Italgas unveils new identity of Greek companies within group

Athens,  February  14th, 2024  –  Italgas  has  officially  introduced  the  new  identity  of Greek companies, which  are now named “Enaon”, the  holding  company, and “Enaon Eda”,  the operating company.

The announcement was made by Italgas CEO Paolo Gallo during the inauguration of the new Athenian headquarters of the companies, in the presence of Italgas Chairperson, Benedetta Navarra, the Minister of Environment and Energy, Mr. Theodoros Skylakakis, the Minister of  Economy  and  Finance,  the  Minister  of  Development,  Kostas  Skrekas,  the  Italian Ambassador to Greece, Paolo Cuculi. Sia Kossioni, journalist, moderated the event.

The establishment of Enaon and Enaon EDA, which will be responsible for the development and management of services, represents a further step forward in the reorganization process undertaken by Italgas, marked by the merger of the previous three DSOs into one, which occurred in 2023.

“Just over a year ago,” stated Paolo Gallo “we successfully concluded the acquisition of Depa Infrastructure. Today, with the presentation of Enaon, we inaugurate a new chapter in our journey. The  launch of  the  new  corporate  image comes at a time  when  we  have already successfully achieved significant goals that will enable us to work better and more efficiently. I refer to the migration of the IT system to the Cloud, the unification of the three companies into a single operator, the selection of a new headquarters where people, previously spread across multiple locations, have more space and greater comfort. Italgas confirms itself as the ideal technological and industrial partner to support Greece in the phase-out from coal and lignite  towards  EU  decarbonization  goals.  Our  experience  in the digital  transformation  of networks, an enabling factor for the decarbonization of consumption, has already been made available  to  our  colleagues  and  will  also  allow Greek  distribution  networks  to  soon accommodate biomethane, green hydrogen, and other renewable gases”.

“Today’s presentation of ENAON and the reorganizational process carried out by the company in recent months are concrete signs of Italgas’ commitment to the Greek market and further contribute to the strengthening of the partnership between our two countries. Italy and Greece indeed boast strong bilateral relations, which continue to grow thanks to the contribution of companies  like  Italgas  that  have  decided  to  invest  in  this  market”  –  stated  the  Italian Ambassador to Greece, Paolo Cuculi, who emphasized the role of the Italian company in a crucial sector for the development of bilateral relations.

“The initiatives being taken with a focus on Greece through the Italgas Group  -several of which were presented in detail today- are helping us to gain access to technical knowledge that  will  enable  Greek  distribution  networks  to  be  upgraded  in  a  way  that could  soon accommodate  biomethane  and  other  renewable gases” stated the Minister of Environment and Energy, Mr Theodoros Skylakakis.

MEMORANDUM OF UNDERSTANDING BETWEEN ENAON AND HABIO

On the occasion of the unveiling of the new brand, Enaon has signed a Memorandum of Understanding with HABIO, the Hellenic Biogas Association, which today represents  the operators of 48 production plants who have already shown great interest in converting their production into biomethane to be injected into distribution networks.

The agreement, signed by Barbara Morgante, CEO of Enaon, and Alexandros Yfantis, President of HABIO, will last for 2 years and will focus on various topics: from the development of regulatory proposals to the definition of connection parameters to the networks, from the determination of costs for the expansion and connection of plants to the promotion of sustainable biomass collection and the use of digestate as fertilizer.

The collaboration between Enaon and HABIO is strategic to accelerate the development of biomethane, in line with the objectives of the EU and the Greek government. As a renewable gas, biomethane represents an energy source that reduces dependence on foreign supplies and improves energy security. It also contributes to the circular economy and sustainable development of rural areas, generating positive impacts on local communities.

THE MEANING OF ENAON

Enaon takes inspiration from the Greek word “Αέναος”  (Aenaos), which translates  to “perennial” and “renewable” and, when associated with the energy sector, aims to represent a long-lasting offer capable of meeting current needs and the well-being of future generations.

By simplifying its spelling to Enaon, the new brand becomes distinctive, versatile, and with a universal meaning.

Moreover, “Ena” is the Greek word for “one” and recalls the union of the 3 previous DSOs –Eda Thess,  Deda, and Eda  Attikis  –  into a single  Company;  “On”  represents  the  idea  of something being active, operational. Enaon, therefore, embodies the commitment to keep energy in constant flow, providing gas continuously and working to equip the country with cutting-edge, smart, and flexible infrastructure.

THE NEW HEADQUARTERS

The Enaon offices in Athens are located at the Politia Business Center:

The new Greek headquarters of the Group offers the opportunity to concentrate in one place many of the people who were previously scattered in various offices and locations across the city, thus enhancing interaction between people, exchanging professionalism and skills, and ensuring greater comfort for workers.

In the new offices, spread over 7 floors, people have access to modern, functional, and flexible spaces for a more effective balance between individual activities and group work. Overall, the architectural  project  aims  to  ensure  bright,  quiet  environments  away  from sources  of distraction, as well as areas equipped with tools for remote collaboration.

One of the distinctive features of the new headquarters is the complete overhaul of the ICT infrastructure, aimed at further enhancing cybersecurity.  This  revision, implemented with significant improvements, has aligned the Greek headquarters with the Group’s rigorous standards and best practices, effectively reducing risks associated with information and communication technologies.

 

 

DEDA’s 9.99% WACC proposal for 2024-26 above RAAEY goal

Italgas, the Italian buyer of gas company DEPA Infrastructure and distribution subsidiaries EDA THESS, EDA Attiki and DEDA, has proposed a 9.99 percent weighted average cost of capital (WACC) level for DEDA in negotiations with RAAEY, the Regulatory Authority for Waste, Energy and Water, for the rest of a four-year regulatory period covering 2023 to 2026, well above the level envisaged by the regulatory authority, expected to push for a rate below 8.57 percent.

A ratified legislative revision that had been forwarded by the energy ministry on the WACC level of the then-DEPA Infrastructure company, now reorganized, had set a WACC level of 8.57 percent for the current year, leaving the rest of the four-year regulatory period pending until the corporate reorganization of the gas company was completed.

The process has now been completed, as officially announced by Italgas, through a merger of gas distributors EDA THESS and EDA Attiki, both subsidiaries of the former DEPA Infrastructure Group, and absorption by DEDA.

In its DEDA negotiations with Italgas, RAAEY is pushing for a WACC level, for 2024 to 2026, below the 8.57 percent level set for 2023.

RAAEY will propose the precise WACC level it desires after DEDA has provided the authority with data on its borrowings and leverage. RAAEY aims to finalize the matter by the end of the year, so that tariffs can be set immediately afterwards.

As a result of DEPA’s restructuring, DEDA has undertaken the development and operation of the gas distribution network in all areas of Greece where DEPA Infrastructure, now a full-owned subsidiary of Italgas, is active. The company currently manages around 7,700 km of network and serves over half a million customers.

 

DEDA, RAAEY, entering WACC, tariff talks, with gap to cover

Gas distributor DEDA and RAAEY, the Regulatory Authority for Waste, Energy and Water, are entering negotiations to determine gas distribution network weighted average cost of capital (WACC) and tariff levels for the regulatory period covering 2023 to 2026 with some distance between them to cover, energypress sources have informed.

A ratified legislative revision that had been forwarded by the energy ministry on the WACC level of the then-DEPA Infrastructure company, now reorganized, had set a WACC level of 8.57 percent for the current year, leaving the rest of the four-year regulatory period pending until the corporate reorganization of the gas company was completed.

The process has now been completed, as officially announced by Italian buyer Italgas, through a merger of gas distributors EDA THESS and EDA Attiki, both subsidiaries of the former DEPA Infrastructure Group, and absorption by DEDA.

The Italian group recently acquired DEPA Infrastructure and its three gas distribution subsidiaries, EDA Attiki, EDA Thess and DEDA.

According to energypress sources, DEDA will soon forward to RAAEY its proposal for WACC and tariff levels concerning 2024 to 2026, thereby setting in motion negotiations between the two sides. Finalized decisions are expected by the end of the year.

Italgas will propose a WACC level of more than 9 percent, expected to prompt a reaction from RAAEY, which is determined to subdue WACC and tariff levels to limit, as much as possible, the burden on consumers, sources said.

 

DESFA launches LNG truck loading service, suppliers keen

Gas grid operator DESFA launched its LNG truck-loading service at Megara, 45 kilometers west of Athens, earlier this week, finally enabling refueling of consumption points located at a distance from the country’s gas network.

The launch, on Monday, was preceded by an extensive performance test of the LNG truck-loading infrastructure last March. Three companies, Blue Grid, DEPA Commercial, and Motor Oil Hellas, took part in the testing with LNG trucks.

Interest in the new service is already strong as gas suppliers appear keen to utilize its flexibility to expand their customer base.

Transportation of LNG via specially designed trucks promises gas supply to industrial consumers, vehicle refueling stations selling gas, areas not connected to Greece’s gas network within Greece, as well as neighboring countries.

Plans are already underway for LNG delivery to distribution networks being developed by gas distributor DEDA in western Greece – in Patras, Agrinio and Pyrgos.

The first LNG station designed to facilitate gas distribution to remote areas was installed in September, 2022 by gas distributor EDA THESS at Elassona, towards Greece’s north. It will supply the local network. The DEPA Infrastructure subsidiary plans to do likewise for gas supply covering other areas, including the Greek islands Skiathos, Skopelos, and Alonissos.

DESFA’s LNG truck-loading initiative represents the first segment of a small-scale LNG supply chain, to be complemented by a small-scale LNG jetty under development at DESFA’s Revithoussa LNG terminal.

This infrastructure will enable bunker vessels to supply LNG-powered vessels, such as cargo ships and container ships, at Piraeus port. It will also allow for ship-to-ship refueling, supporting larger vessels, such as cruise ships.

RAAEY decides on WACC levels for DESFA, DEPA Infrastructure

RAAEY, the Regulatory Authority for Waste, Energy and Water, has decided, after lengthy consideration, on WACC levels for two gas companies, DESFA, Greece’s gas grid operator, and DEPA Infrastructure.

The WACC level set for DESFA, 7.85 percent, will apply for a four-year period covering 2024 to 2027, while DEPA Infrastructure’s rate, 8.57 percent, applies for 2023.

The discrepancy between the two WACC levels resulted from different borrowing-cost coefficients applied to a WACC formula used by RAEEY. All other factors that were taken into account, including country risk and cost of capital, were identical.

DESFA is now expected to set tariffs ahead of tenders for three grid interconnection projects.

As for DEPA Infrastructure, the company’s new owner, Italgas, Europe’s second largest gas distributor, was expecting a WACC level of between 8 and 9 percent over the next four-year regulatory period in order to carry out its Greek investment plan through DEPA Infrastructure and its three gas distribution subsidiaries, EDA Attiki, EDA Thess and DEDA.

Decisions on WACC levels for power grid operator IPTO and distribution network operator DEDDIE/HEDNO are expected by the end of July.

IPTO has requested a revised WACC level for the regulatory period covering 2022 to 2025, while DEDDIE/HEDNO is awaiting a revision for 2023 and 2024.

Athens court orders gas distribution operators to return €8m to industries

The Athens Administrative Court of Appeals has given industrial enterprises the green light to recover just over 8 million euros in compensation fees for 2015 and 2016, validated by RAAEY, the Regulatory Authority for Energy, from the country’s three gas distribution network operators, EDA Attiki, EDA THESS and DEDA, after they had appealed the authority’s decision.

RAAEY has approved specific amounts compensating industrial enterprises for universal charges imposed on them by the three gas distribution network operators between August 14, 2015 to December 1, 2016.

However, the gas distribution network operators have failed to make the specified compensation payments, resorting, instead, to legal action disputing RAAEY’s decision.

Three of metal group Viohalco’s companies, Elvalhalkor, Sidenor and Sovel, are entitled to compensation amounts.

According to the RAAEY decision, gas distributor EDA Attiki, covering the wider Athens area, must return a total of 1.44 million euros to industrial consumers, EDA THESS, covering Thessaloniki and Thessaly, owes 3.26 million euros to industrial players, and DEDA, responsible for gas distribution to all other parts of Greece, must return 4.13 million euros to industrial customers.

The 8.83 million-euro sum is expected to be paid by the three gas distribution network operators over 36, interest-free installments, from November, 2021 to October, 2024.

Should the operators appeal the Athens appeals court verdict, the case will need to be taken to the Council of State, Greece’s Supreme Administrative Court.

Italgas seeking WACC of 8-9% to carry out Greek investments

Italgas, Europe’s second largest gas distributor, is seeking a WACC level of between 8 and 9 percent over the next four-year regulatory period in order to carry out its Greek investment plan through the Italian group’s recently acquired DEPA Infrastructure and its three gas distribution subsidiaries, EDA Attiki, EDA Thess and DEDA.

Italgas has submitted three related studies to RAAEY, the Regulatory Authority for Waste, Energy and Water, as support for what the energy group believes to be the necessary WACC level for the regulatory period starting this year and running through 2026, its CEO, Paolo Gallo, noted during a London presentation last week of the company’s strategic plan for 2023 to 2029.

RAAEY will initially reach a decision, expected early in July, on Italgas’ WACC level for 2023, given priority through a legislative revision ratified just months ago.

Prioritizing the 2023 WACC level for DEPA Infrastructure will enable Italgas to reassess its investment plans for the year concerning its three gas distribution subsidiaries, EDA Attiki, EDA THESS and DEDA.

DEPA Infrastructure’s allowed revenues and tariffs for 2023 will be determined at a latter date.

 

 

Italgas’ Greek EBITDA goal for ’23, €106m, highlights local importance

Italian energy group Italgas’ 2023 EBITDA target of 106 million euros for its Greek portfolio, representing 9 percent of the group’s overall EBITDA objective this year, highlights the strategic importance of the group’s business plan in Greece.

Italgas’ CEO, Paolo Gallo, highlighted this importance during his presentation yesterday of the Italian company’s strategic plan for 2023 to 2029 to investors and analysts in London.

According to Italgas’ seven-year strategic plan, the Greek portfolio’s EBITDA will contract slightly to 8 percent of the group’s overall EBITDA in 2029.

Italgas plans to greatly increase the group’s activities in the Greek market and subsequently boost their value from 700 million euros in 2022 to 1.2 billion euros by 2029, at an annual growth rate of 7.3 percent.

A key objective for the group in the Greek market is to expand natural gas distribution to new areas through the addition of 42 municipalities to the network, either through pipeline distribution or LNG stations.

Italgas has acquired DEPA Infrastructure and its three gas distribution subsidiaries, EDA Attiki, EDA THESS and DEDA.

The Italian group is currently working on a plan to merge its three Greek gas distribution subsidiaries, a development expected to offer significant benefits in terms of efficiency, effectiveness and transfer of know-how. According to Italgas officials, this procedure is expected to be completed by the end of the year.

 

EDA Attikis and EDA THESS’ online workshop with the Supply Companies

In the context of fostering effective cooperation, a constructive working meeting was held between the Distribution Network Operators, EDA ATTIKIS and EDA THESS, and the Supply Companies (Distribution Users) operating on the natural gas networks of Attica, Thessaloniki and Thessaly, with the aim of optimizing the services provided to end consumers and fully complying with the regulatory framework.

The agenda of the meeting included, among others, issues related to market development, increasing the penetration rate, consumer service, as well as the development of new networks in the License Areas of the Distribution Network  Operators.

The participating Supply Companies put forward their proposals and expressed their optimism for the joint and timely management of the issues addressed, prioritizing the strengthening and upgrading of the interoperability of the Operators’ online electronic information exchange tools (portals), always in accordance with the current regulatory framework and with a view to the equal treatment of Supply Companies and End Consumers.

On the part of EDA ATTIKIS and EDA THESS – which hold 99.5% of the total gas meters nationwide – special emphasis was placed on the actions to be taken in order to regain trust in natural gas, as it is the cleanest, most cost-effective, efficient and environmentally friendly fuel.

In addition, the Operators informed the attendants that meetings will soon be held with the Technical Entities and Municipal Authorities to inform them about the implementation of the 2023 Development Programs in the License areas. The Operators are committed to providing access to natural gas to all consumers, by ensuring connection to the existing gas network – also in Attica – within 35 days, with the aim of increasing penetration.

Concluding the workshop, Mr. Leonidas Bakouras pointed out that, as Distribution Network Operators, the recognition of our networks’ potential to channel green energy to thousands of consumers, offering an easy and cost-effective decarbonisation pathway, lays solid foundations for a sustainable future, creating added value for the benefit of all stakeholders.

 

Amendment to prioritize DEPA Infrastructure WACC level for ’23

The energy ministry has prepared a legislative amendment to prioritize the setting of a WACC level for gas company DEPA Infrastructure in 2023, and, at a latter date, determine its allowed revenues and tariffs for the same year.

This legislative revision, ultimately covering DEPA Infrastructure’s latest four-year regulatory period from 2023 to 2026, will initially be applied to set levels for the aforementioned three parameters in 2023, an urgent need that has arisen as a result of the volatility in energy markets, especially the gas market, due to Russia’s ongoing war in Ukraine.

Prioritizing the 2023 WACC level for DEPA Infrastructure will enable Italgas, the company’s Italian buyer, to reassess its investment plans for the year concerning its three gas distribution subsidiaries, EDA Attiki, EDA THESS and DEDA. According to sources, Italgas is inclined to limit its investment plans for these subsidiaries in 2023.

Italgas is working on reviewing its overall corporate plan for DEPA Infrastructure in the light of an apparent downward revision of gas penetration targets for the end of the decade.

Top energy sector officials taking part at Power & Gas Forum, March 22-23

The government’s top-ranked energy sector officials as well as a host of other leading figures from political, institutional, academic and business domains will be talking part in the Power & Gas Forum on March 22 and 23 at the Wyndham Grand Athens Hotel, an event being staged by energypress for a fourth time. Conference speakers and attendees will participate in person.

Speakers at the event will include Greek energy minister Kostas Skrekas; the energy ministry’s secretary-general Alexandra Sdoukou; secretary-general of transport at the ministry of infrastructure and transport Ioannis Xifaras; RAE (Regulatory Authority for Energy) president Athanasios Dagoumas; EFET’s (European Federation of Energy Traders) Jerome Le Page; Tomás Llobet of European Energy Retailers (EER); two former Greek energy ministers, Giannis Maniatis and Giorgos Stathakis; Sokratis Famellos, a member of the main opposition leftist Syriza party; and Haris Doukas of the PASOK-KINAL socialist party.

Other conference participants will include power grid operator IPTO’s chief executive officer Manos Manousakis and his deputy Giannis Margaris; gas grid operator DESFA’s chief executive Maria Rita Galli; RES market operator DAPEEP’s president and CEO Giannis Giarentis; distribution network operator DEDDIE/HEDNO’s chief executive Anastasios Manos; EDEYEP (Hellenic Hydrocarbons and Energy Resources Management Company) president Aristofanis Stefatos; the Hellenic Energy Exchange’s newly appointed CEO Alexandros Papageorgiou; EDA THESS general manager and EDA ATTIKI CEO Leonidas Bakouras; the Greek prime minister’s special adviser for energy Nikos Tsafos; energy ministry adviser Theodoros Tsakiris; and energy markets guru Alex Papalexopoulos.

The academic community will be represented by professors Pantelis Kapros, Stavros Papathanasiou, Pantelis Biskas, Nikolaos Hatziargyriou and Antonis Metaxas.

As always, energy-sector authorities will also participate at the event. They include Loukas Dimitriou (ESAI/HAIPP – Hellenic Association of Independent Power Producers); Antonis Kontoleon (EVIKEN – Association of Industrial Energy Consumers); Giannis Mitropoulos and Miltos Aslanoglou (ESPEN – Greek Energy Suppliers Association); Irodotos Antonopoulos (ESEPIE – Hellenic Association of Electricity Trading & Supply Companies); Panagiotis Lostarakos and Panagiotis Papastamatiou (ELETAEN – Greek Wind Energy Association); Stelios Loumakis (SPEF – Hellenic Association of Photovoltaic Energy Producers); and Stelios Psomas (SEF/HELAPCO – Hellenic Association of Photovoltaic Companies).

Key sector entrpreneurs and executives who have so far confirmed their participation include: Ioannis Kalafatas (Mytilineos); Kyriakos Kofinas (PPC); Nikolaos Zahariadis (Elpedison); Anastasios Lostarakos (NRG); Dinos Nikolaou (Energean); Kostis Sifnaios (Gastrade); Nikolaos Satras (Dioryga Gas); Panos Nikou (Volterra); and Ioannis Kokkotos (ABB).

The forum’s full agenda will be finalized and announced in the coming days.

DEPA Infrastructure to gain investment clarity with revision

The energy ministry is planning to allow Italgas, the Italian buyer of DEPA Infrastructure, through an acquisition completed last year, to adjust the gas infrastructure company’s investment and corporate plan in accordance with an anticipated downward revision of gas penetration targets to be set for the end of this decade.

The ministry plans to submit a related amendment to Greek Parliament, possibly as part of a multi-bill currently being discussed by a parliamentary committee ahead of its imminent tabling for ratification.

According to energypress sources, the amendment will remove an existing parameter simultaneously determining the WACC levels and allowed revenues of DEPA Infrastructure’s three gas distribution subsidiaries, EDA Attiki, EDA THESS and DEDA, for the next regulatory period, covering 2023 to 2026.

This revision would pave the way for the average cost of capital concerning the four-year period to be determined first before regulated income is also determined.

The energy ministry’s legislative initiative, the same sources noted, comes following a request made by Italgas, so that the company may examine and establish its investment plan for the new four-year regulatory period based on WACC levels to be set until 2026.

The company’s investment plan will, as a result, be tailored to generate allowed revenues and lead to the creation of new assets.

 

Gas distribution operator 5-year investment plans worth €788m

The country’s three gas distribution operators, EDA Attiki, EDA Thess and DEDA, covering Athens, Thessaloniki-Thessaly and the rest of Greece, respectively, have proposed investments totaling 788 million euros for the network’s development over a five-year period between 2023 and 2027.

Italgas, the new owner of the EDA companies, has set ambitious objectives to expand Greece’s existing gas distribution network in order to facilitate further market penetration of gas around the country.

The three gas distribution operators have been forwarded their network development plans to RAE, the Regulatory Authority for Energy, for consultation.

DEDA, covering the country’s north, northwest, west, as well as the Peloponnese, has forwarded the biggest investment plan of the three gas distribution operators. It is worth 378.3 million euros and aims to increase the number of customers in these regions to 103,127 by 2027.

During this same five-year period, DEDA aims to develop low and medium-pressure distribution networks of more than 2,600 kilometers. This extension is expected to enable gas quantity distribution quantities of 4.7 million MWh for households and businesses in five years’ time.

EDA Attiki, covering the wider Athens area, has submitted a five-year network development plan budgeted at 159.59 million euros, its aim being to increase the number of customers to 531,939 from 430,147 at present.

EDA Thess has proposed a five-year network development plan for Thessaloniki worth 136.6 million euros for projects to include an additional 359.7 kilometers to the city’s distribution network, enabling an increase in the number of customers to more than 331,818 from 275,172 at present.

The EDA Thess network development plan for Thessaly is worth 113.9 million euros and expected to enable the number of customers in this region to reach 147,177 by 2027 from 118,512.

 

RAE approves EDA development programs covering 2022 to 2026

RAE, the Regulatory Authority for Energy, has approved five-year development programs submitted by Greece’s three gas distribution operators, EDA Attiki, EDA Thess and DEDA, covering Athens, Thessaloniki-Thessaly and the rest of Greece, respectively, energypress sources have informed.

RAE is expected to soon publish these development programs, the sources noted.

The three operators have already submitted their ensuing five-year development plans, covering 2023 to 2027, to the authority, expected to offer its approval within the next two to three months, after two pending issues are settled.

Italgas, the new owner of the EDA companies, has set ambitious objectives to expand Greece’s existing gas distribution network in order to facilitate further market penetration of gas around the country.

Italgas aims to increase total gas connections in Greece to a level of one million by 2028, from roughly 600,000 at present.

However, RAE has maintained a cautious stance as it wants to ensure these investments do not end up becoming an excessive burden for consumers.

 

Gas meters to be replaced with digital equivalents by 2027

Gas distributors EDA Attiki and EDA THESS plan to gradually replace 400,000 existing natural gas meters in Athens, Thessaloniki and Thessaly, the areas they cover, by 2027 with upgraded smart versions, a project estimated to cost between 40 and 50 million euros.

The upgrade promises to play an important role in the digitization of the country’s gas distribution, greatly improving its performance as well as services offered to households and businesses using natural gas.

The gas companies aim to have this ambitious project included in development programs covering 2023 to 2027.

The two operators have already prepared a cost-benefit analysis that will soon be forwarded for consultation by RAE, the Regulatory Authority for Energy.

The authority will then recommend an overall strategy for the project to the energy ministry, which, in turn, will deliver a ministerial decision paving the way for the project’s launch through development programs.

 

RAE, operators far apart on WACC levels for 2023-2026

RAE, the Regulatory Authority for Energy, and the country’s gas distribution network operators appear to be far apart on WACC (weighted average cost of capital) figures for the next regulatory period covering 2023 to 2026, energypress sources have informed.

The authority is expected to set its levels early in 2023, the sources noted. Locking in the WACC level for the four-year period will enable Required Income levels to be determined along with tariffs for each of the operators.

The distribution network operators, EDA Attiki, EDA Thess and DEDA, have yet to announce their desired WACC levels for 2023 to 2026, but it is believed they want a significant increase on the current levels.

The current regulatory period is ending with a WACC level of 7.03 percent, the level recorded in 2021, following levels of 8.18 percent in 2019 and 7.45 percent in 2020.

RAE contends there is no reason to deviate from the current WACC formula, which, it has noted, includes all the factors that reflect the economic environment in which EDA Attiki, EDA Thess and DEDA operate, including inflation and country risk.

Given its approach, RAE appears likely to set just marginally higher WACC figures for the next four-year regulatory period.

RAE reserved about Italgas’ network expansion plan

RAE, the Regulatory Authority for Energy, is deeply concerned about the prospect of gas distribution network expansions into new geographical territories as, at present, amid the energy crisis, it remains unclear whether an expanded network would result in a greater number of overall gas users in Greece or, on the contrary, excessively increase the cost of this fuel for existing gas users through higher charges on regulated tariffs.

Italgas, following up on its recent 733 million-euro acquisition of DEPA Infrastructure, one of Greece’s biggest energy-sector privatizations, is keen to expand the country’s gas network through three DEPA Infrastructure subsidiaries, EDA Attiki, EDA THESS and DEDA. The expansion project is included in their investment plans for 2022 to 2026.

RAE will soon need to decide on whether to approve these gas network expansion plans.

Italgas has made clear it views geographical expansion of the country’s gas network as am approach that will increase gas usage in the Greek energy market.

Italgas aims to increase the number of gas users in Greece from approximately 600,000 at present to one million by 2028.

 

Distributors bent on network expansion despite crisis

Gas distributors EDA ATTIKI, EDA THESS and DEDA, unperturbed by the energy crisis, plan to expand the country’s gas network through the development of more than 3,000 kilometers of medium and low-pressure networks over the next four years, as well as digitization upgrades, investments worth a total of 740 million euros. RAE, the Regulatory Authority for Energy, has just forwarded the operators’ gas network expansion plans for consultation.

These investment plans demonstrate the willingness of all three gas operators to push ahead with their business plans for expanded gas usage as a key part of the country’s decarbonization effort, despite the sharp rise in gas prices.

Highlighting this intention, Italgas, whose acquisition of DEPA Infrastructure, the parent company of EDA ATTIKI, EDA THESS and DEDA, was completed one month ago, has just announced a loan of 580 million euros to be primarily used to help finance the gas network expansion plans of the three gas operators.

EDA ATTIKI, EDA THESS and DEDA cover the regions of wider Athens, Thessaloniki-Thessaly and the rest of Greece, respectively.

EDA THESS plans investments worth 233 million euros for new gas networks in the Thessaloniki and Thessaly regions.

EDA Attiki’s expansion plan for Athens, 570 km of low and medium-pressure networks by 2026, worth 122.23 million euros, will aim for 85,500 new connections by the end of 2026, taking the company’s total to 260,000 links.

DEDA Athens is planning over 2,000 km of new networks in seven regions, the biggest of the three initiatives, budgeted at 396 million euros.

 

Copelouzos in talks with Italgas for Depa Infrastructure stake of 10-20%

Greece’s Copelouzos Group is interested in joining a new company founded by Italgas after acquisition of gas company DEPA Infrastructure was officially completed, the Italian buyer’s chief executive Paolo Gallo has informed media.

Italgas and Copelouzos Group are currently involved in talks concerning a stake of between 10 and 20 percent for the latter in the new DEPA Infrastructure company, a stake closer to the lower level being likeliest, Italgas’ CEO noted.

The negotiations between the two sides could last anywhere between weeks and months, while there is no definite outcome, Gallo informed.

Italgas intends to offer an overall stake of as much as 49 percent in the new DEPA Infrastructure company. No other potential partners or initiatives have been revealed.

Gallo, responding to journalist questions, said it is too early to tell if there will be any organizational changes at DEPA Infrastructure.

However, he did confirm that the current CEOs at DEPA Infrastructure’s distribution subsidiaries EDA Attiki and DEDA, two of three in total, would remain at their posts.

As for EDA THESS, DEPA Infrastructure’s other distribution subsidiary, Italgas is still in the process of completing its purchase of a 49 percent stake held in this company be Eni. Price and terms have been agreed.

Italgas will aim for further gas penetration in parts of Greece where natural gas networks already exist, the CEO noted.

 

Investments in Region of Thessaly serve as a catalyst for the growth of the area

A landmark connection contract of 17 M. Νm3 with “Hydranthos”

The agreement between EDA THESS and “Hydranthos” for the connection of the new Hydroponic Cultivation Greenhouse Unit to the distribution network of EDA THESS leads to a record high, increasing the distributed natural gas volumes by 17 million Nm3 annually. The strong investing activity in the Region of Thessaly serves as a catalyst not only for the growth of the broader area but also for the strengthening of the productive fabric of the whole country.

The newly established company “Hydranthos Single Member Private Company“, owned by the US company “Aurarius Investment Group” based in Washington D.C., is proceeding with the construction of a high-tech greenhouse plant for the cultivation of hundreds of acres of tomatoes in Almyros, Magnesia.

Hydranthos will use natural gas in a new High-Efficiency Combined Heat and Power (CHP) unit with a total capacity of 10 MW to cover its energy needs in terms of electricity, heating/cooling and carbon dioxide. The greenhouse unit is expected to be fully operational in 2025. The investment has been included in the submitted 2022-2026 Development Program and the Business Plan of EDA THESS.

The Company’s consistent implementation of sustainable investments based on technical and economic efficiency criteria generates multiple benefits for the business and economic activity of the Licensed areas. The productive sector and industries benefit from the use of natural gas as they take advantage of the continuous and uninterrupted supply through the distribution network that enables them to plan and manage their production activity in an optimal manner. At the same time, the increased industrial consumption rates recorded both in the Regional Unit of Thessaloniki and the Region of Thessaly, contribute to the increase of the distributed volumes, enhance efficiency and ensure the long-term viability of the distribution network.

According to the statements of the CEO, Mr. Mario Rizos, Aurarius Investment Group and “Hydranthos” intend to develop a portfolio of high-tech, innovative hydroponic units combined with energy plants throughout Greece, focusing on the cultivation of high-quality vegetables and aiming at strengthening local communities while ensuring good financial results.

Hydroponic greenhouses are sophisticated production units that operate more efficiently with the use of new technologies. The key components of their production process are heat and carbon dioxide – both of which are by-products of Cogeneration of heat and power-. Cogeneration technology can typically recover through inverters – more than 80 % of the heat produced. In addition to using recovered heat, cogeneration is also beneficial to the environment, as it increases energy efficiency and reduces emissions into the atmosphere. In addition, cogeneration can save up to 30% of fuel compared to conventional “separated production” of heat and power.

From his part, the General Manager of EDA THESS, Mr. Leonidas Bakouras pointed out that innovative natural gas technologies and CHP units are the ideal solution to improve energy efficiency and achieve decarbonisation of the industrial sector. In the same context, the future injection of renewable gases with reduced or zero carbon footprint and the optimized use of the grid thanks to the digitization of the distribution infrastructure will provide the necessary flexibility to manage demand, enhancing the resilience and sustainability of the energy system; concepts that are directly linked to the fulfillment of the medium-term (2030) and long-term (2050) energy and climate goals.

EDA THESS, fully consistent with its strategic planning, continues the implementation of its development programs to expand the use of natural gas, with utmost care for safety, sustainability and environmental protection.

Pictured are: Mr. Mario Rizos, CEO of Aurarius Investment Group, Mr. Leonidas Bakouras General Manager of EDA THESS, Ms. Kalogirou Efthymia Manager of Natural Gas Market Development for Thessaly and Ms. Katerina Liakou, Lead Developer of Aurarius Investment Group in Greece

DEPA Infrastructure sale hurdle overcome by ministry revision

The energy ministry has incorporated provisions into a RES licensing simplification draft bill in order to overcome obstacles that have delayed the completion of gas company DEPA Infrastructure’s sale to Italian company Italgas.

The ministry’s provisions, now paving the way towards this sale’s finalization, separate certification requirements set by RAE, the Regulatory Authority for Energy, for the gas company’s distribution subsidiaries from the DEPA Infrastructure sale procedure.

RAE recently set terms that would essentially nullify certification for DEPA Infrastructure’s three gas distributors, EDA Attiki, EDA THESS and DEDA, if the buyer proceeds with an equity capital increase within three years of the sale’s completion.

Italgas officials have been in Greece since December, when the sale and purchase agreement was signed by the sellers, the Greek State and Hellenic Petroleum (ELPE), holding a stake, and the Italian buyer.

During this period, the Italgas officials have been collecting financial and other data concerning DEPA Infrastructure’s subsidiaries.

Natural Gas Infrastructure at the core of the Energy Transition

The General Manager of EDA THESS, Mr. Leonidas Bakouras, answers  whether the energy crisis marks the end of Natural Gas.

 Interview of the General Manager, Mr. Leonidas Bakouras, to energypress.gr 

Recent geopolitical developments do not affect the role of natural gas, since in all the realistic scenarios that have been put on the table, gas will continue to be the fuel delivering reliability to the energy system of Greece and Europe for the coming years. This is what the General Manager of EDA THESS, Mr. Leonidas Bakouras pointed out in his interview, adding that the role of natural gas will therefore be sustained and will not be relegated by the RePowerEU plan for reducing energy dependence on Russia.

According to Mr. Bakouras, an important reason is that – taking into account the increasing penetration of RES in the power generation mix  – natural gas is the most efficient solution for power adequacy,  while at the same time it is a reliable source of energy for industries, providing multiple advantages. As a result, along with its increasing use in the residential sector, it will continue to catalyze the achievement of targets set for climate change mitigation (fit-for-55).

In this context and given that Greece has received gas late compared to the rest of Europe, there is an urgent need to increase its penetration throughout the country, through the investments for the development of new distribution networks that are in progress. Moreover, he added, the same distribution networks that are currently accommodating natural gas, will in the future act as multipliers for the penetration of renewable gases into the final energy mix, accelerating its decarbonization.

The General Manager of EDA THESS also pointed out that along with the investments in new networks, there should be incentives in order for the citizens in the new areas to switch to the use of natural gas. Also, energy saving programs for existing consumers (such as household condensing boilers that reduce consumption by 25-30%), could partially offset high prices. 

  1. After three months of warfare in Ukraine and following the “response” of the EU through the REPowerEU plan, is the role of gas relegated in your opinion?

 The transitional role of gas will be sustained and will not be relegated by the RePowerEU. On the contrary, in all the realistic scenarios that have been put on the table, natural gas will be the fuel that will offer reliability to the energy system of Greece and Europe for the coming years.

The REPowerEU plan provides for a number of actions to diversify gas supply sources, save energy and further develop renewable energy sources. Natural gas is the cleanest fossil fuel, its CO2 emissions amounting to only half of the emissions from coal combustion. Replacing coal with natural gas reduces total emissions by hundreds of millions of tonnes annually in Europe.

There is no question of relegating the role of gas but it is necessary to replace polluting fuels such as lignite and coal. Νatural gas will support the country’s power generation with alternative supply sources (LNG), covering peak loads and helping to meet the demand that RES are unable to address due to intermittent production and the lack of large-scale storage.

Especially for industry, gas is a reliable form of energy that is always available as it is continuously supplied through the grid, without need for storage tanks and without supply outages. It thus allows industries to plan and manage their productive activity in the optimal way. At the same time, the supply and combustion of natural gas can be regulated with high precision, which makes it an ideal solution for immediate adaptation to the various operational needs of the production process.

The transitional role of natural gas in our country is reflected on the total consumption, which has increased by 10% from 2020 to 2021 and by 6.18% in the first quarter in 2022 compared to the corresponding period last year.

The critical importance of natural gas is reinforced by the large infrastructure projects currently implemented in the country, securing and diversifying energy supply. Projects such as the upgrade of the Revythousa Terminal, the construction of floating LNG storage and regasification units (FSRU), the underground gas storage facility in South Kavala and the cross-border pipelines that have been put into operation (TAP) or will be put into operation soon (IGB), safeguard the adequacy of supply and at the same time, turn Greece into a Liquefied Natural Gas Hub for the Balkans (as supplies are already directed to Bulgaria and Romania) but also for the whole of Europe.

 Emissions reduced by 50% in cities supplied by gas 

  1. Do you believe that the recent geopolitical developments will negatively affect the deployment of new distribution networks in Greece? 

To achieve RePowerEU’s energy goals and aspirations, one must consider the different starting point and maturity of each EU Member State.

Greece, unlike other European countries, welcomed natural gas late. At the moment, a large investment program in new distribution networks is underway, in order to supply natural gas to 70% of the territory, which to date does not have access to gas. It is worth noting that with the distribution network covering the rest of the country, the number of gas delivery points (meters) – which today exceeds 500 thousand – is expected to double, reaching 1 million by 2030.

The same networks, being widely dispersed, will in the future act as multipliers for the penetration of renewable gases into the final energy mix, accommodating and circulating renewable gases (biomethane, hydrogen, synthetic methane) to end consumers currently connected.

If our country really wants to drastically reduce greenhouse gas emissions and achieve the NECP targets, natural gas must first penetrate all areas and replace conventional fuels – namely fuel oil in industries and heating oil in households. This will lead to the immediate reduction of the carbon footprint and the improvement of the environment throughout the country. As I have pointed out in the past, in every new city where gas penetrates, greenhouse gas emissions are reduced by 50%.

The main transitional fuel in Greece for at least another 25 years 

  1. In the context of revised National Plan for Energy and Climate, do you think that the geographical expansion of natural gas in our country will remain a priority?

Europe’s ambition to zero carbon emissions must ensure that the transition to climate neutrality is financially sustainable, socially just and that it safeguards the countries’ security of supply. Existing and planned energy infrastructure are important assets that policy makers must utilize to avoid huge investments that will disproportionately burden end consumers. In the same context, the EU financial tools should be used to the maximum, taking into account the know-how of the Operators, who are the connecting links between consumers and the energy market.

The revision of NECP, in addition to the frontloaded goals it will set for the increase of RES and the production of renewable gases, should strengthen the role of natural gas as the main transitional fuel of our country for at least the next 25 years. Both the NECP and the financial programs and tools should convey the appropriate signals to the market in order for the networks to be deployed throughout the territory, and on the other hand, for the infrastructure to enhance the adequacy of supply and the resilience of the country’s energy system, strengthening the role of Greece as a “gateway” of natural gas for the wider region.

In this regard, the quantified target set for the 50% increase of natural gas use in the end consumption sectors by 2030 compared to 2017 should be preserved in the revised NECP. Funding for the development of gas infrastructure should remain as the top priority; dual-benefit infrastructure, which on the one hand will contribute to achieving the goals of tackling climate change (fit-for-55) and on the other hand, will accelerate the transition to RES and the carbonization of the energy mix.

  1. How do you assess the measures that the Commission has taken to diversify sources of supply and to strengthen security of supply and price competitiveness? Do you think that more drastic measures could be taken to decelerate prices? 

The diversification of the gas import routes achieved in our country through the infrastructure I mentioned, guarantees the resilience of the energy system and the adequacy of supply for all consumers.

In the same context, the obligation to fill gas storage facilities by 90% throughout the EU by next winter, will further enhance security of supply.

With regard to price formation, the voluntary joint procurement mechanism (EU Energy Platform) can enable Member States to jointly negotiate more competitive prices. However, the most drastic measure proposed by both the Greek State and several other European states is the price cap on the wholesale market at least until the end of the war. A measure that will decouple prices from the upstream reference markets (TTF), in order to reduce the effects of price pressures and to adjust the price charged to end consumers according to the fluctuation of supply and demand.

If this proposal is adopted by the European Commission, prices charged to end consumers are expected to gradually decelerate. Let us not forget that, despite the fact that we are in the middle of the summer season and household consumption is limited, energy-intensive industries are still faced with high energy prices affecting their sustainability, competitiveness and the implementation of planned investments.

Triple benefit from biomethane injection

  1. Going back to the changes in the energy mix that are promoted for the coming years, what should be the role of biomethane in the NECP? In countries like Greece, what is the potential for creating a biomethane supply chain?

The injection of biomethane in the distribution networks is a challenge that will bring a triple benefit for our country. Initially, it will help achieve the 35 bcm biomethane target set under REpowerEU. Furthermore, it will contribute to the decarbonisation and greening of the distribution networks, while strengthening the country’s circular economy.

The biggest advantage of biomethane is its full compatibility with the existing distribution networks; networks which, due to their geographical dispersion in urban and interurban areas, will allow the cost-effective connection of production and injection facilities. Therefore, biomethane is a “key” asset for the country, as it will directly help reduce over-reliance by replacing part of Russian gas, while also making distribution networks sustainable.

Today in our country there are about 40 biogas production units which – due to the lack of regulatory framework – are used exclusively for power generation. However, injecting biomethane into the grid is more energy efficient than using biogas to generate power. About 90% of energy is preserved when injected into the grid, compared to only 65-70% when biogas is burned to generate electricity. The first step is to submit proposals for the introduction of the appropriate legal and regulatory framework in line with the European directives, to support appropriate incentives for business initiatives to thrive. In particular, the NECP targets on the production of renewable gases in line with the REpowerEU plan should be made binding. In this regard, it is advisable to apply Feed-in Tariff / Premium mechanisms for producers as well as to establish a framework for Guarantees of Origin.

Energy saving as a “counterweight” to cost

  1. 6. As a measure to reduce reliance from Russian gas imports, REPowerEU also includes energy savings to reduce consumption. What measures could be implemented? 

Together with the REPowerEU plan, the Commission presented the EU communication to promote immediate energy saving by citizens and businesses through changes in consumer behavior and strengthening medium- to long-term structural energy efficiency measures.

The key strategic question for Europeans is what we should do to stop wasting energy. Especially for heating, solid and coordinated efforts by all involved bodies are required in order to take full advantage of the benefits delivered by natural gas as well as the various technological solutions available.

In this context, the State should continue to provide incentives for potential consumers to switch to natural gas, by introducing subsidy schemes for replacing oil heating systems with natural gas systems. These schemes should be granted in all Regions throughout the territory.

For existing residential consumers using Natural Gas, funding should be provided for the replacement of the old burner – which in many cases dates back to 2000 – with modern natural gas condensing boilers; a measure that will directly contribute to energy savings by at least 25-30% while improving the environmental footprint of consumers.

In the same context, the competent bodies that manage the municipal and public buildings should raise their awareness, so that saving programs such as “Electra”, include actions to modernize the installations and the boilers that have been used for more than 20 years and are now considered obsolete, their energy efficiency being lower than 60%. Modern gas boilers with compensation control systems can achieve an efficiency of up to 100%.

Similar programs should be introduced for the upgrading of industrial facilities with technologically advanced equipment that will result in higher energy efficiency and the rationalization of resource management while ultimately promoting their competitiveness and environmental sustainability. It is therefore obvious that energy savings can offset some of the high energy prices.

Distribution networks are also key for the decentralized production of “green” hydrogen

                         It is said that the final answer for the decarbonization of hard-to-electrify activities will be given through the development of a “green” hydrogen economy. What is your opinion? 

Greece has recognized the role of hydrogen in the green transition, highlighting the strategic position of our country as a future producer of green hydrogen for European markets. Moreover, Greece’s potential in RES energy production paves the way for the development of large green hydrogen production projects such as the White Dragon that is expected to be completed in 2029 with a planned production amounting to 250,000 tons of hydrogen / year.

Despite the promising potential, there is currently no production of “green” hydrogen in Greece. The main challenges concern the development of hydrogen demand both for existing uses (heavy industry, refineries) and for new uses (electricity, residential heating). The development of a hydrogen value chain will also depend on the successful completion and connection of production, transmission, distribution, storage and end-use infrastructure. This requires coordinated investment by all actors along the value chain.

As evidenced by other European projects (Ready4H2) that have been piloted, gas distribution networks – with appropriate modifications – will be able to accommodate quantities of hydrogen mixed with natural gas and biomethane in the future. This means that hydrogen will be incorporated in the mixture supplied to the end consumer, utilizing the existing infrastructure and the already implemented investments.

In the future, the biomethane production model I mentioned can be replicated for “green” hydrogen, where Gas Distribution Network Operators will collect and circulate the decentralized production of hydrogen from “small-scale” electrolytes to their networks, utilizing local RES power surplus; a surplus that, in fact, if not converted to hydrogen and introduced into the gas distribution system, will not be exploited. This is a cost that Europe cannot bear if it wants to meet its target of 20 million tonnes of hydrogen annually by 2030 to regain its energy independence and achieve its environmental ambitions.

In this context, we plan long-term investments for the upgrading, repurposing and digitization of infrastructure with new technologies and automatic control systems, so that the networks are ready for the future injection and accommodation of renewable gases.

Realistic goals for a just and smooth energy transition 

  1. What do you think should be done to promote your proposals at National and Community level?

It is easily understood that distribution networks and Operators now play a pivotal role in accelerating the achievement of the RepowerEU goals for energy independence, diversification of resources and the protection of the right of consumers to access affordable energy, which is now one of the key challenges to address.

In this context, we, the Operators, should be able to participate in the Energy Committee – as is the case in the rest of Europe – as through our experience and familiarity with market conditions, we can highly contribute to the drafting of policies and plans that will link the theoretical objectives with realistic and readily applicable solutions for the benefit of end consumers, of the society and the environment.

One of the key issues for energy transition is the revision of the 3rd energy gas package. In this context, the Gas Distributors for Sustainability GD4S – of which EDA THESS is a member -, actively participate in the consultations for the shaping of a framework on the biomethane, hydrogen and decarbonated gases market (Gas Decarbonization Package). To this end, it is appropriate to incorporate the binding objectives of REpowerEU into the Community Directive under consultation and to set the horizontal and vertical separation rules for Operators, to enable them to operate renewable gas networks, supplying initially biomethane and in the distant future, hydrogen.

By raising its voice at Community level, GD4S rightly advocates the creation of a separate EU Gas DSO Entity for natural gas, biomethane and later hydrogen, in order to achieve the objectives I mentioned, utilizing existing Natural gas infrastructure. Thus, the role of Distribution Network Operators is taking hold in the context of European planning.

In a transitional period with intense ambiguity, where on the one hand the gas market tends to stabilize, while on the other, the long-term goal at Community level is to reduce and finally eliminate the use of fossil fuels, it is obvious that realistic objectives for a just and smooth energy transition should be set at both European and national level. In this sense, not only has the end of Natural Gas not come but now its momentum is at its highest, as the role of Natural Gas is being upgraded and acting as a catalyst, it can be the bridging fuel for the achievement of Community goals.

 

 

 

DEPA Infrastructure sale certification obstacles cleared

Italgas, the Italian buyer of gas company DEPA Infrastructure, a deal yet to be finalized, has accepted certification terms set by RAE, Greece’s Regulatory Authority for Energy, for the gas company’s three subsidiaries, the gas distributors EDA Attiki, EDA THESS and DEDA, a development that paves the way for the finalization of the sale, worth 733 million euros.

RAE has forwarded its decision on certification conditions for publication in the government gazette after clarifying terms, accepted by Italgas, Europe’s second largest gas distributor.

Italgas officials have been in Greece since December, when the sale and purchase agreement was signed by the sellers, the Greek State and Hellenic Petroleum (ELPE), holding a stake, and the Italian buyer.

During this period, the Italgas officials have been collecting financial and other data concerning DEPA Infrastructure’s subsidiaries.

DEPA Commercial sale over, DEPA Infrastructure completion June

Privatization fund TAIPED’s attempted sale of gas company DEPA Commercial is officially over, the European Commission admitting that the procedure cannot proceed as a result of an ongoing legal battle between the company and fertilizer producer ELFE, which, Brussels noted, in a report on the Greek economy, is expected to take two to three years to be resolved.

ELFE is seeking compensation from DEPA, claiming overpriced gas supply between 2010 and 2015, while DEPA has filed a legal case seeking overdue amounts from the fertilizer producer, based in Kavala, northern Greece.

TAIPED is now examining alternative sale solutions, according to the Brussels report.

As for the yet-to-be-finalized sale of gas company DEPA Infrastructure, acquired by Italgas, Europe’s second largest gas distributor, it is expected to be finalized in mid-June, the European Commission’s report noted.

The Brussels report made no mention of recent certification issues raised by RAE, the Regulatory Authority for Energy, which has changed its stance on the certification conditions for DEPA Infrastructure’s three subsidiaries, the gas distributors EDA Attiki, EDA THESS and DEDA.

DEPA Infrastructure sale facing hurdle on final stretch

The yet-to-be-finalized sale of gas company DEPA Infrastructure, acquired by Italgas, Europe’s second largest gas distributor, has encountered a hurdle on the final stretch as a result of certification issues raised by RAE, Greece’s Regulatory Authority for Energy.

The unexpected issues faced by this privatization, promising to provide 733 million euros to TAIPED, the country’s privatization fund, are serious and threaten to derail a sale and purchase agreement signed last December by the two sellers, the Greek State and Hellenic Petroleum (ELPE), and the Italian buyer.

The sale’s procedure had progressed swiftly, leading to competition committee approval, but events over the past few days, instigated by RAE’s change of stance on the certification conditions of DEPA Infrastructure’s three subsidiaries, the gas distributors EDA Attiki, EDA THESS and DEDA, have suddenly led to confusion, bringing the sale to a standstill.

RAE has offered conditional certification for the three subsidiaries, setting terms that did not exist in the lead-up to the sale and its conditions, according to sources.

Consequently, certification offered to the subsidiaries will not be considered valid if the buyer proceeds with an equity capital increase within three years of the DEPA Infrastructure sale’s finalization. Also, the agendas of all three subsidiaries will need to remain unchanged for their certification to remain valid, according to the sources.

TAIPED officials are believed to have been angered by these initiatives, considering them to be beyond RAE’s authority. Officials at Greece’s finance and energy ministries, as well as Italgas, have also been annoyed by RAE’s decision.

TAIPED and Italgas officials are believed to be engaged in talks in search of a compromise solution.

 

Italgas’ DEPA Infrastructure deal to be finalized late March

The sale of gas company DEPA Infrastructure, acquired by Italgas, Italy’s biggest natural gas distribution company and the third largest in Europe, is expected to be completed in the first quarter of the year, energypress sources closely monitoring the procedure have informed.

Final sale procedures will have been completed towards the end of March, enabling Italgas to make its payment, an amount of 733 million euros, the sources noted.

The competition committee needs to approve the sales and purchase agreement, signed between the buyer and two sellers, privatization fund TAIPED and Hellenic Petroleum ELPE, on December 10, 2021.

RAE, Greece’s Regulatory Authority for Energy, also needs to issue necessary certification for the acquisition, but the competition committee’s approval is a prerequisite for this stage.

The acquisition will be fully completed once Italgas also purchases purchase gas distributor EDA THESS’s 49 percent stake held by Italy’s Eni gas e Luce, wanting to sell. This follow-up purchase of the EDA THESS stake has been set as a condition for Italgas, the winning bidder.

DEPA Infrastructure, EDA THESS’s parent company, holds a 51 percent stake in the gas distributor covering the Thessaloniki and Thessaly areas, while Eni gas e Luce, holds 49 percent.

The overall sum expected to be spent by Italgas for DEPA Infrastructure and EDA THESS’s 49 percent stake is expected to reach 940 million euros.

Then, Copelouzos group subsidiary Faethon is expected to enter DEPA Infrastructure with a stake seen ranging between 10 and 20 percent

Italgas and the Copelouzos group had reached a related agreement on this minority-stake arrangement prior to the DEPA Infrastructure tender.

Historic achievement for EDA THESS: 26,000 new connection contracts in 2021

The beginning of the new year for EDA THESS is laced with the achievements of 2021 that verify the Company’s primary role in the natural gas distribution sector, as well as its strategic contribution to energy transition and the recovery of national economy. Going through a period marked by the impact of the pandemic and the surge of prices in the energy market, the Company safeguarded the uninterrupted continuation of its activities, recording robust results that will serve as compass for a new year of growth.

As the General Manager of EDA THESS, Mr. Leonidas Bakouras, pointed out, EDA THESS abided by the approved Development Program for the year 2021, fully implementing its €36 million investment plan, in compliance with the legal and regulatory framework and its Licenses. Thanks to its impeccable organization, strict planning and its commitment to goals, the Company concluded the construction of high-standard infrastructure and supplied all the new areas included in its planning.

The company continued the development of the natural gas market in the areas of its License with the same momentum, observing the principles of transparency and equal treatment of the Distribution Users and the End Consumers to promote fair competition. The year 2021 was a landmark for EDA THESS, as new Connection

Contracts reached a record high exceeding 26.000, increased by ~14% compared to last year, while natural gas penetration surpassed 65% of the population in the Licensed Areas. A proportional increase of 9% was also recorded in terms of the construction of new delivery points (Natural Gas Meters) that reached 24,877 in 2021. Equally remarkable was the increase in distributed volumes of natural gas, that amounted to 532.9 million Nm3, increased by 18.8% compared to 2020.

The Company continues with consistency to develop modern infrastructure based on technical-financial parameters, guaranteeing the sustainability of the distribution network. The targeted development planning of the Company is depicted on the high efficiency indicators of the network, as it currently distributes more than 216,000 cubic meters per kilometer of low-pressure network, while there is one activated consumer every 6.19 meters of network.

An integrated strategy ensuring a reasonable return on investments for the shareholders and resulting in low regulated charges and the reduction of the energy cost for all consumers. Through the extended use of natural gas, EDA THESS promotes energy saving for consumers, optimizes resource allocation and offers competitive advantages to enterprises and industries.

The operational readiness of EDA THESS remained high, thus shielding the smooth and uninterrupted operation of the distribution network. Along the 21-year history of natural gas in Greece, the Company has been ensuring the safety of natural gas infrastructure under any circumstances. At the same time, it maintains open channels of communication to provide information to consumers and stakeholders, establishing a culture of safe use of natural gas and thus, enhancing everyone’s trust to the Operator.

The multifaceted development program consistently implemented by EDA THESS, leverages investments in its areas of License and supports employment by creating thousands of indirect jobs along the value chain of natural gas. The Company pursues its strategy and redirects its targets, incorporating sustainable growth conditions to ensure a sustainable future. With a view to continuously deliver added value, the Company develops strategic alliances with all stakeholders, delivering multiple benefits to the society and the environment.

Corporate Responsibility stems from the principles and the values of the Company, emphasizing the active involvement of its people to the accomplishment of its strategic objectives. Through its sound corporate governance, the robust structure and the implementation of best management practices, EDA THESS safeguards a healthy working environment and a high level of know-how by constantly investing in its human capital.

According to the Manager of Natural Gas Market Development, Mr. M. Stergiopoulos, the natural gas network of EDA THESS currently covers all 14 Municipalities of the Regional Unit of Thessaloniki.

In 2021, new connection contracts in the Licensed area of Thessaloniki reached 17,194, showing an increase of 9.5% compared to last year. Total connections progressively reached 288,017. At the same time, the constructed delivery points in the Regional Unit of Thessaloniki currently amount to 284,254. Distributed volumes in 2021 were 330.5 million cubic meters, increased by 20% compared to 2020. More specifically, in terms of use, distributed quantities for domestic consumption amounted to 229.4 million m3, increased by 20.7%, while for commercial and industrial use, they reached 101.1 million m3, increased by 18.7%, compared to the same period last year.

At the same time, the average distribution tariff of EDA THESS in Thessaloniki was further reduced by 14.8%, compared to the previous regulatory period, while particularly for industrial consumers, the regulated charge was reduced by 45%.

According to the Manager of Natural Gas Market Development for Thessaly, Mrs. E. Kalogirou, the consistent implementation of the Development Program of EDA THESS results in the increasing use of natural gas in the Region of Thessaly. The distribution network of the Company covers 17 Municipalities of the Region of Thessaly.

New connection contracts of consumers in the Licensed area of Thessaly reached 8,823 recording an impressive increase of 24% compared to 2020 and progressively exceeded 123,934. This increase was supported by the Project for the replacement of oil heating systems with natural gas systems in Thessaly, that is implemented in the framework of the NSRF 2014-2020 for the Region of Thessaly and the executive NSRF structure of the Ministry for the Environment and Energy, with a budget of 6,12 million € – EDA THESS being in charge of receiving and evaluating applications as well of granting the certification and paying the subsidy.

Respectively, distributed volumes in the Licensed area of Thessaly amounted to 202.4 million m3 in 2021, recording an increase of 17% compared to 2020. More specifically, distributed quantities for domestic consumption amounted to 112.4 million m3, increased by 13.4%, while for commercial and industrial use, they reached 90.0 million m3, increased by 21.5%.

With regard to industries, there is strong interest in the construction of High Efficiency Combined Heat & Power plants (CHP) as well as greenhouse plants. The average distribution tariff of EDA THESS in Thessaly was further reduced in 2021 by 21.9% compared to the previous regulatory period, while there was a radical decrease of 56% for industrial consumers.

In concluding, the General Manager, Mr. Leonidas Bakouras, states that “Despite the volatile environment prevailing due to the pandemic as well as to the energy crisis, we have come to the end of a successful year with 26.000 new connection contracts. It is a historic achievement that, on the one hand, verifies the sustained trust of consumers to natural gas and on the other hand, certifies the strategic potential of EDA THESS and its ability to identify and turn challenges into opportunities. We continue to implement our investment program with consistency to develop sustainable networks and to provide safe access to natural gas, the main transitional fuel in the following years”.

 

Copelouzos group enters DEPA Infrastucture alongside Italgas

The Copelouzos Group is set to acquire a minor stake in Italgas’ 100 percent acquisition of DEPA Infrastructure, to be completed tomorrow when Italgas is expected to sign a final agreement with Greek privatization fund TAIPED.

The Copelouzos Group is expected to acquire a stake of between 10 and 20 percent in DEPA Infrastructure through Faethon, a group company controlled by family member Elmina Copelouzou.

The Copelouzos Group and Italgas had reached an agreement on this partnership while the DEPA Infrastructure tender was still in progress.

The total value of the DEPA Infrastructure acquisition by Italgas is worth 940 million euros, making it one of the biggest deals reached in Greece in recent years.

The 100 percent privatization of DEPA Infrastructure comprises 100 percent of gas distributor EDA Attiki, covering the wider Athens area; 100 percent of gas distributor DEDA, representing all other areas in Greece except for Thessaloniki and Thessaly; as well as a 51 percent stake in gas distributor EDA THESS, covering the Thessaloniki and Thessaly areas.

As its next step, Italgas will also buy the remaining 49 percent of EDA THESS following a decision by Eni Gas e Luce to sell this stake.

Producers expecting €8.83m surcharge return from gas distributors

RAE, the Regulatory Authority for Energy, has determined the size of network usage surcharges all large-scale consumers stand to be handed back by natural gas distributors to offset across-the-board surcharges imposed on industrial enterprises between August 14, 2015 to December 1, 2016. The amount to be returned by the gas distributors totals 8.83 million euros.

Gas distributor EDA Attiki, covering the wider Athens area, will need to return to large-scale consumers a total of 1.44 million euros, EDA Thess, covering the Thessaloniki and Thessaly areas, must return 3.26 million euros, and DEDA, covering the rest of Greece, needs to return 4.13 million euros.

The 8.83 million-euro amount that will need to be returned by the three gas distribution companies is expected to be offered in 36 monthly installments from November, 2021 to October, 2024.

Large-scale consumers were universally charged a network usage surcharge of 4 cents per MWh over a 16-month period, based on a bailout term from 2015, which prompted EVIKEN, the Association of Industrial Energy Consumers, to forward an official complaint to the European Commission.

EDA THESS general manager: Italgas arrival decisive in further network digitization, development of renewable gases

The important role of natural gas for the promotion and success of energy transition was underlined by the General Manager of EDA THESS, Mr. Leonidas Bakouras, during his speech yesterday at the Renewable & Storage Forum organized by energypress (October 13-14).

The promotion and utilization of renewable gases, as well as the digitalization and sustainability of the networks were the main topics of his address. Mr. Bakouras stressed that natural gas is transforming through the necessary changes and adjustments in light of the green energy transition. In this context, he suggested that the recent undertaking of the Greek gas networks by Italgas will highly contribute – thanks to its advanced knowhow – to the further digitization of the networks and the development of renewable gases.

Renewable gases: The future of the distribution networks

Identifying the perspective of renewable gas integration (biomethane, SNG and hydrogen) in the energy mix of the next decades, EDA THESS is adjusting its networks to achieve energy transition, without however compromising energy security of its customers. As Mr. Bakouras mentioned, biomethane can replace more than 20% of the current natural gas demand.

In this context, EDA THESS has started performing research and studies revealing high potential for biogas and biomethane production in the areas of EDA THESS.

The existing wide geographic dispersion of the distribution networks, in conjunction with the deployment of new networks near agricultural waste production units, are favoring the sustainability of green networks. Another factor in the “equation” is the cost-effective connection of the injection points for the integration of renewable gases, that enhances circular economy and creates opportunities for the generation of additional income from waste recovery.

Network digitization 

A central pilar in the strategy of EDA THESS is the digitization of the networks. As a distribution network operator, the company has already taken important steps to this end, the General Manager of the Company said.

Among others, the digitalization of the networks allows for:

  • The introduction of new Participants, further enhancing the production of renewable gases
  • The monitoring and management of the gas mix quality for the optimal integration of renewable gases
  • The rapid transformation of the energy markets, upgrading the market and launching new products.

All this results in increased necessity for bilateral real-time information exchange. In this scope, EDA THESS is using smart sensors, smart meters and digital communication technologies.

EDA THESS: member of the European organization GD4S

Finally, the General Manager talked about the membership of EDA THESS in the powerful European organization “Gas Distributors for Sustainability” GD4S, where the Company is cooperating with the leading energy companies of Europe.

The President of the Organization is Paolo Gallo, CEO of Italgas, which is expected – as Mr Bakouras mentioned-  to highly contribute to the further digitization of the networks and the development of renewable gases after its recent introduction in the Greek market.

As for its membership in the international organization, EDA THESS promotes – both at the European and national level:

  • The strategic importance of the development of natural gas infrastructure as an activity harmonized with the taxonomy of sustainable investments
  • The crucial role of the distribution networks in energy transition
  • The establishment of the legislative and regulatory framework for the integration of renewable gases (biomethane, hydrogen) in the distribution networks.
  • The exchange of best practices and know-how

Mr. Bakouras also talked about the role of the Distribution Systems’ Operators. The priorities are the following:

  • Guaranteed stability of the distribution system
  • Cooperation between all the stakeholders of the system
  • Assurance of the gas mix quality
  • Application of technological innovations reducing the methane and pollutants’ emissions
  • Optimization of the networks’ capacity management

With regard to the company, EDA THESS serves more than 400 thousand consumers and distributes 5.1 million MWh annually. The strategic plans of the company include 8.8 million euro investments for the digital transformation of the company, rising the digital maturity index of its main business operations from 48% in 2020 to 75% in 2025.