Brussels forwards new PCI list, to be finalized late this year

The European Commission’s fifth PCI (Projects of Common Interest) list in the electricity and natural gas sectors, being forwarded for public consultation, features, for now, a number of project additions and removals, compared to the previous edition.

Market officials and state authorities will have the opportunity to offer their views and observations over the consultation procedure’s twelve-week period before the European Commission adopts a finalized version of the fifth PCI list towards the end of 2021, based on an existing Trans-European Networks for Energy (TEN-E) framework, focused on linking the energy infrastructure of EU countries.

PCI projects are entitled to EU funding support. Brussels authorities introduced selection criteria revisions in December, ascertaining, however, that the impact of all projects, especially on CO2 emissions, will be appraised when finalizing the PCI list’s fifth edition.

The provisional list includes a number of electricity and gas sector projects concerning Greece.

Electricity-sector projects involving Greece include: a Bulgarian-Greek grid interconnection, expected to be completed in 2023; an Egyptian-Greek-Libyan grid interconnection headed by Green Power 2020 and scheduled for delivery in 2025; as well as three Egypt-Greece interconnections, two of these featuring Kykladika Meltemia SA as project promoter and expected to be respectively completed in 2025 and 2028, and a third headed by Elica SA and scheduled for completion in 2028.

An energy storage project planned by Eunice for Ptolemaida, northern Greece, and scheduled for completion in 2022 is a new entry on the PCI list.

In the natural gas sector, the PCI list includes: the Alexandroupoli FSRU (2022); a subsea pipeline between Greece and Italy, known as the Poseidon Pipeline (2025); EastMed, a pipeline planned to carry natural gas from the east Mediterranean to European markets, via Crete (2025); a compressor station in Thessaloniki’s Nea Mesimvria area (2022); a metering and regulating station in Megalopoli, Peloponnese (2025); a compressor station in Abelia, in Greece’s mid-north (2023); a compressor station in Kipoi, northeastern Greece (2024); a pipeline link for the Alexandroupoli FSRU (2022); a TAP pipeline capacity increase (2025); and the development of an underground gas storage facility (UGS) in the almost depleted natural gas field of “South Kavala” in northern Greece (2023).

Operators disagree on Crete network responsibility shift

Power grid operator IPTO and distribution network operator DEDDIE are locked in a dispute over the point in time at which management responsibility of Crete’s small-scale grid interconnection, to reach the Peloponnese, should be transferred from DEDDIE, currently responsible for Crete’s network as the island is classified as a non-interconnected island, to IPTO.

DEDDIE contends that IPTO must take on the responsibility of managing the island’s network with the launch of the small-scale interconnection, anticipated in March, and not in 2023, when Crete’s full-scale interconnection, all the way to Athens, is expected to begin operating.

Crete should be considered an interconnected island as soon as the small-scale grid interconnection to the Peloponnese is launched, even though this infrastructure’s capacity will be able to cover about 30 percent of the island’s energy needs, DEDDIE contends.

Normally, the grid status of islands is automatically revised from non-interconnected to interconnected when grid interconnections serving their energy needs are launched. However, Crete, Greece’s biggest and most populous island, represents a much bigger interconnection project that is being developed over two stages.

DEDDIE, backing its case, has cited an older opinion forwarded by RAE, the Regulatory Authority for Energy, to the energy ministry, through which the authority supported that Crete’s network must be considered a part of the national grid, ending its non-interconnected island status, once the small-scale interconnection begins operating.

Also citing technical reasons to support its view, DEDDIE has pointed out that IPTO will be responsible for the operation and maintenance of the small-scale grid link, infrastructure directly influencing the Cretan network’s performance. Therefore, the island’s high-voltage network and the Crete-Peloponnese interconnection must be managed by the one operator, DEDDIE contends.

IPTO does not reject the prospect of eventually becoming responsible for Crete’s network, but the power grid operator does oppose the idea of assuming responsibility for a fixed asset that does not belong to the company. Crete’s high-voltage network is owned by power utility PPC.

At present, PPC does not appear ready to sell. As a result, IPTO believes DEDDIE must be responsible for the network’s management until this asset is transferred to the power grid operator.

North Macedonia involvement in key Alexandroupoli projects

North Macedonia plans to help cover its energy needs through an involvement in two Greek-based projects, the prospective FSRU in Alexandroupoli, northeastern Greece, and, in the same region, a gas-fueled power station to run on LNG stemming from the floating LNG terminal.

Much progress has been made on the neighboring country’s interest in these two projects since a meeting in Athens last September between Greek Prime Minister Kyriakos Mitsotakis and his North Macedonian counterpart Zoran Zaev. The partnership also represents a strategic decision for the Greek government.

It is considered certain that a state-owned North Macedonian company will soon enter the Alexandroupoli FSRU project’s equity pool with a 10 percent stake, energypress sources have informed.

This project’s five current partners – Copelouzos group, Gaslog, Greek gas utility DEPA, Greek gas grid operator DESFA and Bulgartransgaz – are expected to each offer small portions of their respective 20 percent stakes to make available a 10 percent stake for the state-owned North Macedonian company in the Alexandroupoli FSRU.

The project’s development is not expected to be impacted by any equity reshuffles.

Two international tenders staged by Gastrade, a company established by the Copelouzos group for the development and operation of the Alexandroupoli FSRU, have been successfully completed. One of the two tender concerns the FSRU’s construction. The other concerns the installation of pipelines linking this facility to the national gas grid.

The Alexandroupoli FSRU consortium is expected to make a final investment decision in late February, sources informed.

On the other front, ESM, North Macedonia’s state electricity company, is expected to acquire a 25 percent stake in a gas-fueled power station to be developed by Damco Energy, a Copelouzos group subsidiary, in Alexandroupoli’s industrial zone.

The initiative will secure 200 MW of the facility’s 800-MW capacity for North Macedonia. The country currently has an electricity deficit of approximately 2 GWh.

Bulgarian state-owned electricity company NEK EAD also appears interested in acquiring a stake in the Alexandroupoli power station. Bulgaria has projected an electricity deficit a few years from now as the country must phase out major lignite-fired power stations. European Commission exemptions extending the lifespans of these units are expiring.

New minister, just appointed, has issues to resolve in 2021

Kostas Skrekas, just appointed new energy minister as part of the government’s cabinet reshuffle, in place of Costis Hatzidakis, who has headed the ministry for a constructive year and a half, faces a series of pending energy-sector matters that remained unresolved in 2020. They need to be addressed as soon as possible. Developments and conditions this year will be pivotal for these matters.

Skrekas was previously deputy minister for agricultural development and food.

Also in 2021, a year during which takeovers and mergers are seen occurring in the retail electricity and gas markets, rivals will continue battling for market share gains. The target model’s launch two months ago has brought about new conditions, strengthening the positions of vertically integrated suppliers.

The need for a normalization of the target model’s new markets stands as the energy ministry’s most pressing task at present. A sharp rise in wholesale electricity prices as a result of soaring balancing market costs has deeply unsettled the market, impacting the standings of non-vertically integrated suppliers, as well as industrial enterprises and consumers, who face rising bills.

Market coupling with Bulgaria’s day-ahead market, scheduled to take place within the first three months of the new year, is the next step of the target model, a procedure designed to harmonize EU energy markets and promote competition.

New energy-intensive industrial tariffs also need to be set soon. Though essentially a matter concerning state-controlled power utility PPC and Greece’s industrial players, the cost of industrial energy is crucial for Greek industry, carrying particular political and economic weight.

Also, Greece has little time left in its negotiations with Brussels for a framework to offer third parties access to PPC’s lignite-based generation. This issue is no longer as crucial as it once was because the country’s lignite output has been drastically reduced. Even so, it remains important for independent suppliers.

A number of energy-sector privatizations could be completed this year. Gas utility DEPA’s two new entities, DEPA Infrastructure and DEPA Commercial, electricity distribution network operator DEDDIE/HEDNO, and a tender for a tender for the development of an underground natural gas storage facility (UGS) in the almost depleted natural gas field of “South Kavala” in northern Greece are all on this year’s privatization list.

In renewable energy, the ministry needs to take decisions within the first few months to clarify terms regulating the sector. RES investment interest is currently high. Steps still need to be taken in an ongoing effort to simplify RES licensing procedures, while a legal framework must be established for energy storage, offshore wind farms and hydrogen use.

 

Target model decision needed in 2021, Elpedison chief points out

The new year will demand a decision from authorities and market participants on whether a true target model for the electricity market is desired, Nikos Zahariadis, chief executive at Elpedison, has pointed out in an article published by energypress as part of a feature on 2021 prospects.

The market was caught by surprise during the launch of the new electricity market in the final weeks of 2020, the official pointed out. Balancing market costs rose sharply during this period.

Most authorities and participants were expecting a different development, including a solution for the market’s chronic “missing money” problem, as well as a drop in retail electricity prices, Zahariadis noted, expressing belief that the new year will present an opportunity, even for the unprepared, to adjust to the new conditions that will ultimately enable the new energy market to operate without restrictions and showcase its advantages.

However, the new market, even when it has matured and stabilized, will still pose threats, especially for players seeking to keep distinctly separate retail and production portfolios, as protection against price manipulation has stopped functioning since the launch of the target model, he pointed out.

Looking towards the future, a gradual prevalence of the RES sector is discernible, as long as economically feasible energy storage technology is developed, Zahariadis projected. Until then, the grid will rely on natural gas-fueled power stations, the only flexible solution available at present, he added.

As for the natural gas sector, two unrelated events late in 2018, the first being an expansion at the Revythoussa LNG terminal facilities that enables bigger tankers to dock, and the second, a drop in LNG prices, have brought about permanent change in the Greek market, the Elpedison official noted.

Market players responded swiftly with LNG imports, prompting gas price reductions along with concurrent electricity price reductions. Also, the first steps were taken towards the establishment of a Balkan hub for transboundary LNG sales, Zahariadis noted.

More gas market opportunities will be offered in 2021 through the TAP project’s functioning, the company official pointed out.

Elpedison has played a leading role in sector developments, capitalizing on opportunities by importing significant LNG amounts and capturing a key position in the wholesale gas market, Zahariadis added.

The completion of equipment procurement tenders for a new 800-MW combined cycle power station, a project that will enable Elpedison to double its production as of 2023 and gradually increase sales to higher levels, stands as the company’s biggest challenge in the new year, he noted.

Solid Fitch Ratings grading for PPC paves way to bond issue

American credit rating agency Fitch Ratings has delivered a favorable review of power utility PPC that enhances the company’s credit image and takes it a step closer to capital markets.

The credit agency has not only added PPC to its catalogue of companies reviewed, but also given the utility a BB- rating, noting that a firm outlook lies ahead. This status is twice as good as a B rating offered by S&P in November.

It enables PPC to begin examining the prospect of borrowing through a bond issue for the first time in six years.

The Fitch Ratings grading has been embraced at PPC’s Athens headquarters, as it not only seals a perfectly successful year but also puts in place a solid foundation for an even better year in 2021.

Interpretations of the outcome by some analysts remain cautiously optimistic. These analysts believe consolidation of PPC’s improved standing must wait for the release of its financial results for the year. Favorable news on the forthcoming 49 percent privatization of subsidiary DEDDIE/HEDNO, the distribution network operator, will also further enhance PPC’s image, they pointed out.

PPC’s integrated business structure, dominant market position, long-term sustainability as a result of strategic repositioning, as well as favorable energy sector reforms from 2019 to the present were key factors in the favorable Fitch Ratings grading.

Industry opposes bilateral contract restrictions

EVIKEN, the Association of Industrial Energy Consumers, has expressed opposition to an energy exchange proposal, delivered through public consultation, calling for the imposition of restrictions on bilateral contracts reached by suppliers.

In its letter, EVIKEN notes that an upper limit restricting supplier bilateral contracts to 20 percent of total sales, if suppliers hold a retail electricity market share greater than 4 percent, ensures conditions of liquidity in the day-ahead market and prevents a squeeze on prices.

The association, in its letter, proposes that this regulatory measure be abolished in the day-ahead market given the extremely high price levels registered, noting its maintenance over an extended period threatens to create oligopolistic conditions in the market.

Legal action, even at an EU level, could be taken over the matter, crucially important for the industrial sector, EVIKEN indicated.

Strong market test turnout for DEDDIE sale, 18 players in all

A total of 18 prospective bidders have taken part in a market test staged by Goldman Sachs for power utility PPC’s forthcoming sale of a 49 percent stake in subsidiary firm DEDDIE/HEDNO, the distribution network operator.

The list, forwarded by Goldman Sachs to PPC, includes investors already familiar to the Greek market such as US firm Blackrock, specializing in transportation and energy infrastructure long-term investments; prominent infrastructure funds; as well as many European operators.

France’s Engie and Italy’s Enel, both often linked with the DEDDIE/HEDNO sale, were not among the 18 market test participants, sources informed.

Interestingly, no previous market test staged to gauge interest in the prospective sale of any Greek State asset has generated such a strong turnout.

Authorities behind DEDDIE/HEDNO’s partial privatization hope this more than promising response for the market test will result in intense bidding competition and a higher sale price.

A clear picture on the number and identity of the sale’s participants will become apparent on January 29, the deadline for the procedure’s first round official expressions of interest.

Officials have attributed the strong market test interest to five key factors: the operator’s new regulatory framework; an elevated WACC level of 6.7 percent for 2021 to 2024, well over levels of between 2.5 and 3 percent offered by other European operators; strong confidence in the governance of the country, pivotal for long-term investments; good timing, as, at present, no other network operator in Europe is up for sale; and a massive accumulation of global capital currently available for investment as a result of numerous lockdowns imposed in many parts of the world since March.

The Greek government will aim to complete DEDDIE/HEDNO’s partial privatization in the first half of 2021.

 

Brussels unveils electricity, hydrogen project conditions for PCI status

The European Commission has just unveiled new criteria that need to be met by energy infrastructure projects concerning the electricity, and now, also hydrogen, sectors for Project of Common Interest (PCI) status.

Brussels presented these details as part of its wider plan concerning the financing and development of energy infrastructure. The European Commission will commit annual investments of 50.5 billion euros in the effort to meet 2030 climate-agreement targets.

Electricity transmission projects will need to increase trans-boundary capacities between EU member states by at least 500 MW, according to one of Brussels’ new criteria for PCI status, enabling favorable EU funding.

In energy storage, projects will need to offer capacities of at least 225 MW to secure their PCI status.

Smart meter installations must involve transmission and/or distribution operators of at least two EU member states and represent at least 5,000 users either producing or consuming 300 GW per year, including at least 20 percent from renewable energy sources.

As for hydrogen, projects must facilitate trans-boundary transmission between EU member states or boost storage capacities at borders by at least 10 percent.

Investment funds targeted in operator DEDDIE’s 49% sale

Power utility PPC’s forthcoming sale of a 49 percent stake in subsidiary firm DEDDIE/HEDNO, the distribution network operator, will not be limited to potential buyers with energy-market backgrounds, according to the sale’s terms, published yesterday, suggesting the seller is aiming to attract investment funds.

DEDDIE/HEDNO’s investment plan for the next five years is worth 2.3 billion euros, including 850 million euros for a nationwide digital power meter upgrade, an amount the government will seek to draw from the EU recovery fund.

Three major infrastructure funds have already expressed unofficial interest in the operator’s sale through a market test staged by Goldman Sachs, sources informed.

The sale is planned to take place over two stages, beginning with expressions of interest by candidates until a January 29 deadline, followed by a second round of binding bids from second-round qualifiers.

They will be given access to a virtual data room for evaluations before binding offers are shaped and submitted.

The government will aim to complete DEDDIE/HEDNO’s partial privatization in the first half of 2021, energy minister Costis Hatzidakis noted during an online Capital Link Forum staged yesterday.

 

At least 10 candidates emerge for DEDDIE sale’s market test

At least ten prospective bidders, among them a number of infrastructure funds as well as European operators, have taken part in a market test staged by distribution network operator DEDDIE/HEDNO in the lead-up to its sale of a 49 percent stake.

The privatization’s officials have deemed the turnout as considerably satisfactory, both in terms of numbers and the reputations of participants.

Some of the funds, both from Europe and beyond, that emerged for this market test are either already present in the Greek market or have been considering to make an entry for quite some time. They specialize in infrastructure and energy projects as long-term investments.

The board at power utility PPC, DEDDIE/HEDNO’s parent company, will be fully informed on the market test’s participants at a meeting scheduled for today, before the privatization is officially launched.

The privatization’s exact number of first-round participants should become known by the end of January, when the expression-of-interest deadline is expected to be set.

Officials believe the overall sale procedure can be completed by spring in 2021. Attractive WACC levels set recently by RAE, the Regulatory Authority for Energy – 7 percent for 2020 and 6.7 percent for 2021 to 2024 – are expected to lure candidates.

DEDDIE/HEDNO’s ambitious 2.3 billion-euro investment plan, included in the operator’s preliminary network development plan, its projects featuring the installation of 7.5 million digital power meters, transmission network upgrades and expansions, as well as a fiber optics project, should serve as further stimulus for a solid sale price.

RAE preparing to grant its first energy storage system licenses

RAE, the Regulatory Authority for Energy, is preparing to grant its first ever licenses for battery energy storage systems following a related board decision last week.

The authority opted to base its decision on a rule from 2000 concerning electricity generation units as specific legal framework for installations of such energy storage systems does not exist.

RAE was prompted to move ahead with this licensing plan following interest by investors for installations of large-scale battery energy storage systems. Also, the new target model markets have shown a need for a flexible national grid.

“Markets are sending messages that illustrate a need for flexible units,” RAE president Thanassis Dagoumas pointed out.

The development of a new legal framework designed specifically for battery energy storage systems would have taken many months, the RAE chief noted, explaining the authority’s decision to move forward by utilizing the rule from two decades ago on electricity generation units.

“We analyzed avenues taken by regulatory authorities in other countries for the creation of their frameworks and determined that they have not addressed the subject in any uniform way,” Dagoumas said. “Some see these storage units from the perspective of production while others relate them to production and consumption.”

PPC plan includes strategic investments for distr. operator

Power utility PPC’s new business plan, presented yesterday, envisages distribution network operator DEDDIE/HEDNO, a subsidiary, as a key catalyst in the country’s energy transformation with major investments lined up for the operator.

DEDDIE/HEDNO, according to the business plan, covering 2021 to 2023, will make 13 strategic investments worth a total of 1.6 billion euros.

These investment moves are expected to increase the operator’s regulated asset base by 500 million euros to 3.5 billion euros at the end of the three-year period and also boost PPC’s operating profit by 70 million euros by 2023.

The operator’s list of strategic investments includes control center and information system upgrades, smart meter installations, improved customer service, network automation, IT modernization, development of remote customer service systems, adoption of digital tools, supply chain reorganization, and a new data management system.

In addition, DEDDIE/HEDNO expects to save 80 million euros from operating cost improvements, including partial replacement of retiring personnel; automation and digitization of key operations; as well as the adoption of RES load forecast analysis systems and demand management tools.

Ministry set to intervene if wholesale prices do not fall

The energy ministry is seriously examining the prospect of imposing a price ceiling, next week, on wholesale electricity prices if they do not deescalate over the next three days.

Wholesale electricity prices have risen sharply since last month’s  launch of the target model, pitched by the government as a price-reducing tool.

Day-ahead market prices for today – based on offers made prior to on online meeting between energy minister Costis Hatzidakis and electricity producers – fell mildly to 77 euros per MWh from 90 euros per MWh on Thursday.

If current prices do not fall further, it is a matter of time before suppliers pass them on to the retail market. Prior to the target model, wholesale electricity price levels ranged between 55 and 60 euros per MWh.

Some suppliers are considering to activate cost-related clauses for their tariff prices, while others have done so already, sources informed.

Producers contend the ascent in wholesale electricity prices reflects actual market conditions, adding that their power stations were previously incurring operational losses under the preceding pricing system.

However, energy ministry officials believe producers are exploiting certain rules to artificially raise prices. Hatzidakis, the energy minister, has urged producers to heed the government’s call or face intervention as of Monday.

Elpedison’s Thessaloniki power station upgraded, target model-fit

Elpedison’s power station in Thessaloniki, temporarily withdrawn on September 28 for a programmed upgrade, is set to start operating again at the end of this week.

The upgrade work, an investment worth approximately 20 million euros, was conducted to enhance the facility’s flexibility and performance, attributes that benefit in the target model’s new markets. The upgrade has also reduced the facility’s maintenance costs.

The power station’s increased flexibility enables operating level increase and decrease adjustments to be made with greater ease, while ignition emissions will now be far lower.

Elpedison has made clear its intent to invest in flexibility as demand for flexible units is expected to increase in the new target model framework.

The company’s Thessaloniki unit, a 400-MW facility constructed in 2006, had emerged as the first privately owned natural gas-fired power station in Greece.

Its development, including supplementary units needed to link the power station with the high-voltage and natural gas networks, cost a total of 250 million euros.

DEPA Commercial, reshaping, seeks electricity supply license

DEPA Commercial, one of gas utility DEPA’s new entities established as part of its privatization, has applied for a 500-MW electricity supply license, RAE, the Regulatory Authority for Energy, has announced.

This move by DEPA Commercial comes as part of the utility’s restructuring and transformation effort, sources said.

An electricity supply license promises to broaden DEPA Commercial’s portfolio, regardless of whether it will actually be used or not. In essence, the company, through this initiative, is making the most of tools available in the market, sources have concluded.

DEPA Commercial owns Fysiko Aerio – Hellenic Energy Company (EPA Attiki), a subsidiary already active in Greece’s electricity market. DEPA Commercial, however, could use its own electricity supply license for PPAs.

S&P upgrades PPC rating on strength of favorable prospects

Credit rating agency Standard & Poor’s has upgraded power utility PPC’s financial status, driven by the utility’s plan to decarbonize sooner than planned, as well as, by 2022, a projected EBITDA figure of between 900 million and one billion euros and an investment plan to reach a total of two billion euros.

S&P projects PPC’s swifter withdrawal of high-cost lignite facilities will result in a lignite-fired power station portfolio with a total capacity of just 700 MW in 2023, down from 3.7 GW in December, 2019. This development will decrease PPC’s electricity generation costs as a result of the utility’s greater emphasis on renewable energy sources and natural gas for production, the credit agency noted.

PPC, according to S&P, will invest two billion euros to increase its RES portfolio from 154 MW to 1.5 GW.

PPC’s retail electricity market share contraction, which reduced its customer base from 6.9 million in 2019 to 6.6 million in 2019, will be offset by bigger profit margins to be achieved through reduced discount rates for tariffs, S&P noted.

The credit agency projects PPC’s market share will drop sharply in 2022 to 60 percent, from 75.8 percent at present.

S&P has also taken into account the utility’s two securitization package collections for unpaid receivables, expect to bring in 500 million euros.

Grid upgrade restarts, enabling Peloponnese RES development

A strategically important 400-kV western-corridor grid upgrade project reaching Megalopoli, central Peloponnese, to greatly increase electricity transmission to and from the Peloponnese, enable further development of RES facilities and gas-fueled power stations in the region and ensure voltage stabilization for the country’s southern grid, is now nearing completion following a delay of more than a year prompted by objections from a nearby monastery in Kalavryta, northern Peloponnese.

Contractor crews have now returned to work without resistance from nuns at the Kalavryta’s Agion Theodoron monastery, who previously objected, contending the construction activity, half a kilometer away, impacted the monastery’s tranquility.

Work on the project, budgeted at 110 million euros, had been brought to a standstill for nearly 14 months. The project contractor estimates construction of the project’s two remaining transmission towers will require between 60 to 80 days.

Overall, the project was blocked for a total of 12 years before work finally began in 2018 for completion in 2020.

 

Elvalhalcor remains firm on combined cycle, 651-MW power plant plan

Elvalhalcor, the Hellenic Copper and Aluminium Industry, is pushing ahead with an investment plan for a combined-cycle, natural gas-fueled power station, despite having made relatively slower progress than other investors behind such projects.

The industrial producer is moving ahead with the project’s licensing procedure and soon expects to submit an environmental impact study that would fulfil, to a great extent, the number of approvals needed ahead of an investment decision, sources informed.

Despite having made relatively slow progress on this project, Elvalhalcor remains convinced of its feasibility.

Last month, Elvalhalcor submitted an application to RAE, the Regulatory Authority for Energy, requesting an upward capacity revision of the project’s production license, to 651 MW from 566 MW.

This capacity increase request has been attributed to an agreement reached by Elvalhalcor with a construction company for the development of the power station.

The facility is planned for development on an Elvalhalcor-owned plot of land in Thisvi, Viotia, slightly northwest of Athens.

 

 

 

DEDDIE board moves to reduce workforce ahead of privatization

Privatization-headed distribution network operator DEDDIE/HEDNO, a subsidiary of power utility PPC, has decided to implement employment term revisions enabling the termination of contracts of workers who, by December 31, have either qualified for pension rights and are at least 63 years of age or have turned 67 and served at the operator or the power utility for a total of at least 15 years.

The operator’s board has also decided to offer aged employees a 20,000-euro bonus as an incentive to hasten departures ahead of the privatization. This bonus will only apply for employees who take up the departure offer by December 31.

The company intends to apply this new employment rule unilaterally if workers belonging to either of the two aforementioned retirement categories do not submit their resignations by the end of 2020.

Employees will be gradually dismissed as of January 31, 2021, beginning with oldest staff members, according to the DEDDIE/HEDNO plan.

Severance pay not exceeding 15,000 euros will be offered to departing employees irrespective of whether they volunteer to retire or end up being dismissed.

Any debt owed by employees to the company will be offset with exit package amounts.

DEDDIE/HEDNO employees serving in highly specialized fields and not instantly replaceable will be exempted from the operator’s new staff exit plan and could have their contracts extended by a year with an option for an additional year for exceptional cases.

NECP and efforts on the right track, Brussels report notes

The country’s efforts to reach objectives set in the National Energy and Climate Plan, shaped by long-term European climate and energy goals, as well as the domestic plan itself, have been favorably reviewed by the European Commission in a related report released yesterday as an appraisal of the finalized NECP submitted to Brussels by the Greek government.

The European Commission, which has reviewed the NECPs of EU member states and how they stand in connection with Europe’s energy and climate objectives, described the Greek plan and its progress as “satisfactory” and “sufficient”.

The Brussels review, however, pointed out that the country’s reforms concerning competition in the retail and wholesale electricity and gas markets, among other domains, require strengthening.

The report also called for an enhancement of Greece’s just transition plan concerning the post-lignite era. Greater detail in the assessment of the social and employment repercussions, as well as retraining requirements, in lignite-dependent areas where the lignite-fired power stations are planned to be withdrawn over the next three years is needed, it noted.

As for measures concerning the Greek economy’s pandemic-related recovery, at least 37 percent of recovery funds to be made available should be invested in climate-linked initiatives so that mid-term emission reduction targets are met, the report noted.

Revision to ensure HEDNO framework for privatization

A legislative revision set to be submitted to parliament by the energy ministry will enable the implementation of a new regulatory framework for DEDDIE/HEDNO, the distribution network operator, as of January 1, 2021, as planned by a revised schedule.

The operator’s new framework, including two four-year periods covering 2021 to 2024 and 2025 to 2028, was initially scheduled to be approved by June 30 but this date was missed as a result of the pandemic’s impact and a leadership change at RAE, the Regulatory Authority for Energy.

Besides being crucial for the market’s operation, the new regulatory framework is a prerequisite for the announcement of the operator’s privatization, to offer prospective buyers a 49 percent stake.

The operator’s WACC rate is expected to be announced in the lead up, either this month or next, if no further delays hamper the overall procedure.

PPC’s latest voluntary exit plan reaches success rate of over 80%

A total of 437 power utility PPC employees have registered for the corporation’s latest voluntary exit plan, limited to staff members over the age of 55, which makes the offer, expiring today, available to approximately 500 persons.

Based on these figures, the success rate of PPC’s latest exit plan, until yesterday, was well over 80 percent.

The total number of voluntary employee exits could reach 450 by the time the offer’s deadline expires later today.

Besides a compensation amount of 15,000 euros for each exiting employee, the program also includes 20,000-euro bonus payments, taking the total package to 35,000 euros for departing staff members.

Approximately 1,300 employees left PPC in 2019 through the voluntary exit plan. The total figure for 2020 is expected just as high, if not higher.

If so, this would take PPC over the half-way mark in its overall voluntary exit strategy. The company has set an overall target of 4,500 departures, according to the latest PPC business plan. PPC also intends to refresh by recruiting 800 new employees.

PPC’s payroll cost has fallen by 45.1 million euros, from 419.3 million to 374.2 million euros, the company announced in its first-half results.

 

DEDDIE sale launch awaiting RAE approval of framework

Distribution network operator DEDDIE/HEDNO is awaiting the approval of its new regulatory framework by RAE, the Regulatory Authority for Energy, needed for the launch of a tender concerning the operator’s privatization, to offer investors a 49 percent stake.

As things stand, RAE is expected to give the green light within October, energypress sources informed.

The operator’s new regulatory framework, to be valid for a four-year period, from 2021 to 2024, and feature an option for a four-year extension, was forwarded for public consultation in June, but a change of leadership at RAE early in July delayed the process.

The operator’s new WACC level, determining the yield for potential buyers, is expected to be announced in October or November so that the privatization’s tender can be announced before the end of the year.

At present, the operator’s annual revenue totals 800 million euros.

It remains to be seen if the overall plan will be carried out as planned as the framework’s approval is a complicated task requiring plenty of work, while RAE faces no legal obligation to deliver on schedule.

Last week, energy minister Costis Hatzidakis, speaking at an Economist conference, assured the DEDDIE/HEDNO privatization will begin in November. However, certain pundits contend the current schedule is overoptimistic.

The new DEDDIE/HEDNO business plan – envisaging an increase of investments to a level of between 350 and 400 million euros, annually, considerably higher than previous levels of around 150 million euros; as well as the recruitment of 1,000 staff members for technical posts – cannot be considered complete without a new regulatory framework.

New target model department at Mytilineos, raising retail, RES goals

The Mytilineos group is assembling a new energy management and trading division, described as a pioneering effort for Greece, in preparation for the forthcoming arrival of the target model.

The new division will be tasked with handling all the group’s electricity production and trading matters, as well as natural gas trading and import activities, the objective being to bring together all the aforementioned concerns under the one management system.

Much is expected of this initiative, Evangelos Mytilineos (home), the group’s chairman and CEO, told analysts during a presentation of company first-half results.

The energy supply market is not yet mature enough for further concentration, Mytilineos noted, making clear his corporation is prepared for this prospect.

He attributed favorable results in the energy sector to low natural gas prices, forecasting a correction in the second half.

The Mytilineos group aims to have captured a 10 percent share of the retail energy market by the end of 2020, its head official noted.

The group has also set elevated RES goals and is aiming for 300 MW of operational wind energy farms and several more hundred MW at various stages of development by the end of 2021, Mytilineos informed.

Negotiations with power utility PPC for new electricity tariffs concerning aluminium producer Aluminium of Greece, a Mytilineos group member, are in progress, he added.

The cost of industrial electricity tariffs is a crucially important issue for the government and power utility PPC.

Mytilineos said he expects metal prices to rebound in the second half of this year, noting the group is not exposed to any price fluctuations for the remainder in 2020 as a result of hedging.

The group’s financial results for 2020 will be close to record levels posted for 2019, analysts were informed.

First-half results have taken the group a step closer to its objectives for the year, while, barring unexpected developments, last year’s dividend level will be maintained, the CEO added.

Pending issues to delay target model launch by a few weeks

The target model’s scheduled September 17 launch date is expected to be postponed by a few weeks following the identification, by authorities, of crucial unresolved issues, even at regulatory level, as well as discrepancies between dry-run market testing results and actual market conditions.

The energy ministry is believed to be preparing to announce the postponement over the next few days. A delay of at least four weeks is expected.

Officials identified the biggest discrepancies in the balancing market, one of the four market systems of the target model, also including day-ahead, intraday and forward markets.

Power grid operator IPTO forwarded a technical decision on balancing market clearing matters for public consultation last Friday, inviting market participants to comment by September 16, just one day ahead of the target model’s scheduled launch.

Other pending issues, sources noted, include a procedure for the selection of reserve power stations; a regulatory framework determining offers by participating units; as well as mechanisms enabling RAE, the Regulatory Authority for Energy, to monitor the behavior of market participants.

Ministry to finalize target model launch date next week

Though the electricity market’s target model launch is scheduled for a September 17 launch, energy ministry officials have shown some reservation by noting the ministry will be in a position to make a finalized decision on the precise date in one week, energypress sources have informed.

The ministry is closely monitoring an ongoing dry-run procedure offering simulated testing of all market systems and assessing their level of readiness on a daily basis, the sources noted.

Operators may have declared being ready for the launch but the energy ministry will not give the green light for a launch until it is absolutely certain that every single issue has been fully resolved.

A change of the launch date for the new markets – day-ahead, intraday, forward and balancing – will be made if this is considered necessary, but any deferral will be limited, officials noted, implying that no more than a few weeks could be given.

The dry-run procedure and rectification of any glitches was supposed to have been completed by now, but authorities have just granted an extension until September 6.

 

Extra week for dry-run tests ahead of target model launch

A dry run procedure offering simulated testing of all market systems and resolving any glitches ahead of the target model launch, scheduled for September 17, has been extended for another week until September 6.

Authorities met last Friday for a latest review of dry-run results. ESAI/HAIPP, the Hellenic Association of Independent Power Producers, in its observations, primarily focused on the balancing market.

The association also objected to integrated programming process revisions proposed by power grid operator IPTO, as well as the timing of these proposals, just days ahead of the official launch of markets.

ESAI/HAIPP is expected to forward its views on the issue, in writing, to the energy ministry, later today or tomorrow. The matter essentially concerns the calculation of reserves to be covered by the system for its security.

The Energy Exchange, to operate the day-ahead, intraday and forward markets, and IPTO, operating the balancing market, are both scheduled – based on a ministerial decision – to deliver an interim report this week for the energy ministry and RAE on the progress and level of readiness of market systems.

These systems have been undergoing continual testing since August 3. The number of dry-run participants has increased in recent days, while price levels are now at far more rational levels, especially in the day-ahead market.

All market participants, approximately 60 in total, have until September 4 to submit required supporting documents to the Energy Exchange in order to receive membership registration certificates by September 11.

 

Supplier guarantees proposed by IPTO ‘needless, excessive’

Electricity suppliers have expressed reservations about a power grid operator IPTO report calling for the payment of guarantees by all parties registered with ESMIE, Greece’s electricity transmission system, to fulfill obligations, describing these guarantees as needless and excessive.

The operator’s report was put forth for consultation by RAE, the Regulatory Authority for Energy, prompting responses from ESEPIE, the Hellenic Association of Electricity Trading and Supply Companies, and three energy suppliers, the power utility PPC, Heron and Protergia.

The IPTO call for guarantees would excessively burden ESMIE members and create serious cashflow problems in the mid to long term, the association and suppliers noted in their responses.

Contrary to formulas used for IPTO and the Energy Exchange, a financial danger coefficient was not applied to the calculations determining the ESMIE member guarantees, the association and suppliers pointed out.

In addition, the IPTO report also calls for a monthly system-use charge imposed on suppliers to be doubled and paid in advance.

The report also proposes a revision to the formula determining penalties for delayed guarantee payments. ESEPIE described the IPTO proposal for a penalty charge of 1,000 euros per month as erroneous, instead offering its support for the current formula, increasing penalty payments for delays by 0.1 percent per day.

RAE has yet to take a position on the IPTO report’s proposals.