electricity market reforms

Stricter switching, power theft rules headed for Parliament

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The energy ministry plans to submit a draft bill of retail electricity market revisions to Parliament next week. The bill contains stricter rules aiming to prevent consumers with unpaid electricity bills from switching suppliers and counter electricity theft.

Consumers will not be able to move away from their electricity supplier if the supplier is the third power retailer at which they have accumulated overdue energy bills within a five-year period beginning January 1, 2020, according to the draft bill.

This obstacle will be combined with a debt-flagging system prepared by RAAEY, the Regulatory Authority for Waste, Energy and Water, energy minister Thodoris Skylakakis informed suppliers just days ago.

The retail electricity market revisions also include a single variable tariff formula that all electricity retailers will need to adopt and include in their tariff packages offered to customers as of January 1, 2024.

Speaking yesterday at the 27th National Energy Conference “Energy + Development”, an event organized by IENE, the Institute of Energy for Southeast Europe, the energy minister spoke of the very high cost to the system caused by electricity theft, estimating its cost at 400 million euros per year.

Rules against electricity thieves will become a lot stricter, while complicit electricians will have their professional licenses revoked, according to the new rules.

EU reaches agreement on electricity market reforms

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Germany has taken a step back permitting France to use state subsidies to fund its nuclear power plants, a development that has enabled EU member states to establish a wider agreement on electricity market reforms.

As part of the new EU rules, governments will be free to use funding structures known as contracts for difference (CfD). These set a minimum price guarantee for electricity suppliers, as well as a price ceiling, above which the state can recover any revenue.

EU member states backed the reforms almost unanimously at yesterday’s EU energy council, Hungary being the only member state to vote against the electricity market revisions.

It was agreed that CfD contracts will be mandatory, with certain exceptions, when public funds are used in long-term contracts.

Also, CfDs will be used for electricity generation investments using photovoltaic, geothermal, hydro and nuclear technologies, in order to provide predictability and stability.

The EU energy council agreed to provide flexibility in how member states can distribute revenues generated by CfD contracts. As a result,  these revenues will be able to be distributed to consumers and also to finance mechanisms reducing electricity costs.

CfD regulations will be implemented following a three-year transitional period for all electricity production sectors except offshore wind farms, to be given a five-year transitional period.

EU ministers have been negotiating reforms to the bloc’s electricity market for months, the objective being to offer RES developers better investment signals and secure consistent electricity supply to prevent price spikes.

Nuclear plants, Baltic pipeline on energy council agenda

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Electricity market reforms, the energy situation in Ukraine, progress on revised National Energy and Climate Plan appraisals, energy-efficiency financing matters, Europe’s preparations for winter, the shutdown of the Baltic-connector pipeline, CO2 emission rights, as well as nuclear power plant support are among the agenda items to be discussed at today’s EU energy council.

On the electricity market reforms front, support for nuclear power plants will be a key agenda topic. France and nine other EU member states are expected to call for two-way Contracts for Difference. Germany has already expressed reservations, fearing the impact of CfDs on the rest of the market if unconditionally applied.

This disagreement needs to be resolved as quickly as possible so that the revised market structure can be finalized and adopted by the end of the year. Market players are confident a compromise solution will be found before the end of this month.

European Commissioner for Energy Kadri Simson is expected to update EU energy ministers on how assessments of revised NECPs are progressing.

Also, Finland and Estonia will inform fellow EU members on any findings of an investigation conducted to determine the cause of damage discovered last week at the Baltic-connector gas pipeline, used by the two countries for access to an underground gas storage facility in Latvia. Suspicions of sabotage have been raised.

German-French nuclear dispute delaying capacity mechanism

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Greek government efforts for the establishment of a capacity mechanism concerning gas-fueled power stations have been bogged down, indefinitely, by a long-running dispute between France and Germany over nuclear energy. Paris is seeking to secure a greater role for nuclear energy in the European Union’s energy revamp.

According to reliable sources, this nuclear dispute is the only unresolved issue and one remaining obstacle to the EU adopting a new set of regulations for its electricity market reforms. A text for the reforms was established at an Energy Council of EU energy ministers in June.

The new set of regulations, in the context of capacity availability mechanisms, includes a provision enabling remuneration for gas-fueled power plant availability, if these plants meet required technical specifications. The text also permits the implementation of a mechanism rewarding such power plants for flexibility.

According to the same sources, developments on these mechanisms are expected later this month, under the shadow of the German-French nuclear energy dispute, which has derailed any schedule that may still exist for the EU’s electricity market reforms.

Berlin has expressed a preference for these reforms to be completed following the EU elections next June, while Paris, in response, has demanded no less than a partial agreement before the end of 2023.

 

Short-term EU action curbing crisis effects sought by Greece

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European Commission proposals for electricity market reforms as well as gas supply security measures ahead of next winter will be the focus of attention at a European Council summit of EU leaders later this week, planned for March 23 and 24, as well as at an upcoming EU Energy Council, scheduled for March 28.

According to energypress sources, Greek officials are approaching these sessions with a mostly favorable view of the European Commission’s proposed framework of measures, while pointing out, however, that they do not offer solutions but rather set defense strategies in the event of further crises.

Given this stance, Greek officials, at both upcoming meetings, intend to support the need for short-term measures aimed at curbing the effects of the energy crisis and contend that the European proposals are too timid.

As for the segment of upcoming talks to focus on European electricity market reforms, Greek officials will promote the establishment of a European fund, which they believe is necessary to provide state guarantees for CfDs and other European Commission proposals such as hedging.

The absence of such support would limit the benefits of measures proposed by Brussels to EU member states possessing sufficient fiscal leeway and marginalize all other member states, Greek officials believe.

The possibility of extending, into next winter, a voluntary objective for reducing gas demand will be among the topics to be discussed at next week’s EU Energy Council. The European Commission has proposed extending this voluntary goal to March, 2024. It was originally set to run from August 1, 2022 to March 31, 2023.

Brussels proposals include PPA priority, RES growth support

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A series of European Commission proposals for the EU electricity market do not call for any major changes to its structuring but make note of the need for mild revisions to the current model through the implementation of various market tools.

A draft of the proposals, obtained by energypress ahead of their official presentation, scheduled for March 14, highlights the need for industry to be provided obstacle-free access to long-term tools, such as PPAs; consumer rights for fixed tariffs and improved market information; and long-term markets offering investment support for RES development.

Also, revisions must ensure that the benefits of renewables reach consumers, the draft notes, placing emphasis on the functioning of the intraday market and its improved liquidity.

It also calls for transmission operators to develop a market tool limiting consumption peaks during the most challenging times of the day as a means of better managing demand and limiting prices.

The European Commission, according to the draft, continues to support the existing market model, stressing “it has provided a well-integrated market, allowing Europe to reap the economic benefits of the single energy market under normal conditions, assuring adequacy of supply and decarbonization”.

However, it admits that “in the midst of the crisis the current model has shown certain major weaknesses related to elevated and volatile fuel prices and short-term electricity markets that have exposed consumers to significant price increases”.

 

Faults observed in Greek model proposed for electricity market

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A fundamental change in the way energy prices are set in the market and, consequently, the elimination of demand-side signals for market participants has been identified as a key disadvantage in a Greek model for changing the structure of the electricity market in Europe, according to a new study carried out by the EPICO Klimalnnovation institute from Germany in cooperation with Aurora Energy Research.

The study analyses the impact of Greek and Iberian models as the two currently discussed options and also explores a third option for building a future-proof market design based on merit order, by securing investments in renewables and allowing for stronger long-term hedging opportunities for consumers to shield them against price spikes and volatility.

According to the study’s findings, the “Greek model fundamentally changes how prices are set in the market, making major impact, as the price signal gives crucial information to market participants, showing levels of scarcity and guiding the dispatch.” It goes on to note: “As all renewables would fall under contracts for difference (CfDs), it [Greek model] would put an end to market-based renewables and hamper their system-friendly design,” adding demand-side flexibility is crucially needed for the future power market system.

Creating separate pools for technologies, with a part of them under a regulated income stream, “risks to impact cross-border trading,” while “the less generation reacts to the cross-border price signals, the less efficient the market coupling process is,” the study notes.

Price caps a risky solution, expert warns, proposing filters for bids

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A leading energy market expert, professor Alex Papalexopoulos, has reiterated his opposition to a complete reform of the European electricity market, believing proposals currently being tabled will lead to perilous conditions.

Speaking at the 17th IAEE European Energy Conference, Dr. Papalexopoulos, the architect behind Greece’s target model, noted markets are signaling the need for reduced dependence on natural gas, representing too great a share of the energy mix.

The European electricity market needs reforms, but not in the manner currently being discussed in Brussels, Dr. Papalexopoulos contended. Instead, revisions should focus on issues such as flexibility and back-up solutions, the expert noted.

Dr. Papalexopoulos pointed out that US wholesale markets are equipped with special filters that examine offers submitted by gas units and determine whether these have the potential to manipulate the market. Equivalent filters do not exist in Europe, resulting in excessively high prices, he noted.

Dr. Papalexopoulos expressed doubts about price caps and recovery of windfall profits, noting they actually do not exist.

 

Brussels launches consultation for Greece’s Market Reform Plan

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The European Commission has uploaded, for public consultation, a Market Reform Plan  submitted by Greece proposing electricity market revisions.

The public consultation procedure’s feedback will assist Brussels’ assessment of the Greek reform plan. Participants have until September 6 to deliver their responses.

Brussels’ endorsement of the Market Reform Plan is one of two prerequisites needed before Greece can submit an application for a capacity mechanism – either a Strategic Reserve or Capacity Remuneration Mechanism (CRM).

The second prerequisite entails Brussels’ approval of an Adequacy Report, currently being prepared by power grid operator IPTO. The operator initially planned to deliver this report by the end of July but a few more weeks are still needed for its completion.

Greece will be able to apply for a capacity mechanism once the two prerequisites have been satisfied.

The energy ministry and European Commission have agreed on a schedule for the approval of a capacity mechanism by the end of this year and its launch early in 2022.

However, maintenance of this schedule will be difficult given the European Commission’s demands, complex and time-consuming, when examining member-state capacity mechanism plans, officials monitoring the Greek effort have noted.

 

Lignite units to exit in August, according to IPTO plan

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

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

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

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

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

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

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

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

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

Market Reform Plan draft at EC, strategic reserve by end of year

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A draft of the country’s Market Reform Plan, whose finalized version will carry target model market revisions for Greece, has been forwarded, by the energy ministry, to the European Commission for consultation between the two sides, expected to begin without delay.

The energy ministry and Brussels have also agreed on a timeline concerning Athens’ submission and examination of a proposal for a Strategic Reserve Mechanism, needed to ensure electricity supply security through the market’s transition and reforms.

Based on this schedule, the two sides will strive to have finalized the Strategic Reserve Mechanism by the end of the year, so that it may be launched in early 2022.

Brussels’ Directorate-General for Competition plans to begin its consultation for the Market Reform Plan in July. The procedure is expected to last four months, before target model market revisions are implemented.

As part of the overall effort, Pantelis Kapros, Professor of Energy Economics at the National Technical University of Athens, conducted a study – commissioned by RAE, the Regulatory Authority for Energy – serving as a road map for the Greek wholesale electricity market’s revisions, the objective being to fine-tune the target model.

Power grid operator IPTO will concurrently conduct a new adequacy report, including reliability standards, to accompany the Greek plan.

RES spatial plan to be delivered within 2021, Action Plan notes

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The completion of a RES sector spatial plan within the current year has been included in an energy ministry Action Plan for 2021, just published along with the respective action plans of all other ministries.

The energy ministry’s action plan lists interventions planned for 2021 in nine areas under its authority, including energy-sector privatizations, energy market reforms, support for decarbonization and recycling, adoption of circular economic principles, greenhouse gas emission reduction, the tackling of climate change effects, as well as green energy transition.

RES sector measures this year will help cut down the time needed by new RES projects for licensing procedures to two years, the ministry anticipates in its action plan.

It also expects the installation, by the end of the year, of at least 2,000 recharging units for electric vehicles in public areas, including along highways, and at private properties, including domestic and commercial.

On the privatization front, the energy ministry expects all seven energy privatization plans to have been completed or reached an advanced stage by the end of the year.

On energy market reforms, the adoption of a remuneration mechanism for grid sufficiency, to replace a transitional mechanism remunerating flexibility, is a standout feature.

The energy ministry also intends to adopt, as Greek law, an EU directive promoting energy storage and demand response systems.

The ministry’s action plan also anticipates the signing of agreements this year for distribution network development and RES penetration support. It also expects DEDDIE/HEDNO, the distribution network operator, to announce a tender for the installation of smart power meters within the current year.

Taking into account plans by DEDDIE/HEDNO and power grid operator IPTO, the ministry expects investments in distribution and transmission networks to reach one billion euros this year.

Investments for gas network upgrades and expansion are expected to reach at least 300 million euros, primarily driven by projects planned by gas distributor DEDA, covering all areas around the country except for the wider Athens, Thessaloniki and Thessaly areas.

On international projects, the action plan notes that a Greek-Bulgarian gas pipeline project, the IGB, promising to significantly diversify Greece’s gas sources, will be completed by the end of 2021.

A latest edition of the Saving at Home program subsidizing energy efficiency upgrades of properties, budgeted at one billion euros, will stimulate work on 80,000 buildings in 2021, according the energy ministry’s action plan.

This activity will contribute to a National Energy and Climate Plan objective for an improvement, by 2030, of energy efficiency at buildings by 38 percent, reducing energy consumption to levels below those registered in 2007, the action plan notes.

 

Barriers, restrictions affecting power, gas market liberalization

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Greece’s retail electricity and gas markets are moving towards full liberalization, but, in the course, needing to overcome major barriers and restrictions, a European Commission report for 2020 has highlighted.

Despite the progress made, obstacles in four key areas continue to obstruct the entry of new players in the country’s electricity and gas markets, the report noted.

Disincentives of regulatory nature, market inequalities, entrepreneurial and procedural barriers, as well as customer inaction were identified as the four key areas that need to be dealt with if full liberalization of the electricity and gas markets is to be achieved, the report found.

On the regulatory front, proposals offered by the European Commission focus on the need for a consistent framework offering long-term stability and security for market players.

Market surveillance and monitoring by authorities needs to be effective and accurate to prevent unfair competition behavior by market players, it added.

On market entry, the report recommends actions that would enhance the procedure’s reliability and uniformity.

As for customer immobility, signifying a market still not fully mature, the European Commission report proposes the provision of improved information to customers before supply agreements are signed, greater transparency, better price-comparing ability, as well as mechanisms protecting consumers against unprincipled actions by suppliers.

EU directive for electricity market to bring about changes

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Legislation of an EU directive from 2019 concerning electricity market regulations, whose features include establishing consumers as active players through an ability to sell self-produced electricity, and also providing the framework governing smart meter systems, is expected to be one of the energy ministry’s first legislative acts, if not first, in the new year, within the first two months.

Energy minister Costis Hatzidakis has assembled a team of lawmakers to adopt the EU directive as Greek law.

Active consumers selling their electricity output will be able to do so directly, on an individual basis, or through accumulated group representation.

Consumers will also be able to participate in, and benefit from,  flexibility and energy efficiency programs.

In addition, the new rules will enable active consumers to give third parties management rights – without any further powers – over related system installation, operation, maintenance and data management.

Other changes to result from the new rules include giving consumers active pricing policy rights through which agreements between supplier and consumer will reflect fluctuations in the electricity market, including the day-ahead and intraday markets.

Revised lignite remedies called for in latest energy reform talks

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A team of Brussels technocrats, in Athens for further energy-reform talks officially beginning today, will be entering these sessions fully aligned with rigorous formalities included in a related surveillance report.

This intention for a hard-line approach by the technocrats was made evident during preceding informal talks yesterday.

A surveillance report contains a series of positions that are not in harmony with the Greek government’s views. Most significantly, the government’s presentation of an accelerated decarbonization process as a remedy for main power utility PPC’s lignite monopoly has not been accepted.

However, the technocrats talking part in the talks do not have the authority to step beyond boundaries set by official progress reports. The European Commission has kept separate  Greece’s decarbonization process from PPC’s dominant position in lignite-related matters, calling for revised remedies.

The latest round of talks are expected to be based on the submission of revised measures.

Though the Greek government’s approach may differ to that of the European Commission, Athens insists both sides have set the same objective, this being to achieve full liberalization in the energy market and adopt reforms designed to intensify competition.

The government is confident its aggressive decarbonization policy, expected to begin soon with a first round of lignite unit withdrawals within 2020, will serve the European Commission goal to remedy PPC’s dominant position in the lignite sector.

PPC’s new products in spring, Brussels reform talks influential

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New retail electricity packages being prepared by power utility PPC, currently seeking to reshape and modernize, are expected to be ready for launch early in spring.

The utility’s recently appointed deputy chief, Giorgos Karakousis, who assumed his post in November, is busy putting together a new commercial policy to feature packages for households and businesses.

Concurrent negotiations between the government and the European Commission on wider electricity market reforms in Greece will influence the shape of these new PPC packages.

The state-controlled power utility, in the eyes of Brussels, has continued maintaining a monopoly in the lignite sector, offering lower-cost electricity, as well as a dominant market position.

Talks between energy ministry and European Commission officials are focused on generating greater competition in Greece’s electricity market.

The outcome of these negotiations will determine the extent of PPC’s permitted retail market presence in the high, mid and low-voltage categories. These commitments will serve as a guideline for PPC’s forthcoming packages.

During his presentation, last month, of PPC’s new business plan, chief executive Giorgos Stassis did not rule out the possibility of additional services concerning energy efficiency at households and businesses.

In other European markets, electricity supply packages are often combined with house insurance policies as well as energy-saving equipment.

 

 

Work needed for Athens-EC convergence on energy reforms

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Greek and European Commission positions on energy reforms for further market liberalization remain at opposite ends, despite January being previously billed as a key month, and will require great effort if agreements are to be reached, government sources have informed ahead of a series of meetings in Athens. Both Athens and Brussels want further market liberalization but their approaches differ.

A first round of meetings is scheduled to begin next week with the arrival of Brussels technocrats for preliminary talks with government and market officials. Top-level lender representatives will then follow up a week later.

The Greek government’s basic position is centered around a swift decarbonization process at state-controlled power utility PPC, which would eliminate the need for third-party access to PPC’s monopolized lignite sources, offering lower-cost electricity.

A government proposal for the establishment of SPV partnerships with private-sector companies that would facilitate purchases of high-voltage lignite-generated PPC electricity by industrial enterprises has only been entertained by the power utility, limiting the measure’s prospects for a market share reduction at PPC, still dominant.

In preceding negotiations, the country’s lenders have indicated that decarbonization alone does not suffice. The views of the lenders on the government’s SPV proposal also differ.

The European Commission’s Directorate-General for Competition has called for wider participation in the SPV that would effectively also take on board independent electricity suppliers, not just energy-intensive industrial enterprises, for purchases of lower-cost lignite-generated electricity produced by PPC.

Opposing views are seen requiring more work for convergence, which could be achieved by the end of the first half. The implementation of the target model promises to serve as a catalyst.

Two more rounds of talks in Athens are scheduled for March and May.

Drastic changes to reshape energy sector by end of 2020

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Major developments in Greece’s energy sector, from lignite to natural gas, renewable energy, energy efficiency, as well as the geopolitical effects, promise a drastic reshape of the sector over the next year.

A first batch of power utility PPC’s existing lignite-fired power stations will have ceased operating as part of a plan for a full withdrawal by the end of 2023. PPC will have a reduced number of employees on its payroll. This will have positively impacted the utility’s profit figures.

Also, a first round of major renewable energy projects expected to be launched by PPC subsidiary PPC Renewables through partnerships, as part of the parent company’s wider turn to green energy, will intensify competition in the renewable energy market.

Furthermore, this time next year, assets currently belonging to gas utility DEPA, both in trade and infrastructure, may have been transferred to new owners. This development promises to reshape the entrepreneurial map as the private sector’s dominance will be absolute.

In the retail market, the number of players is expected to have diminished as a result of a new round of takeovers and mergers, amid heightened competition, as was also the case in telecommunications in the recent past.

In addition, Greece’s energy exchange will have clocked up several months of operations by the end of the year. Its arrival will intensify competition, remove market distortions and allow dormant potential to be realized through coupling with neighboring markets.

By the end of 2020, the TAP gas pipeline will have begun delivering its first orders of Azeri gas to Europe, the Greek-Bulgarian IGB gas pipeline will be nearing completion, while procedures leading to the development of the Alexandroupoli FSRU and an underground gas storage facility in the offshore area south of Kavala will have made progress.

Without a doubt, Greece’s energy sector appears to be waking up to the new reality, leaving behind anachronistic perceptions and embracing the green energy revolution. The country is now adopting new ways implemented by the overwhelming majority of European territories two decades earlier.

 

Brussels pressuring for wider access to PPC lignite power

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The European Commission’s Directorate-General for Competition has proposed wider participation in a Special Purpose Vehicle plan tabled by the energy ministry that would effectively also take on board independent electricity suppliers, not just energy-intensive industrial enterprises, for purchases of lower-cost lignite-generated electricity produced by power utility PPC.

Energy ministry officials began talks aiming for further electricity market liberalization in Greece in the lead-up to the Christmas break. These are expected to continue following the festive season and end by mid-January.

The energy ministry officials went into the talks having proposed the establishment of an SPV that would exclusively facilitate lignite-generated electricity purchases made by energy-intensive industrial enterprises.

This is seen as a plan that could contribute to the power utility’s market share contraction in the high-voltage category and also support emission cost savings.

Greece’s pledge for a thorough plan promising to fully liberalize the electricity market and break PPC’s ongoing dominance has been under the spotlight during these talks.

Going into the negotiations, Brussels made note of Greece’s non-compliance with a European Court ruling on PPC’s lignite monopoly.

The European Commission has remained relentless in its demand for corrective anti-monopoly measures on lignite, including, according to sources, the establishment of auctions along the lines of the NOME auctions recently abolished by the Greek government.

Brussels insists the SPV would need to be supplied electricity by PPC through auctions. Greek officials have sought to avoid discussing such a prospect given the government’s recent decision to end NOME auctions, arguing these have cost PPC plenty without delivering results in terms of market share contraction at the utility.

A proposal entailing hydropower sourced electricity supply to the SPV, in addition to lignite-generated electricity, has also been tabled at these talks. This would help limit emission costs if suppliers also enter the SPV.

The European Commission may have applauded the government’s recent decision for a swifter decarbonization process, but it has remained adamant on the necessity for third-party access to lignite – until 2023, when all of PPC’s existing lignite units are planned to have been withdrawn – as well as hydropower  if full market liberalization is to be achieved.

 

Ministry preparing market liberalization plan for January

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The energy ministry, working following a latest report by the European Commission, has yet to decide on the details of corrective antitrust measures it is expected to present to Brussels in January, energypress sources informed.

Market officials, seeking greater electricity market liberalization, are looking forward to measures.

The ministry is striving to revise the negotiating base with Brussels. Athens believes the country’s decarbonization package, aiming for the closure of the bulk of power utility PPC’s carbon generators by 2023, and the rest by 2028, will successfully counter a European Court decision against PPC’s lignite monopoly.

The Greek lignite withdrawal effort includes a plan to close the Megalopoli and Amynteo coal generators by summer.

The energy ministry measures should emerge as a prelude to negotiations with Brussels that month.

The Greek government will, under no circumstances, accept a return of NOME auctions, as these are deemed to have generated considerable losses for PPC without any result in terms of the utility’s market share contraction to 50 percent, as had been agreed to by the previous government, sources noted.

Brussels has consistently opposed the Greek government’s recent decision to terminate NOME auctions.

Stricter PPC hiring supervision among energy draft bill changes

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A number of observations made during public consultation for an energy-sector draft bill concerning the energy market’s liberalization, power utility PPC’s modernization, gas utility DEPA’s privatization and RES support, including stricter recruitment control at PPC, have been incorporated into the bill.

The draft bill, submitted to Parliament last Friday, will now be distributed to parliamentary committees for discussion before being transferred to the house for ratification towards the end of the month.

The stricter recruitment control at state-controlled PPC will require inspections and approvals by ASEP, the Supreme Council for Civil Personnel Selection, during hiring procedures, not afterwards.

In another important draft bill revision, gas utility DEPA’s possible stake in the prospective Alexandroupoli FSRU would be held by DEPA Trade, a new DEPA entity being formed as part of the gas utility’s privatization. Previously, this stake was planned for the utility’s international projects division.

Furthermore, the new shareholders to acquire the Greek State’s 65 percent of DEPA Infrastructure, the gas utility’s other new entity in the making, will need to maintain this stake for at least five years.

Also, a universal electricity supply service covering the electricity needs of blacklisted consumers not wanted by suppliers for repeatedly failing to meet electricity bill payments, will require the market’s top five suppliers – up from three – to cover this sector’s market needs for two years if a competitive procedure for the service fails to produce a result.

Independent suppliers, repelled by market irregularities, have shunned this universal service since its introduction in Greece in 2011. This has forced PPC to step in, by law, as the dominant player.

The aim is to transform the universal service, offering electricity at considerably elevated rates, into an attractive market for local suppliers, as is the case in other European markets.

Energy sector draft bill to be presented at cabinet meeting tomorrow

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The key aspects of a new institutional framework to bring about energy market revisions will be presented by energy minister Costis Hatzidakis at a Ministerial Council meeting tomorrow.

Power utility PPC’s detachment from bailout-related restrictions imposed on public sector enterprises; a plan for the partial privatization of distribution network operator DEDDIE/HEDNO, a PPC subsidiary; and details concerning gas utility DEPA’s upcoming privatization represent the new framework’s most significant components.

Details of moves intended to accelerate the RES sector’s penetration in energy production and consumption are also included in the framework.

The energy ministry will also forward its plan to the country’s lenders, including the European Commission. It will also be forwarded for public consultation, sources believe.

Once these stages have been cleared, a draft bill is expected to reach Greek Parliament in the second half of November, the aim being to complete its ratification by the end of that month.

 

Energy deputy in Brussels electricity market talks, NOME auctions end near

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Deputy energy minister Gerassimos Thomas, representing Greece at tomorrow’s council of EU energy ministers in Brussels, where climate change targets between 2030 and 2050 will be discussed, intends to combine the visit with a series of meetings with European Commission energy and competition officials for talks on latest government plans striving for greater competition in Greece’s electricity market.

Talks concerning the Greek government’s plans to intensify electricity market competition have yet to officially commence, as was noted just days ago by recently appointed energy minister Costis Hatzidakis. He is preparing for his first meeting with the country’s lender representatives in Athens this Wednesday.

The government’s electricity market agenda is comprised of five key measures – swifter decarbonization; partial privatization of distribution network operator DEDDIE/HEDNO; power utility PPC’s detachment from Greek State bailout-related procedures; greater emphasis on renewable energy; and termination of NOME auctions.

The measure abolishing NOME auctions will be submitted to Greek Parliament within the next few days, Hatzidakis, the energy minister, told local media yesterday. The plan will be attached to a multi-bill for development, now undergoing public consultation, sources informed.

NOME auctions were introduced in Greece about three years ago to offer PPC rivals lower-cost wholesale electricity. Hatzidakis argues the auctions ended up forcing the power utility to offer below-cost electricity, inflicting an accumulation of financial damage worth approximately 600 million euros.

At the council of EU energy ministers in Brussels tomorrow, his deputy, Thomas, will present the Greek government’s ambitious agenda for cleaner energy.

He also plans to hold talks with Finnish minister of economic affairs Katri Kulumni, Spain’s energy minister José Dominguez Abascal, and Italy’s economic development minister Stefano Patuanelli, amongst others, sources informed.

First round of new ministry, lender talks this Wednesday

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The current financial standing of state-controlled power utility PPC, effort  to reduce the power corporation’s market share, competition in the electricity market, target model progress, and prospective energy utility privatizations will all feature on the agenda of the recently appointed energy ministry’s first official meeting with the country’s lender representatives, scheduled for this Wednesday in Athens, sources have informed.

Energy minister Costis Hatzidakis will participate in the meeting but the country’s lenders will not be represented at the highest level, the sources added. The energy minister’s participation at the meeting Wednesday highlights the political significance of the PPC rescue effort for the government, the sources noted.

Finalized decisions are not expected during Wednesday’s negotiations. Talks are expected to run until mid-November. A Greek post-bailout  appraisal has been deferred until then as a result of European Commission personnel changes following the European elections last May.

This Wednesday, the energy ministry will inform the country’s lenders on the results of a first round of measures taken by the new Greek government to prevent PPC’s collapse.

A government decision to abandon NOME auctions, introduced about three years ago to offer lower-cost wholesale electricity to independent players, will also be officially announced at Wednesday’s meeting. This measure has cost PPC approximately 600 million euros since its launch, according to Hatzidakis, the energy minister.

The energy ministry officials will also seek a revision of a PPC market share contraction agreement, included in the bailout terms, requiring the utility to reduce its retail market share to less than 50 percent by the end of this year. It is not yet clear if the lenders will accept this request and, if so, what the replacement plan could be.

The key aspects of a government plan for swifter decarbonization, including the closure of PPC’s Amynteo and Megalopoli III power stations; planned efforts for no further target model delays; as well as privatization plans concerning gas utility DEPA and Hellenic Petroleum ELPE will also be discussed Wednesday.

Brussels hears out Greek plan for electricity market reforms

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The recently elected conservative New Democracy government’s plan for energy market reforms, especially in the electricity sector, has been closely listened to by leading European Commission officials over two days of talks in Brussels, generating cautious optimism for acceptance amid the government’s ranks.

Deputy energy minister Gerassimos Thomas spearheaded a Greek team to present the government’s proposals that include the termination of NOME auctions; withdrawal of lignite-fired power stations; reinforcement of the RES sector; and restructuring at power utility PPC.

The plan was presented to various Brussels officials, including the European Commissioner for Climate Action and Energy Miguel Arias Canete; the Director-General of the Directorate for Energy Ditte Juul Jørgensen; as well as to the office of new European Commission president Ursula von der Leyen.

The main aim of the Greek officials was to underline PPC’s poor financial standing as a systemic threat, stress the need for further electricity market reforms, and highlight the government’s commitment over these matters.

The Greek proposals did not prompt any negative reaction, at least for the time being. On the contrary, they could represent the beginning of a positive course as the proposed measures are in line with EU policies on lignite unit withdrawals, emphasis on renewable energy and other matters.

Prime Minister Kyriakos Mitsotakis may have set the tone by presenting a green agenda during recent talks with key European officials.

European Commission technocrats will soon be in Athens for negotiations concerning the Greek economy’s post-bailout monitoring. These talks could stretch beyond October given the recent change of guard at the European Commission.

Energy ministry officials believe negotiations concerning the government plan to abolish Greece’s NOME auctions will have been completed prior to October 16, when the year’s final session is scheduled to take place, and therefore enable energy minister Costis Hatzidakis to scrap this particular session and the auctions in general, as the minister has declared he intends to do.

The NOME auctions, introduced by the previous Syriza government, are seen as a loss-incurring measure for PPC, obligated to offer below-cost wholesale electricity to independent suppliers since 2015.

Energy deputy in Brussels for electricity market negotiations

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Deputy energy minister Gerassimos Thomas (photo) and the ministry’s secretary-general Alexandra Sdoukou are both in Brussels to negotiate measures for the electricity market’s liberalization.

The Greek officials are scheduled to remain until September 5 for meetings with the European Commissioner for Climate Action and Energy Miguel Arias Canete and other Brussels officials, the intention being to pave the way for ensuing negotiations concerning the Greek economy’s post-bailout monitoring.

Thomas, the energy deputy, will present the recently elected Greek government’s plan for the energy sector, including its decision to abolish NOME auctions. They are seen as a loss-incurring measure for power utility PPC, obligated to offer below-cost wholesale electricity to independent suppliers since 2015.

Government plans entailing a partial privatization of distribution network operator DEDDIE and closure of old lignite-fired power stations run by PPC are also on the Brussels agenda.

In exchange for the termination of NOME auctions, which were introduced to reduce PPC’s retail electricity market dominance, the Greek officials will present a lignite unit withdrawal schedule that includes PPC’s Amynteo, Megalopoli III and Kardia power stations.

The European Commission’s overall position remains unknown.

The Greek government intends to renegotiate an older term committing PPC to reduce its retail electricity market share to less than 50 percent by the end of this year, sources informed. Athens will aim for a softer target of between 60 and 65 percent, the sources added.

More clarity on where the two sides stand is expected next week, when a team of Brussels technocrats is expected in Athens for further negotiations.

Energy deputy: ‘OTE should serve as an example for PPC’

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The electricity market’s liberalization will help the power utility PPC restructure, as was the case with the Hellenic Telecommunications Organization OTE, the newly elected centre-right New Democracy government’s deputy energy minister Gerassimos Thomas supports.

The official, backed by experience as a deputy at the European Commission’s Directorate-General for Energy, has not specified what action should be taken if PPC’s current bailout-required disinvestment of lignite units fails to deliver.

But he is in favor of a national policy for the energy system’s decarbonization that would take initiatives and move a step ahead of bailout requirements rather than simply observe them.

It remains to be seen if further measures – beyond PPC’s lignite units disinvestment and the NOME auctions – will be needed for the electricity market’s liberalization, Thomas had commented late last year, adding, at the time, that the country has spent the last 8 years relying on the bailout program as its guide. Irrespective of this, the country needs to look at where it is heading and take initiatives as the market is changing completely, he added.

Thomas is a firm supporter of renewable energy and is expected to give priority to this sector.

On the NOME auctions, the official believes that their failure, so far, to break PPC’s market dominance must first be analyzed before any further action is taken.

 

 

Brussels delivers strictest energy-sector report in years

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The European Commission’s latest report on the country’s energy-sector commitments is the strictest to have emerged in recent years and certainly the toughest during the Syriza party’s four-year mandate, now into its final year.

All energy-sector deadlines the country has committed itself to are behind schedule, prompting ambiguities regarding the sector’s course, the report notes. It observes increased delays in the implementation of reforms over the past few months and a slowdown in commitments agreed to at a Eurogroup level.

The report also makes note of the energy-sector challenges to face the country’s next administration. The government has called for snap elections, scheduled to take place on July 7.

Greece is held responsible for main power utility PPC’s delayed disinvestment of lignite units. The report also blames the country for the delayed market coupling procedures with Italy and Bulgaria.

RAE, the Regulatory Authority for Energy, has been held accountable, is blamed for its export restrictions imposed on electricity amounts acquired at Greece’s NOME auctions, as the results of this action are seen as unclear.

The report also calls for PPC to increase electricity tariffs for cost recovery and needed investments.

Also, RES sector procedures are deemed as too complex and time-consuming, a disincentive for investments.

 

Lender representatives visiting Athens in a pre-election mood

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Pending energy market reforms, including privatizations, PPC’s disinvestment of lignite units, and other market liberalization measures, will be discussed between government officials and the country’s lender representatives, visiting Athens to begin a post-bailout review this week.

Long-term decisions on various matters will most likely need to be made following Greece’s elections, due in autumn, once the political climate has settled. This delay, though, could end up prompting tougher demands by the lenders, including the European Commission.

PPC’s sale of lignite units, relaunched following a failed previous effort, is expected to dominate the talks. The disinvestment’s deadline for binding bids has been extended to May 28, which virtually coincides with the European elections, making the prospect of the sale procedure’s punctuality uncertain.

The lenders are expected to push for financial restructuring measures at state-controlled PPC, which has just posted disappointing results for 2018. Some of these measures will entail political cost.

The lender representatives will also push for decisions on slow-moving energy-sector privatizations. The sale procedure for gas utility DEPA has fallen behind schedule while uncertainties have crept into the the ELPE (Hellenic Petroleum) privatization.

The target model as well as Crete’s urgently-needed electricity grid interconnection with Athens will also be on the agenda. The latter has led to a control-related dispute between Greek power grid operator IPTO and Euroasia Interconnector, a consortium of Cypriot interests heading a wider PCI-status Greek-Cypriot-Israeli electricity grid interconnection project.

DG Energy boss in Athens to inspect on reforms, wider EU commitments

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Klaus-Dieter Borchardt, Director of the European Commission’s Directorate-General for Energy, is currently in Athens for a series of meetings with local authorities to inspect on energy-sector reforms included in the bailout agreement, and, beyond the Greek progam, ensure the country is on the right track for EU energy policy commitments leading to the European energy market’s unification, as presented in the target model.

The DG Energy top official’s two-day agenda, concluding today, includes meetings with officials at IPTO, the power grid operator, RAE, Regulatory Authority for Energy, the main power utility PPC, and the Athens Energy Exchange.

Borchard is focused on ensuring the country’s ongoing and prospective energy-sector reforms will be implemented following the Greek program’s conclusion next month, according to certain local officials who have held talks with the visiting authority.

The DG Energy boss also appears to be applying pressure for the maintenance of schedules, by all local energy institutions, as presented in a binding road map resulting from the country’s EU membership, which stretches beyond the Greek bailout agreement.

Prior to his arrival in Athens, Borchard was in Bulgaria.