Vigilance required, new danger from France expected next week

DESFA, the natural gas grid operator, still apprehensive as a result of the energy warning system’s rise to Level 2 Alert over the past few days, has requested suppliers and gas-fueled electricity producers to submit consumer demand forecasts for the next seven days.

The arrival of an Algerian LNG ship yesterday to Greece’s terminal on Revythousa, an islet just off Athens, helped ease the pressure on the system. A further LNG shipment measuring 110,000 cubic meters is expected on January 20.

Local authorities need to remain vigilant. An electricity demand forecast made for yesterday by IPTO, the power grid operator, was nearly 1,000 MW below actual demand at midday.

ENTSO-E, the European Network of Transmission System Operators, has warned that new issues for European networks are possible as a result of problems expected in France next week.

It remains unclear who will be responsible for covering the cost of the energy crisis experienced. Besides the freezing temperatures, the crisis was primarily caused by market mechanism shortcomings and deficiencies.

As a result of the elevated energy demand in Greece, DEPA, the Public Gas Corporation, has been forced to make emergency LNG orders from Algeria, which costs 40 percent more than regular Russian supply. Spot market orders are even more costly, reaching 80 percent above usual levels.

Though DEPA normally charges its buyers accordingly, the corporation absorbed the additional cost entailed during the country’s first energy crisis over the festive season, but this cannot be continued. Consequently, the additional gas import costs will most likely be passed on to gas-fueled electricity producers, industries and households.

Electricity’s System Marginal Price (SMP) has remained low amid the energy crisis because the main power utility PPC, as the dominant supplier, opted to shoulder the bulk of the burden. Subsequently, the low SMP levels encouraged exports and prompted a demand increase for natural gas.

 

 

 

 

Ministry content with energy alert handling, now ‘resolved’

The energy ministry has expressed satisfaction over the handling of the country’s energy alert by sector authorities, while adding that the situation has now been normalized.

Energy ministry officials also confirmed the arrival today of an Algerian LNG shipment at Greece’s terminal on Revythoussa, an islet just off Athens, which was necessary to boost natural gas input to the system as a result of record demand levels reached over the past few days.

According to the energy ministry, the emergency situation experienced over the past few days, which lifted the energy warning system to Level 2 Alert, was attributed to three factors, the drop in wind and solar energy production as a result of the weather conditions; the disruption of two main power utility PPC power stations; and Greece’s inability to import electricity from neighboring countries, as they, too, needed to counter energy shortages of their own.

Today’s LNG shipment arrival, along with a coinciding rebound in wind energy production due to improved weather conditions, played fundamental roles in normalizing the situation.

The energy ministry also informed that a specific strategy factoring in Greece’s electricity imports and exports has been prepared for January and February to prevent a further energy crisis this winter.

Even so, the energy alert of the past few days has exposed a series of issues, both domestic and European, as energypress has been extensively reporting.

Hydropower plants, exports, industry key tools in energy crisis battle

Local energy authorities are heavily relying on hydropower station output, electricity export restrictions, activation of the demand response mechanism limiting industrial energy use during peak hours, as well as a new LNG delivery to the terminal on Revythoussa, an islet just off Athens, in the effort to safeguard the country’s energy adequacy level.

A main power utility PPC lignite-fired power station in northern Greece’s Florina region, ousted just days ago by the strains of the high energy demand, has returned to action and is now contributing to the grid. The unit, located in Amynteo, is one of four lignite-fired stations sidelined in recent weeks. Two of these have been temporarily closed for desulphurization maintenance work.

The aforemenioned factors have by no means resolved the energy crisis. Two nights ago, electricity demand in Greece reached 9,300 MW, the highest level recorded in five years.

Electricity export interruptions – imposed yesterday afternoon – to Albania, the Former Yugoslav Republic of Macedonia (Fyrom), Bulgaria and Turkey, contributed a further 150 MW to the country’s grid.

Steel and cement producers that activated the demand response mechanism yesterday afternoon, will allow a further 300 MW to be used by the grid over a 48-hour period. Likewise, Aluminum of Greece contributed 287 MW through the demand response mechanism. It enables major industrial enterprises to benefit from energy cost savings in exchange for shifting energy usage to off-peak hours whenever required by the operator.

PPC’s hydropower plants are taking on the bulk of the energy crisis challenge. These units can produce as much as 2,400 MW when operating at full capacity.

Any further lignite-fired power station technical setbacks need to be avoided to avert a further energy warning system rise to Level 3 Alert. It was lifted to Level 2 Alert just days ago. Should any lignite-fired power stations be sidelined, natural gas-fueled power stations will need to fill the gap, which would subsequently place a major strain on the LNG reserves at the Revythoussa terminal, as was the case a few days ago.

A 114,000-cubic meter LNG shipment from Algeria is being unloaded today at the Revythoussa facility, controlled by DESFA, the natural gas grid operator. It was preceded by a 140,000-cubic meter shipment two days earlier. Natural gas demand struck an all-time national record on Monday, reaching 290,000 MWh.

If power cuts to households and enterprises are needed, despite the reinforcements, then authorities will activate an automatic mechanism that would remove 250 MW, before continuing with further amounts, in order to stabilize the grid.

Fearing the political cost this would entail, the government wants to avoid such an outcome, as was made clear yesterday at an energy ministry meeting headed by energy minister Giorgos Stathakis.

Lessons learnt from second energy crisis in a few days

The country’s second energy crisis in just a few days has served to further highlight a series of energy market problems and voids that led to misjudgments and pushed the energy system to the verge of collapse. It seems that a degree of luck helped avert such an outcome. The response by authorities to raise the energy system to Level 2 Alert just two days ahead of a natural gas shortage most probably came a little too late.

The basic lesson learnt from the crisis, one which all market players need to pay close attention to, is that the energy market’s demand-related issues have shifted in terms of time and no longer concern the summer period, as was the case in the past, but the winter. Energy demand peaks during the summer months are nowadays resolved with relative ease courtesy of contributions made to the grid by solar producers during the daytime and natural gas-fueled power stations at nighttime. Unlike the winter period, natural gas supply has never been an issue during the summer.

As things turned out, a decision by IPTO, the power grid operator, and its parent company, the main power utility PPC, to temporarily close two lignite-fired power stations for desulphurization maintenance work proved to be a bad move. The missing input to the grid of these two units was crucial. Electricity exports needed to be restricted as of yesterday afternoon, while interconnections were closed today for the energy system to regain its balance.

A second lesson learnt from the crisis is that the market, as it currently operates, does not reflect the true cost of natural gas and electricity amid adverse conditions. Energy price levels soared throughout Europe, including in neighboring Bulgaria, as a result of the extreme weather conditions, but they remained subdued here.

Contrary to certain previous criticism, the demand response mechanism offered to industrial units proved to be a pivotal tool in the effort to overcome the energy crisis, both in cases of units fueled by gas and – especially – electricity.

The demand response mechanism enables major industrial enterprises to benefit from energy cost savings in exchange for shifting energy usage to off-peak hours whenever required by the operator.

The crisis also highlighted, yet again, the lack of coordination between authorities and the Greek State. Meteorologists had warned of the bad weather coming but the Greek State was caught off guard, overall, not just for energy matters.

 

Misjudgments, market issues highlighted by energy crisis

A series of energy system problems and insufficiencies encountered as a result of the country’s latest energy crisis, which struck just days and has yet to ease, has underlined a misjudgment of forecasts and market operation limitations.

Market conditions that do not allow for a true reflection of energy costs amid times of crisis have emerged as the main problem, which is causing a domino effect and severely limiting the capacity for action.

The cost of additional gas required amid the energy shortage has remained low. This has not troubled consumers and suppliers from demanding a gas amount exceeding usual levels by 110,000 MWh over a period of just two days. It will result in a slight shortage tomorrow.

Likewise, the electricity market’s System Marginal Price (SMP) is today expected to reach just 77.80 euros per MWh, following a level of 60.60 euros per MWh yesterday and 50.30 MWh on Sunday. Such subdued price levels rule out the possibility of electricity imports, especially when market forces in neighboring countries actually work and extreme weather conditions impact the cost of energy. For example, the cost of electricity in Bulgaria currently exceeds 100 euros per MWh.

Subsequently, the local system faces the challenge of overcoming the current energy crisis by pushing the country’s hydropower stations to their limits. A number of main power utility PPC lignite-fired power stations have been forced out of action amid the strain. If the freezing weather conditions persist, more units could be sidelined.

A decision by local authorities to withdraw two power stations for an extended period of time, in order to conduct desulphurization maintenance work, has proven to be a bad move in terms of timing.

As for the gas market, DESFA, the natural gas grid operator, clearly underestimated the situation. Its forecasts ended up falling well short of actual consumption levels. Suppliers who misjudged the market’s conditions are also responsible.

 

 

 

 

Energy system stretched to its limits by freezing weather

The surge in demand for electricity and natural gas prompted by the freezing weather conditions around the country has been met by the enforcement of emergency measures intended to protect the grid’s sufficiency following a crisis management team meeting convened by RAE, the Regulatory Authority for Energy.

Both the electricity and natural gas grids have been stretched to their limits and power cuts have not been ruled out.

Over the past few days, natural gas demand peaked at 279,000 MWh, exceeding the previous high of 220,000 MWh. Electricity demand also rose to levels of over 9,000 MW and is expected to exceed 9,400 MW today, a level not reached in years.

Natural gas imports from Bulgaria and Turkey are flowing at the levels agreed to with suppliers. Further increases are not possible as a result of the high demand also being experienced throughout Europe and Turkey.

A 75,000 cubic meter LNG shipment that arrived at the terminal on Revythoussa, an island just off Athens, last Saturday was expected to last until tomorrow but, at the current consumption rate, will run dry sooner. The next LNG shipment, measuring 120,000 cubic meters, is due to arrive tomorrow, its unloading procedure scheduled to start at 1pm. The combination and timing of events will produce a marginal shortage of 34,600 MWh.

As for the electricity grid, four main power utility PC units are out of action. Two of these are undergoing scheduled desulphurization maintenance work while a further two units were knocked out by the high demand on Sunday and yesterday, respectively.

In addition, electricity imports are not possible as a result of the low prices in Greece and high prices in Bulgaria. As anticipated, renewable energy output has diminished. Solar units are not producing while wind energy farms are delivering small amounts.

All gas-fueled power stations have been ordered to operate today, while hydropower station output is expected to increase significantly to a level of about 22,000 MWh.

Emergency measures taken include limiting gas consumption at industrial units and activating the demand response mechanism for industry, today and tomorrow. Cement and steel producers are expected to be the main contributors with savings of roughly 300 MW.

The demand response mechanism enables major industrial enterprises to benefit from electricity cost savings in exchange for shifting energy usage to off-peak hours whenever required by the operator.

Energy system raised to Level 2 Alert amid freezing weather conditions

The country’s energy system was raised to Level 2 Alert today as a result of the increased demand for electricity and natural gas prompted by freezing weather condition around the country over the past few days.

The Greek energy system also needed to be raised to Level 2 Alert just prior to the festive season. This move was attributed to the temporary closure of French nuclear power stations, which caused an energy supply crisis in the wider region.

DESFA, the natural gas grid operator, raised its warning system to Level 2 Alert today after concluding that existing LNG reserves at the terminal facility on Revythoussa, an islet just off Athens, are insufficient to cover demand until the arrival of an extraordinary LNG shipment scheduled to arrive on Wednesday.

DEPA, the Public Gas Corporation, has secured emergency LNG orders from Algeria, while no problems have been reported in the delivery of natural gas from Russia’s Gazprom, via Sidirokastro, northeastern Greece, and Turkey’s Botas, via Kipous in Evros, also in the northeast. Even so, the extraordinarily high demand for energy registered over the past few days amid persisting low temprarures has forced local authorities to re-raise the energy system to Level 2 Alert.

Energy supply crisis to prompt gas, electricity sector measures

The energy supply crisis experienced in Greece over the past few days, prompted by the temporary withdrawal of nuclear power stations in France, appears set to serve as a pretext for restructuring in the natural gas sector.

The recent developments exposed the current system’s limits while highlighting that the natural gas sector is well behind at regulatory and market operation levels, sector officials told energypress. Necesssary mechanisms that may readily detect possible problems and help the market regain balance are lacking, the officials stressed.

According to energypress sources, action will be taken along two fronts. RAE, the Regulatory Authority for Energy, is expected to include a safety mechanism into the high pressure gas code revision. Its components will include a mandatory quantity scheduling mechanism to coordinate transactions between suppliers and major consumers, especially electricity producers. This will allow for timely consumption level forecasts over short and medium-term periods. Obligations included in agreements between suppliers and major-scale consumers will be included in the code and monitored by DESFA, the natural gas grid operator.

As for the second front, the government is expected to take legislative action that will establish a new institutional framework for the electricity market, its key element being the creation of primary markets. This initiative could be completed within 2017.

“It is completely irrational to have a major natural gas shortage that is not reflected, in any way at all, in the fuel’s market price,” one sector official remarked.

 

National energy plan in the making, lignite gains ground

The Environment and Energy Ministry is expected to soon launch procedures for a National Strategic Plan concerning energy sector objectives in 2030. The European Commission’s recent winter package obligates all EU member states to present a national energy and climate plan within 2017.

Greece’s lignite sources, a fundamental energy source for the country, are expected to figure as a pivotal aspect of the national plan. The current energy crisis in Europe and its wider impact stands as a key reason behind the insistence on coal as a vital domestic energy source.

According to energypress, Greece’s energy ministry will soon assemble a working group that will be charged with preparing a proposal based on new conditions and needs. It will provide answers to fundamental questions concerning the country’s energy mix, required investments and needed infrastructure, based on EU directives and obligations.

Besides the gradual expansion of the role to be played by the renewable energy (RES) sector, the presentation’s other key obectives will be to achieve a balanced mix of technologies used for energy production; improve energy efficiency; and further diversify conventional energy sources through the development of oil and gas transmission and storage infrastructure, electricity interconnection projects and digital power meters that will help combat fluctuating energy supply stemming from renewable energy and decentralized sources.

Europe’s recently emerged and ongoing energy supply crisis, prompted by the temporary withdrawal of French nuclear power stations, has already made firm impact and served as a lesson that will be taken into account by Greece when preparing the National Strategic Plan, sources informed.

The same sources noted that lignite, as the fundamental domestic energy source, will need to keep playing a key role in Greece’s energy mix for many years to come. The transition to the post-lignite era will need to be made based on terms that ensure energy security for the country, the sources said.

Highlighting this point, the crisis of the past few days could not have been combated had it not been for the crucial contributions of the country’s lignite and hydropower units, operating at maximum levels, the sources stressed.

 

Arrival of Sonatrach LNG load eases grid’s capacity pressure

Capacity shortage pressure faced by Greece’s electricity grid has been successfully dealt with following yesterday’s arrival of a 130,000 cubic-meter Algerian LNG order at the country’s terminal facility on Revythoussa, the islet just off Athens.

The LNG carrier, which arrived at the facility operated by DESFA, the natural gas grid operator, yesterday morning, to deliver an order placed by the operator’s parent company DEPA, the Public Gas Corporation, to Algeria’s Sonatrach, was fully unloaded by late last night.

The country’s energy system was placed on Level 2 Alert last week, prompting a crisis management team at RAE, the Regulatory Authority for Energy.

Despite the refill at the Revythoussa facility, local authorities will remain vigilant as a result of a sharp drop in temperatures forecast for later this week.

The energy alert was prompted by the temporary closure of a large number of nuclear power stations in France, causing energy supply problems in the country. This led to wider impact as France needed to draw all spot-market loads in the Mediterranean. As a result, Greece and other countries were unable to secure LNG loads in the market to cover their energy needs. This prompted DEPA to place the emergency 130,000 cubic-meter order with Sonatrach. As a further measure, electricity producers were ordered to cut back on gas consumption.

Electricity contributions by various hydropower stations in Greece, as well as increased renewable energy production, helped overcome the crisis.

Energy alert system lowered, industry’s cooperation pivotal

Greece’s energy capacity warning system was lowered to Level 1 Alert yesterday after the grid’s operator determined that the natural gas reserves are now back up to a level sufficient to cover the country’s needs for a seven-day period.

The alert system had been raised to Level 2 last Wednesday, prompting the need for emergency action. RAE, the Regulatory Authority for Energy, and the energy ministry convened for emergency meetings and took action in order to ensure sufficient energy levels for the festive season. Additional LNG amounts were shipped in.

Natural gas-fueled power station operators volunteered to interrupt production at their facilities while IPTO, the power grid operator, activated the demand response mechanism, which enables major industrial enterprises to benefit from electricity cost savings in exchange for shifting energy usage to off-peak hours.

According to sources, the long-term demand response mechanism was activated for 48 hours, last Friday and Saturday, saving 550 MW, while the short-term mechanism was enforced for an hour on Friday afternoon, saving 650 MW.

The industrial sector’s cooperation proved pivotal in the effort to combat the energy emergency.

High RES output, swifter DEPA gas order combat energy alert

The country’s energy system has been placed on Level 2 Alert, prompting a crisis management team at RAE, the Regulatory Authority for Energy, to convene yesterday for marathon talks that are expected to be followed up today with an additional session involving major-scale energy consumers.

Greece’s energy level alert already appears to be heading towards normalization as a result of two key factors.

DEPA, the Public Gas Corporation, has managed to swiften the delivery date of a major 130,000 cubic-meter LNG order. Its delivery, originally due to arrive at the country’s LNG terminal in Revythoussa, an islet just off Athens, on December 26, has been rescheduled for December 24.

The significant level of Greece’s renewable energy (RES) output has also proved crucial to avert a bigger crisis. The wind energy sector is today expected to contribute a precious 32,000 MWh electricity amount to the energy system. Market sources informed energypress that this amount is literally keeping the energy system standing.

According to the day’s grid plan, natural gas-fueled power stations are scheduled to provide significant electricity amounts, while most of PPC’s lignite-fired power stations, as well as hydropower facilities, are being called into action.

Demand for natural gas, expected to be particularly high today, is forecast to reach 227,000 MWh.

These extraordinary conditions, also expected to apply pressure on the system tomorrow, should be back to normal on Saturday when a major 130,000 cubic-meter LNG load, supplied by Algerian energy firm Sonatrach, is set to arrive.

Officials at today’s follow-up RAE meeting will further evaluate the situation and decide whether additional measures are required.

An energy-level crisis in the French market has significantly contributed to an increase of Greek exports. Local officials have requested that export limits be imposed as a result of the increased pressure being encountered by the Greek system. However, such a solution is viewed as one that contravenes EU principles.

Europe taking precautionary measures to avoid cold winter

The European Commission is taking precautionary measures to avoid any natural gas supply issues this winter, expected to be particularly cold.

Last week, Maros Sefcovic, the European Commission vice president responsible for Energy Union, met in Moscow with Russia’s energy minister Alexander Novak. The two officials decided to hold a follow-up meeting, with Ukraine represented, to focus on natural gas and its transportation to Europe.

Sefcovic has stressed that Russia and EU depend on each other when it comes to energy matters. “The EU is a basic export destination for Russian fuels and payments are made on time with hard currency,” Sefcovic pointed out. “The EU wants to continue buying Russian natural gas in the future,” he added.

Just days ago, on November 24, the EU and Ukraine signed a ten-year memorandum of cooperation for a strategic energy alliance, which reinforces an agreement reached between the two sides in 2005.

Greece finds itself at the core of the wider region’s energy developments. Various scanarios being contemplated and discussed include Greek territory or activity by the country’s borders.

The Southern Corridor and LNG supply are high-priority items on the US agenda for the southeast European region. Studies have shown that LNG transportation will eventually overshadow gas pipelines, internationally, in terms of importance. The US is seeking the lion’s share of the LNG transportation market. US President-elect Donald Trump has promised to place emphasis on US exports.

The natural gas market was also a key matter during a recent meeting in Athens between Greek Prime Minister Alexis Tsipras and US President Barack Obama. Subjects covered by the two leaders included the TAP, IGB and Alexandroupoli LNG terminal, as well as deposits in the eastern Mediterranean.

European Commission energy sector proposals due tomorrow

The European Commission’s “winter package”, a series of proposals representing an effort to modernize Europe’s energy system, is expected to include legal framework revision proposals aiming to normalize conditions in the sector and provide growth potential. At this stage, many issues remain unresolved. Even so, the “winter package” is expected to be published tomorrow.

One detail drawing plenty of attention concerns the wording and terms to be employed by the European Commission to define energy storage. The prefered definition, according to a text that has been leaked, will allow for the use and storage of hydrogen-based systems.

The “winter package” also includes incentives for services offering flexibility, the aim being to boost energy storage and promote the development of small-scale RES production.

The text also notes that operators will not be able to own, develop or operate energy storage facilities.

Energy firms have protested the practice of network usage double charges, or fees paid to load and unload energy storage units. Energy firms argue that the same rules do not apply for all European markets. The European Commision is not expected to offer specific solutions at this stage. Its response, based on the text made available, is limited to a request for fair practices in all markets for all energy storage technologies.

PPC, DEPA meetings two steps towards new-look sector

The coinciding general shareholders meetings today at main power utility PPC and DEPA, the Public Gas Corporation, symbolize, in a sense, concurrent developments in the electricity and natural gas markets that are leading the country towards a new-look energy sector.

At PPC, barring no unexpected developments, shareholders are expected to approve the recent announcement of SGCC, the State Grid Corporation of China, as the prefered strategic investor of an international tender offering a 24 percent stake of Greece’s power grid operator IPTO, until now a wholly owned PPC subsidiary. SGCC emerged as the winning bidder with a 320 million euro offer.

Based on the sale plan, the prospective buyer will need to submit a six-month letter of guarantee of 20 million euros. Also, in 2017, PPC will be the recipient of dividends to be distributed by IPTO for the 2016 financial year. These will be worth 35 percent of IPTO’s net profit.

Another clause in the sale agreement specifies that a 5 percent surcharge will be added to the 320 million euro sale price if the transfer of shares from IPTO to SGCC is not completed within 2017. If needed, a further 4 percent will be added for 2018.

Also, SGCC will not have the right to transfer its stake in IPTO for a two-year period.

The sale’s terms also obligate IPTO to pay PPC of 131 million euros minus taxes as a cash upstream payment, which, according to sources, represents a return of capital as a result of the capitalization of fixed assets at IPTO.

At the DEPA meeting, also today, shareholders are expected to endorse the natural gas distribution division’s split from the corporation as a step towards establishing a new wholly owned subsidiary to handle natural gas distribution to new networks in urban centers such as Halkida, Lamia, Thebes and Livadia, whenever the required infrastructure in these regions is developed.

The new DEPA subsidiary will be granted full independence. The parent company will not have a say in its administrative matters, including choice of board.

Ultimately, once all distribution activity is taken away from DEPA, the parent company will focus on matters such as supply, trade and international contracts.

 

 

PPC, DEPA, ELPE privatizations to remain on TAIPED agenda

TAIPED, the State Privatization Fund, is expected to keep the energy utility privatizations concerning the main power utiliy PPC (17%), the Public Gas Corporation DEPA (65%) and Hellenic Petroleum ELPE (35%) on its updated strategic plan, sources have informed.

A draft plan of pending privatizations forward by the country’s creditor representatives to the Greek government includes all three as well as slow-moving and troubled privatization efforts such as that of DESFA, the natural gas grid operator.

These will all be included in TAIPEDs’s new Asset Development Plan (ADP), updated every six months. A total of 17 privatizations are expected to be included on the next ADP list, two less than in May. The sales of Piraeus Port Authority (OLP) and the Asteras hotel resort in Vouliagmeni, southern Athens, have been completed.

The energy sector privatizations will stand as a leading priority on the new ADP list. TAIPED, according to the bailout agreement, will need to recruit consultants, a prior action for the second review’s completion, expected by December 5, when the next Eurogroup meeting of EU finance ministers is scheduled to be held.

The consultants will offer guidance on the best possible routes for these privatizations. Options, for example, could include sale procedures via the bourse or purchases by strategic investors. The objective will be for the privatization procedures of PPC and DEPA, at the very least, to be launched in 2017.

Once officially announced, the updated ADP list will bring an end to the serious doubts of energy sector privatizations expressed by the recently replaced energy minister Panos Skourletis.

Of course, some time will be needed to get the PPC, DEPA and ELPE sales rolling once consultants have been hired. Unique obstacles concerning each of the three utilities will first need to be cleared.

 

Trump adviser Papadopoulos touted as energy convoy successor

Last week’s US election victory by President-elect Donald Trump has brought to the fore the possible role to be played by Greek-American George Papadopoulos, one of Trump’s campaign advisers on energy policy.

The role of Papadopoulos, who joined Trump’s campaign after fellow Republican candidate Ben Carson dropped out of the party’s race last March, has been the subject of many recent media reports.

In the lead-up to the US elections, the Greek-American official visited Greece at least once for a series of meetings with officials on the energy sector.

Papadopoulos attended Thessaloniki’s inauguration ceremony for construction of the Trans Adriatic Pipeline (TAP) last May. During that stay, he also engaged in a number of meetings, including with foreign ministry officials, held to disccuss the TAP pipeline, a key US regional interest.

Judging by the views expressed by Papadopoulos while in Greece, little change is expected on America’s pipeline strategy for the southeast European region. The US has been pushing for greater diversification in natural gas supply, which would break Russia’s dominance. The TAP project, to run through northern Greece, is planned to primarily carry Azerbaijani natural gas to Europe.

The tenure of Amos Hochstein, the US Special Envoy and Coordinator for International Energy Affairs, expires this month. Certain pundits claim Papadopoulos could be named his successor. It remains unknown whether Hochstein, an expert in the region’s energy matters, will maintain a role as an adviser.

In an interview published by Greek daily Kathimerini, Papadopoulos placed emphasis on the future energy cooperation between Greece, Cyprus and Israel.

 

 

ELPE results show weak fuel sales, firm gas, power markets

The latest quarterly financial results at ELPE (Hellenic Petroleum), a reliable indicator of where Greece’s energy markets are headed as the corporate group is active in the fuel, electricity and natural gas markets, have unveiled a negative picture for the country’s fuel markets and a more favorable one for the electricity and natural gas sectors.

Corporate group member Hellenic Fuels (BP, EKO), reported a virtual stagnancy for the third quarter and nine-month period, whose fuel sales grew by just one percent to 2,616 metric tones). Factoring in the number of fuel stations operated by BP and EKO, ELPE’s retail trading arms, which increased from 1,712 to 1,735 stations, results in an actual market decline.

The overall drop in fuel sales would have been even greater had significant demand increases not been reported in the aviation and shipping fuel sectors.

This trend is reflected by ELPE’s lower sales and adjusted EBITDA, down by 13 percent to 38 million euros.

Contrary to the corporation’s fuel-related figures, electricity sales, through group member Elpedison, nearly doubled during the nine-month period from 111 million euros to 218 million euros, lifting Elpedison from a pretax loss of 21 million euros to a profit of 8 million euros. Production reached 1.75 billion MWh from 552,000 MWh during last year’s nine-month period.

DEPA, the state-controlled Public Gas Corporation in which ELPE holds a 35 percent stake, reported a 38 percent volume-based sales increase. The gas supply company’s EBITDA figure rose to 169 million euros and net profit after tax increased to 60 million euros from 49 million euros.

 

 

Newly appointed energy minister faces four key issues

The country’s new Environment and Energy Minister Giorgos Stathakis, just appointed as part of a government reshuffle, faces for key isssues – the ailing main power utility PPC; the bailout-related plan entailing the privatization of a 17 percent stake; the long-running and troubled sale of a 66 percent share of DESFA; and the position to be adopted in the natural gas market’s ongoing liberalization.

PPC’s future course amid Greece’s changing electricity market is the most challenging matter of all. The utility, whose market share and profit figures are weakening as a result of a bailout-required contraction that demands a further 40 percent market share fall by 2020, from around 89 percent at present, faces growing debt and bad debt figures.

Households, businesses, industrial enterprises and the Greek State owe the utility an alarming total of roughly 3 billion euros in overdue electricity bills. PPC, itself, owes contractors around 900 million euros, much of this overdue. The new energy minister will need to add his personal touch to all these developments.

Despite the reshuffle, it remains unknown if the government will, in 2017 and 2018, succeed in carrying out the expected energy-sector privatizations, key aspects of the bailout program from here onwards.

Prime Minister Alexis Tsipras and associates will need to strike a balance that will keep satisfied both the country’s lenders and Syriza party members opposed to energy-sector privatizations.

Further decisions on PPC’s 17 percent will be made once the split and sale of a chunk of subsidiary IPTO, the power grid operator, has been completed. The minister will need to be done here by early 2017.

Besides the electricity market, major developments in the natural gas market also need to be managed by the minister.

The delayed sale of a 66 percent of DESFA, the natural gas grid operator, has been given an additional month, until the end of November, following the renewal of a letter of guarantee by prospective buyer Socar. The Azerbaijani energy company, as well as Italy’s Snam, expected to take on part of Socar’s share, stand far apart from the Greek government on the deal’s price tag. The possible buyers contend that the original price of 400 million should be reduced to around 300 millin euros as a result of revenue-limiting measures imposed on DESFA by the previous energy minister, Panos Skourletis, now in charge of the Ministry of Interior Affairs.

The liberalization of Greece’s natural gas market is progressing rapidly. Stathakis, the new energy minister, will need to keep a close watch on the developments.

The local market is following a European trend through which intergrated electricity companies are also selling natural gas. As of 2017, non-household consumers will be free to choose supplier, regarless of quantity consumed. Households will also be able to do so as of January, 2018.

Russia’s Gazprom recently bypassed its traditional Greek market representative, DEPA (Public Gas Corporation), by selling an amount to Promitheas Gas, a 50-50 joint venture established by Gazporm with the Copelouzos group.

 

 

 

Main opposition ND party to discuss energy sector alternatives

Greece’s main opposition conservative New Democracy party, viewing the local energy market as a fundamental tool for the counry’s economic recovery, will today launch a new communication drive with sector representatives and entrepreneurs.

Three pertinent party officials, Kostis Hatzidakis, Olga Kefalogianni and Kostas Skrekas, will spearhead an event to be staged at a central Athens hotel with this objective in mind.

Utility representatives as well as various other officials, including independent electricity supply company representatives, RES producers and large-scale industrial energy consumers, will also take part.

Besides presenting a critical view of the current government’s energy-sector policies and decisions, the New Democracy party officials will also offer their party’s energy policies. Discussions will also be held with sector official on the national energy strategy and energy market.

Minister’s energy privatizations policy troubling government

A decision made by energy minister Panos Skourletis to try and exclude the energy-sector privatization plans concerning 17 percent of PPC, the main power utility, 65 percent of DEPA, the Public Gas Corporation, and 35 percent of ELPE, Hellenic Petroleum, from the TAIPED State Privatization Fund’s list is causing wider functional problems for the government.

Prime Minister Alexis Tsipras invited the minister to his office for talks yesterday in a bid to avoid – at least temporarily – the development of a rift within the ranks at Syriza, the coalition’s main party.

Syriza party members are stongly opposed to the aforementioned privatization plans. However, as experience has shown, Greek government minister reactions, or opinions, and the implementation of bailout-era measures are two completely different things in the Greek politics of today.

The Prime Minister and associates may agree with the energy minister on many of his alternative proposals but they are also well aware of the fact that the country’s lenders are adamantly against any changes to the privatization program they endorsed, comprised of 19 privatizations, including PPC, DEPA and ELPE.

These three energy-sector sales contribute significantly to a privatizations revenue target of 6.2 billion euros by 2018 that was included in Greece’s bailout agreement, the country’s third, signed by the current government in the summer of 2015. If these planned privatizations are removed from the TAIPED list, then they will need to be replaced by other assets or even tougher tax measures.

Besides the revenue side of things, the issue is also a matter of principle. “You can’t name privatizations in June for the sake of receiving a sub-tranche and then change your mind in October,” one government source told energpress.

According to the plan that had been agreed to by the government and the country’s lenders, TAIPED was supposed to hire consultants for the three aforementioned energy-sector privatizations by September. This has yet to happen.

During an older meeting with the lenders, Skourletis, the energy minister, informed that he intends to discuss separate counterproposals with them for each of the three energy corporations. This discussion has yet to take place. Its staging will also depend on whether Skourletis will remain at his post.

 

China’s interest in local energy sector, ubiquitous, a strategic choice

The Chinese factor in Greek energy sector developments has gained ground over the past few days. Chinese interests are at play, both directly and indirectly, as part of the country’s strategic energy interest here.

Zhang Chun, president of CMEC (China Machinery Engineering Corporation), who headed a Chinese delegation to Athens, yesterday signed a strategic agreement with main power utilty PPC’s chief executive Manolis Panagiotakis.

Last Friday, SGCC, the State Grid Corporation of China, was one of two investors to submit a binding bid for a 24 percent stake of IPTO, the power grid operator. Italy’s Terna was the other bidder.

This trend of a growing Chinese presence in Greek energy matters appears likely to continue. Certain pundits believe that SGCC will not only be named the prefered bidder for IPTO’s 24 percent, but will also significantly shape the future development of the operator as well as its parent company PPC.

Interestingly, a closer look at the IPTO tender reveals that SGCC is also a part of the Terna bid. In November, 2014, SGCC acquired a 35 percent stake of Cassa Depositi e Prestiti Reti (CDP Reti), an Italian holding company, from Cassa depositi e prestiti Spa. CDP Reti holds a 29.85 percent stake in Terna. Yupeng He, is a member of CDP Reti’s board as an SGCC representative. Simply put, Terna’s rival bidder for IPTO’s 24 percent holds a stake in Terna.

SGCC is also linked to Greece’s long-running sale effort offering a 66 percent share of DESFA, the natural gas grid operator. Azerbaijani energy firm Socar, which appears set to finalize a deal for the DESFA sale with the Greek government, will need to cut at least 17 percent from a 66 percent DESFA stake it is entitled to, as the winning bidder of a 2013 tender, following intervention from the European Commission. Italy’s Snam is expected to take on Socar’s surrendered amount. It could exceed 30 percent. CDP Reti, in which SGCC holds a 35 percent share, owns 30 percent of Snam.

Skourletis, lenders launch second review’s energy sector talks

A number of issues are expected to be tabled at a meeting in Athens today between energy minister Panos Skourletis and creditor representatives, launching the start of the bailout program’s second review of energy prior actions.

The meeting was originally planned for last Friday but was rescheduled for today after the Greek minister reported feeling unwell.

Skourletis is expected to inform the creditor representatives on a decision reached just days ago by RAE, the Regulatory Authority for Energy, to keep a RES-supporting ETMEAR surcharge unchanged for all consumer categories.

The lenders have requested RAE to review the progress made on the RES special account’s deficit every three months. If a lack of improvement is detected, then the ETMEAR surcharge appearing on electricity bills, a key source of revenue for the RES special account, will need to be revised accordingly.

Procedures concerning the Greek natural gas market’s liberalization are also on today’s agenda. The two sides appear to have reached a compromise deal on the amount of gas offered by DEPA, the Public Gas Corporation, to traders through its gas auctions. An agreement for a level of about 16 percent is believed to have been reached for 2017. However, other gas sector issues, such as regulatory matters and DEPA gas auction starting prices, still need to be sorted out.

Developments in the tender offering a 24 percent stake of IPTO, the power grid operator, will also be discussed. According to sources, no problems were encountered in the process entailing the submission of binding bids from potential buyers. The deadline expired on October 21. China’s State Grid International Development and Italy’s Terna submitted bids. These will be opened up and examined within the next few days. A prefered bidder will need to be announced next week or no later than October 31.

The proceedings at today’s inaugural NOME auction will also be discussed. Electricity traders were offered a total of 460 MW as the one and only package for 2016, launching an initiative to provide third parties with access to main power utility PPC’s low-cost lignite and hydropower sources as a measure to help break the utility’s market dominance.

Procedures concerning the target model, local revisions based on a European framework for an intergrated EU energy sector, will also be tabled today.

A series of preliminary meetings by officials prior to today’s session have been purely informative, sources said. No stumbling blocks were encountered during these preliminary talks. However, this does not guarantee a trouble-free ride towards the completion of the second review’s energy prior actions.

Brussels approval of Bulgarian industry aid plan sets EU precedent

The European Commission has endorsed a Bulgarian support plan for the country’s energy-intensive industries in the form of reduced renewable energy (RES) duty fees.

A landmark decision, the move stands to set a precedent for other EU member states, including Greece. It concerns energy-intensive companies that meet a series of specific criteria adopted in line with EU directives.

According to the plan prepared by Bulgarian authorities, companies to benefit from the measure must be financially sound without any outstanding tax and social security fund debts or EU support funds that need to be returned after being ruled illegal by the European Commission.

Bulgarian authorities have set an annual consumption lower limit of 1 GWh as a criterion for energy-intensive industries seeking to qualify for the new support plan.

Corporations that qualify for the measure will be granted RES energy duty reductions of between 40 and 85 percent, depending on their energy intensities.

The total cost of the measure, covering August 1, 2015 to December 31, 2020, is worth 260.75 million euros.

Energy sector prior action talks with creditors start today

The bailout agreement’s second review of outstanding energy-sector prior actions begins today with a series of meetings between creditor representatives and local officials representing Greece’s energy ministry, RAE (Regulatory Authority for Energy), DEPA (Public Gas Corporation), PPC (Public Power Corporation) and other energy-sector enterprises.

Today’s meetings will serve as a lead-up to a meeting scheduled for tomorrow between energy minister Panos Skourletis and the creditor representatives. Greek energy-sector officials are confident the review procedures will be completed swifly and successfully.

A meeting that took place in Brussels last week between European Commission officials and the energy minister’s leading aid, Demosthenes Papastamopoulos, accompanied by DEPA’s chief executive Theodoros Kitsakos, appears to have set solid ground for today’s talks.

A gas release obligation – requiring DEPA to double, through its auctions, the amount of natural gas made available to the industrial sector as well as suppliers, at weighted average cost prices, plus operational costs – is believed to be the only pending issue. Greece needs to open up the wholesale gas market to competition. The DEPA auction changes are a basic tool for this bailout requirement.

All other outstanding energy-sector bailout prior actions such as obligations concerning the upcoming NOME auctions, revisions to the renewable energy sector-supporting ETMEAR surcharge, as well as a draft bill for the Target Model – a road map to guide Greece through a series of reforms needed as part of the EU’s wider effort to establish an integrated European energy market – are expected to be quickly settled. The government has already taken action on the work required, concerning certain technical details and time schedules.

 

 

Upbeat mood for energy prior actions dispels collapse fears

Contrary to recent reports of a breakdown, the energy ministry is close to reaching an agreement with the country’s creditors on energy-sector bailout prior actions due for completion by the end of September, according to energypress sources.

Completion of these energy-sector prior actions and all others included in Greece’s bailout will pave the way for the disbursement of a subtranche of 2.8 billion euros.

High-ranking energy ministry officials have held meetings with European Commission officials in Brussels over the past couple of days to prepare the ground for a meeting in Athens next Tueday between energy minister Panos Skourletis and creditor representatives, the energypress sources said.

The European Commission officials were cooperative, dispelling various reports of a likely breakdown in the review of energy-sector issues, the sources said.

Judging by the latest talks, both sides appear to mutually agree that the majority of pending issues for Greece’s energy-sector prior actions due this month concern scheduling rather than content. The ministry is expected to complete five energy-related prior actions by the end of this month.

Despite some delays, satisfactory overall progress has been made on matters concerning the upcoming NOME auctions; renewable energy sector-supporting ETMEAR surcharge revisions; legislation for the Target Model, Greece’s contribution to a fully integrated EU energy market; as well as tariff issues for high-voltage consumers, all prior actions expected this September.

The gas release obligation, a prior action set by the European Commisison requiring DEPA, the Public Gas Corporation, to double, through its auctions, the amount of natural gas made available to the industrial sector as well as suppliers at weighted average cost prices, plus operational costs, is the only real pending issue at this stage.

Greek officials have opposed this prior action set by creditors, contending it will negatively impact DEPA’s financial performance and transform the corporation into a loss-incurring State company. European Commission officials apparently paid heed to the Greek argument on this matter without rejecting it.

At this point, it is believed that an agreement slanted in favor of Greece’s DEPA concerns will be reached at next Tuesday’s meeting between Skourletis, the energy minister, and creditor representatives.

Turkish unrest boosts local gas storage, LNG station prospects

Last week’s attempted coup in Turkey, the three-month state of emergency just declared by the neighboring country’s president Recep Tayyip Erdogan, the polarization of citizens, and, above all, the overwhelming fear that Turkey is entering a period of prolonged unrest amid which an eventual outbreak of civil war cannot be ruled out, are all new factors reshaping plans for the region’s energy projects.

Energy-sector players with interests have already recognized the arrival of a new era for the region and are rethinking and revising their plans accordingly, regardless of whether they are openly admitting so or not.

For example, Russia is now displaying a revived interest for the development of a stalled oil pipeline to link Burgas, on the Bulgarian Black Sea coast, with Alexandroupoli, in Greece’s northeast. The pipeline would bypass the Bosporus and Dardanelles and offer an alternative route for the delivery of Russian and Caspian oil should any shipping limitations arise in the Black Sea straits, as Nikolay Tokarev, president of the Russian pipeline company Transneft, put it just days ago.

The prospects for the Trans Anatolian Pipeline (TANAP), a major pipeline planned to transfer natural gas from the Azeri deposit Shah Deniz across the Georgian-Turkish borders, in Turkey’s west, are suddenly not as bright as a result of the latest political turmoil in Turkey. This pipeline, if completed, would transport natural gas to the Greek-Turkish border and, from there, continue via the TAP (Trans Adriatic Pipeline) across to Italy.

Yesterday, the consortium behind the TANAP project rushed to assure that Turkey’s political developments will not affect the pipeline’s progress, noting that the pipeline’s construction remains on schedule. However, it is quite obvious that a 1,800-kilometer pipeline crossing a country mired in major political uncertainty represents a business venture whose current risk greatly exceeds the level originally anticipated. Without a doubt, within this context, the consortium will reassess its plans.

The prospects of other projects have gained ground as a result of the situation in Turkey. These include a planned floating LNG station in Alexandroupoli, as well as an underground natural gas storage facility at a depleted deposit in the Gulf of Kavala, northern Greece.

Development of the Alexandroupoli’s floating LNG station, if the required capital and entrepreneurial participation are secured, promises to establish the facility as a safe supply point for the TAP pipeline, if the TANAP project is delayed or rerouted. The Alexandroupoli LNG station also promises to support the planned Greek-Bulgarian IGB interconnector.

During a recent meeting in Athens with Greece’s energy minister Panos Skourletis, officials of US energy company Cheniere, primarily active in LNG-related businesses, declared, clearer than ever before, the company’s interest to take part in the development of the Alexandroupoli LNG station.

Gastrade, a Copelouzos corporate group company and fundemantal proponent behind the investment plan for the Alexandroupoli station, plans to have finalized an investment plan and capacity commitments from traders by the end of the year. The objective is to complete the LNG station’s construction by the end of 2018.

Majority of energy issues must be settled by end of June

The Greek government has just two weeks to complete at least eleven pending energy-related issues, according to the country’s revised bailout agreement, whose details were published yesterday, highlighting just how crucial and relentless the current month is for the reforms effort.

The bailout agreement’s section on the energy sector notes that “extensive reforms are needed for Greece’s energy market to adopt EU directives, become more modern and competitive, without monopolies and ineffectiveness, achieve greater RES and natural gas penetration, and pass on these benefits to consumers.”

Main power utility PPC, whose prospective reduced market dominance is a key aspect of Greece’s needed energy reforms, will need to make official by the end of June a bailout-required plan entailing the sale of at least 20 percent of its subsidiary form IPTO, the power grid operator, to a strategic investor. A tender will then need to be launched in July and a prefered strategic investor announced within October.

Should this plan fail to make progress, Greek authorities will be forced to announce, in October, a deadline for offers leading to the full sale of IPTO. This alternative tender, dreaded by the government, would need to be completed by December to enable the full privatization of IPTO within 2017.

In another measure intended to lessen PPC’s dominance, NOME auctions, to provide third parties with access to the utility’s low-cost lignite and hydropower sources, are scheduled to be launched in September. Independent traders will be offered an electricity amoung equivalent to eight percent of the total used in the grid in 2015. The objective is to reduce PPC’s wholesale and retail electricity market shares by 20 percent until 2017. These respective market shares will need to have contracted to less than 50 percent by 2020.

Fast action is also needed on new natural gas network usage fees which DESFA, the natural gas grid operator, will need to submit to RAE, the Regulatory Authority for Energy.

By the end of June, PPC will need to have completed negotiations with energy-intensive industrial consumers for new individualized agreements. The Greek State, PPC’s majority shareholder, will authorize the utility to offer flexible, cost-based tariffs for the industrial sector at a PPC general shareholders meeting on June 30.

Greek officials will also need to forward a permanent CAT mechanism plan to the European Commission within June.

New legal framework for the RES sector will need to be ratified in Greek Parliament by the end of this month.

Also by the end of June, Greek lawmakers must ratify a revised RES-supporting ETMEAR surcharge included on electricity bills to ensure the RES special account’s sustainability. Its deficit will need to be eliminated within twelve months, or no later than June, 2017.

PPC and LAGIE, the Electricity Market Operator, will need to settle their debt differences by the end of June.

Energy tax revisions and natural gas market revisons must also be finalized by the end of the month.

‘Strong Greek regional energy role to improve investment climate’

The energy sector indeed constitutes the backbone of Greece’s economic development and evidently at the moment it is facing some structural challenges, both internal and external in nature. These challenges are driven by the volatility of global energy prices, as well as the political and regulatory instability in the country. The combination of these two sets of factors is a major obstacle for attracting the necessary investments in the industry. At the same time, energy markets’ liberalization in Greece remains key and constitutes a crucial prerequisite for unlocking the next bailout package.

Having in mind all the above, the Greek Energy Forum (GEF) spoke to Panos Skourletis, Environment and Energy Minister in Greece’s Syriza-led government. In this interview, crucial questions for the energy sector in Greece are discussed and focus on a) the practical aspects of the reform program that the government is envisaging for the country; b) the key elements of the national strategy aimed at dealing with the challenges faced by different sectors within the national energy industry.

GEF: What are the steps that the government is taking to liberalize the natural gas and electricity markets in Greece and what is the timeline for completing market liberalization?

Minister: The first gas market regulations were adopted and in the coming months the unbundling of distribution and supply networks of natural gas will take place. The latter are currently exclusively provided by the gas supply companies (GSC) Attica, Thessaloniki and Thessaly. We expect market opening to have a positive impact on the expansion of the natural gas network. When it comes to electricity, the requirements for market liberalization are even greater.

Our interventions aimed at achieving the 2020 target are reinforced by the auction mechanism for electricity produced from lignite and hydro by the Public Power Corporation (PPC) to third-party suppliers, also known as ‘NOME’. The auction’s establishment is near and the auctions could start within the year.

Gef: Could you name the key policy initiatives of the government on the national and the regional level aimed at strengthening Greece’s position as part of the regional natural gas hub?

Minister: From the very start, the Greek government has been exercising a multi-dimensional policy in the energy sector, which – in combination with the active external politics – has already brought the first positive results.

As for the transformation of the country into an energy hub, the role of TAP remains key. This world class project brings natural gas from the Caspian directly to Europe. The construction of the pipeline on Greek territory has started on 17 May, after the resolution of some important open issues. Some additional elements that can help achieving the objective of establishing an energy hub in Southeastern Europe include the construction of the natural gas pipeline Interconnector Greece-Bulgaria, as well as its extension – the Vertical Corridor to Romania; the upgrade of the existing LNG terminal in Revithoussa; the plan for building the Alexandroupolis Floating Storage and Regasification Unit in Northern Greece.
In addition to that, there is an ongoing process of examining the opportunity to build a reverse flow pipeline for Russian gas to be delivered through Greece to Italy

Certainly, the prospects of establishing energy interconnection between Greece and Cyprus, Israel and other countries in the wider region – whom we are holding discussions with – are very important.

Based on this agenda, employing the necessary expertise and, as appropriate, we are approaching many international contacts that we have established in recent months with representatives of all the relevant states – involved both directly and indirectly in this agenda.

GEF: Sustainability of the national energy mix: How could Greece move away from lignite-dominated electricity generation while bringing down electricity prices, both wholesale and retail?

Minister: The gradual reduction in the use of lignite does not mean the outright elimination of the latter from the energy mix of the country. However, there is no turning back – climate change does not leave us room for complacency. The process of moving away from lignite has started long ago, and has already led to a reduction of the use of lignite and replacement of some old units [coal-fired power plants] with new gas-fired ones. At the same time, there are some satisfactory developments in the renewable energy sector in Greece, with the target percentage for penetration of photovoltaics being twice as high. The reduction of [electricity] prices is something that we believe is required throughout Europe and to some extent it seeks to improve competition on the market, which is targeted by the new regulations that are being put forward as well. In Greece, the combination of low oil and gas prices form the basis for the reduction of electricity bills, under certain conditions. I believe that with the evolution of the RES technologies’ decline in costs, the room for bills’ reduction [for the consumer] will be growing, regardless of fuel prices. Our energy policy is pursuing this as well.

GEF: Would, in your view, the combination of natural gas and renewables constitute a sustainable alternative to lignite for the national energy mix? What would be the prerequisites for Government’s support for such energy transition?

Minister: The combination of natural gas and renewables, approached in a rational way and complemented by energy generation from lignite (which would have to be done under certain environmental conditions for security of supply reasons and due to energy costs) can make a difference, as long as one moves towards a balanced market system instead of going from one extreme dysfunctional system to another. This was the case with the initial support schemes for RES, guaranteed for many years thanks to very high energy prices. This policy secured very favorable conditions for the return on investments, but brought about distortions throughout other segments of the energy market. We are therefore interested in building a market, which could be accessed by all market players; a market with reliable companies and a set of rules respected by everyone,; a market where no additional state aid would be needed. The combined operation of gas-fired power plants and renewable energy can be maximized to the extent that the stability of the power system is ensured.

GEF: How do you plan on improving the sustainability of energy systems across the Greek islands?

Minister: We are particularly interested in this area. We want our islands to be energy efficient, we want to reduce the electricity costs across them, especially for islands that aren’t connected to the mainland electricity system – and we want energy autonomy for the islands. Islands constitute ideal platforms for the use of new technologies, renewable energy and hybrid units, where the local communities themselves – through their representatives – would be able to meet their energy needs with low cost and intelligent solutions. Of course regulatory changes are required, but I am nevertheless optimistic that some important new developments could happen on that front and we are already dealing with this issue. There is a strong stakeholder interest already, relevant proposals have been tabled, and it is indeed very important to enable the island residents with the choice of the relevant energy solutions. Soon, the construction of the hybrid generation unit in Ikaria will be completed and there are similar project proposals for other islands.

GEF: Shipping Sector: What is your political strategy towards the transition to alternative fuels (LNG in particular) in shipping and your opinion about the potential of the Mediterranean to become a new Emissions Control Area? What role in your view should Greece be playing in cooperation with its international partners to ensure the suitability and competitiveness of the industry on the regional and international level?

Minister: The use of LNG as a marine fuel can give a new impetus to shipping, especially coastal shipping in the Mediterranean. Impetus to innovation and to new technologies, impetus to energy saving and be a step forward to a cleaner environment.

Greece – through the companies DEPA and DESFA – is participating in European programs (Poseidon Med I, II), together with the other two countries (Cyprus and Italy) with the aim to upgrade port facilities in certain ports of the region and to make the supply of LNG as a marine fuel possible. Simultaneously, the world of shipping in Greece sees positively the possibility of using this new type of fuel, as long as the conditions for it are in place, in particular, adequate port facilities and funding for conversion of ships or for construction of new LNG-fuelled vessels.

Greece does not view in a negative way the prospect of the Mediterranean to follow the Baltic and become an “Emissions Control Area” (ECA) in due time. This should happen, as long as the conditions that I have mentioned above are secured, namely, the necessary port facilities are put in place, and the incentives for the industry (financial, fiscal, etc.) are there to enable the possible conversion of vessels in the Mediterranean and gradual substitution of the aging ships with new vessels fuelled by LNG.

GEF: To conclude, what message would you like to pass to international investors who consider participating in energy projects in Greece?

Minister: Stability is one of the most important preconditions for doing business. We are working on ensuring this stability in Greece. When it comes to the general regulatory framework, there are no surprises there – we are moving ahead having the European strategy as a basis, along with the guidelines for the Target Model and the Energy Union strategy. We believe that the strengthening of Greece’s role in energy markets in the wider region – in combination with the development of interconnectors that will unify the European market, as well as the plans to return to growth by boosting domestic energy consumption – create a promising investment climate in the country.