CO2 emission rights

New forest biomass market backed by €150m in CO2 funds

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Carbon emission right auction funds totaling 150 million euros are estimated to be utilized to establish a new forest biomass market in Greece, according to a plan just presented by energy minister Thodoris Skylakakis.

This new market is planned to involve many players, beginning with forestry departments, to be subsidized for harvestable biomass with a proportion of revenues generated at auctions for carbon credits.

The plan, as a second step, will entail the establishment of an exchange for CO2 tons to be made available in a voluntary market for carbon credits. These carbon credits will correspond with additional volumes of CO2 emissions absorbed through actions such as efficient forest management and reforestation.

Companies and energy-intensive industries wanting to improve their environmental footprints will be the potential buyers of these carbon credits.

New forest management entities, to act as project developers, will result from partnerships between 293 forest cooperatives and companies certified for the amount of CO2 they can absorb.

Subsidy amounts to be paid to these forest management entities will be determined by the extent of forest management studies that have been carried out. Subsidy amounts offered will increase in accordance with the degree of difficulty in biomass collection and resulting level of contribution to fire prevention and forest protection, according to the plan.

The ministry plans to have its plan legislated by the end of the year so that the initiative may be launched in 2024, initially on a smaller budget.

 

 

 

Power suppliers project sharp price rises if conditions persist

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Domestic electricity prices will inevitably rise by up to 15 percent as of January – when energy-crisis measures are planned to be lifted, reactivating indexation clauses – if current unfavorable international trends continue, local electricity market officials has projected.

Upward trajectories of natural gas and CO2 emission right prices, as well as the danger of a further rise in already-elevated interest rates, are worrisome factors whose combined effect could push up electricity prices, one official pointed out.

In Greece, wholesale electricity prices have soared by 80 percent over the past three days. On Sunday, wholesale electricity was priced at 93.49 euros per MWh, rose to 127.75 euros per MWh yesterday, before reaching 168.43 euros per MWh today.

Worse still, these wholesale electricity prices have yet to factor in October’s sharp rise in the price of natural gas, up approximately 30 to 35 percent in the first half of the month, to a peak of 56 euros per MWh, as Greece’s wholesale electricity market factors in gas prices from a month earlier.

Natural gas holds the dominant share of Greece’s energy mix, at 43.35 percent, followed by renewables, well below with a 21.37 percent share.

Though still well below last year’s astronomical price levels, natural gas prices of as low as 30 euros per MWh, recorded early this month, now seem to be a thing of the past.

The Israel-Gaza war and threat of a wider conflict in the Middle East – a negative development that has already disrupted operations at Israel’s Tamar gas field, from where gas quantities are delivered to Egypt and processed into LNG for export to Europe – is already impacting prices.

Price levels have been hit even harder by last week’s discovery of damage to the Estonian-Finnish Baltic-connector gas pipeline and telecommunications cable.

As for CO2 emission right prices, they have skyrocketed to levels 500 percent higher than pre-energy crisis levels, reaching approximately 90 euros per ton and, according to analysts, are projected to remain elevated over the next three years.

Nuclear plants, Baltic pipeline on energy council agenda

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Electricity market reforms, the energy situation in Ukraine, progress on revised National Energy and Climate Plan appraisals, energy-efficiency financing matters, Europe’s preparations for winter, the shutdown of the Baltic-connector pipeline, CO2 emission rights, as well as nuclear power plant support are among the agenda items to be discussed at today’s EU energy council.

On the electricity market reforms front, support for nuclear power plants will be a key agenda topic. France and nine other EU member states are expected to call for two-way Contracts for Difference. Germany has already expressed reservations, fearing the impact of CfDs on the rest of the market if unconditionally applied.

This disagreement needs to be resolved as quickly as possible so that the revised market structure can be finalized and adopted by the end of the year. Market players are confident a compromise solution will be found before the end of this month.

European Commissioner for Energy Kadri Simson is expected to update EU energy ministers on how assessments of revised NECPs are progressing.

Also, Finland and Estonia will inform fellow EU members on any findings of an investigation conducted to determine the cause of damage discovered last week at the Baltic-connector gas pipeline, used by the two countries for access to an underground gas storage facility in Latvia. Suspicions of sabotage have been raised.

Continued energy subsidies a tough equation, fewer funds, higher prices

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Government officials face a growing challenge in their effort to continue subsidizing electricity and natural gas for household and business consumers as funds backing this support are decreasing at a time when energy prices have continued rising.

According to sources, the government is looking to extend its subsidy package for households and businesses to also cover April.

Wholesale electricity prices have continued their ascent during the first ten days of March, well above levels in February, while reduced CO2 emission right prices are restricting cash injections into the Energy Transition Fund, funding the subsidies.

The wholesale electricity price average for the first ten days of March is 322 euros per MWh, well over February’s average of 211.71 euros per MWh. During this period, CO2 emission right prices have dropped to 60 euros per ton from 80 euros per ton.

Prime Minister Kyriakos Mitsotakis has called for a price ceiling to be imposed on the Dutch TTF gas exchange.

Energy markets are forecast to remain volatile as a result of Russia’s invasion of Ukraine.

Gov’t utilizes EU terms to offer PPC lignite units more time

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The government has utilized flexible terms in European law, expiring tomorrow, concerning high-polluting power stations to secure a further extension for power utility PPC’s lignite-fired power stations, through additional operating hours, which, in some cases, could stretch as far forward as 2025.

Even so, the power utility insists this initiative will not change the corporation’s withdrawal plan for its lignite-fired power stations, according to which all existing units will be withdrawn by the end of 2023.

PPC, in an announcement, has informed that the additional operating hours secured for lignite-fired power stations will be used within the time limits of respective withdrawal plans that exist for units.

The power utility has avoided using its lignite-fired power stations to full capacity, even though they have developed into lower-cost options than natural gas-fueled power stations.

Under the current market conditions, wholesale electricity prices may have been lower if PPC used its lignite-fired power stations more frequently.

Greater use has been avoided by PPC as these units remain loss-incurring for the power utility given the increasing prices of CO2 emission rights and a variety of technical difficulties, sources told energypress.

 

CO2, natural gas prices soaring, no end in sight for energy crisis

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CO2 emission right prices climbed to a new record level yesterday, peaking at over 90 euros per ton before retreating to approximately 80 euros per ton, while, similarly, natural gas prices once again rose to over 100 euros per MWh after having eased to levels of up to 85 euros per MWh late in November.

These latest price trends dispel any projections of an imminent end in the energy crisis as both CO2 emission right prices and natural gas prices are pivotal factors in the determination of wholesale electricity prices.

The energy crisis appears set to remain for at least this winter, which will hurt economies and increase inflation rates, reemerging as a serious concern in the EU after many years.

Wholesale electricity prices remain well over 200 euros per MWh throughout Europe.

In Greece, today’s wholesale electricity price is 231.83 euros per MWh, with the December average for the country currently at 226.99 euros per MWh, slightly below the November average.

The highest price in Europe for today was registered in Switzerland, at 270.25 euros per MWh, followed by Italy at 256.32 euros per MWh, France at 247.19 euros per MWh, Serbia at 246.45 euros per MWh, and Croatia and Slovenia, both registering 244.25 euros per MWh.

 

Electricity bills now hit by record CO2 prices, at over €81 per ton

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CO2 emission right prices are soaring, breaking one record after another to exceed levels of 81 euros per ton and looking likely to rise even higher, which comes as a new round of upward pressure for household and business electricity bills, already severely impacted by the surge in natural gas prices.

CO2 emission right prices have now doubled since April, when prices were at levels of about 40 euros per ton.

CO2 emission right prices are now approaching the levels reached by natural gas on the Dutch TTF platform, seen reaching levels of between 80 and 90 euros per MWh in the short term.

Though electricity price levels have slightly deescalated so far in December, to 217.26 euros per MWh from 230 euros per MWh five days earlier, will make little difference to retail prices, analysts have noted.

Energy company officials believe a a drop in electricity prices is possible in spring, but not all the way down to pre-energy crisis levels.

These officials are also anticipating energy crises to become a regular occurrence that will keep pressuring households and businesses.

 

PPC ’21 operating profit virtually unchanged at €800-850m

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Power utility PPC is headed for an operating profit of between 800 and 850 million euros for 2021, marginally below the previous year’s level, despite the impact of the energy crisis on outlays in the third quarter, the corporation’s administration has informed analysts during a presentation of results for the nine-month period.

PPC’s outlays for natural gas, energy and CO2 emission right purchases rose by an overall 629 million euros in the first nine months, to a level 37 percent higher than the total registered for the equivalent period in 2020, PPC officials reported.

Natural gas outlays were up 119.8 percent, reaching 452.7 million euros from 206 million euros.

PPC’s outlays for liquid fuels increased by 14.7 percent in the first nine months to 410.2 million euros, compared to the equivalent period in 2020, as a result of higher prices for mazut (8.9%), diesel (8.4%) and increased generation powered by liquid fuels.

The corporation’s CO2 emission right outlays surpassed all other expenses, reaching 539.4 million euros in the nine-month period of 2021 from 263.1 million euros during the same period a year earlier.

 

Natural gas strategic reserve among EU thoughts for crisis

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A series of measures to be announced today by the European Commission to help EU member states counter the energy crisis may include a strategic reserve for natural gas, complementing respective supply contracts, for abnormal periods such as the current energy crisis affecting the world, especially Europe.

EU member state participation in this strategic reserve would be optional. The initiative, still at a preliminary stage, is being examined. No decisions have been taken.

The EU’s energy market integration and transboundary grid interconnections have helped avoid even more extreme developments in the current crisis, Brussels has observed.

Measures taken by member states at a national level will need to comply with EU law and not contravene Europe’s energy transition towards renewables, Brussels has made clear.

The European Commission has defended its views on the causes of the energy crisis, insisting that increased natural gas prices have been primarily responsible, while noting that the EU’s Emission Trading System (ETS), through which carbon emission right prices have been driven higher, has played a lesser role.

RES operator given control of new Energy Transition Fund

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DAPEEP, the RES market operator, whose influence in the energy market is growing, will be given control of the new Energy Transition Fund, a move promising to give the operator a key role in efforts to counter energy cost increases when prices are at exorbitant levels, as is the case at present.

A large percentage of the ETF’s revenues will come from CO2 emission right auctions, staged by DAPEEP.

Through its authority over the new ETF, DAPEEP will be in a position to manage state funds, including, for example, planned subsidies for natural gas bills, expected to be derived from the state budget, at least for the final quarter of 2021, sources informed.

In due course, DAPEEP, through the ETF, will also manage funds to be generated by other prospective green surcharges, including an expected expansion of the carbon emission rights system into transportation and buildings.

These new roles promise to further establish the place of DAPEEP in the domestic energy market.

Crisis Management Committee to examine supply security

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The Crisis Management Committee is expected to meet within the first fortnight of October to examine the overall situation in the energy market, driving price levels up to exorbitant levels for consumers of all categories.

The committee’s members will discuss the issue of supply adequacy and security for meeting electricity generation needs, primarily.

Electricity, natural gas and CO2 emission prices are skyrocketing, while natural gas shortages are now emerging in EU markets, all as a result of an extraordinary combination of developments in European markets.

For the time being, Greek energy sector authorities – RAE, the Regulatory Authority for Energy; DESFA, the gas grid operator; and IPTO, the power grid operator – have remained reassuring. Yesterday, RAE president Athanasios Dagoumas noted: “We are not in a state of alarm but are vigilant.”

Overall natural gas consumption is expected to increase in 2021. Consumption was 14 percent higher in the first half compared to the equivalent period a year earlier, DESFA data has shown.

Gas demand rose in July and August to meet increased electricity generation needs and is also expected to be elevated this coming winter.

In Greece, approximately 60 percent of natural gas consumption results from electricity generation. The ongoing withdrawal of coal-fired power stations and greater reliance on fluctuating RES output is expected to lead to a further increase in demand for natural gas.

Local authorities have pointed to Greece’s natural gas source diversification, made possible by the Revythoussa LNG terminal and TAP, both offering alternative solutions, as crucial in the effort to manage the current energy crisis.

State subsidies for electricity bills, additional discounts concealed

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Power utility PPC and the country’s independent suppliers are set to include state electricity subsidies into electricity bills in ten days’ time, while, from October 1, they plan to follow up with additional discounts to ease the burden of increased energy costs for consumers.

Electricity suppliers are now finalizing adjustments to their information systems for the inclusion of these state subsidies, worth 9 euros per electricity bill and retroactively effective as of September 1.

However, all suppliers are keeping under wraps the details of their additional discounts to be offered.

Market sources expect suppliers to offer discounts with the intention of retaining customers and also capturing greater retail electricity market shares.

Meanwhile, the energy ministry is expected, any day now, to submit a draft bill to parliament for the establishment of an Energy Transition Fund, its purpose being to gather amounts from CO2 emission right auctions for distribution as electricity-bill subsidies.

As a first step, the Energy Transition Fund is expected to collect between 180 and 200 million euros to support households and businesses in the low-voltage category, all facing additional pressure as a result of the sharp increase in energy costs.

 

 

Greece tables hedging fund plan to soften energy crisis

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Energy minister Kostas Skrekas has proposed the adoption of a temporary hedging mechanism by EU member states as a means of easing the burden of increased electricity costs on consumers.

The minister’s proposal, which would enable funds to be drawn from the Emissions Trading System through extraordinary auctions offering additional carbon emission rights or prepayment of potential ETS revenue, was tabled at a meeting of EU energy ministers in Ljubljana yesterday.

The ministers assembled in search of a solution to counter the relentless rise in carbon emission right costs.

Skrekas’ proposal is similar to household mitigation measures recently announced by the Greek government for which electricity subsidies will be financed by revenues generated at carbon emission right auctions, through the Energy Transition Fund.

According to estimates by Greek officials, a sum of between 5 and 8 billion euros will be needed to cover the EU’s overall energy support needs this coming winter. Distribution of this amount to member states would take into account respective electricity consumption levels, heating needs and GDPs.

At the Ljubljana meeting, Greece, Spain and Italy were the only member states to propose the adoption of EU-wide measures as an effort to restrict the effects of the energy crisis, seen worsening for households and businesses this coming winter.

 

EU ministers to meet on carbon emission costs, causing alarm

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The EU’s energy ministers plan to meet in Ljubljana Wednesday in search of a solution to counter the relentless rise in carbon emission right costs, which, for some time now, have reached elevated levels that hang as a dark cloud over energy consumers, hundreds of suppliers and Europe’s energy transition strategy, breeding increasing Euroscepticism.

Carbon emission rights have been stuck at levels of no less than 60 euros per ton, prompting allegations of manipulation.

Last week, the European Commission submitted to European Parliament the EU’s more ambitious climate-change package, “Fit for 55”, aiming for a 55 percent reduction of carbon emissions by 2030, compared to 1990 levels. It is planned to lead to ETS mechanism revisions.

In response to accumulating messages of alarm from energy consumers and industrial enterprises from all over the continent, European MPs, at Wednesday’s meeting, are expected to push for stricter ETS rules.

Until now, governments of EU member states have been left to act independently for support measures whose extent is being determined by the capabilities of state budgets.

In Italy, the government, facing electricity cost increases of 40 percent, is lowering taxes linked to electricity bills. In France, low-income households stand to receive increased energy-cost coupon amounts, currently worth 150 euros annually.

The situation is far more dramatic in the UK. To date, seven electricity suppliers, under growing market pressure, have disrupted their operations, forcing over 600,000 customers to seek new suppliers. Bulb, one of the UK’s biggest electricity suppliers, serving 1.7 million customers, is on the verge of bankruptcy. A merger with a rival player is seen as the likeliest solution for this company.

 

Brussels fears electricity prices could reignite Euroscepticism

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The European Commission is pressing for an antidote to counter the sharp rise in electricity prices around Europe, fearing a prolonged period of escalated prices could spark a new wave of Euroscepticism that would put EU citizens at odds with the continent’s energy transition plan, a key Brussels climate-action strategy.

Allegations of market manipulation and doubled CO2 emission right prices since the beginning of the year, at 59.43 euros per ton yesterday, have reinforced the overall reaction against the EU’s energy policy, placing governments under pressure and fueling unrest.

With fears growing of a resurgence in France’s yellow vest movement, the European Commission is seeking to convince citizens that the Emissions Trading System (ETS), a cornerstone of the EU’s green-energy transition policy, is not the cause of the electricity price rises, instead laying the blame on natural gas and fossil fuels.

European Commission president Ursula von der Leyen, in her State of the Union Address, delivered yesterday, was clearly distressed by the situation, offering strong support for the European Green Deal. But, judging by the overall response, she has not appeased the concerns about rising energy prices.

The president’s thinking was reiterated by her deputy Frans Timmermans, in charge of the European Commission’s climate action portfolio, according to whom, only one-fifth of the electricity price increases can be attributed to the elevated CO2 emission rights prices.

 

 

PPC to partially absorb power costs, Brussels action imminent

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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.

Combination of events pushing electricity costs higher

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Higher-priced electricity, globally, may have arrived to stay given the combination of events such as the sudden rebound of the global economy, which is intensifying demand for fuels, metals and electricity, as well as the European Green Deal, new climate change laws and more ambitious carbon neutrality targets, pushing up CO2 emission right prices.

In Greece, wholesale electricity prices have risen sharply in recent days, to levels above 100 euros per MWh, the heatwave conditions exacerbating the situation. CO2 emission right prices have reached 55 euros per ton, from 32 euros per ton at the beginning of the year. The market clearing price for June is estimated to be 79.33 euros per MWh from 59 euros per MWh in December.

Major electricity suppliers in the Greek market expect the wholesale price to settle at 83-84 euros per MWh in the next month before rising to 85 euros per MWh over the next few months, and reaching 92 euros per MWh towards the end of the year.

Wholesale price clauses included by suppliers in their agreements with consumers for protection against higher prices are well below the aforementioned projections, meaning consumers should soon expect considerably higher electricity costs if these forecasts prove to be accurate.

Even if eventual electricity cost hikes turn out to be milder, RAE, the Regulatory Authority for Energy, and the energy ministry will be bracing for a bigger wave of consumer complaints.

 

RAE effort for universal supplier cost-clause policy facing delay

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RAE, the Regulatory Authority for Energy, working on a universal cost-clause policy for all electricity suppliers, to offer consumers greater electricity-bill transparency and price-comparing ability, has extended, until the end of June, a deadline it set for suppliers to deliver related market data details concerning all of 2020 and 2021, until the present.

Independent suppliers, who recently triggered wholesale price-related clauses in electricity bills to protect themselves against elevated wholesale prices, were questioned by the authority and then requested, as early as a month ago, to produce related data but have failed to deliver, instead calling for more time.

Power utility PPC was the first supplier to be summoned for questioning over its decision to trigger a CO2 cost-related clause incorporated into its electricity bills.

RAE had initially planned to stage a public consultation procedure for a universal clause policy within July, after examining the data provided by suppliers, but this plan will now be delayed.

Given the fact that overall business activity slows down severely during the August holiday period, RAE’s proposal is now not expected to be forwarded for consultation any sooner than September.

Taking into account supplier objections expected to surface during the procedure, the new cost-clause policy cannot be expected to be implemented before October.

Consumer complaints over sharp electricity cost increases and lack of transparency in electricity billing have risen considerably in recent times.