Enedis

RAE to set DEDDIE’s WACC level this week, investors keen

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The launch of a privatization procedure to offer a 49 percent stake in distribution network operator DEDDIE/HEDNO should be brought one step closer to its actualization this week as RAE, the Regulatory Authority for Energy, is expected to set a WACC level for 2020, before following up, a few weeks later, within December, with a WACC level covering 2021 to 2024.

These steps are intended to offer investors clarity on the operator’s earning potential.

The distribution network operator’s WACC level for 2021 to 2024 is expected to be set at just below 7 percent, a highly attractive level given the far lower yields offered by respective European distribution network operators.

Investor interest in the forthcoming DEDDIE/HEDNO sale is currently high, energy ministry sources informed. Though no companies were specified, the sources indicated that potential buyers who had surfaced prior to the pandemic remain interested.

Germany’s EON, Italy’s Enel, France’s Enedis and a number of Chinese firms had all expressed interest. Surprise additions to this list cannot be ruled out.

A market test, to measure the level of interest of prospective bidders, is expected to take place next month, immediately following an Investor Day online event planned by state-owned power utility PPC, the operator’s parent company, for early December, energy minister Costis Hatzidakis told a recent energypress conference.

DEDDIE/HEDNO, possessing networks covering 242,000 kilometers, has prepared a major investment plan that includes installation of 7.5 million smart power meters, a project budgeted at 850 million euros, and a digital upgrade of the network. The operator’s assets are valued at 3.6 billion euros.

DEDDIE formula for required revenue approved by authority

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

 

PPC to push for fully reshaped smart meters plan, active role

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The main power utility PPC, in association with its subsidiary DEDDIE/HEDNO, Greece’s Electricity Distribution Network Operator, wants a troubled model concerning the replacement of Greece’s conventional power meters with digital-technology systems to be fully reshaped, and is also seeking an active role, the power utility’s CEO Manolis Panagiotakis told journalists yesterday on the sidelines of a general shareholders’ meeting.

An older pilot plan prepared by DEDDIE/HEDNO concerning the installation of 200,000 digital power meters as a lead up to the full-scale project has been severely bogged down by issues, including appeals and legal disputes between bidders, prompting the need for a new business model.

PPC’s boss attributed the disputes to the initial model’s scale, which he believes is over-sized and has therefore incited candidates to regard the pilot program as a preliminary step assuring contracts for the full-scale project.

In his comments yesterday, Panagiotakis said the staging of two or three smaller pilot projects in provincial cities could be a more effective approach. He also implied the procedure’s current model will need to be reexamined and comprehensively redesigned from scratch.

All possible models will need to be explored, including public-private partnerships, the PPC boss told.

As was recently disclosed by energypress, French electricity distribution network operator ENEDIS has expressed an interest to take part in such an entrepreneurial team for the installation of digital power meters.

According to the original plan, the entire project was scheduled to be completed by 2020, now ruled out as impossible.

The project’s total cost was originally estimated at 1.2 billion euros but this figure is expected to fall to a level of around 800 million euros as the technology to be used matures and related purchase prices deescalate.

The installation of digital power meters in Greece is both a necessity and obligation promising to radically change how the electricity market operates and offer benefits to consumers. The country’s lenders have demanded a clear-cut development time frame in the bailout agreement.

 

 

 

 

France’s Enedis wants role in derailed smart meters project

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French electricity distribution network operator ENEDIS has expressed an interest to take part in an entrepreneurial team for the replacement of Greece’s conventional power meters with digital-technology systems.

An older pilot plan concerning the installation of 200,000 digital power meters as a lead up to the full-scale project has been severely bogged down by issues, including appeals and legal disputes between bidders, prompting the need for a new business model.

According to the original plan, the entire project was scheduled to be completed by 2020. DEDDIE/HEDNO, Greece’s Electricity Distribution Network Operator, is now aiming to launch the project’s development, based on a new business model, within the current year, if possible.

Just days ago, a team of leading ENEDIS officials, joined by French energy regulatory authority officials, travelled to Athens to offer a detailed presentation of their proposal to DEDDIE/HEDNO, RAE (Regulatory Authority for Energy) and energy ministry officials. Based on a model already implemented in France, the plan would bring together the public and private sectors for a joint venture.

DEDDIE/HEDNO would hold a stake of no less than 51 percent in this venture, while the rest of the team would be comprised of private-sector firms selected through an international tender and banks. ENEDIS is striving to be included in this framework. The European Investment Bank (EIB), which has previously supported other DEDDIE/HEDNO infrastructure projects, is believed to also be interested.

The French model, initially discussed by French President Emmanuel Macron during an official visit to Athens last September, appears to have convinced the heads at Greece’s energy ministry and RAE. However, final decisions have yet to be reached. The main power utility PPC has expressed reservations, if not objections.

According to the French proposal, a business team, joined by the operator – DEDDIE/HEDNO in Greece’s case – would take on financing, procurement and installation of the digital power meters. Also, consumer repayment of the part of the project’s cost not covered by EU development fund subsidies would be delayed by a few years in exchange for a predetermined interest rate. Once consumers eventually begin servicing the repayment process, a reduction of overall consumer energy costs can be anticipated as a result of energy savings promised by the smart meters. Network surcharge increases, it is estimated, will be offset by electricity bill amount reductions, according to the French proposal.

The project’s total cost is currently estimated at 1.2 billion euros but this figure is expected to fall to a level of around 800 million euros as the technology to be used matures and related purchase prices deescalate.

The installation of digital power meters in Greece is both a necessity and obligation promising to radically change how the electricity market operates. The country’s lenders have demanded a clear-cut development time frame in the bailout agreement.

 

 

 

Smart network development to dominate Enedis, DEDDIE talks today

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Leading officials of French electric grid operator Enedis, a subsidiary of French electric utilty EDF, are scheduled to meet today with the chief of HEDNO, Hellenic Electricity Distribution Network Operator SA, in Athens for a session to be dominated by the prospects of digital technology development in electricity networks.

Though the meeting coincides with President Emmanuel Macron’s official two-day visit to Greece, concluding today, it had been arranged prior to the official announcement of this trip by the French leader.

Christian Buchel, the deputy at Enedis, and other company officials will meet with HEDNO president Nikos Hatziargyriou.

A major player in its field, Enedis operates low and medium-voltage networks measuring over 1.3 million kilometers and employs approximately 35,000 persons.

The global development of “smart” digital systems in the electricity networks field is expected to constitute a key part of the talks between Buchel, Hatziargyriou and other officials. The two sides will discuss the prospect of working together for development in this sector.

The use of digital technology systems for electricity networks is widely seen as necessary for the improvement of network management, optimal incorporation and penetration of RES systems, better overall efficiency and more active consumer roles.

Besides his deputy role at Enedis, Buchel is also president of the European Distribution System Operators’ Association for Smart Grids, supporting the development of smart networks. HEDNO, locally acronymed DEDDIE, is also a member of this assoication.