demand response mechanism

Sympower official: ‘Storage with demand-response optimal mix for grid stability’

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The importance and benefits of the demand-response market, especially for commercial and industrial consumers, has been highlighted, amongst other matters, by Sympower Commercial Director Kostas Athanasopoulos in an interview with energypress.

The official also underlined the need for Greek power grid operator IPTO and the energy ministry to take action to further consolidate the demand-response service in the Greek energy market as a crucial tool for balancing the electricity system.

Mr. Athanasopoulos stressed the need to further promote the demand-response service as a complementary tool to battery energy storage for an ideal combination enabling the electrical system’s proper functioning under conditions of increased RES penetration.

In addition, the Sympower commercial director referred to the initiatives taken by his company to inform participants, stressing, however, that the central role in this process should be played by IPTO, as the responsible TSO, as well as the energy ministry, in order to properly inform market participants.

The full interview with energypress follows:

  • Demand-response is something new in the Greek energy reality. Your company is one of the very few market participants who work on that in a commercial way. So, I would like to start our conversation from point zero. What is demand response and which are the main advantages for the energy market, taking into account the actual challenges of the market? In different words, demand response solves any problem or not? 

Demand response is solving one of the most crucial challenges the Greek Transmission System Operator (TSO) is facing: how to stabilise the electricity grid and avoid blackouts in times of grid imbalance. 

But first, we have to understand how the energy transition impacts grid operation. TSOs have to cover demand during peak hours throughout the day, every day. Demand peaks regularly occur, so, historically, more energy had to be produced to prevent blackouts. However, this also resulted in production sites operating less efficiently to meet this increased demand. 

The Greek power grid had been designed for electricity supply to come from conventional energy sources, such as lignite. As Greece aims to become carbon neutral by 2050, its most recent energy reform plan firmly pushes for a green energy transition powered by wind, solar and hydrogen energy sources. While being sustainable alternatives, wind and solar are also volatile sources which add pressure to the grid by creating increased volatility and reduced predictability. In parallel, we also see an increased electricity demand as companies move away from fossil-fuel-powered processes and electric mobility develops throughout the country. 

Balancing the supply and demand of electricity to prevent blackouts is therefore one of the most critical and challenging aspects of transitioning the grid to a climate-neutral energy system.  

One of the most efficient ways to stabilise the grid, especially as we integrate more volatile energy sources, is through balancing services and demand response. Demand response is a change in electricity consumption from consumers, such as commercial and industrial businesses, to help keep the supply and demand of electricity in balance, stabilise the grid and prevent serious power outages. 

 The moment we see a discrepancy in the grid frequency, which is meant to operate at a stable 50Hz, we can opt to decrease or increase consumption according to what is required to stabilise the grid and prevent blackouts. 

  • As we said before, Sympower is one of the few market participants, acting in demand-response in Greece. If I am right, you are acting in the market as FOSE of demand response for a few months now. What have you observed until now? Could you give us feedback in a few words of that «journey»? 

Demand response in Greece is a very promising market, that not only supports the creation of a sustainable energy grid, but also provides a way for industries to participate in balancing markets and reduce their energy costs. 

Our journey so far has been very interesting, albeit challenging. We were the first independent aggregator to go live on the market in June, so of course we’ve been a bit the Guinea pigs in the market of demand response in Greece. Our licensing process was quite long, since the TSO was simultaneously building the market and ensuing regulation. Actually, we have been in the Greek market for the last three years, as we wanted to be active in the field and support the TSO in establishing a successful and competitive market in Greece. 

We’ve brought our extensive knowledge and experience from the Nordics market to answer their questions and help them solve challenges. We’ve also dedicated time and resources to educating companies, as the overall awareness of demand response was close to nonexistent. We are continuing this education work, and we’ve actually recently hosted a webinar to demonstrate further how commercial and industrial businesses can benefit from demand response services. 

Of course, there are still issues that need to be addressed, but the TSO is working hard on fixing them.  They strongly believe in the future of demand response, and want to create a positive environment for FOSE (ΦΟΣΕ) to participate in. The TSO has learnt through our participation in demand response, and we’re really proud to work closely with them to establish a successful demand response model and market in Greece. 

  • In the same spirit, what do you think that it has to be improved in the Greek market in order to promote in a better way the demand – response? 

The Greek demand response is still in its infancy, so it has to learn to crawl and walk before being able to run. There is much room for improvement, but we must remember that it is a new market. 

So far, the first data that we’ve extracted is very promising and shows that the Greek demand response market will be one of the most financially exciting in Europe. 

There are still many aspects of the market to improve in order to bring it to the same professional level as the Nordics’. The rule book, that is to say the daily operations of the market, the rules and the settlement process, has to improve, as well as the overall communications with the TSO and integration into their platform. 

Despite all of these needed improvements, I can already say with the utmost certainty that the Greek demand response market is only going to grow. Yes, we do have to protect this market, but it also already makes sense for companies to enter it, just in terms of reducing their energy and production costs. 

Demand response is here to stay. The grid will require more balancing as we increase the share of renewable energy, and as a result more demand response will be needed. Battery storage and demand response cannot cover the grid’s balancing needs alone, we need a joint approach. 

The business case for demand response has already been proven, and it will continue to be financially attractive for companies to enter as the market develops. The grid will expand, and so will the demand response market. 

  • In my opinion, demand-response is something «unknown» largely to the market. Do you think that the stakeholders and the Ministry have to take specific initiatives to change this situation? Do you have something to propose?  

Indeed, there is still a general lack of awareness regarding demand response. We have been working in Greece for the last three years, and we can see that industries still need to be made aware of demand response and the opportunities it can bring to their business. 

The TSO and the Ministry of Energy are actively trying to change this, but they need ramp up their effort to inform people. They have all the required data to run educational campaigns, produce case studies and articles, and show expected revenues for various industries and company sizes. 

So far, we have been the ones taking on the role of educators by creating series of articles and setting up a webinar to educate industries about demand response. Of course, our strength and reach are limited compared to what the TSO and Ministry can do to inform industries about what are balancing markets and demand response, how they can participate and which benefits they can receive. Even though we are experts in the field, after all, we are the number one aggregator in Finland and Sweden, we know that the TSO and Ministry can reach industries faster and better. 

I also advise the TSO and Ministry on promoting demand response in the right forums. In 2023, we were at the Power and Gas Supply Forum organised by Energy Press where we presented balancing services. Commercial and industrial companies with the right kind of assets for demand response attend this kind of forums, so they represent the perfect opportunity for the TSO to present the demand response market that they opened. 

Demand-response for energy exchange markets early in ‘24

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A new date will be set for the demand-response mechanism’s entry into the Greek energy exchange, now expected early in 2024.

The demand-response mechanism’s slightly delayed entry can be attributed to additional technical controls being incorporated into the relevant regulation after RAAEY, the Regulatory Authority for Waste, Energy, ordered the Greek energy exchange to conduct another round of consultation.

To ensure the proper functioning of the demand-response mechanism, it’s essential to have robust technical controls and regulations in place.

The mechanism has the potential to benefit both consumers and the overall grid system by optimizing energy use during periods of high demand or supply fluctuations.

As a result of the timetable change, the additional round of consultation is expected around the end of September. A finalized plan for the demand-response mechanism’s entry into the Greek energy exchange will then be adopted around November, while a further month or two will be needed for necessary preparations.

RAAEY asked the Greek energy exchange to rework the relevant regulation so that it could facilitate technical controls for orders submitted by green aggregators that are equivalent to those applicable for orders concerning other balancing service providers, the aim being to ensure market uniformity.

Early on, the demand-response mechanism is not expected to impact energy exchange markets as, for the time being, quantities linked to the mechanism are limited.

At present, two companies, Mytilineos and Sympower, are pursuing demand-response activities in power grid operator IPTO’s balancing market.

 

Mytilineos uses aggregator permit for country’s first demand-response transaction

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The Mytilineos group, through a portfolio including its Aluminium of Greece company, has become the country’s first company to use an aggregator (FOSE) permit in a demand-response program, established as part of an EU proposal aiming to reduce energy consumption by 5 percent.

The Mytilineos group conducted its first such transaction on May 28, energypress sources informed.

In the lead-up, RAE, the Regulatory Authority for Energy, had approved a 500-MW permit for Mytilineos to use in this demand-response program, while power grid operator IPTO conducted trial runs to ensure the system’s platform was ready to operate.

The demand response system enables variation of electricity consumption by end-users such as commercial and industrial enterprises in order to balance the electricity network during periods of peak production or consumption.

Sympower Greece, also holding a 500-MW aggregator permit for the demand-response program, has registered to participate but had not conducted any transactions until last Friday, the sources noted.

NRG holds a 100-MW aggregator permit for the the demand-response program, Optimus Energy possesses a 350-MW permit, power utility PPC holds a 1,500-MW permit, and Elpedison holds a 500-MW permit. These companies are believed to be preparing to conduct their first aggregator demand-response transactions.

 

Heightened market activity ahead of demand-response service launch

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Preparations are in full swing for the introduction of a demand-response service into the wholesale electricity market, expected to be launched in the coming weeks, initially in the balancing market, followed by other energy exchange markets.

Although this is still a relatively new service in Europe and internationally, strong interest is being expressed by participants in Greece, sources have informed.

Companies wishing to take part in the demand-response service need to take care of three key issues as part of their preparation.

Firstly, they must successfully integrate an appropriate operating system and become familiar with it, by no means an easy matter, according to the same sources.

Secondly, companies need to recruit and train appropriate personnel for this service.

A third step interested parties will need to take to complete their preparation process is to convince partners of the importance and value of the demand-response service.

According to market estimates, providers are not confronting solid resistance, but some degree of skepticism does exist, which is no surprise given the service’s novelty aspect.

According to market officials closely following the overall process, power grid operator IPTO has prepared well and is currently in the process of settling certain pending issues, including configuration of web services facilitating communication between participants and the operator.

Demand-response tool to enter day-ahead, intraday markets

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The demand-response mechanism is the latest tool being prepared for entry into Greek energy exchange markets, within the next few weeks, as a move intended to contribute to the system’s balancing and proper functioning, energypress sources have informed.

Besides its basic use in the balancing market, the demand-response mechanism’s coverage will now also be extended into the energy exchange’s day-ahead and intraday markets.

The Hellenic Energy Exchange and power grid operator IPTO, the two authorities handling the procedure, have made progress on the matter.

The energy exchange has already forwarded its related proposal for necessary day-ahead market and intraday market revisions to RAE, the Regulatory Authority for Energy, while IPTO plans to do likewise within the next few weeks.

IPTO has already made technical adjustments to its systems for the demand-response mechanism’s integration in the day-ahead market and intraday markets, while test runs are now being carried out.

Demand-response inclusion in Energy Exchange markets early March

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A demand-response mechanism is expected to be introduced to Energy Exchange markets by early March, following a consultation procedure for revisions to rules concerning the exchange’s day-ahead and intraday markets.

Completion of the consultation procedure, expected to commence within the next few days, according to energypress sources, will enable a demand-response mechanism to be applied in the day-ahead and intraday markets for the first time since Greece’s adoption of the target model.

The basic idea is to actively involve the demand-response mechanism – the consumption side – for creating economic signals that will enable better management of the energy market.

This particularly concerns distributed loads or industrial loads that will be able to participate in markets on competitive terms with all other electricity producers, while at the same time setting signals for the balancing market.

The European framework, especially the Clean Energy Package and subsequent EU regulations, envisages full demand-response participation in electricity markets. EU member states and their respective market operators and energy exchanges have been requested to take all necessary measures to make this possible.

Demand response for electricity markets in first quarter of 2023

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The Energy Exchange is preparing a demand-response mechanism for all electricity markets, in accordance with the European framework, and is aiming for a launch within the first quarter of 2023.

Brussels’ Clean Energy Package and subsequent European Regulations enable full access of demand response mechanisms into electricity markets. EU member states, market operators, and energy exchanges have been requested to take all necessary measures to make this possible.

The basic idea is to actively involve demand response mechanisms (consumption side) to ultimately allow for better management of the energy market.

For its part, the Energy Exchange is taking all necessary steps to provide the technical capacity offering this service to participants.

Distribution loads or industrial loads will be able to participate, on competitive terms, in all markets with electricity producers, while at the same time setting signals for the balancing market.

As for regulatory matters, the Energy Exchange is already preparing an amendment to day-ahead and intraday market regulation, which will soon be forwarded to RAE, the Regulatory Authority for Energy, so that it may stage public consultation before adopting relevant regulation.

Balancing market participation for demand response delayed

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The demand response mechanism’s participation in the balancing market is headed for a delay that could require about four more months, despite a Market Reform Plan target that had set the launch for early February.

This estimate is based on the time still needed for the completion of a series of preliminary steps.

These include a legal framework for green aggregation concerning demand response, still needing approval.

Meanwhile, progress has been made on other Market Reform Plan revisions, such as terms distinguishing between balancing energy and redispatching.

Also, a term limiting physical delivery by independent vertically integrated energy suppliers to 20 percent of bilateral agreements has been lifted since the beginning of the year. RAE, the Regulatory Authority for Energy, also plans to soon lift this limit for PPC, the power utility.

The intraday market entry of traders faces delay as, according to sources, terms for transboundary trade concerning intraday markets that have not been coupled have not been finalized with market operators and grid transmission authorities in Albania, North Macedonia and Turkey.

Balancing market entry imminent for demand response

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The imminent approval by RAE, the Regulatory Authority for Energy, of a legal framework for demand-response green aggregators represents a first step towards the entry of a second category of players into the balancing market.

RAE president Athanasios Dagoumas made reference to the prospect this week during a speech delivered at an Ecomobility conference staged by HAEE, the Hellenic Association for Energy Economics.

“One of the first revisions to be made in 2022, early on, too, concerns demand response participation [in the balancing market],” the RAE head told the conference.

Demand-response green aggregators will offer balancing services to the grid through appropriate consumption adjustment of load portfolios managed by them.

The energy ministry and RAE are aiming to include the demand response system into the balancing market within the year’s first quarter, sources told energy press.

 

 

 

Demand response extension talks continuing, hope remains

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A government proposal for an extension of the demand response mechanism until the end of July, 2022 faces challenges, the energy ministry’s secretary-general Alexandra Sdoukou has informed, adding that she remains hopeful Brussels will offer its approval.

As part of ongoing negotiations between the energy ministry and the European Commission’s Directorate-General for Competition, the Brussels authority has forwarded a set of questions concerning technical matters.

Sdoukou, whose comments on the subject were made during an online event organized by SVSE, the association of mainland Greece industries, on the impact of the energy crisis on industry, informed that the questions forwarded by Brussels officials pertain to the participation of the demand response system in the balancing market and its functioning since September, 2020, when last approved.

The Directorate-General for Competition also informed that Greece’s proposal for an extension will need to be examined under new climate and environment directives to be implemented early in 2022, the energy ministry official informed.

The demand response system compensates major-scale electricity consumers when the TSO asks them to shift their energy usage (lower or stop consumption) during high-demand peak hours, so as to balance the electricity system’s needs.

Sector officials believe the system needs to be maintained given the tougher grid conditions expected this coming winter.

 

 

 

Ministry seeks extension for demand response system

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The energy ministry has decided to seek an extension, from the European Commission, of a demand response system beyond its September 30 expiry date as a commitment for the demand response mechanism’s participation in the balancing market does not appear feasible.

According to some sources, the ministry has already submitted an application for the continuation of the current demand response system until June, 2022.

The demand response system compensates major-scale electricity consumers when the TSO asks them to shift their energy usage (lower or stop consumption) during high-demand peak hours, so as to balance the electricity system’s needs.

Sector officials believe the system needs to be maintained given the tougher grid conditions expected this coming winter.

The industrial sector’s drastic cutback on energy consumption last summer was crucial in the effort made for energy sufficiency during the extended heatwave and grid problems caused by wildfires.

A market reform plan submitted by Greece to the European Commission keeps open the prospect of new, more realistic mechanisms for demand, exclusively, as a means of ensuring the grid’s smooth functioning. Germany and France have also included similar considerations in their market reform plans.

Strategic Reserve Mechanism by early ’22 requires much work

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Athens and Brussels have agreed on an early-2022 launch for Greece’s Strategic Reserve Mechanism, planned to remunerate power-generating units made available by electricity producers for grid back-up services, but, even so, a considerable amount of work lies ahead.

The European Commission plans to make an official announcement on the Strategic Reserve Mechanism between late November and early December, ahead of the mechanism’s approval by the Directorate-General for Competition.

Authorities in Athens and Brussels are still engaged in talks aiming to finalize the shape of the mechanism, while, at the same time, preparations are in progress for the submission of a new Adequacy Report by power grid operator IPTO, a prerequisite for the approval of Greece’s Market Reform Plan, needed for the new strategic reserve mechanism’s implementation.

At present, Greek officials are preparing responses to a set of second-round questions forwarded by the European Commission. As was the case with the first round, the questioning is extensive. Many of the Brussels questions concern financial details linked to the operation of lignite-fired power stations.

The ongoing Athens-Brussels talks are based on a new draft for the mechanism delivered by the Greek government last May. It includes a proposal for demand-response incorporation into the new strategic reserve mechanism.

 

Industry concerned over demand response absence from market reforms

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Industrial energy consumers are concerned about the absence of any proposal on a demand response system in public consultation being staged by the European Commission on Greece’s electricity market reform plan.

Industrial energy consumers are expected to express their concerns through the procedure.

The only related reference concerns a Manual Frequency Restoration Reserve (MFRR), expected to be launched on a trial run as of February before being adopted a year and a half later.

The industrial sector will be called upon to compete with other reserves, which will make demand response participation an issue, industrial sources fear.

They described the MFRR as extremely insufficient and unable to replace the demand response mechanism, which has compensated major-scale electricity consumers when the TSO asks them to shift their energy usage (lower or stop consumption) during high-demand peak hours, so as to balance the electricity system’s needs.

Given the proposals presented in the public consultation procedure, the demand response system appears headed for a marginal role, the industrial sources noted.

Imports, lignite, technical issue avoidance key to grid stability

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The role of electricity imports, mobilization of power utility PPC lignite-fired power stations that have been sidelined for months, such as Megalopoli III, and unexpected technical failures at grid infrastructure and power stations are three key factors that will determine the performance of the country’s grid over the next few days, during which the ongoing heatwave conditions are forecast to peak and reach temperatures of as high as 45 degrees Celsius.

Power grid operator IPTO has already asked PPC to mobilize the Megalopoli III power station, a 250-MW unit headed for withdrawal and out of action over the past nine months as a result of grid saturation at the network in the Peloponnese.

But the extreme electricity demand has forced this unit’s return, highlighting the grid’s continuing dependence on lignite-fired generation during times of extreme need.

Over the past few days, lignite-based electricity has represented 16 percent of the country’s overall generation.

As for electricity imports, Greece, ideally, will need to import a few hundred MW from North Macedonia, Bulgaria and Turkey. The import potential from these sources is limited to between 1,400 and 1,500 MW annually.

A new interconnection to link Nea Santa, northeastern Greece, with Bulgaria’s Maritsa area in the country’s south, designed to double the grid interconnection capacity between the two countries, will not be ready before mid-2022.

The demand response system, compensating industrial consumers when the TSO (IPTO) asks them to shift their energy usage (lower or stop consumption) during high-demand hours, so as to balance the electricity system’s needs, is another tool that could be activated to save and re-channel approximately 1,000 MW.

Lignite units to exit in August, according to IPTO plan

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The introduction of a demand response mechanism in the balancing market within 2021 is projected in a Market Reform Plan, according to a power grid operator IPTO document that has been forwarded for public consultation until Wednesday.

The document notes that a related grid sufficiency study takes into account structural interventions in wholesale markets. These interventions have been included in the Market Reform Plan.

According to the reform plan, the demand response’s participation in markets is expected to be feasible as of the fourth quarter this year.

The new grid sufficiency study will be attached to the Market Reform Plan, whose draft copy has already been forwarded to Brussels, as previously reported by energypress.

The purpose of the study, along with a road map for wholesale market revisions, will be to support the need for a Strategic Reserve, during a first phase, as well as a Capacity Reserve Mechanism (CRM), planned to succeed it.

Besides these two mechanisms, IPTO also intends to take into account a plan entailing a swifter withdrawal of the country’s lignite-fired power stations. This is based on a key assumption that the power utility PPC, as it has announced, will withdraw remaining lignite units within August due to the unfeasibility of operating these units, nowadays high-cost as a result of elevated CO2 emission right costs.

Megalopoli III was withdrawn in March, even though IPTO had not offered its consent due to grid sufficiency concerns, while Agios Dimitrios, Megalopoli IV and Meliti are expected to follow in August.

The introduction of new units is expected to commence in September, 2022, beginning with a new Mytilineos natural gas-fired power station, and followed by Ptolemaida V early in 2023, initially as a lignite-fired unit before it is converted to gas in early 2026, a change that will also offer a capacity boost to 1,000 MW.

Also, new PPC hydropower facilities are expected to begin emerging midway through the decade, these being Metsovitiko (29 MW) in 2025, Mesohora (160 MW) in 2026 and Avlaki (83 MW) in 2028.

Balancing market entry for RES, demand response by end of ’21

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RAE, the Regulatory Authority for Energy, is planning the balancing market entry of all energy sector players offering flexibility to the grid by the end of this year, a prospect seen as a key factor in lowering balancing market costs.

As a result, RES players, through green aggregators representing them, will participate in the balancing market by the end of 2021, along with the demand response mechanism.

The addition of RES producers promises to intensify competition in the balancing market, which, combined with the demand response mechanism’s participation, will contribute to a further de-escalation of balancing market surcharge costs.

Wind and solar energy farms will have a place in the balancing market. Other RES technologies, such as biogas units, are linked to operating aid contracts with fixed tariffs.

The demand response mechanism’s participation in the balancing market promises to enhance the system’s flexibility, in terms of demand, while the entry of RES producers will make electricity production even more flexible.

Foreign firms seeking local demand response service roles

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Major European companies with considerable interests in energy exchanges abroad are now seeking to represent local industrial producers for demand response services in Greece’s balancing market.

Two major international players, currently assembling new related divisions in Greece, have already approached Greek producers to take on their representation.

Demand response system entry into Greece’s new balancing market is expected to begin within 2021, barring unexpected developments.

Once launched, foreign representatives will be able to assume demand-response, green-aggregator roles in Greece, offering balancing services to the system.

Power grid operator IPTO, in its effort to ensure grid stability, will be able to utilize the flexibility major-scale electricity consumers are capable of offering.

Demand response service’s activation more probable, conditions tight

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Power grid operator IPTO’s two final demand response auctions for the year, scheduled for December 29 and 30 and to concern the time period between January 1 and March 31, 2021, will be staged amid tight market conditions that resemble those of the country’s supply security crisis in 2017, making the operator’s activation of the demand-response mechanism, a key energy-saving tool for the industrial sector, more probable.

Major-scale electricity consumers such as industrial enterprises are compensated when the TSO (IPTO) asks them to shift their energy usage (lower or stop consumption) during high-demand peak hours, so as to balance the electricity system’s needs.

Capacities totaling 800 MW will be offered at the two upcoming demand response auctions, equally divided into 400-MW amounts for the two sessions.

 

 

First demand response auction in July, TFRM validity to get extra month

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The energy ministry, anticipating the European Commission’s imminent approval of Greek government proposals for a demand response mechanism and a transitory flexibility remuneration mechanism (TFRM), has signed related ministerial decisions so that the mechanisms, vital tools for industrial energy costs, can be implemented immediately once Brussels has given the green light.

Official approval of the plans by the European Commission is expected within the next few days.

Power grid operator IPTO has been informed by the ministry so that it can prepare the first demand response auction, seen taking place within July. IPTO announced a registration procedure yesterday, setting a July 23 deadline for applicants.

The TFRM’s validity is expected to run for an additional month, compared to the initial term agreed to by Athens and Brussels, to make up for its delayed delivery.

Over the past few days, Greek authorities have needed to respond to numerous questions forwarded by Brussels officials, seeking explanations and clarification on both the demand response and flexibility mechanisms.

 

Ministry awaiting Brussels nod for demand response, TFRM

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The energy ministry, anticipating the European Commission’s approval of Greek government proposals for a demand response mechanism and a transitory flexibility remuneration mechanism (TFRM), has decided to sign related ministerial decisions, possibly even today, so that the mechanisms can be immediately implemented once Brussels has given the green light.

Though the two sides have come closer on the mechanisms, it still remains unclear when the European Commission will go ahead with its approval.

Over the past few days, government officials have needed to respond to a series of questions from Brussels, seeking explanations and clarification on details concerning both mechanism plans.

The European Commission’s Directorate-General for Competition is treating both mechanism proposals as one package.

Domestic energy-intensive industries are urgently awaiting the package’s approval in the hope that Greek power grid operator IPTO can stage a demand response auction before July is out.

Under terms agreed to so far, IPTO will be permitted to offer up to 800 MW through demand response auctions, down from 1,030 MW allowed through the preceding plan.

Also, the demand response mechanism will be made accessible to a greater number of companies, including smaller players, through a reduction of a consumption lower limit.

In addition, the demand response mechanism is expected to be valid for a one-year period, not two years, as was requested by EVIKEN, the Association of Industrial Energy Consumers.

The TFRM is expected to be divided into two stages, the first running until the launch of target model markets, scheduled for September 17, under the same terms that applied for a mechanism that expired in March, 2019.

The TFRM’s second stage is seen running from the launch of the target model until a permanent flexibility mechanism is introduced. Its capacity is expected to be drastically reduced to 750 MW from 4,500 MW. Remuneration levels are also expected to drop.

 

Ministry preparing for Brussels demand response, TFRM approvals

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Anticipating the European Commission’s approval of government proposals for a demand response mechanism and a transitory flexibility remuneration mechanism (TFRM), the energy ministry is preparing ministerial decisions for immediate signing once Brussels has given the green light.

These decisions will need to be signed by Greek officials before the two mechanisms can be implemented. The ministry is preparing the ground to have both mechanisms launched as soon as possible.

Brussels and Athens have reached an agreement on the mechanisms, prompting the energy ministry to deliver a finalized version of the demand response plan to the European Commission’s Directorate-General for Competition, ahead of this mechanism’s reintroduction.

The energy ministry expects power grid operator IPTO to be able to stage its first auction for demand-response capacities in July.

According to the agreement reached with Brussels, IPTO will be permitted to auction demand response capacities of up to 800 MW, below the previous limit of 1,030 MW.

Also, a greater number of participants will be eligible as enterprises with capacities of at least 2 MW will be able to take part, down from 3 MW in the previous mechanism. Troubled nickel producer Larco will not be excluded.

In addition, the new mechanism will run until September 30, 2021, not for two years as had been requested by EVIKEN, the Association of Industrial Energy Consumers.

As for the TFRM, it will remain valid until the implementation of a permanent CAT mechanism, which the energy ministry expects to launch in March, 2021.

The TFRM will be divided into two stages, the first running until the launch of target model markets, scheduled for September 17, under the same terms that applied for a mechanism that expired in March, 2019.

The TFRM’s second stage will run from the launch of the target model until a permanent flexibility mechanism is introduced. Its capacity is expected to be drastically reduced to 750 MW from 4,500 MW. Remuneration levels are also expected to drop.

Brussels grants Athens demand response, TFRM extensions

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The European Commission has granted extensions for Greece’s demand response mechanism and transitory flexibility remuneration mechanism (TFRM), according to sources well-informed on the negotiations. They have dragged on for over seven months.

The development promises to offer energy-intensive industries and electricity producers crucial support given the period’s adverse conditions. Both mechanisms are vital for energy-cost savings.

The agreement also paves the way for the establishment of a permanent Capacity Remuneration Mechanism (CRM). The energy ministry plans to assemble a special committee comprised of various electricity market officials for work on the CRM details.

Greece’s demand response mechanism and transitory flexibility remuneration mechanism (TFRM) had both expired – the former three months ago and the latter in March, 2019.

Both mechanisms were extended by Brussels despite Greece’s pending implementation of the target model, now behind schedule.

Suppliers also given lignite access by DG-Comp agreement

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The Greek government and European Commission’s Directorate-General for Competition appear close to reaching an agreement that would give the country’s independent electricity suppliers access to state-controlled power utility PPC’s lignite-based production through a transitional mechanism running until 2023, when most of the utility’s lignite units are expected to cease operating.

This prospect comes hot on the heels of an agreement between Athens and Brussels enabling extensions of Greece’s demand response mechanism and transitory flexibility remuneration mechanism (TFRM).

PPC has monopolized Greece’s lignite sources and generation, but an agreement offering lignite access for all would open the door for independent suppliers as well as industry.

For quite some time, the DG-Comp has criticized PPC for not complying with a European Court decision requiring lignite access to third parties.

Settlement of the lignite dispute would leave just one pending energy-sector matter, the target model’s implementation.

Talks between Athens and Brussels on Greece’s energy sector matters have dragged on for at least seven months.

Athens and Brussels also appear to have drawn closer for an agreement on how lignite-based electricity will be priced.

Industrial energy cost reduction measures planned, deputy tells

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The government is preparing to reduce a special consumption tax for energy-intensive mid-voltage companies and also push through a series of other measures aiming to reduce industrial energy costs, deputy energy minister Gerassimos Thomas has revealed in an interview with Greek daily Kathimerini.

The deputy minister said he is confident a Greek proposal seeking extensions for the country’s demand response mechanism and transitory flexibility remuneration mechanism (TFRM) will be approved by the European Commission.

The special consumption tax for energy-intensive mid-voltage companies will be reduced to the level offered to high-voltage companies, the deputy minister informed.

Also, a new public service compensation (YKO) mechanism offering benefits for high and mid-voltage industries will be introduced, he said.

Power grid operator IPTO needs to design and launch new demand response products in compliance with EU directives, the deputy minister noted while addressing the forthcoming launch of the target model in Greece.

The objective is to provide incentives to private-sector producers and industry for equal participation in the balancing and energy markets, he explained.

 

 

Industrial sector needs delayed demand response mechanism

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The country’s energy-intensive industrial enterprises are keen to accept a solution that would also offer independent electricity suppliers access to power utility PPC’s lignite-based generation, acknowledging that delays in the government’s ongoing negotiations with the European Commission on across-the-board lignite issues will consequently delay Brussels’ approval of Greece’s request for an extension of the demand response mechanism, a key energy-saving tool for the industrial sector, and threaten the sustainability of a number of producers.

EVIKEN, the Association of Industrial Energy Consumers, recently informed the energy ministry of its position in writing.

Greece’s lignite-issue negotiations with the European Commission have dragged on for some time. Athens has received a list of new questions after responding to a dense set of previous questions.

The government’s proposal for an extension of the demand response mechanism was forwarded to Brussels late December following lengthy consultation with European Commission officials to ensure its details would be aligned with Brussels’ directives.

Even so, Greece’s industrial enterprises have been left without the support of demand response mechanism since February 7. Worse still, a new measure promising to reduce the cost, for industry, of a RES-supporting ETMEAR surcharge, has yet to be implemented.

As a result, certain industrial sectors, namely steel and cement, have slid further in terms of competitiveness while, in some cases, sustainability and job maintenance are also at stake.

Pundits believe Brussels has bundled together all of Athens’ pending energy sector issues.

Brussels ‘attaching unresolved market issues to target model’

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Greece’s unresolved energy market issues, including demand response and flexibility mechanism requests, appear to have been bundled up into one package by the European Commission as it waits to see if the country will honor its commitment to launch the target model this summer, sources believe.

Brussels has held back on approving a demand response mechanism extension request and CATs rewarding flexibility. Sources believe the European Commission will maintain delay tactics, through ongoing correspondence, until the summer.

The Greek government forwarded a request for a demand response mechanism extension of two years in late December before presenting the plan in Brussels the following month.

The presentation prompted an extended period of correspondence between the two sides that ended up requiring Greece’s energy ministry to respond to a lengthy list of questions. The ministry’s responses to these questions were forwarded two weeks ago. Athens is now awaiting news from the European Commission.

Work still needed for demand response, flexibility approvals

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European Commission officials of the Directorate-General for Competition have questioned various aspects of a Greek proposal seeking a two-year extension of the country’s existing demand response mechanism, a key energy-saving tool, as well as a proposal for a transitional mechanism rewarding flexibility.

Despite the hesitation, a series of meetings held Wednesday between the energy and environment ministry’s secretary-general Alexandra Sdoukou and DG Comp officials have been described as constructive.

Brussels officials appear to be gradually overcoming reservations stemming from Greece’s failure to meet previous commitments.

The energy ministry plans to address the DG Comp’s concerns on the demand response and flexibility mechanisms in a response to be forwarded today.

Sdoukou is scheduled to travel to Brussels in about two weeks for further talks.

Industry experts believe Greece’s demand response mechanism proposal stands a solid chance of being approved as it is based on a power grid operator IPTO study determining that a real need exists for the mechanism.

However, any chance of an approval by February 6, the expiry date of the existing demand response mechanism, has been ruled out. The industrial sector will be left without a demand response mechanism for a period of at least two months, it is estimated.

European Commission approval of the flexibility mechanism is seen as a less likely prospect as units offering flexibility to the grid face less of a financial strain and, moreover, flexibility will soon be rewarded within the framework of the target model.

Demand response mechanism proposal seeks two-year extension

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A Greek proposal forwarded to the European Commission late in December for an extension of the country’s existing demand response mechanism, a key energy-saving tool for industry, is seeking an additional two years.

This application was forwarded along with a proposal for a transitional mechanism rewarding flexibility.

If an entirely new permanent demand response mechanism is granted a two-year lifespan, then the two-year extension for the existing system will cease to apply, sources informed.

The target model will need to be launched before a permanent mechanism can be implemented.

Conclusions to be drawn through the target model’s introduction will enable Greek officials to shape a proposal for the permanent mechanism, seen occurring late this year.

A previous demand response proposal forwarded to Brussels by former energy minister Giorgos Stathakis is no longer valid as the country’s energy plan has been completely reshaped since last summer’s change of government.

Demand response mechanism to be extended ahead of bid for new plan

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The energy ministry has decided to extend a December 31 deadline concerning the country’s demand response mechanism (interruptability) into February, and, during this additional period, apply for a new two-year replacement.

A ministerial decision to facilitate this extension adheres to provisions offered by the European Commission, energypress sources informed.

This action will secure uninterrupted demand response mechanism coverage for the industrial sector. Power grid operator IPTO may stage one more demand response mechanism auction in January based on the support system’s existing terms.

The application for Greece’s new demand response mechanism, a key energy-saving tool for industry, will be along with another application for a temporary mechanism compensating flexibility.

Both mechanisms are considered crucial for the market’s proper functioning, a recent IPTO study determined.

The demand response mechanism compensates major-scale electricity consumers when the TSO (IPTO) asks them to shift their energy usage (lower or stop consumption) during high-demand peak hours, so as to balance the electricity system’s needs.

 

IPTO delivers study needed for Greek demand response extension bid

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A supportive study needed by the Greek government to submit an application to the European Commission for an extension of the country’s existing demand response mechanism (interruptability), a pivotal energy cost-saving tool for industry, has been delivered to the energy ministry by power grid operator IPTO, tasked with preparing the additional study, energypress sources have informed.

The existing demand response mechanism is valid until December 31, following an approval last February. Industry is looking for a three-year extension.

Industrialists fear the effort to extend the demand response mechanism’s validity risks being rejected if it does not precede or coincide with notification concerning the flexibility mechanism.

The demand response mechanism compensates major-scale electricity consumers such as industrial enterprises when the TSO (IPTO) asks them to shift their energy usage (lower or stop consumption) during high-demand peak hours, so as to balance the electricity system’s needs.

On another front, IPTO will have completed all studies related to Greece’s new decarbonization and RES targets before the end of the year, the operator’s deputy chief Yiannis Margaris noted during last week’s Renewable & Storage Forum in Athens, staged by energypress.

These studies will enable technical and financial assessments concerning the updated National Energy and Climate Plan for an estimate of the cost of infrastructure required to reach the new decarbonization and RES objectives, the IPTO deputy official explained.