FSRU will be linked with Greece’s gas grid via a 28-km pipeline, enabling gas supply to Greece, Bulgaria and the wider region, including Romania, Serbia, North Macedonia, Moldavia and Ukraine.

 

Alexandroupoli FSRU project development launch on May 3

Development of the Alexandroupoli FSRU, in Greece’s northeast, a project promising to boost energy security and widen energy source diversification in Greece and the wider Balkan region, is scheduled to officially commence on May 3.

The Alexandroupoli FSRU, to be developed and operated by Gastrade, a project-specific consortium established by the Copelouzos group, has become particularly crucial given the energy market challenges faced by the EU following Russia’s invasion of Ukraine and the ongoing war.

The Alexandroupoli FSRU promises to initially offer a new gas transmission corridor to Greece and Bulgaria, and, at a latter stage, to Romania and North Macedonia, helping all these countries reduce their reliance on Russian natural gas.

Completion of the project’s second stage, expected in 2024, promises to double the unit’s capacity and enable natural gas transportation as far as Ukraine.

The Gastrade consortium is comprised of five partners, founding member Elmina Copelouzos of the Copelouzos group, Gaslog Cyprus Investments Ltd, DEPA Commercial, Bulgartransgaz, and DESFA, Greece’s gas grid operator, each holding 20 percent stakes.

All five partners have agreed to offer 2 percent each so that North Macedonia can enter the consortium with a 10 percent stake.

Prime Minister Kyriakos Mitsotakis and his Bulgarian counterpart Kiril Petkov will attend next week’s ceremony marking the start of work on the project.

PM calls emergency meeting after Russia gas cut to Bulgaria

Prime Minister Kyriakos Mitsotakis will hold an emergency meeting this afternoon at the government headquarters with the energy ministry leadership’s participation following Russia’s decision yesterday to disrupt gas supply to Bulgaria, following a disruption to Poland.

The Greek leader had a telephone discussion with his Bulgarian counterpart Kiril Petkov this morning, pledging Greek energy-supply support, within the framework of EU solidarity, following Russia’s decision to disrupt supply to the neighboring Balkan country.

This support will most likely stem from Greece’s LNG terminal at Revythoussa, the islet just off Athens, through a partial reservation of this facility’s capacity for Bulgaria’s needs.

Consumption in Bulgarian at this time of the year is low, meaning supply through the Revythoussa unit should help cover the neighboring country’s needs, at least temporarily.

Bulgarian-based MET Energy has already ordered a 142,500 m3 LNG shipment through the Revythoussa terminal.

Revythoussa FSU 12-month rental or permanent solution

Greek authorities are making comparisons in preparation for a choice between an FSU one-year rental and a permanent floating storage unit at the Revythoussa LNG terminal as part of a plan to boost the country’s gas storage capacity ahead of next winter.

A decision for a capacity boost at the Revythoussa LNG terminal, with the addition of a fourth unit, has already been reached, highly ranked energy ministry officials have informed. A competitive procedure will be staged for the contract.

The option of renting an FSU for the Revythoussa LNG terminal, a facility operated by DESFA, the gas grid operator, would take approximately two months to complete, sources said.

This solution would make operations at the Revythoussa LNG terminal more flexible as it would enable unloading of two LNG orders simultaneously, instead of just one, as is the case at present.

A disruption of Russian gas supply to the EU would force all member states to try and secure additional LNG shipments.

The second alternative, entailing the installation of a permanent floating storage unit at the Revythoussa LNG terminal, would require more time to complete without offering any additional advantages, compared to the FSU rental, energy ministry officials noted.

Officials at RAE, the Regulatory Authority for Energy, are comparing market data such as domestic gas demand projections, and also considering Revythoussa’s prospects for a bigger role as a natural gas gateway for neighboring countries. Bulgaria and Romania are already using the Revythoussa terminal for LNG imports.

South Kavala UGS tender’s final round not until early summer

The final round of privatization fund TAIPED’s tender for a prospective underground natural gas storage facility (UGS) at the almost depleted natural gas field of “South Kavala” in the Aegean Sea’s north will not be held until early this summer following a latest deadline extension by RAE, the Regulatory Authority for Energy, on consultation regarding the facility’s business pricing framework, sources closely following the project’s developments have informed energypress.

Prior to this deadline extension, the overall procedure was delayed by several months as a result of a disagreement between RAE and gas grid operator DESFA over supplementary investments that would enable the country’s grid to cater to the needs of the UGS.

Consultation for UGS pricing framework proposals and other details, including DESFA’s ten-year development plan, was to expire on March 14, but RAE has offered participants an extension until March 30.

It is believed RAE’s text forwarded for consultation has been deemed far from satisfactory by prospective investors. If no changes are made, the tender could fail to produce a result, despite its long duration.

Such a prospect threatens to leave Greece as Europe’s only country without a single UGS for many years to come.

Elsewhere, EU member states are rushing to fill their UGS facilities ahead of next winter, following an order issued by the European Commission as part of a plan to drastically reduce Europe’s reliance on Russian gas.

The EU has a total of 170 UGS facilities, offering a total capacity of 4.2 trillion cubic metres. Germany tops the list with 60 facilities that represent 42 percent of the continent’s UGS capacity. France follows with 16 UGS facilities, Italy has 13 functional facilities and 7 under construction, while Romania has 8 UGS facilities and Bulgaria one.

 

 

Revythoussa LNG terminal to acquire fourth storage facility

Gas grid operator DESFA is preparing to upgrade its Revythoussa LNG terminal on the islet close to Athens by adding a fourth LNG storage unit at the facility as a means of further reinforcing the country’s energy system for greater energy-crisis protection.

According to sources, the operator has finalized its decision on the plan, to be developed as a floating storage unit (FSU), or permanently moored LNG tanker.

The FSU’s storage capacity is planned to exceed 100,000 cubic meters, almost half the Revythoussa facility’s current 225,000 cubic-meter capacity offered by three existing LNG storage tanks installed on the islet.

Besides bolstering the Greek energy system, the Revythoussa LNG terminal upgrade also promises to create supply opportunities for Balkan markets.

In the event of a disruption of Russian gas to the Balkans, the Revythoussa LNG terminal, as it stands, could cover basic energy needs of the Bulgarian market. The Revythoussa LNG terminal is already supplying Bulgaria.

The terminal was last upgraded in 2018 with the construction of a third LNG tank, a 148 million-euro investment that has enabled transmission of gasified LNG quantities amounting to five billion cubic meters annually.

 

IGB nearing completion, Bulgarian PM to visit Komotini

The Greek-Bulgarian IGB gas pipeline, whose construction is expected to be completed by mid-April, promises to contribute to the EU’s effort for drastically reduced reliance on Russian gas.

The IGB gas pipeline, a 50-50 joint venture of the ICGB consortium, involving Greek-Italian company IGI Poseidon (DEPA and Edison) and Bulgaria’s BEH, will run from Komotini, northeastern Greece, to Stara Zagora in Bulgaria and be linked with the TAP pipeline that runs across northern Greece for supply of Azerbaijaini gas to the region.

The IGB pipeline will offer a second interconnection between Greece and Bulgaria, in addition to the nearby Sidirokastro link.

Last week, EU officials announced a new energy strategy, Repower EU, aiming to reduce Russian gas imports to the continent by two-thirds. The establishment of alternative energy supply routes into Europe is now a priority on the Brussels agenda.

Bulgarian prime minister Kiril Petkov is scheduled to visit the IGB project contactor AVAX’s construction site in Komotini this Friday. His Greek counterpart Kyriakos Mitsotakis has been forced to miss the occasion after being sidelined by the Covid-19 virus. Energy minister Kostas Skrekas will fill in.

DEPA Commercial plans extra LNG orders for March, April

DEPA Commercial is planning to place extra LNG orders for March and April as a result of higher consumption levels at natural gas-fired power stations, prompted by increased electricity exports, as well as a greater level of natural gas exports to Bulgaria.

The gas company intends to import three LNG shipments in April and is also considering an additional LNG order for this month, which would be shipped in along with a 40,000-cubic meter order placed by energy company Elpedison, scheduled to arrive in just a few days, on March 13.

Should DEPA Commercial go ahead with this latter March order, it would be the gas company’s second for the month. DEPA Commercial has already placed a 73,855-cubic meter LNG order that is due to arrive tomorrow.

Natural gas-fired power stations in Greece have been operating at full capacity in recent times to cover increased electricity exports to neighboring countries, where electricity prices have exceeded those of the Greek market.

Two days ago, electricity exports reached 27.5 GWh, while electricity imports were under 6 GWh.

Additional natural gas exports to Bulgaria in recent times have also prompted the need for more LNG in Greece.

To date, four LNG orders for March, totaling 261,447 cubic meters, have been placed by three companies, DEPA Commercial, Mytilineos and Elpedison.

In general, enterprises are moving cautiously with any extra LNG orders as a result of fluctuating natural gas prices in international markets. Companies placing gas orders at current price levels could be set back millions by any sudden price dip.

 

Greece, Bulgaria in talks for nuclear power supply deal

Greece and Bulgaria are engaged in preliminary talks exploring the possibility of a long-term agreement that would secure fixed amounts of electricity imports to Greece from a prospective nuclear power station in the neighboring country, the Bulgarian government’s deputy prime minister and finance minister Asen Vasilev has told local TV station Nova.

Greek government sources confirmed the news in comments to energypress, noting that talks aiming for such as an agreement have begun.

This would help bolster Greece’s energy security, given the wider insecurity created by Russian’s invasion of Ukraine. Greece would be supplied the majority of electricity produced by the prospective Bulgarian nuclear plant, it is understood.

Bulgaria’s nuclear power company would establish long-term supply agreements with one or more Greek electricity suppliers, sources said.

Early last week, a delegation of Bulgarian ministers visited Athens for a series of meetings, including with Greek prime minister Kyriakos Mitsotakis, energy-sector collaboration between the two countries being high on the agenda.

Physical delivery limit eased for bigger suppliers, except PPC

RAE, the Regulatory Authority for Energy, has relaxed, as of 2022, a limit on bilateral agreements established by energy suppliers with market shares in excess of 4 percent, which restricted their physical deliveries to 20 percent of total sales, increasing this limit to 40 percent.

However, RAE has maintained the 20 percent limit for power utility PPC until the end of 2022.

RAE had imposed the 20 percent limit on bilateral agreements since the launch of the target model, before extending the measure through 2021.

Virtually all of the country’s vertically integrated energy suppliers have been subject to the restriction.

RAE, in announcing its revision of the limit, noted that new electricity markets have now been operating for a year, achieving sufficient liquidity in the day-ahead market but not in the futures market.

The authority also pointed out that single day-ahead coupling with the Italian and Bulgarian markets in December, 2020 and May, 2021, respectively, have led to satisfactory price-level convergence with southeast European markets.

Bulgaria power imports lower wholesale price, down 12.28%

Wholesale electricity prices in the Greek energy exchange’s day-ahead market have plunged by 12.28 percent, driven down by electricity imports from Bulgaria, following a continual price surge over five consecutive days.

Even so, Greece’s wholesale electricity prices levels are the third highest in Europe. Day-ahead market transactions in today’s day-ahead market will average 250.22 euros per MWh, down from 285.24 euros per MWh a day earlier.

Significant price reductions were also registered throughout Europe, suggesting that a de-escalation process could now be underway following alarm in markets prompted by a sharp drop in temperatures in central and western Europe, as well as windless conditions that restricted wind energy production.

Winds have now lifted, offering increased wind energy contributions to the EU energy mix, which has led to big price reductions in day-ahead markets. Wholesale electricity prices in Belgium and Germany fell by 10 and 22 percent, respectively, and dropped nearly 9 percent in France and by more than 12 percent in Italy.

The plunge in Bulgaria reached 22 percent to 217.25 euros per MWh. This sharp drop in the neighboring market has helped reduce the overall cost of Greece’s energy mix as a result of lower-cost electricity imports from Bulgaria.

For today’s trading, electricity imports constitute 13.42 percent of Greece’s energy mix, renewable energy accounts for 28.31 percent, and natural gas-fueled generation represents 47.24 percent of the mix.

 

 

Foreign institutional investors hold 50% of PPC for first time

Power utility PPC is entering a new era following yesterday’s completion of the corporation’s equity capital raise, which lowers the Greek State’s share in PPC below 51 percent, to 34 percent, for the first time in the utility’s 70-year history. Foreign institutional investors now hold an overall 50 percent stake in PPC, up from 27 percent, while domestic stakeholders have a 16 percent share.

Greek governments will no longer be able to do as they please with PPC. Issues concerning management, policies, strategic decisions and new hirings will now require the approval of foreign investors at the general shareholders’ meetings. The Greek State will remain influential with its 34 percent stake.

The corporation’s new equity line-up promises to transform PPC into a far more efficient corporation capable of achieving more favorable terms in capital markets.

The Covalis and Zimmer funds, among the new multinational stakeholders, specialize in utility investments. Wellington is regarded as a highly selective fund, more so than Blackrock, also part of PPC’s new equity line-up.

PPC easily achieved its 1.35 billion-euro target through the equity capital increase. The business plan, approved on the eve of the equity capital increase, envisions investments worth 8.4 billion euros between 2022 and 2026, but the amount is now seen rising to 9.3 billion euros. Investments are planned in renewables, networks, Balkan investments and waste management.

More than half the sum of new investments, or 55 percent, is planned for the RES sector, both in Greece and abroad. A further 20 percent is planned for distribution networks, 7 percent for conventional energy sources, 4 percent for waste-to-energy units and 3 percent for retail concerns.

Geographically, 85 percent of PPC’s new investments will be made in Greece, and 15 percent in the Balkans, primarily in Romania and Bulgaria.

PPC makes waste-to-energy plans, RES moves worth €2bn in Balkans

Power utility PPC plans to develop waste-to-energy plants and also make RES investments in the Balkans worth two billion euros, a bulleting attached to the corporation’s ongoing equity capital raise, offering an update on the board’s strategic plan, has revealed.

The book building process, which began yesterday, will run until Thursday. Investors anticipate that PPC will enter new circular economy activities and also expand its green interests beyond Greece’s borders.

PPC expects to raise 1.35 billion euros through the equity capital raise, which will partially fund the corporation’s ambitious 5 billion-euro investment plan covering 2022 to 2024.

The power utility had initially announced a plan to enter the waste-to-energy sector in 2020 and is now reviving this part of its strategic plan.

This plan is in line with the overall national policy for waste management, developed in response to condemnation by European institutions of Greece for the country’s uncontrolled landfill management.

The power utility is expected to adopt advanced waste-to-energy technologies used in Europe’s north for the development of units making minimal environmental impact.

As for renewable energy, PPC has planned investments worth two billion euros between 2022 and 2026. Of this total, 820 million euros is planned to be invested between 2022 and 2024 and 1.11 billion euros from 2024 to 2026, according to the equity capital raise’s bulletin.

These sums are expected to be used for RES portfolio acquisitions. PPC is aiming for a green portfolio of 7.2 GW by 2024 to include extensive investments in the Balkans. Bulgaria and Romania are being targeted as markets of major potential.

 

PPC: EBITDA green exposure to 39%, Balkan investments

Power utility PPC’s chief executive Giorgos Stassis, in an extensive update to analysts following the announcement of a 750 million-euro equity capital increase plan, described the utility of the future as a radically transformed company to be primarily based on green energy production.

Stassis, who was addressing approximately 120 analysts, noted that the equity capital increase plan’s timing reflects current opportunities for PPC as well as the country’s needs.

Besides takeover opportunities in Balkan markets and RES sector investments that will help Greece achieve its energy and climate plan objectives, the country will also decrease its exposure to energy imports at fluctuating price levels, according to the chief executive.

The equity capital increase, Stassis noted, will enable PPC to carry out an 8.4 billion-euro investment plan by 2026, its objectives including the installation of RES units with a total capacity of 9.1 GW.

The utility has set an objective for a green-related EBITDA exposure of 39 percent by 2026, up from 17 percent at present.

PPC’s push for greater Balkan presence is planned to begin with projects in Romania and Bulgaria.

Romania’s RES market is growing at an annual rate of 8 percent, the country’s objective being to reach an installed capacity of 6 GW by 2030. Bulgaria’s RES market is growing at an even greater rate, 15 percent. The neighboring country’s objective is to have installed a further 3 GW by 2030.

 

PPC planning equity capital increase, big funds involved

Power utility PPC will proceed with a 750 million-euro equity capital increase, effectively a partial privatization coming twenty years after a previous round at the bourse that will result in a decrease of privatization fund TAIPED’s current stake in the company from 51 percent to 34 percent.

The company administration’s step back for a minority share, plus management, aims to maximize the participation of foreign institutional investors, who, along with local investors, are expected to easily cover the equity capital increase’s financial demands.

US, British and northern European funds are among the interested parties, private talks held over the past six months, at least, have indicated, energypress sources informed.

Blackrock, EBRD, Fidelity, Apollo, Carmignac, Twenty Four AM, Bluecrest, Pictet, Union Investments, Sona Asset Management, Barings, Aperture, Saba Capital and Vontobel are funds that could be involved, it is believed.

The equity capital increase paves the way for the influx of capital that will contribute to PPC’s 8.4 billion-euro investment plan until 2026, currently ranked as the most ambitious in the Greek market.

Besides the installation of RES units with a total capacity of 8.1 GW, PPC also aims to branch out into the Balkans, beginning with projects in Romania and Bulgaria.

Romania’s RES market is growing at an annual rate of 8 percent, the country’s objective being to reach an installed capacity of 6 GW by 2030. Bulgaria’s RES market is growing at an even greater rate, 15 percent. The neighboring country’s objective is to have installed a further 3 GW by 2030.

Positive start for Greek, Italian, Slovenian intraday coupling

The coupling of the Greek, Italian and Slovenian intraday markets took a positive first step yesterday with a successful trial. According to Greek energy exchange sources, the transition from local intraday auctions (LIDAs) to regional intraday auctions (CRIDAs) covering the three countries was successfully completed.

Two complementary CRIDAs have been staged without any problems, while a third session is scheduled to take place early today.

The first CRIDA session ended with electricity price levels at 149.64 per MWh, 14.31 percent below the LIDA auction level recorded a day earlier. The initial CRIDA session’s transactions represented a total electricity amount of 2.53 GWh.

As a result of the market coupling, intraday market transactions will no longer be limited to domestic restrictions but will also utilize the capacity of the Greek-Italian grid interconnection left over once electricity import and export activity, through day-ahead markets, has been completed by the two neighboring countries.

Utilization of the grid interconnection’s leftover capacity will offer greater flexibility to suppliers, producers and self-supplying consumers.

The coupling of the Greek, Italian and Slovenian intraday markets represents a first step towards European intraday market unification.

It is planned to be followed, on March 8, by Greece’s entry into the European Cross-Border Intraday Market (XBID), offering continual intraday market transactions, via Italy and Bulgaria.

PPC to partially absorb power costs, Brussels action imminent

Power utility PPC has decided to pursue a policy that will partially absorb electricity market price increases prompted by a volatile combination of unfavorable factors.

The utility plans to limit the impact of carbon emission costs and not pass on the entirety of their effect to consumers.

Competitors will either have to follow suit and subdue price hikes, which will hurt their financial results, or risk suffering market share losses.

The response of PPC’s rivals remains unclear at this stage. Marker players are now trying to estimate the duration of this unfavorable period of elevated prices.

Natural gas prices have surged, driven by Russia’s decision to slow down gas supply to Europe, presumably to pressure Brussels into brushing aside its reservations about a new Nord Stream pipeline from Russia to Germany. Also, CO2 emission costs have continued to rise.

CO2 emission cost futures contracts for December are stuck at levels of between 61 and 62 euros per ton, while analysts forecast levels of 65 euros per ton over the next few months, or possibly longer.

Given these factors, analysts believe it is a matter of time before the European Commission intervenes in an effort to deescalate market price levels by subduing CO2 emission costs and increasing its pressure on Moscow for a return to normal gas supply levels to Europe.

Otherwise, market conditions will become increasingly volatile with social repercussions, especially in countries experiencing extreme price increases that have been even greater than those in Greece.

In Bulgaria, for example, wholesale electricity prices have skyrocketed to more than 100 euros per MWh, well over the country’s usual levels of about 30 euros per MWh.

Greek-Italian-Slovenian intraday market coupling in autumn

Market coupling of the Greek, Italian and Slovenian intraday markets has been scheduled for September 21 through complementary regional intraday auctions (CRIDAs), a further step towards full unification of the European electricity market.

This market coupling move promises to bolster the liquidity of Greece’s intraday market, which has remained subdued since its launch several months ago, while also easing balancing market burdens of participants.

A liquidity boost in the intraday market is necessary for optimal management of intermittent production, as is the case with most RES units.

Greece’s coupling with Italy and Slovenia constitutes the first step in this direction, the intention being to avoid significant discrepancies for RES units and costs they cause.

The degree to which this coupling step will impact Greece’s intraday market remains to be seen, given the limited capacity of an existing subsea cable linking Greece and Italy, offering 500 MW.

This interconnection will require a capacity boost if high-level intraday market activity is to be achieved, as the infrastructure will need to be able to facilitate physical deliveries of electricity amounts ordered.

Also, the interconnection’s leftover capacity for intraday market trading will depend on the level of electricity import and export agreements established through the preceding day-ahead market.

For example, if, on certain days, the interconnection’s capacity is entirely taken up for day-ahead transactions, then intraday market trading will not be possible.

A second step in the coupling of Greece’s intraday market is planned with the country’s entry into the continual XBID (Cross Border Intraday) market with Italy and Bulgaria, planned for the first quarter of 2022.

Mytilineos considering new gas-fired power units in Balkans

The Mytilineos group is examining the prospect of developing natural gas-fired power stations in Bulgaria and North Macedonia, seeing investment opportunities, like Greece’s other major energy players, in the Balkan region.

EU members Bulgaria and Romania, as well as non-EU members in the Balkan region, such as Albania, North Macedonia and Serbia, are announcing closures of old coal-fired power stations.

This development is creating investment opportunities as older units being withdrawn will, over the next few years, need to be replaced by new facilities, including natural gas-fired power stations.

A month ago, after receiving equipment for a new gas-fired power station unit in Agios Nikolaos, Viotia, northwest of Athens, Mytilineos informed that the company is examining the prospect of developing a similar combined cycle unit in Bulgaria.

Bulgaria, like Greece, is withdrawing its coal-fired power stations and aims to have completed the country’s decarbonization effort by 2025. The neighboring country will need to replace lost capacity through the introduction of natural gas-fired power stations and RES unit investments.

Extremely higher carbon emission right costs have made the withdrawal of coal-fired power stations a priority for Bulgaria and the wider region, one of Europe’s most lignite-dependent areas.

Greece, Bulgaria and Romania, combined, represent nearly ten percent of the EU’s total lignite electricity generation capacity.

Carbon emission right prices relaxed to 49.26 euros per ton yesterday after peaking at 56.65 euros per ton last Friday, following a months-long rally.

Last week, during a meeting with Greek Prime Minister Kyriakos Mitsotakis, North Macedonian leader Zoran Zaev disclosed that his government is discussing the prospect of a new gas-fired power station, in the neighboring country, with Mytilineos.

In Romania, projections for 2030 estimate the installation of 5.2 GW in wind energy units and approximately 5 MW in solar energy units.

Serbia, possibly offering even bigger green energy investment opportunities, aims to replace 4.4 GW of coal-fired generation by 2050. The country is now making plans for 8-10 GW in RES investments.

PPC power plant in northeast to rely on new Bulgaria, Turkey grid links

New transboundary grid interconnections with Bulgaria and Turkey will seemingly play a pivotal role in the sustainability of a new 665-MW gas-fueled power station planned by power utility PPC in Komotini, northeastern Greece, judging by estimates at RAE, the Regulatory Authority for Energy.

The authority has already issued a production license for this unit, which PPC aims to launch by the end of 2024, despite the fact that five other investments plans for new gas-fueled power stations, promising additional total capacity of 3.2 GW, already exist, including a Mytilineos group unit already under construction.

According to a related report submitted by RAE to Greek Parliament, the National Energy and Climate Plan foresees an increase in installed natural gas-fueled power stations from 5.2 GW in 2020 to 6.9 GW by 2025, a 1.7 GW increase.

Given these figures, RAE presumably considers that the development of all planned units will not be possible. Instead, market forces will determine which of the investors will be able to proceed with their plans, based on individual company feasibility studies.

Power grid operator IPTO’s ten-year development plan covering 2021 to 2030, expected to soon be approved by RAE, includes projects designed to bolster the grid in the east Macedonia and Thrace regions of northeastern Greece, and also reinforce the grid interconnections of these regions with the North Aegean islands, Bulgaria and Turkey.

PPC eyeing Bulgaria, Romania, Serbia for RES investments

Power utility PPC is looking to make its next major investment moves in the neighboring countries of Bulgaria, Romania and Serbia, solar energy and hydropower projects being a priority.

RES activity has soared in these three countries over recent years and is expected to continue.

PPC, which has not taken any investment initiatives abroad in quite a few years, anticipates it will be ready to announce details on major-scale solar farm projects in these countries towards the end of the year.

Bulgarian officials are making plans for 2.64 GW in new RES installations by 2030, of which 2.2 GW will concern solar farms, according to the country’s ten-year climate plan.

In Romania, the country’s 2030 projection is for investments reaching 5.2 GW in wind farm investments and approximately 5 GW in solar farms.

Serbia, possibly offering the biggest green energy investment opportunities among these three countries, will need between 8 and 10 GW in RES investments to replace coal-fired generation with a capacity of 4.4 GW by 2050, deputy energy minister Jovanka Atanackovic recently announced.

A first round of wind and solar project auctions is planned to take place in Serbia by the end of this year.

A month and a half ago, a partnership involving PPC and international contractor Archirodon advanced to the second round of a tender staged in North Macedonia for construction and operation of a major hydropower plant, Cebren, budgeted between 500 and 600 million euros and with a capacity between 333 and 458 MW.

PPC will continue to pursue this Cebren contract but its main focus will be on Bulgaria, Romania and Serbia and their solar energy project opportunities, sources informed.

 

 

EastMed alliance broadens, eight countries express support

Support for the EastMed pipeline, planned to transport natural gas from offshore Levantine Basin gas reserves in the southeast Mediterranean to Greece and further into Europe, is growing in numbers with an initial Greek-Israeli-Cypriot alliance promoting this project now joined by five additional partners, Bulgaria, Romania, Hungary, Serbia and North Macedonia.

Energy ministers representing these eight countries forwarded a letter of support for the EastMed project to the European Commissioner for Energy Kadri Simson late last week, Greece’s energy and environment minister Kostas Skrekas has told local media.

The pipeline, to be developed by IGI Poseidon SA, a 50-50% joint venture between Greek gas utility DEPA and Italian gas utility Edison, is planned to cover a 1,470-km distance.

IGI Poseidon plans to develop EastMed all the way to Italy via Cyprus, Crete, the Peloponnese, mainland Greece and Epirus, the country’s northwestern flank.

This latest move, bringing the eight energy ministers together for the joint letter, was initiated by Skrekas, Greece’s energy minister, sources informed, following an initiative taken two months earlier by his Israeli counterpart Yuval Steinitz to organize a joint virtual conference involving ministers of all eight countries.

In their letter to Simson, the EU energy commissioner, the eight ministers highlight the importance of EastMed, noting the project promises to contribute to the wider region’s energy security and offer benefits to consumers as a result of increased competition and reduced natural gas price levels.

Regional gas interconnections, including the Greek-Bulgarian IGB, Bulgarian-Serbian IBS, Bulgarian-Romanian IBR and the Romanian-Hungarian IRH would be utilized to extend EastMed’s reach, the letter notes.

Greece and North Macedonia are currently planning a new gas pipeline interconnection whose Greek segment is being promoted by gas grid operator DESFA.

IPTO seeking active role in Cyprus, Israel, Egypt grid interconnections

Power grid operator IPTO is seeking an active role in the grid interconnections to link Greece with Cyprus and Israel, as well as Egypt, the company’s chief executive Manos Manousakis told yesterday’s Power and Gas Supply Forum, an online event staged by energypress.

Responding to questions as to whether IPTO is considering to acquire an equity stake in these projects, Manousakis noted that the operator’s role is to ensure the interoperability of the Athens-Crete and Crete-Cyprus power grid interconnections, a commitment made by the Greek government back in October, 2019.

The European Commission, engaged in ongoing exchange with IPTO in an effort to understand the level of maturity of these grid interconnection projects and, primarily, the interoperability of its systems, has mentioned that Brussels would be interested in the equity involvement of a European TSO, Manousakis informed.

Other priorities at IPTO include upgrading and expanding Greece’s grid interconnections with neighboring countries, which would boost cash flow in the domestic energy market through electricity exports, the chief executive noted.

A tender for the development of the local segment of a second transboundary grid interconnection linking Greece and Bulgaria, from Nea Santa, northeastern Greece, to Bulgaria’s Maritsa area in the south, will be completed this year, Manousakis informed.

New interconnections with Albania and North Macedonia are also being examined at present, he noted.

In addition, IPTO is close to signing a cooperation agreement with Italian operator TERNA for the development of a second Greek-Italian grid interconnection.

Furthermore, plans for an upgrade of the Greek-Turkish interconnection, a project linking the European and Turkish transmission systems, are also maturing, the IPTO chief informed.

 

 

Greek market coupling with Bulgaria scheduled for May 11

Greece’s next market-coupling step, a day-ahead market link with Bulgaria, following an equivalent step with Italy in December, is scheduled to take place on May 11 as part of a wider effort by Europe’s Nominated Electricity Market Operators and Transmission System Operators for a single European day-ahead market.

Preceding trial runs, started on March 16 and planned to take place until April 30, must be successfully completed before the Greek-Bulgarian day-ahead market link is given the green light for its launch.

Automatic energy flow from the more expensive to the less expensive electricity market is expected to initially prompt a slight reduction in domestic wholesale electricity prices.

Greater price convergence between the Greek and Bulgarian markets is expected to be achieved with the introduction of a second transmission line running from Nea Santa, northeastern Greece, to Bulgaria’s Maritsa area in the south. This second line promises to greatly boost transmission potential between the two countries.

The additional transmission line was originally slated for launch in 2023, but swift progress from the Bulgarian side has increased the likelihood of an earlier delivery, mid-way through 2022, according to Greek power grid operator IPTO’s ten-year development plan (2022-2031), forwarded for public consultation at the beginning of this year.

Until now, Bulgaria has clearly been the dominant electricity exporter in trading with Greece, but this role is expected to be reversed as of 2023 because Greek electricity prices will be relatively lower, according to ICIS, a specialized news portal covering energy and related domains.

RES spatial plan to be delivered within 2021, Action Plan notes

The completion of a RES sector spatial plan within the current year has been included in an energy ministry Action Plan for 2021, just published along with the respective action plans of all other ministries.

The energy ministry’s action plan lists interventions planned for 2021 in nine areas under its authority, including energy-sector privatizations, energy market reforms, support for decarbonization and recycling, adoption of circular economic principles, greenhouse gas emission reduction, the tackling of climate change effects, as well as green energy transition.

RES sector measures this year will help cut down the time needed by new RES projects for licensing procedures to two years, the ministry anticipates in its action plan.

It also expects the installation, by the end of the year, of at least 2,000 recharging units for electric vehicles in public areas, including along highways, and at private properties, including domestic and commercial.

On the privatization front, the energy ministry expects all seven energy privatization plans to have been completed or reached an advanced stage by the end of the year.

On energy market reforms, the adoption of a remuneration mechanism for grid sufficiency, to replace a transitional mechanism remunerating flexibility, is a standout feature.

The energy ministry also intends to adopt, as Greek law, an EU directive promoting energy storage and demand response systems.

The ministry’s action plan also anticipates the signing of agreements this year for distribution network development and RES penetration support. It also expects DEDDIE/HEDNO, the distribution network operator, to announce a tender for the installation of smart power meters within the current year.

Taking into account plans by DEDDIE/HEDNO and power grid operator IPTO, the ministry expects investments in distribution and transmission networks to reach one billion euros this year.

Investments for gas network upgrades and expansion are expected to reach at least 300 million euros, primarily driven by projects planned by gas distributor DEDA, covering all areas around the country except for the wider Athens, Thessaloniki and Thessaly areas.

On international projects, the action plan notes that a Greek-Bulgarian gas pipeline project, the IGB, promising to significantly diversify Greece’s gas sources, will be completed by the end of 2021.

A latest edition of the Saving at Home program subsidizing energy efficiency upgrades of properties, budgeted at one billion euros, will stimulate work on 80,000 buildings in 2021, according the energy ministry’s action plan.

This activity will contribute to a National Energy and Climate Plan objective for an improvement, by 2030, of energy efficiency at buildings by 38 percent, reducing energy consumption to levels below those registered in 2007, the action plan notes.

 

Market coupling with Bulgaria expected by early May

Market coupling to unify the Greek and Bulgarian day-ahead markets, representing a second step for the participation of Greek wholesale electricity markets in a pan-European unification of markets through the target model, is planned for late April or early May, sources have informed.

The forthcoming step was preceded by market coupling between Greece and Italy, unifying, as of December 15, the day-ahead markets of the two countries through a single price coupling algorithm, EUPHEMIA (Pan-European Hybrid Electricity Market Integration Algorithm). It calculates energy allocation, net positions and transboundary electricity prices.

Greece’s market coupling with Bulgaria promises to create an even broader trading platform for market participants, sector officials noted. Besides bilateral contracts for energy imports and exports, market coupling will also facilitate automatic energy flow from the higher-priced country to the lower-priced country.

To date, Greece has clearly been an energy importer in its transboundary energy trading relationship with Bulgaria. It remains to be seen if this will be maintained under the new conditions.

Once market coupling of the Greek and Bulgarian day-ahead markets has been accomplished, Greece’s next step towards unification with European energy markets will be to link its intraday market with that of Italy, a step expected by next summer, through the implementation of complementary regional intraday auctions (CRIDA).

Further ahead, a third step, balancing market coupling through two European platforms, MARI (Manually Activated Reserves Initiative) and PICASSO (Platform for the International Coordination of Automated Frequency Restoration and Stable System Operation), is planned for the second half of 2022.

 

Alexandroupoli FSRU 2Q investment decision, work to start in ’21

The shareholders of Gastrade, a company founded by the Copelouzos Group for the development and operation of the Alexandroupoli FSRU planned for Greece’s northeast, are gearing up for an investment decision, expected in the second quarter, ahead of the beginning of the project’s development, anticipated within the current year.

Gastrade’s shareholders will most likely make an investment decision in May, sources informed.

The consortium’s shareholders are currently awaiting final administrative details that will formalize the entry into Gastrade of Bulgaria’s Bulgartransgaz and DESFA, the Greek gas grid operator.

Last week, Thanassis Dagoumas, the head official at RAE, the Regulatory Authority for Energy, approved the transfer of a 20 percent Gastrade stake from the Copelouzos Group’s Asimina Eleni Copelouzou to the Bulgarian gas company.

Copelouzou now controls 40 percent of Gastrade, with three stakeholders, Gaslog, DEPA Commercial and Bulgartransgaz each holding 20 percent.

Within the next few weeks, the RAE chief is also expected to endorse a further 20 percent transfer from Copelouzou to DESFA, giving the consortium’s five partners equal shares of 20 percent each.

Gastrade has already announced a tender offering an EPC contract for the floating LNG terminal in Alexandroupoli. Participants face a February 18 deadline.

An investment decision promises to push forth engineering studies, including geotechnical, as well as the order of a floating vessel for the project during the year. The FSRU will be completed in 2023, Gastrade shareholders have announced.

The shareholders appear receptive to the idea of North Macedonian involvement in the Gastrade consortium. They are awaiting bilateral developments at a diplomatic level, sources informed.

Gas developments in the East Med

The international oil companies (IOCs) are still reeling under the impact of low oil and gas prices and massive losses and asset write-offs during 2020. ExxonMobil, under increasing pressure, is considering further spending cuts and even a shake-up of its board.

The path to full recovery will be slow and at the end of it, in 2-3 years, the IOCs will be different, placing more emphasis on clean energy and renewables.

In the meanwhile, around the East Med, Egypt is forging ahead. It has signed a new exploration agreement with Shell for an offshore block in the Red Sea. This is in addition to the 22 agreements signed during 2020 that included major IOCs such as ExxonMobil, Chevron, Shell, BP, Eni and Total. Moreover, EGPC and EGAS are planning to offer onshore and offshore exploration blocks for bidding in February.

This continuing activity led to the discovery of 47 oil and 15 natural gas fields in 2020, 13% more than in 2019, despite Covid-19.

Tareq El-Molla, Egypt’s petroleum minister, signaled earlier this month Egypt’s intention to expand its petrochemicals sector to take advantage of the country’s expanding hydrocarbon resources. Egypt has updated its petrochemical national plan until 2023 to meet the increasing prospects in this industry.

LNG exports

Egypt has also benefited from the recent increase in LNG prices, resuming exports from its liquefaction plant at Idku, with most exports going to China, India and Turkey. The country is also ready to resume exports from its second liquefaction plant at Damietta starting end February. This has been lying idle since 2012 due to disputes that have now been resolved.

LNG exports will mainly utilize surplus gas from the Zohr gasfield and possibly imports from Israel, should prices allow it.

In fact, the resumption of LNG exports from Idku relieved some of the pressure on Egypt’s gas market, which is in oversupply partly due to impact of the pandemic, but also due to falling gas demand in Egypt’s power sector and growth in renewable energy.

El-Molla said that Egypt is planning a revival of its LNG exports. But this depends greatly on what happens to global markets and prices.

The International Energy Agency (IEA) said that the Asian LNG demand and price spike in January was a short-term phenomenon and it is not an indicator that global demand will rebound in 2021. The IEA expects only a small recovery in global gas demand this year, after the decline in 2020, partly due to the pandemic. But given ongoing concerns over the pandemic, the rate of gas demand growth will remain uncertain. The IEA said the longer-term future of LNG markets remains challenging.

Gas from Israel

Chevron – having acquired Noble Energy and its interests in the region last year – with Delek and their partners in Israel’s Leviathan and Tamar gasfields, signed an agreement to invest $235million in a new subsea pipeline, expanding existing facilities. According to an announcement by Delek, the pipeline will connect facilities at Israeli city Ashod to the EMG pipeline at Ashkelon, enabling Chevron and its partners to increase gas exports to Egypt to as much as 7billion cubic meters annually (bcm/yr).

The partners signed agreements last year to export as much as 85bcm/yr gas to Egypt over a 15 year period. Gas supplies from Israel to Egypt started in January last year.

It is not clear at this stage if new agreements will be reached to fully utilize the increased export capacity from Israel to Egypt, but given Egypt’s gas oversupply this may not be likely.

These developments, though, show the vulnerability of Cyprus and the weakness of relying on trilateral alliances with Egypt and Israel for its gas exports.

EastMed gas pipeline

This is being kept alive by regional politicians. Only this week, Greece, Cyprus, Israel, Bulgaria, Hungary and Serbia confirmed their support for the EastMed gas pipeline.

While such developments are good politically, bringing like-minded countries around the East Med closer together, they are not sufficient to advance the project. This requires private investment and buyers of the gas in Europe. None of these is forthcoming, because the project is not commercially viable. By the time the gas arrives in Europe it will be too expensive to compete with existing, much cheaper, supplies.

Europe is also moving away from gas and from new gas pipeline projects. Catharina Sikow Magny, Director DG Energy European Commission (EC), covered this at the European Gas Virtual conference on 28 January. Answering the question how much natural gas will the EU need in the future, she said ZERO. She was emphatic that with the EU committed to net zero emissions by 2050, by then there will be zero unabated gas consumed in Europe. In addition, with the EU having increased the emissions reduction target from 40% to 55% by 2030, the use of gas in Europe will be decreasing in order to meet the 2030 and 2050 climate targets. She said that ongoing natural gas projects are expected to be completed by 2022 – with no more needed after that.

With exports to global markets becoming increasingly difficult, there are other regional options to make use of the gas discovered so far around the East Med, including power generation in support of intermittent renewables and petrochemicals, as Egypt is doing. The newly constituted East Med Gas Forum (EMGF) should place these at the heart of its agenda.

What about Cyprus?

Hydrocarbon exploration activities around Cyprus are at a standstill, partly due to the continuing impact of Covid-19, but also due to the dire state of the IOCs and the challenges being faced by the natural gas industry in general.

This lack of activity in resuming offshore exploration may be a blessing, taking the heat off hydrocarbons, while priorities shift to discussions to resolve the Cyprus problem and the Greece-Turkey maritime disputes.

Dr Charles Ellinas, @CharlesEllinas

Senior Fellow

Global Energy Center

Atlantic Council

3 February, 2021

 

Greece, Israel eyeing broader alliance for Balkans, central Europe

The Greek-Israeli energy alliance is broadening its scope by aiming for the establishment of a Greek gateway to facilitate Israeli gas supply to the Balkan region and, by extension, central Europe.

This objective, part of strong diplomatic relations between the two countries in energy, was confirmed during a recent virtual meeting between Greece’s newly appointed energy minister Kostas Skrekas and his Israeli counterpart Yuval Steinitz.

Their bilateral talks will be followed up by broader meeting today to involve the energy ministers of Greece, Israel, Cyprus, Serbia, Bulgaria, Romania, North Macedonia and Hungary.

The participating officials will seek to lay the foundations for a closer energy alliance that would facilitate distribution from Israel’s Leviathan gas field via alternate routes – the Alexandroupoli FSRU and the IGP – to soon be offered by Greece.

The aforementioned Balkan and central European countries are extremely keen on securing alternative supply routes, diplomatic sources informed.

Much work is needed by Israel and Greece to establish energy alliances with Balkan countries, but a first step will seemingly be taken today.