Greek-Bulgarian MoU for oil pipeline likely in February

Greece and Bulgaria are likely to sign a Memorandum of Understanding in Athens next month for the development of an oil pipeline to run from Alexandroupoli in Greece’s northeast to Burgas, on Bulgaria’s Black Sea coast, sources have informed.

If so, a joint Greek-Bulgarian working group would soon commence work on a new study for the project, unchanged at many sections, compared to an original plan.

However, contrary to the original plan, the pipeline will flow in the opposite direction to supply oil from Greece to Bulgaria.

This project promises to further upgrade the geopolitical significance of Alexandroupoli, a prospect not embraced by Turkey as the pipeline would reduce the geopolitical importance of the Bosphorus Strait.

The Alexandroupoli-Burgas oil pipeline, to cover a 260-km distance, equally divided between Greece and Bulgaria, is planned to have a 24-inch diameter and capacity of 10 million tons.

Oil will be transported to Burgas’ Lukoil refinery, which will need a capacity boost from 7 to 8 million tons at present to 10 million tons.

The revised oil pipeline plan appears to have the backing of the EU and the USA, as part of Europe’s wider effort aiming for an end of its reliance on Russian fossil fuels.

Officials estimate work on the Alexandroupoli-Burgas oil pipeline will begin in one to two years for a possible launch in three to four years’ time.

 

 

Athens continuing with subsidy model despite Eurogroup request for cuts

The Greek government will continue offering electricity subsidies universally, to all consumers, based on a model it introduced in 2022, despite a Eurogroup proposal earlier this week for more restricted coverage giving priority to low-income households.

Finance minister Hristos Staikouras, commenting from Davos, and energy minister Kostas Skrekas, both ruled out any possibility of electricity subsidy cuts for now.

Greek elections are due within the next few months. Though electricity subsidies are keeping energy costs under control for consumers, they have hampered economic growth, as highlighted by GDP figures for 3Q in 2022.

The country’s subsidy strategy adopted in 2022, one that primarily supports households, as well as businesses, and which covered the majority of the energy crisis’ additional energy costs last year, without significant fiscal cost, will be continued, Staikouras, the finance minister, asserted from Davos.

Meanwhile, Skrekas, the energy minister, ruled out any chance of subsidy cuts until electricity suppliers are able to set retail prices at levels of 15 to 16 cents per KWh. He was fielding questions at a news conference on Greece’s revised National Energy and Climate Plan.

Given the current market conditions, suppliers are not too far off being in a position to set electricity prices at such levels. Their nominal prices for February, to be announced tomorrow – based on recent market rules requiring suppliers to announce their prices for each forthcoming month by the 20th of the previous month – are expected to be slashed by as much as 50 percent compared to January, to levels of around 20 cents per KWh. At such nominal levels, the government will chip in with subsidies not exceeding 6 cents per KWh.

In Greece, energy subsidy support offered in 2022 has been estimated to be worth 2.3 percent of the GDP, above the EU average of 1.3 percent of GDP, seen falling to 0.9 percent this year.

Brussels electricity subsidy proposal on Eurogroup agenda

An electricity subsidy proposal put forth by the European Commission, essentially seeking to replace universal subsidies offered by EU member states such as Greece with a two-tier system prioritizing subsidies for low-income households, is on the agenda of a Eurogroup meeting in Brussels today.

According to the Brussels proposal, any electricity tariff increases will be fully covered through subsidy support offered to consumers in the top-tier subsidy category for low-income households.

The second-tier subsidy group, which would include medium and high-income consumers, would offer gradually increasing subsidies, as long as consumers have proven records of reduced energy consumption.

The Greek government has implemented an electricity subsidy system based on energy consumption levels. Subsidy amounts for households are reduced if monthly energy consumption levels exceed 500 MWh.

This consumption-based system was chosen by Athens as a result of low income levels in general and higher electricity prices in Greece compared to many other EU member states.

Acceptance and implementation of the Brussels proposal would result in higher electricity costs for medium-income groups. However, the Brussels proposal faces major obstacles as each EU member state has its own subsidy-related electricity market conditions to deal with.

Greek energy minister Kostas Skrekas, in comments offered to media over the weekend, ascertained the country’s existing electricity subsidy program for households and businesses will continue to apply until at least July.

RAE prepares list of crucial industries for gas rationing exemption

RAE, the Regulatory Authority for Energy, has prioritized industrial enterprises for a ranking system exempting the most crucial players from natural gas rationing in 2023, should such an emergency measure be necessary.

This list of prioritized industries is needed so that a revised emergency plan for 2023, prepared by gas grid operator DESFA and approved by RAE, can be implemented, if needed.

The European Commission requires all EU member states to deliver lists prioritizing industries for the year as part of an EU’s emergency plan designed to weather extreme energy market conditions.

In Greece, a total of 104 industries have been divided and prioritized in eight groups. Industries belonging to the highest-ranked group would be the first to be subject to rationing, while industries in the lowest-ranked group are least likely to be subject to gas rationing.

Industries in the highest-ranked group could convert to alternative fuels and second-tier industries could reduce gas consumption without any major impact on their operations.

Natural gas prices tumble to 12-month low, crucial period still ahead

European natural gas prices tumbled to 65 euros per MWh yesterday, a new 12-month low last reached in mid-January, 2022, prior to Russia’s invasion of Ukraine.

The price drop has been attributed to mild European winter conditions, so far, that have flattened demand and kept the continent’s energy storage facilities 84 percent full, well above the level recorded a year ago and approximately 30 percent higher than the average level recorded over the past five years.

Analysts insist European market conditions remain fragile, despite the favorable price trajectory of natural gas so far this winter. A sudden change of weather conditions, combined with a complete disruption of Russian gas supply to Europe, could spark a new round of price volatility and deplete European gas reserves by the end of winter, analysts have warned.

The European energy market, experts have long pointed out, will face its toughest test in spring, when EU member states will begin efforts to refill their gas storage facilities in preparation for the winter of 2023-2024.

This refilling period could once again spike natural gas prices to levels of 120 euros per MWh, analysts have noted. Russian pipeline gas supply is expected to be considerably lower in spring, while the LNG market, on which Europe now greatly depends, is expected to be tight in spring.

A worst-case scenario for Europe would combine a complete disruption of Russian natural gas supply with an increase of LNG demand in the Chinese market. Such a combination would prompt a natural gas shortage estimated to reach as much as 57 billion cubic meters, or 15 percent of projected demand.

Industrial power usage cut auction set for January 18-19

An auction offering compensation amounts to high and medium-voltage consumers for electricity usage reductions of 5 percent during peak hours, an order that needs to be met by all EU member states this winter, will be launched on January 18 and 19 by power grid operator IPTO, the operator has announced.

Industrial consumers submitting lowest compensation amounts requested in return for their electricity consumption cuts will qualify for this mechanism, which will remain valid until March 31, 2023, when a commitment made by all EU member states to limit respective industrial electricity demand during peak hours will expire.

Greek authorities have defined the evening hours between 6 pm and 9 pm as the country’s peak hours.

Compensation amounts to be awarded to the winning bidders are planned to stem from the Energy Transition Fund.  An upper limit of 400 euros per MWh has been set for the mechanism’s bidding process.

 

 

PPC ‘transforming rapidly, entering natural gas, LNG market’

Power utility PPC’s participation at the 22nd World LNG Summit indicates the energy group is transforming rapidly, on many levels, one of these being its involvement in natural gas and LNG markets, Konstantinos Nazos, PPC’s General Director of Energy Management, has pointed out in comments to energypress.

“It is a very interesting conference and I think the fact that it is being held in Athens highlights the role that our country has to play in the future in terms of LNG and, more generally, electricity supply security in the wider region,” Nazos noted.

Energy security, in relation to sustainability and cost-effectiveness of solutions, is the most challenging matter that needs to be resolved, the PPC official determined, having heard summit speeches and held meetings during this event.

“We are still close to the crisis. We have successfully dealt with many risks without having left it behind. We have managed to turn those risks into opportunities and we are looking for more,” Nazos commented.

 

EU gas price cap agreement sends firm message to markets

The EU’s gas price cap agreement yesterday, achieved following months of deliberation, comes as a major European step that offers energy-cost protection to households and businesses, while also sending a strong message to markets that natural gas purchases will not be made at any price.

EU energy ministers agreed to trigger a cap if natural gas prices exceed 180 euros per MWh for three days at the Dutch TTF index, which serves as the European benchmark. The cap could serve as a crucial tool against any future price surge, as was the case last summer.

Gas price levels are not expected to fall immediately. Even so, the TTF index did drop to 107 euros per MWh yesterday, following the EU’s gas price cap agreement.

It is impossible to predict whether the price cap will prove effective enough to contain gas prices below 100 euros per MWh on a permanent basis and level out wild price fluctuations swinging over 30 euros per MWh in a single day.

Also, it remains to be seen how individual market players will respond if demand increases and gas prices escalate to levels near 180 euros per MWh in the months ahead. If they please, buyers and sellers could establish bilateral agreements above the price cap level, essentially nullifying it.

 

 

Incentives sought for PPAs between renewable energy producers, industry

The government is urgently looking for solutions that would offer incentive for power purchase agreements (PPAs) between renewable energy producers and industrial enterprises, the objective being to ease the energy-cost burden on industries, facing, within the first half of 2023, expiring energy supply agreements that were established with power utility PPC prior to the energy crisis at prices well below current levels.

Government officials are working on the issue with increased urgency following energy minister Kostas Skrekas’ participation at a meeting held by SEV, the Hellenic Association of Industrialists.

SEV members, at the meeting, pressed for an energy supply solution offering competitive prices as protection against the threat of industrial unit closures, already occurring in central Europe.

Industrial enterprises in Greece are currently under enormous pressure as a result of elevated energy costs. PPC has already made clear it cannot continue to offer industrial firms new supply agreements at favorable prices, as has been the case over recent decades.

PPAs with RES producers appear to be the only solution for industrial enterprises as such agreements would secure competitively priced energy over extended periods.

 

PM hopeful of a European gas price cap agreement

Prime Minister Kyriakos Mitsotakis, on his way to today’s Council summit of EU leaders, expressed hope that a European agreement on a gas price cap could be achieved either today or next Monday, the latest, when the EU’s energy ministers are scheduled to meet.

The Greek leader stressed it is absolutely essential that Europe sends a clear message to energy markets as well as to Russia by underlining that Moscow’s exploitation of natural gas as a tool to burden European citizens and businesses will not be tolerated.

“We are close to being able to impose a price cap on gas. Our arguments are now known to all member states and I believe that, one way or another, we will find the necessary majorities to move in this direction,” Mitsotakis noted.

Greece supports the implementation of a gas price cap at 200 euros per MWh or less, applicable at all European hubs with an accompanying limit-up mechanism. Though well below the European Commission’s initial proposal of 275 euros per MWh, it seems to have gained increased acceptance by fellow EU member states.

However, a group of six EU member states – Germany, Austria, the Netherlands, Denmark, Estonia and Luxembourg – remains skeptical, fearing a low-level price cap could prompt market instability.

“In any case, regardless of European decisions, the Greek government is continuing to take all measures needed to support Greek households and businesses,” Mitsotakis noted, pointing out that 900 million euros in state budget money will be used in December to support low-income households and offer allowances for heating oil purchases.

EU energy ministers edge towards gas price cap deal

The EU 27’s energy ministers appear to have made progress on a gas price cap agreement at yesterday’s emergency Energy Council, but divisions remain over the impact of such a measure.

Greek energy minister Kostas Skrekas’s proposal for a gas price cap of 200 euros per MWh, or possibly even less, applicable at all European hubs with an accompanying limit-up mechanism, appears to have gained further EU acceptance.

The European Commission’s original proposal called for a more elevated gas price cap that would go into effect if prices on the Dutch TTF hub reached 275 euros per MWh for two weeks and were more than 58 euros per MWh higher than LNG prices on the global market.

If adopted, the latest proposal’s purpose would be to subdue any rampant speculation and prevent a repeat of the spike in gas prices last August, when they briefly reached 350 euros per MWh.

A gas price cap at a level of approximately 200 euros per MWh, questioned by a group of five countries – Germany, Austria, the Netherlands, Denmark and Hungary – as they fear it could prompt market instability, and favored by roughly 12 countries, including Greece, will now be discussed by EU leaders at tomorrow’s Council summit.

If the leaders reach an agreement, the EU 27 energy ministers will meet finalize its formula and wrap up the deal at a meeting on December 19.

An agreement now would not result in an immediate drop in gas prices. Its main purpose would be to avoid any new surge in gas prices, as has been forecast by international analysts for around March, 2023, in the wake of increased winter demand and the need for countries to refill storage facilities for the rest of 2023 and the following winter.

Unpaid power bills rise in absence of consumer supplier switch restrictions

Electricity retailers are facing a growing amount of overdue electricity bills, prompted by higher energy prices and the absence of market rules that could prevent consumers with energy bill arrears from switching suppliers.

Suppliers lost the right to order power supply cuts for customers switching suppliers and leaving behind unpaid amounts following a decision delivered by the Council of State, Greece’s Supreme Administrative Court, approximately two years ago.

Higher energy prices have made it increasingly difficult for households and businesses to keep up with their energy bill payments, suppliers have noted, adding they are offering installment-based payment options in an effort to minimize unpaid receivables.

Since the supreme court’s decision two years ago, RAE, the Regulatory Authority for Energy, has proposed a framework offering protection to suppliers but the energy ministry has yet to take any legislative action. Next year is an election year in Greece.

In addition, last July, the ministry abolished a penalty for early withdrawals by customers from their agreements with electricity companies, the objective of this initiative being to pressure suppliers to lower their electricity price offers. Instead, it has enabled strategic defaulters to freely switch power suppliers, leaving behind unpaid amounts.

EU 27 firmly divided on gas price cap, headed for summit

Any chance of a gas price cap agreement at today’s Energy Council, involving the bloc’s 27 energy ministers, appears to have already been written off judging by European Commission president Ursula Von der Leyen’s comments yesterday, who noted a political solution will need to be sought at Thursday’s Summit of EU leaders.

Despite the ongoing energy crisis and need for solutions at a time when gas and electricity prices are once again rising, the EU appears more divided than ever on a gas price cap agreement. Proposal and counter-proposals have so far failed to lead towards compromise and a deal.

Greece and a further eleven EU member states are pushing for a gas price cap level of 160 euros per MWh, strongly opposed by six member states, Germany, the Netherlands, Austria, Luxembourg, Denmark and Estonia, a group supported on the issue by the European Central Bank. They contend a price cap would threaten market stability.

Germany appears willing to consider a higher gas price cap of 220 euros per MWh proposed by the Czech Republic, currently holding the EU’s rotating presidency.

The EU’s Committee of Permanent Representatives, tasked with agenda preparatory duties, failed to make any progress on the matter at a meeting yesterday following a previous failure on Saturday.

 

 

 

Gas price cap agreement unlikely at EU Energy Council

EU officials failed to make any progress over the weekend on a natural gas price cap plan whose foundations were established by the bloc’s 27 leaders nearly two months ago, strongly suggesting an agreement will not be reached at tomorrow’s meeting of EU energy ministers but, instead, be deferred until the EU summit on Thursday.

A German-led group including Austria, Denmark, Estonia, Luxembourg and the Netherlands, now also backed by the European Central Bank, wants to avoid a natural gas price cap at 220-euro per MWh, as proposed by the European Commission, or any alternative of equal worth, in an effort to subdue gas prices and wild fluctuations, as was the case in August, despite signs of yet another surge in gas and electricity prices.

The group of six opposes Brussel’s gas price cap proposal, warning it could backfire and result in even higher natural gas prices as the measure could repel major gas suppliers from the European market. The group of six appears to prefer a gas price cap level well above the level proposed by Brussels.

Greece, Belgium, Italy and Poland are the biggest supporters of the the European Commission’s proposal.

Over the past few months, the price cap issue has gone around in circles, passed on by the EU’s 27 leaders to their respective energy ministers, who, in turn, have relayed it to their permanent representatives in Brussels, and back again.

EU headed for new impasse on gas price cap agreement

The EU’s energy ministers appear headed towards another deadlock for a gas price cap agreement at an upcoming council meeting on December 13, which will prove a disappointment for Europeans as prices surge again.

Several EU member states seem to be resisting any sort of compromise for the establishment of a gas price cap level ahead of next week’s meeting of energy ministers, a measure now more urgent than ever before as winter temperatures begin to fall.

Gas prices surged yesterday at the Dutch energy exchange, a European benchmark, reaching 160 euros per MWh before easing to 140 euros per MWh and ending the day at 138 euros per MWh.

Though the prospect of high-priced natural gas is alarming, a price cap agreement does not appear to be a priority for a group of EU member states, led by Germany. Berlin, according to sources, wants the issue deferred until a summit of EU leaders, scheduled for next Thursday, two days after the meeting of EU energy ministers.

This, of course, would be a setback as it was at the previous summit, in October, that EU leaders referred the issue to the Energy Council, asking its members to work on details of an agreement reached by the 27 EU leaders.

Germany, joined by the Netherlands, Austria, Denmark, Estonia and Luxembourg, appears to be insisting on gas price cap at the level initially proposed by the European Commission, 275 euros per MWh, well above the 220-euro proposal forwarded by the Czech Republic, currently holding the EU’s rotating presidency.

Athens adamant on big energy subsidies despite hit on GDP

The government is determined to keep offering generous energy subsidies for as long as is necessary, regardless of their cost and negative impact on GDP, in order to ensure fair prices for consumers, despite facing pressure at a Eurogroup meeting to reduce subsidy levels.

The administration, facing an election year in 2023, will obviously make sure energy prices are subdued when voters head to the polls, even if this strategy undermines economic growth, as was the case in the third quarter this year.

GDP growth in the third quarter, normally the Greek economy’s strongest due to the country’s robust tourism industry, was restricted to 2.8 percent, well below the 7.9 and 7.1 percent rates in the first and second quarters, respectively, as a direct result of the energy crisis.

Rather than reduce energy subsidies, the government will instead increase them, if required by international price developments, currently on an upward trajectory.

The government has already begun calculating the cost of subsidies for January. Electricity suppliers will announce their retail prices for next month on December 20, based on a recent rule requiring them to announce each forthcoming month’s prices by the 20th of the preceding month. State budget money was not needed to cover the government’s energy subsidy costs for November and December.

 

 

Suppliers want power cuts for roving consumers with arrears

Electricity suppliers are pressuring authorities for measures protecting them against energy-bill debt left behind by consumers switching to other suppliers.

Two industry associations, ESAI/HAIPP, the Hellenic Association of Independent Power Producers, and ESPEN, the Greek Energy Suppliers Association, are believed to have forwarded proposals to the energy ministry for measures protecting electricity suppliers against consumers on the run.

The energy ministry launched a related consultation procedure approximately one month ago.

According to sources, electricity suppliers want the energy ministry to establish a law permitting them to cut power supply to customers who have switched to other suppliers for up to 90 days following their respective moves, if they still owe amounts to previous suppliers.

This rule would require consumers who have switched suppliers, leaving behind outstanding electricity bill amounts, to settle arrears within a 90-day period, either through full payments or installments, or have their electricity supply cut.

Electricity suppliers have been under increased pressure as a result of a growing amount of unpaid electricity bills during the energy crisis as well as the absence of rules countering consumers who rove from one supplier to another as a means of avoiding electricity-bill payments.

Soaring gas prices in Europe, up 60% in 3 weeks, ‘unjustified’

Wholesale gas prices have surged by 60 percent over the past few weeks – widely regarded as unjustified – under the pretext of falling temperatures and increased demand, despite no supply issues as gas storage facilities around Europe are virtually full.

January derivatives on the Dutch exchange (TTF) exceeded 160 euros per MWh yesterday, reaching as high as 165 euros per MWh, the highest level since October 13, following levels as low as 105 euros per MWh during the first ten days of November.

This surge, supposedly resulting from an increase in demand, strongly suggests speculators and traders are having a field day as gas storage facilities around Europe are about 95 percent full and offer supply security.

Meanwhile, the EU’s 27 member states remain divided over the details of a possible gas price cap and are continuing their negotiations without an agreement in sight.

“In essence, the energy market is once again hostage to speculation. The volume of virtual trading in January derivatives is bought and resold ten, twenty times, or even more, creating unjustified revaluations,” Dimitris Kardomateas, former Director General of Strategy & Development at gas grid operator DESFA, told energypress. “Prices at the US Henry Hub are 22-23 euros per MWh, while, in Europe, they are now at 140-150 euros per MWh,” he added.

 

Latest energy price surge reawakens market concerns

Energy market prices are on the rise again, serving as an unpleasant reminder of the upward trajectory experienced in previous months. Wholesale natural gas prices are no longer in double-digit territory, as was the case in recent weeks, but have rebounded to levels of approximately 150 euros per MWh, while wholesale electricity has surged to 330 euros per MWh over the past few days.

If this trend continues, then retail prices to be paid by consumers for energy from January onwards, the heart of winter, will be pushed up.

European authorities and consumers had felt some relief as a result of mild late-autumn weather around the continent, which helped subdue energy prices in November. But fears are now been reawakened following the latest surge in energy prices.

Two key factors, both hard to predict, are now at play and will influence energy prices in Europe. The duration of China’s deeply unpopular lockdowns, subduing energy demand in China, is one factor. Europe’s ability to keep energy storage facilities filled for as long as possible is the other factor. Both these factors will determine the duration and intensity of the new upward trend in energy exchanges.

Consumers in Greece can expect to be charged among Europe’s lowest retail electricity price levels in December, as the current month’s prices are shaped by the country’s month-ahead model, requiring all suppliers to declare prices for each forthcoming month by the 20th of the preceding month.

December’s retail prices were set by suppliers on November 20, when wholesale electricity prices were down to levels of between 115 and 120 euros per MWh. It remains to be seen what lies in store from January onwards.

 

Energy minister and EU peers to push for lower gas price cap

Energy minister Kostas Skrekas and a number of EU peers are expected to push for a lower gas price cap at tomorrow’s Council of energy ministers, believing the European Commission’s proposed level of 275 euros per MWh will not offer any solutions.

The European Commission, through the introduction of a price cap on gas, is seeking to address enormous discrepancies, as was the case in August, between the market price of derivatives and physical LNG deliveries.

Besides the group of EU energy ministers, Eurometaux, the European industry association, as well as other European agencies, have also expressed concern over the level of Brussels’ proposed price cap level for natural gas.

Briefing its members yesterday, Eurometaux estimated that a big price surge, well over current levels of between 110 and 120 euros per MWh, would be needed for the proposed price cap to be activated. A price cap of 275 euros per MWh would hardly ever be triggered, the association noted.

Eurometaux, in its briefing, also enquired whether the European Commission is proposing such an elevated gas price cap level because it foresees a new and far more severe gas crisis in 2023.

New household gas connections plunge 50%, energy crisis prompts hesitation

The number of households connecting to the gas grid has fallen by roughly 50 percent since mid-2021, many residential consumers now hesitant to make the switch as natural gas has lost its appeal amidst the energy crisis.

Consumer hesitation for new gas connections has been even more severe in the business category, where it has just about frozen.

Industrial consumers, too, have reduced their consumption levels of natural gas, turning, if technically possible, to alternative fuels such as diesel or LPG.

This overall downturn in the usage of natural gas is having a wider affect on the gas sector, impacting distribution network operators, gas companies as well as technicians specializing in the development and operation of gas-based facilities.

Even though supply of Russian gas to Greece has not been affected – Turk Stream, supplying the country via Turkey, has been operating continuously since the beginning of the Russian invasion of Ukraine – the possibility, alone, of a mandatory 15 percent reduction of gas usage should a heightened state of alert be triggered in Europe has led to reservations among businesses and residential consumers.

Natural gas prices have, for the time being, only remained competitive in Greece courtesy of generous subsidies offered to households by gas utility DEPA Commercial.

 

Brussels proposes gas price cap for extreme pricing situations

A price cap on gas, to serve as a market correction mechanism, will only be activated under certain combined conditions, according to a draft proposal sent by the European Commission to the EU’s 27 energy ministers.

A first round of negotiations took place yesterday between representatives of member-state delegations, ahead of an informal Council of energy ministers on November 24, when a first attempt will be made to reach an agreement on the price cap plan.

According to well-informed sources, Brussels’ draft proposal, seeking to reconcile two opposing EU blocs, one comprising Greece, Italy, Poland and Belgium, and the other, Germany, the Netherlands, Austria and Hungary, will not lead to consensus at next week’s Council of energy ministers and, as a result, will be referred to their ensuing meeting.

Brussels’ draft proposal is intended to act as an effective tool against excessive and extremely high gas prices. The plan is to trigger it into action only if prices reach extremely high levels (compared to international markets), the objective being to avoid significant disruptions in supply contracts, which could lead to serious risks concerning security of supply.

Industrial energy-saving incentives auction next month

An inaugural auction offering compensation amounts to high and medium-voltage industrial consumers for reduced electricity usage is set to take place in December as part of the country’s effort to limit energy demand by 5 percent during peak hours, a European Commission order that needs to be met by all EU member states.

Industrial consumers – high and medium-voltage – submitting the lowest compensation bids at monthly auctions will be offered energy savings through monthly auctions.

Separate auctions will be held for high and medium-voltage industrial consumers, energypress sources informed.

The compensation amounts to be offered to successful bidders will stem from the Energy Transition Fund.

A legislative revision facilitating these auctions has just ratified in parliament. However, other legislative and regulatory matters still need to be settled before the inaugural auction can go ahead, December being the target.

The Greek government has set the three-hour period from 6pm to 9pm, including weekends, as the country’s peak time for energy.

European effort for energy cost solutions well underway

European discussion for electricity market reforms that could lead to permanent solutions for lower-cost energy by detaching the cost of electricity from natural gas is well underway.

European Commission authorities, institutions, major enterprises and other electricity market players are currently putting forward proposals until December, when Brussels is expected to issue its own proposal for consultation, as has just been noted by Mechthild Wörsdörfer, deputy director general for the European Commission’s Directorate-General for Energy.

Discussion for longer-term reforms is planned to continue in February and March. Reforms will need to be approved by the European Parliament, as well as by the Energy Council of Ministers, in order to become binding.

The overall approach is based on a proposal forwarded by Pantelis Kapros, Professor of Energy Economics at the National Technical University of Athens, supporting the need for remuneration of renewable energy, as well as electricity production generated by other low-emission technologies, such as nuclear, to be based on actual cost through long-term agreements rather than through the day-ahead market, whose levels are determined by wholesale market prices.

According to Kapros’ proposal, wholesale market prices should be used to determine remuneration levels for fossil fuel-based energy production technologies (coal, lignite, natural gas) as well as hydropower facilities with water reserves and energy storage units.

North-South gap remains, crisis solution unlikely soon

All developments suggest Europe may need to cope without a common energy solution this coming winter as there is nothing to suggest authorities are close to reaching an agreement at the extraordinary Council of Energy Ministers on November 24.

If so, any decision making will be postponed until the regular Council of Ministers, scheduled for December 19, or passed on to the Swedish EU rotating presidency, which will succeed the Czech presidency on January 1.

Even though the European Commission is reportedly speeding up procedures for a temporary gas cap, following a warning by 15 member states to veto the overall energy package, the chances of a gas cap being ready by the forthcoming meeting of energy ministers are very slim.

Disagreement between the EU 27 remains, dividing Europe’s north and south. Germany insists the introduction of even a flexible price cap could drive gas suppliers out of European markets.

The willingness of European authorities to take action has weakened as the risk of an out-of-control energy crisis has receded. The continued de-escalation of gas prices (just under €114/MWh yesterday) may be good news for households and businesses, but it has led the EU towards a general complacency.

 

Suppliers demand cost consideration ahead of extraordinary tax

Electricity suppliers facing an extraordinary tax of 90 percent on windfall earnings between August and November argue the energy ministry, engineering the tax, should take into account hefty costs they have been prepared to shoulder as a means of subduing retail price levels for consumers.

The energy ministry, currently finalizing a formula for this tax, insists electricity suppliers have benefited from excessive earnings, especially in September and October, implying suppliers overpriced their electricity during this two-month period.

Suppliers, on the other hand, contend they are forced to purchase electricity in advance to protect themselves against fluctuating prices and are engaging in hedging activities as a result of being required, by law, to announce their retail prices for upcoming months by the 20th of each preceding month.

Hedging, as well as other business costs, should be taken into account before the extraordinary tax is imposed, electricity retailers have stressed.

European wholesale market investigated for manipulation

The European wholesale energy market is being placed under the microscope for abuse and manipulation during the energy crisis.

ACER, Europe’s Agency for the Cooperation of Energy Regulators, is assembling a transboundary investigation team for this purpose, with assistance from the Austrian, Dutch and German regulatory authorities for energy.

These authorities intend to examine a series of cases suggesting speculative trading linked to the TTF benchmark and management of gas storage infrastructure, especially regarding transactions that involve Russia’s Gazprom.

As underlined in a relevant statement issued by ACER, high prices and high volatility in wholesale energy markets have prompted the European agency and national energy regulators to reinforce their monitoring in an effort to identify and sanction possible cases of market abuse.

RAE emergency plan with 3-level alert system sent for EC approval

RAE, the Regulatory Authority for Energy, is expected to finalize a list of vital industrial enterprises at a plenary session next week, this inclusion assuring listed companies of gas supply priority should the country be placed on high alert in a three-level warning system that has been prepared.

A total of 104 industrial enterprises have submitted applications for inclusion on this priority list.

RAE’s emergency plan, which includes alert system-linked measures, has, following consultation, been forwarded to the European Commission for approval. It will then also need to be approved by RAE.

Level One of the warning system will be declared if reliable evidence arises of an event that is likely to result in the deterioration of the country’s gas supply.

Level Two will be activated if either a supply disruption or exceptionally high gas demand is experienced, resulting in a significant deterioration of gas supply, which, nevertheless, will remain manageable without market intervention.

Level Three, the highest alert level, will be declared if a significant supply disruption occurs along with exceptionally high demand and resulting market measures are unable to full cover fuel demand.

Auction for lower electricity usage pay by end of November

The energy ministry is aiming to stage a first auction by the end of this month for remuneration of high and medium-voltage enterprises cutting back on electricity usage as of December 1, through a mechanism being prepared by IPTO, the power grid operator.

All EU members will need to reduce electricity consumption by 5 percent during peak demand as of December 1.

In Greece, high and medium-voltage enterprises will bid for remuneration amounts at auction as compensation for reduced electricity usage.

The 5 percent reduction of electricity usage for low-voltage consumers will be optional, one reason beign that households have yet to be installed with smart meters, meaning their electricity consumption levels at specific times of the day cannot be tracked.

Consumers in Greece will be set a three-hour low-consumption period, between 6 pm and 9 pm, throughout the week. Households will need to try and avoid using energy-intensive appliances during these hours.