Energy transition fund to cover DEPA Commercial for LNG cancellations

DEPA Commercial will be compensated through the energy transition fund for its cancellation of two LNG orders made with TotalEnergies a few months ago as part of the country’s overall effort to bolster energy security ahead of this winter period.

A multi-bill submitted to Parliament yesterday by the energy ministry includes a special revision facilitating this compensation payment to DEPA Commercial, which cancelled two LNG orders submitted to TotalEnergies as a result of a sharp reduction in domestic natural gas consumption.

The legislative revision specifies the compensation payment to DEPA Commercial will be made within a two-month period once all supporting documents have been forwarded by the gas company to DAPEEP, the RES market operator.

The two DEPA Commercial orders were planned for delivery between November, 2022 and March, 2023 as cover in the event of a disruption of Russian gas supply to Greece. But the orders ended up proving excessive given the prevailing conditions.

Lower wholesale prices drive down February subsidy requirement

Electricity subsidies for low-voltage, household consumption in February will be set at between 5 and 6 cents per KWh, offered by the government to ensure retail power prices are contained at a level of between 14 and 16 cents per KWh.

Energy minister Kostas Skrekas is expected to announce February’s subsidy level during the week, possibly tomorrow.

This subsidy handout, far smaller compared to the previous month, and the lowest since the start of the government’s new subsidy strategy – launched last August with levels revised monthly based on nominal retail tariffs announced by suppliers for each forthcoming month by the 20th of each preceding month – has been made possible by lower wholesale electricity prices.

This price dip comes as great relief for the Energy Transition Fund, financially supporting the electricity subsidies offered to consumers, and the state budget, chipping in whenever required.

Power utility PPC, the dominant retail player whose monthly nominal tariffs subsequently shape electricity subsidies set by the state, has just announced a nominal tariff rate of 19.9 cents per KWh for monthly household electricity consumption of up to 500 KWh in February, 60 percent below the utility’s nominal retail price for January.

As a result, subsidies of between 5 and 6 cents per KWh will suffice to keep retail tariffs at 14 to 16 cents per KWh, the government’s target. Subsidies of 34 cents per KWh were needed in January to contain tariffs at the government’s desired level.

Money to be drawn from the ETF money for February’s subsidy effort should not exceed 60 to 70 million euros, well below the sum of 800 million euros required for January.

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.



November electricity prices, out tomorrow, down 15-20%

The country’s electricity suppliers, now finalizing their pricing policies for next month, are expected to announce, tomorrow, reduced tariffs for November, down by 15 to 20 percent compared to the current month’s levels, sources have informed.

Based on new law, suppliers are required to announce their electricity prices for the forthcoming month by the 20th of each preceding month.

Supplier tariffs, sources informed, should range between 0.45 to 0.50 euros per MWh, which, if confirmed, will result in a reduction of between 15 and 20 percent, compared to October’s prices.

The government’s level of subsidy support for electricity bills next month has yet to be announced. Given the current de-escalation in electricity prices, the government may choose to only rely on the Energy Transition Fund for next month’s subsidies and not use any budget money for this purpose, sources said.

Market analysts are projecting further electricity price reductions until the end of the year as a result of a drop in TTF natural gas prices. The Dutch index has fallen by 66 percent since an August 26 peak of 349.90 euros per MWh, reaching 116.45 euros per MWh yesterday.

The EU’s overachievement of gas storage levels, now averaging 91 percent of capacity, as well as an abundance of LNG supply to Europe, are key factors that have driven down the TTF.


Surcharge on gas used for power generation imminent

The energy ministry has, according to sources, prepared a provision for the introduction of a special surcharge of 10 euros per thermal MWh on natural gas used for electricity generation.

This new surcharge could be ratified within October for implementation immediately afterwards, the sources added. It was announced in late September by energy minister Kostas Skrekas, along with the energy subsidy package for October, as a new source for the Energy Transition Fund.

According to the minister, funds to be raised through the new surcharge on natural gas used for electricity generation will be used to offer energy-cost support to low-income households and small and medium-sized enterprises, as well as for biomethane and green hydrogen investments.

The new surcharge is not necessarily being introduced to replace a price cap on gas-fueled power stations, meaning it will be implemented regardless of decisions to be taken on whether to keep or drop a cap on payments for gas-fueled power stations.

Windfall tax for oil and gas firms, government decides

Windfall profits earned in 2022 by petroleum companies, through their refineries, as well as by natural gas wholesalers, will be subject to an extraordinary solidarity tax, the government has decided, energypress sources have informed.

The money to be collected through this extraordinary tax will go towards the Energy Transition Fund to support the government’s energy subsidies offered to households and businesses.

The government’s plan to move ahead with this extraordinary tax is linked to a probable European-wide solidarity tax on windfall profits earned by fossil fuel companies.

The Greek plan will be shaped along the lines of a windfall tax model imposed on electricity producers.

This new windfall tax on oil and gas companies was discussed at last Friday’s emergency meeting of EU energy ministers. It was supported by Greek energy minister Kostas Skrekas, as well as his German and Spanish counterparts.

The Greek government appears determined to implement the windfall tax on oil and gas companies even if it fails to receive EU approval. Athens recently imposed a 90 percent windfall tax on electricity producers without EU approval.



September electricity subsidies to be doubled to nearly €2bn

The government intends to absorb the greatest part of electricity price increases for September through subsidies expected to reach nearly two billion euros for the month, a support package seen subduing retail tariffs at 0.15 euro per KWh, the level of retail electricity prices in August.

This latest monthly subsidy amount is nearly double the 1.136 billion euros the government needed to commit for August to fight escalating energy costs.

Electricity retailers announced higher tariffs for September a couple of days ago, but the latest subsidies are expected to keep prices virtually unchanged for household consumers. The cost of electricity for businesses, however, is seen doubling next month.

Electricity subsidies for September will need to increase sharply to a level of 0.60 euro per KWh, up from 0.337 euro per KWh in August, a 70 percent increase.

Approximately 900 million euros of the government’s two billion-euro subsidy package for September will be covered through the state budget, while the other 1.1 billion euros will hail from the Energy Transition Fund, which gathers CO2 emission right auction revenues, RES special account surpluses and windfall profit taxes imposed on electricity producers.

August electricity prices could reach 50 cents per KWh

Electricity suppliers are set to announce their tariff rates this Sunday, price levels expected to reach as high as 50 cents per KWh, which would demand consumer subsidy support worth over one billion euros for the month to keep electricity bill costs serviceable at a cost of approximately 15 cents per KWh for households and 16 to 17 cents per KWh for businesses, the government’s objectives.

According to some estimates, monthly Energy Transition Fund sums needed for the government’s support package could reach closed to 1.5 billion euros.

TTF natural gas contracts for August are at a level of 165 euros per MWh and are not expected to deescalate easily. Energy exchange prices have skyrocketed to levels of between 340 and 370 euros per MWh.

Such price levels are expected to force electricity suppliers to announce retail prices of 50 cents per KWh for August this coming Sunday, exorbitantly high considering June and July levels were at about 35 cents per KWh without subsidies.


Electricity price intervention mechanism to parliament

A legislative amendment enabling the implementation of an electricity-price intervention mechanism has been prepared by the energy ministry and will soon be submitted to parliament for ratification.

The amendment includes the framework of a temporary compensation plan for electricity producers, offers details on price-cap formulas for respective electricity production technologies, and also sets a time period for these extraordinary measures.

According to sources, the mechanism will be implemented next month, on July 1, and remain effective until June 1, 2023, while a series of technical issues, including determination of compensation levels for electricity producers, will be set through ministerial decisions.

Natural gas and lignite-fired power stations will not exactly be subject to price caps, but algorithms taking into account a series of factors will be applied to control prices, the sources said.

Based on current market conditions, the upper-level compensation price for natural gas-fueled power stations has been estimated at between 220 and 230 euros per MWh.

An upper-level compensation price of between 85 to 90 euros will be set for RES producers, while a compensation price of 100 euros per MWh is expected for hydropower stations.

According to the plan, the Hellenic Energy Exchange will withhold the difference between the market clearing price and compensation amounts for electricity producers, transferring these amounts to the Energy Transition Fund. These amounts, along with related state budget sums, will be utilized for electricity-bill subsidies, the aim being to keep the average retail price of electricity at approximately 0.145 euros per KWh.

Energy production technology price caps being finalized

Government officials are finalizing decisions for respective price caps to be applied to electricity generation technologies ahead of the introduction, on July 1, of a compensation mechanism for electricity producers.

Power utility PPC’s hydropower facilities are expected to play a key role in the effort. Windfall profits to be deducted from hydropower unit earnings promise to contribute greatly to the Energy Transition Fund, and, by extension, maximize the level of subsidies offered to consumers.

Officials are taking careful steps so that PPC can keep being able to offer discounts and fixed tariffs to customers and avoid falling into loss-incurring territory.

The cap on hydropower facilities is expected to be set at a relatively high level, ranging from 100 to 120 euros per MWh, well above initial estimates between 80 and 90 euros per MWh, according to figures mentioned by sources.

As for the RES sector, the price cap is expected to be set somewhere between 80 and 90 euros per MWh.

According to energypress sources, the European Commission’s approval of the compensation mechanism for electricity producers is expected imminently. It will be given a 12-month duration.


Gov’t plan aims for electricity prices at first-half ’21 average

The government will pursue a strategic target aiming to reduce retail electricity prices to the average level recorded in the first half of 2021, through the implementation of a price ceiling in the wholesale electricity market and state compensation packages for electricity producers covering the price difference.

However, it remains unclear how this ambitious measure, worth at least 4 billion euros amid the current conditions, will be financed.

The government’s plan will be carried out in coordination with any proposals that may be announced by the European Commission.

Announcements, by the Greek government, are not expected before May 18, when Brussels could deliver energy-crisis proposals for member states.

The price of natural gas in coming weeks, an unknown factor, adds risk to the government’s support plan. Gas prices could further escalate if Russian president Vladimir Putin decides to disrupt supply; if Russia’s war in Ukraine intensifies; or if any other unfavorable factor comes into play.

At present, a best-case scenario would result in a price tag of at least 4 billion euros for the Greek government’s strategic plan to reduce electricity prices.

Three different financing sources could be considered: the Energy Transition Fund, currently financing monthly energy subsidies; a 900 million-euro surplus from a supplementary budget submitted to parliament a fortnight ago; and Recovery and Resilience Facility (RRF) money.



Auto fuel subsidies, grants in support package worth €1.1bn

A latest energy-crisis support package, worth a total of 1.1 billion euros, will offer consumers auto fuel subsidies of at least 15 to 20 cents per liter for up to 60 liters of fuel per month, an extraordinary allowance for lower-income individuals to average up to 300 euros, as well as 60-euro electricity subsidies for March.

An income-limit criterion of 30,000 euros will need to be met for auto fuel subsidies, while the income criterion for the extraordinary allowance is expected to be set at a lower level.

As has been the case with electricity subsidies until now, consumers will not need to meet any criteria to become eligible for this part of the support package.

Individuals seeking auto fuel subsidies will need to submit applications to a finance ministry-linked online platform so that authorities can check on vehicle ownership and income levels of applicants.

The full details of the package are expected to be announced by government officials early today.

At least half of the support package’s 1.1-billion euro sum will be covered by Energy Transition Fund money, while the rest will stem from the state budget.

Continued energy subsidies a tough equation, fewer funds, higher prices

Government officials face a growing challenge in their effort to continue subsidizing electricity and natural gas for household and business consumers as funds backing this support are decreasing at a time when energy prices have continued rising.

According to sources, the government is looking to extend its subsidy package for households and businesses to also cover April.

Wholesale electricity prices have continued their ascent during the first ten days of March, well above levels in February, while reduced CO2 emission right prices are restricting cash injections into the Energy Transition Fund, funding the subsidies.

The wholesale electricity price average for the first ten days of March is 322 euros per MWh, well over February’s average of 211.71 euros per MWh. During this period, CO2 emission right prices have dropped to 60 euros per ton from 80 euros per ton.

Prime Minister Kyriakos Mitsotakis has called for a price ceiling to be imposed on the Dutch TTF gas exchange.

Energy markets are forecast to remain volatile as a result of Russia’s invasion of Ukraine.

PPC hedging gains, €700-800m, used for consumer support

State-controlled power utility PPC, expected to announce its 2021 financial results this month, will either post a minor profit or no profit at all as the company’s entire gain from energy-mix hedging, estimated at between 700 and 800 million euros, has been put to use for customer discounts and subsidies to help consumers cope with the energy crisis, Prime Minister Kyriakos Mitsotakis has noted in parliamentary debate.

PPC, strictly adhering to its business plan, is expected to post modest profit and robust operating profit for one or two years before offering dividends from 2024 onwards, a strategy that serves the interests of shareholders as well as customers.

The energy crisis over the past several months has greatly impacted energy companies across Europe. PPC has remained robust courtesy of its favorable hedging activity, enabling the company to return  resulting benefits to customers.

In many parts of Europe, energy companies have opted to return profit to consumers, either directly or indirectly, an energy-crisis support.

In Greece, RES special account surplus amounts, partially generated by the return of windfall profits in the RES, hydropower and lignite sectors, are being transferred to the Energy Transition Fund as support for electricity and natural gas bill subsidies for consumers.

New subsidy sources needed, energy prices seen persisting

Energy prices are forecast to remain elevated and turbulent for at least another year or so, until early 2023, according to a number of market reports, including one by the European Commission, which means that the government faces the challenge of finding new support fund sources for consumers and businesses, scrambling to meet exorbitant energy prices brought about by the energy crisis.

Until now, the government has relied on Energy Transition Fund money generated by carbon emission right auctions to offer consumers subsidies, but will need to resort to the state budget should this money eventually run out.

Finance minister Christos Staikouras made this need clear in an interview with Greek media outlet Real. “The finance ministry may now possibly need to make available funds from the state budget, not the Energy Transition Fund, for adverse scenarios in the second half of 2022, in order to subsidize households and businesses,” the minister noted.

Energy Transition Fund in 2022 estimated between €1.5-2m

The country’s Energy Transition Fund is estimated to reach a value worth between 1.5 and 2 billion euros in 2022, its funds stemming from CO2 emission right auction revenues, RES special account cuts, as well as the green fund.

These three sources will also be used to fund electricity subsidy support planned for February. Consumers are expected to receive a similar total amount to 395 million euros worth of subsidies offered in January. Details to the government’s electricity subsidy package for February are now being finalized.

Electricity subsidies for the household category are likely to be lower in February, compared to January, as the average wholesale electricity price in January fell to 227.30 euros per MWh from 235.38 euros in December.

It remains unclear if the government will take into account power outages experienced during and after last week’s snowstorm by thousands of households, in some cases over many days, for its subsidy support package covering February.

Suppliers set to receive initial €165m sum for subsidized bills

Electricity suppliers are set to receive a deposit amount totaling 165 million euros from the state’s Energy Transition Fund as compensation for their reduced revenues to result from subsidized electricity bills offered to consumers by the government for September and October as part of the overall effort to tackle the effects of the ongoing energy crisis.

Suppliers also stand to receive a 228 million-euro sum for electricity subsidies concerning November, while a 235.5 million euro-euro sum for December subsidies will be offered in 2022.

These sums will be divided up for electricity suppliers based on their market shares on August 31, 2021. Some corrections and revisions could be needed in 2022.

The subsidy plan announced by the government concerns a total of 7.6 million low-voltage household and business electricity connections.



Power bill subsidies increased, gas cost support also expected

The energy ministry is preparing to increase an electricity-cost subsidy package to between 280 and 300 million euros, from a 200 million-euro sum announced last month by Prime Minister Kyriakos Mitsotakis at the Thessaloniki International Fair, as a result of the continuing surge in energy costs, which, if not combated, could have political ramifications.

The ministry’s response comes following the announcement of September’s increase in the wholesale electricity price average, the latest in a series of monthly rises. Wholesale electricity prices averaged 134.73 euros per MWh in September, up from 121.72 euros per MWh in August and 101.86 euros per MWh in July, all well over the January average of 52.52 euros per MWh.

Finalized decisions on the subsidy support package have yet to be taken but officials have already agreed to draw the amount to be provided to consumers from the Energy Transition Fund.

The expected subsidy increase for electricity consumption would result in support worth between 40 and 45 euros per MWh, instead of 30 euros per MWh, effectively resulting in a monthly electricity bill reduction of 14 to 15 euros for consumers.

The government is also looking to subsidize natural gas bills through an additional support package expected to be worth roughly 150 million euros. Retail natural gas prices have risen by approximately 500 percent since the beginning of the year.

RES operator given control of new Energy Transition Fund

DAPEEP, the RES market operator, whose influence in the energy market is growing, will be given control of the new Energy Transition Fund, a move promising to give the operator a key role in efforts to counter energy cost increases when prices are at exorbitant levels, as is the case at present.

A large percentage of the ETF’s revenues will come from CO2 emission right auctions, staged by DAPEEP.

Through its authority over the new ETF, DAPEEP will be in a position to manage state funds, including, for example, planned subsidies for natural gas bills, expected to be derived from the state budget, at least for the final quarter of 2021, sources informed.

In due course, DAPEEP, through the ETF, will also manage funds to be generated by other prospective green surcharges, including an expected expansion of the carbon emission rights system into transportation and buildings.

These new roles promise to further establish the place of DAPEEP in the domestic energy market.

Suppliers question sufficiency of €150m subsidies to tackle energy costs

Electricity suppliers have questioned the sufficiency of a 150 million-euro amount to be made available by the government through a new Energy Transition Fund as support for households and businesses to combat increased energy costs.

The doubts were raised during an energy ministry meeting yesterday involving the country’s electricity suppliers, facing pricing-policy pressure – especially the non-vertically integrated – as a result of elevated wholesale electricity prices that have been driven considerably higher by a combination of factors in international markets.

According to Greek energy exchange data, the day-ahead market price average for today is 172.27 euros per MWh, while the day’s maximum price level in this wholesale market exceeds 200 euros per MWh.

The subsidy plan’s calculations are based on wholesale electricity prices ranging between 117 and 120 euros per MWh.

Energy markets throughout Europe are being severely impacted by the price surge. In the UK, for example, wholesale electricity prices have risen as high as 400 euros per MWh following colder weather and higher energy demand.

Independent players set to offer discounts, awaiting PPC clarity

Independent suppliers are set to offer discounts and tariff reductions to consumers, their effort focusing on consumption levels ranging between 300 and 600 kWh, not covered by state subsidies, according to latest updates.

Independent suppliers are awaiting the outcome of a meeting today involving energy minister Kostas Skrekas, during which state-controlled power utility PPC’s discount strategy will be clarified, before they take specific decisions, including for the consumption category of up to 300 kWh, applying to the majority of households.

Besides an across-the-board discount of 30 percent for all consumers, including the category up to 300 kWh, PPC has also promised an additional discount of between 3 and 4 percent for the 301-600 kWh category.

It still remains unclear how much the price gap between PPC and independent consumers offering lower tariff prices could be narrowed by this move.

Independent suppliers know well that they will need to keep offering lower tariffs than PPC, the dominant player, to remain competitive.

The government plans to adopt an Energy Transition Fund to offer electricity subsidies to households and small and medium-sized enterprises, heating fuel subsidies, and a range of other initiatives as a tool to contain the surge in wholesale energy costs, prompted by a combination of factors in international markets.