Brussels pressures Athens for energy storage support plan

The country’s plan for a competitive procedure to be applied for energy storage unit subsidies needs to be finalized as soon as possible, the European Commission has informed Greece’s energy ministry.

Brussels has called for swift action so that its assessment of the Greek plan can be based on current EU directive criteria concerning state aid in the environment and energy sectors.

Given the fact that these EU directives will be revised as of 2022, the procedure will need to be completed by the end of this year.

If Brussels is to offer its approval of the Greek plan by the end of December, Athens will ideally need to deliver its proposal by the end of this month as a two-month period for any observations and exchange between the two sides will be needed.

According to energypress sources, two auctions each offering energy storage capacities of 350 MW, for an overall total of 700 MW, is seen as the likeliest scenario.

Funds worth 200 million euros are planned to be made available for energy storage support through the national recovery plan, dubbed Greece 2.0. Also taking into account support planned for pumped storage stations, this sum is expected to reach 450 million euros.

The energy ministry’s secretary-general Alexandra Sdoukou recently noted that this sum should provide subsidies covering up to 40 percent of the cost of energy storage projects needed to support the planned increase in RES penetration by 2030.

Fears of energy market unpaid receivables rebound growing

Government as well as electricity and natural gas company officials appear increasingly concerned about a rebound in unpaid receivables at energy firms as a result of exorbitant energy price increases faced by consumers.

The scale of the ongoing energy crisis plus the inability of analysts to make confident price projections has government officials scrambling for solutions, including through EU action, that could lessen the energy cost burden for consumers and protect supplier cash flow.

During a meeting yesterday with European Commission Vice-President Margaritis Schinas, Greek Prime Minister Kyriakos Mitsotakis reiterated a European Commission proposal for revisions that could enable energy bill payments through installments.

According to sources, the Greek government could insist on a proposal made by energy minister Kostas Skrekas for the establishment of an EU transitional compensation fund, supported by CO2 emission right revenues, distributing amounts to member states as energy-crisis aid.

The Prime Minister suggested this proposal during his meeting with the European Commission deputy, who did not offer a direct response but indicated that a European solution would be sought during an EU summit scheduled for next week, sources said.

Support for energy consumers would also help the finances of suppliers, who, as a result, would be in a better position to offer energy bill payments through installments.

 

Natural gas strategic reserve among EU thoughts for crisis

A series of measures to be announced today by the European Commission to help EU member states counter the energy crisis may include a strategic reserve for natural gas, complementing respective supply contracts, for abnormal periods such as the current energy crisis affecting the world, especially Europe.

EU member state participation in this strategic reserve would be optional. The initiative, still at a preliminary stage, is being examined. No decisions have been taken.

The EU’s energy market integration and transboundary grid interconnections have helped avoid even more extreme developments in the current crisis, Brussels has observed.

Measures taken by member states at a national level will need to comply with EU law and not contravene Europe’s energy transition towards renewables, Brussels has made clear.

The European Commission has defended its views on the causes of the energy crisis, insisting that increased natural gas prices have been primarily responsible, while noting that the EU’s Emission Trading System (ETS), through which carbon emission right prices have been driven higher, has played a lesser role.

PPC lignite antitrust legislation forbids back-to-back agreements

The energy ministry is preparing a legislative revision for its recent antitrust agreement with the European Commission, requiring state-controlled power utility PPC to make available lignite-fired electricity packages to rival suppliers.

The antitrust agreement, already launched by PPC and designed to break its lignite monopoly, requires the utility to offer quarterly lignite-fired electricity packages from September 10, 2021 to December 31, 2024, if still needed.

Details in the plan forbid PPC to conduct back-to-back agreements with rival suppliers, or sale and repurchase of lignite quantities.

According to the plan, PPC, from the fourth quarter of 2021 until 3Q in 2022, must offer rival suppliers lignite-generated electricity quantities representing 50 percent of generation in the corresponding quarters a year earlier.

The upcoming legislative revision will spare PPC from needing to split away lignite divisions into two new companies for subsequent sale, as had been stipulated by legislation ratified by the country’s previous administration.

All existing lignite facilities in Greece are expected to have been withdrawn by the end of 2023, according to the country’s decarbonization plan.

 

 

PPC must market over 2,100 GWh in lignite-fired power by end of month

Power utility PPC needs to move fast this month with its offering of lignite-fired electricity packages to rival suppliers as part of a recent antitrust agreement reached between the energy ministry and the European Commission.

According to the agreement, PPC must market lignite-fired electricity packages for the first, second and third quarters of 2022 by October 31, either through the European or Greek energy exchange.

The three packages also face imminent sale deadlines. All transactions for electricity quantities offered to PPC’s rivals through the first package will need to be completed by the end of November, while transactions for the 2Q and 3Q packages must be done and dusted by December 31.

As for the quantities to be offered, PPC’s 1Q and 2Q lignite-fired packages must total 872 and 515 GWh, respectively. The power utility’s 3Q package will need to offer rivals 50 percent of the company’s lignite-fired power generated in the third quarter this year.

According to data provided by power grid operator IPTO, PPC’s lignite-fired power stations produced 1,081 GWh in July and August, while September’s output has been estimated at 370 GWh.

Given these figures, totaling 1,451 GWh, PPC will need to offer a lignite-fired package of 725 GWh for the third quarter next year, taking the total offering for 1Q, 2Q and 3Q in 2022 to just over 2,100 GWh in futures contracts that must be marketed through either of the two aforementioned exchanges by the end of this month.

 

NTUA study surveying energy price effect on green objectives

The European Commission has commissioned the National Technical University of Athens’ E3 Modelling department with the task of examining scenarios on the EU’s ability to achieve ambitious green energy goals in the event that natural gas, fuel and CO2 emission prices remain high.

The NTUA had also been commissioned to conduct research that served as the basis for most of the twelve legislative proposals forwarded by Brussels for its Fit-for-55 climate-change framework, aiming for a 55 percent reduction of carbon emissions by 2030, compared to 1990 levels.

Early findings produced by the latest NTUA survey have shown that the swiftest possible market penetration of renewable energy sources will not cause further problems linked to the higher energy prices at present but, instead, create favorable conditions for a return to market equilibrium, energypress sources informed.

Swifter market entry of RES units and their full induction into the private-sector market as an energy supply base for customers represents a positive response to the higher natural gas prices, Pantelis Kapros, Professor of Energy Economics at NTUA pointed out in a recent article. The impact of a faster RES entry, however, will not be felt immediately but will require two to three years to produce results, he added.

Brussels hesitant on hedging mechanism for energy prices

A Greek proposal for the EU’s adoption of a temporary hedging mechanism as a means of easing the burden of sharply risen energy costs on consumers, to be tabled at a Eurogroup meeting of EU finance ministers today, will be met with hesitancy as the European Commission would not want to bring to the negotiating table issues linked to the Emissions Trading System, fearing any potential need of a compromise with member states opposed to the ETS, such as Poland, well-informed sources anticipate.

The European Commission has fought hard to establish the ETS as a means of combating climate change.

The temporary hedging mechanism would draw funds from the Emissions Trading System’s auctions of CO2 emission rights.

The hedging mechanism was proposed several weeks ago by Greek energy minister Konstantinos Skrekas and will be officially presented by Greek finance minister Hristos Staikouras to his European counterparts at today’s Eurogroup meeting.

The EU finance ministers will be focusing on the alarming increase in energy prices, prompted by a combination of international factors, though finalized decisions at this session are considered unlikely.

Ariadne Interconnection tender for minority stake approved

RAE, the Regulatory Authority for Energy, and the European Commission have approved a plan for a tender to offer a minority stake in power grid operator IPTO’s subsidiary firm Ariadne Interconnection, established specifically for the development of the Crete-Athens interconnection.

An initial plan for the sale of a 40 percent stake in Ariadne Interconnection is now expected to be lowered by IPTO, offering a reduced share, analysts believe.

The tender is likely to be announced by IPTO towards the end of the year, or possibly early in 2022. The procedure will be preceded by a roadshow pitching the tender and company that has taken on the Crete-Athens interconnection, a project budgeted at one billion euros.

Market officials believe the prospect of a minority stake in Ariadne Interconnection will most likely attract funds. China’s State Grid, holding a 24 percent stake in IPTO, has also expressed early interest.

The Crete-Athens interconnection project, currently in progress, is expected to be completed late in 2023 or early 2024.

It was originally planned as a segment of EuroAsia, a wider interconnection plan of PCI status to link the Greek, Cypriot and Israeli electricity grids, with EuroAsia, a consortium of Cypriot interests, at the helm. IPTO eventually withdrew the Crete-Athens segment for its development as a national project.

PPC fulfils 4Q antitrust lignite obligation for supply to rivals

Power utility PPC has fulfilled its fourth quarter antitrust obligations concerning the supply of lignite-fired electricity packages to third parties by securing futures contracts through the Greek and European energy exchanges for an electricity amount that exceeds the quantity stipulated in the government’s agreement with the European Commission, energypress sources have informed.

According to the agreement, which has resolved a long-running antitrust case concerning PPC’s monopoly in the lignite sector, the power utility, in the fourth quarter, needed to offer third parties a total electricity amount representing at least 50 percent of lignite-fired generation recorded for the equivalent period last year.

PPC’s lignite-fired power stations generated 1,785 GWh in the fourth quarter last year, meaning the amount the utility was expected to provide for the corresponding period this year was approximately 893 GWh.

Until yesterday, a day ahead of today’s deadline of its futures contracts, PPC had already secured deals for electricity packages representing a total of 978 GWh.

A first package of futures contracts was exclusively offered through the European energy exchange in Leipzig on September 17 at an average price of 153.75 euros per MWh, followed by three more packages, on September 23, 24 and yesterday.

Minister calls for swifter Brussels support on new RES auctions plan

Energy minister Kostas Skrekas has requested swifter support from the European Commission, in the form of a comfort letter, on a plan concerning Greece’s new RES auctions, as well as auctions for the installation of hybrid stations on islands.

The minister made the request to European Commission deputy Margrethe Vestager, also Brussel’s Commissioner for Competition, during an online meeting between the two officials on Friday.

During the session, Vestager is believed to have expressed satisfaction over Athens’ implementation of a plan offering third parties access to state-controlled power utility PPC’s lignite-fired power production, an issue that had remained unresolved for many years.

PPC sold a first electricity package at a discount price on Friday, as part of the government’s agreement with the European Commission.

Greece’s energy minister also urged for efficient cooperation with the Directorate General for Competition on an ongoing effort aiming for the introduction, by the end of the year, of a Strategic Reserve mechanism.

The mechanism is planned to compensate PPC for its maintenance, as grid back-up, of lignite-fired power stations headed for withdrawal. The availability of these units is still needed to ensure grid sufficiency and stability.

 

 

EU ministers to meet on carbon emission costs, causing alarm

The EU’s energy ministers plan to meet in Ljubljana Wednesday in search of a solution to counter the relentless rise in carbon emission right costs, which, for some time now, have reached elevated levels that hang as a dark cloud over energy consumers, hundreds of suppliers and Europe’s energy transition strategy, breeding increasing Euroscepticism.

Carbon emission rights have been stuck at levels of no less than 60 euros per ton, prompting allegations of manipulation.

Last week, the European Commission submitted to European Parliament the EU’s more ambitious climate-change package, “Fit for 55”, aiming for a 55 percent reduction of carbon emissions by 2030, compared to 1990 levels. It is planned to lead to ETS mechanism revisions.

In response to accumulating messages of alarm from energy consumers and industrial enterprises from all over the continent, European MPs, at Wednesday’s meeting, are expected to push for stricter ETS rules.

Until now, governments of EU member states have been left to act independently for support measures whose extent is being determined by the capabilities of state budgets.

In Italy, the government, facing electricity cost increases of 40 percent, is lowering taxes linked to electricity bills. In France, low-income households stand to receive increased energy-cost coupon amounts, currently worth 150 euros annually.

The situation is far more dramatic in the UK. To date, seven electricity suppliers, under growing market pressure, have disrupted their operations, forcing over 600,000 customers to seek new suppliers. Bulb, one of the UK’s biggest electricity suppliers, serving 1.7 million customers, is on the verge of bankruptcy. A merger with a rival player is seen as the likeliest solution for this company.

 

Strategic Reserve Mechanism by early ’22 requires much work

Athens and Brussels have agreed on an early-2022 launch for Greece’s Strategic Reserve Mechanism, planned to remunerate power-generating units made available by electricity producers for grid back-up services, but, even so, a considerable amount of work lies ahead.

The European Commission plans to make an official announcement on the Strategic Reserve Mechanism between late November and early December, ahead of the mechanism’s approval by the Directorate-General for Competition.

Authorities in Athens and Brussels are still engaged in talks aiming to finalize the shape of the mechanism, while, at the same time, preparations are in progress for the submission of a new Adequacy Report by power grid operator IPTO, a prerequisite for the approval of Greece’s Market Reform Plan, needed for the new strategic reserve mechanism’s implementation.

At present, Greek officials are preparing responses to a set of second-round questions forwarded by the European Commission. As was the case with the first round, the questioning is extensive. Many of the Brussels questions concern financial details linked to the operation of lignite-fired power stations.

The ongoing Athens-Brussels talks are based on a new draft for the mechanism delivered by the Greek government last May. It includes a proposal for demand-response incorporation into the new strategic reserve mechanism.

 

PPC chooses Greek energy exchange for lignite-fired electricity packages

Power utility PPC has chosen to offer lignite-fired electricity packages to third parties through the Greek energy exchange, not the European energy exchange, as it was also entitled to, sources have informed.

This main reason behind this decision, part of an imminent mechanism to be implemented as a remedy to a long-running antitrust case concerning PPC’s monopoly in the lignite sector, is that PPC sees the forthcoming mechanism as a good opportunity for the domestic futures market to gain momentum and, by extension, help improve the utility’s cash flow.

The mechanism’s launch, coming at a time of elevated wholesale electricity prices, will help PPC’s rivals offset the period’s price volatility, which is crucial support that will enable independent players to compete more effectively in the retail electricity market and offer stable prices to consumers, the European Commission’s Vice-President Margrethe Vestager, also Brussel’s Commissioner for Competition, noted in an official announcement.

A legislative revision for the mechanism offering lignite-fired electricity packages to third parties is likely to be submitted to parliament today by the energy ministry.

The plan is expected to begin offering lignite-fired electricity packages to third parties by the fourth quarter.

 

PPC local, European exchange option for lignite packages

Power utility PPC will be entitled to choose whether to offer lignite-fired electricity packages to third parties through the Greek energy exchange or European energy exchange, according to details of an upcoming mechanism to be implemented as a remedy to a long-running antitrust case concerning PPC’s monopoly in the lignite sector.

PPC preference for the domestic energy exchange would keep open the option of physical delivery of these lignite electricity packages and ensure the company greater flexibility in its portfolio management. Opting for the European energy exchange would not permit physical delivery, making the deals purely financial transactions.

All that remains for the implementation of the mechanism, whose details have been agreed to by the government and European Commission, is a decision by the energy ministry on when to submit a related legislative revision to parliament, according to sources.

The legislative revision has been completed and the ministry is believed to be on standby for an appropriate date, the objective being to make a first round of lignite-fired electricity packages available to third parties by the fourth quarter this year.

All electricity suppliers will be entitled to purchase these packages, to have three-month durations.

As previously reported by energypress, the electricity quantity planned to be offered to suppliers through the mechanism in the fourth quarter this year will represent 50 percent of lignite-fired output in the equivalent period of 2020.

Then, for every quarter in 2022 and 2023, lignite-fired electricity packages to be offered to PPC’s rivals will represent 40 percent of lignite-based production in equivalent quarters of the respective previous years.

According to the country’s decarbonization plan, all existing lignite-fired power stations will cease operating by the end of 2023.

 

Lignite-fired electricity packages to PPC rivals by fourth quarter

The energy ministry plans to soon submit to Parliament a legislative revision for a mechanism offering third parties access to power utility PPC’s lignite-fired electricity production. This move will enable the implementation of an agreement on the matter between the government and the European Commission as a remedy to a long-running antitrust case concerning PPC’s monopoly in the lignite sector.

Officials are aiming for a first round of lignite-produced electricity packages to become available to third parties imminently, by the fourth quarter of this year.

All electricity suppliers will be entitled to purchase these packages, to have three-month durations.

Electricity quantities planned to be offered to suppliers through the mechanism in the fourth quarter this year will be calculated to represent 50 percent of lignite-fired output in the equivalent period of 2020. Then, for every quarter in 2022 and 2023, lignite-fired packages to be offered to PPC’s rivals will represent 40 percent of lignite-based production in equivalent quarters of the respective previous years.

According to the country’s decarbonization plan, all existing lignite-fired power stations will cease operating and no longer participate in the electricity market by the end of 2023.

A prospective PPC facility, Ptolemaida V, is planned to be launched as a lignite-fired power station early in 2023 before it is withdrawn in December, 2024 for a fuel conversion and reintroduction.

 

 

Finalized support framework plan for hybrid RES units on islands in Brussels

The energy ministry and the European Commission have completed talks for a support framework concerning hybrid RES units on non-interconnected islands. The finalized Greek proposal for the plan, based on the agreement, is expected to be forwarded to Brussels this week, energypress sources have informed.

This development resolves yet another pending issue regarding the support framework for green energy investment. The new framework for new RES auctions has already been announced and forwarded to Brussels by KEMKE, the finance ministry’s Central State Aid Unit.

Brussels set competitive procedures as a condition for its approval of a new hybrid RES support framework. However, some exemptions have been made.

The energy ministry, for example, will be able to avoid competitive procedures for tariffs when mixed auctions are intended for very small islands such as Erikousa, Gavdos, Antikythira or Othonoi, where the requirements of the local grid do nor create appropriate reference-price conditions for prospective projects.

The ministry will also be able to implement an alternative formula for the implementation of pilot projects concerning RES projects that promise high penetration in electrical systems. The island Agios Efstratios (Ai Stratis), southwest of Lemnos in the northern Aegean, is one such example. RES units are expected to cover over 85 percent of the small island’s annual electricity needs.

PPC to partially absorb power costs, Brussels action imminent

Power utility PPC has decided to pursue a policy that will partially absorb electricity market price increases prompted by a volatile combination of unfavorable factors.

The utility plans to limit the impact of carbon emission costs and not pass on the entirety of their effect to consumers.

Competitors will either have to follow suit and subdue price hikes, which will hurt their financial results, or risk suffering market share losses.

The response of PPC’s rivals remains unclear at this stage. Marker players are now trying to estimate the duration of this unfavorable period of elevated prices.

Natural gas prices have surged, driven by Russia’s decision to slow down gas supply to Europe, presumably to pressure Brussels into brushing aside its reservations about a new Nord Stream pipeline from Russia to Germany. Also, CO2 emission costs have continued to rise.

CO2 emission cost futures contracts for December are stuck at levels of between 61 and 62 euros per ton, while analysts forecast levels of 65 euros per ton over the next few months, or possibly longer.

Given these factors, analysts believe it is a matter of time before the European Commission intervenes in an effort to deescalate market price levels by subduing CO2 emission costs and increasing its pressure on Moscow for a return to normal gas supply levels to Europe.

Otherwise, market conditions will become increasingly volatile with social repercussions, especially in countries experiencing extreme price increases that have been even greater than those in Greece.

In Bulgaria, for example, wholesale electricity prices have skyrocketed to more than 100 euros per MWh, well over the country’s usual levels of about 30 euros per MWh.

Five hydrogen project proposals make cut for IPCEI contention

Five Greek hydrogen production project proposals have been included in a first-round list submitted by the government to the European Commission for inclusion in its Important Projects of Common European Interest (IPCEI) category, reserved for projects promising important contribution to economic growth, jobs and competitiveness.

The five Greek project proposals, approved by energy minister Kostas Skrekas and development minister Adonis Georgiadis, were selected from 23 proposals submitted by companies for contention following an annoucement by the two ministries last April.

The short list of proposals is planned to be assessed by the European Commission in November for a place on the IPCEI list, ensuring EU support funds.

The list features the 8 billion-euro White Dragon project – involving the country’s biggest energy groups with gas company DEPA Commercial as head coordinator – for a hydrogen producing facility in northern Greece’s lignite-dependent west Macedonia region; the White Dragon-linked Green HiPo project of Advent Technologies; the H2CEM hydrogen project by cement producer TITAN; the BLUE MED project, for eco-friendly blue hydrogen production, by Motor Oil and gas grid operator DESFA; as well as the H2CAT hydrogen storage and transportation project by B&T Composites.

New RES support framework, featuring changes, imminent

The energy ministry appears to have taken initiatives intended to increase capacity quantities offered at RES auctions and also retain national control over the determination of these quantities, depending on developments, given the more ambitious National Energy and Climate Plan (NECP) for the installation of a greater number of RES units, reflecting loftier EU goals, energypress sources have informed.

A draft detailing the new RES support framework for Greece has been finalized following talks between the energy ministry officials and European Commission officials and is now in the hands of the finance ministry’s Central State Aid Unit (KEMKE), responsible for the framework’s official implementation, expected in a few days.

Considerable changes have been made to an initial plan announced by former energy minister Kostis Hatzidakis, not only in terms of the number of auctions to be staged and capacities offered, but also in terms of its overall principles, sources noted.

The new framework makes no mention of an initial Greek proposal for six auctions, each offering 350 MW, for a total of 2.1 GW, but it does call for a capacity of at least 3 GW.

It also includes provisions for geographically based auctions covering areas such as Crete, Evia and the Cyclades, as well as special procedures for small-scale PVs.

In addition, the auctions will not need to be held by 2023 but will be extended until 2025, based on EU directives.

Through the new RES support framework, wind and solar farm energy investors will, through competitive procedures, secure feed-in tariffs for twenty-year periods.

 

 

Brussels launches consultation for Greece’s Market Reform Plan

The European Commission has uploaded, for public consultation, a Market Reform Plan  submitted by Greece proposing electricity market revisions.

The public consultation procedure’s feedback will assist Brussels’ assessment of the Greek reform plan. Participants have until September 6 to deliver their responses.

Brussels’ endorsement of the Market Reform Plan is one of two prerequisites needed before Greece can submit an application for a capacity mechanism – either a Strategic Reserve or Capacity Remuneration Mechanism (CRM).

The second prerequisite entails Brussels’ approval of an Adequacy Report, currently being prepared by power grid operator IPTO. The operator initially planned to deliver this report by the end of July but a few more weeks are still needed for its completion.

Greece will be able to apply for a capacity mechanism once the two prerequisites have been satisfied.

The energy ministry and European Commission have agreed on a schedule for the approval of a capacity mechanism by the end of this year and its launch early in 2022.

However, maintenance of this schedule will be difficult given the European Commission’s demands, complex and time-consuming, when examining member-state capacity mechanism plans, officials monitoring the Greek effort have noted.

 

Strategic reserve necessary, exchange reacts satisfactorily

The end of the Greek energy system’s reliance on lignite, being phased out to help the global climate change effort, needs to be accompanied by a strategic reserve mechanism, which would maintain certain generation capacities outside the electricity market for operation during emergency cases until the ongoing transition to cleaner energy sources has been completed, the extreme heatwave conditions around the country over the past few days have highlighted.

Record-level electricity consumption, combined with power line damages caused by major fires, pushed the grid to the limit, raising fears of widespread power outages.

The government, currently seeking the establishment of a strategic reserve mechanism as part of a Capacity Remuneration Mechanism (CRM), needing European Commission approval, will need to highlight the heatwave-related events that have occurred in Greece over the past ten days.

Sidelined lignite-fired power stations needed to be brought back into action to help the grid meet electricity demand. They offered crucial production contributions representing between 14 and 18 percent of the energy mix.

Lignite-generated output also played a key part in the effort to maintain energy sufficiency last winter, in February, during heavy snowfall that damaged power infrastructure.

The energy exchange has performed rationally during the heatwave conditions, proving its ability to respond to the market’s demand and supply. Day-ahead market price levels rose sharply during the heatwave’s peak and are now subsiding.

 

 

Pilot auction for 200-MW RES units combining energy storage worked on

A new RES support framework prepared by the energy ministry for the European Commission to examine includes provisions for a pilot auction offering tariffs to 200-MW RES projects combining energy storage, energypress sources have informed.

This is the first time a specific tariff-related procedure is being prepared for this category of projects, expected to play an instrumental role on the country’s energy map in the years ahead.

However, it remains unclear when such RES production-energy storage project combinations could mature.

A recent legislative revision delivered by the energy ministry freezes, until the end of the year, applications and issuance of production licenses, environmental permits and connection terms for energy storage projects combining RES units until a related framework is, in the meantime, established.

The new RES support mechanism, nearing finalization as details are being worked on by energy ministry and Brussels officials, is expected to facilitate the continuation of competitive procedures for tariffs until 2025.

 

 

RES capacity boosted, auctions to be extended until 2025

Greece’s new RES support mechanism, whose details are being finalized in talks between the energy ministry and European Commission officials, is expected to offer producers greater capacities, maintain the current system of 20-year tariffs for output through auctions, which will run until 2025, not 2023, as was originally planned.

The changes reflect the country’s revised and more ambitious National Energy and Climate Plan (NECP), aligned with loftier EU objectives for a greater number of RES installations.

The new auctions will be mixed, enabling the participation of both solar and wind energy producers, but wind energy producers will be entitled to at least 30 percent of capacity offered at each auction.

The country’s original RES auction plan, drafted by former energy minister Costis Hatzidakis, now holding the labor and social affairs portfolio, had proposed 6 RES auctions each offering 350 MW for a total of 2.1 GW, but this total is now expected to be raised to at least 3 GW.

RES tariffs remunerating output have fallen considerably at recent RES auctions, driven lower by the intensified competition.

Also, the plan appears likely to include special geographically based RES auctions covering areas such as Crete, Evia and the Cyclades, as well as provisions for small-scale PV installations.

 

Market Reform Plan, Adequacy Report rush ahead of break

The energy ministry is striving to offer a swift response to a set of European Commission queries concerning Greece’s updated Market Reform Plan, forwarded for public consultation by RAE, the Regulatory Authority for Energy.

The energy ministry is aiming to submit a finalized plan to Brussels by the end of July, so that the European Commission can process and approve the plan before its officials take off for their summer breaks in August.

The queries forwarded by the European Commission primarily seek clarification and do not raise any fundamental issues, which has given Greek officials hope of the plan’s imminent finalization.

Brussels’ approval of the Market Reform Plan is crucial as it is one of two prerequisites faced by Athens before the government can submit an application for a support mechanism, either a Strategic Reserve, which would compensate power utility PPC for maintaining its lignite-fired power stations on emergency stand-by, or a Capacity Remuneration Mechanism.

The second requirement is Brussels’ approval of an Adequacy Report being prepared by IPTO, Greece’s power grid operator. Its finalization was originally planned for the end of July but this aim now seems set to be delayed by a week or two.

EU’s ‘Fit for 55’ package to spike heating, auto fuel costs

The EU’s new, more ambitious climate-change package, “Fit for 55”, aiming for a 55 percent reduction of carbon emissions by 2030, compared to 1990 levels, will prompt sharp price increases in diesel heating fuel costs as well as fossil-fuel powered transportation.

The prospective package, announced yesterday in the form of twelve legislative proposals, has already raised the question as to who will cover its cost – consumers, producers, or both.

The package will lead to wider implementation of the ETS for buildings and transportation.

Inevitably, less affluent households and smaller enterprises whose heating and transporation needs are exclusively covered by fossil fuels will face even greater pressure.

The European Commission has proposed a 61 percent reduction of carbon emissions from sectors covered in the EU’s existing Emissions Trading System (ETS), compared to 2005 levels, up from the previous target of 43 percent.

EU ‘Fit For 55’ climate package to bring about many changes

To be presented today by the European Commission, the EU’s upcoming “Fit For 55” package of climate-change measures, setting stricter and more ambitious objectives for a 55 percent carbon emission reduction by 2030, compared to 1990 levels, will bring about a series of revisions.

These will include changes to the Emissions Trading System (ETS) and fuel taxation, as well as the introduction of new taxes and a Carbon Border Adjustment Mechanism (CBAM), promising transboundary taxes on non-EU countries regarded as making a lesser effort, than the EU, to combat climate change.

It still remains unclear if consumers or polluters, or both, will cover the cost of the “Fit For 55” measures.

Heating and transportation costs are expected to rise considerably over the next few years, according to a Euractiv report.

The package’s draft proposes an expansion of the ETS into the heating sector, for buildings, as well as into transportation, as a disincentive restricting high-polluting practices, including use of diesel.

The CBAM is expected to be launched on a three-year trial basis, beginning in 2023, before it is officially implemented in 2026.

Target model restrictions to be lifted, according to reform plan

Existing restrictions in the country’s wholesale electricity markets, or target model, will gradually be lifted over the next year or two, at the latest, according to a Market Reform Plan submitted by the Greek government to the European Commission.

The plan to is intended to determine whether the country’s natural gas-fired electricity producers can fully recover costs in a liberalized market.

Greek officials are seeking to prove that, once all wholesale market restrictions have been lifted, natural gas-fired power stations will need Brussels-approved support mechanisms in the form of a strategic reserve, until the end of 2022, and a permanent Capacity Remuneration Mechanism (CRM) from 2023 onwards.

The Greek government forwarded a draft of the country’s Market Reform Plan to the European Commission in mid-June, while Brussels has since responded with an initial set of questions seeking clarification.

The first wholesale electricity market restriction expected to be lifted, probably within the next few months, concerns a 20 percent limit on futures contracts established by suppliers with a market share exceeding 4 percent.

Following up, officials are then expected to lift upper and lower limits imposed on offers.

 

PPC’s hefty lignite costs lend credibility to strategic reserve mechanism request

Grid needs requiring power utility PPC to operate its lignite-fired power stations have cost the company considerably, lending credibility to the country’s request for a strategic reserve mechanism, a study containing revenue and cost details concerning all of Greece’s power stations over the past six months has shown.

This study has been forwarded to the European Commission as a preliminary step in the establishment of a Market Reform Plan being discussed between Athens and Brussels officials.

PPC has called for a sooner-than-planned withdrawal of its lignite-fired power stations as a result of the elevated cost entailed in operating these units, pushed higher by rising carbon emission right costs.

But the grid’s needs, as highlighted over the past few days of heatwave conditions, are preventing PPC from withdrawing lignite-fired units sooner.

Given the situation, the introduction of a strategic reserve mechanism, over a two-year period covering 2021 and 2022, has emerged as an alternative solution. This mechanism would enable PPC to seek compensation for maintaining its lignite-fired power stations on emergency stand-by.

The implementation of a capacity remuneration mechanism (CRM) will, according to Greece’s plan, ensue and offer incentive for new investments in projects such as gas-fueled power stations and energy storage.

The incorporation, into the strategic reserve mechanism, of the demand response system and natural gas-fired power stations is also being considered.

Athens and Brussels officials are striving for a finalized strategic reserve mechanism plan by the end of the year, which would enable its launch at the beginning of 2022.

Second market test launched for PPC lignite power packages

The European Commission has launched a second and revised market test to measure the level of interest of independent suppliers in power utility PPC’s lignite-generated electricity packages.

Suppliers have received a questionnaire as part of the procedure, staged following a subdued response to a first test in which participants more or less wrote off PPC lignite-generated electricity packages as a measure that could intensify competition in the electricity market. Participants have until July 14 to forward their responses.

A final antitrust agreement was reached at a mid-May meeting in Athens between energy minister Kostas Skrekas and the European Commission’s Vice-President Margrethe Vestager, also Brussel’s Commissioner for Competition.

Some revisions have been introduced to the lignite-based electricity package solution now being tested. The PPC packages would be offered through the energy exchange futures market, not through bilateral contracts with independent suppliers, as was originally proposed.

A second important revision concerns the pricing formula for these packages. It will now be determined through direct negotiation between the buyer and PPC through the futures market, without a market prices floor. Under the previous model, the price of the packages was based on the wholesale price minus a discount.

According to sources, the mechanism offering lignite electricity packages will remain valid until December, 2024, or, otherwise, will expire as soon as the country’s final lignite-fired power station has been withdrawn, if this precedes the aforementioned date.

Given these dates, the output of PPC’s Ptolemaida V, expected to be launched in 2023, initially as a lignite-fired unit before it converts to gas in 2026, will contribute to the lignite electricity packages.