Energy groups pressing ahead with natural gas-fired unit plans

The country’s major energy groups are pushing ahead with investment plans for new gas-fired power stations despite the pandemic’s unprecedented impact on the economy and electricity market.

Mytilineos, a vertically integrated group at the forefront of electricity production and supply, began constructing an 826-MW energy center at Agios Nikolaos in the Viotia area, slightly northwest of Athens, last October and is continuing to press ahead with this project.

Investment plans by other players are also maturing. GEK-TERNA is moving ahead with licensing procedures for a 660-MW unit in Komotini, northeastern Greece. The Copelouzos group is paving the way for a 660-MW facility in Alexandroupoli, also in the northeast, while Elpedison is carrying on with procedures for an 826-MW power station in Thessaloniki.

Copelouzos could partner with an investor for the group’s Alexandroupoli project, sources informed.

All the aforementioned corporate groups are positioning themselves in a new energy landscape being shaped by the dominant role of natural gas in the transition towards renewable energy and cleaner energy sources.

This trend became very apparent during the lockdown in Greece. Natural gas and the RES sector covered 60 percent of domestic electricity demand in March.

Power utility PPC is pushing ahead with its decarbonization program without any backtracking, despite the crisis. This is creating a need for new and modern gas-fired power stations.

Furthermore, Greek energy groups are continuing to eye Balkan markets for prospective electricity exports. Electricity generation in the neighboring region has not been satisfactorily upgraded in recent decades, market officials pointed out.

Vertically integrated groups are also eagerly anticipating a new permanent CAT mechanism.

Elvalhalkor given green light for gas-fueled power station

Elvalhalkor, the Hellenic Copper and Aluminium Industry, has been given approval by RAE, the Regulatory Authority for Energy, for a prospective 566-MW gas-fueled power station in Thisvi, Boetia, slightly northwest of Athens.

The industrial enterprise now intends to continue with its licensing procedure, which will require time, before making a final investment decision later on.

Factors to determine the investment decision include the outcome of a measure offsetting industrial carbon emission costs, currently being looked at by the European Commission; the shape of a CAT remuneration plan for gas-fueled power stations; as well as the target model’s implementation method and schedule.

PPC is also considering such factors ahead of a decision on the development of a gas-fueled power station, either independently or through a partnership.

“Capacity exists for one or two gas-fueled power stations in the country’s overall energy mix, but these will require financial support,” noted PPC chief executive Giorgos Stassis. “At this point, conditions are not clear. We’re all waiting for the regulatory framework.”

CAT plan, outdated by changing energy strategy, to be reworked

A Greek plan for a fixed CAT mechanism that had been submitted to the European Commission by the previous energy ministry is now considered inadequate, primarily as a result of the country’s changing energy plan.

A new CAT mechanism plan will now be prepared early next year once Greece’s revised National Energy and Climate Plan and the power utility PPC’s business plan and withdrawal schedule for its lignite units have both been finalized.

The CAT plan produced by the previous Syriza government’s energy minister Giorgos Stathakis was based on factors no longer relevant as a result of these upcoming changes.

The previous government’s plan also included legislation designed to enable state-controlled PPC to seek CATs for its Ptolemaida V power station, a lignite-fired facility in development but with an indefinite future.

Power grid operator IPTO will conduct an extensive study identifying the system’s needs. This study will serve as the basis for Greece’s new permanent CAT plan, to be forwarded to Brussels ahead of negotiations.

Also, the energy ministry intends to apply to Brussels for extensions to Greece’s transitional CAT plan and the demand response mechanism, a vital energy cost-saving tool for industry.

EU’s new CAT rules launched, no sign of aid for Ptolemaida V

A new European Commission regulation concerning CATs came into effect a few days ago, on July 4, without any sign of support for the main power utility PPC’s prospective Ptolemaida V power station, now being developed but in danger of an unsustainable future.

The outgoing Syriza government’s energy ministry recently ratified a related bill believing this could ensure CAT eligibility for Ptolemaida V. But Brussels did not endorse the Greek CAT plan by the crucial July 4 date, and even more importantly, has not delivered any comfort letter that could be seen as notification for eventual approval.

According to the European Commission’s clean energy package, EU support mechanism subsidies are reserved for units whose CO2 emissions do not exceed 550 grams per KWh. Units beginning their commercial operations any time after the July 4 date and which exceed this upper limit are not entitled to CAT mechanism remuneration, according to the EU regulation.

In a recent letter to Margrethe Vestager, the European Commissioner for Competition, PPC’s chief executive Manolis Panagiotakis stressed that CAT eligibility is crucial for the sustainability of Ptolemaida V, a 1.4 billion-euro investment. Otherwise, PPC would face catastrophic consequences with a knock-on effect for the Greek energy market and national economy, given the role and size of the corporation, he added.

 

‘No chance’ of Brussels approving CAT plan by July 4

Greece’s CAT remuneration mechanism proposal stands no chance of being granted European Commission approval by July 4, when new European regulations on the matter come into effect, nor should the country expect any comfort letter by this date on the proposal’s near-term prospects, well-informed sources have told energypress.

Speaking yesterday, power utility PPC’s chief executive Manolis Panagiotakis stressed this would be a crucial week for Greece’s CAT prospects at the European Commission’s Directorate-General for Competition.

However, there has been no indication of any extraordinary meeting this week between energy ministry and Brussels officials, the sources informed.

In a letter to Margrethe Vestager, the European Commissioner for Competition, the PPC boss has stressed that the sustainability of PPC’s Ptolemaida V power station, a 1.4 billion-euro investment now being developed and expected to be launched in 2022, will depend on CAT eligibility.

Panagiotakis yesterday expressed serious doubts as to whether a recent legislative revision endorsing Greece’s CAT plan in Parliament would suffice without EU approval.

 

Brussels CAT restriction a setback for Ptolemaida V

The European Commission has announced tough CAT remuneration mechanism restrictions for lignite-based power stations, effective as of July 4, a major setback for the CAT eligibility prospects of power utility PPC’s Ptolemaida V unit, now being developed.

According to some sources, the new capacity mechanism restrictions, announced in the Official Journal of the European Union last Friday, end all CAT qualification hopes for Ptolemaida V.

Despite this latest unfavorable development, state-controlled PPC and the energy ministry have remained optimistic and contend hope remains under certain conditions.

Power stations emitting over 550 grams of CO2 per kilowatt-hour will no longer be eligible for the capacity mechanism, according to the new restrictions.

Greek Parliament recently ratified a related energy ministry bill without prior EU approval.

Capacity mechanisms have been used by EU member states to fund electricity generation that may not be cost-effective or as clean as renewable power but is needed to guarantee supply during periods of peak demand.

Brussels tight-lipped on Greek CAT mechanism approval

The European Commission has remained tight-lipped as to if, when and under what conditions it intends to endorse Greece’s proposal for a permanent CAT remuneration mechanism.

The plan, attached to a wider draft bill prepared by the energy ministry, was ratified in Greek Parliament last week just ahead of the house’s closure for upcoming snap elections on July 7, the intention being to secure CAT remuneration and sustainability for the power utility PPC’s prospective Ptolemaida V power station, when the facility is launched.

Brussels has maintained a rigid stance on the matter, adopting an aggressive interpretation of regulations and guidelines, sources have informed.

Greece’s implementation of the target model, aiming for market coupling, or harmonization of EU wholesale markets, is believed to be one of the conditions demanded by Brussels for the CAT mechanism’s approval. Implementation of the target model within 2019 is seen as a highly unlikely prospect.

There have been no indications as to when the European Commission may deliver a comfort letter to Greece on the CAT remuneration mechanism.

The matter may be urgent for Greece but the new European Commission being pieced together following the recent European elections means slower progress in Brussels at present.

 

Ptolemaida V sustainability jeopardized by call for elections

The energy ministry’s legislation plan concerning CAT remuneration for the power utility PPC’s Ptolemaida V and an ensuing 10-year agreement that would ensure CATs and sustainability for the prospective unit are now up in the air following last night’s announcement of national elections, expected June 30, by Prime Minister Alexis Tsipras.

The upcoming national elections, announced by the PM following his party Syriza’s disappointing performance in European and municipal elections, validate the concerns of pundits who had feared the CAT plan for PPC and its Ptolemaida V unit could be destabilized by Greece’s political developments.

Greek officials have been under pressure to meet an approaching deadline for EU CATs concerning PPC’s Ptolemaida V facility, now under construction.

Ptolemaida V could still qualify for CATs if Greece manages to adopt a capacity sufficiency system ahead of the CAT mechanism’s launch and an agreement is signed by the end of the year.

 

PPC takes on expropriation plan for Meliti unit’s sustainability

The main power utility PPC’s board is expected to approve, at a session today, a self-financed expropriation plan designed to ensure lignite quantity and quality standards are met for the sustainability of the utility’s Melti power station, included in a bailout-required disinvestment package.

PPC had reached an improved lignite price agreement with the operator of the Ahlada mine supplying the utility’s Melti power station, at 16.5 euros per ton between 2020 and 2025. However, lignite quality and quantity standards demanded by the sale’s participants were pending.

PPC’s decision to finance the expropriation of the village Giourouki promises the extraction of better and greater amounts of lignite from the Ahlada mine, an initiative expected to make the Meliti power station sustainable.

The Ahlada mine operator, citing high expropriation costs, stopped expanding its mining activities for better-quality lignite and instead dug deeper around Giourouki. The resulting lower-quality lignite affected yield rates at the Meliti power station.

A pre-contractual agreement signed by PPC and Giourouki village residents promises an immediate expropriation payment of 60 percent, while the remaining 40 percent, according to the agreement, will be provided as soon as the precise compensation amount is finalized.

Participants of PPC’s sale of lignite units, relaunched after an initial sale failed to produce a result, face a May 28 deadline for binding bids. PPC’s expropriation plan for the village Giourouki has raised hopes at PPC of a successful follow-up sale.

Meanwhile, the Meliti power station’s eligibility for CAT remuneration remains unclear. PPC has no control over this issue. It is being handled by the energy ministry. The European Commission will have the final say.

 

Industry: Demand response, target model needed for CATs

The implementation of the target model and demand response mechanism are necessary for the acceptance of a permanent CAT mechanism for capacity, energy-intensive industrial enterprises have underlined.

The industrial sector’s views on the matter, presented through public consultation held by the energy ministry, were reiterated yesterday by EVIKEN (Association of Industrial Energy Consumers) official Antonis Kontoleon at an IENE (Institute of Energy for Southeast Europe) conference.

Industrial sector sources raised questions as to why authorities are currently pushing to implement the CAT mechanism by December, ahead of the target model, at a cost of 400 million euros for consumers.

Substantiated energy ministry details on the problems the proposed CAT mechanism is meant to resolve are insufficient, industrial sector officials noted, while questioning whether alternatives offering equivalent results have been thoroughly examined.

 

Ptolemaida V CATs jeopardized by PPC action against TFRM

A delay by the European Commission in endorsing the country’s permanent CAT capacity mechanism is jeopardizing the main power utility PPC’s new Ptolemaida V power station from being included in this mechanism.

A mechanism induction agreement for Ptolemaida V needs to be signed by the end of the year if this new lignite-fired unit is to be eligible.

A rigid interpretation by Brussels of regulations and directives concerning the matter has market officials already believing the deadline will be missed.

The European Commission has set the implementation of the target model as a prerequisite for the CAT mechanism to be approved. This practically means that participants cannot sign mechanism agreements before January of February, at best, when the dry run begins.

PPC’s position on the transitory flexibility remuneration mechanism (TFRM) is also crucial to the matter.

The power utility has taken European Court action against the TFRM seeking its non-implementation and, instead, a direct transition to the permanent mechanism by contending, amongst other things, that market reforms are in progress through target model requirements. PPC has also questioned the necessity of the TFRM.

A withdrawal of PPC’s legal action would lead to a more flexible interpretation of regulations by the European Commission on the permanent CAT capacity mechanism, pundits believe.

Independent producers set to lose €80m in CATs for flexibility

The country’s independent electricity producers are on the verge of missing out on annual remuneration worth 80 million euros and offered through a temporary CAT mechanism rewarding flexibility as a result of a new European Commission term setting the implementation of target model regulations as a prerequisite.

A temporary CATs auction scheduled for March 20 was cancelled after Brussels determined that Greek authorities failed to fully deliver on revisions that would have enabled demand response operators to participate at these auctions.

The loss of these temporary CATs will directly impact private-sector electricity producers. Natural gas-fueled power stations and hydropower facilities were anticipating an influx of flexibility CATs by the end of March, the mechanism’s first period, while the second period, beginning April 1 and running until the end of the year, was planned to include demand response operators and energy storage facilities.

Acknowledging the problem, energy ministry officials have noted that a last-ditch effort is being made to deliver revisions that would enable flexibility CAT eligibility for demand response operators.

PPC unit contenders promised 30% price return without CATs

Investors have been promised a 30 percent return of the price paid for the acquisition of the main power utility PPC’s Meliti and Megalopoli power stations, included in a bailout-required package of lignite units, if these units are not remunerated through a European Commission CAT mechanism within nine months of the acquisition’s completion, according to the sale’s revised SPA terms, endorsed by the utility’s board yesterday, energypress sources have informed.

It remains unclear if the SPA includes an improved lignite supply agreement reached between PPC and the operator of the Ahlada lignite mine supplying the Meliti power station.

Some sources contend this agreement has been incorporated into the revised SPA while others claim it concerns an arrangement for the supply of additional lignite quantities to Meliti from other producers.

PPC has relaunched its sale of lignite units after an initial effort failed to produce a result.

CAT remuneration eligibility for the Meliti and Megalopoli units, as has been called for by some of the sale’s participants, is absent from the revised SPA terms.

 

 

PPC defers crucial lignite units SPA meeting for next Tuesday

A main power utility PPC board meeting scheduled today for a presentation of proposed SPA terms concerning the Meliti and Megalopoli power stations included in a bailout-required sale package of lignite units, has been postponed until next week, the session’s new date being April 23, when the utility’s financial results for 2018 will be announced, sources have informed.

SPA details, pivotal for the interest of investors, have yet to be finalized. Today’s deferral suggests last-minute efforts are being made to embellish Meliti and Megalopoli as more appealing prospects for investors. PPC was recently forced to relaunched its sale of lignite units after an initial effort failed to produce a result.

Sources with inside information on the proceedings have contended that no major changes have yet to be made to previous SPA terms.

“PPC’s disinvestment effort once again finds itself at a crucial stage, given the EU’s adverse regulatory framework concerning carbon,” one source stressed, adding that the sale’s details remain murky despite efforts by the board to clarify.

An agreement reached between PPC and the operator of the Ahlada lignite mine feeding the Meliti power station, for a lignite supply price reduction to 16.5 euros per ton from 23 euros per ton, has yet to be uploaded to the sale’s virtual data room.

Whether the units up for sale will be eligible for CAT remuneration also remains unclear. The European Commission has yet to respond to a Greek request on the matter.

First temporary CATs auction called off by Brussels reaction

A decision by power grid operator IPTO to call off, on the eve of the event, a March 20 auction offering temporary CATs  is believed to have been prompted by European Commission intervention resulting from a Greek breach of the auction’s terms included in a Brussels endorsement, sources have informed.

IPTO attributed its move to reasons concerning a framework revision of the auction procedure’s terms, noting further clarification could be sought at the energy ministry.

The Brussels-approved mechanism for temporary flexibility CATs requires a division of eligible parties into two groups for participation at separately held auctions over two periods.

The first, by the end of March, is intended for natural gas-fired and hydropower plants, while the second is for demand response operators and energy storage facilities. Lignite-fired power plants have been excluded from the temporary CAT mechanism.

 

Relaunched PPC lignite sale planned for completion May 5-8

The main power utility PPC’s follow-up sale attempt offering lignite units, planned to move ahead swiftly with the aim of producing a preferred bidder between May 5 and 8, ahead of European Parliament and local elections, is being relaunched today with investor-friendly terms intact following the initial sale’s failure to excite candidates.

Besides three bidding teams that took part in the first sale attempt, the relaunched sale is expected to include new entries.

PPC’s chief executive Manolis Panagiotakis has returned from a brief trip to China having secured the participation of two Chinese entries, China Energy and CMEC, while two more firms, Russian and American, have also decided to bid for the PPC units, according to the PPC boss.

Last-minute revisions were needed following intervention by the European Commission’s Directorate-General for Competition. Panagiotakis is scheduled to visit Brussels next week for further talks.

According to the revised terms, PPC holds the right to commission a new evaluation of the assets included in the disinvestment, a bailout requirement.

The previous evaluation, projecting an IRR figure of 10.7% and lignite costs at 28.5 euros per ton, was not to blame for the initial sale effort’s failure, the PPC chief has insisted.

Extremely unfavorable market conditions at the time of the sale, including investor insecurity over CO2 emission right costs, as well as serious pending issues such as the need for an improved lignite supply agreement with the operator of the Ahlada mine feeding the Meliti power station, one of the units up for sale, were key reasons behind the failure, Panagiotakis has supported.

A voluntary exit plan for employee reductions at units included in the sale package, Brussels pre-notification for CAT remuneration eligibility of units, and the result of ongoing negotiations with the Ahlada mine’s operator all offer improved potential for a successful sale procedure, the PPC boss has highlighted.

Interested bidders will need to express interest by the end of next week. The re-registration procedure for bidders who took part in the initial sale attempt will be limited to an official statement noting that no changes have been made.

Consultation for the sale and purchase agreement (SPA) will be held over a period of 20 days to one month. Its finalized terms will be announced a week later. Contenders will then have one week to submit their binding offers before a preferred bidder is declared between May 5 and 8. An extraordinary PPC shareholders’ meeting and a parliamentary session will follow to approve the transfer of units to new owners.

 

 

 

Finalized CAT agreement expected within fortnight

Greece and the European Commission are no more than a fortnight’s time away from reaching a deal on the country’s CAT mechanism, reliable sources closely following ongoing negotiations on the matter between the energy ministry and Brussels officials have informed.

Once an agreement is finalized, Brussels will deliver its notification, in other words a finalized list of observations on the Greek CAT plan. Its finalized look, to emerge following any needed adjustments, could be announced by the end of March, barring unexpected developments.

A certain period of time, depending on the pace of bureaucratic procedures in Brussels, will then be needed for the plan’s approval by the European Commission. This will enable preparations for the first CAT auction, expected, without a doubt, within 2019.

The nucleus of the Greek CAT plan, based on an Italian model that has already been endorsed, complies with EU directives, the European Commission has already recognized. Brussels officials have apparently requested revisions from Greece that will result in a CAT mechanism version sharing an even greater amount of similarities with its Italian equivalent.

Greece’s new CAT plan mainly concerns private-sector thermal electricity producers and the main power utility PPC as it will greatly shape their operating conditions over the next decade.

Investors considering PPC’s Megalopoli and Meliti power stations included in an ongoing bailout-required disinvestment of lignite units are also monitoring developments as the resulting CAT plan will greatly determine the earning potential of these units.

The PPC’s Ptolemaida V power station, now under construction, is expected to be among the units to qualify for CAT remuneration.

CAT eligibility prospects for PPC’s Ptolemaida V favorable

The main power utility’s prospective Ptolemaida V power station, now being developed, will most likely be eligible for CAT remuneration, the European Commission’s Permanent Representatives Committee (COREPER) has indicated.

According to the European Commission’s clean energy package, now being shaped, EU support mechanism subsidies will be reserved for units whose CO2 emissions do not exceed 550 grams per KWh. This upper limit promises to exclude units driven by fossil fuels such as carbon and lignite.

The clean energy rule is expected to soon be implemented for all new power stations and also apply for existing units as of July 1, 2025. From this date onward, units fueled by fossil fuels will no longer be valid for CAT remuneration.

Luckily for PPC’s Ptolemaida V project, the European Commission decided, in December, to offer exemptions to the rule as a result of a request made by Poland, whose economy and electricity production are heavily reliant on coal. This sets a precedent. PPC’s effort to ensure CAT remuneration for Ptolemaida V, expected to be launched in 2021, stands to benefit from the development.

PPC lignite unit contenders up pressure, new deadline possible

Three contenders considering the main power utility PPC’s sale of its Megalopoli and Meliti lignite-fired power stations included in a bailout-required disinvestment of lignite units are intensifying their pressure on PPC for more favorable terms as the deadline for binding bids approaches.

In response, PPC has been eager to present any new favorable developments that have emerged from the implementation of incentives in an effort to support the sale’s conditions and price-tag potential.

This was demonstrated yesterday by chief executive Manolis Panagiotakis in comments to journalists.  He made reference to the results of a voluntary exit plan offered to employees at the Megalopoli and Meliti units, both loss-incurring. A total of 360 employees working at the two lignite-fired power stations have accepted the offer. Prospective buyers have indicated they want the workforce at Megalopoli and Meliti, totaling 1,248 prior to the voluntary exit plan, to be cut down to 600. PPC has just announced a voluntary transfer plan for Meliti and Megalopoli unit employees to other company posts.

Panagiotakis also noted PPC is negotiating with the owners of the Ahlada lignite mine, feeding the Meliti power station, for a lower supply price and longer supply agreement.

Reacting to the PPC chief’s comments, China’s CHN and the Copelouzos group’s Damco, one of the sale’s three potential bidding teams, described the results of the staff reduction effort at the two power stations as a good basis for cost reduction.

A consortium comprising the Czech Republic’s Seven Energy and Gek Terna has refused to comment. The Seven Energy firm has yet to present itself as a certain participant in the sale. In recent times, it has made note of narrow profit margins despite the voluntary exit plan, CAT remuneration uncertainties surrounding for the two units, and increased CO2 emission right costs.

Panagiotakis, the PPC chief, yesterday told journalists the Mytilineos group remains a contender for the Megalopoli and Meliti power stations. The Mytilineos group has not responded but, according to sources, remains troubled by what it sees as an unfavorable investment conditions surrounding the lignite sector, including the sharp rise in CO2 emission right costs.

Just days remain before the sale’s January 23 deadline for binding bids expires. An extension could be required as a result of PPC’s last-minute Ahlada mine negotiations and a Brussels delay concerning the European Commission’s position on Greece’s CAT remuneration mechanism proposal, a crucial factor for the lignite units sale.

 

 

Swift Brussels response on CAT plan promised by Moscovici

Greece has been promised solid indication of the European Commission’s intent on the country’s effort to secure CAT remuneration for two lignite-fired power stations, Megalopoli and Meliti, included in main power utility PPC’s bailout-required disinvestment of lignite units.

CAT remuneration for the power stations is seen as a crucial incentive to draw investors to the sale.

Though Brussels is not expected to deliver its decision on Greece’s CAT plan any sooner than April, which stretches well beyond the schedule of PPC’s ongoing disinvestment effort, the European Commissioner for Economic and Financial Affairs Pierre Moscovici, who met yesterday with Greek energy minister Giorgos Stathakis, is believed to have promised a swift response in the form of notification.

PPC has already announced it will upload this notification, regarded as the European Commission’s final position with virtually absolute certainty, into the disinvestment’s data room for investors to appraise. The European Commission’s views on the Greek CAT proposal’s details, including duration, remuneration levels and procedures, are expected to be included in the notification.

Stathakis, the energy minister, also held another important meeting yesterday with officials of EVIKEN, the Association of Industrial Energy Consumers, to discuss the government’s efforts aimed at securing  Greece’s demand response mechanism (interruptability), a pivotal energy cost-saving tool for industry.

EVIKEN officials emerged content from the meeting and confident the energy ministry is committed to this effort. Details concerning the ministry’s moves to be made on the matter have not been disclosed.

Buyers presented PPC sale’s make-or-break SPA terms

Prospective buyers of main power utility PPC lignite units on offer through a bailout-required disinvestment will be presented a finalized sale and purchase agreement’s (SPA) terms today, seen as a make-or-break step in this sale procedure.

The appraisal by investors of the SPA, featuring four new bonuses as incentives, will determine their level of interest in the sale of power stations and mines representing 40 percent of PPC’s overall lignite capacity, as well as the level of  binding bids they will be prepared to submit on January 7. Officials plan to complete the procedure on January 15.

The SPA includes the elimination of a lignite surcharge, already implemented and factored into calculations by investors.

It also includes a new term, submitted to parliament yesterday as part of a wider package of energy sector adjustments, enabling new owners to reduce personnel at units acquired. Any staff members not needed at these units will be transferred to DEDDIE/HEDNO, the Hellenic Electricity Distribution Network Operator, according to the SPA. All prospective buyers had demanded this labor flexibility term. It is estimated between 300 and 400 employees, the majority from the Megalopoli power station, could end up being transferred.

A third bonus in the SPA entails CAT remuneration eligibility for PPC’s lignite-fired power stations up for sale for a period of at least six years, until 2025, as was announced yesterday by the European Commission.

The fourth incentive ensures investors a steady lignite supply price by PPC for the package’s Meliti power station until a dispute concerning the nearby lignite mines in Florina is resolved.

The energy ministry and PPC believe these four bonus terms will offset operating losses believed to be incurred by the power stations for sale, as was determined by investors.

All possible buyers have continued to remain cagey on their intentions, despite the announcement of the sale’s bonus terms.

 

Brussels officials to discuss CAT plan, Crete link on Athens conference visit

European Commission officials scheduled to be Athens later this week for an Athens Conference on European Law and Policy intend to combine the visit with meetings on two crucial matters, Greece’s new CAT mechanism plan and the prospective Crete-Athens grid interconnection.

Christof Schoser, the Brussels official assessing Greece’s CAT mechanism proposal, is expected to meet with energy ministry officials following related talks in Brussels about three weeks ago.

As has been previously reported, the European Commission, in the wake of these talks, forwarded a letter to Greece’s energy ministry seeking clarification on approximately 30 points regarding the CAT mechanism.

Athens is hoping for a swift Brussels approval of the CAT proposal as it is crucial for the prospects of the main power utility PPC’s bailout-required sale of lignite units. The Greek CAT proposal includes remuneration for two lignite-fired power stations, Meliti and Megalopoli, both part of the sale package.

Epistimi Economopoulou, a member of the Directorate-General for Energy’s PCI projects division, will meet with associates of the energy minister Giorgos Stathakis for talks on the troubled Crete-Athens grid interconnection plan.

The project, needed to resolve a Cretan energy sufficiency threat as of 2020, has been delayed by a dispute between Greek authorities and Euroasia Interconnector – a consortium of Cypriot interests heading a wider Greek, Cypriot and Israeli PCI-status interconnection project – for control of the Crete-Athens segment.

In recent days, the European Commission has issued Greek authorities handling the Crete-Athens link’s development a new warning to observe terms set by Brussels and nullify a decision giving Ariadne Interconnection, an IPTO power grid operator-backed special purpose vehicle (SPV) control of the project or risk losing its PCI status.

 

 

PPC wants more lignite sale time, procedure prospects grim

The main power utility PPC has requested a three-month extension for its bailout-required sale of lignite units as the utility’s failure, to date, to secure any sale terms that would make the assets for sale more attractive to investors threatens to sink the entire effort.

Given this threat, PPC, just days ago, forwarded a letter to the energy ministry and the European Commission’s Directorate-General for Competition requesting a deadline extension for binding offers until mid-February. No signs have yet to emerge as to whether Brussels will offer PPC additional time.

The European Commission has rejected a profit-and-loss sharing arrangement proposed by PPC entailing an even split of lignite unit profits and losses with buyers for a two-year period. Brussels believes this term contravenes Greece’s commitment for state-controlled PPC to disinvest, through the sale, 40 percent of its overall lignite capacity.

Brussels has also delayed endorsing the country’s permanent CAT remuneration plan, which includes remuneration for PPC’s lignite-fired power stations. Their exclusion from Greece’s new CAT mechanism would devastate the government’s disinvestment plan for PPC’s lignite units.

These negative developments, combined with higher international CO2 emission prices and PPC unit operating losses identified by prospective buyers through PPC’s data room, have all raised investor concerns with respect to the lignite units sale.

PPC has warned European Commission insistence on the sale’s completion within December would severely limit, if not vanish, investor interest, while any offers made would be too low for the power utility’s board to accept.

Brussels forwards list of some 30 questions on Greek CAT proposal

The European Commission has forwarded a list of some 30 questions to Greece’s energy ministry over the country’s permanent CAT remuneration mechanism plan proposed by Athens and currently being examined and discussed by Brussels authorities.

European Commission officials have already met with government and main power utility PPC authorities to discuss details included in the country’s new CAT plan. The European Commission has also invited other interested parties, including industrialists, to Brussels to listen to views and objections concerning the CAT plan. A series of such meetings are expected to begin this week.

The industrial sector has already warned it cannot accept a CAT mechanism that does not incorporate a demand response system, as was reiterated just days ago by Antonis Kontoleon, a leading figure at EVIKEN, the Association of Industrial Energy Consumers, at an IENE (Institute of Energy for Southeast Europe) conference.

The industrial sector has not ruled out legal action if a demand response system is excluded from the CAT mechanism.

Demand response systems enable major industrial enterprises to be compensated when the TSO (ADMIE/IPTO) requests that they shift their energy usage by lowering or stopping consumption during high-demand peak hours so as to balance the electricity system’s needs.

At the other end, state-controlled PPC and the government are looking for a swift Brussels approval of the new CAT mechanism, seen as pivotal for the prospects of PPC’s bailout-required sale of lignite units.

Lignite units are planned to be eligible for CAT remuneration, according to the Greek proposal, thereby ensuring considerable earnings for prospective buyers of the Meliti and Megalopoli lignite-fired power stations included in PPC’s sale package.

 

Focus on Amynteo upgrade, Meliti II sidelined, for CATs

The energy ministry plans to focus on an environmental upgrade plan of the main power utility PPC’s Amynteo lignite-fired power station in the country’s north, intended to keep the facility running until all lignite deposits in the region have been depleted and, at the same time, sideline the development prospects of Meliti II – also in the north, in the Florina area – as a lower-priority project, as part of a wider effort to ensure CAT remuneration for existing lignite units.

The main power utility PPC, facing a bailout-required disinvestment, is currently selling lignite units and mines representing 40 percent of its overall lignite capacity.

A study conducted by PPC, as part of partnership talks with Chinese investors, has shown that Meliti II can only be a viable project with CAT remuneration support.

Under the EU’s current decarbonization regulations, an addition of Meliti II to the national grid will only be possible if the country’s other lignite-fired units are environmentally upgraded to an extent that would enable a Meliti II entry without any negative impact on the country’s greenhouse gas emission reduction targets.

Any new owner of Meliti II will need to factor in the investment cost of these strict decarbonization regulations.

Prospective PPC lignite unit buyers still waiting for delayed SPA plan

The main power utility PPC’s bailout-required disinvestment of lignite units and mines could fall further behind schedule as a result of the power utility’s delay in presenting prospective bidders a Sales and Purchase Agreement (SPA) plan.

Last week, PPC promised it would imminently present a revised SPA plan based on observations made by potential buyers during the sale procedure’s initial stage.

However, the power utility has yet to deliver, suggesting the sale procedure has been set back by a new delay which, according to some pundits, could prompt PPC to request a further deadline extension for binding bids, currently set for December.

The government’s sale plan for state-controlled PPC’s lignite units is greatly dependent on  European Commission approval of CAT remuneration eligibility – through Greece’s prospective new mechanism – for the units up for sale, as was admitted by the power utility’s chief executive Manolis Panagiotakis in Greek parliament just days ago.

CAT remuneration qualification for the Meliti and Megalopoli power stations included in PPC’s sale package is expected to ensure considerable revenues for their new owners.

Greece’s new CAT plan was discussed in Brussels last week. The European Commission is believed to have demanded certain revisions, including maximum remuneration levels set for respective technologies and auction procedures, as well as details concerning the energy-intensive industrial sector.

Greek CAT proposal OK but revisions needed, Brussels tells

The core of an energy ministry proposal for Greece’s new permanent CAT mechanism meets EU directives but a series of revisions, regarded as manageable, will need to be made, energypress sources have informed.

European Commission and energy ministry officials discussed the issue at a meeting in Brussels last week following pre-notification by Athens.

The Greek plan’s fundamentals are based on an already-endorsed Italian model. The revisions called for by the European Commission are expected to bring the energy ministry’s proposal even closer to the Italian version.

According to sources, the changes called for include maximum remuneration levels for respective technologies and auction procedures, as well as details concerning the energy-intensive industrial sector.

The government now faces the challenge of swiftly implementing these revisions ahead of the ratification and launch of the new model, pivotal to the success of the main power utility PPC’s bailout-required disinvestment of lignite units.

The Greek proposal forwarded to Brussels is believed to be technically neutral and based on reliability options for all existing power stations, including lignite-fired units.

The plan proposes remuneration levels of between 30,000 and 40,000 euros per MW, for one year, for existing units. New units would be entitled to between 45,000 and  65,000 euros per MW, depending on the technology, for five to seven years.

CAT mechanism talks next week, crucial for PPC units sale

Greek energy ministry officials and European Commission authorities are scheduled to meet November 14 and 15 in Brussels to discuss the country’s new CAT mechanism plan, crucial to the outcome of the main power utility PPC’s ongoing bailout-required sale of lignite units, including the Megalopoli and Meliti power stations.

The incorporation, into the mechanism, of CAT remuneration for lignite-based electricity generation, as is hoped for by Greek officials, would boost investor interest and the value of bids to be submitted for the PPC units.

The Greek delegation, to include RAE (Regulatory Authority for Energy) representatives, will be headed by the energy ministry’s secretary general Mihalis Veriopoulos.

The energy ministry has forwarded its CAT mechanism proposal but this will be the first face-to-face meeting with European Commission officials on the matter.

The uncertainty as to whether Greece’s new CAT mechanism plan will be approved by Brussels was a key factor behind the latest deadline extension for binding bids in the PPC disinvestment.

Bidders to face November 6 deadline for PPC lignite units

Prospective buyers of the main power utility PPC’s bailout-required sale of lignite units and mines are expected to face a November 6 deadline for binding offers, energypress sources have informed.

In a weekend newspaper interview, the power utility’s chief executive Manolis Panagiotakis noted the binding offers deadline, for two sale packages offering lignite units and mines in the country’s north and south, went no further than to say that a deadline would be set for the first week of November.

However, investors, who have already been offered one deadline extension, could still seek a follow-up extension as the details of incentives requested by potential buyers remain unclear. Bidders have warned they will not submit offers unless satisfactory incentives are offered.

Rising CO2 emission right costs and indefinite CAT mechanism remuneration prospects are major concerns for prospective buyers looking to invest in PPC’s lignite assets.

CAT prenotification set for EC, public consultation requested

The energy ministry is planning to deliver its pre-notification of the country’s permanent CAT remuneration mechanism to the European Commission within the next two weeks.

The plan, forwarded to the energy ministry by RAE, the Regulatory Authority for Energy, in July, does not deprive power stations of the right to participate in reliability option auctions.

The plan’s assessment by EU authorities – for its compliance with European Commission proposals, directives and CO2 emission right upper limits that need to be met by electricity producers for state aid qualification – is seen as a crucially important step by the Greek government.

Lignite-related exemptions for Greece by the European Commission, given lignite’s key role in local electricity production, are seen as a crucial point. If offered, such exemptions will surely come with a binding plan for a gradual end of the system’s reliance on lignite.

The industrial sector has called for the staging of a public consultation procedure before decisions are made as demand-related issues have not been taken into account.