Decarbonization plan delayed by 2 years, greater lignite focus

The government has asked power utility PPC to extend its lignite-fired electricity generation by two to three years, as a means of cutting back on the use of natural gas, now a high-cost energy source as a result of Russia’s greatly reduced supply to Europe.

The government request, representing one of several energy-crisis measures it has put forth, will delay the country’s decarbonization plan by at least two years.

Lignite currently represents over 10 percent of the country’s energy mix, double its 5 percent share not too long ago, which resulted in annual production of 2.5 TWH. The government is aiming for a lignite energy mix representation of between 17 and 20 percent, or 9 TWH of electricity production, annually.

Increasing lignite-fired generation by approximately 6 TWH will require a natural gas reduction of 12 TWH, which is double the gas cut requested by the European Commission.

Energy minister Kostas Skrekas believes lignite’s 20 percent energy-mix target can be achieved within the first half of 2023.

 

Lignite-fired output to double, PPC sets conditions for return

State-controlled power utility PPC will double its lignite-fired electricity generation over the next 12 months for annual production of 10 TWh, from 5 TWh at present, an increase covering 20 percent of Greece’s annual electricity needs, energy authorities have agreed at an emergency meeting chaired by Prime Minister Kyriakos Mitsotakis.

The overall effort, reversing the country’s decarbonization plan in order to make up for dwindling Russian natural gas exports and help counter skyrocketing gas costs, will include the development of new lignite mines.

The government’s recently introduced price caps for power generation, set at different levels for respective production technologies, will be applied to this emergency lignite plan.

A price cap of 208 euros per MWh has been imposed on lignite-fired electricity production, meaning the additional 5-TWh amount to be generated by PPC will be worth roughly one billion euros. This additional 5-TWh in production would have been worth 1.8 billion euros if current energy exchange price levels were applied. The wholesale cost of lignite-generated electricity at present is 341.17 euros per MWh.

PPC, controlling all the country’s lignite facilities, has set a series of conditions for the return of lignite-fired power stations, including the abolishment of a rule requiring the company to commit 50 percent of the previous year’s lignite-based output to the futures market.

The power utility has also demanded a 150 million-euro guarantee from the government  should Russia’s war on Ukraine end and energy prices deescalate, which would end the need for the emergency lignite-fired production boost. In setting this condition, PPC has taken into account investments it will need to make to double its lignite-fired generation over the next year.

The government appears to be willing to satisfy the conditions set by PPC, which has disinvested in lignite over the past couple of years.

 

Strategic reserve mechanism application to be withdrawn

The energy ministry intends to withdraw its application submitted to the European Commission for a strategic reserve mechanism as a result of the government’s recent decision to revise its withdrawal plan for the country’s lignite-fired power stations in order to permit operations until 2028 instead of 2025, as was planned.

Under the original plan, the strategic reserve mechanism would have been introduced to maintain lignite-fired power stations under the control of power grid operator IPTO for energy contributions during periods of high demand.

Within the framework of these developments, the government is also considering to withdraw a compensation application for power utility PPC’s premature withdrawal of lignite-fired power stations.

PPC’s plan entailed shutting down all existing lignite-fired power stations by the end of 2023.

However, the government is being forced to delay its decarbonization strategy as a result of the steep rise in gas prices prompted by Russia’s war on Ukraine.

Extra 10% in support funds for RES, smart networks, efficiency

Investors seeking to develop energy-related projects in the wind, solar, smart network and energy-efficiency fields will be entitled to bonus support funds of as much as 10 percent through the Just Transition Fund.

The European Commission has just approved 1.63 billion euros in support funds for Greece for the development of projects designed to ease the impact of energy and climate-change policies on local economies.

These areas include Megalopoli in the Peloponnese and northern Greece’s western Macedonia region, both lignite-dependent economies undergoing decarbonization, as well as the islands in the Aegean Sea’s north and south and Crete.

Private-sector projects in these areas, including hotels, agritourism units, wind and solar energy facilities, smart networks and energy-efficiency projects will all be entitled to extra support funds.

PPC awaits Brussels energy strategy to decide on Ptolemaida V

Power utility PPC will wait for the European Commission’s finalized decisions on a strategic plan intended to end the EU’s reliance on Russian fossil fuels before it decides on the operating and conversion details of its prospective Ptolemaida V power station in northern Greece, to be launched as a lignite-fired facility before being converted to natural gas.

The PPC board is now expected to decide on Ptolemaida V’s conversion date towards the end of this year, according to sources.

Ptolemaida V, expected to undergo a trial run in the second half of the year before being launched late in the year or early in 2023, will be introduced as Greece’s last lignite-fired power station.

Early in April, prime minister Kyriakos Mitsotakis announced extensions to withdrawal dates for older lignite-fired power stations that were originally headed for closure prior to 2025. At the time, the prime minister also informed that Ptolemaida V could now operate as a lignite-fired unit until 2028.

Revisions to the country’s decarbonization plan have been prompted by energy security concerns following Russia’s invasion of Ukraine and the exacerbation of the preceding energy crisis as a result of this war.

The Greek government has decided to increase lignite mining output as a safety measure should Russia interrupt its natural gas supply.

A year ago, PPC had announced it intended to convert Ptolemaida V into a natural gas-fired facility as of 2025, but the latest energy security concerns froze this plan.

 

Offshore wind farms, storage, RES licensing, climate in bills

Two legislative initiatives by the energy ministry, one for climate change rules, the other for a second round of RES licensing simplification revisions, development of offshore wind farms, and a framework for the installation and operation of energy storage units, will be presented at a cabinet meeting today.

The country’s climate rules will make official Greece’s target for a 55 percent reduction in carbon emissions by 2030, compared to 1990 levels, aligned with the EU’s new and more ambitious “Fit for 55” climate-change package.

Greece’s legal framework on the climate will also propose a binding road map for the achievement of net-zero emissions by 2050, also in accordance with EU objectives.

As part of the RES licensing simplification procedure’s second round, the energy ministry has proposed the introduction of letters of guarantee, worth sizeable amounts, for RES connections to the network, the aim being to subdue excess investment plan applications, but will enable investors to have their say through public consultation before any decision is made.

 

PPC Renewables, RWE set to finalize joint venture agreement

PPC Renewables, a power utility PPC subsidiary, and Germany’s RWE Renewables are expected to finalize a joint-venture agreement at the beginning of October for solar energy projects in Greece to offer a total capacity of nearly 2 GW.

PPC Renewables plans to contribute to the joint venture 940 MW in solar energy projects at Amynteo, the northern Greece location hosting 4,360 hectares in company lignite fields to be repurposed as part of the decarbonization effort. The Greek company has already received a first round of environmental permits.

RWE Renewables is at the final stage of its search for solar energy projects to total 1 GW.

The two partners will begin their collaboration with the Amynteo project. They plan to begin its development in the first half of 2022. PPC Renewables has established nine special purpose vehicles for these projects.

RWE Renewables, holding a 51 percent stake in the joint venture, has already established a Greek subsidiary, RWE Greece, currently being staffed.

Talks between PPC Renewables and RWE Renewables have intensified since early summer. The respective company heads, Konstantinos Mavros and Katja Wünschel, discussed the prospective partnership at the recent 5th Greek-German Economic Forum, while RWE officials have also visited Athens for negotiations.

PPC local, European exchange option for lignite packages

Power utility PPC will be entitled to choose whether to offer lignite-fired electricity packages to third parties through the Greek energy exchange or European energy exchange, according to details of an upcoming mechanism to be implemented as a remedy to a long-running antitrust case concerning PPC’s monopoly in the lignite sector.

PPC preference for the domestic energy exchange would keep open the option of physical delivery of these lignite electricity packages and ensure the company greater flexibility in its portfolio management. Opting for the European energy exchange would not permit physical delivery, making the deals purely financial transactions.

All that remains for the implementation of the mechanism, whose details have been agreed to by the government and European Commission, is a decision by the energy ministry on when to submit a related legislative revision to parliament, according to sources.

The legislative revision has been completed and the ministry is believed to be on standby for an appropriate date, the objective being to make a first round of lignite-fired electricity packages available to third parties by the fourth quarter this year.

All electricity suppliers will be entitled to purchase these packages, to have three-month durations.

As previously reported by energypress, the electricity quantity planned to be offered to suppliers through the mechanism in the fourth quarter this year will represent 50 percent of lignite-fired output in the equivalent period of 2020.

Then, for every quarter in 2022 and 2023, lignite-fired electricity packages to be offered to PPC’s rivals will represent 40 percent of lignite-based production in equivalent quarters of the respective previous years.

According to the country’s decarbonization plan, all existing lignite-fired power stations will cease operating by the end of 2023.

 

Lignite-fired electricity packages to PPC rivals by fourth quarter

The energy ministry plans to soon submit to Parliament a legislative revision for a mechanism offering third parties access to power utility PPC’s lignite-fired electricity production. This move will enable the implementation of an agreement on the matter between the government and the European Commission as a remedy to a long-running antitrust case concerning PPC’s monopoly in the lignite sector.

Officials are aiming for a first round of lignite-produced electricity packages to become available to third parties imminently, by the fourth quarter of this year.

All electricity suppliers will be entitled to purchase these packages, to have three-month durations.

Electricity quantities planned to be offered to suppliers through the mechanism in the fourth quarter this year will be calculated to represent 50 percent of lignite-fired output in the equivalent period of 2020. Then, for every quarter in 2022 and 2023, lignite-fired packages to be offered to PPC’s rivals will represent 40 percent of lignite-based production in equivalent quarters of the respective previous years.

According to the country’s decarbonization plan, all existing lignite-fired power stations will cease operating and no longer participate in the electricity market by the end of 2023.

A prospective PPC facility, Ptolemaida V, is planned to be launched as a lignite-fired power station early in 2023 before it is withdrawn in December, 2024 for a fuel conversion and reintroduction.

 

 

Listed players plan 16 GW in RES projects worth €16bn

Greece’s listed energy groups, alone, plan to invest a total amount of 16 billion euros over the next decade for the development of green energy projects representing over 16 GW, big figures highlighting the anticipated dominance of the green energy market in the years to come as the country transitions to cleaner energy sources and decarbonizes.

Investments are already anticipated in mature RES technologies, namely wind and solar energy facilities, while, once market and regulatory conditions allow, major investments will be made in energy storage as well as offshore wind farms.

Terna Energy, market leader in Greece’s RES market, plans to reach an installed capacity of 3,000 MW in the next five years. The company, the biggest wind energy player in Greece and southeast Europe, is currently developing wind energy projects representing 400 MW while a further 63 projects are nearing maturity.

Power utility PPC is making impressive RES market progress through its subsidiary PPC Renewables. PPC, according to the company’s updated business plan, will make investments totaling 3.4 billion euros until 2023, 34 percent of this amount concerning RES investments.

Green energy is also a key aspect in the Mytilineos group’s investment plans over the next few years. Its solar energy projects portfolio, representing 1,480 MW, is one of the biggest in Greece. The company possesses 300 MW in RES projects either operating, under construction or set for construction, as well as a further 100 MW headed for final investment decisions by the end of 2021. Mytilineos also plans to develop 20 energy storage projects, each with a 50-MW capacity.

Hellenic Petoleum (ELPE), both acquiring and developing RES projects, is aiming for a 2-GW RES portfolio by 2030.

Motor Oil Hellas recently acquired 11 operating wind farms with a total 220-MW capacity as well as a 20-MW facility still under construction from private equity fund Fortress. MOH is aiming for an operating RES capacity of 364 MW by the end of 2022 as well as a medium-term RES goal of between 500 to 600 MW.

Ellaktor is planning investments worth 1 billion euros for the development of 900 MW through its partnership with Portugal’s EDPR.

Contractor Intrakat also aims to push ahead with a one billion-euro RES investment plan. The company has joined forces with Gaia Anemos, possessing wind and PV production licenses representing approximately 1 GW, plus RES expertise.

RF Energy has reached an investment decision to develop an offshore wind farm with a capacity of 498.15 MW northeast of the island Limnos. The project is budgeted at two billion euros, according to the company.

 

 

 

NSRF offering €5.2bn for green transition, decarbonization

Nearly one quarter, or 5.2 billion euros, of the new National Strategic Reference Framework (NSRF) amount allotted to Greece, covering 2021 to 2027, will be used to support the country’s green-energy transition and decarbonization efforts.

The funding will be divided into two programs, one for Environment, Energy and Climate Change, worth 3.61 billion euros, and the other for Fair Developmental Transition, worth 1.63 billion euros.

The two programs will offer support for investments promoting RES penetration, environmental protection, a circular economy, the climate change defense, while also supporting the decarbonization effort in the western Macedonia and Megalopoli regions, both lignite-dependent local economies, as well as the islands.

The Environment, Energy and Climate Change section of the NSRF funding package, presented in Athens yesterday, has been designed to lead to: “A greener and more resilient Europe with low carbon emissions, through the promotion of clean energy, green and blue investments, a circular economy, climate change mitigation and adjustment, risk prevention and management, and sustainable urban mobility.”

 

PPC to issue post-lignite bonds with yields of 6-7% to residents

Power utility PPC is preparing to offer solar farm-project bonds with yields of 6 to 7 percent to residents of the lignite-dependent west Macedonia and Megalopoli regions, exclusively, where major-scale solar farms are planned as part of the utility’s decarbonization and economic transformation of the two areas.

The company aims to offer two sets of bonds representing 5 percent of its solar farm investments in these areas.

The issues will effectively offer residents a share of the economic growth potential of the west Macedonia and Megalopoli regions.

The lignite-related activity of the two regions has contributed significantly to the country’s GDP over the past six decades.

PPC plans to issue the two sets of bonds as soon as it has received finalized licenses for these solar farm projects.

The power utility has submitted licensing applications for a total capacity of 2.9 GW in both areas.

Assuming PPC is granted a 2-GW license for its west Macedonia project and construction costs average 700,000 euros per MW, the investment cost, for this project, would total 1.4 billion euros, meaning that a 5 percent share for residents would result in bonds worth a sum of 70 million euros.

A similar procedure would be implemented for PPC’s Megalopoli solar farm project, planned to offer a 500-MW capacity.

PPC wants to break up both issues into bonds worth 1,000 euros each so that they can be distributed to as many residents as possible.

 

PPC aims for EBITDA repeat of €900m, carbon cut ‘on track’

Power utility PPC is aiming for a repeat of last year’s EBITDA performance in 2021, a level of between 800 and 900 million euros, an objective to be supported by the corporation’s declining lignite-based electricity generation, both in terms of volume and energy-mix percentage, the company’s chief executive Giorgos Stassis has told analysts.

As part of its decarbonization effort, PPC plans to withdraw its Megalopoli III lignite-fired power station within the current year.

PPC managed to restrict its lignite-fired generation to 22 percent of total output in the first quarter this year, down from 44 percent a year earlier.

The utility needed to spend 138.5 million euros on CO2 emission rights in the first quarter, up from 119.7 million euros during the equivalent period last year, at an average cost of 31.7 euros per ton.

CO2 emission right prices have since risen further and currently register between 51 and 52 euros per ton.

Assuming CO2 emission right prices average 47 euros per ton in 2Q – this level could end up being be far higher – and PPC’s lignite-based generation remains at the current level, then the corporation’s carbon-cost outlay for this quarter will reach approximately 205 million euros, a 48 percent increase.

PPC, which recently borrowed through sustainability-linked bonds, committing itself to a carbon emission reduction of 40 percent by 2022, is confident this target will be achieved, the corporation’s administration told analysts.

 

Strategic reserve milestones set for next two months

A series of milestones have been set until autumn in preparation for Greece’s prospective Strategic Reserve Mechanism, which, if achieved, will enable its launch towards the end of the year.

The timeline and milestones leading to the possible launch of a Strategic reserve mechanism, keeping certain generation capacities outside the electricity market for operation only in emergencies, was discussed in detail during an online meeting yesterday between energy minister Kostas Skrekas and European Commission authorities.

Strategic reserves can be necessary to ensure security of electricity supply when electricity markets are undergoing transitions and reforms and are meant to insure against the risk of a severe supply crisis during such transitions.

Three main prerequisites will need to be satisfied by the end of July, the first being the completion of a market reform plan, intended to intensify competition in the wholesale electricity market.

The plan’s preparations will include the involvement of Pantelis Kapros, Professor of Energy Economics at the National Technical University of Athens, according to sources.

A new adequacy report, or updated study on grid sufficiency proving the need for the introduction of a Strategic Reserve mechanism, will also be needed.

Thirdly, the energy ministry will need to have fully responded, within the next month, to an extensive set of questions forwarded by European Commission officials on the prospective mechanism.

If these steps go well, an indefinite prospect at present, then a clearer picture on the mechanism’s details should have emerged by early autumn.

Any Strategic Reserve formula reached will need to be applied for a brief period so that an ensuing Capacity Remuneration Mechanism, to support new natural gas-fueled power stations, can immediately follow, the European Commission’s Vice-President Margrethe Vestager, also Brussel’s Commissioner for Competition, appears to have made clear to Skrekas, the energy minister, at a recent meeting.

Meanwhile, power utility PPC’s updated decarbonization plan is aiming for a withdrawal of all its lignite-fired power stations by 2025, at the very latest.

 

Ptolemaida V gas conversion board decision end of June

Power utility PPC is moving swiftly towards a finalized investment decision on a fuel-conversion plan for its prospective Ptolemaida V facility in northern Greece, to begin operating as a lignite-fired power station in 2022 before converting, a few years later, to a natural gas-fired facility equipped with infrastructure also enabling the use of hydrogen.

PPC’s chief executive Giorgos Stassis will present the plan to the company board at a meeting scheduled for the end of June, when it is expected to be approved, sources informed.

The plan will include schedules and financial studies for the conversion of Ptolemaida V, Greece’s last lignite-fired power station in development.

The PPC board is expected to stick to its plan of operating Ptolemaida V as a lignite-fired power station until 2025, instead of 2028, as was initially planned, before making the fuel switch to natural gas.

The country’s ambitious decarbonization targets and rallying CO2 emission right prices, currently at lofty levels ranging between 40 and 44 euros per ton, prompted Stassis, the CEO, to hasten PPC’s withdrawal of lignite units.

Ptolemaida V will be loss-incurring as a lignite-fired facility, the chief executive told analysts, responding to questions, during a recent presentation of the company’s financial results.

PPC also plans to increase the production capacity of Ptolemaida V to 1,000 MW from 660 MW. The facility will be flexible, possessing the ability to swiftly increase output from 300 to 1,000 MW within 30 minutes to an hour.

The facility’s fuel conversion cost is estimated at 250 million euros, sources have informed.

Stassis told analysts Ptolemaida V will be competitive even without support from the Capacity Remuneration Mechanism (CRM), being sought by the government from the European Commission as support for flexibility.

 

Energy investment activity rising, focus on RES projects, energy transition

Investment activity in the domestic energy sector is rising with major deals being negotiated, the main focus being on renewables and the energy transition, participants at yesterday’s Delphi Economic Forum made clear.

This activity promises significant growth for all RES technologies, even the more innovative, such as offshore wind farms and energy storage units.

Major energy players are moving to capitalize on opportunities that are emerging as the country pushes ahead with its decarbonization effort. Also, investor talks concerning domestic and international partnerships, the latter promising to secure expertise in sectors such as offshore wind farms, are in progress.

Power utility PPC, moving ahead with RES investments, aims to have launched projects with a total capacity of 1.5 GW by 2023. The utility’s redevelopment plan for the country’s two lignite-dependent regions, Ptolemaida, in the north, and Megalopoli, in the Peloponnese, is in progress.

PPC plans to invest 3.4 billion euros on RES project development in these regions, and an upgrade of their distribution networks, Konstantinos Mavros, chief executive of PPC Renewables, a PPC subsidiary, told the forum.

PPC is also expected to establish partnerships facilitating its entry into the offshore wind market. In addition, the company also aims to have formed a joint venture with German power company RWE by the end of summer for development of RES projects totaling 2 GW.

Elsewhere, energy company Mytilineos is also preparing a strategic alliance with a major international group for its entry into the offshore wind farm sector.

Mytilineos is also close to completing, this year, a major post-lignite investment in natural gas-fueled electricity generation. In addition, the company plans to develop 300 MW in wind farms and 1.5 GW in solar farms over the next two years.

Furthermore, Mytilineos plans to develop 20 energy storage projects, each with 50 MW capacity, by utilizing its immense knowhow gained in this field through involvement in such projects abroad.

Hellenic Petroleum (ELPE) is preparing RES and digital transition projects and will concurrently focus efforts to reduce carbon emissions and develop more eco-friendly products, including biofuels and hydrogen.

The Copelouzos group is nearing an investment decision on the development of a natural gas-fueled power station in Alexandroupoli, northeastern Greece. A decision is expected this summer. The group is currently engaged in talks with neighboring North Macedonia’s power utility for its possible entry into this project as a minority partner.

As for networks, power grid operator IPTO has planned numerous projects as part of a ten-year investment plan worth five billion euros. The operator anticipates new RES project penetration of 17 GW, a forecast exceeding the National Energy and Climate Plan’s goals.

DEDDIE/HEDNO, the distribution network operator, has put together a 3 billion-euro investment plan for the two next regulatory periods, each four years long. Projects include network undergrounding, service upgrades and improvement, new technologies, as well as grid digitalization projects.

NECP needs revising, EU CO2 emission goal more ambitious

The EU’s level of RES investment objectives has been raised even higher following an agreement reached this week by the member states and European Parliament for a swifter reduction of CO2 emissions by 2030, reached after many months of inconclusive negotiations.

The agreement for a CO2 emissions reduction of at least 55 percent by the end of the decade, instead of 40 percent, as had been previously set, will subsequently require EU member states to revise their National Energy and Climate Plans.

NECP objectives concerning wind, solar and all other green-energy technologies will need to be reset.

For Greece, this development means that a 2019 NECP goal for the installation of 8.8 GW in new RES capacity by 2030 needs to be increased to over 10 GW, sources have informed energypress.

The precise figure will be determined by the proportion, or mix, of wind, solar and other RES categories to be included in Greece’s updated NECP, as each technology offers different GWh results per GW installed.

Greece’s NECP committee will soon need to proceed with new calculations and decide on a revised strategy.

The country’s revised NECP will also detail Greece’s updated decarbonization plan, including PPC’s commitment to complete this effort sooner by turning off its Ptolemaida V facility as a lignite-fired unit in 2025, not 2028, as originally planned. PPC’s chief executive Giorgos Stassis pointed out this change of plan to analysts earlier this week.

Greece carbon-free by 2025, among 20 fastest movers

Twelve European countries have, to date, fully withdrawn their coal-fired facilities, while a further seven, including Greece, have committed to do so by 2025.

A coal-free status in Greece is expected by 2025 as state-controlled power utility PPC has decided to convert its Ptolemaida V power station to a natural gas/hydrogen-run unit within the next four-and-a-half years, PPC’s chief executive Giorgos Stassis told analysts yesterday, during a presentation of the company’s 2020 results.

The Greek power utility is currently phasing out all other lignite-fired power stations and related mines until 2023.

Besides sparing PPC of certain losses, given an anticipated sharp rise in CO2 emission right costs, this course yet again reaffirms, to investors, PPC’s plan to transform into an eco-friendly corporation.

In addition, the prospect places PPC and Greece among the world’s fastest movers towards decarbonization.

Austria, Albania, Belgium, Cyprus, Estonia, Iceland, Latvia, Lithuania, Luxembourg, Malta, Sweden and Switzerland are all now carbon-free.

France is expected to be added to this list this year, Portugal and Slovakia anticipate their entries in 2023, the UK is seen turning carbon-free in 2024, while Greece, Hungary, Ireland and Italy are planned to join the carbon-free club in 2025.

Lignite areas from PPC to Greek State through SPVs

Power utility PPC’s lignite zone areas not to be repurposed for the development of RES units as part of Greece’s decarbonization effort will be transferred to the Greek State through the establishment of two special purpose vehicles, one representing PPC, the other the Greek State.

At this stage, it appears that the power utility will transfer to the Greek State about two thirds of lignite areas it has used for electricity generation.

Talks between the coordinating committee, headed by government official Constantinos Mousouroulis, and PPC, held to determine which lignite areas and mines will remain under the wings of the state-controlled utility, are nearing completion.

Expenses that would have been covered by PPC for the repurposing of the lignite areas to be transferred to the Greek state will be taken into account for the agreement between the two sides.

PPC, as a result, will be spared of these expenses as the restoration of the lignite areas taken on by the Greek State will be funded through a 242 million-euro sum expected for the national recovery plan.

PPC has already begun procedures for the establishment of its SPV, sources have informed.

At the other end, a coordinating committee handling Greece’s just transition development is preparing a new section, for a related draft bill,  describing the charter of the Greek State’s SPV. This section will be forwarded for public consultation. Once the draft bill has been ratified, PPC’s unutilized lignite areas will be transferred to this SPV.

 

PPC’s Kardia III and IV lignite power stations set for April 17 withdrawal

Power utility PPC’s Kardia III and IV lignite-fired power stations are nearing withdrawal as the two facilities are due to clock up 32,000 hours of operating time, their limit, on April 17.

PPC has scheduled to close down the two power stations this year as part of a decarbonization plan the company had announced in December, 2019. This plan was included in the National Energy and Climate Plan (NECP).

The two imminent power-station withdrawals, representing a capacity loss of 540 MW, will follow a first stage of exits carried out last year by PPC, when its withdrawal of Amynteo I and II, totaling 546 MW, launched the country’s decarbonization effort.

Besides producing electricity, the two Kardia units, located in Greece’s north, have also been used to provide district heating. Local authorities have asked the energy ministry to keep the two units on standby for a few more weeks until the early spring’s chilly weather is well and truly over.

PPC’s prospective Ptolemaida V unit will eventually take over district heating services following the adoption of intermediate solutions to cover next winter.

PPC also plans to withdraw Megalopoli III, in the Peloponnese, this year, earlier than the 2022 objective listed in the NECP.

Recovery plan eyes €270m for e-car part facilities, rechargers

National recovery plan features will aim to lay the foundations for an electric vehicle industry in Greece through 200 million euros in subsidies for the establishment of production facilities making batteries and parts for electric vehicles, sources have informed.

The national plan, to be fed by the European Commission’s Recovery and Resilience Plan, once approved in Brussels, is designed to create jobs where they are needed most, including in parts of west Macedonia, in Greece’s north, and Megalopoli, in the Peloponnese, whose lignite-dependent economies require restructuring as a result of the country’s decarbonization strategy.

The national recovery plan will also seek to offer a further 70 million euros in subsidies for the installation of approximately 8,500 recharging posts for electric vehicles, both regular and fast chargers, much higher in cost. Regular recharging units cost between 3,000 and 5,000 euros while fast chargers cost about 20,000 euros each.

Given the aforementioned subsidy plans, Greece’s electromobility effort could enjoy financial backing totaling more than 300 million euros, as, besides the 270 million euros being anticipated through the national recovery plan, an amount of between 30 and 40 million euros has already been secured through other financing programs.

The government plan aims for one in three vehicles circulating in Greece by 2030 to be electric.

 

Crete-Athens grid link omitted from Greek RRF proposal

A grid interconnection to link Crete with Athens has been omitted from a national plan containing 112 projects for which financial support will be sought through the European Commission’s Recovery and Resilience Facility.

It was the energy sector’s only surprise omission from the government’s plan for RRF support, to be submitted to Greek Parliament within the next few days for ratification before being forwarded to the European Commission.

Even so, progress of the Crete-Athens grid interconnection project, vital for Crete’s energy sufficiency without reliance on high-cost local power stations, will not be affected by the decision as a number of other financing options remain available, authorities have stressed.

These include the National Strategic Reference Framework and the Just Transition Fund.

The national RRF plan was discussed at a cabinet meeting yesterday ahead of its presentation, planned for tomorrow.

A proposal for a 200 million-euro injection into the RES special account, facing deficit territory, has been included in the national plan.

Other key features of the plans are: the country’s energy efficiency upgrade program for homes, businesses and public buildings; the decarbonization plan; installation of smart meters; upgrade and undergrounding of transmission lines; as well as development of electric vehicle recharging infrastructure.

EC examining compensation bid for PPC lignite closures

The government, determined to ensure compensation for state-controlled power utility PPC over its decision to prematurely close down its lignite-fired power stations, is seeking a solution through the European framework of options, an energy ministry announcement has informed.

The Greek State has submitted a compensation request to cover extraordinary costs related to the premature closure of four PPC lignite mines and lignite fired power stations, the ministry’s announcement noted.

European Commission Vice-President Margrethe Vestager, also Brussels’ Commissioner for Competition, has informed that the Commission views favorably the Greek initiative for a premature closure of these lignite facilities and is now examining the legal grounds of the compensation request, the energy ministry’s announcement added.

The Greek government wants compensation for PPC as the utility’s outgoing units have potential for a longer life, meaning PPC is being deprived of further earnings through these facilities.

A successful Greek compensation bid could also help cover extraordinary costs linked to the restructuring of lignite-dependent local economies.

The energy ministry is basing Greece’s compensation bid on a recent European Commission decision approving 52.5 million euros for the Netherlands as compensation for the premature closure of its Hemweg coal-fired power station.

The Netherlands has implemented law forbidding the use of coal for electricity generation beyond January 1, 2030.

PPC bond issue aims for real-money investors, market clout

Power utility PPC, which has just issued a 500 million-euro bond expiring in 2026, is aiming to attract foreign institutional investors – or real-money investors placed in the real economy, not hedge funds – to the issue, which, the corporation hopes, will also enjoy a solid course in secondary-market trading and help establish the company’s clout in capital markets.

PPC began presenting this bond issue to institutional investors yesterday and will continue to do so over the next two days in an effort to maximize the level of participation in the issue, a Sustainability-Linked Bond, the first of its kind to be offered by a Greek company.

The power utility is committing to a 40 percent CO2 emissions reduction by 2022, which if not achieved, will add 50 basis points to the bond’s yield.

The issue’s order book closes on Thursday. A clear picture on the turnout and type of investors drawn to the issue should emerge today or tomorrow, the latest.

PPC’s push to reduce CO2 emissions, which the company has told investors will fall from 23.1 million tons in 2019 to 13.9 million tons in 2022, is based on two key factors, a planned withdrawal of lignite-fired units representing a total capacity of 3.4 GW by 2023 and a change of investment direction focusing on renewables.

Data shows that PPC managed to reduce its CO2 emissions by 56 percent between 2005, when levels were 52.6 million tons, and 2019. A drop to the 2022 objective of 13.9 million tons would represent a 74 percent reduction, compared to 2005. If achieved, such a reduction would exceed the national target of 62 percent.

An improved BB- rating from Fitch late in December was a key factor in PPC’s decision to head to capital markets at this point in time.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

DESFA focusing on gas pipeline for west Macedonia network

Gas grid operator DESFA and energy ministry officials are currently discussing financing options that could be sought for the operator’s plan to develop a gas pipeline needed to facilitate a gas network expansion in northern Greece’s west Macedonia region, energypress sources have informed.

DESFA is awaiting approval by RAE, the Regulatory Authority for Energy, for its ten-year development plan, worth more than 545 million euros, including the gas pipeline project.

The talks between DESFA and the energy ministry officials are focused on public funding possibilities, primarily European, to cover part of the cost of the gas pipeline, which would ultimately help contain the level of network usage tariffs to be covered by consumers.

Local officials anticipate this network expansion plan should qualify for EU development fund support, even though EU policy generally does not favor gas projects, as it clearly represents a development project that promises multiple regional benefits, including replacement of lignite-based energy, on the way out as a result of the country’s decarbonization strategy.

Besides the EU recovery fund, officials in Greece are also considering the prospects of financial support from the EU’s National Strategic Reference Framework or a number of regional development programs.

The gas network expansion plan in the country’s west Macedonia region will require the development of a 130-km gas pipeline from Trikala, in the mainland’s mid-north, a project budgeted at 110 million euros.

According to sources, DESFA has revised an original pipeline route plan, bringing the pipeline closer to cities where medium and low-pressure networks for households and businesses are to be developed by gas distributor DEDA.

PPC seeks IPTO support for EC lignite compensation request

Power utility PPC wants power grid operator IPTO to provide a statement declaring whether the power utility’s lignite-fired power stations, nowadays loss-incurring units as a result of elevated carbon emission right costs, are still necessary for the achievement of grid sufficiency, the utility’s objective being to gain support for a lignite compensation request submitted to the European Commission, not to immediately shut down its lignite units, sources have informed.

Brussels has been examining the PPC compensation request for months, initially as part of a package incorporating the European Commission’s lignite antitrust case against Greece, and more recently, following settlement of the latter, as a separate issue that has dragged on.

Throughout the entire period, officials in Greece have needed to respond to extensive Brussels questioning over PPC’s compensation request. Most recently, the European Commission is reported to have informed PPC, by email, that it would deliver a decision as soon as possible, once all information has been processed.

PPC, in its letter to IPTO, informs that it would be prepared to shut down the lignite units now if the operator considers them unnecessary for grid sufficiency as they are the cause of losses on a daily basis.

The power utility has planned a phaseout of its lignite facilities over the next three years, as part of the country’s decarbonization effort.

IPTO, in a grid-sufficiency study covering 2020 to 2030, conducted within the framework of the National Energy and Climate Plan, has stressed the period between 2021 and 2024 will be crucial as a result of PPC’s planned phaseout of lignite-fired power stations.

Subsequently, the grid’s sufficiency will depend on how soon three new gas-fueled power stations with a capacity totaling 2,150 MW – PPC’s Ptolemaida V, and units being developed by Mytilineos and TERNA – will be ready for launch, IPTO’s NECP-linked study noted.

Talks continue for EU recovery fund energy projects package

Electricity network upgrades, including restricted underground cable installations – due to limited funds – at areas presenting serious energy security problems; decarbonization; as well as spatial planning and redevelopment for carbon-neutral cities feature as plans in an initial energy-projects package, worth over one billion euros, linked to the EU’s recovery fund, Brussels sources have informed.

Brussels authorities are currently appraising these projects, a procedure expected to be completed by the end of March. The Greek government will then need to immediately incorporate approved plans into a National Recovery and Resilience Plan and submit it to Brussels by early April.

Energy minister Kostas Skrekas and European Commission officials discussed the ministry’s proposals during a virtual conference yesterday.

Besides decarbonization, energy efficiency upgrades of buildings, as well as energy-related town and spatial planning, the government is also addressing the need to modernize infrastructure, especially networks, as was highlighted by problems encountered in many parts of Greece during recent snowstorms.

The installation of underground transmission cables will be restricted to between 2,000 and 2,500 kilometers of medium and low-voltage networks, given the amount of recovery funds available for this project, estimated at 200 million euros, according to energypress sources.

The cost of installing underground medium-voltage power lines is estimated at 100,000 euros per kilometer, compared to 30,000 euros for overhead lines. Installation costs for low-voltage power lines are estimated at 70,000 euros per kilometer, compared to 25,000 for overhead lines.

The overall effort is also expected to include an upgrade of ageing overhead transmission lines around Greece, dating back to the 70s and 80s.

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

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

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

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

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

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

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

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

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

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

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

Preliminary talks for 9th post-bailout review begin today

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

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

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

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

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

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

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