Market coupling with Bulgaria expected by early May

Market coupling to unify the Greek and Bulgarian day-ahead markets, representing a second step for the participation of Greek wholesale electricity markets in a pan-European unification of markets through the target model, is planned for late April or early May, sources have informed.

The forthcoming step was preceded by market coupling between Greece and Italy, unifying, as of December 15, the day-ahead markets of the two countries through a single price coupling algorithm, EUPHEMIA (Pan-European Hybrid Electricity Market Integration Algorithm). It calculates energy allocation, net positions and transboundary electricity prices.

Greece’s market coupling with Bulgaria promises to create an even broader trading platform for market participants, sector officials noted. Besides bilateral contracts for energy imports and exports, market coupling will also facilitate automatic energy flow from the higher-priced country to the lower-priced country.

To date, Greece has clearly been an energy importer in its transboundary energy trading relationship with Bulgaria. It remains to be seen if this will be maintained under the new conditions.

Once market coupling of the Greek and Bulgarian day-ahead markets has been accomplished, Greece’s next step towards unification with European energy markets will be to link its intraday market with that of Italy, a step expected by next summer, through the implementation of complementary regional intraday auctions (CRIDA).

Further ahead, a third step, balancing market coupling through two European platforms, MARI (Manually Activated Reserves Initiative) and PICASSO (Platform for the International Coordination of Automated Frequency Restoration and Stable System Operation), is planned for the second half of 2022.


New market dry-run testing to end this week, target model launch on Nov. 1

The dry-run testing procedure for market systems ahead of the forthcoming target model launch, scheduled for November 1, will be finalized at the end of this week, RAE, the Regulatory Authority for Energy, the energy exchange and power grid operator IPTO have jointly decided.

Dry-run testing of the day-ahead, intraday and balancing markets began on August 3 to test their limits and operating ability ahead of the target model’s launch, aiming for market coupling, or harmonization of EU wholesale markets.

Market coupling, to increase competition and lower wholesale energy prices, will ultimately lead to energy union, the EU strategy seeking to offer consumers secure, sustainable, competitive and lower-cost energy.

All domestic parties involved, as well as the energy ministry, have ascertained the Greek launch will take place on November 1 following previous delays.

Even during these final days of simulated testing, day-ahead market prices have, at times, continued to display discrepancies with Day-Ahead Schedule price levels.

This has been attributed to the absence, from dry-run testing, of many traders who participate in the Day-Ahead Schedule, meaning the price levels of the two situations are based on different data.

Though balancing market prices have improved considerably as the simulated testing has progressed, following discrepancies, conclusions cannot be made until actual market conditions come into effect.

Meanwhile, public consultation by RAE on a market monitoring mechanism and a market surveillance mechanism for the new markets is due to be completed next Monday.

The market monitoring mechanism will seek, through structural and performance indicators, to evaluate levels of concentration and the market power of each participant, while the market surveillance mechanism will focus on identifying and combating strategies detrimental to competition.

The next step, once the new markets are launched, will be to market couple, initially with the Italian market, by the end of the year, followed by the Bulgarian market, in the first quarter of 2021, Greek energy minister Costis Hatzidakis recently informed.



DEDDIE sale a government priority, major players interested

Major European players with network management experience are believed to be interested in acquiring a majority stake of electricity distribution network operator DEDDIE/HEDNO.

Both the government and state-controlled power utility PPC, the operator’s parent company, have received calls of interest, still at an unofficial level, from a number of big firms ahead of the forthcoming privatization.

Interested parties are believed to include E.ON, operating regional networks in Germany, as well as Italy’s ENEL.

DEDDIE/HEDNO is at the top of the government’s privatization list, according to sources. A final decision to offer a stake of 51 percent, including managerial rights, has been taken, the sources added.

The sale is expected to lead to the digitization of the country’s network. This much-needed upgrade project, to feature the installation of smart meters and modernization of mid and low-voltage lines, will contribute to the EU’s network unification plan.

Also, the sale of a majority stake in the Greek electricity distribution network will rake in considerable funds for PPC. The operator’s estimated value is 3 billion euros.

The sale’s procedure is expected to begin early in 2020 with the aim of completing its tender by the end of June.


PPC lignite sale list seems near, leading EC officials to visit

Upcoming concurrent visits to Athens by two leading European Commission officials have raised speculation of a finalized plan for the main power utility PPC’s bailout-required sale of lignite units representing 40 percent of the utility’s lignite capacity.

Two leading European Commission officials, Maros Sefcovic, vice president responsible for Energy Union, and Dominique Ristori, director-geneal of the Directorate-General for Energy, will both in Athens at the same time.

It is believed that a finalized plan detailing the content of PPC’s lignite sale package could be endorsed today during an Athens-Brussels teleconference, currently being held almost on a daily basis. An announcement is possible today or tomorrow.

Officially, Sefcovic’s visit is being presented as part of the official’s second tour of European capitals for matters concerning Energy Union. Ristori, on the other hand, is heading energy-sector bailout negotiations.

Besides PPC’s Meliti unit, Megalopoli III and IV are also expected to be included on the finalized PPC sale list, which will undergo a market test, measuring the level of investor interest, this month.

Finalization of PPC’s sale list would complete the most fundamental part of Greece’s energy-sector negotiations with the counry’s lenders.

Sefcovic, during his Athens visit, is scheduled to meet with energy minister Giorgos Stathakis to discuss Energy Union issues, including an implementation package. It includes aspects concerning supply security; creation of regional markets; promotion of interconnection and pipeline projects; a long-term energy plan; incorporation of more RES units into electricity systems; as well as a decarbonization strategy. The further liberalization of energy markets is also on Sefcovic’s agenda.

Besides the energy minister, Sefcovic is also scheduled to meet with main opposition New Democracy party leader Kyriakos Mitsotakis.



Sefcovic in Athens Thursday as part of Energy Union tour

Maros Sefcovic, the European Commission vice president responsible for Energy Union, is scheduled to travel to Greece this Thursday on an official visit whose agenda will include a tour of the gas grid operator DESFA’s facilities in Elefsina, west of Athens.

Sefcovic’s schedule also includes a meeting with energy minister Panos Skourletis, the administrations of DESFA and RAE, the Regulatory Authority for Energy, while he will also participate at a meeting organized by SEV, the Hellenic Association of Industrialists, and EVIKEN, the Association of Industrial Energy Consumers.

His visit to Greece is part of a tour of European capitals intended to promote Energy Union. Most recently, Sefcovic visited Cyprus and Bulgaria.

Industrial energy costs high, markets shut, EC report notes

Despite progress made in areas such as restriction of CO2 emissions and renewable energy source (RES) market penetration, Greece’s energy markets, especially those of electricity and gas, lack competition, from production to retail, while energy prices for the industrial sector are not competitive, the European Commission has noted on Greece, in a single market progress report.

Reference is also made to Greece’s dependence on energy imports, oil and fossil fuels, which has widened the energy balance deficit between 2009 and 2014. Greece’s dependence on oil and solid fuels is comparatively higher than that of other EU member states, the report noted.

However, some progress has been made in restricting oil and petroleum products, as well as solid fuels, by 11 percent and five percent, respectively, since 1995, combined with an increased RES presence in Greece’s energy mix, the report pointed out.

The absence of fair competition in the electricity market, dominated by the main power utility PPC, was also noted in the report. The utility’s market share needs to be reduced by 25 percent in the short term and 50 percent by 2020, meaning that the government needs to implement effective measures promoting competition, from retail to production, the report reminded.

As for the gas market, the report made note of the dominance of DEPA, the Public Gas Corporation, and regional gas supply monopolies, but noted measures for gas release to other companies, made with the aim of opening up the market to competition, were currently in progress.

Wholesale price levels in both the local electricity and natural gas markets were above the EU average, the report stressed, adding that energy costs for Greek industrial enterprises are higher than in other EU member states and the US.

Although electricity prices were fully liberalized in 2013, no effective entry into the market has taken place, the report noted.

Greece’s energy-sector taxation, as a percentage of GDP, ranks among the highest in the EU, the report pointed out.




Uncertainty over lender views on energy reform proposals

It remains unknown whether Greece’s energy-sector proposals in the bailout negotiations meet demands that had been set by the European Commission and its fellow lenders for market liberalization and adjustments complying with EU and energy unification regulations.

As has been well publicized, energy sector privatizations, with main power utility PPC’s part-privatization and IPTO, the power grid operator, at the forefront, are fundamental in the European Commission’s drive aiming to liberalize markets, generate competition, and create a unified European energy market.

According to an article published by Greek daily Kathimerini, the government’s reform proposals for the energy sector comprise natural gas market revisions, a commitment to reshape the CAT system, currently pending, PPC tariff revisions, based on production costs, as well as the adoption of NOME-type auctions by PPC, offering lignite access to private-sector suppliers.

The Greek package of proposals also includes an electricity market roadmap leading to the “target model”, adjusting the local market to EU regulations. It also includes a proposal for full compliance with EU laws in ownership unbundling, breaking monopolies.

Greek officials, according to the Kathimerini report, have also committed to preparing a new legal framework offering support to renewable energy source (RES) enterprises, and implementing energy-sector tax revisions. Another commitment concerns a pledge by the Greek state to settle amounts owed to PPC, as well as financial support and independence for RAE, the Regulatory Authority for Energy.

Greek authorities have also committed to providing a specific development plan for the RES sector and implementing an EU directive concerning energy efficiency, beginning with ratification of related legislation and the introduction of a new plan to upgrade the electricity network with the aim of improving efficiency and reducing costs for all consumer categories.