Enel 2030 vision in 2021–2023 strategic plan: A Decade of opportunities  

The Road to 2030 

Over a decade of profound transformation, the Group is placing at the core of its strategy the acceleration of the energy transition, alongside sustainable and profitable growth to create significant value shared with all stakeholders and attractive returns for shareholders over time.

Group Ordinary EBITDA is expected to increase at a 5%-6% Compounded Annual Growth Rate (“CAGR”) while Net Ordinary Income is expected to increase at a 6%-7% CAGR between 2020 and 2030.

The Group expects to mobilize investments of 190 billion euros in the 2021-2030 period, boosting decarbonization, electrification of consumption and platforms to create sustainable shared value for all stakeholders and profitability over the medium and long term.

The Enel Group’s leadership position in the industry and its journey towards becoming a fully digital company enable the implementation of two business models: the traditional one, called “Ownership”, where digital platforms are a business enhancer supporting investment profitability, and the “Stewardship” model, which catalyzes third-party investments in partnership with Enel or where platforms are a business generator.

The Group plans to directly invest around 160 billion euros, of which over 150 billion euros through the Ownership business model and around 10 billion euros through the Stewardship business model, while further catalyzing around 30 billion euros from third parties.

As for the investment planned under the Ownership business model:

  • Nearly half will be devoted to Global Power Generation, with Renewables totaling around 70 billion euros, which are expected to lead to around 120 GW of installed capacity by 2030, 7 times higher than the approximately 45 GW currently installed. This will be accomplished by leveraging on a growing pipeline of more than 140 GW, alongside a worldwide platform-based Business Development, Engineering and Construction as well as Operation and Maintenance model;
  • Around 46% is expected to be deployed in Infrastructure and Networks, to address quality and resiliency improvements, new connections and infrastructure digitalization, resulting in a Group Regulated Asset Base (“RAB”) of some 70 billion euros in 2030 and over 90 million end users 100%-digitalized through smart meters, leveraging on an unparalleled scale of operations, the highest digitalization expertise and a distinctive intellectual property value;
  • The remaining amount relates to Customers and is expected to lead, by 2030, to a steep increase in customer value. The Group will enable electrification, accelerating customers’ path to sustainability and energy efficiency, combining traditional offerings with “beyond commodity” services. This business will leverage on the largest customer base worldwide, digital platforms and a growing integrated portfolio of offerings.

As for the investment under the Stewardship business model, the Group is expected to invest, approximately, an additional 10 billion euros, while catalyzing around 30 billion euros from third parties, enabling an overall amount of some 40 billion euros of investments, mainly related to Renewables, alongside Fiber, e-transport and flexibility.

The Group will reach an 80% reduction in direct CO2 emissions versus 2017 (Science-Based Targets initiative, SBTi-certified) and contribute to the creation of over 240 billion euros of Gross Domestic Product in Enel’s countries of presence through local investments in generation and electrification.

The 2021-2023 Strategic Plan

The Group plans to directly invest around 40 billion euros, of which around 38 billion euros through the Ownership business model and around 2 billion euros through the Stewardship business model, while further catalyzing 8 billion euros from third parties.

More than 90% of Enel’s consolidated investments will be in line with the UN Sustainable Development Goals (“SDGs”). In addition, according to Enel’s initial calculations, between 80% and 90% of the Group’s consolidated capex will be aligned to EU Taxonomy criteria for its substantial contribution to climate change mitigation.

The growth rate in investments versus the previous plan is expected to be around 36%.

As for the investment planned under the Ownership business model:

  • More than half is dedicated to Global Power Generation, with around 17 billion euros to Renewables, which will lead to an overall installed consolidated renewable capacity of 60 GW by 2023 (+33% versus 2020). The Group will further accelerate decarbonization by adding renewable capacity that will more than offset thermal decommissioning. As a result, the Group’s Scope 1 CO2 emissions are set to decrease by more than 30%, from 2020 to 2023, positioning the Group on track to achieve its 2030 science-based decarbonization target of 80% greenhouse gas (“GHG”) emission reduction versus 2017, in line with the 1.5°C pathway scenario;

Around 43% is expected to be deployed in Infrastructure and Networks. Capex acceleration is expected to drive the Group’s RAB up by 14% versus 2020, reaching around 48 billion euros in 2023;

  • The remaining amount relates to Customers. The value of Business to Customer (“B2C”) clients is expected to increase by around 30% and that of Business to Business (“B2B”) by around 45%, thanks to the elimination of regulated tariffs, mainly in Italy, and to the electrification of energy consumption trends that will call for “beyond commodity” services.

As for the investment under the Stewardship business model, the Group is expected to invest, approximately, an additional 2 billion euros, while catalyzing around 8 billion euros of investments from third parties, therefore enabling an overall capex of around 10 billion euros, mainly related to Renewables, alongside Fiber, e-transport and flexibility.

The outcome of these investments will show, across all businesses, double digit growth in the three-year plan period. Managed renewable capacity is expected to reach around 8 GW in 2023, more than double versus 2020. Additionally, with Enel X, the Group aims to increase the number of electric buses by more than 6 times to around 5,500 units in 2023, as well as to grow demand response capacity to 10.6 GW (+1.8 times versus 2020) and storage capacity to 527 MW (+4.2 times versus 2020). Finally, in 2023, Enel X is expected to reach around 780,000 public and private charging points made available worldwide (+4.5 times versus 2020).

At Group level, Ordinary EBITDA is expected to be in a range between 20.7 and 21.3 billion euros in 2023, implying a 5%-6% CAGR. Net Ordinary Income is expected to be in a range between 6.5 and 6.7 billion euros in 2023, implying an 8% to 10% CAGR, thanks also to the continued optimization of Group financial management – particularly through an increase in sustainable finance, which will account for around 50% of total gross debt in 2023 – leading to a lower cost of debt.

Enel has set up a simple, predictable and attractive dividend policy for the period. Shareholders will receive an increasing guaranteed fixed Dividend Per Share (“DPS”) over the next three years with a target of 0.43 euros/share in 2023, translating into a CAGR of approximately 7%.

Francesco Starace, CEO and General Manager of Enel said: “With this new Strategic Plan we are setting a direction for the next 10 years, mobilizing 190 billion euros in investments to pursue our goals in a decade full of opportunities. To realize this vision, we can leverage on our clear leadership in the utility sphere across three main elements, all driven by an innovative platform-based model. First, as a ‘Super Major’ in the renewable sector, we operate the world’s largest private generation fleet. Furthermore, we have an unparalleled global network system, where the platform-operating model drives improvements in quality, resiliency, efficiency and flexibility. Last but not least, we count on the largest customer base worldwide to which, through our business platforms, we provide innovative services and integrated offerings. Throughout the decade, we will strengthen the creation of sustainable shared value for all stakeholders, which is also embedded in an attractive remuneration for our shareholders.”

Energy companies, including PPC, look to reinforce ahead of tough winter

Energy sector companies, including power utility PPC, are looking to financially reinforce ahead of what is likely to be a challenging winter in terms of cash flow.

Though overall market activity is clearly better compared to last March, when lockdown measures were introduced in Greece, persisting four-digit figures for new domestic coronavirus cases and hints of tougher pandemic measures in Athens, as is already the case in Thessaloniki, leave no room for complacency.

PPC, fearing stricter lockdown measures could last a while, is working intensively to collect some 500 million euros stemming from two securitization packages for unpaid receivables by late November or early December. The company is also intensifying its hunt for payments from consumers regarded as able but unwilling to service electricity bill arrears.

The power utility has a number of fronts to cover financially. Firstly, the company has offered employees voluntary exit packages as part of its decarbonization drive to phase out lignite-fired power stations. PPC is also preparing to make the first of a number of major RES investments. The utility is also in the midst of a successful and fast-moving effort to reduce debt owed to operators – power grid operator IPTO; distribution network operator DEDDIE/HEDNO; and RES market operator DAPEEP; as well as sub-contractors.

PPC’s total debt to third parties, which was at a level of 900 million euros in July, 2019, was reduced to approximately 650 million euros in June and fell further to 580 million in a latest measure.

The company aims to reduce this debt figure to 550 million euros by the end of the year. However, tougher lockdown measures would probably slow down this debt-reduction effort.

Enel’s Francesco Starace named chief at SEforALL, supporting SDG7

Sustainable Energy for All (SEforALL), a non-profit international organization that works closely with the United Nations to accelerate and deliver at scale the solutions needed to achieve Sustainable Development Goal 7 (SDG7) – access to affordable, reliable, sustainable and modern energy for all – by 2030, has appointed Francesco Starace, Chief Executive Officer and General Manager of Enel S.p.A., as Chair of the SEforALL Administrative Board, SEforALL has announced in a statement.

With less than 10 years to meet SDG7, and with increasing urgency for the world to get on track to meet the Paris Agreement climate goals, SEforALL’s role in driving a global clean energy transition has never been more important, Starace, who has been CEO and General Manager of Enel, one of the largest utilities in Europe, since May 2014, begins in the role with immediate effect.

Speaking on the announcement, Elizabeth Cousens, Vice-Chair of the SEforALL Administrative Board, and President and Chief Executive Officer of the UN Foundation, noted: “Francesco is a visionary energy leader with a long track record in driving business ambition around climate action, sustainability, and energy access for hundreds of millions of  people around the world who lack it. He is a natural choice for this important role at such a critical moment. With SEforALL’s unique mandate from the UN to drive SDG7 action in line with the Paris Agreement, his leadership can help support the organization go even further and faster to achieve our goal of universal energy access.”

As Chair of the Administrative Board – the principal governing body of the organization – Mr. Starace will help shape strategy and operations for the organization at the highest levels. Mr. Starace currently also serves as a member of the UN Global Compact Board of Directors and the Global Commission to End Energy Poverty. He previously served as a member of the former SEforALL Advisory Board and President of EurElectric, the European association for the electricity industry.

“Energy must be at the heart of the global agenda to lead the world on a more sustainable pathway, focusing multi-stakeholder action especially on renewables and energy efficiency, which are key for delivering on the goals of energy access and climate mitigation. I am very proud to join SEforALL and to support its efforts for the clean energy transition and to work together toward achievement of SDG 7,” noted Starace. “My main objective as Chair of the SEforALL Administrative Board will be to cooperate with leading actors to accelerate the critical shift to a more sustainable, modern and accessible energy for all. I have great confidence in SEforALL leadership and its unique strengths to tackle the complexity of the energy challenges and to support ensuring the fundamental right to electricity for everyone, globally.”

The announcement comes after SEforALL recently released a new three-year business plan to help drive scaled action towards sustainable energy for development and energy transitions. The ambitious plan recognizes the need to strengthen global advocacy while expanding activities that prioritize data-driven decision-making, strategic partnerships and country-specific implementation.

Welcoming his appointment, Damilola Ogunbiyi, CEO and Special Representative of the UN Secretary-General for Sustainable Energy for All and Co-Chair of UN-Energy, said: “With ambitious action we can still achieve SDG7 by 2030, but the next few years are critical to increase energy access – especially in the wake of the COVID-19 pandemic. SEforALL’s leadership is pivotal to deliver this vision and why I’m delighted to welcome Francesco Starace as our new Chair of the Administrative Board. Francesco brings incredible experience that can help SEforALL deliver an energy transition that is truly inclusive, equitable and leaves no one behind.”

ELPE seeking greater North Macedonia market share

Hellenic Petroleum ELPE, aiming to capture a bigger share of the North Macedonian market, is currently negotiating for extrajudicial solutions that would enable the reopening of a company oil pipeline linking Thessaloniki with Skopje.

In an effort to help resolve this issue, ELPE has proposed a series of RES investments in the neighboring country as well as a conversion of its Okta refinery into a petroleum products hub facilitating distribution to the western Balkans.

December will be a crucial month for the negotiations between ELPE and North Macedonia as a verdict is scheduled to be delivered on an ELPE compensation request for 32 million dollars for a breach, by the neighboring country, of contractual obligations concerning minimum supply amounts between 2008 and 2011.

The North Macedonian oil market is dominated by two Russian companies, Gazprom and Lukoil, both gaining further ground. Gazprom supplies fuel products to North Macedonia via Serbia and Lukoil does so from Bulgaria.

US officials, seeking to inhibit the dominance of Russian energy firms in North Macedonia, have intervened to help resolve the country’s differences with ELPE.

Just days ago, a meeting on ELPE’s effort to reopen the oil pipeline was held in Thessaloniki during an official visit to the city by US Secretary of State Mike Pompeo. US government officials, Greece’s energy minister Costis Hatzidakis and North Macedonian government deputies participated.

For quite some time now, Washington has made clear its stance aiming to limit Europe’s energy dependence on Russian companies and, as a result, is promoting the ELPE oil pipeline as an alternative supply route into North Macedonia.

 

Energy ministry seeks recovery fund support for many domains

The energy ministry, seeking to ensure EU recovery-fund support for mature projects in key energy-related domains, has proposed their inclusion in a national plan whose first draft will be submitted by the government to the European Commission this month.

Greece is entitled to approximately 32 billion euros from the EU recovery fund, worth a total of 750 billion euros (390bn in subsidies and 360bn in loans) and established to counter the impact of the global pandemic.

Approximately 37 percent of the recovery funds will be used for green-energy development.

Energy efficiency upgrades of buildings; grid interconnections and RES initiatives, including energy storage; electromobility; nature protection; decarbonization; spatial planning for RES development; solid and liquid waste management; and smart power meter installations, a severely delayed project in Greece, are among the domains the energy ministry wants included in the national plan for EU recovery funds.

The energy ministry has previously sought support for some of these domains through the National Strategic Reference Framework.

A total of 130,000 efficiency upgrades of buildings have so far received subsidy support over a decade-long period through Greece’s Saving at Home program. The ministry is looking to significantly increase this rate to 60,000 upgrades per year through the recovery funds program.

Greece’s energy ministry will also seek recovery fund support for two major electricity interconnections – Crete’s major-scale interconnection,  to link the island’s grid with Athens; and the fourth phase of the Cyclades interconnection – both being developed by power grid operator IPTO.

 

Ellaktor investment choices of last 2 years yielding results

Despite the impact of the measures implemented to limit the pandemic, Group EBITDA marked an increase in H1 2020 in three of five key segments in H1 2020, namely RES, Environment and Real Estate compared to the respective period in 2019, while adjusted EBITDA margin improved to 18.8% compared to 15.2% in H1 2019, the Ellaktor Group has announced in statement.

Concessions is gradually recovering, recording a moderate change in monthly vehicle traffic in August compared to the corresponding month last year, while the restructuring plan for Construction is progressing, the group’s statement noted.

The plan includes the reduction of staff costs and cost of sales, the disposal of non-operating assets, as well as the preparation of a “road map” alongside Greek banks, in order to further support Construction.

As a result of the Group’s strategy to limit Construction exposure to Greece and Romania and also due to the lockdown’s impact to vehicle traffic in Concessions, Group revenues stood at €438m in H1 2020 compared to €705m in H1 2019. At profit before tax level the Group recorded losses of €21.2m compared to profit of €29.4m in the corresponding period of last year, and in terms of profit after taxes and minority rights the Group recorded losses of €37.5m compared to losses of €8.4m in H1 2019.

  • EBITDA in Concessions stood at €53.0m in H1 2020 compared to €79.6m in H12019, decreased by 33% due to the lockdown, (traffic reduction in ATTIKI ODOS reached 72% in April 2020, however, there has been gradual improvement since May 2020, with a traffic reduction in this motorway reaching 37% in May, 16% in June, 9% in July and 6% in August compared to the corresponding months last year)
  • EBITDA in Renewables stood at €36.6m in H1 2020 compared to €26.3m in H1 2019, increased by 39% as a result of the increased installed capacity, without impact from the COVID-19 pandemic
  • In Environment EBITDA stood at €6.8m in H1 2020 largely unchanged from H12019, marginally increased by 0.8%, with slight impact from the COVID-19 pandemic
  • EBITDA in Real Estate, given the strong performance before the pandemic, stood at €1.4m in H12020 compared to €0.8m in H1 2019, increased by 84%. Since Smart Park reopened in early May 2020, there has been a gradual recovery in terms of performance, with an increase in footfall of 19% in June and 15% in July compared to the corresponding months in 2019
  • EBITDA in Construction stood at -€12.1m in H1 2020 (excluding non-recurring item with negative impact of €5.2m due to the impairment loss from sale of non-operating asset, including which EBITDA was -€17.3m) compared to €3.2m in H1 2019. Those figures do not include a profit of €6.9m from the sale of Hellas Gold which have been recorded in Other Comprehensive Income in Q2’20.

Commenting on the results, chief executive Anastasios Kallitsantsis noted: “Our choices in the last two years have started to yield results as, despite the lockdown due to the COVID-19 pandemic, EBITDA in three of our five Group segments, i.e. RES, Environment and Real Estate, improved in H1 2020 compared to H1 2019. Traffic in ATTIKI ODOS is rebounding, as the reopening of international flights in August resulted in a [marginal] change compared to August 2019. The restructuring of Construction is also progressing swiftly, as this sector is expected to benefit from the EU “Next Generation Program” package, from which Greece will receive €32b, or 17% of its GDP. Despite the impact of the lockdown on economic activity, the Group Adjusted EBITDA* stood at €82,3 m in H1’2020, with adjusted EBITDA margin improving to 18.8% (compared to 15.9% last year), and Net Debt to adjusted EBITDA of 6.9x.”

(*) Excluding non-recurring items with negative impact of €10m (€4.8m restructuring expenses for Construction and €5.2m from impairment loss due to sale of non-operating property)

 

1.

Profit and Loss

Revenue decreased

by 38% yoy

 

 

 

 

 

Cost of sales decreased

by 42% yoy

 

Gross profit decreased

by 21% yoy

 

 

 

 

Administrative expenses decreased by 14% yoy (excluding restructuring costs)

 

 

Selling expenses decreased by 12% yoy

 

 

 

 

 

 

Adjusted EBITDA

margin of 18.8%

 

 

 

 

 

 

 

 

 

 

 

Loss before taxes of €21.2m

 

 

 

Balance Sheet

 

 

 

Cash and other liquid assets of €400m

 

 

 

 

 

 

 

 

 

 

 

Total Equity for the Group of €484m

 

 

 

2.

Construction

Redefining the size of

the Construction

 

 

EBITDA

 

 

 

 

 

 

 

 

Backlog

 

 

 

Restructuring of Construction in progress

 

 

 

Concessions

or

 

 

 

 

 

Vehicle traffic has recovered significantly after the lifting of lockdown

 

 

 

 

 

 

Renewables (RES)

 No impact of COVID-19

 

 

 

 

 

 

 

Second largest portfolio

in Greece

 

Key figures of the ELLAKTOR Group in H12020

 

Consolidated revenue of ELLAKTOR Group stood at €438m in H1’2020 compared to €705m in H1’2019, decreased by 38% (or €267m). The decrease was mainly due to Construction, as revenue in this segment decreased by €265m (from €521m to €257m). Concessions recorded a decrease in revenue of €27m (from €118m to €91m), whereas revenue in the other segments increased or remained unchanged compared to H1 2019.

 

Cost of sales for the Group (excluding depreciation) stood at €331m in H1’2020, compared to €570m in H1’2019, a decrease of 42%.

 

Gross profit (excluding depreciation) stood at €106m in H1’2020 compared to €136m in H1’2019, decreased by 21% (or €29.1m). This decrease was mainly due to Concessions, which recorded a decrease by €25.2m due to the impact of the measures against the spread of COVID-19, but it was partially offset by the improvement in gross profit in Renewables, which recorded an increase by €10.1m.

 

Administrative expenses (excluding depreciation) stood at €32.2m in H1’2020 compared to €31.8m in H1’2019, increased marginally by 1.2%. Administrative expenses in H1’2020 included restructuring costs for Construction, amounting to €4.8m. Excluding these costs, administrative expenses stood at €27.3m in H1’2020, decreased by 14% compared to H1’2019.

 

Selling expenses (excluding depreciation) stood at €1.9m in H1’2020 compared to €2.2m in H1’2019, decreased by 12%.

 

Other income (excluding depreciation) and other profit/loss stood at €5.3m and            -€5.3m (including non-recurring item with negative impact of €5.2m due to the impairment loss from sale of non-operating asset), compared to €10.1 m and €0.5 m in H1 2019.

 

Adjusted EBITDA stood at €82,3m in H1’2020 (or €72.3m including €4.8m of restructuring costs and €5.2m impairment of non-operating property for sale)  compared to €112.2m in H1’2019, decreased by 27% which was mainly due to Concessions (€53.0m in H1’2020 compared to €79.6m in H1’2019).

 

The adjusted EBITDA margin improved to 18.8% in H1’2020 compared to 15.2% in H1’2019.

 

Depreciation and amortization stood at €52.4m in H1’2020 compared to €50.6m in H1’2019.

 

EBIT stood at €19.9m in H1’2020 compared to €61.6m in H1’2019.

 

At profit before tax level the Group recorded losses of €21.2m compared to profit of €29.4m in H1’2019, and in terms of profit after taxes and minority rights the Group recorded losses of €37.5m compared to losses of €8.4m in the corresponding period of 2019.

 

 

Total assets stood at €2,988m as at 30 June 2020 compared to €3,056m at 31 December 2019, a decrease of 2.2%.

 

Cash and other liquid assets decreased to €400m as at 30 June 2020 compared to €463m at 31 December 2019, mainly due to interest expense and distribution of dividends from ATTIKI ODOS.

 

Total borrowings stood at €1,543m on 30 June 2020 compared to €1,491m on 31 December 2019. The increase was mainly due to the successful issuance and placement of bonds with face value of €70m in January 2020, with an interest rate of 6.375%, and maturing in December 2024.

 

Net debt stood at €1,143m as at 30 June 2020 compared to €1,028m on 31 December 2019, with a net debt to EBITDA ratio of 6.9x (calculated on the annualized adjusted EBITDA of H1’2020).

 

Group total equity stood at €484m as at 30 June 2020, compared to €533m at 31 December 2019, decreased by €49m. The decrease was mainly due to losses after taxes. Equity attributable to shareholders stood at €380m compared to €414m on 31 December 2019, decreased by €34m.

 

Performance per segment in H12020

 

Revenues in Construction stood at €257m in H1’2020, decreased by 51% (or €265m) compared to €521m in H1’2019, mainly due to reduced construction activity, as the Group has decided to focus geographically on Greece and Romania.

 

Adjusted EBITDA in the Construction stood at -€12.1m in H1’2020 (or -€17.3m including impairment of non-operating property for sale) compared to €3.2m in H1’2019.

 

Losses before taxes stood at €28.2m in H1’2020 vs to losses of €7.5m in H1’2019.

 

Profit & Loss of H1’2020 does not include a profit of €6.9m from the sale of Hellas Gold which has been recorded in Other Comprehensive Income in Q2’2020.

 

AKTOR and its subsidiaries’ backlog amounted to €1.3b, of which €326m were signed in 2020. In addition, projects worth a further €587m have been secured the contracts for which are expected to be signed (total backlog of €1.9b)

 

The restructuring plan for Construction will generate an upside of more than €100m between 2020-2023. Of this, ~€30m will be generated through reduced cost of sales from the new Group Procurement office; €32m from reduced HR costs; and about €38m from the sale of non-operating assets and collection of old receivables.

 

 

Revenue in Concessions stood at €91.1m in H1’2020, decreased by 23%, compared to revenue of €118.1m in the corresponding period of 2019. Reduced revenue in H1’2020 is due to the drop in traffic as a result of government restrictions due to the COVID-19 pandemic (ATTIKI ODOS -26%; MOREAS -30%).

 

There have been clear and encouraging signs of rebounding traffic in ATTIKI ODOS since early May, when the gradual lifting of restrictions began. After a decrease of 72% in April, vehicle traffic followed a continuous upward trend, reaching -16% in June, -9% in July and finally -6% in August.

 

EBITDA in Concession stood at €53.0m, a decrease of 33% compared to €79.6m in H1’2019.

Profit before taxes stood at €4.4m in H12020 compared to €33.1m in H1 2019 (-87%).

 

 

Revenues in RES stood at €45.1m in H1’2020 compared to €33.1m in H1’2019, increased by 36% as a result of the increased installed capacity.

 

EBITDA in RES stood at €36.6m in H1’2020 compared to €26.3m in H1’2019, increased by 39% also as a result of the increased installed capacity.

 

PBT stood at €20.1m in H1’2020 compared to €14.2m in H1’2019 (+41%).

 

Installed capacity stands at 491 MW as of on 30 June 2020, while an additional 88 MW is under construction.

 
Environment

Increase in revenue and profit despite the pandemic

 

 

 

 

 

 

 

 

 

Revenue in Environment stood at €47.3m in H1’2020 compared to €41.4m in H1’2019, increased by 14% due to the increased rate of implementation of construction projects.

 

EBITDA stood at €6.8m in H1’2020 compared to €6.8m in H1’2019, increased marginally by 1%.

 

Earnings before taxes stood at €3.9m in H1’2020 compared to €2.5m in H1’2019, increased by 54%.

 

Prospects appear to be strong, as Greece has to proceed quickly in order to comply with the national and EU legislation on waste management.

 

Real Estate

Increase in operating profit despite the impact of the COVID-19 pandemic

 

 

 

 

 

 

Revenue in Real Estate stood at €3.1m in H1’2020, compared to €3.1m in H1’2019, decreased marginally by 2% due to the impact of COVID-19.

EBITDA stood at €1.4m in H1’2020 compared to €0.8m in H1’2019, increased by 84%. After the reopening of the park on 11 May 2020, there has been a recovery in footfall, recording an increase by 19% in June and 15% in July.

Losses before taxes stood at €0.2m in H1’2020 compared to losses of €0.9m in H1’2019.

 

 

 

Energy issues ‘perhaps greatest technological challenge of today’

By Mr. Vasilis Digalakis

Undersecretary of Education

Imposed mainly by climate change, the upcoming modifications in the way we produce, distribute, store and consume energy constitute perhaps the greatest technological challenge of our time. Almost all of science and engineering converge in energy technologies, which is why it will be the focus of research activity and the main field of innovation in the years to come.

It is generally admitted that our country has the privilege of possessing a wealth of energy potential. However, we are lagging significantly behind in its exploitation and must move rapidly towards energy transformation, by strengthening our infrastructure and adopting innovative models of production and consumption. There is a range of challenges that we will have to face, especially due to the fact that we are launching from a particularly negative starting point with regard to the existing production and distribution assets.

Crete, in particular, having until now had an autonomous power system and major requirements especially during the summer months, constitutes an extremely urgent priority: in order to offer 1 Kwh of electricity for consumption today, 2.9 KwH of primary energy are needed, with obvious consequences for national economy and the environment.

At the same time, the rich solar and wind energy potential of the island cannot be exploited, due to the regulatory restrictions imposed by a failure of interconnection of the island with the continental network. Worse still, a significant part of the existing Renewable Energy Sources production is discarded and not exploited. This can change with the upcoming interconnections implemented by the Independent Power Transmission Operator, as well as by making use of storage technologies.

Today we have a unique opportunity: we can turn the island into a living laboratory of energy technologies. With excellent research institutes – which in some cases lead European programmes for energy transformation – Crete can and should set an example of successful application of production, management and energy saving technologies:

  • With the implementation of smart grids and the extensive installation of smart meters in order to reduce needs during peak periods, through demand response technologies and IT know-how exploitation.
  • By transforming urban centres into smart cities using intelligent energy management and energy infrastructure improvement systems combined with water management and agricultural production systems.
  • Utilizing energy storage and management technologies in conjunction with the introduction of electric vehicles (Vehicle to Grid – Grid to Vehicle).
  • Through energy upgrading of the building stock with an emphasis on tourism and hospitality and the promotion of zero energy balance buildings and zero energy emissions.
  • By reducing the urban heat island effect, which in turn can lead to a drastic reduction in energy demand during the summer season.

Key reform directions of the current political leadership of the Ministry of Education in the field of higher education are to improve the quality of education and relevance to the labour market, as well as the transfer of knowledge generated in universities to the real economy. In this context, the 5th Pancretan Energy Conference gives the opportunity to the Higher Education Institutes of the country to participate in the dialogue on the energy developments in our region and to highlight their action and research results.

 

Book review: Does energy cause ethnic war?

BOOK REVIEW 

‘Does energy cause ethnic war? East mediterranean and Caspian sea. natural gas and regional conflicts’ By Andreas Stergiou and Marika Karagianni, Cambridge Scholars Publishing, 2019

This is an intriguing book which deals with a current and hot issue, the relation of energy supply and energy resources to warfare or conflict. The book analyzes the role of energy wealth and, more precisely, of natural gas in the power game of the Eastern Mediterranean and the Caspian Sea. A key question which permeates the book is whether the prospect of economic benefits in connection with the successful exploitation of energy resources can be an incentive for peace or a catalyst for war for the people living in these regions.

Chapter 1 poses the theoretical considerations between energy and conflict and contrary to other well-substantiated studies, it argues that energy trade, in whatever form, has either a minimal impact or no impact at all on deep-rooted ethnic conflicts and political disputes. This argument is elaborated in detail in chapters 2–4 which mainly focus on a challenging part of the world, stretching from the Eastern Mediterranean to the Caspian Sea.

Chapter 2 stresses the multiple and divergent approaches that the European Union (EU) member states take regarding energy security, as well as their different relations with energy suppliers. It explains all the aspects of the ‘necessarily symbiotic’ relationship between Russia and the EU regarding its energy supply (mainly gas). The EU needs Russia and Gazprom to supply her gas needs whereas Russia needs the EU since the latter is a big gas customer and gas exports to the EU play a key role in Russia’s profits from exports. According to estimations, in 2025 Russia’s share of EU gas consumption will be around 40%. This means that Russia will remain the main energy provider for the European Union (EU) despite the efforts of the latter for energy diversification.

The chapter further analyzes the EU’s attempts to securitize reliable alternative energy suppliers through the establishment of new pipelines such as the Southern Gas Corridor (SGC), the last part of which is the so-called TAP system. The chapter explains also the geostrategic behaviour of ‘intermediate’ countries to the SGC system, such as Turkey, Greece and Italy and argues that the SGC ramifications have even had diplomatic impacts such as upon the Prespes Agreement, which led to a solution of the dispute between Greece and the Former Yugoslav Republic of Macedonia by renaming the latter North Macedonia. The chapter analyzes the ‘response’ of Russian policymakers to the SGC through the so-called Turkish Stream pipeline project and also analyzes US attempts to ameliorate Russian energy dominance over Europe by enabling the EU to import more LNG from the US.

Chapter 3 focuses on Eastern Mediterranean natural gas reserves. The region has attracted attention in recent years, with global energy companies registering their interest one after another due to the promising estimations regarding the amount of hydrocarbon reserves. This chapter describes all the complexities that lay behind this new environment of potential energy exploitation through supranational cooperation between the states in the region. It shows that the discovery of large natural gas deposits in Israel (Leviathan), Egypt (Zohr) and Cyprus (Aphrodite) and the prospect of regional energy market integration and the potential of the East Med gas pipeline to supply Europe could be a driving force for resolving existing conflicts, tensions and rivalries between Lebanese, Syrians, Israelis, Turks, Greeks, and Greek and Turkish Cypriots. Towards this direction, some countries have already signed Exclusive Economic Zone (EEZ) agreements with each other, such as Cyprus and Israel who signed their EEZ as early as 2010. Further important aspects of this chapter explain, among others, why the East Med project is considered a very expensive option, why it is related to the impressive upgrade of relations between Greece, Cyprus and Israel, why it is considered competitive to the gas pipelines that serve Russian interests such – as the Turkish Stream –, why Russia dynamically intervened in the Syrian Civil war – an issue which is connected to the attempts of Qatar to transfer its gas to Europe –, etc.

The book predicted a development that occurred recently in the wake of the Corona virus pandemic, i.e., energy companies’ reluctance to exploit their energy reserves. The authors argued that – long before the corona virus began to wreak havoc across the world’s economies and slash energy demand – prices had been falling sharply because of the simple reason of a gas glut. Another prediction of the book is related to Turkey’s assertive involvement in Libyan War because of its exclusion from the looming energy architecture in the region.

Chapter 4 comes as a sequence in the already existing discussion, this time by analysing the energy deposits of the Caspian Sea as a means of supplying European energy needs. It explains why Azerbaijan is considered an emerging and important strategic gas and oil export outlet for the West. The chapter analyzes in detail the complexities, the limitations and the potential that lay behind between the five littoral states in the Caspian basin: Kazakhstan, Russia, Azerbaijan, Turkmenistan and Iran. These range from fishing rights and navigation routes to hydrocarbon exploitation rights. The chapter explains that, as with the Eastern Mediterranean case, the prospect of monetization of gas played a significant role on the decision of the littoral Caspian states to encourage supranational cooperation between them and overcome their past differences.

This book explains efficiently all the aspects that are included in the relationship between energy, conflict and warfare. Another benefit of the book is that it provides original and tangible evidence through interviews of regional experts, academics, diplomats and politicians. This material is harmoniously combined by evidence extracted through reach academic bibliography and this blend creates a very convincing outcome.

Academics, university students and researchers who focus on strategic studies, economic diplomacy, International Relations theory, as well as political scientists, historians, economists, politicians, policymakers and strategic investment consultants can be benefited from the multi-level evidence and argumentation that is provided by this book.

Remaining energy utility sales, DEDDIE and IPTO, nearing

The time is nearing for Greece’s two remaining energy utility  privatizations, those of electricity distribution network operator DEDDIE/HEDNO and power grid operator IPTO.

An energy ministry official yesterday updated journalists on the progress of both sales at a presentation of gas distributor DEDA’s five-year investment plan.

All details concerning the sale of a 49 percent stake in DEDDIE/HEDNO, a fully owned power utility PPC subsidiary, will be ready and finalized in September, enabling the announcement of a tender that month, according to the ministry official.

Preparations for this sale include the evaluation and transfer of assets used by DEDDIE/HEDNO from PPC to the operator.

As for the IPTO sale, talks between the operator and China’s SGCC – already holding a 24 percent stake in IPTO and first-offer rights in the event of the sale of a further stake in the operator – are still at an early stage.

The energy ministry is moving carefully in an effort to comply with fine details of EU directives concerning the entry of non-EU members into European enterprises and infrastructure.

Role adjustment needed at RAE, former chief notes

The original purpose of RAE, the Regulatory Authority for Energy, to regulate networks and facilitate robust competition, needs to be restored, while adjustments are needed so that the authority can promote technological advancements and investments, Pantelis Capros, Professor of Energy Economics at the National Technical University of Athens, who served as RAE’s very first president, has noted, timing his comments with a change of leadership at the authority.

The government is in the process of filling three vacant positions on RAE’s seven-member board, including chief executive and deputy.

Over the 20 years that have elapsed since RAE’s launch, the authority has changed considerably, taken on many duties, but also become more bureaucratic, possibly more conservative and less independent, Capros pointed out, adding that technological and political developments concerning the energy sector have been enormous during this time.

“I am in favor of a cold restart, in a groundbreaking way,” Capros noted, adding that a new regulatory strategy that may support the transition to carbon neutrality is necessary.

The terms of Nikos Boulaxis, the former chief, his deputy Sotiris Manolkidis, and board member Nektaria Karakatsani have all just ended.

New RAE officials imminent, gov’t seeks upgraded RAE role

The government’s intention to upgrade the role of RAE, the Regulatory Authority for Energy, is expected to be reflected by imminent appointments to fill three vacant positions on the authority’s seven-member board, including a new chief executive and deputy.

Decisions on the new recruits are expected any day now before the new RAE board is presented, by law, to Greek Parliament’s permanent committee on institutions and transparency, probably next week.

A large number of top-credential resumes have been submitted by applicants for the three positions, sources informed.

The terms of Nikos Boulaxis, the former chief, his deputy Sotiris Manolkidis, and board member Nektaria Karakatsani have all ended.

The government wants their replacements appointed as soon as possible to avoid dead time as pending issues await to be resolved.

The administration will push for closer cooperation between RAE and other independent bodies, including the telecommunication and postal authority as well as the competition committee, as the number of issues with common concerns is growing.

Gov’t plans special court divisions for fast-track energy dispute hearings

Jurisdiction of energy-sector disputes will be transferred to special court divisions facilitating fast-track priority hearings, the objective being to end major delays holding back energy investment plans, according to a Ministry of Justice draft bill believed to be headed for Greek Parliament within the next few days.

Besides the energy sector, Greek judicial-system delays have plagued business plans across the board.

The government, through the justice ministry’s draft bill, intends to make incisive revisions that would transform the legal system into a tool for economic growth rather than a deterrent.

Energy projects a main focus of new financial support tool

A financial-support plan backing energy projects, the circular economy – waste elimination and continual use of resources – as well as pivotal infrastructure features in a wider support program announced by government officials yesterday for the economy and enterprises.

The support plan, to involve public and private-sector money, will seek to achieve economic regrowth as lockdown measures are gradually eased.

Development and Investment Minister Adonis Georgiadis presented the various facets of the support program yesterday following a speech from Prime Minister Kyriakos Mitsotakis on the government’s plan for a restart of the economy.

The government intends to provide state support worth 400 million euros for the support plan’s section concerning energy, the circular economy and pivotal infrastructure. The amount will be channeled into the market by the Hellenic Development Bank.

In addition, this support fund will also seek to attract private-sector capital worth 600 million euros and ultimately generate energy-sector investments totaling approximately 3 billion euros.

Renewable energy and energy storage projects will be the main focus of this part of the support program, while qualification will be based on transparent criteria and banking rationale, officials noted.

The support plan’s section for energy, the circular economy and pivotal infrastructure, along with another section supporting strategic sectors of the economy, share the top spot in terms of state support – 400 million euros for each – among eight sections in total.

The total sum to be provided by the state for the support plan’s eight sections amounts to 1.8 billion euros, projected to snowball into investments worth 5 billion euros overall.

 

 

IPTO, DEPA Trade, DEPA Infrastucture sales put on hold

Energy-sector privatizations planned for launch in the second quarter, as well as sales already in progress, are being put on hold as a result of the coronavirus pandemic’s impact on the global economy and the plans of the government and privatization fund TAIPED.

Two thirds of Greece’s privatization program this year concerns energy utilities, as energy minister Costis Hatzidakis has noted.

The freeze on plans includes the sale of an additional stake of power grid operator IPTO, which was planned for the second quarter.

State Grid Corp of China (SGCC), already holding a 24 percent share of IPTO and possessing first-offer rights, has expressed an interest to boost its stake.

However, IPTO and SGCC officials have not been able to meet for talks as a result of the extreme conditions. Greece’s deputy energy minister Gerassimos Thomas had planned a trip to China one-and-a-half months ago but was unable to travel as a result of a travel ban imposed by the Chinese government following the coronavirus outbreak in China early this year.

Two privatization procedures for gas utility DEPA’s new entities, DEPA Trade and DEPA Infrastructure, both of which have drawn considerable interest, have also been put on hold.

The DEPA Trade sale attracted nine bidding teams, domestic and international, for its first round, a turnout interpreted as a vote of confidence for the Greek economy. The sale’s first-round expressions of interest could be appraised in the summer.

New energy ministry to face many issues, from PPC to RES

Yesterday’s elections may have produced a new government, the New Democracy party, with a majority, but Greece’s energy sector issues, from the troubled power utility PPC to the renewable energy market’s need for greater growth, remain the same, if not more pressing.

ND party deputy, Costis Hatizidakis, possessing extensive experience, is slated for the energy portfolio, a choice suggesting the country’s new administration will place particular emphasis on the energy sector. The new cabinet will be announced later today.

In the lead-up to yesterday’s elections, ND described the situation at PPC, under severe financial pressure, as a time bomb created by the outgoing Syriza-led government’s choices.

ND will need to pursue measures that, on the one hand, will lessen the power utility’s electricity market dominance – as part of a wider EU-required effort for electricity market liberalization – and, on the other, restructure and modernize the corporation for ensured sustainability. This would enable PPC to continue serving as a main pillar in the country’s energy system.

The new energy minister will also need to reinvigorate investment interest in the energy sector, both for conventional electricity generation and, most crucially, renewable energy output. Corporate groups, domestic and foreign, have shown signs of investment interest in the Greek market. But specific conditions need to be guaranteed if this interest is to be followed through with action.

The same goes for the hydrocarbon exploration and production sector, where procedural delays need to be eradicated.

Also, industrial energy costs, a chronic issue in Greece, need to be resolved if investment activity is to be boosted.

 

 

New energy and climate change committee set to meet February 21

The newly formed National Committee for Energy and Climate Change, whose establishment was made official through a recent government gazette announcement by energy minister Giorgos Stathakis, is scheduled to hold its inaugural meeting on February 21.

This initial session, to focus on establishing the roles and objectives of the committee, will be followed by meetings with energy sector authorities, including local governments, NGOs active in energy and climate change, sector experts, professional and scientific associations, as well as employee representatives.

These groups have already received questionnaires to help shape preliminary procedures and positions.

Ensuing sessions will examine issues such as energy supply security, RES markets, energy efficiency, as well as R&D matters in the energy sector.

The committee’s initial findings, leading to the establishment of a national strategy for energy and climate change, will be presented by the energy minister in parliament. The objective is to forge a clear-cut road map for energy sector revisions and utilization of investment opportunities covering the sector’s entire gamut.

Established as a 20-member committee featuring the heads of all the country’s energy sector authorities, the group will be led by Mihalis Veriopoulos, the energy ministry’s secretary general.

Major energy sector changes expected in 2018

The arrival of 2018 promises to bring about big changes to all the local energy sector’s major fronts – electricity, natural gas, renewable energy and hydrocarbons – and radically reshape these sub-sectors by the time the year is out.

The government is expected to have finalized a national energy plan within the year, officially presenting the direction of policies pursued.

It should be a busy year for energy-sector privatizations. An international tender offering 66 percent of DESFA, the natural gas grid operator, is already well in progress. The launches of privatizations concerning ELPE (Hellenic Petroleum), DEPA (Public Gas Corporation) and PPC (Public Power Corporation) are expected this year.

Energy infrastructure developments concerning natural gas pipelines, a prospective LNG terminal in Alexandroupoli, northeastern Greece, as well as an underground gas storage facility in the Kavala area, northern Greece, are also expected.

The bailout-required sell-off of PPC units, a procedure already underway and representing 40 percent of the power utility’s overall lignite capacity, promises to reshape Greece’s electricity market.

The establishment of an energy exchange, another bailout requirement incorporated into the Target Model, a process entailing the local electricity wholesale market’s harmonisation with EU law, promises to significantly alter how the electricity market operates.

The end of PPC’s monopolization of the country’s lignite sources, combined with the utility’s required retail electricity market share contraction, will clearly change the market. Bigger electricity amounts to be offered to independent suppliers through four NOME auctions in 2018 promise to reshuffle market shares. NOME auctions were introduced slightly over a year ago to offer independent suppliers access to PPC’s lignite sources.

The new flexibility remuneration mechanism, new demand response mechanism (interruptability) auctions, following a two-year extension, will also lead to market changes. The demand response mechanism enables major industrial enterprises to be compensated when the TSO (ADMIE/IPTO) requests that they shift their energy usage by lowering or stopping consumption during high-demand peak hours so as to balance the electricity system’s needs.

In the natural gas sector, DEPA, the gas utility, will need to limit its dominant market presence. The utility is currently engaged in negotiations with its co-shareholders in the EPA Attiki and EPA Thessaloniki-Thessaly retail ventures. The Greek government is supporting DEPA’s withdrawal from EPA Thessaloniki-Thessaly and an increased share of EPA Attiki. Shell, the holder of a 49 percent stake in EPA Attiki, has indicated it wants to withdraw. Italy’s ENI holds a 49 percent share in EPA Thessaloniki-Thessaly. DEPA is the majority shareholder in both ventures with 51 percent stakes.

A 9 percent sales increase reported by DEPA for the nine-month period of 2017, upbeat forecasts for the utility’s performance in 2018, as well as heightened trading activity anticipated from Prometheus Gas and M&M Gas promise to increase the market’s size and competition.

Combined electricity-and-gas packages are being prepared by retailers now that the gas and electricity markets have been liberalized. PPC, the main power utility, is preparing to enter the natural gas market while major independent electricity retailers have launched campaigns offering customers combined electricity-and-gas packages.

The new year also promises significant RES market changes. New renewable energy projects planned for development are expected to enter the RES market with new and more competitive terms.

The European Commission has already endorsed a Greek plan for new RES auctions. These are expected to end the stagnancy experienced by the local sector over recent years and also boost RES capacity.

As for the hydrocarbons sector, foreign investors are expressing a rekindled interest in Greece following recent discoveries of deposits in the east Mediterranean and Egypt. Petroleum giants such as ExxonMobil, Total and Repsol appear interested in taking part in hydrocarbon exploration initiatives, seen intensifying over the next few years.

The Greek government announced two international tenders last year offering offshore blocks in the Ionian Sea and south and southwest of Crete. Progress is expected in 2018.

 

IEA: Greater energy demand to offset RES penetration emission benefits

RES penetration in the global energy mix stands to experience rapid growth but, even so, CO2 emissions will rise slightly, compared to current levels, as a result of an increase in primary energy demand over the next 25 years, according to an IEA World Energy Outlook 207 report covering 2016 to 2040.

This essentially means current CO2 emission concerns will remain an issue in the years ahead and obstruct climate change objectives from being reached, unless far more ambitious policies, an unlikely prospect, are applied.

Over the next 25 years, the world’s growing energy needs will first be met by renewables and natural gas, as fast-declining costs turn solar power into the cheapest source of new electricity generation, the IEA report notes.

Global energy demand is expected to be 30 percent higher by 2040, half as much as it would have been without efficiency improvements, according to the report.

It added that the boom years for coal are over — in the absence of large-scale carbon capture, utilization and storage (CCUS) — and rising oil demand will slow down but not reversed before 2040 even as electric-car sales rise steeply.

Solar PV is set to lead capacity additions, pushed by deployment in China and India, while, in the EU, wind stands to become the leading source of electricity soon after 2030, according to the IEA report.

“Solar is forging ahead in global power markets as it becomes the cheapest source of electricity generation in many places, including China and India,” noted Dr Fatih Birol, the IEA’s executive director. “Electric vehicles (EVs) are in the fast lane as a result of government support and declining battery costs but it is far too early to write the obituary of oil, as growth for trucks, petrochemicals, shipping and aviation keep pushing demand higher. The US will become the undisputed leader for oil and gas production for decades, which represents a major upheaval for international market dynamics.”

These themes – as well as the future role of oil and gas in the energy mix, how clean-energy technologies are deploying, and the need for more investment in CCUS – were among the key topics discussed by the world’s energy leaders at the IEA’s 2017 Ministerial Meeting in Paris last week.

 

US support to boost Greek energy hub role, PM tells Chicago event

US support promises to bolster Greece’s role as an energy hub, Greek Prime Minister Alexis Tsipras noted during a speech delivered at the Chicago Council on Global Affairs, included on the agenda of his current official US visit.

On the economy, a key part of his speech, the Greek leader declared that the country’s growth trajectory is now a reality. Greece’s economic recovery is not based on a return to the past but the establishment of new, strong foundations, he stressed.

The objective is to now move ahead with a new and sustainable model for economic growth, placing emphasis on innovation, export orientation, investment attraction and social justice, Tsipras stressed.

The Greek leader made special reference to energy sector projects and developments concerning Greece, citing a long list of projects, these being: the TAP gas pipeline, IGB gas pipeline; the Revythoussa LNG terminal’s expansion; the Alexandroupoli FSRU; plans for additional natural gas imports from the USA; developments leading to US shale gas imports into Europe via Greece; the East Med gas pipeline; the Euro-Asia Interconnector, to link the electricity systems of Greece, Cyprus and Israel; new tenders for offshore hydrocarbon exploration in Cretan and Ionian waters, which have engaged US firms; as well as negotiations with Turkey for the development of a pipeline to supply Russian natural gas to Europe.

 

Greece crucial in west’s effort to limit Russian energy influence

The US is increasingly viewing Greece as a platform capable of supporting American energy interests in the wider region, a development that would stifle Russia’s current energy-related dominance. This outlook ultimately upgrades Greece’s geostrategic role in the region.

This American perception of the wider region was made clear yet again yesterday by the US Ambassador to Greece, Geoffrey R. Pyatt, during a speech delivered at the “1st Oil & Gas Forum” in Alexandroupoli, northeastern Greece. The event was organized by the American-Hellenic Chamber of Commerce.

Signs of growing intervention by Russia in the domestic affairs of Balkan countries have prompted US officials to increase their monitoring of the region.

Closer ties being established between Balkan countries and the west, combined with the development of energy projects supporting western interests, promise to reduce the Balkan region’s energy dependence on Moscow, currently as high as 90 percent.

Pyatt, during yesterday’s energy conference in Alexandroupoli, noted that an attempt made last year to prevent Montenegro from becoming a NATO member – the accession process was completed just months ago, in June – was propelled by Russian concerns over Russia’s  potential loss of influence in energy regions. This remark reiterated a recent comment made on the issue by US Vice President Mike Pence.

Montenegro is now a NATO member, the new Fyrom (Former Yugoslav Republic of Macedonia) government appears to be distancing itself from the previous administration’s pro-Russian position, while Albania, Bosnia, Kosovo and Serbia all find themselves at different stages along the EU accession course.

Energy projects of western interests, which, once completed, promise to reduce the region’s reliance on Russia, are now in full progress. Many of these projects carry Greek dimensions.

One of these, the TAP natural gas pipeline, to pass through Greece’s north, Albania and the Adriatic Sea across to Italy, promises to reform energy security in southeast Europe, Pyatt, the US Ambassador to Greece, told yesterday’s energy conference.

Pyatt expressed concerns over delays holding back the development of the IGB Greek-Bulgarian gas grid interconnection and extolled the roles to be played by a prospective FSRU in Alexandroupoli and extension of the existing LNG facility on Revythoussa, an islet just off Athens.

 

China Development Bank and PPC set to sign MoU in Thessaloniki

China Development Bank (CDB) and the main power utility PPC are scheduled to sign a memorandum of understanding (MoU) on September 9 in Thessaloniki, during a conference organized within the framework of the 82nd Thessaloniki International Fair (TIF).

The conference, titled “Investment opportunities in Southeastern Europe – Trends and challenges in the energy sector”, is being organized by PPC at the Macedonian Museum of Contemporary Art.

Energy mnister Giorgos Stathakis, China Ambassador Zou Xiaoli, the Head of European Commission Representation in Greece Panos Karvounis as well as representatives of companies and banks from China and southeast Europe will speak at the conference.

PPC aspires to have a leading role not only in the reconstruction of the energy environment, but also in its development and modernization prospects. Through its leading role in enhancing the competitiveness of the Greek economy, it also aspires to mark the expansion framework for investments, aiming at maximizing synergies and upgrading energy networks, the company stressed.

The conference will also focus on the promotion of Greece’s geographic position as an energy hub for the Balkans and Europe.

Local, EU, non-EU firms keen for PPC units, minister tells

Local and foreign enterprises, both from within and beyond the EU, are in the process of establishing partnerships to express interest in an upcoming market test for main power utility PPC lignite-fired power stations and mines to be offered for sale through a bailout-required PPC sale list, energy ministry Giorgos Stathakis assured energypress in an interview.

The country’s hydropower sources must remain under state control, the minister supported in the interview.

Stathakis expressed his outright opposition to energy sector privatizations not involving state-run companies.

The minister also noted that studies of strategic and developmental nature are currently being conducted in search of the best possible ways and most approporate time to utilize PPC, DEPA (Public Gas Corporation) and ELPE (Hellenic Petroleum).

As for the interconnection of the country’s islands, Stathakis informed that projects would proceed based on their sustainability. In cases where sustainability cannot be assured, other options, such as hybrid systems, would be pursued, the minister stated.

The minister also made reference to China’s presence in the Greek energy sector; the road map for natural gas sector revisions; the National Energy Plan, to be submittted to the European Commisssion by the end of this year; the smart meters installation project being prepared by HEDNO, the Hellenic Electricity Distribution Network Operator; as well as Greece’s effort to become an energy hub in southeast Europe by supporting the development of all related energy supply projects.

 

 

 

 

 

Mytilineos prepares for bond issue to support investments

Mytilineos, one of Greece’s leading industrial groups with activities in the sectors of EPC (Engineering-Procurement-Construction), Metallurgy & Mining, and Energy, has announced the terms of a company bond issue offering 300,000 bonds worth 1,000 euros each, enabling smaller investors to also take part.

The group’s chief executive Evangelos Mytilineos had recently told a shareholders’ meeting that a bond issue allowing smaller invetsors to take part would be considered.

The bond issue will enable the corporate group to draw from a pool worth a total of 1.4 billion euros for investment needs. Its rate will be set on June 20, while the issue will be made available to investors over a three-day period, June 21 to 23. Trading of the bonds is scheduled to commence on June 28.

The Renewable energy and industrial sectors are expected to draw the bulk of the corporate group’s investment needs, Aluminium of Greece being a key recipient. The group plans to boost annual production capacity at Aluminium of Greece to 1.8 million tons from the current level of 830,000 tons. An investment of about 400 million euros will be needed for this production capacity increase.

The group is increasing its activities in the shipping sector. Dry cargo ships have been purchased at a cost of 35.8 milion euros with own capital. Further vessel purchases worth 64.7 million euros are being planned. These will also be financed with own capital. The objective is to reduce the group’s exposure to fluctuating shipping costs and also serve the transportation needs of Aluminium of Greece.

New renewable energy sector investments being planned by the Mytilineos group are worth 73.9 million euros. Own capital, grants and bank loans are expected to fininace these initiatives.

The corporate group also plans to proceed with various other aluminium and energy sector investments worth 213 million euros.

 

Electricity bill levies triggering greater energy poverty

Energy poverty, an issue affecting a growing number of consumers as a result of greater levies added to electricity bills, depsite often being unrelated to electricity supply, is the focus of an article, for energypress, by Kristian Ruby, Secretary General of Eurelectric, a sector association representing the common interests of the electricity industry throughout Europe.

By Kristian Ruby, Secretary General, Eurelectric

More and more consumers struggle to pay their energy bills and to heat or cool the place they live in. Faced with this reality, national governments should act. Consumers’ electricity bills should stop being a vehicle for financing other – sometimes totally unrelated – policies. Moreover, while energy efficiency is key to alleviate energy poverty, financing tools which leverage private investment should be chosen ahead of regulating prices or indeed imposing obligations on suppliers.

Electricity prices and “energy poverty” have recently been top of the news in several European countries with suppliers occasionally accused of being responsible. However, reality shows that the main driver for households’ electricity prices over the past few years has been policy costs and levies. According to European Commission figures, they have indeed increased by no less than 70% between 2008 and 2015. Today, their weight equates that of the energy and supply component of the bill for a residential consumer.

Consumers struggling to pay their electricity bills are of concern for companies too – beyond the fact that the cost of arrears borne by companies can amount to millions of euros – and it is in their interest to find effective solutions. Suppliers generally assist consumers who are struggling to manage their electricity usage and bills through energy efficiency advice, payment arrangements and appropriate debt management processes. Many suppliers have also signed agreements with local authorities and social services to support low income consumers and help avoid supply interruptions due to unpaid bills.

So, what are some solutions to this problem? How can Europe face the challenge of energy poverty? First of all, it is crucial to recognise that EU member states are best placed to define criteria and policies to alleviate energy poverty. This is because their situations differ greatly in terms of employment, social security systems, climatic conditions, electricity consumption, home insulation and energy retail prices. Tackling the issue should be done at the level where it is most efficient to do so, in line with the subsidiarity and better regulation principles. Governments should also be aware that increasing taxes and levies on energy is not in line with combatting energy poverty. Consumers’ bills should reflect as far as possible the market-based cost of energy and should not be a vehicle for financing other – sometimes totally unrelated – policies.

The way network charges and levies are charged to consumers is also problematic. These regulated costs are indeed paid according to the consumption, even though they are largely fixed and need to be paid even if consumption decreases. With technological developments like distributed generation, storage, or electro-mobility, some customers are now consuming less electricity from the grid, thereby contributing less to system costs through tariff payments. Those costs then have to be charged across a smaller consumer base – those consumers not willing or not able to invest in such technologies, including many low income consumers – meaning an effective increase to their tariff payments. To reverse this trend, regulated costs should be charged in an efficient way, progressively removing cross-subsidisation.

Similarly, whilst energy efficiency is key to alleviate energy poverty, financing such measures through the bill is not sustainable. Indeed, costs are distributed among consumers regardless of their ability to pay. In addition, they inevitably create winners, those who receive measures, and losers, those who cannot or do not receive measures. We must transition to using financing tools, which leverage private investment such as Energy Performance contracts (EPC), Energy Saving Agreement (ESA) or on-bill repayment.

Last but not least, as customers who have energy debts are likely to struggle paying for other essential services too (e.g. housing, food, etc.), wider social policy is the best mechanism to help consumers tackle the root causes of debt, including energy debts. Considering the progressive nature of taxation, using social policies would also allow for a fair burden-sharing without causing those on lower incomes to bear a disproportionally higher burden.

 

Energy networks must remain under state control, HEDNO chief notes

The country’s energy networks represent strategic infrastructure and must remain under the Greek State’s control, Nikos Hatziargyriou, president and CEO of HEDNO, the Hellenic Electricity Distribution Network Operator, notes in an article appearing in Greek Energy 2017, an annual energypress industry publication.

HEDNO is closely following the bailout-related developments at the main power utility PPC, which owns the system’s distribution network assets and funds the operator’s projects, Hatziargyriou points out. PPC is needs to adapt to bailout terms requiring a contraction of its electricity retail market share and sale of production units.

“HEDNO is solely responsible for the development, maintenance and operation of the electricity distribution network throughout Greece, including the islands. The main objective is to ensure uninterruped electricity supply to 7.4 million consumers throughout the country. The operator’s objective is [to provide] the best possible combination of quality service and low operating costs with considerable contribution to environmental protection,” notes Hatziargyriou in his article for Greek Energy 2017. “Therefore, the company is at the frontline, in direct contact with all of the citizens of the country, and playing a key role in their interconnection with the grid, repairing its faults, and properly measuring consumption,amongst other tasks,” he adds.

In recent years, HEDNO has operated amid extremely difficult conditions, which have presented greater demands and restrictions, while new roles are required by the constantly changing energy market, the operator’s head official notes. Tightened finances caused by wider cash flow problems and bailout terms imposed over recent years represent a major challenge for the operator, Hatziargyriou notes. Even so, HEDNO has managed to successfully perform tasks, resolve older issues, relauch plans for the development of stalled projects, and generally improve its performance, the head official stresses in his Greek Energy 2017 article.

More work is needed, including for the adaption to major European revisions introduced for cleaner energy and greater renewable energy market penetration, as is detailed in the recent winter packge, presenting EU directives for the continent’s new energy plan. The role to be played by distribution network operators in this overall effort is crucial, the HEDNO chief notes.

HEDNO’s development plan includes a core of twelve strategic investments budgeted at 1.25 billion euros, until 2020. These include an update of networks and infrastructure as well as the introduction of modern customer services to be supported by innovative technologies and information systems.

The development of strategic energy sector projects in the present and near future will help support Greece’s effort towards economic recovery, Hatziargyriou notes. Otherwise, a unique opportunity for economic growth will have gone astray, he continues.

The HEDNO chief underlines that electricity network upgrade work currently being conducted around Europe, until 2020, worth approximately 600 billion euros, is not coincidental. Of this amount, 400 billion euro is being invested in distribution networks, he continues.

Twelve energy-sector prior actions included in revised bailout

A total of twelve energy-sector prior actions have been included in the revised Greek bailout. Of these, legislation will need to be ratified for the implementation of a NOME auction monistoring system as well the increase in electricity amounts to be offered by PPC at the NOME auctions – 16 percent of production in 2017, 19 percent in 2018 and 22 percent in 2019.

Other bailout requirements include the delivery of an action plan to aim at improving PPC’s unpaid receivables situation; a road map detailing the recovery of public service compensation (YKO) payments owed to the utility; a share purchase agreement for the sale of IPTO’s (power grid operator) 24 percent; a new IPTO grid capacity study; as well as gas market reforms leading to a first auction in 2017 offering independent traders 16 percent of the total annual gas amount supplied by DEPA, the Public Gas Corporation, to its customers.

Visiting Eurostat team informs of stricter data monitoring

Eurostat officials completed a two-day visit to Greece yesterday, staged under the radar, as a preliminary step to inform of the Brusssels authority’s plan to carry out stricter monitoring of energy market data, a key aspect in the European Commission’s accumulation of energy-sector statistics and shaping of policies.

On this visit, the Brussels team updated Greek government officials and authorities on issues such as Eurostat data-collecting methods, recent revisions made, issues that could arise as a result of these changes and the legal framework surrounding energy market statistics.

Requirements linked to the EU “winter package” of energy sector measures were discussed. New demands required by Eurostat were also highlighted during the two-day visit.

Both sides also took the opportunity to exchange ideas that could improve the collaboration and discussed initiatives that may be needed for improvements should any gaps or shortcomings be detected.

 

 

Bailout energy sector differences expected to be bridged by Friday

The gap dividing Greece and the country’s lenders on energy sector measures needed as part of the effort to conclude the Greek bailout’s second review have been narrowed and should be bridged by Friday, energy minister Giorgos Stathakis announced after emerging from a meeting with lender representatives.

A plan for the sale of 40 percent of main power utility PPC’s carbon-fired production units, as well as a demand by lenders for the utility to increase its electricity amounts offered through NOME auctions – introduced last October to offer independent traders access to the utillity’s low-cost carbon-fired and hydropower sources – stand as the key energy-sector issues of these talks.

According to the agreement, a market test will be staged for old and new PPC carbon-fired power stations to determine the level of investor interest. If deemed to be insufficient, hydropower stations will be added to the power utility’s sale package. Legislative revisions for the number and content of PPC units to be sold are planned for December this year, while the sale process is slated for June, 2018.

A review of PPC’s market share contraction progress, scheduled for June, is unlikely to convince lenders that the utility is on track for a retail electricity market share of 75.24 percent by the end of this year. To get there, the utility needs to shed a further 12 percent from its current market share.

The two sides have agreed to limit potential buyers of PPC units to firms already active in Greece’s electricity supply market.

Also, as demanded by the European Commission, one of the country’s three lenders, electricity amounts to be offered at the NOME auctions will be successively increased through a compounding system. Electricity auction amounts offered each preceding year will be added to the following year’s amount. As a result, PPC will need to offer 20 percent of its output in 2017 and 33 percent in 2018. From then on, amounts are expected to fall as it is anticipated PPC will have sold units and cut its production capacity.

Buyers of PPC’s carbon-fired power stations will also be required to offer electricity amounts to NOME auctions. This measure is expected to prevent uneven competition between enterprises that have bought PPC production units and ones that have not.

An attempt by Greek officials to transfer a 17 percent share of PPC from the TAIPED state privatization fund to a superfund, intended to offer state assets a chance of improving their business performance ahead of privatization, appears unlikely to succeed.

The Greek State would maintain 51 percent control of PPC if privatization of the 17 percent stake of the utility currently under TAIPED’s control is avoided.

Military report highlights region’s complex issues

A report published recently by a high-ranking Greek military academy, believed to echo classified information, notes that the role of the military, among other factors, amid a competitive southeast Mediterranean environment possessing hydrocarbon deposits needs to be defined.

It also makes a note of the ongoing political turmoil in the wider region, including the emergence of fragile states, problems of dysfunctional and failed states, possible de facto border revisions, the role of political Islam, the refugee problem, ambitions of regional countries and competition for energy sources.

The report reminds that the southeast Mediterranean region represents a crucial energy supply corridor for Europe while adding that the EU is heavily dependent on oil and gas imports as 35 percent of these supplies hail from Russia.

This lack of diversification in energy supply also poses a threat for Greece, the military report pointed out.