Short-term EU action curbing crisis effects sought by Greece

European Commission proposals for electricity market reforms as well as gas supply security measures ahead of next winter will be the focus of attention at a European Council summit of EU leaders later this week, planned for March 23 and 24, as well as at an upcoming EU Energy Council, scheduled for March 28.

According to energypress sources, Greek officials are approaching these sessions with a mostly favorable view of the European Commission’s proposed framework of measures, while pointing out, however, that they do not offer solutions but rather set defense strategies in the event of further crises.

Given this stance, Greek officials, at both upcoming meetings, intend to support the need for short-term measures aimed at curbing the effects of the energy crisis and contend that the European proposals are too timid.

As for the segment of upcoming talks to focus on European electricity market reforms, Greek officials will promote the establishment of a European fund, which they believe is necessary to provide state guarantees for CfDs and other European Commission proposals such as hedging.

The absence of such support would limit the benefits of measures proposed by Brussels to EU member states possessing sufficient fiscal leeway and marginalize all other member states, Greek officials believe.

The possibility of extending, into next winter, a voluntary objective for reducing gas demand will be among the topics to be discussed at next week’s EU Energy Council. The European Commission has proposed extending this voluntary goal to March, 2024. It was originally set to run from August 1, 2022 to March 31, 2023.

NECP adjusted to meet loftier EU aim for energy usage drop

The Greek government has adjusted its National Energy and Climate Plan (NECP), setting a loftier energy consumption reduction goal that aligns the plan with an even more ambitious EU target just set.

Greece has now set a loftier 8 percent energy consumption reduction goal, compared to 2020, by the end of the decade, while the EU, through a provisional agreement reached by the European Council Presidency and Members of the European Parliament, is aiming for an overall 11.7 percent drop by 2030, compared to 2020, above the target of a 9 percent reduction that was set in 2021.

The 11.7 percent reduction goal, at EU level, is a binding target and means EU consumers will need to limit annual energy usage to the equivalent of 763 million tons of oil by the end of this decade.

The EU reduction target is not proportionally shared by member states but, instead, takes into account their capacity to limit respective consumption, a realistic approach offering a certain degree of flexibility.

Greek authorities intend to intensify the country’s energy-efficiency drive concerning buildings, further promote smart management of energy consumption, and maintain efforts aiming to reshape consumer behavior for an overall reduction of energy demand.

Energy ministry multi-bill at parliamentary committee

Greek Parliament’s Standing Committee on Production and Trade begins is set to begin discussions today on a multi-bill covering a wide range of energy-sector issues. The committee’s talks are expected to continue during the week, but a date has yet to be set for the multi-bill’s tabling in Parliament for ratification.

Energy-sector issues included in the multi-bill include a formula for filtering out stagnant RES projects as a means of freeing up required grid capacity.

Non-auction tariff levels in 2023 for small-scale wind and solar energy projects of up to 6 MW is another matter included in the energy ministry’s multi-bill, as are power purchase agreement (PPA) rights for RES projects, instead of fixed tariffs, which were trimmed as part of the new deal.

Also included is an article concerning a compensation amount for gas company DEPA Commercial following the cost of its recent decision to cancel LNG orders, not required as a result of lower energy demand this winter.

It also includes revisions exempting businesses and farmers from public service compensation surcharges, included in electricity bills, worth 63 million euros.

In another section, the multi-bill includes terms increasing upper capacity limits to 100 kW on solar energy panels installed for net-metering purposes by churches, charities, NGOs and schools.

Moreover, the revisions include an EU formula to be adopted for the development of offshore wind farms as a pilot project off Alexandroupoli, northeastern Greece.


Alexandroupoli offshore wind farms given RES priority status

Offshore wind farms planned to be introduced in Greece as a pilot program off Alexandroupoli, in the country’s northeast, will be developed through an EU go-to-areas formula designed to accelerate green-energy project development as a means of ending Europe’s reliance on natural gas as soon as possible.

A local draft bill incorporating this European formula, which has been adopted in Greece for the first time for the Alexandroupoli offshore wind farms, was submitted to Greek Parliament yesterday as a “RES First Choice Areas” initiative.

As stipulated in the draft bill, RES priority areas must be located beyond areas offered environmental protection through the EU’s Natura 2000 network. In addition, these areas will be approved by Presidential Decree.

Go-to-area RES projects will be exempted from the environmental permitting process and a special ecological assessment procedure.

For the time being, Alexandroupoli is Greece’s only area to have been awarded RES priority status.

Energy price drop reduces likelihood of market revisions

Reduced energy prices in Europe have dampened the likelihood of any major market revisions, while, given the currently mild conditions, officials are most likely to enter a period of protracted talks before reaching any decisions, developments on the first day, yesterday, of an informal meeting between EU energy ministers in Stockholm have indicated.

The opening day of talks in Sweden, holding the EU’s rotating presidency for the first half of 2023, included a session on “Energy market planning and security of supply – preparing for next winter and beyond” and will today be followed up by talks on “Future energy policy for industrial competitiveness in all Member States”.

Greece, represented by the energy ministry’s secretary-general, Alexandra Sdoukou, is upholding its long-held view in support of radical market changes that would decouple electricity prices from those of natural gas so that final prices reflect actual cost rather than be influenced by gas price fluctuations.

Though natural gas prices have levelled off lately, they remain a constant threat given pricing methods used in wholesale electricity markets.

Greece, France, Spain, Portugal, Italy and Romania support radical market changes that would stop prices being fully shaped by the day-ahead market.

Some EU member states, including Denmark and the Netherlands, are in favor of certain market changes but are steering clear of radical restructuring, while others, among them Belgium and Hungary, propose no changes to the target model.

Germany has proposed deferring talks for any market revisions until 2024.

RES generation biggest energy-mix contributor for first time ever in 2022

Renewable energy was ranked the country’s biggest electricity producer for the first time ever in 2022, capturing a 41.6 percent share of the energy mix for output totaling 19.7 TWh, data provided by power grid operator IPTO has shown.

Natural gas-fueled generation, previously the country’s biggest producer, was ranked second in 2022 with a 38 percent share of Greece’s energy mix and output of 17.9 TWh. It was followed by lignite, once the country’s leading source of electricity production until it was overtaken by natural gas, with an 11.8 percent share and 5.6 TWh. Hydropower ranked fourth in terms of output in 2022, capturing an 8.5 percent share with output totaling 4 TWh.

Combining the energy-mix shares captured by the RES sector and hydropower adds up to 50.1 percent, meaning these two energy source categories edged past fossil fuels as Greece’s main producer of electricity.

Last year, natural gas-fueled generation fell by just over 4 percent compared to 2021, dropping from a leading energy-mix share of 42.8 percent.

All EU member states have set objectives, on a voluntary basis, to reduce natural gas consumption by 15 percent this winter.

In 2021, the RES sector was ranked second in terms of electricity generation in Greece with a 35.3 percent share of the energy mix followed by lignite, whose share hardly changed. Compared to 2022, hydropower output was slightly higher in 2021, when it had captured a share of approximately 11 percent.


Gas orders through collective EU platform to be discussed

An energy ministry meeting scheduled for tomorrow will focus on a European platform introduced to facilitate collective natural gas orders next winter, the session’s objective being to determine gas quantities Greek market players would be prepared to order through this platform, promising collective-bargaining benefits expected to result through deals struck between the EU and international suppliers.

Tomorrow’s meeting, organized by the energy ministry, will involve the participation of the country’s four electricity producers, gas company DEPA Commercial, as well as industrial-sector officials.

A key objective of this new European platform will be to prevent competition between EU member states in international markets for natural gas orders, a consequence of the reduction in Russian gas supply to Europe that has escalated prices.

EU energy ministers approved the European platform for collective gas orders in mid-December.

EU member states equipped with gas storage facilities will be required to place gas orders – though the new collective platform – representing at least 15 percent of their respective gas demand when refilling storage facilities for next winter.

The European Commission has set an objective for EU gas storage facilities to be 90 percent full by next November.

At present, Greece does not possess gas storage facilities. Domestic market players may place orders through the new platform on a voluntary basis.


Expanded RAE role to bring about administrative changes

A prospective expansion of the executive powers at RAE, the Regulatory Authority for Energy, to result in the addition of water and waste management duties, will bring about administrative changes at the authority, which will be renamed RAAEY, or the Regulatory Authority for Waste, Energy and Water.

Three new divisions will be created as part of the authority’s expansion, each supervising its respective sector. These divisions, all under the control of the expanded authority, will each consist of a vice chairman and three members.

Also, a main board will be comprised of 13 members, chaired by the RAAEY president.

The energy ministry plans to soon stage a consultation procedure for a draft bill concerning the authority’s expanded role.

RAE’s expanded role will facilitate the country’s eligibility for EU Recovery and Resilience Facility (RRF) funds.

Brussels electricity subsidy proposal on Eurogroup agenda

An electricity subsidy proposal put forth by the European Commission, essentially seeking to replace universal subsidies offered by EU member states such as Greece with a two-tier system prioritizing subsidies for low-income households, is on the agenda of a Eurogroup meeting in Brussels today.

According to the Brussels proposal, any electricity tariff increases will be fully covered through subsidy support offered to consumers in the top-tier subsidy category for low-income households.

The second-tier subsidy group, which would include medium and high-income consumers, would offer gradually increasing subsidies, as long as consumers have proven records of reduced energy consumption.

The Greek government has implemented an electricity subsidy system based on energy consumption levels. Subsidy amounts for households are reduced if monthly energy consumption levels exceed 500 MWh.

This consumption-based system was chosen by Athens as a result of low income levels in general and higher electricity prices in Greece compared to many other EU member states.

Acceptance and implementation of the Brussels proposal would result in higher electricity costs for medium-income groups. However, the Brussels proposal faces major obstacles as each EU member state has its own subsidy-related electricity market conditions to deal with.

Greek energy minister Kostas Skrekas, in comments offered to media over the weekend, ascertained the country’s existing electricity subsidy program for households and businesses will continue to apply until at least July.

RAE prepares list of crucial industries for gas rationing exemption

RAE, the Regulatory Authority for Energy, has prioritized industrial enterprises for a ranking system exempting the most crucial players from natural gas rationing in 2023, should such an emergency measure be necessary.

This list of prioritized industries is needed so that a revised emergency plan for 2023, prepared by gas grid operator DESFA and approved by RAE, can be implemented, if needed.

The European Commission requires all EU member states to deliver lists prioritizing industries for the year as part of an EU’s emergency plan designed to weather extreme energy market conditions.

In Greece, a total of 104 industries have been divided and prioritized in eight groups. Industries belonging to the highest-ranked group would be the first to be subject to rationing, while industries in the lowest-ranked group are least likely to be subject to gas rationing.

Industries in the highest-ranked group could convert to alternative fuels and second-tier industries could reduce gas consumption without any major impact on their operations.

Natural gas prices tumble to 12-month low, crucial period still ahead

European natural gas prices tumbled to 65 euros per MWh yesterday, a new 12-month low last reached in mid-January, 2022, prior to Russia’s invasion of Ukraine.

The price drop has been attributed to mild European winter conditions, so far, that have flattened demand and kept the continent’s energy storage facilities 84 percent full, well above the level recorded a year ago and approximately 30 percent higher than the average level recorded over the past five years.

Analysts insist European market conditions remain fragile, despite the favorable price trajectory of natural gas so far this winter. A sudden change of weather conditions, combined with a complete disruption of Russian gas supply to Europe, could spark a new round of price volatility and deplete European gas reserves by the end of winter, analysts have warned.

The European energy market, experts have long pointed out, will face its toughest test in spring, when EU member states will begin efforts to refill their gas storage facilities in preparation for the winter of 2023-2024.

This refilling period could once again spike natural gas prices to levels of 120 euros per MWh, analysts have noted. Russian pipeline gas supply is expected to be considerably lower in spring, while the LNG market, on which Europe now greatly depends, is expected to be tight in spring.

A worst-case scenario for Europe would combine a complete disruption of Russian natural gas supply with an increase of LNG demand in the Chinese market. Such a combination would prompt a natural gas shortage estimated to reach as much as 57 billion cubic meters, or 15 percent of projected demand.

Athens electricity prices ranked 15th among 33 EU cities

Household electricity price levels in Athens were slightly below the EU average for yet another month in December, ranked 15th among 33 European cities included in a Household Energy Price Index (HEPI) survey.

Household electricity prices in Athens averaged 0.30 euros per KWh in December, just under the EU average of 0.317 euros per KWh.

Residential electricity prices were highest in Brussels, Prague, Copenhagen, Rome, Berlin, Amsterdam, Dublin and London, ranging between 0.50 and 0.54 euros per KWh.

The biggest electricity price drops in December were recorded in Vienna (-39%), Berlin (-19%), Rome (-18%), Paris (-11%), Brussels (-8%) and Oslo (-5%), the HEPI survey showed. December prices in Athens fell by one percent.

December wholesale prices second-highest in EU

Wholesale electricity prices in Greece ranked as the EU’s second-highest in December, reaching 276.89 euros per MWh in the day-ahead market, up considerably, both on a monthly and annual basis, while electricity demand fell, a Hellenic Energy Exchange report has shown.

This December’s wholesale price level was 21.5 percent over the November price, and 18 percent above the level recorded in December, 2021.

Greece ranked second behind the common Italian and Maltese energy market, whose December price level was 294.91 euros per MWh.

Greece’s DAM prices remained high last month as a result of the country’s usage of a month-ahead model incorporating the TTF gas index. December’s electricity prices in Greece were shaped by the end-of-November price level of the TTF gas index, which ended the month at 118.68 euros per MWh.

By contrast, most other European wholesale electricity markets benefited from a drop in gas spot prices. They fell significantly in the last ten days of December to levels of 75 euros per MWh.

Limited renewable energy contributions to the country’s energy mix, down to 23 percent in December, compared to 33 percent in November, were another factor. This decline was attributed to lower wind energy output in Greece last month. On the contrary, wind energy output in central and northern Europe increased significantly during the final days of December.

Reduced trading at the day-ahead market in December, down 19 percent on December, 2021, signaled a further reduction in electricity demand last month, the Hellenic Energy Exchange report noted.

January power subsidies at €840m, double December sum

The government’s electricity subsidies support program for January will reach 840 million euros, energy minister Kostas Skrekas has announced, double the amount needed for December as a result of higher retail electricity prices just announced by suppliers for next month.

Recently introduced rules require electricity suppliers to announce their prices for each forthcoming month by the 20th of the preceding month.

A much-delayed European gas price cap agreement reached this week by the the EU’s energy ministers comes as a significant measure but could have offered even greater benefits for consumers had it been reached sooner, the Greek energy minister noted.

He highlighted Greece’s role in helping push the EU towards a gas price agreement, officially requested by Greek Prime Minister Kyriakos Mitsotakis in a letter to European Commission President Ursula von der Leyen.

Greece was one of several EU members in favor of a low-level gas price cap. EU energy ministers agreed to trigger a cap if prices exceed 180 euros per MWh for three days at the Dutch TTF index, which serves as the European benchmark.

Monthly residential power consumption of up to 500 KWh, a category applicable to 90 percent of the country’s households, will be subsidized at a rate of 330 euros per MWh.



Gas prices down after EU price cap agreement, big test in spring

Natural gas prices are on a downward trajectory, confirming projections that an EU gas price cap agreement, reached earlier this week, would help contain international prices.

Yesterday, wholesale gas prices dropped to below 100 euros per MWh for the first time in months, ending the day at 97.752 euros per MWh. During trading today, the price level has dropped as low as 96.325 euros per MWh.

Though the gas price cap appears to be having a calming affect on international gas prices for now, the mechanism is expected to face a tougher test in spring, when gas demand will be greater as EU member states move to refill storage facilities following winter.

EU energy ministers agreed to trigger a cap if prices exceed 180 euros per MWh for three days at the Dutch TTF index, which serves as the European benchmark.


EU gas price cap agreement sends firm message to markets

The EU’s gas price cap agreement yesterday, achieved following months of deliberation, comes as a major European step that offers energy-cost protection to households and businesses, while also sending a strong message to markets that natural gas purchases will not be made at any price.

EU energy ministers agreed to trigger a cap if natural gas prices exceed 180 euros per MWh for three days at the Dutch TTF index, which serves as the European benchmark. The cap could serve as a crucial tool against any future price surge, as was the case last summer.

Gas price levels are not expected to fall immediately. Even so, the TTF index did drop to 107 euros per MWh yesterday, following the EU’s gas price cap agreement.

It is impossible to predict whether the price cap will prove effective enough to contain gas prices below 100 euros per MWh on a permanent basis and level out wild price fluctuations swinging over 30 euros per MWh in a single day.

Also, it remains to be seen how individual market players will respond if demand increases and gas prices escalate to levels near 180 euros per MWh in the months ahead. If they please, buyers and sellers could establish bilateral agreements above the price cap level, essentially nullifying it.



EU gas price cap agreement to also propel other measures

A gas price cap agreement reached at yesterday’s Energy Council also promises to propel a series of significant energy-sector measures such as collective gas purchases, solidarity mechanisms, a new benchmark and fast-track procedures for renewable energy units in the EU.

EU energy ministers agreed to trigger a cap if prices exceed 180 euros per MWh for three days at the Dutch TTF index, which serves as the European benchmark.

Member states that have supported the lower-level gas price cap agreed to, including Greece, wanted the series of measures incorporated as one package alongside the gas price cap. These measures are expected to be shaped and implemented swiftly in order to protect the EU’s natural gas supply security and contain natural gas price levels.

The European Commission has proposed collective gas purchases representing at least 15 percent of the EU’s gas storage capacity, the intention being to bolster the bloc’s negotiating power.

The Brussels measures also call for improved solidarity mechanisms to counter any possible supply shortages; the establishment of a new LNG pricing index by March, 2023, as an alternative benchmark to the TTF; as well as prioritizing RES projects and simplifying green energy licensing procedures to reinforce Europe’s energy independence.

Gas price cap decisions at today’s Energy Council

A Czech EU presidency proposal for a gas price cap of 188 euros per MWh, which would be triggered if wholesale prices have exceeded this level for three days at the TTF index, represents a good compromise solution, Greek energy minister Kostas Skrekas noted today ahead of the day’s Energy Council of EU energy ministers.

A gas price cap of 188 euros per MWh is well below a price cap of 275 euros per MWh initially proposed by the European Commission, which Greece, along with a number of countries, including Belgium and Poland, have rejected as too high.

This group of countries preferring a lower gas price cap believes a level of less than 200 euros per MWh is needed if higher natural gas prices for consumers are to be countered.

Decision on the price cap’s details are expected today following a political decision reached by EU leaders at last week’s Summit.

EU energy ministers are expected to decide on the gas price cap level, whether it will be applicable at all EU energy exchanges, and if it will be suspended should any EU member state request the measure’s suspension for reasons concerning supply security.

PM hopeful of a European gas price cap agreement

Prime Minister Kyriakos Mitsotakis, on his way to today’s Council summit of EU leaders, expressed hope that a European agreement on a gas price cap could be achieved either today or next Monday, the latest, when the EU’s energy ministers are scheduled to meet.

The Greek leader stressed it is absolutely essential that Europe sends a clear message to energy markets as well as to Russia by underlining that Moscow’s exploitation of natural gas as a tool to burden European citizens and businesses will not be tolerated.

“We are close to being able to impose a price cap on gas. Our arguments are now known to all member states and I believe that, one way or another, we will find the necessary majorities to move in this direction,” Mitsotakis noted.

Greece supports the implementation of a gas price cap at 200 euros per MWh or less, applicable at all European hubs with an accompanying limit-up mechanism. Though well below the European Commission’s initial proposal of 275 euros per MWh, it seems to have gained increased acceptance by fellow EU member states.

However, a group of six EU member states – Germany, Austria, the Netherlands, Denmark, Estonia and Luxembourg – remains skeptical, fearing a low-level price cap could prompt market instability.

“In any case, regardless of European decisions, the Greek government is continuing to take all measures needed to support Greek households and businesses,” Mitsotakis noted, pointing out that 900 million euros in state budget money will be used in December to support low-income households and offer allowances for heating oil purchases.

EU energy ministers edge towards gas price cap deal

The EU 27’s energy ministers appear to have made progress on a gas price cap agreement at yesterday’s emergency Energy Council, but divisions remain over the impact of such a measure.

Greek energy minister Kostas Skrekas’s proposal for a gas price cap of 200 euros per MWh, or possibly even less, applicable at all European hubs with an accompanying limit-up mechanism, appears to have gained further EU acceptance.

The European Commission’s original proposal called for a more elevated gas price cap that would go into effect if prices on the Dutch TTF hub reached 275 euros per MWh for two weeks and were more than 58 euros per MWh higher than LNG prices on the global market.

If adopted, the latest proposal’s purpose would be to subdue any rampant speculation and prevent a repeat of the spike in gas prices last August, when they briefly reached 350 euros per MWh.

A gas price cap at a level of approximately 200 euros per MWh, questioned by a group of five countries – Germany, Austria, the Netherlands, Denmark and Hungary – as they fear it could prompt market instability, and favored by roughly 12 countries, including Greece, will now be discussed by EU leaders at tomorrow’s Council summit.

If the leaders reach an agreement, the EU 27 energy ministers will meet finalize its formula and wrap up the deal at a meeting on December 19.

An agreement now would not result in an immediate drop in gas prices. Its main purpose would be to avoid any new surge in gas prices, as has been forecast by international analysts for around March, 2023, in the wake of increased winter demand and the need for countries to refill storage facilities for the rest of 2023 and the following winter.

EU 27 firmly divided on gas price cap, headed for summit

Any chance of a gas price cap agreement at today’s Energy Council, involving the bloc’s 27 energy ministers, appears to have already been written off judging by European Commission president Ursula Von der Leyen’s comments yesterday, who noted a political solution will need to be sought at Thursday’s Summit of EU leaders.

Despite the ongoing energy crisis and need for solutions at a time when gas and electricity prices are once again rising, the EU appears more divided than ever on a gas price cap agreement. Proposal and counter-proposals have so far failed to lead towards compromise and a deal.

Greece and a further eleven EU member states are pushing for a gas price cap level of 160 euros per MWh, strongly opposed by six member states, Germany, the Netherlands, Austria, Luxembourg, Denmark and Estonia, a group supported on the issue by the European Central Bank. They contend a price cap would threaten market stability.

Germany appears willing to consider a higher gas price cap of 220 euros per MWh proposed by the Czech Republic, currently holding the EU’s rotating presidency.

The EU’s Committee of Permanent Representatives, tasked with agenda preparatory duties, failed to make any progress on the matter at a meeting yesterday following a previous failure on Saturday.




Gas price cap agreement unlikely at EU Energy Council

EU officials failed to make any progress over the weekend on a natural gas price cap plan whose foundations were established by the bloc’s 27 leaders nearly two months ago, strongly suggesting an agreement will not be reached at tomorrow’s meeting of EU energy ministers but, instead, be deferred until the EU summit on Thursday.

A German-led group including Austria, Denmark, Estonia, Luxembourg and the Netherlands, now also backed by the European Central Bank, wants to avoid a natural gas price cap at 220-euro per MWh, as proposed by the European Commission, or any alternative of equal worth, in an effort to subdue gas prices and wild fluctuations, as was the case in August, despite signs of yet another surge in gas and electricity prices.

The group of six opposes Brussel’s gas price cap proposal, warning it could backfire and result in even higher natural gas prices as the measure could repel major gas suppliers from the European market. The group of six appears to prefer a gas price cap level well above the level proposed by Brussels.

Greece, Belgium, Italy and Poland are the biggest supporters of the the European Commission’s proposal.

Over the past few months, the price cap issue has gone around in circles, passed on by the EU’s 27 leaders to their respective energy ministers, who, in turn, have relayed it to their permanent representatives in Brussels, and back again.

EU headed for new impasse on gas price cap agreement

The EU’s energy ministers appear headed towards another deadlock for a gas price cap agreement at an upcoming council meeting on December 13, which will prove a disappointment for Europeans as prices surge again.

Several EU member states seem to be resisting any sort of compromise for the establishment of a gas price cap level ahead of next week’s meeting of energy ministers, a measure now more urgent than ever before as winter temperatures begin to fall.

Gas prices surged yesterday at the Dutch energy exchange, a European benchmark, reaching 160 euros per MWh before easing to 140 euros per MWh and ending the day at 138 euros per MWh.

Though the prospect of high-priced natural gas is alarming, a price cap agreement does not appear to be a priority for a group of EU member states, led by Germany. Berlin, according to sources, wants the issue deferred until a summit of EU leaders, scheduled for next Thursday, two days after the meeting of EU energy ministers.

This, of course, would be a setback as it was at the previous summit, in October, that EU leaders referred the issue to the Energy Council, asking its members to work on details of an agreement reached by the 27 EU leaders.

Germany, joined by the Netherlands, Austria, Denmark, Estonia and Luxembourg, appears to be insisting on gas price cap at the level initially proposed by the European Commission, 275 euros per MWh, well above the 220-euro proposal forwarded by the Czech Republic, currently holding the EU’s rotating presidency.

EU member states divided on gas price cap level

A European Commission proposal for a gas price cap of 275 euros per MWh will be strongly opposed at today’s meeting of the EU’s twenty-seven energy ministers by representatives of fifteen EU member states, including Greece, fearing this proposal could result in higher gas prices.

The fifteen energy ministers are expected to demand a lower price cap level of between 150 and 200 euros per MWh, which they view as the only possible solution that could secure lower prices.

Their approach, however, is opposed by a small yet powerful group of four EU member states, comprised of Germany, the Netherlands, Sweden and Finland, who fear a low price cap level could repel LNG suppliers and send them away to non-European markets.

Besides Greece, other EU member states in favor of a lower gas price cap level include Belgium, Bulgaria, France, Italy, Latvia, Lithuania, Poland, Romania and Spain.

A final decision on the issue is not expected at today’s meeting and will most likely be deferred until the next Council meeting of EU energy ministers, scheduled for December 19.


Energy minister and EU peers to push for lower gas price cap

Energy minister Kostas Skrekas and a number of EU peers are expected to push for a lower gas price cap at tomorrow’s Council of energy ministers, believing the European Commission’s proposed level of 275 euros per MWh will not offer any solutions.

The European Commission, through the introduction of a price cap on gas, is seeking to address enormous discrepancies, as was the case in August, between the market price of derivatives and physical LNG deliveries.

Besides the group of EU energy ministers, Eurometaux, the European industry association, as well as other European agencies, have also expressed concern over the level of Brussels’ proposed price cap level for natural gas.

Briefing its members yesterday, Eurometaux estimated that a big price surge, well over current levels of between 110 and 120 euros per MWh, would be needed for the proposed price cap to be activated. A price cap of 275 euros per MWh would hardly ever be triggered, the association noted.

Eurometaux, in its briefing, also enquired whether the European Commission is proposing such an elevated gas price cap level because it foresees a new and far more severe gas crisis in 2023.

North-South gap remains, crisis solution unlikely soon

All developments suggest Europe may need to cope without a common energy solution this coming winter as there is nothing to suggest authorities are close to reaching an agreement at the extraordinary Council of Energy Ministers on November 24.

If so, any decision making will be postponed until the regular Council of Ministers, scheduled for December 19, or passed on to the Swedish EU rotating presidency, which will succeed the Czech presidency on January 1.

Even though the European Commission is reportedly speeding up procedures for a temporary gas cap, following a warning by 15 member states to veto the overall energy package, the chances of a gas cap being ready by the forthcoming meeting of energy ministers are very slim.

Disagreement between the EU 27 remains, dividing Europe’s north and south. Germany insists the introduction of even a flexible price cap could drive gas suppliers out of European markets.

The willingness of European authorities to take action has weakened as the risk of an out-of-control energy crisis has receded. The continued de-escalation of gas prices (just under €114/MWh yesterday) may be good news for households and businesses, but it has led the EU towards a general complacency.


New European LNG benchmark to be shaped by EU-27 prices

Europe’s new LNG benchmark will be determined by LNG price-level data presented by the EU’s 27 member states, the objective being to offer a broader, better-balanced and more reliable pricing formula than the existing one, shaped by the Dutch TTF index, sources have informed energypress.

ACER, Europe’s Agency for the Cooperation of Energy Regulators, will present a preliminary plan for this new market correction mechanism at a meeting in Brussels today to be attended by the EU’s permanent representative committee, Coreper, involving all EU member states.

The new European LNG benchmark, promising a more accurate reflection of international prices for LNG, the dominant global energy source at present, will not affect existing agreements, officials have pointed out.

EU officials are striving for an imminent launch of this new LNG pricing tool, the aim being to have it introduced by early 2023. Last month, the European Commission noted it wants the new LNG benchmark to be ready by March 23.

On a wider scale, although the European Commission hopes EU member states can resolve differences for a common solution to the energy crisis, there have been no indications of possible consensus. On the contrary, the North-South divide remains and expectations for a common European approach to the issue this winter are extremely low.

November electricity prices, out tomorrow, down 15-20%

The country’s electricity suppliers, now finalizing their pricing policies for next month, are expected to announce, tomorrow, reduced tariffs for November, down by 15 to 20 percent compared to the current month’s levels, sources have informed.

Based on new law, suppliers are required to announce their electricity prices for the forthcoming month by the 20th of each preceding month.

Supplier tariffs, sources informed, should range between 0.45 to 0.50 euros per MWh, which, if confirmed, will result in a reduction of between 15 and 20 percent, compared to October’s prices.

The government’s level of subsidy support for electricity bills next month has yet to be announced. Given the current de-escalation in electricity prices, the government may choose to only rely on the Energy Transition Fund for next month’s subsidies and not use any budget money for this purpose, sources said.

Market analysts are projecting further electricity price reductions until the end of the year as a result of a drop in TTF natural gas prices. The Dutch index has fallen by 66 percent since an August 26 peak of 349.90 euros per MWh, reaching 116.45 euros per MWh yesterday.

The EU’s overachievement of gas storage levels, now averaging 91 percent of capacity, as well as an abundance of LNG supply to Europe, are key factors that have driven down the TTF.


Wholesale power up 238% in second quarter, EU’s second-highest rise

Greece’s wholesale electricity price registered Europe’s second-biggest annual increase in the second quarter of 2022, compared to the equivalent period a year earlier, soaring 238 percent, a new report published by the European Commission has shown.

France topped the list with a 254-percent increase over the same period, while Italy was ranked third-highest, its wholesale electricity price rising 234 percent between the second quarters of 2021 and 2022.

Greece’s 238-percent increase resulted in the country having the third-highest wholesale electricity price in the EU in the second quarter this year, at 237 euros per MWh, behind Malta, at 252 euros per MWh, and Italy, at 249 euros per MWh.

Elsewhere in the EU, Bulgaria’s wholesale electricity price in the second quarter this year was 199.9 euros per MWh, France registered 226.3 euros per MWh, and Germany was at 187.1 euros per MWh, the report showed.

As for industrial energy prices, without taxes, Greece topped the list in the second quarter. Electricity prices for mid-size industrial consumers rose by 194 percent in Greece between the second quarters of 2021 and 2022, to 34.5 cents per KWh, the highest in the EU.

In the household category, Greece’s electricity prices, including taxes and fees, were ranked 10th in the EU, at 30.46 euros per KW/h, above the EU average of 28.62 euros per KW/h, following the second-biggest annual increase, 81 percent, exceeded only by Estonia.

Subsidies were not taken into account for this report. During the energy crisis, Greece has so far offered the highest amount of subsidies as a percentage of GDP.


Cohesion Funds worth €40bn for household, business aid

The European Commission’s energy crisis plan includes a proposal enabling EU member state governments to redirect some of their Cohesion Fund money to support households and businesses, sources have informed ahead of Thursday’s EU summit.

According to a Bloomberg report, the EU plans to propose using as much as 40 billion euros from the bloc’s budget to support people and companies struggling to cope with high prices caused by the energy crisis.

However, it is estimated that this amount would not suffice to cover the EU-27’s needs this coming winter.

According to Bloomberg, the European Commission, the EU’s executive arm, will offer governments the ability to tap existing cohesion funds to support small- and medium-sized companies affected by the price hike of gas and electricity and to help vulnerable households pay their energy bills through national programs.

Other package proposals aimed at countering high energy prices are expected to include a supplementary gas contract in early 2023; voluntary collective gas purchases by member states for greater bargaining power; and a solidarity mechanism for emergency gas supply by fellow member states able to provide cover, at fair price levels, to member states short of sufficiency levels during the forthcoming winter.