GEK TERNA, Elpedison close to decisions on gas-fueled units

GEK TERNA and Elpedison are expected to announce finalized investment decisions for new gas-fueled power stations with total capacity over 1,400 MW within the next two months, energypress sources informed.

GEK TERNA plans to develop a 660-MW power station at the industrial zone of Komotini, northeastern Greece, while Elpedison, a joint venture involving Hellenic Petroleum ELPE and Italy’s Edison, intends to construct units with a total capacity of 826 MW at the ELPE facilities in Thessaloniki.

These project plans are estimated to be worth a total of at least 600 million euros.

The energy companies have already received energy production licenses as well as other licensing requirements, including environmental permits, for these prospective units, regarded as mature investment plans.

Both companies are awaiting new CAT mechanism details for gas-fueled power stations before finalizing their investment plans. The economic uncertainty caused by the pandemic, plus the anticipation of a second wave, are also crucial factors influencing the thinking behind these investment decisions.

Market capacity exists for new combined-cycle gas-fueled power stations during the energy transition over the next ten to 15 years, electricity market officials insist.

The planned withdrawal of power utility PPC’s lignite-fired power stations over the next three or so years combined with a lack of development in RES energy storage systems offers gas-fueled power generation an opportunity to cover capacity to be lost by lignite-fired power station closures.

A recent BloombergNEF report noted big natural gas-fueled power stations are not necessary. However, market officials point to the National Energy and Climate Plan as proof of the need for such units.

The Mytilineos group is developing an 826-MW CCGT in the Agios Nikolaos area of Boetia, northwest of Athens, with the aim of a launch in late-2021.

Energy transition to boost medium-term gas demand; 6 bcm total expected in ’20

The energy transition is boosting the prospects of an increase in Greek natural gas consumption, which could rise by 2.5 to 3 bcm in the medium term, market experts project.

Pundits expect total gas consumption in 2020 to reach 6 bcm, up considerably from levels registered in 2019, and stabilize at this level in 2021.

Electricity generation is a key factor in the anticipated rise of gas consumption as the withdrawal of lignite-fired power stations should increase the energy-mix share of natural gas to levels of between 30 and 40 percent.

The rise in gas consumption in the short term will greatly depend on the number of new gas-fired power stations to be introduced. For example, a gas-consumption increase of as much as 1.5 bcm is expected if three gas-fired power units with respective capacities of 800 MW are introduced to the system.

Exports are expected to add a further 1 bcm to the market’s size, while small-scale expansion covering the shipping sector and needs of detached areas should add another 500 million cubic meters to consumption.

 

PPC turn to renewable energy backed by BNEF report findings

Wind and solar energy production costs will be lower than those of existing natural gas-fueled power stations by 2025, according to a BloombergNEF analysis on Greece’s electricity market.

The projection vindicates the power utility PPC’s decision to turn to renewable energy, the corporation’s head has indicated.

“The conclusions of the BNEF report are in full agreement with the key pillars of our new strategy,” PPC’s chief executive Giorgos Stassis said.

Installed wind and solar energy capacity will have quadrupled by 2025 compared to present levels, and renewable energy sources will have captured an energy mix share of nearly 50 percent, toppling fossil fuel from its dominant position, even if RES subsidies are not offered for existing technologies such as solar and wind, according to the BNEF analysis.

“The ever-increasing competitiveness of renewable energy sources also confirms, from an economic point of view, our choice to restructure our portfolio and transition our production towards renewable energy sources,” Stassis noted. “By focusing on clean energy, we can achieve a decarbonization of our activities in electricity generation and also reduce the cost of electricity for consumers.”

In addition, the report highlights the important role of consumers as key players in the future energy system, the PPC chief noted.

This supports PPC’s decision to develop a new customer-oriented approach and offer a reinforced portfolio of products and services, using new technologies and digital systems, according to Stassis.

Utilizing lower generation costs offered by wind and solar energy production, PPC will be well positioned for leading roles in other energy sectors, beginning with electromobility, the PPC head supported.

According to the BNEF report, Greece can establish itself as one of the EU’s energy transition leaders.

Lower-cost solar and wind energy production, as well as storage systems, plus increased CO2 emission right costs, are all radically transforming the country’s energy system, the BNEF report noted.

Greece is expected to gain an additional 18 GW in generation capacity by 2030, 67 percent of this increased output represented by wind and solar energy.

No turning back on decarbonization effort, PM stresses

Prime Minister Kyriakos Mitsotakis, speaking at a press conference at the Thessaloniki International Fair, has described the country’s decarbonization effort as personal challenge and one for the government as a whole.

He was responding to questions on whether the plan can be successfully implemented given resistance by unions and local communities at the lignite-dependent regions of west Macedonia in Greece’s north and Megalopoli, in the Peloponnese.

Mitsotakis was critical of any thoughts concerning extended operations at power utility PPC’s lignite-fired power stations, stressing a decision for their gradual withdrawal has been reached as a result of financial and environmental factors.

State-controlled PPC is incurring losses worth hundreds of millions of euros as a result of hefty CO2 emission right costs, he noted.

The Prime Minister informed he would soon visit the west Macedonia region and also launch a 204-MW solar energy farm, Greece’s biggest to date, currently being developed in Kozani by Hellenic Petroleum (ELPE).

 

Ministry proposal seen ending PPC lignite monopoly case

Independent electricity retailers would be entitled to lignite-generated electricity supply from power utility PPC at a predetermined price, definitely not below cost for the utility, in quantities constituting 40 percent of each lignite-fired power station’s production, to be distributed to suppliers in proportion to their respective retail electricity market shares, until 2023, when  lignite-fired units are expected to have been phased out as part of the country’s decarbonization plan, according to a finalized proposal forwarded by the energy ministry to the European Commission’s Directorate-General for Competition a fortnight ago in an effort to resolve a long-running antitrust case.

Energy ministry officials are confident this formula will end the antitrust dispute, now a decade long, concerning’s PPC’s lignite sector monopoly.

Back in 2010, lignite dominated Greece’s energy mix but there is now much less at stake as lignite-fired power stations are being phased out over the next three years.

PPC’s lignite-fired electricity generation dropped 47.8 percent in the first half, diving 70 percent in the second quarter, the utility announced just days ago when presenting its first-half results.

PPC’s lignite-based output totaled 3,000 GWh in the first half and just 756 GWh in the second quarter.

Energy ministry officials believe the Directorate-General for Competition will not resist accepting the Athens proposal as a rejection would take the dispute back to European Court, meaning a case would not be heard any sooner than late-2021. By then, PPC’s lignite-fired power stations Kardia III and IV and Megalopoli III will have all been withdrawn, according to the latest schedule announced by energy minister Costis Hatzidakis earlier this week.

 

Megalopoli III to exit 6 months ahead of schedule, in mid-2021

Power utility PPC plans to prematurely withdraw its Megalopoli III lignite-fired power station in mid-2021, six months earlier than planned, energy minister Costis Hatzidakis announced yesterday while presenting the government’s decarbonization plan.

A decision was taken to shut down Megalopoli III, in the Peloponnese, ahead of schedule as this facility has operated for a total of just one week since spring, indicating its output is no longer required to secure grid sufficiency.

In his comments to media yesterday, Hatzidakis, the energy minister, highlighted the high cost entailed in operating lignite-fired power stations.

The averages variable cost of lignite-based energy is €0.80 per MWh, well over the System Marginal Price of €0.45 per MWh, according to data presented by the minister.

A 550-MW PPC lignite-fired power station at Amynteo, northern Greece, has already been shut down.

For the time being, no other PPC lignite unit withdrawal plan revisions were reported at yesterday’s news conference.

Kardia III and IV are still planned to be withdrawn in 2021. These will be followed by Agios Dimitrios I, II, III and IV, representing a total capacity of 1,100 MW, in 2022. Their withdrawal will coincide with the entry of a new unit, Ptolemaida V, to offer a 610-MW capacity. It will be launched as a lignite-fired unit before continuing to generate on cleaner fuel as of 2028.

PPC is also scheduled to withdraw 260-MW Megalopoli IV, 290-MW Meliti I and 340-MW Agios Dimitrios V in 2023.

 

Gov’t plans 11 decarbonization investments worth €2.5bn

The government plans to facilitate the post-lignite transition of Greece’s west Macedonia and Megalopoli areas by promoting 11 big investments totaling 2.5 billion euros and also making available, through a six-year plan, national and EU support funds in excess of three billion euros.

This plan, already presented to west Macedonia working groups earlier this week, will be discussed today by a government committee before being presented to media by energy minister Costis Hatzidakis.

Besides the 11 major-scale investments, the plan, intended to reshape the production models of both regions, will also feature tax and financing incentives.

For decades, both the west Macedonia and Megolopoli areas have depended on lignite for economic growth.

The new plan will be based on five key pillars – clean energy; industry, small-scale industry, commerce; smart agricultural production; sustainable tourism; technology and education – for growth and utilization of comparative advantages.

Investment plans include the development of solar farms in west Macedonia and Megalopoli with a total capacity of 2.3 GW; a state-of-the-art gas-fueled power station in west Macedonia; as well as the establishment of electromobility industrial parks in both areas.

The government’s decarbonization plan for the two areas is expected to create 5,100 jobs, directly, and a further 6,400, indirectly.

The government expects to deploy national and EU support funds worth 3.2 billion euros for the overall effort over six years, with the majority of this total, 2 billion euros, to be made available over the first three years (2021-2023).

The plan is expected to be forwarded for public consultation in mid-September.

 

PPC business plan to include more ambitious RES goals

Power utility PPC’s new business plan, to be announced towards the end of the year, will feature a more ambitious transition towards the corporation’s RES objective of between 2,000 and 3,000 MW, as well as bolder steps concerning digital products, the retail electricity market, electromobility and the decarbonization schedule.

PPC, undergoing strategic changes, has decided to present three-year business plans that will be revised annually instead of its customary five-year plans.

This reflects the corporation’s determination to remain connected with rapid developments in the energy sector, capable of outdating business plans announced just a year earlier.

The new PPC business plan, expected in December, will aim for a RES portfolio of 2,000-3,000 MW within two years; swifter digitalization; increased collaboration with the private sector for electromobility development; greater emphasis on cost-reduction synergies; as well as revenue reinforcement through the application of new technologies in all fields.

The business plan will be complemented by a new regulatory framework for PPC’s privatization-headed subsidiary HEDNO, the distribution network operator, as well as European Commission negotiations, crucial for the new generation of retail products.

The new PPC business plan will offer fundamentals for the establishment of a corporation delivering annual operating profit of between 750 and 900 million euros between 2021 and 2023.

A smooth ride is not guaranteed. Fluctuations are possible. Gas and petroleum prices, currently low, will most likely rise over the next few months, PPC’s decarbonization plan represents an enormous challenge, while difficulties and delays in the absorption of amounts from the recovery fund are feared.

For the time being, the market is approving PPC’s approach. The company share has risen 187 percent over the past six months, up from 1.55 euros in March to 4.45 euros yesterday.

 

Rising CO2 right prices signal irreversible post-lignite course

Higher CO2 emission right costs, forecast to rise even further over the next few years, and this trend’s growing cost for power utility PPC’s lignite-fired power stations, highlight the country’s irreversible course towards the post-lignite era.

CO2 emission right costs have climbed to levels of about 30 euros per ton, the highest since 2006, Nikos Mantzaris, policy analyst at The Green Tank, an independent, non-profit environmental think tank, noted yesterday during a presentation of a new report, by the think tank, on Just Transition, the EU policy to end lignite dependence in Europe.

CO2 emission right prices will increase further over the next five years to reach levels of 35 to 40 euros per ton, sector experts have projected, Mantzaris said.

Stricter CO2 emission right regulations to be implemented by the European Commission in 2021 will push prices even higher, Mantzaris supported.

This upward trajectory of CO2 emission right costs is weighing heavy on PPC. Energy minister Costis Hatzidakis has estimated that PPC’s CO2-related costs in 2020 will amount to at least 300 million euros, a repeat of last year.

PPC has already made moves to restrict its lignite-fired generation for the grid. “The downward trend became even steeper following a full decarbonization decision announced [by the government] in September, 2019, which led, in May, 2020, to lignite covering just 6 percent of electricity demand on the grid, a historic low,” according to the latest Green Tank report.

For the first time in seven decades, not a single lignite-fired power station in Greece’s west Macedonia region operated on May 20 this year, while, between June 7 and 9, all the country’s lignite-fired power stations did not operate for 40 hours, the report noted.

 

 

PPC staff left idle by lignite unit closures to be transferred

Power utility PPC employees left idle as a result of the corporation’s planned phaseout of lignite-fired power stations until 2023 will be transferred to other company units and posts, the PPC board has decided.

The company’s leadership anticipates PPC’s two voluntary exit programs this year will end up attracting some 1,200 participants, a figure deemed satisfactory considering the company’s financial figures.

PPC is preparing to launch a second voluntary exit program on September 1. It will concern some 1,700 company employees, of which 500 have already qualified for full pension rights.

The full details of the upcoming voluntary exit offer have not yet been announced but are expected within the next few weeks.

It is known that interested parties will face a September 31 deadline to lodge their applications. Also, the follow-up voluntary exit plan will offer outgoing employees bonus payments of 20,000 euros on top of severance pay worth 15,000 euros.

An initial voluntary exit program offered by PPC earlier in the year drew 702 employees from PPC’s lignite-fired units, slightly below the target figure, prompting company savings estimated at 48 million euros.

EU recovery fund compromise cuts into JTF for lignite end

A significant contraction of the Just Transition Fund that has resulted from a major compromise deal just reached between the EU’s north and south for a huge post-coronavirus recovery package has raised questions about the decarbonization effort’s financing and ability to progress smoothly.

A sum of 30 billion euros initially planned by the European Commission to be offered to lignite-dependent EU members states for their transition to cleaner energy will be cut to 10 billion euros.

A variety of post-coronavirus recovery sub-funds have been reduced in size, including the JTF, established to support Europe’s decarbonization process.

Prior to the compromise deal, a European Commission proposal had been made to increase the JTF amount for the EU’s lignite-dependent members to 40 billion euros from an initial sum of 7.5 billion euros.

Subsequently, Greece now stands to receive a few hundred million euros for its  decarbonization policy following an earlier estimate for a sum of 1.7 billion euros. The loss for Greece is worth approximately one billion euros.

The recovery package talks over the past few days saw a split between nations hardest hit by the virus and “frugal” members who were concerned about costs.

The deal centers on a 390 billion-euro program of grants to member states hardest hit by the pandemic. Italy and Spain are expected to be the main recipients.

It is the biggest joint borrowing ever agreed by the EU. Summit chairman Charles Michel described it as a “pivotal moment” for Europe.

 

Telethermal plan for the north enables faster lignite unit exits

Power utility PPC’s prospective combined cooling, heat and power plant in Kardia, northern Greece, will be designed to operate both independently and in connection with Ptolemaida V and provide telethermal needs to the regional provincial cities Ptolemaida and Kozani, seen as vital coverage that will enable the power utility to withdraw lignite-fired units, cost-incurring facilities, sooner than planned.

Ptolemaida V, a new facility nearing its launch and planned to remain as the power utility’s last lignite-fired power station, will spare PPC’s other lignite-fired units in the region from telethermal responsibilities.

This overall plan was agreed to yesterday by the government, municipal authorities, PPC and gas grid operator DESFA.

Ptolemaida V, when operating, will provide necessary telethermal energy through pipelines to the Kardia CCHP unit, which, in turn, will offer heating.

Even when Ptolemaida V is not generating electricity, the prospective Kardia CCHP unit, to run on natural gas, will be able to function independently and offer telethermal needs to residents in the region.

Authorities are pushing for the Kardia unit’s completion and launch by 2022, admitting that it could take until 2023.

PPC’s Agios Dimitrios I, II, III, IV phase-out starting July 1

Power utility PPC’s four Agios Dimitrios power station units in Kozani, northern Greece will be phased out as of July 1 and should cease operating, completely, well before 2022, when the facilities are officially scheduled to shut down as part of Greece’s decarbonization effort.

At this stage, it appears that Agios Dimitrios I, II, III and IV will only be available in winter to cover telethermal needs. These units will not be used for electricity generation, according to PPC’s new business plan, meaning they will be withdrawn sooner than had been expected.

Contrary to the four Agios Dimitrios units, an emission-limiting desulphurization investment now being completed at Agios Dimitrios V is expected to prolong the life of this unit as the effort’s results should meet EU emission limits.

PPC, responding to an EU directive from 2010 asking producers to inform, by 2013, on how they intended to transform high-polluting facilities, had performed a dry desulphurization process on Agios Dimitrios I, II, III and IV ahead of a June 30, 2020 deadline, but this technique failed to produce the desired results.

GEK TERNA set to develop new 660-MW thermal unit

GEK TERNA is expected to finance its development of a gas-fueled power station with a 660-MW capacity in Komotini, northeastern Greece, through bond funds totaling 500 million euros, sources have informed.

In a company statement, GEK TERNA noted it intends to use 400 million of 500 million euros in bond funds to finance the group’s investment program, which includes gas-fueled power generation.

GEK TERNA is close to reaching an investment decision on this facility, the sources added. It would represent the third thermal unit involving the group.

GEK TERNA, which has the potential to play a key role in renewable energy through Terna Energy, is not overlooking thermal-unit developments.

Greece’s decarbonization strategy and the dominance of natural gas as the main fuel during the energy transition are two factors creating major opportunities for the GEK TERNA group.

Other vertically integrated electricity producers are also preparing new thermal facilities. The Mytilineos group is already constructing an 826-MW gas-fueled power station in the Boetia area, slightly northwest of Athens. This unit is expected to be launched next year.

A licensing procedure by Elpedison, also for an 826-MW facility, in Thessaloniki, is maturing.

In addition, the Copelouzos group is making progress on licensing for a 660-MW facility in Alexadroupoli, northeastern Greece. Company official Kostas Sifneos recently said this facility’s launch is scheduled for 2022.

The country’s big energy players are also continuing to eye Balkan markets for electricity exports, pundits informed.

‘Energy ministry policies crucial in effort to revitalize economy’

The energy ministry’s policies promise to play a pivotal role in the challenge faced by the government to revitalize the national economy following lockdown, energy minister Costis Hatzidakis has noted in an article featuring in GREEK ENERGY 2020, the energypress team’s latest annual publication covering the Greek energy sector.

Action is already being taken by the ministry through a decisive energy-sector agenda that aims for growth and is fully aligned with the European Green Deal, now a key economic growth tool throughout Europe, the minister notes.

New financial tools such as an EU recovery fund, worth 750 billion euros, according to a European Commission proposal, are designed to help the EU achieve its goal of transition towards a zero-emission economy through support for the gradual elimination of fossil-fuel dependence, RES growth and energy savings, the minister writes.

Greece is ready to make the most of this EU support package, effectively an additional NSRF funding program for the country promising capital worth around 32 billion euros, in order to achieve sustainable green-energy growth, according to Hatzidakis.

Besides decarbonization and RES development, other aspects incorporated into the energy ministry’s wider plan include:  electromobility growth; a third Saving at Home subsidy program for domestic energy-efficiency upgrades; reforms for greater competition, transparency and more attractive price offers in the energy market; reduced industrial energy costs; and energy-sector privatizations, the minister notes.

 

PPC chief delivers favorable news on a number of fronts

Power utility PPC, undergoing gradual transformation, expects to have amortized the cost of an initial voluntary exit plan for lignite-unit workers within six months, while amounts owed by the corporation to a series of third parties are being reduced, chief executive Giorgos Stassis informed analysts during a conference call yesterday, following a presentation of first-quarter results.

The cost of an initial voluntary exit package concerning approximately 1,000 PPC employees working at lignite units in northern Greece, is estimated between 30 and 35 million euros.

Stassis offered positive news on a number of fronts, including electricity-bill payments and cash flow, service digitization, securitization of unpaid receivables, and the ongoing implementation of a five-year business plan.

Online payments by customers now represent 30 percent of transactions, an 80 percent increase since the beginning of the lockdown measures, while 18,000 customers per day turn to the corporation’s call center for information, up from 5,000, maximum, prior to the lockdown, the company boss informed.

PPC has chosen the current period to launch its initial voluntary exit plan in order to determine, within the next two-and-a-half months, how many of its 4,000 or so employees working at lignite-fired power stations and mines will take up the offer, offering severance pay totaling 35,000 euros.

State-controlled PPC wants to organize personnel transfers as part of the country’s decabonization process.  Vacant positions will be filled by workers to be transferred from PPC’s Amynteo facilities, planned to shut down in September, and Kardia, whose withdrawal is expected in 2021.

Electricity-bill payments by customers, down 18 percent in March and 14 percent in April, have rebounded to pre-lockdown levels since May, the chief executive informed.

Amounts owed to contractors, suppliers, operators and other third parties have fallen to 650 million euros from 900 million euros, Stassis said.

A small-scale securitization package for unpaid receivables up to 60 days will be offered in June or July, he added.

 

 

Post-lignite plan to Boston Consulting, Grant Thorton

Boston Consulting and Grant Thorton have been awarded contracts by Greece’s privatization fund to prepare a master plan for Greece’s post-lignite era, due at the end of 2020, energypress sources have informed.

The two professional services companies, awarded deals totaling 200,000 euros plus VAT, will need to deliver a draft of their master plan to a coordinating committee heading the task around early autumn, three months after contracts have been signed.

Their finalized version must be completed and delivered six months from now, or roughly at the end of the year.

The master plan will include policies to tackle job losses as a result of Greece’s decarbonization policy, as well as policies for the establishment of new businesses and jobs in Greece’s west Macedonia and Megalopoli areas, both lignite-dependent local economies that will be severely impacted by the decarbonization plan.

Boston Consulting and Grant Thorton will need to analyze all related data, including  demographics and infrastructure-related data, and identify competitive advantages offered by the two aforementioned regions.

Industrial infrastructure, farming, research and innovation, tourism, logistics, energy and the environment, as well as social policies will all be examined for sustainable growth not requiring state support following the post-lignite transition.

Most of power utility PPC’s lignite units are expected to be phased out by the end of 2023.

PPC endorses exit plan for 890 workers in west Macedonia

Power utility PPC’s board has approved an initial voluntary exit plan for 890 employees at lignite-fired power stations and mines operated by the corporation in the west Macedonia region, northern Greece.

The overwhelming majority of these workers, or 80 percent, are aged over 55, performing jobs  classified as labor-intensive and health-hazardous, and eligible for full pensions, energypress sources informed.

Company employees eligible for the voluntary exit plan must lodge applications by June 30.

The exit plan is being offered as a result of PPC’s phasing out of lignite units by 2023, beginning with a unit at Amynteo this year.

Just under 3,000 jobs will be lost following gradual closures of state-controlled PPC’s power stations and mines in the west Macedonia region, part of the government’s decarbonization policy.

Outgoing employees will each receive bonus severance pay of 20,000 euros, to cost the company 18 million euros, plus compensation of 15,000 euros, by law, for a further total cost of 13.5 million euros.

Salaries for the initial exit plan’s 890 workers are estimated to cost PPC an annual amount of 56 million euros.

Specific dates for the voluntary exit plan have yet to be announced by PPC officials. Workers are expected to gradually depart from July to December this year.

The PPC board will soon also reach decisions on equivalent voluntary exit plans for workers at Meliti, in northern Greece’s Florina area, and Megalopoli, in the Peloponnese.

 

 

PPC to report better 1Q results, approve voluntary exit plan

Power utility PPC will, later today, report significantly improved financial results for the first quarter, compared to the equivalent period a year earlier, sources have informed.

The results, to show higher operating profit and a sustained rebound following a downward trajectory experienced in the final quarter of 2019, according to the sources, will be officially announced once the day’s trading session at the Athens stock exchange has ended.

PPC’s improved results will reflect the positive impact of a series of changes made by the power utility’s new administration last August, especially a decision to increase tariffs, the sources noted.

Interestingly, the financial effects of the pandemic have been subdued as a reduction in electricity-bill collections was far lower than feared, the sources said.

State-controlled PPC may also announce a 160 million-euro financing plan stemming from a European financial institution as a measure to boost the corporation’s cash flow.

The first-quarter results will be accompanied by a PPC announcement on the corporation’s ongoing implementation of initiatives for restructuring and adjustment to modern energy-transition demands, the sourced informed.

Also today, the PPC board is expected to approve a voluntary exit plan for between 700 and 1,000 of approximately 4,500 employees working at the corporation’s lignite-fired power stations units, all headed for closure by 2023. Ptolemaida V, now under construction, will keep operating until 2028, according to the government’s decarbonization plan.

 

Natural gas in Greece: The bridge to decarbonization

Authors: Dr Valentina Dedi, Head of Global Operations, Greek Energy Forum; Panagiotis Mavroeidis-Kamperis, Associate, Greek Energy Forum

Last December, in alignment with the European Union (EU) legislation, Greece submitted a revised version of its 10-year National Plan for Energy and Climate (NEPC) to the EU Commission. The “fairly well-developed” document, as quoted in the summary of the Commission’s assessment, set out an ambitious roadmap for specific national energy and climate objectives to be met by 2030, committing the country to the bloc’s wider pledge to a clean energy transition.

Of the key targets outlined in the document, the reduction of greenhouse gas emissions was the main element of the NECP structure, with the Greek government targeting a reduction of more than 42% compared to 1990 levels. The lignite phase-out commitment was another key objective set in the plan, aiming at putting a complete end to the use of lignite in Greece by 2028. The increase of renewables’ share in the country’s total energy consumption to 35%, up from about 13% currently, was further included.

To work toward the achievement of those targets in this relatively ‘short’ timeframe, it seems imperative that Greece uses all its available tools. Natural gas, considered as by far the cleanest fossil fuel, can play its part in this transition process. The role of gas as a bridge to decarbonization has been advocated for a long time, especially that of fuel switching primarily from coal.

The revived momentum

Natural gas penetrated the Greek energy market in 1986. The introduction of gas at that time was seen not only as a way of diversifying energy sources in the country, which would lead to reduced oil dependency, but it would more importantly give Greece the opportunity to establish itself in the European energy map. Moreover, gas would help the country to improve its environmental credentials in accordance with the EU regulations.

Despite the positive momentum during the first years of its inception, natural gas maintained a minor share in the Greek energy market, at about 0.2%, till 1996, with its use mainly limited to power generation. Gas started gaining some ground in the market over the following decade or so, especially after the commissioning of the first LNG terminal in Revythoussa in 2000, which was followed by some initial efforts for the liberalization of the market, but its consumption soon stalled as the country was entering into a decade-long economic crisis. As of today, one could argue that natural gas, with a market share of just 13% of total energy demand, never met those initial aspirations.

A number of recent developments, though, seem to have revived its growth prospects, facilitating its contribution to the country’s broader decarbonization efforts. After Greece’s emergence from the final bailout program in 2018, the investment climate has seen signs of improvement, with gas being among those feeling the benefits. The long-delayed privatization of the state-owned gas distribution network was finally materialized, with the stake majority being sold to a consortium of three major European natural gas transmission companies. A few months later, in January 2019, the European Investment Bank (EIB) agreed on the financing of the construction of a new LNG bunkering vessel in Greece, which is expected to be a first-of-its kind in the broader Eastern Mediterranean region, further pledging to the transformation of Greece into a regional hub.

Abundance and affordability

The latest domestic developments have coincided with a situation of global abundance and affordability, especially following the US shale revolution which brought in new supplies and added downward pressure to global gas prices. Also, the country’s geographical position to resource-rich areas makes it another determining factor for the fuel’s affordability in the country as transportation – either by pipeline or as LNG – takes a relatively high share of the delivered cost.

The country currently receives gas indirectly from Russia, with a capacity of 6.8 bcm per annum. In 2018, the expansion of Revythoussa LNG import terminal was also finalized, increasing capacity by 50% and adding another 8.3 bcm per annum to the market. Some 2 bcm per annum of Azeri gas delivered through the Trans-Antriantic Pipeline (TAP) have further been booked for Greece’s domestic market, expected to commence in mid-2021. Supplies of up to 2.6 bcm per annum could be further added through the Alexandroupolis Floating Storage Regasification Unit (FSRU) (Alexandroupolis LNG) based on the bidding offers following the completion of the binding phase of the market test in March 2019.

With potential supplies reaching up to 19 bcm per annum over the next few years, Greece would gain access to a sufficiently deep gas market, able to cover current gas demand by factor of more than 3. The projected depth of the Greek gas market, in turn, would increase price competition domestically, favoring the wider deployment of natural gas in the country.

Fuel Switching

The bigger prospect of natural gas as a key fuel in the decarbonization is in fuel switching (lignite-to-gas), leaving significant prospects for CO2 emissions savings. Lignite, a domestically produced form of coal, has been the backbone of the country’s power generation for many decades now, as well as the main source of heat for industry and buildings.

According to the IEA, on average, coal-to-gas switching reduces emissions by 50% when producing electricity and by 33% when providing heat, which could be translated to total CO2 emissions savings of about 10% in today’s power and heat sectors in Greece. By switching from lignite to existing gas-fired plants, there is a potential to reduce around 4% of the country’s total CO2 emissions.

In 2019, lignite power plants supplied a fifth of the total power generation after recording a substantial drop of 4.5 TWh from 2018 levels on higher CO2 prices, in tandem with increasing generation from wind, decreasing continental gas prices and slightly higher net imports (Figure 3). However, about 10 TWh of lignite power generation are still to be eliminated by 2028, requiring alternative sources to step up their production to substitute it. Natural gas can be the fuel that can compensate for the lost lignite production with the existing gas-fired plants. Even in the extreme scenario where all lignite production is terminated in a single year, domestic gas supplies can still successfully cover the baseload demand. That would require about 25 TWh of gas-fired production, which would see gas-fired utilization rates of existing plants increasing to 60% till 2022 and 50% afterwards following the construction of the new 826MW Combined Cycle Gas Turbine (CCGT) station in the country.

Gas can also contribute to less carbon in the heating segment, mainly in the residential sector where a further penetration of about 30% is estimated by the Regional Distributor System Operators (DSO) in areas connected to the main gas grid such as Thessaloniki, Attiki (wider Athens area) and Thessalia by 2025. Industrial gas demand seems to have reached a peak with a rather stable demand projected over the next decade or so. 

A quick win

With a global and domestic abundance of natural gas, a high price competitive market is expected, creating a favorable scenario needed for the wider natural gas development in Greece. A projected bullish trajectory of CO2 prices in Europe is further expected to facilitate the transition to gas as higher CO2 prices will add financial burden on lignite power plants.

Switching between fossil fuels, on its own, does not provide a long-term answer to climate change, especially considering the country’s privileged position in the potential growth of its renewable capacity. However, given the time it takes to build up new renewables and with the increasing penetration of renewables creating a greater volatility due to the lack of a stable and predictable production, natural gas represents a potential quick win for emissions reductions in the medium-term.

PPC, seeking key electric car market role, to announce MoUs

Power utility PPC is expected to soon announce two MoUs signed with private-sector companies for collaboration in the nascent electric vehicles market, a domain the utility is looking to dominate in the years ahead.

The power utility’s MoUs, believed to have been signed with Greek companies, concern recharging station installations and a range of electric vehicle services, as foreseen in a PPC business plan presented last December.

According to the plan, PPC intends to install 1,000 recharging stations around Greece over the next two to three years as well as a further 10,000 stations in the medium term.

The company is now assembling a new electric vehicles division in the lead-up to its latest business endeavor.

PPC’s wider plan could even entail collaboration with a specialized partner for production of electric vehicle parts at new plants in west Macedonia and Megalopoli, both lignite-dependent local economies in the country’s north and the Peloponnese, respectively, now being decarbonized.

A related draft bill being prepared by the government will feature incentives for the establishment of new production units at these locations.

Prime Minister Kyriakos Mitsotakis is scheduled to present the government’s ambitious plan for electric vehicle market growth this Friday. The development of a recharging network is crucial for this plan.

New EU support plan to boost energy-sector investments

The decarbonization plan, a third round of the Saving at Home subsidy program for energy efficiency upgrades at buildings, the electric vehicle market growth effort and renewable energy-hydrogen development are seen capturing the lion’s share of energy-sector funds expected to be made available to the country through a wider European Commission support package proposal entitling Greece to 32 billion euros, plus funds from the new National Strategic Reference Framework (NSRF) covering 2021 to 2027.

Over ten billion euros could end up being absorbed for investments in these four sub-sectors, according to enerypress sources.

The energy ministry, taking this prospective influx into account, is now shaping preliminary energy-sector plans to comprise part of a wider government plan.

An upcoming series of energy-sector privatizations are being attached to these plans as the increasing importance of energy as a growth tool promises to intensify Greek and foreign investment interest.

According to latest estimates, the amount Greece will be entitled to through the European Commission’s Just Transition Fund, designed to support regions impacted by the EU’s decarbonization policy, now stands at 1.7 billion euros. The new Brussels support package could more-than-triple this amount, according to some early estimates.

Also, the third round of the Saving at Home energy efficiency upgrade program, estimated at 350 billion euros, could now end up reaching a level of about one billion euros as a result of the new Brussels support plan.

 

Electricity demand down 12.6% in April, industrial use slumps 23.6%

Electricity demand slumped 12.6 percent in April compared to the same month a year earlier, the biggest drop registered by high-voltage industrial consumers, forced to suspend or restrict output during the lockdown, power grid operator IPTO’s monthly report has shown.

Industrial electricity consumption in April fell sharply by 23.6 percent, the IPTO report showed.

The drop in electricity consumption linked to mining activity was even sharper, falling 55.5 percent in April. Besides the lockdown, this drop was also attributed to significant operational restrictions implemented at power utility PPC’s lignite-fired power plants.

Electricity generation in April fell by 3.2 percent, to 2,893 GWh compared to 2,990 during the same month a year earlier, according to the data.

This reduction was mild compared to major shifts observed in sources of generation. Lignite-based generation fell by 62.7 percent year-on-year, confirming, most emphatically, the commencement of PPC’s decarbonization effort.

High costs for lignite-based generation severely reduced the operational time of PPC’s lignite-fired power plants, limiting lignite’s share of the electricity production mix to just 10 percent in April.

On the contrary, the production share of interconnected RES facilities, benefiting from favorable conditions, rose sharply by 33.9 percent, year-on-year, to capture a market-leading 36 percent share of overall electricity generation in April.

Natural gas-fired power plants followed with a 30 percent share following an 11 percent year-on-year rise in output.

Electricity imports (grid interconnections) contributed 18 percent, while hydropower facilities increased their output by 19.8 percent to capture a 6 percent share in April.

PPC provided 951 GWh, or 56.6 percent of the production, while independent producers covered 43.4 percent.

Among the independent producers, Mytilineos led the way with 228.1 GWh, followed by Elpedison (210.4 GWh), Korinthos Power (154.1 GWh) and Heron II (136.3 GWh).

The IPTO data on generation highlights an increasing shift towards cleaner energy sources.

 

 

Electric vehicles bill to include production line incentives

A draft bill being prepared by the government to promote growth for Greece’s embryonic electric vehicle sector will not only include incentives for buyers and users but also producers, energypress has been informed.

Producers establishing production lines for electric vehicle parts, including batteries, transformers and recharging units, will be offered incentives in the form of lower tax rates and reduced social security system contributions for employees, the sources said.

However, eligibility for these incentives will be conditional and require producers to establish their production facilities in either northern Greece’s west Macedonia region or Megalopoli in the Peloponnese, both lignite-dependent local economies headed for decarbonization.

The incentives are expected to include subsidies of between 4,500 and 5,000 euros for purchases of zero or low-emission electric cars, approximately 1,000 euros for electric scooters and 800 euros for electric bicycles.

Government officials plan to submit the draft bill on electric vehicles to Parliament in June.

Besides seeking to promote industrial development in current lignite areas, the master plan will also aim to make the most of early interest expressed by foreign investors.

One of these, Tesla, has, for months now, expressed interest to the Greek government for development of a fast-recharge network at Greece’s highways, a project budgeted at 10 million euros. This project is envisioned as part of a wider plan stretching from Portugal to Spain, France, Italy, Greece and Turkey.

Pricing, distribution pending in PPC lignite access case

Despite definite progress confirmed in a latest Brussels report, Greece still needs to resolve two pending issues concerning pricing and distribution in a long-running antitrust case with the European Commission over state-controlled power utility PPC’s lignite monopoly, which Brussels demands must be opened up to third parties.

Brussels insists on the sale of tailor-made electricity packages to electricity suppliers and industrial enterprises, adjusted accordingly to meet their respective needs. Pricing details must also be worked out.

The antitrust case has dragged on over the past decade or so. The European Commission wants it closed by the end of this year.

In the lead-up, a market test needs to be staged with the participation of all interested parties, the intention being to test in practice the proposal described in the Brussels report.

The plan envisions a mechanism designed to offer PPC’s rivals access to a share of the utility’s lignite-based generation. The extent of this access will be correlated with the progress of the power utility’s decarbonization effort.

Transparent, competitive procedures, as well as lignite access to smaller-scale suppliers, must be assured, the Brussels report notes.

The Greek government and the European Commission are currently discussing the market test’s details.

 

Energy groups pressing ahead with natural gas-fired unit plans

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

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

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

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

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

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

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

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

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

Decarbonization an independent business plan linked to NSRF

The decarbonization master plan for the west Macedonian region in Greece’s north and Megalopoli in the Peloponnese, both lignite dependent local economies, will be an independent business plan linked to the new National Strategic Reference Framework, running from 2021 to 2027, exclusively funded and based on four main axes, sources have informed energypress.

A draft of the master plan has already been prepared and endorsed by the development ministry, while a competitive procedure will be staged for the shaping of the finalized plan.

A special advisory committee will present its opinion to the privatization fund, involved in the process, for the hiring of a consultant and development of the decarbonization master plan.

Its four main axes will be comprised of industry, the primary sector, tourism-culture and differentiation of lignite area energy identities, the sources said.

Though specific plans have yet to be set out as to how the country’s two main lignite zones will be restored, a tendency towards industrial development is already emerging.

The decarbonization project’s progress to date, procedural matters and its four axes will be discussed by the coordinating committee of the fair development plan at its next meeting, scheduled for this Friday.

PPC, decarbonizing, to hire consultant for worker exits

Power utility PPC has decided to soon hire a consultant to help shape a voluntary exit plan for employees working in the corporation’s lignite sector, set to gradually wind down as a result of the country’s decarbonization policy.

The consultant’s efforts will focus on the structure of the voluntary exit plan, its incentives, timing and extent within PPC’s workforce, not including employees eligible for retirement and workers to be transferred to other company units.

PPC plans to appoint a consultant in the immediate future with the objective of announcing the full details of its voluntary exit plan towards the end of this year.

PPC’s voluntary exit plan is intended to stretch over a number of years as a gradual process aligned with the decarbonization effort.

Severance payments, according to a company announcement made several months ago, currently total 22,000 euros per employee.

PPC’s objective is to reduce its workforce to 11,500 by 2024 from 15,300 at the end of 2019, according the company’s new business plan.

The Amynteo lignite-fired power station in Greece’s north is at the top of PPC’s withdrawal list, but it now remains unclear when this exit can take place.

Amynteo was originally scheduled to be withdrawn by April 30, tomorrow, but this exit may be postponed until next year. The completion, by local authorities, of regional projects securing telethermal services is a key factor. PPC is currently awaiting an update on these projects.

 

 

Green energy to remain a catalyst for Greek economic growth

Local authorities, in the coming months, will focus on reigniting green energy investment interest expressed by many international funds until February, when the coronavirus outbreak began halting plans.

The restart could be a challenging task as certain funds may hold back following losses on stock exchanges.

Even so, the pandemic’s impact on green energy markets is expected to be far milder compared to other sectors.

Market analysts throughout the continent believe prospective investments in renewable energy, waste management, energy efficiency upgrades for buildings, as well as decarbonization initiatives, will serve as key factors for economic growth in Europe, including Greece.

The European Green Deal, aiming for a climate-neutral EU of zero greenhouse gases by 2050, will not be endangered by the current pandemic-induced crisis as it is a short-term condition that pales by comparison to the grander plan set out for the next 30 years, energy ministry sources told energypress.

However, a slight regression of green energy investment plans is initially anticipated, compared to positions in February.

Between 70 and 80 percent of foreign investors are expected to remain interested in Greece’s green energy sector in the months ahead, analysts believe.