energy

Putin’s agenda for this week’s visit to cover a range of issues

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Last time Russian President Vladimir Putin had made an official visit to Athens was in 2007 for the signing of an oil pipeline linking the Bulgarian coastal city of Burgas with Alexandroupoli in northeast Greece. The Russian leader’s next scheduled visit to the Greek capital, this coming Friday and Saturday, will be his first to an EU member state in over a year. According to an official statement released by the Kremlin, matters of bilateral economic interest and investments, including joint energy-sector projects, will be discussed.

Putin will arrive in Greece ten days after the Thessaloniki ceremony held to launch work for the local segment of TAP (Trans Adriatic Pipeline), a natural gas project that contravenes Russia’s regional energy interests, as it is planned to primarily supply Azeri natural gas to European markets.

Over the past couple of years, Russia has reacted to the TAP prospect by proposing projects to help safeguard its energy supply interests in Europe’s southeast, such as South Stream or Turkish Stream. Moscow will need to come to terms with the idea of energy supply competition in the Balkan and Italian markets as of 2020.

South Stream 2, Russia’s most recent gas pipeline proposal for the region, which, according to its latest version, would utilize an older Greek-Italian ITGI plan for a route across the Adriatic Sea, will be discussed during Putin’s upcoming visit, market officials have informed. However, spectacular developments are not expected as the case is a low-priority item on Putin’s agenda at this point in time. Russia is currently focused on developing Nord Stream, a natural gas pipeline in Europe’s north.

The Russian head’s visit to Athens is expected to focus on bilateral trade prospects, including boosting Greece’s exports to Russia and increasing Russian investments in Greece – if privatization and energy partnership plans in the fields of energy, infrastructure and transportation progress.

Ties between DEPA, the Public Gas Corporation, and Gazprom are in excellent shape. The two sides recently completed talks for the renegotiation of gas supply prices, currently at the most competitive level in years.

Russia’s interest in prospective privatizations concerning the Greek Trainose railway company and Thessaloniki port will also be discussed during Putin’s visit.

Rumors have recently been rife in the local energy market about an upcoming announcement for the construction of a new lignite-fired power station in Florina, northern Greece, by a Russian company. This prospect is linked to a pending issue that will offset Greek benefits gained from a favorable older Russian natural gas supply deal. A plan for Russian companies to construct hydropower stations in Sykia and Pefkofyto, alongside the Achelous River in Greece’s northwest, was never carried out as a result of technical problems concerning the river’s dam.

A proposal has been tabled for PPC and Gazprom to join forces and construct a lignite-fired power station in Florina, which would utilize a regional coal mine in Vevi. This prospect is complicated and still at a premature stage.

Announcements on the expansion of existing trading ties between ELPE (Hellenic Petroleum) and Russia’s Rosneft could be made during Putin’s visit. The two sides have been engaged in talks over the past month.

 

Independent producers to be affected by natural gas tax hike

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Reduced natural gas price levels have brought about major changes in the electricity market, as highlighted by electricity wholesale market’s day-ahead data. The role of natural gas has developed into a key factor for the stability of the local electricity market.

The drop in natural gas prices has made gas-fueled power stations more competitive, as indicated by their increased role in the shaping of the local System Marginal Price (SMP). Even during peak-demand hours, the SMP level is alternately shaped by lignite-fired stations, previously dominant, and gas-fueled stations.

In March, the SMP average, 40.78 euros per MWh, was the lowest registered over the past 15 months, according to data provided by LAGIE, the Electricity Market Operator. Lignite-fired stations determined the SMP for 36.74 percent of the time, gas-fueled stations factored in with a percentage of 39.3 percent, while, for the remaining period, the SMP was shaped by electricity imports, exports, and, occasionally, by hydropower stations.

Taking the current day as an example to illustrate the development’s practical impact on the market, both lignite and gas-fueled stations will be equally active in the market to cover electricity demand anticipated to be less than 6,300 MW, with the SMP at a level of 47.32 euros.

Meanwhile, market sources have told energypress that the imminent special consumption tax (EFK) hike on natural gas agreed to by government officials and the country’s international lenders will affect independent gas-reliant electricity producers as natural gas costs will increase considerably. However, the level of competitiveness of these units will not change as offers submitted into the energy market’s Day Ahead Scheduling (DAS) do not incorporate the special consumption tax, the sources added.

Corporate bonds impacted by ongoing bailout review

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The long-running negotiations for the first review of Greece’s third bailout package, a process now several months old, has not only negatively impacted the national economy but also bonds of major Greek corporate groups being traded on the London, Frankfurt and Luxembourg stock exchanges.

The high country risk factor is reflected in the yields offered, now at 8 percent and over, which are extraordinarily high compared to the levels offered by corporate bonds of companies based abroad.

Certain exceptions do exist, such as corporate bonds of globalized groups previously based in Greece, such as Coca Cola 3E and Titana, not being influenced by the uncertaintly surrounding the Greek bailout review negotiations.

For example, the 3E bond expiring on November 16, 2016, with an interest rate of 4.25 percent, has remained virtually unaffected by the ups and downs of Greece’s negotiation process with the country’s lenders. The company transferred in base to Switzerland four years ago.

The impact has also been minimal for two Titan Cement bonds. The first of these, expiring on January 19, 2017, at an interest rate of 8.75 percent, has shed just 1.20 percent since the beginning of the year, while the second, to expire on July 10, 2019, with an interest rate of 4.25 percent, is up 1.02 percent. Titan operates nine production facilities worldwide, with the majority of output generated in western Europe, the US, southeast Europe, and the eastern Mediterranean.

The picture is varied for Greek energy groups. The bonds of enterprises maintaining a greater level of activities abroad have suffered smaller losses, or even enjoyed gains. A Motor Oil bond totaling 350 million euros and set to expire in 2019 with an interest rate of 5.125 percent has gained 2.06 percent since the beginning of the year. Also, an ELPE (Hellenic Petroleum) bond worth 500 million euros, expiring in 2017, issued with an interest rate of 8 percent, is up 2.99 percent. A second ELPE bond, worth 325 million euros, issued with an interest rate of 5.25 percent, is down just 0.57 percent.

The situation is not good for main power utility PPC. Its five-year bond expiring on May 1, 2019, shed 11.31 percent between the beginning of the year and April 18.

The main power utility’s unpaid receivables are five times greater than the corporation’s market value. PPC has just launched a softened payback program in an attempt to increase its collection of consumer arrears.

As part of Greece’s bailout program, PPC stands to lose its most profitable subsidiary firm, IPTO, the power grid operator, whose breakaway will cut 180 million euros from the corporation’s EBITDA. Last summer’s third bailout agreement also obligates PPC to cut its dominant electricity market share by 50 percent by 2020.

PPC also needs to refinance a bond loan worth 300 million euros this year, and a 600 million loan by 2017.

 

Gov’t facing pressure for more privatizations, energy included

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The government is remaining cagey about privatizations as negotiations with the country’s creditor representatives, aiming to finalize the first review of Greece’s third bailout package, continue.

Though government officials have spoken considerably on prospective tax and social security revisions, virtually no information has been released on the privatizations plan, the new privatizations fund, and the state assets it may take on board. The picture is extremely blurry, which strongly suggests this is a high-pressure front for the government in its talks with the lender representatives.

Energy Minister Panos Skourletis is the only government official to have touched on the subject when he unleashed  an attack yesterday on TAIPED, the existing State Privatization Fund, established by the country’s previous administration, and its intentions. Skourletis described the fund as a “domestic troika”, adding that “it has its own privatization plans,” implying that more privatizations are being prepared in addition to nine the government has insisted it will confine the sale to.

According to certain sources, the privatization front remains open with Berlin pressuring for additions to the nine sale efforts already in progress. At this stage, it is unclear how many public service companies, including enterprises from the energy sector, could be added to the privatization list.

Sources informed that, for some weeks now, the country’s lenders have presented Greek officials with a proposal calling for full utilization of TAIPED’s current assets listed on the Asset Development Plan (ADP), 23 in total, as well as an additional four. The ADP plan includes privatizing 17 percent of main power utility PPC, 65 percent of DEPA, the Public Gas Corporation, and 35 percent of ELPE (Hellenic Petroleum).

Berlin, sources informed, has categorically rejected a Greek proposal to lower the new privatization fund’s target figure of 50 billion euros.

Stergios Pitsiorlas, TAIPED’s president, yesterday told local media that although the existing agreement commits the government to nine privatizations, it also includes an objective for 6.4 billion euros of privatization revenues to be raised by 2018, meaning that a supplementary program will be needed.

TAIPED has collected nearly three billion euros from 2011 to the present, and will need to raise roughly this much more by 2018.

 

 

Brussels: ‘Greece a special case, energy market not liberalized’

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The European Commission has released an interim report on electricity capacity mechanisms in the EU, indicating that although these can reinforce electricity supply security many EU member states need to do more to ensure they are focused and cost-effective measures.

The report also pointed out that badly designed capacity mechanisms can distort competition, affect transboundary power trade, and lead to higher costs for consumers.

Brussels has forwarded a request for all EU member states, agencies, and enterprises in the sector to submit comments to help facilitate the capacity mechanism assessment procedure’s continuation, until the European Commission makes final decisions.

“The report shows that there is a lot of room for member states to improve how they assess whether capacity mechanisms are needed, and how they design them,” remarked Margrethe Vestager, the European Commissioner for Competition. “For a capacity mechanism to be well-designed, it needs to be open and take into account electricity that can be provided across EU borders.”

Vestager described Greece as a special case as the country’s energy market has not yet been liberalized, adding that the situation needs to gradually change.

Hirings to boost understaffed RAE, LAGIE in the making

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The Environment and Energy Ministry is preparing an amendment to a legislative bill that will permit RAE, the Regulatory Authority for Energy, and LAGIE, the Electricity Market Operator, both currently understaffed, to overcome bailout-related limits and hire additional personnel.

RAE and LAGIE are both subject to a bailout-linked bill for public sector firms, permitting one recruit for every five departures.

RAE, in particular, is under pressure as the temporary contracts of 20 employees – of 80 in total – are due to expire in about three months, meaning the institution’s workforce will soon be down to 60 members.

The functional problems encountered by both RAE and LAGIE, as a result of staff shortages, have been raised by the ministry to the country’s lenders, who, according to Greek officials, are showing understanding. Not too long ago, last December, the lenders, during a discussion on the matter, had proposed that RAE and LAGIE be reinforced with staff on loan from equivalent institutions operating in other EU member states, such as Italy and Germany.

Had such a proposal been accepted, as ministry sources have pointed out, RAE’s independence, validity of opinions, and ability to operate as an institution would all have been undermined.

LAGIE, too, faces extreme staff-shortage pressure. The operator’s new president and managing director, Michalis Filippou, has already underlined the issue. LAGIE, whose workforce currently numbers 40 persons, will soon be expected to take on additional tasks such as management of NOME auctions and the new renewable energy source (RES) and combined heat and power (CHP) support system.

The NOME auctions will be introduced to provide third parties with access to main power utility PPC’s low-cost lignite and hydropower sources as part of the bailout-related obligation to help break the utility’s dominance.

Deal reached on IPTO, NOME plans – privatizations pending

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Update (12pm)

The Enviroment and Energy Minister Panos Skourletis has reached an agreement with the lender representatives, at a meeting this morning, on the breakway of IPTO, Greece’s power grid operator, and the NOME auctions, with the aim of liberalizing the electricity market.

Skourletis met with the lender representatives at 10.30 am, just before the latter departed for Washington. The meeting had been postponed late last night.

The minister told the Athens News Agency that the IPTO agreement entails transferring a 51 percent share of the operator, a subsidiary firm of main power utility PPC, to the Greek State, in exchange for a compensation package to PPC. As for the other 49 percent of IPTO, a network operator will have the right to acquire at least 20 percent, while the remainder will be placed on the bourse, according to the news agency.

The Greek State will control the new IPTO board’s majority and appoint the new managing director, while procedures for the sale of at least 20 percent of IPTO to an investor will begin in June, according to the agency.

As for the NOME auctions – to provide third parties with access to main power utility PPC’s low-cost lignite and hydropower sources as part of the bailout-related obligation to help break the utility’s dominance – regulations will be established based on LAGIE (Electricity Market Operator) data as well as proposals by RAE (Regulatory Authority for Energy) to be forwarded to the ministry. These initiatives will determine the electricity amounts to be auctioned and the starting price. The first auctions are expected to be staged in the second half of this year.

Discussions on technical details concerning the IPTO plan and NOME auctions will be held during the day between local officials and lender representatives.

Greek privatizations were not discussed at this morning’s meeting between Skourletis and the lender representatives. These will be discussed as a whole, not just for the energy sector, during negotiations for the establishment of a new Greek privatization fund.

The Greek government insists that the Greek State’s equity shares of PPC, DEPA (Public Gas Corporation) and ELPE (Hellenic Ptroleum) that have been transferred to TAIPED, the existing privatization fund, serve only for the bailout review and not privatization procedures.

Earlier in the day, energypress reported:

Privatizations, including ones concerning Greece’s energy sector, are among the “many unresolved issues” in the government’s negotiations with the quartet of lenders, Greek Finance Minister Euclid Tsakalotos announced in the late hours last night, while also declaring that talks to complete the first review of the country’s third bailout package would be suspended so that the lenders could travel to IMF’s Washington-based headquarters.

An hour earlier, Environment and Energy Minister Panos Skourletis, on his way out of the Athens Hilton, where meetings and negotiations are taking place, informed that negotiations would run into “trouble only if lenders insist on the privatization of energy companies.”

Moments later, Skourletis told journalists that his meeting with the lenders last night would be postponed until today, before the finance minister announced, at around 2am, that the talks were being suspended.

Though Tsakalotos did not provide details, it is believed that, besides non-performing loans and pensions, an impasse was also reached on privatizations.

Earlier yesterday, the energy minister, in comments made on local radio station “Sto Kokkino”, had warned that the “lenders are bringing back older plans that he have rejected and which were not included in the bailout agreement last summer, such as privatizations of DEPA (Public Gas Corporation) and ELPE (Hellenic Petroleum).”

The Greek state holds a 35 percent stake in ELPE and 65 percent of DEPA.

The government is pushing to complete the first review of Greece’s third bailout package by Easter so as to push for debt relief at the IMF’s Spring Meeting in Washington this weekend.

According to the Greek government, last summer’s bailout agreement stipulates that debt relief would be discussed as soon as the first review was completed.

Essentially, energy-sector privatizations had never really been cleared from the negotiating table. However, it seems the pressure by lenders has intensified over the past few days.

Shipping and Island Policy Minister Thodoris Dritsas, in an interview for local Mega TV channel last weekend, noted: “We have not committed to privatization revenues of 50 billion euros for the new [prospective] privatization fund. Officials linked to TAIPED [the exisiting State Privatization Fund established prior to Syriza’s rise to power] are seeking to put 26 privatizations on the negotiating table instead of nine that had been agreed to.”

According to sources, the lenders, especially Berlin, will remain adamant on the privatizations.

As had been reported in the past by energypress, the lenders are not content with the nine – plus an additional two – privatizations accepted by the government. Instead, they are pushing for most of the 23 privatizations that had been attached to last August’s third bailout agreement.

TAIPED is expected to continue operating unil it reaches its goal of raising three billion euros of  privatization revenues between 2016 and 2018.

 

Minister critical of PPC tariffs, content with creditor talks

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The main power utility PPC’s electricity tariffs will be reduced for all household categories, under the condition that the utility’s just-revised payback scheme, offering softer terms for PPC consumers with arrears, improves the corporation’s electricity bill collection effort and international crude oil and natural gas prices remain low, the energy minister Panos Skourletis noted at a news conference today.

The current combination of lower household incomes in Greece, down by as much as 45 percent over the past few years, and electricity tariff increases by an equivalent percentage, or possibly more, cannot go on any longer, the minister noted, obviously critical of PPC.

PPC’s revised payback scheme, which will be launched tomorrow and offers all consumers the right to settle arrears over 36 installments without any deposit payment, emerged following pressure applied on the utility by the government.

During the news conference, Skourletis acknowledged that PPC’s large amount of unpaid recievables, estimated at 2.3 billion euros by the utility, have negatively impacted its financial standing and ability to reduce electricity tariffs in the immediate future. Earlier this week, PPC reported a 102 million-euro loss for 2015.

As for the natural gas sector, the minister left open the prospect of a tax hike on natural gas but stressed that, even if imposed, prices would remain lower than last year.

Skourletis condemned the EPA Attiki gas supply company, which covers the wider Athens area, for not having sufficiently decreased its natural gas prices. The company lowered its prices by 11 percent last year, compared to 24 percent by EPA Thessaloniki and EPA Thessalia, the energy minister pointed out.

However, Skourletis partially justified EPA Attiki, saying that the discrepancy could be attributed to the much greater penetration of natural gas in the Thessaloniki and Thessalia markets, which makes operating costs for these suppliers lower.

Acknowledging that the cost of natural gas for the industrial sector is hefty, Skourletis said officials are examining ways to reduce the level of various components leading to the final price. An informal committee is looking into the issue, he said.

The minister expressed satisfaction over the progress being made in negotiations with the country’s creditor representatives for major energy-sector matters, especially plans to introduce NOME-type auctions into the Greek market and split the power grid operator IPTO from PPC, its parent company. Both issues will soon be finalized, when creditor representatives return for a bailout deal review, Skourletis said.

The effort to sell a 66 percent stake of DESFA, the gas grid operator, to Azeri energy company Socar and other certified European operators has stalled as a result of a dispute concerning network usage fees. Skourletis wants to nullify original terms that would allow the prospective buyers to significantly increase network usage fees by levels of as much as 60 percent. These network usage fees represent DESFA’s earnings. Skourletis said the Greek government had forwarded a proposal to Socar and is awaiting a response.

The minister declared official the government’s interest in steering PPC towards corporate partnerships with private-sector investors for ventures that would include PPC’s lignite-fired power stations and hydropower facilities. “All is open for discussion,” he commented.

Skourletis also highlighted the importance of major infrastructure projects headed for development, such as the TAP natural gas pipeline, to carry Azeri gas to central Europe via northern Greece, Albania and Italy, and whose construction will be officially launched at a ceremony in Thesssaloniki on May 17; the Greek-Bulgarian IGB interconnector; as well as a floating LNG terminal in Alexandroupoli, northeastern Greece.

 

 

 

Target model’s legal framework imminent, ministry official says

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The legal framework for Greece’s energy target model will soon be introduced, while a forthcoming support plan for the renewable energy source (RES) sector promises to offer protection to investments and gradually reduce a RES-supporting ETMEAR surcharge on electricity bills, Mihalis Veriopoulos, the Environment and Energy Ministry’s secretary general noted today.

Veriopoulos, who delivered a speech at a conference organized by TEE, the Technical Chamber of Greece, and titled “Energy Market: Unlocking Greece’s Economic Potential”, pointed out that energy should serve as a tool for growth. He highlighted that energy production and transportation must be carried out with respect for the environment and local communities, while also adding that the country’s energy policy must be fully integrated with the EU plan for energy union.

Greece does not enjoy the same level of energy security as other EU member states, meaning that the country must offset this weakness by integrating with European policies for energy union, Veriopoulos remarked. The major gas-sector projects promise to help steer the country in this direction, he added.

“Despite facing considerable difficulties at present, Greece is insisting on creating positive expectations in the fields of the economy, politics, and geopolitics,” Veriopoulos noted. “Greece is a country that succeeds regardless of circumstances and constitutes an island of stability and democracy in the region.”

 

OECD report calls for local energy network privatizations

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Greece’s energy-sector privatizations – meaning the networks – need to be swiftened, state-controlled monopolies must be restricted, and markets that essentially remain closed need to be liberalized to reduce natural gas and electricity costs, currently among the costliest in the world, the Organization for Economic Cooperation and Development (OECD) has proposed to the Greek government.

A new OECD economic survey on Greece, presented yesterday to Prime Minister Alexis Tsipras by the organization’s secretary-general Angel Gurria, highlights the various chronic issues that continue to mainly affect the country’s electricity market and, to a lesser degree, the natural gas market.

Cross subsidization, the practice of charging higher prices to one group of consumers in order to subsidize lower prices for others, is proving detrimental in the electricity market as many consumer categories of the main power utility PPC are still being weighed down by the approach. This is limiting competition and increasing prices, especially for the industrial sector, the report notes.

In a list of 27 countries, Greece ranked seventh in terms of natural gas costs for the industrial sector. Greece ranked fifteen places above the average price. As for industrial electricity, Greece ranked as the tenth costliest in a list of 29 countries, five places above the average level.

High energy costs are making Greek exports less competitive, the OECD report points out.

Boosting the independence of network operators is another crucial matter that needs to be looked at, the report notes.

Increased contribution of renewable energy (RES) electricity production to the grid would also boost Greek competitiveness, according to the report. The RES share of local power production increased from just five percent in 1990 to 23 percent in 2013, the report observed.

Skourletis: ‘Greece can develop into a regional energy hub’

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Greece’s energy policies as part of a wider European Commission strategy aiming for energy union and security in the EU were discussed during a meeting in Athens yesterday between energy minister Panos Skourletis and Maros Sefcovic, the European Commission vice president responsible for Energy Union.

The two officials focused on the importance of prospective European interconnection projects, both in the natural gas and electricity sectors, institutional framework revisions made in the Greek gas market, as well as expected revisions in the renewable energy (RES) sector.

“We discussed all the issues concerning energy in the EU and, obviously, how these are being shaped for our country,” Skourletis remarked following the meeting. “Greece now possesses all the prerequisites to become a regional energy hub. This prospect is based on the major projects planned – the natural gas pipelines as well as electricity interconnections,” he added.

Describing the session as highly constructive, Skourletis also noted that the efforts being made by all EU member states to achieve secure, reliable, and lower-cost services, both for households and enterprises, were also discussed.

Skourletis and Sefcovic, joined by officials representing DESFA, Greece’s gas grid operator, DEPA, the Public Gas Corporation, and the energy ministry, also visited the LNG terminal facility on Revythoussa, an islet in the Saronic Gulf, close to Athens, where progress on the development of an additional third LNG storage tank was presented.

The Revythoussa facility has acquired a more crucial role as a result of the EU’s increased gas needs in more recent times, as well as the plan to widen LNG supply. The Revythoussa facility’s expansion is expected to be completed within 2017.

 

 

Energy union head reiterates EU support for TAP, IGB in talks with PM

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Talks between Prime Minister Alexis Tsipras and Maros Sefcovic, the European Commission vice president responsible for Energy Union, at a meeting in Athens yesterday, primarily focused on Greece’s prospective role as a key energy hub and gateway for new gas entering Europe from the Caspian region, the visiting official told reporters afterwards.

Sefcovic, who is touring European capitals to check on the energy union progress of EU member states, reiterated the European Commission’s full support for the development of both the TAP and Greek-Bulgarian IGB natural gas pipeline projects.

Tsipras told the visiting official that Greece is playing a crucial role in the regional energy sector’s future as a result of the country’s geographical position, while also making note of the effort being made by Athens to utilize opportunities such as that of the prospective TAP natural gas pipeline.

Construction work on the Greek segment of this infrastructure project, to bring new gas to Europe via Greece’s north, Albania and Italy, is scheduled to officially commence in May. A ceremony is planned to take place in Thessaloniki to mark the start.

In an exclusive comment to the Athens News Agency, the European Commission’s vice president said Greece is making satisfactory progress on energy efficiency objectives set as part of the EU’s wider drive towards energy union.

The visiting official said he offered encouragement to Athens to continue pursuing reforms in the energy sector, while adding that he will contribute to an effort for Greece to utilize EU structural funds for investments in energy efficiency projects.

The Commission’s vice president noted that he and Greek partners are looking for ways to boost Greece’s level of innovation, growth, and competitiveness, which, he added, would offer benefits to the Greek economy, citizens and the integrated European energy market.

 

UniCredit renews interest to finance energy investments

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Officials of the Unicredit Bank AG group, which has financed renewable energy projects in Greece in the past, met with Greece’s energy minister Panos Skourletis this week, expressing an interest to once again provide financing for the development of projects in the local RES sector and other energy domains.

Vassilis Tsolakidis, the president of CRES, the Center for Renewable Energy Sources and Saving, locally acronymed KAPE, and other officials also took part in the meeting.

Commenting on the talks, the energy minister noted that the banking group’s interest to finance investments in Greece in the energy sector and other fields stands as proof of the positive changes taking place in the Greek economy.

Skourletis also made note of the upcoming revisions to the RES sector’s institutional framework and the adjustment process of Greece’s electricity market in accordance with European standards, known as the target model. The revisions being worked on will soon clarify the local electricity market’s regulations to apply in the years to come, he added.

Energy minister fares soundly in local MRB popularity poll

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Energy Minister Panos Skourletis, who was appointed following the Syriza-led coalition’s re-election last September, was ranked the government’s sixth most popular minister by a sample of the electorate and second most popular minister by Syriza-party backers, the results of a new poll conducted by local research company MRB have shown.

On the contrary, the energy minister’s deputy, Yiannis Tsironis, fared poorly to rank close to the bottom, both among the electorate’s sample and voters who picked the Syriza party at last September’s elections.

Interestingly, finance minister Euclid Tsakalotos, who holds one of the government’s toughest portfolios amid the recession, ranked as the most popular minister, both among electrorate representatives and Syriza supporters.

Banks, suppliers, producers eyed for operator’s deficit

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Renewable energy sources (RES) producers fear they may be hit by a new round of tariff cuts for their output following last week’s announcement by LAGIE, the Electricity Market Operator, forecasting a widened RES special account deficit to 190.64 million euros in 2016 from 82.68 million euros at the end of last year.

Sector authorities will need to seek solutions that may counter this unfavorable prospect, which has raised concerns, especially among wind-energy producers and the considerabe number of photovoltaic system investors.

Energy minister Panos Skourletis has ruled out any possibility of increasing a RES-supporting surcharge (ETMEAR) imposed on electricity bills. This surcharge makes up about half of the RES special account’s revenue. An enormous number of consumers are already struggling to meet electricity bill payments, as highlighted by the alarming level of unpaid overdue amounts owed to PPC, the main power utility.

LAGIE has largely attributed its forecast of a widened RES special account deficit to the fall in international prices for CO2 emission rights. The operator expects a 150 million-euro reduction from this source of revenue for the RES special account.

One possible solution already being considered is to increase the percentage withheld from CO2 emission rights for the RES special account.

According to energypress sources, RES sector authorities are looking at banks, electricity suppliers, and RES producers, in this order, for possible solutions.

Banks have provided financing for most wind-energy and PV sector investments. Loan interest rates, especially for PV investors, are considerably high, making the sustainability of investments extremely difficult. A reduction of interest rates could make available some savings for the RES special account.

Electricity suppliers, meaning PPC, primarily, want to avoid any revisions that could require them to cover part of the RES special account deficit.

The government wants to avoid further tariff cuts for RES producers following those included in the New Deal, established in an effort to resolve the RES sector’s financial woes. Even so, the prospect of tariff cuts cannot be ruled out until other solutions are found.

 

Authority to speak on US energy strategy at London event

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David Koranyi, Director of the Eurasian Energy Futures Initiative of the Atlantic Council, is the guest speaker at an event to be hosted today (6pm) at ESCP Europe’s London Campus on the topic “In Search of a US Energy Strategy.”

Koranyi will discuss the current issues surrounding the US energy market, the government’s strategy, and various other geopolitical implications.

A Nonresident Fellow at the Johns Hopkins University SAIS Center for Transatlantic Relations since 2010, Koranyi speaks and publishes on the geopolitics of energy, and Hungarian, European, and US foreign and energy policy.

The speaker served as Undersecretary of State and Chief Foreign Policy and National Security Advisor to the Prime Minister of Hungary Gordon Bajnai (2009-2010). Koranyi is a member of the European Council on Foreign Relations and the Hungarian Europe Society.

Admission is free of charge but places are limited and allocated on a first-serve, first-come basis.

Top RAE officials, unendorsed by committee, may be ousted

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Last June’s appointments of a chairman and deputy chairman at RAE, the Regulatory Authority for Energy, following proposals made by the energy minister at the time, Panagiotis Lafazanis, had not gained the majority backing of a parliamentary committee, as is required by law, it has just been revealed.

This is made apparent by the content of a letter forwarded, at the time, by the former Speaker of Parliament, Zoe Constantopoulou, to inform the ex-minister of the results of a voting session carried out by the committee. The information was neglected by Lafazanis, who may now face legal charges following the disclosure, just made by the local weekly Proto Thema.

Eight members of a Parliamentary Commmittee on Institutions and Transparency, responsible for endorsing the candidates, voted in favor of the two officials – Nikos Boulaxis as chairman and Sotiris Manolkidis as deputy chairman – seven committee members voted against, while two members remained neutral, Constantopoulou’s letter had informed.

The committee voted on the appointments last June 5 amid the country’s heightened political turmoil, not long before the government’s bailout-related referendum.

Despite not having gained the committee’s required majority vote, the two officials are currently serving as RAE’s top officials. The disclosure could lead to their dismissals and repercussions, while all responsible at a political level question could also face questioning.

Athens bourse slump affecting energy sector developments

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The Athens stock exchange’s sunken general index, now at the low level struck in 2012, when Grexit fears prompted a mass sell-off and investor withdrawals from the Greek market, is also a major concern for developments in the local energy sector.

The key problem has to do with the Greek market’s main player, the power utility PPC, currently burdened by unpaid overdue electricity bills owed by consumers, worth over two billion euros. This has resulted from the inability of consumers to service their bills as well as the poor results of the utility’s collection effort, despite a more aggressive policy.

The issue has been widely pointed out by analysts and rating agencies. Over the years, such pundits have steadily linked their appraisals of PPC with the overall prospects and dangers of the Greek economy.

If reports claiming that the sell-off at the Greek bourse has been spurred by major international investment funds are confirmed, then, obviously, the situation is precarious at best. These investment funds had entered the Athens stock exchange based on their forecasts of a Greek economic recovery.

The negative climate and re-emerged doubts concerning the Greek economy’s prospects create serious problems for PPC’s immediate plans, such as the future of its subsidiary firm IPTO, the power grid operator. The government’s plan for IPTO’s privatization and sale of an equity share to a strategic investor through a parallel placement is not a feasible option under the current subdued conditions at the Athens bourse.

Highlighting the problem, PPC’s total value, based on its current share price at the Athens bourse, has fallen to less than 650 million euros. To put this figure into context, the utility’s investment plan for a new power station in the Ptolemaida area, northern Greece, has a budget of 1.4 billion euros. A new PPC power station in Megalopoli, southwest Peloponnese, cost over 800 million euros to develop.

Quite clearly, PPC’s interest in establishing joint ventures with private-sector partners for various projects, a plan promoted by the utility’s administration, is not made any easier by these negative developments. PPC is pushing for joint ventures as a milder solution concerning the break-up of its lignite and hydropower source monopolies, while, at the same time, seeking private-sector funds for new investments.

 

Region’s first event focused on energy IT solutions to be held in Sofia

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The first event in southeast Europe dedicated to IT solutions in the energy field, the “First Energy Software Day SEE”, will be held in Sofia, Bulgaria, on January 28.

Last year at E-World in Essen, Germany, one of the take home messages was “Money is made at the frontiers”. Southeast Europe is one such frontier for the development of energy markets and it comes with a set of specific challenges that are waiting to be tackled. Among them are unstable regulatory framework, concentrated production assets, general backwardness with respect to liberalization, intercompany debt, and EU regulatory frameworks also hitting the local players. In this setting, the questions about reducing complexities of trading and improving operational efficiencies have fallen slightly behind in the past years. Organizers of the “First Energy Software Day SEE” believe that the topic about business software in the niche needs to be urged back and put towards the top of the agenda.

Energy and commodity trading typically require a suite of complex solutions supporting the operational and market activities of sector companies. From wholesale market operations where the main topics are load forecasting, load management, load decomposition, and optimization of deliveries to retail operations where the purchased energy has to be delivered to multiple customers which require a high level of operational efficiency in order to ensure lower cost of customer support, invoicing, reconciliation against network companies, etc., a company which can start with a small investment and a laptop has to invest in itself to keep a good competitive edge.

ROITI has set a target for itself: to create a community of educated buyers and sellers in the region where it is headquartered: Southeast Europe. For this reason, ROITI has teamed up with the editors of the Utilities magazine from publics.bg and initiated the First Energy Software Day SEE in Sofia, Bulgaria. The event’s goal is to stir up the conversation between potential customers and vendors and help identify the key problems specific to the region, the quick wins in terms of maximum business improvement at a minimum investment, and the potential solutions that will make the life of market players simpler and longer. Participants interested in joining the event may register at http://seeenergysoftwareday.com/.Registration is free of charge.

Energy ministry appoints new secretary general

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The Environment and Energy Ministry has appointed a new secretary general, Mihalis Veriopoulos, it has just announced, confirming a previous energypress report.

Veriopoulos, a civil engineer, holds an MBA, and is also managing director of PPC Renewables, a subsidiary of main power utility PPC. He succeeds Apostolos Alexopoulos, who resigned from his post last month.

Alexopoulos’s powers at the ministry had been diminished following the appointment of Panos Skourletis as Energy Minister last summer, just prior to September’s snap elections, the second to be held this year.

 

Energy minister announces plan for National Energy Council

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Environment and Energy Minister Panos Skourletis has announced a plan for the establishment of a National Energy Council to be given an institutional role to help shape Greece’s energy strategy and contribute decisively to better inform the state on real conditions and needs in the energy field, while also facilitating coordination in the production sector.

The plan was announced during the minister’s meeting in Athens today with energy industry officials spanning the entire sector for an overall update on energy reform developments linked to the bailout agreement.

Industrial energy costs high, markets shut, EC report notes

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

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

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

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

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

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

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

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

 

 

 

Progressive national energy strategy needed, ex-minister notes

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The country needs to pursue a progressive, open-minded national energy strategy with a European direction, Yiannis Maniatis, Greece’s former energy minister, who held the portfolio in the pre-Syriza coalition, has told an Athens conference organized by IENE, the Institute of Energy for South-East Europe.

Major energy-sector initiatives taken, at bilateral levels, by the previous coalition, which was led by the conservative New Democracy party, concerning projects such as the IGB (Greek-Bulgarian interconnector), the Vertical Corridor, and East Med, to offer a direct link for gas deposits in the southeast Mediterranean area with the European gas network via Greece, need to be continued, Maniatis told the conference.

 

 

Consumer interests a key factor in energy policy, official notes

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The interests of consumers, until now insufficiently covered, will stand as a key factor in the energy sector policy of the government, which is aiming for a fairer system and is committed to adopting EU framework guidelines, Nikos Kaimaikis, an advisor to energy minister Panos Skourletis, has told an Athens conference organized by IENE, the Institute of Energy for South-East Europe.

Kaimakis, who represented the minister at the event, noted priorities will be given to the renewable energy source (RES) sector, whose new operational framework is currently being prepared, as well as the further penetration of natural gas in the Greek market. LNG will play an increasingly important role in this market, the official said.

Commenting on the significance of the East Med pipeline, to offer a direct link for gas deposits in the southeast Mediterranean area with the European gas network via Greece, Kaimakis described the project as a top-priority item.

He also stressed that current tenders offering hydrocarbon block licenses in Greece need to be completed so that deposits may start being utilized.

PM may either follow or offer fresh ideas at Paris conference

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Prime Minister Alexis Tsipras, who is scheduled to have fifteen minutes of speaking time to project his views at the upcoming UN Climate Change Conference in Paris, to be held November 30 to December 11, faces the choice of either generalizing his way through his speech and adopting wider European positions or rising to the occasion and announcing a truly ambitious Greek program.

Should Tsipras opt to present groundbreaking policies “this ought to be not because the US president and leaders of other major economies are doing so, but because Greek society truly requires such an approach for its future generations,” noted Takis Grigoriou, environmental change head official at the local Greenpeace branch.

The Paris conference, being widely described as humanity’s last chance to restrict any additional global warming to less than two degrees celcius, comes following a series of initiatives taken by leaders of major economies, who appear to be announcing policies intended to reduce fossil fuel dependence. Examples include the US, China, India, as well as certain European countries, such as Sweden and Denmark. Just days ago, the US President Barack Obama cancelled plans for the Keystone oil pipeline, despite strong opposition from the oil industry. The project, which had been planned to run from Canada through the US, faced heavy criticism from environmentalists.

Tsipras will travel to Paris as the leader of a nation that has little to show in renewable energy source (RES) progress over the past few years, except for recent legislation encouraging photovoltaic self-production. On the contrary, the only investments being pushed in Greece at this stage concern further fossil fuel development.

Although the Greek economy is small and any initiatives taken by the country can only have minimal impact on global developments, a prudent local energy policy could reinforce the national economy and, by extension, society. Global climate change authorities contend that even smaller countries have the opportunity to play key roles at international conferences such as the imminent Paris event, if they choose to present groundbreaking ideas or policies.

 

EIB signs €285m in loan deals with PPC, DESFA and IPTO

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The European Investment Bank (EIB) has signed loan agreements worth 285 million euros with PPC, the main power utility, DESFA, the natural gas grid operator, and IPTO, the power grid operator, to improve electricity transmission and the interconnection network across the country.

The ageements between the three Greek energy companies and the EIB concern the development of power stations on 18 islands in the north and east Aegean, the Cyclades, Dodecanese, and the Diapontia Islands, a complex of islets northwest of Corfu, all of which will be backed by 110 million euros of EIB funds. As part of the deal, network projects in the Peloponnese and Evia will receive 70 billion euros in loans, interconnection projects for the Cyclades a further 65 million euros, and the LNG terminal in Revythoussa, an islet in the Saronic Gulf, close to Athens, will receive financing of 40 million euros to increase the facility’s storage capacity.

EIB president Werner Hoyer, the country’s Finance Minister Euclid Tsakalotos, Economy, Development & Tourism Minister Giorgos Stathakis, Environment & Energy Minister Panos Skourletis, PPC’s chief executive Manolis Panagiotakis, and the head officials of IPTO, Yiannis Blanas, and DESFA, Konstantinos Xifaras, all attended the signing ceremony in Athens.

Skourletis, Greece’s energy minister, stressed the state can make crucial investments in the energy sector, while also noting talks with the TAP (Trans Adriatic Pipeline) consortium on local issues for the development of gas infrastructure through northern Greece were at an advanced stage. Minor TAP-related issues will soon be overcome, the minister said.  The TAP project will carry Azeri natural gas to Europe, through Greece, Albania and Italy.

The energy minister also noted the DESFA plan to increase storage capacity at the Revythoussa LNG terminal is a significant step as this type of energy source promises to play a greater role in Greece. Skourletis reminded Greece is planning to develop a second LNG station in Alexandroupoli, northeast Greece.

Hoyer noted the EIB will continue to support Greece and expand its banking activities in the country, while, responding to a question on Greece’s risk of a eurozone exit, reiterated European unification represents an irreversible course.

Energy savings bill to create lucrative market in Greece

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Digital power meters will need to be installed for all new electricity connections, while apartments with central heating systems must be equipped with calorimeters, used for precise measurement of energy consumption in buildings, as of 2016, according to a draft bill submitted to Greek Parliament yesterday. It contains energy efficiency requirements as part of the bailout agreement.

The draft bill, which sets a national energy efficiency objective for 2020, promises to create a lucrative market as the country has fallen well behind in this domain.

The legislative effort also demands energy-related modernization of at least three percent of the country’s public buildings each year. This could prove overambitious for Greece’s public sector, currently hampered by wider cashflow issues.

As for the household sector, all apartments with central heating systems must have independent calorimeters installed by the end of 2016. Though the requirement’s cost will burden property owners, EU subsidies may become available.

Digital power meters will need to be installed at all new buildings as well in full-revamp projects, as of January 1, 2016.

This essentially means that HEDNO, the Hellenic Electricity Distribution Network Operator, in charge of power meter installations, will need to implement the imminent law’s requirements ahead of the launch of a pilot program supervised by the operator for the installation of 200,000 digital meters around Greece. An international tender for this latter project has yet to be completed following several deadline extensions. Bidders have just submitted their offers.

Compared to energy efficiency progress made in most other parts of Europe, Greece lags well behind in objectives set for 2020.

According to market estimates, over one billion euros worth of investments need to be made in the near future for energy efficiency upgrades to buildings and infrastructure, including at hospitals, schools, swimming pools, as well as lighting facilities for local and national road networks.

Establishing a legal framework for energy efficiency in Greece has proved to be a major struggle. A previous draft bill had also been forwarded for public consultation procedures in September, 2014 but never made it to Parliament for ratification. Amid the process, the European Commission decided, last June, to take Greece to the European Court as a result of the country’s failure to adopt EU energy efficiency directives. The current draft bill follows that threat.

 

Parliament to begin debate on delayed energy efficiency law

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Discussion on new legislation concerning energy efficiency and saving is scheduled to begin in Greek Parliament this Thursday. The intention is to introduce a law to the country’s legal framework based on EU guidelines issued in 2012, which require measures for increased energy efficiency at households, buildings, industrial facilities, and transportation between January 1, 2014 and December 31, 2020.

Just four months ago, the European Commission filed a case against Greece at the European Court for the country’s failure, until now, to introduce guideline-related measures to national law. Greece has been threatened with a fine of 29,145.60 euros for each day that has elapsed since January 1, 2014 without these measures intact.

Earlier this year, former energy minister Panagiotis Lafazanis had launched public consultation proceedings for a draft law on the matter, whose details include setting annual objectives, monitoring through the National Energy Efficiency Action Plan (ESDEA), as well as reinforcing the market for energy savings companies (ESCO), businesses providing design and implementation of energy-saving projects.

A total of 47 proposals have been submitted to the public consultation procedure until now, sixteen of these concerning the establishment of energy efficiency inspections by certified independent inspectors.

OTE, Forthnet, Copelouzos also eyeing retail electricity market

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A growing number of companies are planning to enter Greece’s retail electricity market, currently being opened up to competition by the country’s bailout-linked obligation of reducing main power utility PPC’s virtually monopolistic market share to 50 percent by 2020.

As part of the effort to break the utility’s dominance, from the production stage to the retail market, upcoming NOME-type auctions will offer wholesalers access to PPC’s low-cost lignite-fired electricity production.

According to energypress sources, besides ELTA (Hellenic Post), which announced last week its intention to enter Greece’s retail electricity market, the telecommunications companies OTE and Forthnet, as well as the Copelouzos Group, whose various activities include energy, are either considering or planning to enter this market.

OTE, already represented by a vast retail network through its Germanos mobile technology outlets around the country, is currently engaged in negotiations with at least two existing electricity wholesalers for a strategic partnership. OTE has already made a successful first step into the energy market by offering customers energy management services through mediums such as tablets and mobile phones.

The involvement of telecommunication companies in electricity and natural gas supply markets, for favorable all-encompassing package deals, is now an established trend in European markets.

Forthnet, whose previous attempt at entering the energy market through a supply deal with Hellas Power had ended following the latter company’s debacle, is now making a renewed effort. Forthnet faces considerable financial issues in its main line of telecommunications-and-TV business activity and, as a result, is seeking to ways to bolster its standing.

Officials at the Copelouzos Group, sensing firm business prospects through combined telephony-TV-electricity services, have not refrained from expressing the company’s interest in entering the retail electricity market. The Copelouzos Group is determined to establish itself in Greece’s retail electricity market despite the demise of a recent agreement reached with PPC for the co-development of a retail network throughout Greece.

ELTA announced just days ago it is planning to submit an application to sector authorities for a electricity supply permit in November with the aim of entering the market by December. However, market authorities have described this plan’s schedule as overambitious. At present, the company lacks energy market knowhow to enter the electricity market alone, but its existing retail network is extensive throughout the country.

Latest data for Greece’s electricity market showed that 5.7 percent of consumers had switched from PPC to other electricity companies by the end of September, with PPC controlling 94.3 percent. Heron captured 1.9 percent, Elpedison’s share measured 1.6 percent, and Protergia held 1.2 percent. Four other smaller suppliers – Green, Voltera, Watt + Volt, and NRG – shared one percent of the pie.

All these alternative suppliers are forecast to have captured a combined market share of roughly 7 percent by the end of this year.

Visiting French delegation scanning wider business interests

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The series of Greek-French business meetings being staged as part of French President Francois Hollande’s two-day visit to Athens, concluding today, concerns interests primarily in the industrial, energy, construction, and infrastructure sectors. Hollande is heading a delegation that includes French entrepreneurs seeking to invest in Greece and also form partnerships with local businessmen for ventures both in Greece and elsewhere. However, the French team is smaller than had been expected.

Leading business federations of both countries, as well as enterprises, are engaged in talks. SEV, the Hellenic Association of Industrialists, had begun proceedings with a visit to Paris late last month by its president Theodoros Fessas and Greek businessmen from the trading, industrial, services, and technology sectors.

French entrepreneurs are also scheduled to meet with Greek officials representing the energy, environment, technology and construction sectors at an event organized by the French Embassy.

French investors are believed to be interested in the energy sector with a focus on the electricity market, renewable energy, as well as hydrocarbons exploration. EdF and Total are being represented by high-ranked officials on this trip.

Infrastructure and major projects are also generating the interest of companies such as Vinci and France’s state-run railway company SNFC, which appears to be interested in TRAINOSE, Greece’s railway company.

As for the environment sector, Suez Environment, which already holds stakes in EYDAP, the Athens Water Supply and Sewage Company, and EYATH, the Thessaloniki Water Company, seems interested in expanding its association, even if privatization plans do not proceed. Waste management investment opportunities are also being examined.

Other fields being looked at include logistics, the land registry, tourism, defense, and pharmaceuticals.

Greek-French entrepreneur Pâris Mouratoglou, a former chief at EdF Energies Nouvelles who now heads his own enterprise, EREN, a group developing natural resource efficiency worldwide, including in Greece, is also part of the French delegation visiting Greece.

These Greek-French meetings carry a mostly political dimension aiming to highlight the positive shape of bilateral relations. It remains to be seen whether this favorable political momentum can be transformed into business deals in the near future. More business missions are planned for later this year.