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.

Greece registers Europe’s lowest wholesale electricity price today

Greece has registered Europe’s lowest day-ahead market price today, helped by greater RES contributions that have lowered the wholesale electricity price by 57.44 euros per MWh in a day, to 197.24 euros per MWh.

Elsewhere in Europe, wholesale price levels for today are upwards of 250 euros per MWh, while in some countries, the level greatly exceeds 300 euros per MWh, headed by France, where the wholesale price is 329.27 euros per MWh.

Renewable energy units represent 31.13 percent of the energy mix in Greece today, offering a total capacity of 61.5 GWh, just below the level of natural gas, the top contributor, with a 35.62 percent share of the energy mix, or 70.4 GWh.

The country’s hydropower generation is also significantly up today, capturing a 16.5 percent share of the energy mix, or 32.6 GWh, well over usual recent levels of less than 10 percent, as a result of heavy rainfall over the past few days that filled hydropower reservoirs.

The price gap between Greece and other European markets has prompted an increase in electricity exports today to a level of 31.2 GWh. Imports were restricted to 3.2 percent of the energy mix, or 6.3 GWh.

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.

 

 

Electricity suppliers reshaping pricing policies, wholesale cost up to new high

The ongoing surge in wholesale electricity prices, now over 204 euros per MWh, a new record level, has astonished even the most seasoned company managers.

“The day-ahead market price surge to such levels has prompted great uncertainty as to what lies ahead,” one highly ranked official at a vertically integrated energy group told energypress

Responding to the wholesale market’s latest record-breaking level, an official at another energy group active in production and supply told energypress that suppliers are now recalculating their pricing policies from scratch.

Without a doubt, the electricity supply market has entered unchartered territory as the upward trajectory in prices, sparked by an unfavorable combination in international markets, appears to be unstoppable.

Company officials have admitted they have no choice but to pass on the majority of the price increase to their customers.

Some companies are cutting back on big discount offers extended to attract customers.

 

 

 

Greece tops August wholesale electricity price list in Europe

Greece’s wholesale electricity market was rated Europe’s most expensive in August, the country’s day-ahead market averaging a level of 121.72 euros per MWh for the month, according to Energylive data.

Romania followed with an average of 112. 7 euros per MWh, while Italy was ranked third with a day-ahead market average of 112.4 euros per MWh in August. They were followed by: Bulgaria (111.55 euros per MWh); Serbia (109.65 euros per MWh); Hungary (109.02 euros per MWh); and Portugal (105.99 euros per MWh). France recorded Europe’s lowest day-ahead market average in August, 77.3 euros per MWh.

The elevated wholesale electricity market levels closing off August, following various factors that prompted a surge throughout the summer, confirm that de-escalation remains beyond reach at present.

Analysts and market officials, at European and national levels, have warned wholesale electricity price levels will be extremely high in autumn and winter.

Yesterday’s energy exchange day-ahead market prices for today average 123.43 euros per MWh, a 5.52 percent drop compared to the previous day.

August day-ahead market prices in Greece peaked at 142.00 euros per MWh, while the lowest level recorded for the month was 100.56 euros per MWh.

 

 

Wholesale electricity prices ease as RES input increases

Wholesale electricity price levels are expected to drop to an average of 130 euros per MWh in the day-ahead market today, down 20 percent compared to yesterday, a de-escalation attributed to increased RES input, the energy exchange has informed.

Stronger winds have been forecast, increasing the generation potential of wind energy units.

The maximum price in the day-ahead market today is expected to reach 186 euros per MWh and the minimum price will be 92 euros per MWh.

Natural gas-fired power stations are scheduled to contribute the lion’s share, 40 percent, of the day’s electricity needs, renewable energy sources will contribute 24 percent, electricity imports and lignite-fired power stations will each provide 15 percent, while hydropower facilities will contribute 6 percent.

Electricity demand for the today is forecast to drop by 2.5 percent compared to yesterday.

 

 

Heatwave pushes up wholesale prices to over €100/MWh once again

The latest rise in temperatures, prompting further heatwave conditions around Greece, is impacting the wholesale electricity market as the average clearing price in the day-ahead market has risen again to levels of over 100 euros per MWh, following days of more subdued levels, according to energy exchange data.

The average clearing price for today is up to 103.8 euros per MWh, up from yesterday’s level of 93.47 euros per MWh and Sunday’s level of 75.34 euros per MWh.

According to the day-ahead market figures, overall electricity generation today is planned to reach 167,437,017 MWh, with lignite-fired power stations covering just 11,172 MWh, natural gas-fired power stations providing 86,541,739 MWh, hydropower facilities generating 11,829 MWh and all other RES units providing 57,894,278 MWh. Electricity imports are planned to reach 16,159,231 MWh.

Today’s electricity demand is expected to peak at 12.30pm, reaching 8,580 MW, according to data provided by IPTO, the power grid operator.

Three of power utility PPC’s lignite-fired power stations, Agios Dimitrios III, Megalopoli IV and Meliti, will be brought into action today, while five of the utility’s natural gas-fired power stations, Aliveri V, Lavrio IV and V, Komotini and Megalopoli V, will also be mobilized, along with gas-fired units operated by the independent players Heron, ENTHES, Elpedison (Thisvi), Protergia and Korinthos Power.

Wholesale ascent prompting hefty retail electricity price hikes

The activation, by electricity suppliers, of wholesale cost-related clauses included in their supply agreements is prompting significant retail increases, seen rising, compared to three months earlier, by 40 percent for the medium-voltage category and at least 33 percent for the low-voltage category.

Medium-voltage tariffs, previously at levels ranging between 64 and 65 euros per MWh, have reached 90 euros per MWh, a 40 percent increase, since the wholesale cost-related clauses were triggered by suppliers earlier this year, and are expected to rise further.

In the low-voltage category, concerning households, tariffs have increased from levels ranging between 70 and 90 euros per MWh, depending on the supplier and agreement, and will need to be raised to 120 euros per MWh for the recovery of increased wholesale costs.

Higher wholesale electricity prices have been attributed to a combination of factors, including higher CO2 emission right and natural gas prices, as well as a sharp rise in demand.

The situation is exacerbated during periods when RES output is subdued, prompting record-level price levels in the wholesale electricity market.

Last week, CO2 emission right prices set a new record of 58.25 euros per ton, up from 32 euros per ton in December, an 82 percent increase.

Natural gas prices have hit a 13-year high, TTF contracts reaching 29 euros per MW/h following levels of between 15 and 17 euros per MW/h in spring, a 93 percent increase. In June last year, gas prices had sunk to record-low levels of as low as 4.9 euros per MWh.

Last week, the average clearing price on the energy exchange ranged from 100.33 to 118.56 euros per MWh, up from 63.16 euros per MWh a month earlier.

In June, the average day-ahead market price on the energy exchange was 83.47 euros per MWh, more than double the level of 40.74 euros per MWh a year earlier.

Suppliers request revisions to alleviate cash-flow pressure

Electricity suppliers, facing steep and lasting wholesale electricity cost increases, which have resulted in cash-flow issues, are seeking revisions that could alleviate the pressure, in recommendations submitted to RAE, the Regulatory Authority for Energy.

Rising wholesale electricity costs have created major cash flow problems for non-vertically integrated electricity suppliers as they are being forced to pay increasing amounts for electricity and related guarantees ahead of payments, to them, by consumers.

Consumers have also felt the pinch as suppliers, seeking protection against the rising wholesale prices, have activated wholesale cost-related clauses incorporated into their supply agreements.

Solutions for both sides seem elusive at present as market forecasts do not see any price de-escalation ahead, only further increases.

In one of the recommendations forwarded to RAE, suppliers called for their cash collateral payments made to the Hellenic Energy Exchange, as a form of guarantee, to be replaced by letters of guarantee representing equivalent amounts.

Suppliers have also requested a reexamination of the clearing price and payment formula in the day-ahead and intraday markets.

They also requested extensions for surcharge payments to power grid operator IPTO and the distribution network operator DEDDIE/HEDNO.

 

Energy Exchange Group (EnEx) celebrates its 3-year anniversary

Founded in June 2018, EnEx is comprised of the Hellenic Energy Exchange S.A. (HEnEx) and the EnEx Clearing House S.A. (EnExClear). Since its designation by the Greek Regulatory Authority for Energy (RAE) as the Nominated Electricity Market Operator (NEMO), HEnEx has evolved in line with the European agenda for a single and integrated European energy market.

As a designated NEMO, HEnEx successfully performed the necessary market transformations for the preparedness and operation of the Greek power market under the new model. All changes were completed in time and by the 1st of November 2020, the Greek power market was integrated with the European Target Model for electricity markets. HEnEx now operates the Day-Ahead Market, the Intraday Market and an energy Derivatives Market.

A very important milestone for HEnEx was the market coupling of the Greek Day-Ahead market to the European markets – over the border between Greece and Italy on December 15th 2020. On May 11th 2021, HEnEx achieved its second market coupling with Bulgaria. These interconnections enable cross-border trading, optimal capacity allocation and congestion management – all of which, facilitate a European Union-wide market in electricity with optimal welfare and resource allocation.

EnExClear plays also an important role in the flawless operation of the spot electricity markets in Greece. It provides clearing, risk management and settlement services for the Day-Ahead Market and the Intraday Market, and is also responsible for the clearing, settlement and shipping of implicit cross border transactions with the coupled markets. Furthermore, EnExClear is also responsible for the risk management and the settlement of positions of the balancing market, which is run by the Greek Transmission System Operator (IPTO).

Both HEnEx and EnExClear are directing their efforts towards the next important steps:

The establishment of a gas trading platform is the next major milestone. In collaboration with the Greek Gas TSO (DESFA), RAE and the Ministry of Environment, EnEx is designing the model for the new gas trading platform which is expected to be operational in fall 2021.

This year, HEnEx will also start operating three Complementary Regional Intraday Auctions (CRIDAs) and foresees its inclusion in the European Cross-Border Intraday (XBID) initiative in Q1 2022. Furthermore, following the connection of the island of Crete to the mainland electricity network, HEnEx is also leading the integration of the island to the existing Day-Ahead and Intraday Markets of mainland Greece.

In this dynamic and evolving energy environment, EnEx is committed to contributing to sustainability and providing high quality, transparent and non-discriminatory services to its markets participants. With confidence, EnEx will continue developing with vision and determination, while learning from its positive experiences, and strengthening the relationship with its partners and stakeholders.

 

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.

Ministry committee set to deliver energy-storage framework plan

Facilities operating purely as energy storage stations will be placed under one category for licensing and regulatory purposes, while a separate category will be established for operations combining storage and RES stations, according to a proposal being prepared by a special committee assembled by the environment and energy ministry.

Also, all electricity markets, such as the day-ahead, intraday and balancing markets, will be open to all energy storage units, regardless of category, according to sources.

Units operating as energy storage stations, alone, are likely to receive licenses through an existing framework already used to grant licenses to natural gas-fired power stations, sources informed.

RAE has resorted to this existing framework as a solution to offer production licenses to a number of companies that have lodged applications for large-scale battery facilities.

The committee, set to stage its final session tomorrow, is expected to present a finalized proposal early next week to authorities, including political officials, RAE, the Regulatory Authority for Energy, energy market operators, and the energy exchange.

The energy ministry, placing great emphasis on energy storage as part of the country’s decarbonization strategy, intends to forward the committee’s framework plan for public consultation at the end of June. The ministry plans to submit a related draft bill to Parliament by October 31.

Medium-voltage suppliers seek higher-priced deal revisions

A sharp rise in medium-voltage energy costs over recent times, resulting from higher wholesale prices, threatens to damage the competitiveness of Greek manufacturers, Antonis Kontoleon, president of EVIKEN, the Association of Industrial Energy Consumers, has told energypress.

Rallying CO2 emission right prices as well as persistently higher prices in the day-ahead and balancing markets have prompted electricity suppliers to seek revised medium-voltage agreements as protection against loss-incurring sales.

Electricity suppliers, maintaining business to business agreements with medium-voltage consumers have increased – by 20 percent compared to just recently – their number of requests forwarded for new supply agreements.

More crucially, suppliers are asking their customers to accept upward price revisions.

In many cases, suppliers have forwarded letters to customers informing that they will no longer be able to service existing supply agreements unless prices per KWh are raised.

Low-voltage consumers also face increased electricity bill costs following the activation, by suppliers, of cost-protection clauses.

Independent suppliers have activated wholesale price-related clauses, incorporated in their supply agreements, while power utility PPC has triggered, for the first time, a CO2 emission rights cost-related clause.

RAE, the Regulatory Authority for Energy, has summoned PPC’s administration to offer an explanation on this decision, at a meeting today. The authority is also expected to soon summon independent suppliers.

Consumers returning to PPC, led by wholesale-linked hikes

Higher wholesale electricity prices, prompting independent suppliers to activate wholesale-cost clauses included in their supply agreements to avoid losses, are tightening up the market by leading disappointed consumers back to the power utility PPC, a clear regression in the effort to establish a broader, more competitive field of players, latest data has indicated.

Consumers opting to leave independent suppliers and return to PPC rose by 56 percent in the first quarter of 2021 compared to the equivalent period a year earlier, market data obtained by energypress has shown.

The number of consumers leaving independent suppliers for any other supplier increased by approximately 40 percent in the first quarter of 2020, the data showed.

This increase in consumer returns to PPC is expected to be reflected in forthcoming market-share data, market officials believe.

Last year, the wholesale market price, represented, at the time, as the system marginal price, ended April last year at 38.02 euros per MWh, whereas this year, in the form of the recently launched target model’s day-ahead market, the wholesale price in April has exceeded 63 euros per MWh.

Increased CO2 emission right costs and elevated TTF and Brent prices are factors that have driven wholesale electricity prices higher. So, too, are higher balancing costs, currently more than double levels of previous years.

Wholesale electricity prices for the next twelve months are seen averaging 89 euros per MWh in the low-voltage category and 79-80 euros per MWh in the medium-voltage category.

PPC, which has never achieved its commitment to lower its market share to less than 50 percent, is offering customers significant discounts at below cost, and, as a result, hampering the market liberalization process and further narrowing the profit margins of independent suppliers, a prominent market official has told energypress.

RAE, the Regulatory Authority for Energy, has the authority and responsibility to take action against suppliers selling electricity at  below cost and protect consumers against misleading offers, the official added.

Wholesale electricity cost up 8% in 1Q, surcharges double

The cost of wholesale electricity averaged 65.412 euros per MWh in the first quarter of 2021, up 8 percent compared to the equivalent period a year earlier, when the level averaged 60.67 euros per MWh, data provided by power grid operator IPTO has shown.

It should be pointed out that a direct price comparison of all components making up wholesale cost during these two quarters is not possible as, during this time, the structure of the wholesale electricity market changed from a mandatory pool system to the target model.

For example, a minimum RES-supporting surcharge burdening wholesale costs by an average of 3.4 euros per MWh during the first quarter last year has since been abolished. Also, the market-clearing price fell to 0.72 euros per MWh in the first quarter from 2.11 euros per MWh in the equivalent period a year earlier.

Even so, the reduction in these costs was outweighed by the increase in wholesale electricity prices. The total cost in the day-ahead and intraday markets averaged 55.17 euros per MWh in the first quarter this year, compared to last year’s average cost of 50.39 euros per MWh in the mandatory pool.

Surcharge costs also increased, averaging 9.53 euros per MWh in the first quarter this year, double the level of 4.78 euros per MWh a year earlier.

Particularly high prices registered late in 2020, during the early days of the target model launch, have eased so far this year. Last November and December, surcharge costs reached 17 and 16.09 euros, respectively.

Electricity consumption fell by 6 percent in the first quarter this year, compared to a year earlier, to 12.39 TWh from 13.175 TWh, as a result of lockdown measures amid the pandemic.

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.

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.

 

Day-ahead market prices unusually low despite crisis conditions

Though the balancing market and its various problems since November’s launch of new target model markets may have been the focus of attention of late, irregularities have also troubled the day-ahead market, necessitating a closer look, officials have stressed.

This need was first pointed out by Alex Papalexopoulos, one of the architects of the country’s electricity system, who observed that the day-ahead market has shown signs of offers being systematically submitted at levels below actual cost. He said market dumping was taking place, referring to offers submitted by lignite-fired units.

These concerns have now also been raised by Dinos Benroubi, head of energy supplier Protergia’s electricity and gas divisions, as well as Antonis Kontoleon, the chief official at EVIKEN, Greece’s Association of Industrial Energy Consumers.

At a time of crisis, high electricity demand and calls on industrial producers to hold back on energy consumption, day-ahead market prices remain very low and full-scale electricity exports are taking place towards Italy, Kontoleon noted during a panel discussion at Athens Energy Dialogues, a conference held yesterday.

Protergia’s Benroubi took the issue a step further by noting that RAE, the Regulatory Authority for Energy, must implement a monitoring mechanism for the day-ahead market, as, despite serving as a base for the target model’s functioning, it is displaying irregularities.

Greek-Italian market coupling boosts transaction efficiency

The Greek-Italian electricity market coupling of day-ahead markets, launched on December 15 as part of the target model, is living up to its expectations as a safety valve facilitating optimal electricity flow between countries.

The initiative, operating through a single price coupling algorithm, EUPHEMIA (Pan-European Hybrid Electricity Market Integration Algorithm), which calculates energy allocation, net positions and transboundary electricity prices, has run smoothly since its launch over a month ago.

Greek-Italian transboundary electricity transactions admittedly enjoyed a high level of maturity prior to the introduction of market coupling, courtesy of reliable price forecasts by participants for the Greek and Italian markets.

A grid interconnection, in the form of a 163-km, 400-kV voltage and 500-MW capacity subsea cable, has been in service since 2002.

However, the market-coupling initiative has taken the efficiency of these transboundary Greek-Italian electricity transactions to a higher level as auctions allocating grid interconnection capacities are no longer required.

Since the mid-December coupling of the Greek and Italian energy markets, electricity has constantly flowed from the market offering lower prices to the higher-priced market, proving this market system’s ability to utilize interconnections to their fullest.

Market coupling of the Greek and Bulgarian day-ahead markets is planned to follow, its launch scheduled for spring.

An increased number of interconnected electricity markets promises to give the Greek wholesale electricity market a regional role. However, transboundary grid interconnections will need to be upgraded if this is to be achieved.

CO2 right prices up 39% in 45 days, adding to wholesale market price ascent

CO2 emission right prices have hit new records, trading at levels of over 30 euros per ton in recent days for a rise of 39 percent over the past month and a half that has contributed to the wholesale market price ascent.

These elevated CO2 right levels peaked on Tuesday, at 32.02 euros per ton, well over a price of 23.05 euros per ton recorded just weeks ago, at the end of October.

The upward trajectory of CO2 emission right costs is also contributing to even higher prices in Greece’s wholesale electricity market.

Last Wednesday, the day-ahead market’s average price exceeded 80 euros per MWh, rising further to 93 euros per MWh hour yesterday.

If CO2 emission right trading prices persist at levels of more than 30 euros per ton, power utility PPC will activate a related wholesale price clause incorporated into its supply agreements.

Besides the increase in CO2 emission right costs, the Greek day-ahead market has followed the upward trajectory of other European markets, where the combination of higher demand and deteriorating weather conditions is pushing price levels higher.

According to Greek energy exchange data for today’s day-ahead market, the price will average 82.31 euros per MWh, peaking at 114.1 euros per MWh and dropping as low as 44.38 euros per MWh.

 

Market restrictions on the way for electricity cost reduction

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

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

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

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

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

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

 

Industry opposes bilateral contract restrictions

EVIKEN, the Association of Industrial Energy Consumers, has expressed opposition to an energy exchange proposal, delivered through public consultation, calling for the imposition of restrictions on bilateral contracts reached by suppliers.

In its letter, EVIKEN notes that an upper limit restricting supplier bilateral contracts to 20 percent of total sales, if suppliers hold a retail electricity market share greater than 4 percent, ensures conditions of liquidity in the day-ahead market and prevents a squeeze on prices.

The association, in its letter, proposes that this regulatory measure be abolished in the day-ahead market given the extremely high price levels registered, noting its maintenance over an extended period threatens to create oligopolistic conditions in the market.

Legal action, even at an EU level, could be taken over the matter, crucially important for the industrial sector, EVIKEN indicated.

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

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

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

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

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

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

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

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

Target model markets showing signs of price de-escalation

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

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

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

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

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

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

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

Ministry set to intervene if wholesale prices do not fall

The energy ministry is seriously examining the prospect of imposing a price ceiling, next week, on wholesale electricity prices if they do not deescalate over the next three days.

Wholesale electricity prices have risen sharply since last month’s  launch of the target model, pitched by the government as a price-reducing tool.

Day-ahead market prices for today – based on offers made prior to on online meeting between energy minister Costis Hatzidakis and electricity producers – fell mildly to 77 euros per MWh from 90 euros per MWh on Thursday.

If current prices do not fall further, it is a matter of time before suppliers pass them on to the retail market. Prior to the target model, wholesale electricity price levels ranged between 55 and 60 euros per MWh.

Some suppliers are considering to activate cost-related clauses for their tariff prices, while others have done so already, sources informed.

Producers contend the ascent in wholesale electricity prices reflects actual market conditions, adding that their power stations were previously incurring operational losses under the preceding pricing system.

However, energy ministry officials believe producers are exploiting certain rules to artificially raise prices. Hatzidakis, the energy minister, has urged producers to heed the government’s call or face intervention as of Monday.

Producers content with target model markets, suppliers edgy

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

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

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

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

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

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

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