energy

Energy projects a main focus of new financial support tool

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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.

 

Staff level agreement on energy issues sought today

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Greek energy ministry officials will seek to reach a Staff Level Agreement today, during a teleconference with lender representatives, on the pending energy sector issues required to conclude the bailout’s second review.

A government official with direct involvement in the negotiations told energypress that efforts over the past few days have further narrowed the gap between the two sides. The official described the current differences as marginal.

Technocrats representing Greece and the lenders will seek to find solutions that may satisfy both sides.

Finalizing the details for prospective hydropower station additions to main power utility PPC’s sales package should a market test in September indicate insufficient investor interest in the utility’s carbon-fired power stations will be a tricky issue. Poor results in a forthcoming review to examine the progress of PPC’s required retail electricity market share contraction would force the utilty to add hydropower stations to its sales package.

Energy minister Giorgos Stathakis is battling hard to avoid the inclusion of hydropower units to the PPC sales package. Any formal addition of such a prospect is not expected to go down well within the ranks of the Syriza party, the coalition’s main partner, and, of course, local communities that would be affected.

According to sources, the two sides are expected to agree to the sale of old and new carbon-fired PPC stations representing 40 percent of the utility’s capacity. Details on which units will be picked will be determined over the next six months. The European Commission will be involved in this process.

The agreement is also expected to include a clause requiring the continuation of NOME auctions, not only for PPC but also private-sector buyers expected to acquire carbon-fired stations currently owned by the utility.

NOME auctions were introduced last October in an effort to break PPC’s market dominance by offering independent traders access to PPC’s low-cost carbon and hydropower sources. The NOME auction progress will be reviewed over two stages, initially in June and followed by December.

 

 

Mytilineos Group gearing up for major transformation

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Mytilineos, one of Greece’s leading industrial groups with activities in the sectors of EPC (Engineering-Procurement-Construction), Metallurgy & Mining, and Energy, will soon be transformed from a successful family-run enterprise into a corporation of European standards and reach, chief executive Evangelos Mytilineos noted during a conference call yesterday, staged to present the group’s 2016 financial results and future plans.

Mytilineos concluded the session by noting that he will be speaking as president and CEO of the new group by August, when the current year’s first half results are presented. Results would be rewarding for shareholders, he noted.

The corporate group’s boss highlighted that 2017 promises to be an especially significant year for the group, its administration and subsidiaries.

The transformed corporate group can be expected to produce an annual turnover figure of 1.5 billion euros, an EBITDA performance of 300 million euros, and a net profit of 200 million euros, he noted.

The group’s performance in the first quarter of 2017 confirms that figures forecast for the year last December will be attained, the corporate group’s boss noted.

The group’s Metallurgy division’s performance was mixed in 2016. It experienced a negative first half as a result of unfavorable commodity prices before rebounding for a positive second half.

An energy supply agreement was reached with main power utility PPC, the special consumption tax (EFK) imposed on natural gas was reduced, while the euro-dollar currencies exchange rate proved favorable for the division.

A new cost-cutting program, aiming to reduce costs by 100 to 150 dollars per ton, is now being implemented. This will be a challenging task as the division is already operating as an efficiently lean enterprise.

The Mytilineos boss noted that if the cost-cutting objectives are achieved then group member Aluminium of Greece will operate at a lower cost level than equivalent industries of the Middle East.

The corporate group’s energy division experienced growth and captured an increased share of the retail electricity market in 2016. An important agreement reached with mobile telephony company Cosmote, offering the Mytilineos energy supply firm Protergia major retail market presence through the former’s extensive retail network, was also stressed during the conference call.

Responding to a question on whether the Mytilineos group would consider acquiring main power utility PPC production units, expected to soon be placed for sale as a result of a bailout demand by the country’s lenders, the chief executive remained reserved, noting that the group’s position on the matter would become known if specific proposals are forwarded by the government.

The 2016 performance of METKA, the corporation’s leading international contractor and industrial manufacturing group, was affected by an unstable environment in the Middle East, the chief executive informed. The company is currently undergoing transformation and continuing to strive for diversification both in terms of projects taken on and their geographical location, the CEO informed.

 

 

Compromise deal for PPC units sale demand in progress

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A Greek delegation handling negotiations for bailout-related energy sector measures and the country’s lenders appear to be moving towards a compromise deal on a demand by the latter for the sale of main power utility PPC units.

Spearheaded by energy minister Giorgos Stathakis, the Greek team appears to have accepted the inclusion of PPC units as part of the overall package of measures needed to conclude the bailout’s prolonged second review.

In response, the lenders seem to be easing up on earlier pressure for a sell-off representing 40 percent of PPC’s lignite-fired and hydropower station capacity. This proportion may now be lowered.

Though finalized agreements were not reached, sources noted that considerable progress is being made at the talks, in Brussels.

Latest developments suggest that the Greek team is striving to keep the utility’s hydropower stations out of the formula for an agreement but the lenders consider their inclusion essential. The Greek team is also seeking to limit the lignite-fired PPC units to be included in the sale package to older units with less operating time remaining, meaning ones set for withdrawal by 2020, such as the utility’s Amynteo unit in northern Greece.  The lenders want more modern facilities, such as the Meliti unit, also in the country’s north, to also be included in the sale package.

The redirected focus of the talks, now seeking a solution on the content of PPC units to be included in the sale package, represents a significant step ahead for the negotiations.

According to energypress sources, the lenders have reiterated a demand for the provision of detailed information on each of the PPC units. The Greek team has pledged it will deliver. The continuation of the talks will be subject to the Greek team’s response to this request. The information is expected to be used to prepare the list of PPC units that will be put up for sale.

A formula is still being sought to ensure that any agreement reached bypasses Greek Parliament and avoids the need for legislation. The Greek coalition holds a slim majority in the house.

 

 

Effort to cover up minister’s Brussels trip suggests unease about PPC

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Bailout-related energy sector talks for measures being negotiated by Greek government officials and the country’s lenders will resume in Brussels today without any narrowing of a gap left last time the two sides met in Athens a couple of weeks earlier.

The government is exteremely concerned that demands by the lenders for the sale of main power utility PPC units will spill over into the country’s political arena and destabilize the coalition, holding on to a slim majority.

Reflecting this unease, energy minister Giorgos Stathakis and his associates appear to have attempted to cover up his trip to Brussels. The minister was notified about the need to be in Brussels on Monday but news of the trip only became known after information was leaked yesterday.

In recent days, the government seems to have misled the media by creating an impression that energy issues would be temporarily put aside in the latest bailout review talks so as to allow for the negotiating sides to focus on pending labor matters.

Stathakis, who flew to Brussels from Berlin, where he was invited to attend an energy conference, will remain in the Belgian capital for as many days as are required for the negotiations, government sources informed.

The European Commission, which has emerged as the prime negotiator among the country’s lenders for energy sector matters, appears to be giving up on the recently introduced NOME auctions as an effective tool that may reduce PPC’s dominant market share and is expected to push hard for the sale of PPC units.

Local market players are maneuvering in anticipation of such a development. Chinese firms, they believe, will play a key role if PPC units are sold.

 

 

Energy issues, on hold, must be cleared for review conclusion

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Disagreements and pending issues concerning bailout-related energy sector measures are high on the agenda and will need to be overcome if the ongoing and prolonged second review of Greece’s program is to be concluded, European Commission officials have underlined.

Creditor representatives cannot be expected to return to Athens in the effort to conclude the bailout’s second review unless the pending energy issues are resolved, an official in Brussels has pointed out.

A decision by finance minister Euclid Tsakalotos, his deputy Giorgos Houliarakis, as well as labor minister Efi Achtsioglou to remain in Brussels yesterday appears to be linked to an effort aimed at settling pending labor issues. A team of IMF officials is currently also in Brussels. It has become apparent that the Greek bailout’s second review will not be concluded unless the IMF offers its approval, especially on labor measures.

This does not appear to be the case with the energy-sector issues. Convergence with the European Commission on a schedule mapping out a sale plan for main power utility PPC units would suffice for an agreement at a technical level.

Also yesterday, energy minister Giorgos Stathakis was in Berlin to participate in an energy conference before heading to Italy following an invitation by Italian multinational oil and gas company Eni to discuss hydrocarbon prospects.

Though Greece’s energy issues appear to have been temporarily placed aside as government officials grapple with the lenders on labor matters, the second review’s finalization cannot be expected without an agreement on the future of Greece’s electricity market and PPC.

According to sources and leaks, government officials have now realized that the lenders will not tolerate any further maneuvering from the Greek side that could delay the implementation of inevitable structural reforms needed to support the electricity market’s liberalization.

Certain sources claim that PPC has already begun preparing a portfolio of company units to be sold. Utility officials hope a downsize will reshape the corporation as a leaner but meaner enterprise.

 

DEPA forms retail gas division for changing energy market

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Upcoming legal framework revisions and the imminent full liberalization of Greece’s natural gas market as of January 1, 2018 promises to reshape the retail energy market. The players, old and new, have already begun preparations.

According to latest information, DEPA, the Public Gas Corporation, is now establishing a retail division to be tasked with running the corporation’s imminent retail activities in the electricity and natural gas markets.

As was disclosed by energypress last November, DEPA has made changes to its company charter in order to widen its activities and participate in the electricity supply and waste management sectors.

Just days ago, EPA Attiki, a DEPA subsidiary that has made moves to now operate independently, unveiled a new business plan that includes an entry into the electricity supply market.

DEPA’s revision to also facilitate its entry into the retail gas and electricity energy markets at the beginning of 2018, along with plans by independent electricity suppliers to offer combined electricity and gas packages to households, promises to completely alter the local energy market’s retail landscape.

At this stage, it remains unclear whether partnerships will be established. Plenty of maneuvering by players exploring their options is now in progress.

EPA Attiki’s moves so far indicate that the company will operate independently. As for DEPA, its existing ties with major-scale industrial enterprises stand as a key strength.

 

Improved weather forecast eases energy system pressure

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A considerable rise in temperatures forecast for central Europe around the middle of next week comes as welcome news that will ease the pressure on Greece’s energy system. Temperatures in Europe, including Greece, are expected to increase by as much as 10 degrees Celsius.

The country’s energy system experienced heightened pressure over the past few days, cold weather being a major factor. However, contrary to the energy crisis in late December and early January, the energy market proved far more sensitive this time round. Problems encountered were reflected by higher prices.

As a result, the elevated prices helped avoid electricity outflow abroad, instead prompting increased electricity imports to satisfy the heightened demand.

In addition, RES production has risen over the past few days, helping ease the pressure on the system. Wind farms, for example, are expected to contribute roughly 26,200 MWh to the grid today.

An extraordinary LNG shipment is expected to arrive at Greece’s terminal on the islet Revythoussa, just off Athens, on February 3. Its arrival will further de-escalate the pressure, at least for the time being.

Regulatory measures prepared as gas supply crisis persists

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Local authorities are still struggling to combat the ongoing energy crisis. The ill-equipped market, not possessing mechanisms that could help secure equilibrium, has made the task extremely difficult. Highlighting the unsettled situation, DEPA is continuing to ship in emergency LNG orders from Algeria, trans-boundary trade is up, while natural gas-fueled power stations are producing at full capacity.

The crisis has emphatically exposed the many pending issues that need to be resolved in order to establish a complete and coherent regulatory framework for the natural gas market. A market mechanism that is capable of coordinating consumption prices and demand does not exist. Any such related provision is also missing from agreements signed between major gas-fueled electricity producers and DEPA, the Public Power Corporation.

Measures needed for the market’s smoother functioning include the establishment of daily and futures markets, in line with the electricity market.

A procedure forecasting natural gas consumption level patterns is necessary. Admittedly, it would be extremely difficult to establish a mechanism that could factor in small-scale demand patterns concerning regular households. However, the needs of major-scale consumers – industry and, especially, electricity producers – are easier to anticipate and are aided by the existence of daily and futures markets.

Highlighting the local market’s persisting unsettled state over the past few weeks, the extraordinary natural gas amounts required to keep the country’s energy system balanced during the first ten days of 2017 represents 20 percent of the total amount needed for the same purpose throughout the entire year in 2016.

DEPA’s LNG shipments from Algeria’s Sonatrach and the spot market are being secured at far higher costs.

 

New Brussels-required energy strategy committee imminent

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A special committee to be charged with preparing a new national strategic energy plan required by the European Commission is expected to be established within February through a ministerial council decision.

This committee is needed as a result of the European Commission’s recently presented “winter package”, requiring all EU member states to prepare national energy and climate strategies within 2017. Targets looking ahead to 2030 are expected.

According to energypress, the procedure for the establishment of the Greek committee has been prepared.

The committee’s national energy and climate strategy will need to take into account new conditions and needs, offer solutions to the country’s energy portfolio and determine investment and infrastructure development needs, all within an EU context.

The strategy will also need to provide guidelines for further renewable energy sector growth; a balanced energy production technology mix; energy efficiency improvement; increased conventional energy source diversification through development of natural gas pipelines as well as natural gas and oil storage facilities; and development of interconnections and digital networks.

New market systems, including secondary markets, for both the natural gas and oil sectors will also be included in the national strategy.

Convergence with Brussels on energy matters, minister tells

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Greece’s energy sector matters stand on common ground with the expectations of European Commissioner for Climate Action and Energy Miguel Arias Canete, the country’s energy minister Giorgos Stathakis, sided by the commissioner, told a joint news conference in Athens this afternoon.

Commenting on the ongoing negotiations between Greek government officials and the country’s creditor representatives on energy matters, Stathakis said the two sides shared common views on the DESFA sale, set for a new international tender following the recent collapse of the previous sale effort, as well as on the recently introduced NOME auctions, intended to reduce the main power utility PPC’s still-dominant market share.

Greece’s energy market is undergoing a transition period, the minister noted. A new institutional framework being developed by the European Commission as part of its target model will be adopted as of January 1, 2018.

PPC will meet its market share contraction targets in 2017 and 2018, the minister assured, while adding that the utility’s bailout-required market share fall to 50 percent of the retail electricity market by 2020 will be achieved.

As for PPC’s future prospects, Stathakis noted the utility will remain a powerful corporation, acknowledging that competition is intensifying.

Commenting on the renewable energy sector, the minister said that coal-based electricity production has fallen to 30 percent of the energy mix from 45 percent over the past two years. This does not mean that the intention is to wipe out coal-based electricity production, Stathakis remarked. On the contrary, the aim is to maintain this low-priced energy producing source within EU target figures.

The effort to further boost the RES sector, already representing 18 percent of Greece’s energy mix, will be continued, he noted.

 

 

New energy fears prompted by delayed Algerian LNG delivery

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A delay in the expected arrival of an extraordinary Algerian LNG shipment, which was scheduled to arrive in Greece this Saturday, has raised concerns among local energy authorities, including RAE, the Regulatory Authority for Energy, all coordinating their efforts to combat a new European energy crisis anticipated over the next few days as a result of sub-zero temperatures that have been forecast around the continent.

The delay, caused as the Algerian port at which the LNG order was expected to be loaded remained closed today, means that LNG reserves at the Greek terminal on Revythoussa, an islet just off Athens, will run out on Saturday.

This unexpected LNG shortage will require local authorities to resort to alternatives. The electricity output of Greece’s renewable energy facilities, especially wind farms, will be pivotal. Windy conditions are being hoped for by authorities.

The country’s energy crisis management team is expected to convene today and assess the situation as a result of the delayed Algerian LNG delivery. Emergency measures may need to be taken.

Greece’s energy warning system has remained elevated at Level 2 Alert as local authorities are bracing for heightened pressure on the grid between January 22 and 30.

The grid is operating at full scale to meet local requirements, prompting swift consumption of LNG amounts shipped in to the Revythoussa station, Greece’s only LNG terminal at present.

 

Europe’s operators taking emergency measures as new energy crisis looms

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Energy network operators around Europe are taking emergency measures as the threat of another energy adequacy crisis is considered possible over the next few days due to sub-zero temperatures forecast for around the continent and current power production limitations in France. The prospect has prompted fears of electricity blackouts.

France’s diminished electricity production capacity, caused by the temporary withdrawal of nuclear power stations, is at the core of Europe’s energy adequacy concerns. Electricity may have to be imported from neighboring countries.

According to forecasts, the current week’s remainder poses the biggest threat, prompting Europe’s operators to take action.

Reliable European sources believe that the looming energy crisis, following two preceding periods of turmoil experienced over the past few weeks, could develop into a crisis of major proportions as the energy deficit in France may reach as much as 1.5 GW. Analysts believe France’s electricity grid will be particularly challenged if demand exceeds 100 GW.

Thursday evening, around 19:00 French time, has been pinpointed as the time period of greatest concern. Domestic electricity demand is forecast to reach 101.6 GW, just 600 MW below the all-time record set on February 8, 2012. French electricity production capacity has fallen to 104 GW since the start of the year as a result of the temporary withdrawal of nuclear power stations. The country’s production capacity in 2012 measured 126.4 GW.

Highlighting the level of concern, Professor Damien Ernst of the University of Liege in Belgium, a country where strategic power reserves are maintained through power stations not normally used, warned that importing electricity could prove difficult.

“Even by activating the strategic reserve, we will need to find 1,700-1,800 MW from abroad, most likely from the Netherlands. But France and Belgium will both want to be able to import electricity from the Netherlands, so the risk is that it could even be difficult to import these 1,700-1,800 megawatts from this country,” Professor Ernst told Euronews.

Measures are also being taken by operators in the Balkans, a region where questionable moves were made during the recent energy crisis. Bulgarian authorities, for example, opted to stop electricity exports. The measure remains valid. Also, Romania refused to accept a Bulgarian request for increased exports to the latter country. Romania is considering imposing an electricity consumption restriction on the country’s industrial sector, according to local press.

European Parliament ETS decision vital for grid upgrade

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The country’s serious electricity capacity issues exposed by the recent energy crisis has once again brought to the fore wider discussion on the need for an upgraded energy system, especially in electricity production.

The crisis highlighted the need to start shaping medium-term plans now in order to avoid a repeat. Of course, the necessary funds for investments to upgrade the country’s electricity production sector are a prerequisite.

The main power utility PPC has proposed that planning gets underway ahead of the imminent concluding talks for revisions to the EU Emissions Trading System covering 2021 to 2030. European Parliament is scheduled to  reach final decisions on February 15.

According to PPC, the fulfillment of its position on carbon emission allowances – the utility is seeking free rights – would significantly contribute to the effort to upgrade Greece’s energy system.

The utility has pointed out that the recent energy crisis exposed the energy system’s weak spots. The crisis highlighted the pivotal role played by the country’s lignite-fired power stations and hydropower units, the need to schedule coal mining production, as well as the need for effective coordination of energy production units entering and exiting the system. The crisis also exposed interconnection insufficiencies and the energy supply security dangers these caused, as was the case for the wider region. The system’s inability to rely on natural gas and renewable energy production was also highlighted by the experience.