EU recovery fund compromise cuts into JTF for lignite end

A significant contraction of the Just Transition Fund that has resulted from a major compromise deal just reached between the EU’s north and south for a huge post-coronavirus recovery package has raised questions about the decarbonization effort’s financing and ability to progress smoothly.

A sum of 30 billion euros initially planned by the European Commission to be offered to lignite-dependent EU members states for their transition to cleaner energy will be cut to 10 billion euros.

A variety of post-coronavirus recovery sub-funds have been reduced in size, including the JTF, established to support Europe’s decarbonization process.

Prior to the compromise deal, a European Commission proposal had been made to increase the JTF amount for the EU’s lignite-dependent members to 40 billion euros from an initial sum of 7.5 billion euros.

Subsequently, Greece now stands to receive a few hundred million euros for its  decarbonization policy following an earlier estimate for a sum of 1.7 billion euros. The loss for Greece is worth approximately one billion euros.

The recovery package talks over the past few days saw a split between nations hardest hit by the virus and “frugal” members who were concerned about costs.

The deal centers on a 390 billion-euro program of grants to member states hardest hit by the pandemic. Italy and Spain are expected to be the main recipients.

It is the biggest joint borrowing ever agreed by the EU. Summit chairman Charles Michel described it as a “pivotal moment” for Europe.

 

ENTSO-E pledges for climate-neutral, resilient, innovative European recovery

The Green Deal represents an unprecedented energy and societal transition with a massive deployment of large-scale renewable sources, innovative low carbon technologies, deeper electrification, new electrical uses, and energy system integration. ENTSO-E welcomes the European Commission’s strategy to gear all policies towards achieving a climate-neutral, resilient and innovative EU. The European TSOs stand ready to do their part to help the green recovery.

During the COVID-19 crisis, TSOs have demonstrated their unfailing solidarity and entire commitment to deliver electricity to all EU consumers and vital services. This unprecedented crisis should not deter EU and national Governments to deliver on the Green Deal as it is core to the European economic recovery. For the green recovery to be a success, ENTSO-E recommends EU policy makers to:

1/ recognize the key-enabling role of electricity TSOs in the energy system integration. As system operators, grid planners & developers, and as market facilitators, TSOs can drive Europe’s energy ecosystem towards a “system of interconnected systems” starting with the development of a multi-sectorial approach to grid planning and anticipatory investment for both onshore and offshore networks.

2/ put electrification at the heart of EU decarbonization policies. Electricity is the dominant vector for clean energy and the electricity transmission network will play a central role in achieving climate neutrality by 2050.

3/ invest in low-carbon and fit-for-purpose infrastructures and their digital “twins”. Investing in the adequate extension of the transmission network and in the “cyber physical” power system delivers value for the whole society in terms of competitiveness, resilience and sustainability. Innovation is essential and especially in areas that will help most the transformation materialize.

4/ ensure a smooth recovery of the whole electricity value chain. The lockdown measures impacted the whole electricity sector. Risk of shortage in strategic value chains and of critical materials should be monitored and addressed. This is also about strengthening Europe’s industrial and strategic autonomy.

Investing in the transmission grid helps move the energy transition forward and concretely supports Europe’s economic recovery by generating direct and indirect revenues throughout the planning and building phase, and by reducing price differentials between regions and the overall energy costs. Policy makers’ and stakeholders’ support is needed to overcome barriers to the needed extension and upgrading of the transmission power network, notably when it comes to facilitating the permitting process.

ENTSO-E and its members are committed to put their expertise at the service of decision makers to turn the EU Green Deal into reality and believe that these recommendations will contribute to the climate-neutral, resilient and innovative recovery of the European economy.

Hydrogen factor needed for financing of South Kavala UGS

Development of an underground natural gas storage facility (UGS) in the almost depleted South Kavala offshore natural gas field will require a solution incorporating hydrogen into the investment, estimated between 300 and 400 million euros, which would categorize the project as eco-friendly and facilitate European Investment Bank financing.

As has been made clear by the energy ministry, Greek privatization fund TAIPED, currently conducting a cost-benefit analysis, will need to consider this prospect and plan for a storage facility holding hydrogen or a mix of this fuel with natural gas. Installation of carbon-capture and storage technology may also be helpful.

The EIB will stop financing conventional natural gas projects as of 2022. The bank may exempt from this rule projects limiting their emissions to 250 grams per KWh of energy produced.

This emission limit can only be achieved if natural gas is mixed with hydrogen, a prospect requiring higher-cost technologies but aligning the UGS with EU policies for full decarbonization in Europe by 2050.

The privatization fund has just launched an international tender for the South Kavala UGS in an effort to achieve EU funding for the project before a crucial EU funding deadline expires.

As a Project of Common Interest, this UGS is eligible for funding through the EU’s Connecting Europe Facility, vital for the investment’s sustainability. However, investors behind the project will need to submit their CEF application by the end of 2020.

The UGS South Kavala is intended to serve as energy infrastructure that will enhance supply security in the Greek market as well as  southeastern Europe.

 

‘Energy ministry policies crucial in effort to revitalize economy’

The energy ministry’s policies promise to play a pivotal role in the challenge faced by the government to revitalize the national economy following lockdown, energy minister Costis Hatzidakis has noted in an article featuring in GREEK ENERGY 2020, the energypress team’s latest annual publication covering the Greek energy sector.

Action is already being taken by the ministry through a decisive energy-sector agenda that aims for growth and is fully aligned with the European Green Deal, now a key economic growth tool throughout Europe, the minister notes.

New financial tools such as an EU recovery fund, worth 750 billion euros, according to a European Commission proposal, are designed to help the EU achieve its goal of transition towards a zero-emission economy through support for the gradual elimination of fossil-fuel dependence, RES growth and energy savings, the minister writes.

Greece is ready to make the most of this EU support package, effectively an additional NSRF funding program for the country promising capital worth around 32 billion euros, in order to achieve sustainable green-energy growth, according to Hatzidakis.

Besides decarbonization and RES development, other aspects incorporated into the energy ministry’s wider plan include:  electromobility growth; a third Saving at Home subsidy program for domestic energy-efficiency upgrades; reforms for greater competition, transparency and more attractive price offers in the energy market; reduced industrial energy costs; and energy-sector privatizations, the minister notes.

 

Colossal task ahead for decarbonization goal

Greece faces a colossal task – in terms of money needed, level of complexity and coordination – to reach ambitious post-lignite objectives set by the government.

The effort could require as much as 4.4 billion euros in EU funds, deputy energy minister Gerassimos Thomas noted yesterday, plus many more billions from the private sector.

Greece is entitled to a considerable sum in EU funds for the country’s decarbonization effort but, as a first step, a cohesive master plan will need to be submitted to Brussels. It will then need to be executed. The plan’s rate of execution will depend on the country’s ability to absorb EU funds made available.

An inter-ministerial committee involving seven ministers and deputies and established to oversee the entire effort will stage its inaugural meeting today.

A collective effort will need to be made involving teamwork of at least five ministries (finance, environment & energy, development, interior and agricultural development), two regional authorities (west Macedonia and Peloponnese), and no less than four municipalities (Florina, Kozani, Amynteo and Megalopoli). The local economies of these regions are lignite-dependent at present.

A national action plan must now be swiftly prepared. Its specific project proposals will then need to be tabled to the European Commission for approval before any investment activity can commence.

Personnel retraining, heightened research activity and development of new technologies are other necessities.

 

PPC coal unit losses €596m in ’19, 80% of EU units in the red

Power utility PPC’s lignite-fired power stations are projected to incur losses totaling 596 million euros this year, while four in five EU coal generators are no longer profitable and could lose 6.6 billion euros in 2019, according to a latest report by Carbon Tracker, an independent financial think tank.

In its report, titled “Apocoalypse Now” and released today, Carbon Tracker urges  policymakers and investors to plan for full dercarbonization by 2030 as the coal-generating sector will no longer be sustainable if not heavily subsidized.

European coal generators are losing considerable amounts owing to relentless competition from RES sources, as a result of continual cost reductions of wind and solar generation, as well as gas, noted Matthew Gray, Carbon Tracker’s head of power and utilities.

Energy deputy in Brussels electricity market talks, NOME auctions end near

Deputy energy minister Gerassimos Thomas, representing Greece at tomorrow’s council of EU energy ministers in Brussels, where climate change targets between 2030 and 2050 will be discussed, intends to combine the visit with a series of meetings with European Commission energy and competition officials for talks on latest government plans striving for greater competition in Greece’s electricity market.

Talks concerning the Greek government’s plans to intensify electricity market competition have yet to officially commence, as was noted just days ago by recently appointed energy minister Costis Hatzidakis. He is preparing for his first meeting with the country’s lender representatives in Athens this Wednesday.

The government’s electricity market agenda is comprised of five key measures – swifter decarbonization; partial privatization of distribution network operator DEDDIE/HEDNO; power utility PPC’s detachment from Greek State bailout-related procedures; greater emphasis on renewable energy; and termination of NOME auctions.

The measure abolishing NOME auctions will be submitted to Greek Parliament within the next few days, Hatzidakis, the energy minister, told local media yesterday. The plan will be attached to a multi-bill for development, now undergoing public consultation, sources informed.

NOME auctions were introduced in Greece about three years ago to offer PPC rivals lower-cost wholesale electricity. Hatzidakis argues the auctions ended up forcing the power utility to offer below-cost electricity, inflicting an accumulation of financial damage worth approximately 600 million euros.

At the council of EU energy ministers in Brussels tomorrow, his deputy, Thomas, will present the Greek government’s ambitious agenda for cleaner energy.

He also plans to hold talks with Finnish minister of economic affairs Katri Kulumni, Spain’s energy minister José Dominguez Abascal, and Italy’s economic development minister Stefano Patuanelli, amongst others, sources informed.

Deputy to present more ambitious national energy plan at EU meeting

Deputy energy minister Gerassimos Thomas, an advocate of further RES penetration and complete decarbonization in Europe by 2050, will present a revised national package of cleaner energy proposals and more ambitious RES targets at a council of EU energy ministers in Finland on September 24, ministry associates have informed.

The ministers will meet to update National Energy and Climate Plan targets for 2030 at the Finnish meeting next week, in preparation for an EU summit in mid-October to focus on longer-term climate change targets between 2030 and 2050.

Thomas, until recently the Deputy Director-General at the European Commission’s Directorate-General for Energy, is expected to present a Greek package based on three key aspects in Finland next week.

One will concern swifter market decarbonization through the withdrawal of lignite-fired power stations. Another will call for a RES market share increase to 35 percent from a previous target of 31 percent. A brief summary on how this increase can be achieved will be presented at next week’s meeting. The plan’s third aspect entails energy efficiency improvement and greenhouse gas emission reductions.

It is believed the deputy minister will also present – as a wider and supportive fourth tool – a proposal for the establishment of an improved institutional framework in support of further energy storage and, by extension, more effective RES penetration of the energy mix.

RAE energy storage support framework plan by end of year

A new energy storage support framework aiming to foster renewable energy growth is being prepared by RAE, the Regulatory Authority for Energy, and should be completed by the end of the year, the authority’s chief executive Nikos Boulaxis has told the Thessaloniki International Fair.

“The future of renewable energy is linked to the ability to store it. RES growth and  decarbonization cannot be achieved without storage and strong interconnections,” Boulaxis noted.

The RAE boss underlined storage system development is vital for the non-interconnected islands as this would encourage RES installations prior to the completion of grid interconnection projects and also offer support to the interconnections.

The energy storage plan has already undergone public consultation. RAE is now working on shaping its proposal in collaboration with the energy ministry, responsible for any legislative revisions to be needed.

Also, the plan will soon be discussed with the European Commission for approval details concerning state aid as well as its target model compatibility.

New gas-fired units reshaping electricity generation sector

Independent electricity producers, sensing opportunities, are reshaping the sector by planning the development of new gas-fired power stations to replace the power utility PPC’s outgoing lignite-fired units. The independent producers are even replacing power stations of their own, launched about 15 years ago, as part of the overall drive.

The country’s required withdrawal of old lignite-fired power stations operated by state-controlled PPC, as well as the implementation of the target model, beginning in the summer of 2020 with a link of the Greek and Italian electricity markets, followed by a Bulgarian link as a second stage, have been cited as the two main factors bringing about this change of scene in the electricity production sector.

The independent producers GEK TERNA (Heron), Mytilineos (Protergia) and Elpedison, as well as new arrivals such as the Copelouzos and Karatzis groups, have all expressed an interest to acquire licenses for the development of new power stations.

PPC, heavily reliant on lignite-based production, is gradually losing grip of its dominance in the electricity generation sector.

Pushed higher by the EU’s environmental policy, rising CO2 emission right costs, now nearing 30 euros per ton after being worth approximately 5 euros per ton a year-and-a-half ago, are a key factor in the developments.

PPC’s CO2-related costs rose to 279.5 million euros in 2018 from 141.6 million euros a year earlier.

Elections, EuroAsia case to delay Crete link tender approval

Greece’s upcoming elections on July 7 and legal action pursued by EuroAsia Interconnector stand in the way of a decision by RAE, the Regulatory Authority for Energy, to approve the terms of a competition offering investors a minority stake of up to 39 percent in Ariadne Interconnection, a subsidiary established by power grid operator IPTO for the development of a grid interconnection project to link Crete with Athens.

The RAE decision was expected any day now, but these two factors will delay the announcement for a latter date, sources at IPTO have informed.

Euroasia Interconnector, a consortium of Cypriot interests heading a wider PCI-status Greek-Cypriot-Israeli electricity grid connection, has reacted as IPTO has taken control of the project’s Crete-Athens segment.

The consortium has submitted a case to Greece’s Authority for the Examination of Preliminary Appeals (AEPP) challenging tenders for the Crete-Athens link’s tenders concerning the project’s development (cables and transformers, budgeted at 600 million and 315 million euros, respectively).

AEPP has set a July 15 date to hear the Cypriot consortium’s case. EuroAsia Interconnector’s bid is not expected to succeed, legal officials explained, as this authority’s jurisdiction deals with companies protesting  tender terms that could exclude them from participating. Even so, the case needs to be heard and will contribute to the delay in RAE’s approval.

The Athens-Crete grid interconnection is urgently needed as electricity demand on the island is increasing while high-polluting units operating on Crete will soon need to be withdrawn as part of the EU’s environmental policy.

IPTO has committed itself to delivering the Athens-Crete link by the end of 2022.

 

Brussels CAT restriction a setback for Ptolemaida V

The European Commission has announced tough CAT remuneration mechanism restrictions for lignite-based power stations, effective as of July 4, a major setback for the CAT eligibility prospects of power utility PPC’s Ptolemaida V unit, now being developed.

According to some sources, the new capacity mechanism restrictions, announced in the Official Journal of the European Union last Friday, end all CAT qualification hopes for Ptolemaida V.

Despite this latest unfavorable development, state-controlled PPC and the energy ministry have remained optimistic and contend hope remains under certain conditions.

Power stations emitting over 550 grams of CO2 per kilowatt-hour will no longer be eligible for the capacity mechanism, according to the new restrictions.

Greek Parliament recently ratified a related energy ministry bill without prior EU approval.

Capacity mechanisms have been used by EU member states to fund electricity generation that may not be cost-effective or as clean as renewable power but is needed to guarantee supply during periods of peak demand.

Ministries to extend Kardia unit time limits, EC stance unclear

The energy and economy ministries are set, any day now, to deliver a joint ministerial decision offering an operating time extension for the main power utility PPC’s lignite-fired Kardia III and IV power stations from a current 17,500-hour limit to 32,000 hours.

The decision will not make specific reference to the Kardia facility but will note that an operating extension to 32,000 hours will be permitted for units offering telethermal services to surrounding regions.

For quite some time now, energy ministry officials have been negotiating the matter with the European Commission but it remains unclear if Brussels will offer its  consent for the two Kardia unit extensions.

This specification frames Kardia III and IV and satisfies a long-standing request by residents of Ptolemaida, in the country’s north, for a lifetime extension of the units as the wider region’s heating depends on them in the winter.

Energy minister Giorgos Stathakis and state-controlled PPC’s chief executive Manolis Panagiotakis had both promised residents, power station employees and local MPs that an extension would be granted.

The government recently called for snap elections on July 7.

More recently, the energy ministry has expressed increased confidence of an approval despite the strict terms of the EU’s debarbonization policy.

 

 

 

RES-focused Ellaktor in talks for sale of its Elpedison stake

The Ellaktor group has reached an advanced stage in talks with foreign investors interested in acquiring its 22.74 percent stake in electricity producer and supplier Elpedison, sources have informed, a reflection of the corporate group’s intensifying focus on the renewable energy sector.

Last December, the Ellaktor group took over listed wind energy subsidiary El. Tech. Anemos, Greece’s second biggest renewable energy company, as part of a strategy to bolster its position in the RES domain and better adjust to the EU’s decarbonization policy aiming for a drastic reduction of CO2 emissions by 2030 and elimination by 2050.

The corporate group’s takeover of El. Tech. Anemos promises to provide additional cash flow supporting the subsidiary’s investment plan.

The brothers Anastasios and Dimitris Kallitsantsis, who took over the Ellaktor group’s helm last July following a tumultuous battle between the group’s major shareholders, had committed themselves, as a key strategy, to not selling the group’s stake in El. Tech. Anemos but, on the contrary, strengthen the group’s standing in the renewable energy sector.

ELPE (Hellenic Petroleum) and Edison – acquired by EDF – hold a 75.78 stake in Elpedison as a joint venture, Ellaktor holds 22.74 percent, and Halkor has the other 1.48 percent.