DEDDIE formula for required revenue approved by authority

RAE, the Regulatory Authority for Energy, has approved a formula determining the required revenue for electricity distribution networks, an important first step towards the finalization of distribution network operator DEDDIE/HEDNO’s regulatory framework, essential for its privatization procedure to offer a 49 percent stake, sources have informed.

A WACC level still needs to be set and approved for the operator. RAE intends to reach a decision by December 31 so that prospective buyers can have even greater clarity on the operator’s potential revenue.

Given the time required for the processing of related data concerning the operator’s regulated earnings and the network’s business development plan for 2021 to 2024, RAE should deliver a decision on the four-year period by March 31, 2021, which would be retroactively applied as of January 1, 2021.

The new framework includes two periods covering 2021-2024 and 2025-2028, offering investors a long-term picture of the investment’s potential yield.

According to sources, the authority intends to set a WACC level of just below 7 percent for 2021-2024, highly attractive for investors given levels of no more than 2.5 percent offered by equivalent distribution network operators around Europe.

RAE plans to launch a market test, to measure the level of investor interest in DEDDIE/HEDNO, next month.

Prior to the pandemic, Germany’s EON, Italy’s Enel, Enedis – an EDF subsidiary – as well as a number of Chinese companies, had expressed interest in the DEDDIE/HEDNO privatization plan.

DEDDIE’s WACC close to 7%, RAE framework approval soon

Distribution network operator DEDDIE/HEDNO’s new WACC level, determining the yield, required by potential buyers, will be set at just below 7 percent for a four-year period covering 2021 to 2024, energypress sources have informed.

This WACC level, well over rates of no more than 2.5 percent offered by respective European operators, is expected to be seen as a very attractive offer by investors.

RAE, the Regulatory Authority for Energy, has been given the green light by the energy ministry to hasten proceedings for a launch of the DEDDIE/HEDNO privatization, offering a 49 percent stake, in November, as promised by the ministry.

DEDDIE/HEDNO has awaited RAE’s approval of its new regulatory framework, including the WACC level, to launch the tender. This framework will include an option for a four-year extension, covering 2025 to 2028.

If the privatization is launched next month, it could be completed within the first quarter of 2021.

Market officials have forecast a DEDDIE/HEDNO selling price of close to 1.5 billion euros for the 49 percent stake.

The operator’s assets, essentially comprising networks totaling 239,000 kilometers in length, plus substations, are estimated to be worth 3.5 billion euros.

The DEDDIE/HEDNO business plan for 2021 to 2024, still subject to official approval, should excite investors. It features investments worth 2 billion euros and network 5G add-on potential for a wide range of telephony and internet services.

The prospective installation of 7.5 million digital power meters in place of conventional meters around the country, an upgrade budgeted at 850 million euros, is another strong selling point. Recovery funds will be sought for this project, energy minister Costis Hatzidakis recently informed. This would save the operator a considerable amount.

Germany’s EON, Italy’s Enel, Enedis, a subsidiary of France’s EDF, as well as a number of Chinese companies had showed interest, unofficially, in the DEDDIE/HEDNO sale well before the pandemic broke out.

 

 

JinkoPower, EDF Renewables land UAE PV project, world’s biggest

JinkoPower and its bidding partner EDF Renewables have been awarded the Al Dhafra Project, the world’s largest standalone Solar Photovoltaic (PV) Plant in Abu Dhabi, United Arab Emirates, JinkoPower has announced in a statement.

A 30-year Power Purchase Agreement was been signed by the consortium this week with Emirates Water and Electricity Company (EWEC), a leading company in the coordination of planning, purchasing and providing of water and electricity across the UAE, the statement noted.

With an expected production capacity of 2 GW, the Al Dhafra Solar PV Project will almost double the size of the approximately 1.2 GW Noor Abu Dhabi solar plant – amongst the largest operational solar PV plants in the world. The Noor Abu Dhabi project, which was awarded to Marubeni Corp and Jinko Consortium in 2017, commenced commercial operations in April 2019.

Once operational, the Al Dhafra Solar PV Project will lift Abu Dhabi’s total solar power generation capacity to approximately 3.2 GW. This will reduce the overall Emirate’s CO2 emissions by more than 3.6 million metric tons per year, which is equivalent to removal of the combustion output of approximately 720,000 vehicles.

In June 2019, EWEC, a part of ADQ, launched a call for tenders. The winning consortium formed by China’s JinkoPower and France’s EDF Renewables submitted the most cost-competitive tariff of USD 1.35 cent per kilowatt-hour on a levelized cost of electricity (LCOE) basis, which is approximately 44% lower than tariff set by Jinko Consortium three years ago on the Noor Abu Dhabi project – Abu Dhabi’s first large-scale solar PV project and a world record tariff-setter at the time.

With the collaborative effort and consensus with the partners, JinkoPower-EDF Renewables is committed to begin the development of the Al Dhafra Solar PV Project by delivering diligently the latest world-class technology and construction methods in order to reach its commissioning by 2022.

Charles Bai, President of Jinko Power International Business, commented: “Jinko, once again, is privileged to take on the unforeseen challenge of building the largest PV generation plant in the world, following our success of Noor Abu Dhabi project. Utmost fairness, transparency, and an attractive environment for investors underpin our long-term desire to keep developing renewable energy projects in Abu Dhabi. The Al Dhafra Solar Project raises the bar for international infrastructure investment and creates the avenue for an elite group of competitions to demonstrate how records can be made. Today Jinko undertakes within our capacity to deliver this technology and construction benchmark in two years to come. We are proud to have the chance to break our own world record and Jinko will diligently execute this project with our partners.”

Speaking about the milestone, Othman Al Ali, Chief Executive Officer of EWEC, said: “We are delighted to work with our partners and sign a PPA with a record-low tariff for solar power. We are working to secure long-term energy supply and reinforce solar power’s integral role in meeting current and future energy needs. Combined with key technological advances, the Al Dhafra Solar PV project will have a significant impact on diversifying the approach to our current electricity supply, and drive our strategic plan to further contribute towards the sector’s transformation in water and electricity production, as we develop a low-carbon grid in the UAE.”

Bruno Bensasson, EDF Group Senior Executive Vice-President Renewable Energies and Chief Executive Officer of EDF Renewables added:

“We are very proud to be awarded the largest solar project in the world at Al Dhafra. This success reflects the quality of our competitive bid submitted to EWEC in Abu Dhabi, in partnership with Jinko Power.

After the Mohammed bin Rashid Al Maktoum Solar Park 1 GWp Phase 3 with DEWA and Masdar as partners, and the implication in the built of the Hatta hydroelectric with storage power plant, near Dubai, this new ambitious project represents a major step forward in EDF group’s renewable energies development in the UAE. These solar projects, along with the Dumat Al Jandal 400 MW wind farm under construction in Saudi Arabia, clearly demonstrate our commitment to actively participate to the energy transition of the Middle East. The region with its great ambitions in low carbon energies is strategic for EDF. Al Dhafra new project greatly contributes to meet the EDF Group’s CAP 2030 strategy, which aims to double its renewable installed energy capacity from 2015 to 2030 worldwide to 50 GW nets.”

RES auction produces record-low bid, by PPC Renewables

A mixed RES auction staged yesterday by RAE, the Regulatory Authority for Energy, produced a record-low bid of 49.11 euros per MWh, submitted by PPC Renewables for a 200-MW solar park in Kozani, northern Greece.

A total of five major RES projects – four solar farms and one wind energy farm – secured tariffs at the session.

The auction’s average bidding price was 51.59 euros per MWh, far lower than previous levels.

The session’s only wind energy project, ENTEKA’s 153-MW facility in Vermio, northern Greece, struck a record low price, for the wind-energy category, of 54.7 euros per MWh. This project involves funding from US fund Quantum Energy Partners.

A 70-MW solar park project on EREN’s portfolio secured a price of 50.68 euros per MWh. A 42-MW park by EDF emerged from the session with a price of 50.87 euros per MWh. Also, Spes Solaris, a member of the Panagakos corporate group, secured a price of 54.82 euros per MWh for a 37.94-MW solar park project.

Four projects – two solar and two wind – failed to secure prices. ENTEKA missed out with two wind farm projects measuring 72 MW and 63 MW. A 50-MW solar park by PPC Renewables and a 23-MW solar park by EDF also missed out.

 

RAE hybrid project licenses for islands include Accusol, EDF

German energy storage company Accusol and French corporate group EDF, already firmly present in the Greek market, are among a number of investors, local and foreign, to be granted the country’s first hybrid production licenses by RAE, Greece’s Regulatory Authority for Energy, for island projects.

The authority is believed to be preparing to officially issue these licences, already approved by its board.

Accusol’s licences concern the installation of hybrid energy storage systems on nine Greek islands, including Patmos, Kasos, Anafi and Gavdos.

The German company, working closely with Siemens, is offered technical consultancy by the Karlsruhe Institute of Technology.

For the financing needs of its hybrid energy projects on Greek islands, Accusol has secured a 90 million-euro loan from Alpha Bank and Siemens with German government guarantees through the Heuler Hermes export credit agency.

Accusol has already launched, free of charge, a pilot BESS (Battery Energy Storage System) project on the island Karpathos for Greek power utility PPC, following an agreement late in 2016.

The company’s BESS system uses lithium-ion batteries to store renewable energy.

Development and Investment minister Adonis Georgiadis made indirect reference to Accusol at a Berlin investment forum yesterday, noting “licenses for solar energy production and storage, on Greek territory, have been granted”, without naming the company.

 

PPC in talks with over 10 local, foreign firms for RES ventures

Power utility PPC is considering renewable energy joint venture proposals by over ten companies, domestic and foreign.

The pool of firms interested in doing business with PPC includes Germany’s RWE, Italian companies such as Enel, French enterprises associated with the Greek power utility in the past, among them EDF, scores of Chinese companies, as was confirmed at a Shanghai forum early November, as well as numerous Greek companies.

PPC’s involvement in RES joint ventures will have an important place in the power utility’s new business plan, to be announced within the next 10 to 15 days, energy minister Costis Hatzidakis told a National Energy and Climate Plan (NECP) event yesterday.

The forthcoming business plan will officially signal the Greek power utility’s turn to the renewable energy sector, listing specific objectives.

Any partnership announcements should not be expected before the business plan’s presentation.

Plans for a PPC bond issue to finance the company’s expansion into the renewable energy sector are also in the making.

PPC’s favorable corporate image in Greece’s provincial areas, where renewable energy investments will be made, is a key factor drawing both local and foreign RES players towards prospective partnerships with the Greek power utility.

 

DG Comp lists Greek electricity market issues needing action

Greece has been handed a list of pending electricity market issues, old and recent, requiring urgent government action at a meeting between the country’s finance minister Hristos Staikouras and European Commissioner for Competition Margrethe Vestager in Athens just over a week ago, sources informed.

The delay of a market coupling plan for the Greek and Bulgarian electricity markets, as well as uncertainty surrounding Greece’s operating schedule for lignite-fired power stations this coming winter and, by extension, its impact on natural gas-fueled units and the market’s liberalization, are among the urgent matters listed by Vestager.

The Danish politician will continue to head the DG Comp following last May’s European Parliament election.

In February, 2017, DG Comp officials had ambushed the Athens headquarters of power utility PPC and power grid operator IPTO to collect data for a market abuse investigation.

Brussels officials are continuing their probe with further questioning, it is believed. No findings have been released, but these will undoubtedly be published once Brussels deems the time is right.

The DG Comp moves methodically when dealing with such matters. In France, for example, the authority last week ordered Paris to open up the country’s hydropower production to competition after launching an investigation into French energy utility EDF’s market dominance back in 2015.

 

ELPE, Edison reach deal with Ellaktor for its Elpedison share

Hellenic Petroleum (ELPE) and Edison, holding an equally divided 75.78 percent share of electricity producer and supplier Elpedison, have finalized an agreement with construction firm Ellaktor for the acquisition of its 22.74 percent share in the retail energy firm.

ELPE and Edison, now a subsidiary of France’s EdF, have submitted an undisclosed offer that has been accepted by Ellaktor, sources representing all three parties have confirmed. An official announcement on the agreement is expected within the next few days.

The agreement will give ELPE and Edison an equal share of Elpedison’s 98.52 percent. Halkor (Hellenic Copper Industry) is the holder of the remaining 1.48 percent.

Ellaktor’s decision to withdraw from Elpedison – part of a corporate restructuring plan pursued by the former’s new administration that includes a focus on renewable energy – triggered a clause in an agreement between Elpedison’s shareholders offering preferential rights to other shareholders in the event of a withdrawal.

Elpedison, whose retail electricity market share was last measured at 3.73 percent, in April, operates two gas-fueled power stations offering a combined production capacity of at least 810 MW.

 

Upcoming mixed RES auction applications submitted today

Procedures leading to the country’s first mixed RES auction, to place the sector’s main players, wind and solar energy investors, in the same bidding arena with equal terms for intensified competition, begin today with the submission of online applications.

These will be followed by the submission of dossiers containing all required documents ahead of the auction, expected on April 15, according to an announcement made by RAE, the Regulatory Authority for Energy.

A total of 600 MW will be offered to auction participants. Amounts requested in applications will need to exceed this 600-MW total by 40 percent if the entire amount is to be offered at the upcoming auction.

Terna Energy, Mytilineos, PPC, the Panagakos group, as well as major foreign players such as Total Eren, Juwi, EDF and ENEL are among the firms likely to participate.

Mixed RES auctions have become standard practice in other European markets, the objective being to secure optimal solutions for coverage of energy needs at the lowest possible cost.

 

RES-focused Ellaktor in talks for sale of its Elpedison stake

The Ellaktor group has reached an advanced stage in talks with foreign investors interested in acquiring its 22.74 percent stake in electricity producer and supplier Elpedison, sources have informed, a reflection of the corporate group’s intensifying focus on the renewable energy sector.

Last December, the Ellaktor group took over listed wind energy subsidiary El. Tech. Anemos, Greece’s second biggest renewable energy company, as part of a strategy to bolster its position in the RES domain and better adjust to the EU’s decarbonization policy aiming for a drastic reduction of CO2 emissions by 2030 and elimination by 2050.

The corporate group’s takeover of El. Tech. Anemos promises to provide additional cash flow supporting the subsidiary’s investment plan.

The brothers Anastasios and Dimitris Kallitsantsis, who took over the Ellaktor group’s helm last July following a tumultuous battle between the group’s major shareholders, had committed themselves, as a key strategy, to not selling the group’s stake in El. Tech. Anemos but, on the contrary, strengthen the group’s standing in the renewable energy sector.

ELPE (Hellenic Petroleum) and Edison – acquired by EDF – hold a 75.78 stake in Elpedison as a joint venture, Ellaktor holds 22.74 percent, and Halkor has the other 1.48 percent.

 

Tesla presents microgrid plan for non-interconnected islands

US energy company Tesla has presented a plan for the development of a microgrid on Greece’s non-interconnected islands at a meeting yesterday with Greek energy minister Giorgos Stathakis.

The Tesla proposal, a system dubbed Powerpack and based on solar panels and large-capacity batteries, has already been developed on American Samoa, unincorporated US territory including five main islands in the South Pacific Ocean, as a replacement for inefficient diesel-fueled generators consuming 1,400 liters of diesel per day.

Tesla’s system for American Samoa entailed installing solar panels with a 1.4-MW capacity and 60 Tesla Powerpacks for a battery energy storage capacity of 6 MWh.

Regarded as one of the world’s most advanced electricity microgrid solutions, this system ensures electricity supply for as many as three days without sunshine, while its batteries may be fully recharged in seven hours.

According to Tesla, the Powerpack system’s resulting energy cost ranges between 170 and 135 euros per MWh, which is 15 to 30 percent less than the cost of diesel-generator electricity, reaching 200 euros per MWh.

Tesla’s power-network proposal for Greece’s non-interconnected islands, growing into a major attraction for energy sector investors, is the latest following presentations by companies such as Enagas, Socar and EdF.

PPC units sale interest limited to east Europe, China investors

Investor interest in main power utility PPC’s approaching bailout-required sale offer of lignite units is restricted to east European firms, especially Polish and Czech, as well as China, all of which are expected to seek the backing of local partners, sources have informed.

Greek officials, who will discuss the PPC unit sale plan at the Directorate-General for Energy and Directorate-General for Competition in Brussels on Monday, will present these expressions of interest made so far as part of the effort to examine the level of attractiveness of Greece’s lignite-only offer.

The Greek sale plan will need to be deemed as attractive for investors if the European Commission is to endorse it. The offer will also need to represent 40 percent of PPC’s lignite capacity and also permit the utility to remain sustainable.

PPC officials contend their sale package plan was prepared with genuine intentions and does not aim to undermine and delay the sale procedure. Even so, it does not seem capable of luring central European investors, as was highlighted by the absence of EdF representation in French President Emmanuel Macron’s delegation assembled for an official two-day visit to Athens last week.

France’s EdF, which already maintains a Greek market presence through Italian energy firm Edison, ought to have been represented in Macron’s visiting delegation if the PPC sale plan was viewed favorably by European investors.

Gov’t to seek French support for PPC sale of lignite units

The Greek government can be expected to seek France’s support for October’s market test concerning main power utility PPC’s unit sale package, to offer investors 40 percent of the utility’s lignite production capacity, when French President Emmanuel Macron heads a delegation for an official visit to Greece, scheduled for September 7 and 8.

French support would add clout to the market test if EDF or its subsidiary Edison express an interest in state-controlled PPC’s lignite units. The interest so far appears to be limited to firms from China and east Europe.

Greek Prime Minister Alexis Tsipras is expected to raise the issue to Macron during the French leader’s visit.

To date, efforts by Greece’s energy minister Giorgos Stathakis to lure Edison to the prospective PPC sale have failed to produce results. Echoing the thoughts of most pundits and market players, Edison officials have noted that hydropower units would need to be added to PPC’s lignite-only sale package.

Less than a fornight ago, Evangelos Mytilineos, the chief executive of the Mytilineos group, a key player in Greece’s energy market, noted that it will be particularly difficult for PPC to sell a lignite-only package that does not include hydropower units.

At this stage, the Greek government appears adamant on limiting the offer to lignite units, despite being fully aware of the fact that an EU policy for increased emission right costs is subduing investment interest in solid fuels.

At present, PPC lignite-fuled power stations generate electricity at a cost of around 50 to 60 euros per MWh. This cost is expected to skyrocket to about 100 euros per MWh by 2030. Such a prospect will surely keep investors back.

Even if French support for the PPC lignite package sale is limited to October’s market test, when investors will be invited to express non-binding interest, and is not followed up by actual offers in the ensuing international tender, the Greek government will have gained valuable support in its effort, over the past few months, to create a positive picture for the lignite-only sale. Athens could, as a result, contend that the inclusion of hydropower units into the PPC sale is not necessary and, ultimately, gain time against European Commission demands for electricity market reforms targeting PPC’s dominance.

This aim for a delay is the core issue at play. More time would help PPC maneuver and reshape for its future in a drastically changed electricity market. PPC is expected to reduce its retail electricity market share to less than 50 percent by the end of 2019, from a litle over 85 percent at present. The utility’s contraction has fallen behind schedule.

 

 

 

Terna Rete Italia, France’s RTE interested in IPTO’s 24%

Envisioning an expansion into the Balkans with Greece as their base, at least two major European electricity network operators, Terna Rete Italia and France’s RTE, an EDF subsidiary firm, appear to be interested in acquiring a 24 percent share of Greek power grid operator IPTO, to be offered to strategic investors as a bailout-required measure.

An international tender offering this 24 percent stake of IPTO is expected to be announced within the next few days.

According to sources, both Terna Rete Italia and RTE are closely following the developments at IPTO, currently a wholly owned subsidiary of main power utility PPC, which, in turn, is controlled by the Greek State with a 51.12 percent stake, including a 17 percent share already transfered to a Greek privatization fund.

The tender’s terms and conditions have been finalized by Greece’s energy ministry and PPC. Not wasting any time amid a tight schedule, the two have been working on the matter since a marred general shareholders meeting on June 30, which had been interrupted by PPC’s main union group Genop but was restaged yesterday, a key item on the agenda being the endorsement of the IPTO sale. Part of the procedure was endorsed yesterday.

RTE employs 8,400 persons and ranks as Europe’s biggest power grid operator. The company controls a network with a total length of 105,331 kilometers, while 46.2 percent of its high-voltage lines offer long-distance transportation to 48 cross-border connections with neighboring countries.

In 2014, RTE posted a total turnover figure of 4.5 billion euros while its investments exceeded 1.3 billion euros. Its customers include eleven railway companies, 258 industrial enterprises and 54 power stations. In 2014, RTE transferred 494 billion KWh and marketed 112 billion KWh as cross-border transactions.

Terna Rete Italia, Italy’s power grid operator, has been interested in expanding into the Balkans through Greece for years. It had taken part in a preceding IPTO tender staged in 2014 by the then-ruling conservative New Democracy-led government, which had offered a 66 percent stake of IPTO. The Italian opertor withdrew when it became apparent the procedure was headed towards a dead end, but, even so, remains interested in branching out into the Balkans. Terna Rete Italia operates 72,000 kilometers of high-voltage lines in Italy.

PPC shareholders, or, essentially, the Greek State, yesterday approved the sale of 49 percent of IPTO to private-sector investors. Of this, a 24 percent share will be be offered to strategic investors and 25 percent to investors through the bourse. Based on the plan, a 51 percent share of IPTO will be taken over by the Greek State.

The tender’s procedures will need to move fast to avoid IPTO’s full privatization later in the year, as specified in the bailout agreement.

Based on IPTO’s new administrative terms, its chief executive will be appointed by the Greek government, while its managing director will be jointly appointed with participation from the strategic investor.