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.

Market Reform Plan draft at EC, strategic reserve by end of year

A draft of the country’s Market Reform Plan, whose finalized version will carry target model market revisions for Greece, has been forwarded, by the energy ministry, to the European Commission for consultation between the two sides, expected to begin without delay.

The energy ministry and Brussels have also agreed on a timeline concerning Athens’ submission and examination of a proposal for a Strategic Reserve Mechanism, needed to ensure electricity supply security through the market’s transition and reforms.

Based on this schedule, the two sides will strive to have finalized the Strategic Reserve Mechanism by the end of the year, so that it may be launched in early 2022.

Brussels’ Directorate-General for Competition plans to begin its consultation for the Market Reform Plan in July. The procedure is expected to last four months, before target model market revisions are implemented.

As part of the overall effort, Pantelis Kapros, Professor of Energy Economics at the National Technical University of Athens, conducted a study – commissioned by RAE, the Regulatory Authority for Energy – serving as a road map for the Greek wholesale electricity market’s revisions, the objective being to fine-tune the target model.

Power grid operator IPTO will concurrently conduct a new adequacy report, including reliability standards, to accompany the Greek plan.

RES auction plan to be unveiled July, solution for saturated spots

The country’s new RES auctions plan, designed to offer investors six mixed wind and solar energy auctions until 2024, each with a capacity of 350 MW for a grand total of 2.1 GW, is expected to be announced in July, enabling preparations for the first of these sessions to begin in autumn.

Energy ministry officials have been involved in a series of virtual meetings with Brussels authorities for the new RES auction plan, the latest session taking place last week.

As previously reported by energypress, the negotiations have focused on specific details, not structural matters, concerning the new RES auction plan.

The provision of an additional 1-GW capacity for projects under special categories, including small-scale units with capacities of up to 1 MW, is considered a certainty.

In addition, ministry officials are confident Brussels will endorse a Greek proposal making available a portion of this additional 1 GW for saturated areas, namely the Cyclades, Crete, Evia and the Peloponnese.

The agenda for the ongoing talks does not include RES auctions for offshore wind farms, from the additional 1-GW capacity for special-category projects, energy ministry officials pointed out.

Any RES auction progress for offshore wind farms will need to wait until conditions have matured for the establishment of a support framework. This will need to be preceded by a legal framework.

 

DESFA pipeline agreement with North Macedonia’s MER in July

Gas grid operator DESFA expects ongoing negotiations with North Macedonia’s energy sources company MER, for a cooperation agreement concerning the construction of a natural gas pipeline linking the two countries, will be successfully completed in July, enabling the staging of a market test for the project, whose Greek segment will run north from Thessaloniki’s Nea Mesimvria area.

DESFA plans to stage a market test for the pipeline in early autumn, assuming its cooperation agreement with MER is signed in July.

The cooperation agreement will commit both sides to the project’s construction, serving as a road map for its development and also specifying responsibilities to be taken on by DESFA and MER.

RAE, Greece’s Regulatory Authority for Energy, has set conditions, demanding a market test, and its successful outcome, in order to give the green light for construction of the Greek segment.

Apart from the cooperation agreement to be signed between DESFA and MER, the governments of Greece and North Macedonia plan to sign a corresponding bilateral agreement concerning the interconnection of the two countries through the project.

The details of this bilateral agreement are just about ready and have already been submitted to the European Commission for approval, Greek energy minister Kostas Skrekas told a recent conference.

Brussels’ approval is needed for North Macedonia to qualify for Western Balkans Investment Framework (WBIF) support funds for its segment of the gas pipeline.

The Greek segment, budgeted at 51.4 million euros, will cover a 57-km distance.

Energy ministry pushing ahead with CRM despite Brussels doubts

The government is pushing to deliver, as soon as possible, to Brussels its plan for a Capacity Remuneration Mechanism (CRM), a challenging endeavor given the strict stance maintained by the European Commission’s Vice-President Margrethe Vestager during her meeting with energy minister Kostas Skrekas last month.

RAE, the Regulatory Authority for Energy, assisting the government’s effort with swift progress on preliminary procedures, has commissioned consulting firm E3-Modelling, a decision based on its specialized skills, to prepare an implementation plan, required by Brussels, in order to help eliminate regulatory distortions or market failures.

Vestager, at her meeting with minister Kostas Skrekas in May, made clear that Greece will need to incorporate its strategic reserve model – remunerating units made available by electricity producers for grid back-up services – into a wider Capacity Remuneration Mechanism.

The Brussels deputy, also the Commissioner for Competition, has demanded a new grid sufficiency study and the reserve mechanism’s restructuring from scratch, aligned with EU directives.

Besides remunerating power utility PPC facilities for grid back-up services, the mechanism will also need to incorporate a demand response system.

Brussels officials have indicated the Greek plan will need to have a short duration.

The E3-Modelling company’s team includes Pantelis Kapros, Professor of Energy Economics at the National Technical University of Athens, who possesses a high level of expertise in European energy market reforms, as well as other officials with the necessary expertise, to help the authority complete its task within the limited time given by the government.

DEPA Infrastructure buyer must also buy Eni 49% in EDA Thess

The winning bidder in a privatization offering gas company DEPA Infrastructure will be obligated to also purchase gas distributor EDA THESS’s 49 percent stake held by Italy’s Eni gas e Luce, wanting to sell, according to an agreement between the two sides, revealed by a European Commission post-bailout surveillance report, the 10th edition, on Greece.

DEPA Infrastructure, EDA THESS’s parent company, holds a 51 percent stake in the gas distributor covering the Thessaloniki and Thessaly areas, while Eni gas e Luce, holding 49 percent, wants to withdraw.

A total of six qualifiers through to the DEPA Infrastructure privatization’s final round have been informed of the condition requiring the eventual DEPA Infrastructure buyer to also purchase Eni gas e Luce’s 49 percent stake in EDA THESS.

Investors have also been informed on, and agreed to, a formula to be applied to evaluate the additional sum that will be required by the DEPA Infrastructure buyer for the 49 percent stake of EDA THESS.

The finalists face a July 15 deadline for binding bids in the DEPA Infrastructure privatization, according to the European Commission report.

Until then, the government has a series of pending issues to resolve, including legislative revisions to unify the asset bases of the DEPA Infrastructure subsidiaries EDA THESS, EDA Attiki, distributing in Athens, and DEDA, covering the rest of Greece.

These legislative revisions will be needed for both the sales of DEPA Infrastructure and Eni gas e Luce’s 49 percent stake in EDA THESS, sources informed.

Strategic reserve milestones set for next two months

A series of milestones have been set until autumn in preparation for Greece’s prospective Strategic Reserve Mechanism, which, if achieved, will enable its launch towards the end of the year.

The timeline and milestones leading to the possible launch of a Strategic reserve mechanism, keeping certain generation capacities outside the electricity market for operation only in emergencies, was discussed in detail during an online meeting yesterday between energy minister Kostas Skrekas and European Commission authorities.

Strategic reserves can be necessary to ensure security of electricity supply when electricity markets are undergoing transitions and reforms and are meant to insure against the risk of a severe supply crisis during such transitions.

Three main prerequisites will need to be satisfied by the end of July, the first being the completion of a market reform plan, intended to intensify competition in the wholesale electricity market.

The plan’s preparations will include the involvement of Pantelis Kapros, Professor of Energy Economics at the National Technical University of Athens, according to sources.

A new adequacy report, or updated study on grid sufficiency proving the need for the introduction of a Strategic Reserve mechanism, will also be needed.

Thirdly, the energy ministry will need to have fully responded, within the next month, to an extensive set of questions forwarded by European Commission officials on the prospective mechanism.

If these steps go well, an indefinite prospect at present, then a clearer picture on the mechanism’s details should have emerged by early autumn.

Any Strategic Reserve formula reached will need to be applied for a brief period so that an ensuing Capacity Remuneration Mechanism, to support new natural gas-fueled power stations, can immediately follow, the European Commission’s Vice-President Margrethe Vestager, also Brussel’s Commissioner for Competition, appears to have made clear to Skrekas, the energy minister, at a recent meeting.

Meanwhile, power utility PPC’s updated decarbonization plan is aiming for a withdrawal of all its lignite-fired power stations by 2025, at the very latest.

 

Brussels strategic reserve conditions discussed by RAE, IPTO, ministry

A new adequacy report and a new market reform plan, two conditions set by the European Commission for Greece’s adoption of a strategic reserve mechanism, have been discussed during an online meeting between RAE, the Regulatory Authority for Energy, power grid operator IPTO, and the energy ministry.

The European Commission’s Vice-President Margrethe Vestager, also Brussel’s Commissioner for Competition, during a preceding meeting, earlier last week, with energy minister Kostas Skrekas, called for a new adequacy report, in other words, an updated study proving the country’s need for a strategic reserve mechanism to cover actual grid needs.

The Brussels official also requested a new market reform plan detailing reforms designed to intensify competition in the wholesale electricity market.

Pantelis Kapros, Professor of Energy Economics at the National Technical University of Athens, has been asked to contribute to this new market reform plan, sources informed.

Besides the strategic reserve mechanism, RAE, IPTO and energy ministry officials also discussed details on prospective power purchase agreements (PPAs) between industrial enterprises and RES producers.

Vestager, at her meeting with Skrekas, the energy minister, recommended that Greece follow the examples of PPA models adopted by other EU member states, such as Spain.

Strict schedule for Crete target model transition plan

The European Commission has offered preliminary approval, still unofficial, of a Greek proposal concerning a transitional framework for Crete’s electricity grid link with target model markets.

This development will now enable RAE, the Regulatory Authority for Energy, to conduct public consultation for a temporary plan concerning the island’s participation in the target model’s wholesale markets.

RAE is expected to begin the public consultation procedure this week, sources said. It will feature a strict road map for the model’s implementation, from forthcoming steps all the way to legislation.

The plan’s framework will include two alternative methods for the island’s electricity supply transactions through a small-scale interconnection, with the Peloponnese.

The solution to be selected will greatly depend on the results of the public consultation process.

As previously reported by energypress, a transitional framework is necessary as Crete’s electricity needs will only be partially covered, at a level of about 30 percent, through the small-scale interconnection.

The framework will expire once the island’s full-scale grid interconnection, all the way to Athens, begins operating in 2023.

Prinos support package, worth €100m, submitted to Parliament

A financial support plan for upstream company Energean’s Prinos field, south of Kavala, comprised of a state-guaranteed commercial loan of 90.5 million euros for the group’s domestic subsidiary, plus a supplementary loan of 9.5 million euros from the Greek State, has been submitted to Greek Parliament for approval following its endorsement by the European Commission.

The financial support to be offered for Energean’s Prinos field, based on a temporary EU support framework established to offer economic support in response to pandemic-related effects, will be provided by December 31, 2021, used to cover Energean’s investment and working capital needs over 12 months, and will have a maximum duration of 8 years.

The European Commission offered its approval of the support package as it deemed that Energean generates the greatest proportion of its domestic revenues through the sale of crude, acknowledging this activity has been hit hard by plummeting oil prices amid the pandemic, making it difficult for the company to gain access to capital markets.

According to the company’s results for 2020, announced at the end of April, Energean’s Greek subsidiary incurred operating losses of 83.4 million euros in 2020, forcing its parent company to provide it with 62.4 million euros during the year.

According to sources, Energean’s Prinos activity lost 120 million euros over the two-year period covering 2019 and 2020.

Despite improved oil price levels, more recently, the subsidiary’s inability to invest as a result of a lack of financing has led to a further reduction of production, which is expected to lead to losses of approximately 40 million euros this year.

Competitive procedure for RES units over 250 MW examined

The energy ministry has begun considering a competitive procedure specified for wind and solar energy parks with capacities of over 250 MW, a move prompted by the European Commission’s clear-cut opposition to individual investor initiatives for RES projects of such scale, sources have informed.

However, it is still too early to tell if the ministry will end up implementing any such plan.

The European Commission, in response to a related enquiry made by the ministry, noted it cannot endorse any reference price formula for individual wind and solar energy project initiatives of such scale, stressing that such plans have not been endorsed by Brussels anywhere in the EU.

A number of investors are believed to have expressed strong interest to the energy ministry for the development, based on individual initiatives, of wind and solar energy parks with capacities exceeding 250 MW.

PPC strategic reserve, lignite exit compensation hopes fade

Power utility PPC’s prospects for some type of compensation in the foreseeable future, either through the Strategic Reserve Mechanism for the corporation’s withdrawal of units from the market and availability for back-up services, or for the utility’s earlier-than-planned closures of lignite-fired power stations, appear to have dwindled.

The reduced likelihood of any such compensation money for PPC became apparent at a meeting yesterday between energy minister Kostas Skrekas and the European Commission’s Vice-President Margrethe Vestager, also Brussel’s Commissioner for Competition.

Progress was made on an antitrust remedy, through which PPC will soon begin offering rival suppliers lignite-based electricity packages, but the same cannot be said of the strategic reserve.

Vestager made clear, during yesterday’s session, that a strategic reserve plan proposed by the Greek government cannot be approved by the European Commission. Instead, she noted, a new grid sufficiency plan, one aligned with EU directives, will need to be prepared to enable the implementation of an acceptable mechanism.

Subsequently, a strategic reserve plan must be  prepared from scratch, incorporating, besides PPC’s facilities, the demand response mechanism.

According to estimates by some officials, Brussels’ approval of a finalized strategic reserve proposal, requiring considerable work, could take as long as a year.

PPC lignite electricity packages through futures market

State-controlled power utility PPC will soon begin offering rival suppliers lignite-generated electricity packages through the target model’s futures market, energy minister Kostas Skrekas and the European Commission’s Vice-President Margrethe Vestager, also Brussel’s Commissioner for Competition, have agreed at a meeting yesterday.

Vestager, during the session, also made clear that the balancing cost of a mechanism concerning power purchase agreements (PPAs) between industrial producers and RES producers cannot be subsidized, but, instead, will need to be aligned with terms that apply for other EU member states.

Athens expects to submit its PPA plan to Brussels in June for approval.

Also next month, the government plans to submit its support framework proposal for energy storage units.

As for the country’s Strategic Reserve Mechanism, the European Commission’s deputy requested a new proposal from Athens, in line with new EU directives.

Under the Strategic Reserve Mechanism, PPC and all other electricity producers opting to withdraw units from the market for back-up services, would be remunerated for sidelining these units for periods determined by IPTO, the power grid operator.

Vestager stressed that the country’s Strategic Reserve Mechanism cannot coincide with the wider Capacity Remuneration Mechanism (CRM).

The Brussels deputy also pointed out that a compensation request made by Greece for PPC’s redevelopment of lignite areas, part of the decarbonization effort, is legally baseless and cannot be pursued further.

Brussels insists on PPC sale of lignite power packages to rivals

Power utility PPC must soon start offering rival suppliers portions of its lignite-based electricity production, as specified in an antitrust agreement, despite subdued interest by possible buyers expressed in a February market test, the European Commission insists.

The subject, which has remained stagnant for months following slow development over the past 13 years or so – ever since legal action was taken against PPC in 2008 over its lignite monopoly – will be one of the topics to be discussed at a meeting today between energy minister Kostas Skrekas and the European Commission’s Vice-President Margrethe Vestager, also Brussel’s Commissioner for Competition.

Given Brussels’ insistence, the energy ministry has devoted considerable time over the past few weeks to shape a lignite electricity sale plan, based on a January agreement between the minister and the country’s creditor institutions, that could finally settle the dispute.

The January agreement calls for the sale of energy packages, either quarterly or annually, representing, in 2021, 50 percent of the previous year’s lignite-based production.

The percentage of PPC’s lignite-based electricity quantities to be offered to rival suppliers in 2022 and 2023 should be reduced to 40 percent of the previous year’s output, according to the agreement.

These amounts are seen as insufficient to make any real impact on the retail electricity market’s standings.

Other issues to be discussed at today’s meeting between Skrekas and Vestager include Brussels’ support for a grid back-up model as part of a wider Capacity Remuneration Mechanism (CRM). Athens favors a separate Strategic Reserve Mechanism to remunerate units that are made available by electricity producers for grid back-up services.

Skrekas is also striving to establish a mechanism that would subsidize RES producers for power purchase agreements (PPAs) with energy-intensive industrial enterprises.

Energy storage subsidy program in 1Q next year

A competitive procedure to offer 200 million euros in subsidies for energy storage projects is planned to take place in the first quarter of 2022, energy minister Kostas Skrekas has told the 6th Delphi Economic Forum, making clear the ministry’s determination to utilize as swiftly as possible funds being made available for energy storage through the national recovery plan, dubbed Greece 2.0.

In the lead-up, the energy ministry intends to invite investors interested in participating in the procedure to submit investment plans in autumn.

The procedure will be based on a related framework, describing the conditions and terms, to require the European Commission’s approval.

The subsidy program will financially support energy storage installations to offer capacity totaling hundreds of MW, the minister told the forum.

The Greece 2.0 national recovery plan, to carry funds expected to be worth a total of 450 million euros, will also be used to support the development of pumped storage stations.

Investors have expressed tremendous interest in the development of energy storage units. RAE, the Regulatory Authority for Energy, has received a large number of production license applications for various RES technology units.

Since 2019, RAE has received a total of 98 applications for energy storage units, pumped storage facilities and hybrid stations, representing a total of 8,213 MW, which, along with a prospective pumped storage station set for development by Terna Energy in Amfilohia, northwestern Greece, will reach 8,893 MW.

To date, RAE has granted licenses for the majority of these applications, while 34, representing 4,519 MW, still need to be processed.

 

DESFA’s Alexandroupoli FSRU entry on Vestager agenda

The European Commission’s pending approval of gas grid operator DESFA’s acquisition of a 20 percent stake in Gastrade, the company established by the Copelouzos group for the development and operation of the Alexandroupoli FSRU, a floating LNG terminal planned for Greece’s northeast, is expected to be on the agenda of an Athens meeting this Thursday between energy minister Kostas Skrekas and the European Commission’s Vice-President Margrethe Vestager, also Brussel’s Commissioner for Competition.

The Greek government considers the Alexandroupoli FSRU to be a pivotal energy supply source for Greece and the EU.

Gastrade’s other participants are awaiting Brussels’ approval of the DESFA entry so that they can go ahead with an investment decision and commence its development.

European Commission approval of DESFA’s participation in the Alexandroupoli FSRU is necessary as the company is the operator of Greece’s gas grid and, by acquiring a 20 percent of Gastrade, would also gain entry into an independent gas system.

The DG Comp’s endorsement of the DESFA entry is seen as a formality following Brussels’ recent approval of the entry of Bulgaria’s Bulgartransgaz as a fourth member of the Gastrade consortium, also with a 20 percent stake.

Brussels favors uniting Strategic Reserve Mechanism, CRM

The European Commission is supporting the incorporation of a grid back-up model as part of a wider Capacity Remuneration Mechanism (CRM), energypress sources have informed.

A Greek government proposal for a separate Strategic Reserve Mechanism remunerating units made available by electricity producers for grid back-up services – an idea that has been backed by the energy ministry for quite some time now – does not appear likely to be approved by the European Commission, latest online talks between technocrats in Athens and Brussels have indicated.

Under the Strategic Reserve Mechanism, power utility PPC and all other electricity producers opting to withdraw units from the market for back-up services, would be remunerated for sidelining these units for periods determined by IPTO, the power grid operator.

Instead, the European Commission has tabled a proposal for the establishment of a single system that would include both a Capacity Remuneration Mechanism and a Strategic Reserve Mechanism, as two distinct components, respectively remunerating units active in the market and those maintained as reserves and used only when IPTO requires their services.

Athens and Brussels technocrats are holding these mechanism talks ahead of a forthcoming visit to Athens by the European Commission’s Vice-President Margrethe Vestager, also Brussel’s Commissioner for Competition, scheduled for May 13.

Unlocking Greece’s offshore wind potential – Challenges, opportunities

Greece’s attempts to develop its untapped offshore wind potential have stalled in the past, but renewed investor interest and government commitment to set up a sound regulatory framework has strengthened its prospects.

By Dimitris Assimakis, Partner, and Minas Kitsilis, Senior Associate, Reed Smith.”

Introduction

Since 2006, Greece has taken several different approaches to the development of offshore wind projects. So far, these policy measures have had few concrete results. Given the present ambitious national energy and climate plan for the period up to 2030, dictating at least a twofold increase of the existing renewable energy capacity, the immediate necessity for new capacity due to the government’s decision to cease the operation of all existing lignite-fired power plants by 2023, as well as the existence of certain impediments to the further development of onshore wind farms, such as the availability of land, the pressure from other activities, such as tourism, and the necessity for the considerable expansion or reinforcement of the grid, offshore wind is expected to start playing an important role in the country’s pursuit of cost-effective and efficient renewable energy prospects.

For several years now other EU coastal countries with significant sea fronts have developed offshore wind projects and so this could certainly be a successful approach for the country with the most extensive coastline among all Mediterranean countries and one of the highest offshore wind potential in the region.

Therefore, aside from certain technical challenges (e.g. steep sea-bed drop-off around mainland Greece and around most of the Greek islands) and foreign affairs policy issues (e.g. territorial disputes in the Aegean Sea), a clear national regulatory framework, which adequately addresses spatial planning, licensing, grid interconnection and economic support issues, is also required in order for offshore wind technology to deliver its significant potentials in the country’s power generation mix.

Ongoing structured public discussions with interested investors and stakeholders as well as recent policy statements from the Greek Ministry of Environment and Energy are expected to result in an offshore wind-specific framework within this year that will enable the exploitation of this valuable renewable energy source also in Greece. Already, major international market players such as Ocean Winds (EDPR and Engie) in cooperation with Terna Energy, the largest renewable power producer in Greece, Iberdrola, Copenhagen Infrastructure Partners and Equinor are actively involved in these discussions, while reportedly other international investors such as Blue Float Energy and Innogy are closely following the developments in the sector. Moreover, local market players such as PPC Renewables, the renewables arm of Public Power Corporation (Greece’s largest power producer and supplier), Copelouzos group and RF Energy are actively engaged in this process. These deliberations are conducted within a very positive momentum for the offshore wind sector, following the recent release of the EU Strategy on Offshore Renewable Energy and the great technological developments in the sector, especially with respect to the imminent commercialisation of large-scale floating wind projects, which seem to be the most proper offshore wind technology for Greece given the depth of its territorial waters.

Past approaches stalled

Until mid-2010 the generally applicable licensing scheme at the initiative of interested investors was also applicable for offshore wind projects’ development, licensing, spatial planning and economic support against transparent and objective criteria and a regulated feed-in tariff through a standardised long term (20 years) power purchase agreement with the energy market operator as offtaker and dispatch priority for the power produced. In this context a large number of licence applications for offshore wind projects were filed with the competent Regulatory Authority for Energy in Greece (RAE).

However, only two fixed-bottom offshore projects were licensed by RAE in 2012, one of an approximately 500 MW capacity offshore the island of Lemnos in the north Aegean Sea and another one of 216 MW capacity offshore the port of  Alexandroupolis in the Thracian Sea. On the other hand, most of the licence applications filed within the period are still pending assessment from RAE with unclear further development options in anticipation of the new offshore wind-specific framework.

Subsequently, in mid-2010 Greece introduced a special centralised planning scheme for offshore wind projects to be rolled out at the initiative of the jointly competent Ministers of finance and economy, maritime affairs, foreign affairs, national defence, culture, tourism, environment and energy by virtue of a new provision introduced into the Renewables Law 3468/2006 (i.e. Article 6A), which rendered the previous open licensing scheme inapplicable for offshore wind projects.

That rather unclear approach entailed the strategic environmental assessment (SEA) of potential offshore project sites before the respective projects were licensed by the Minister of Environment and Energy, instead of RAE, and before they were auctioned off for construction through an open public tender process (public works procurement process) against economic exploitation by the successful bidder during the concession period; presumably through some long term power purchase agreement with the energy market operator as offtaker against an agreed feed-in tariff and dispatch priority. Environmental impact assessment (EIA) and further site planning, installation and construction works licensing until the operation period (inclusive) would follow the generally applicable legislation for renewables, except for some special provisions of law for the concession of sea areas in favour of renewable energy projects that would be anyways addressed as above.

This framework also entailed a number of implementing ministerial decisions and presidential decrees that were never adopted as this approach was never actually pursued in spite of a SEA study commissioned to this end by the Centre for Renewable Energy Sources in Greece (CRES) and presented in September 2015.

New approach required │ key issues

Licensing framework – recent developments & challenges ahead

The recent review of the Environmental Licensing Law 4014/2011 in May 2020 (i.e. by virtue of Law 4685/2020) raised certain hopes at it was aimed at simplifying and expediting the environmental licensing of projects of any type, including renewable energy projects, as well as at simplifying the first licensing milestone for renewable energy projects before RAE. Offshore wind projects are qualified as ‘special renewable energy projects’ and may benefit from the above simplified licensing framework as soon as an offshore wind-specific framework is adopted. In effect, this licensing framework reinstates the previous licensing scheme at the initiative of interested investors but ultimately, fails to provide any coherent legal certainty as it does not explicitly repeal the rather problematic provision of Article 6A of Renewables Law 3468/2006 mentioned above.

So although the general environmental licensing and the RES specific licensing framework were improved through the adoption of Law 4685/2020, there was not actually any real value for the offshore wind sector from this legislative process, since two parallel and apparently, inconsistent licensing regimes are currently in place although neither in full force and effect until Greece finally decides whether it will go on with a centralised or a develop-led planning system. Moreover, the licensing framework in place does not really address what will happen with the existing two electricity production licences granted as well as the various licence applications that are still pending assessment under the past licensing scheme.

Apparently, the envisaged new framework should provide for a consistent, coherent and well-structured licensing regime enabling as well the performance of any early development actions from the investors, in the sense that they should be allowed, on the basis of an exclusive right, to enter into a specific sea area in order to perform wind measurement campaigns and preliminary field surveys.

Spatial planning issues

The Special Spatial Planning Framework for Renewables of December 2008 provides for wind power in general and onshore and offshore wind power in particular. Such provisions include generally applicable criteria, limitations and exclusion zones for wind energy and special ones for onshore and offshore wind projects. However, it is commonly admitted that the said framework needs to be reviewed to account for technological developments and acquired experience in spatial planning and deployment of renewables not only in Greece but also in the EU, including current best practices.

The Ministry of Environment and Energy is already working on updating the framework but it will take some time to achieve concrete results due to the technical and SEA studies involved. In addition, it must also be compatible with the regional and other special frameworks for spatial planning that are also under review pursuant to Part A of Law 4417/2016 and most importantly, with the still pending maritime spatial planning for marine areas in Greece according to Part A of Law 4546/2018 (as per the relevant EU Directive 2014/89) for the avoidance of conflicts. An interim solution may have to be sought in this connection as otherwise neither central nor individual planning will be feasible and legally sound against a reasonable time schedule and certain target capacity for offshore wind development by 2030 and beyond.

Sovereign rights and public international law

Greece has reserved the right to exercise all its sovereign rights under Article 3 of the 1982 United Nations Convention on the Law of the Sea (UNCLOS) to expand its territorial sea beyond six (6) nautical miles, which is the current breadth thereof, up to twelve (12) nautical miles measured from baselines determined in accordance with the UNCLOS. Greece has signed and ratified the UNCLOS by virtue of Law 2321/1995. Recently, by virtue of Law 4767/2021, Greece has expanded its territorial sea to twelve (12) nautical miles in the whole of the Ionian Sea area up to the Cape Tainaron in south Peloponnese, while it is reiterated therein Greece’s sovereign rights to do the same with all other sea areas, including the Aegean Sea, being the area with the highest offshore wind potential.

However, given the historical tension between Greece and Turkey concerning the Aegean Sea, it is rather questionable whether Greece will finally decide to exercise such sovereign rights and expand its territorial sea to twelve (12) nautical miles also in the Aegean Sea, according to the UNCLOS, in the years to come. In this respect, it is reasonably expected that any development of offshore wind projects in the Aegean Sea will need to be limited within the six (6) nautical miles zone. Further, the establishment and delimitation of the Greek exclusive economic zone by means of valid and legally binding agreements with neighbouring states pursuant to the UNCLOS is still pending too, save for the recent agreements with Italy in the Ionian Sea and Egypt in part of the Mediterranean Sea south-east of the island of Crete.

Proper support scheme for offshore wind

The new support scheme for renewables in Greece introduced by virtue of Law 4414/2016 in line with the European Commission’s Guidelines on State aid for environmental protection and energy for the period 2014 – 2020 provides for operating aid to renewables through a technology-specific sliding feed-in premium (FiP) scheme for the vast majority of new projects which is added as a premium to wholesale market revenues and thus tops up their market revenues in order for the operating aid to reach an acceptable level of support measured against a technology-specific reference tariff (RT).

Aside from small scale and experimental projects, since 2017 the RTs are set through competitive bidding processes (auctions) on project basis for the two mature technologies (i.e. onshore wind and solar photovoltaic) in technology-specific and technology-neutral auctions run by RAE. In the event that the wholesale market price of a renewable technology exceeds the applicable RT, the excess is rebated to a special account for renewables kept by the RES operator and aggregator of last resort (DAPEEP) and hence the operating aid contract is a standardised two-way contract for differences (CfD) between the applicable RT (as strike price) and the producer’s revenues from the wholesale electricity market.

The auctions scheme is expected to extend beyond 2020, likely up to 2024 and for a certain overall capacity threshold not in excess of 2.1 GW, in accordance with the relevant statements made by the Minister of Environment and Energy in mid-November 2020.  However, technology-specific auctions for offshore wind or technology-neutral auctions including offshore wind are not likely to be feasible for Greece in this time schedule. In the meantime, previous auctions for renewable electricity have resulted in applicable RTs for onshore wind and solar photovoltaic projects below wholesale market prices for certain time periods. Therefore, alternative revenue structures involving corporate renewable power purchase agreements (PPA) cannot be excluded for onshore wind and solar photovoltaic or offshore wind projects in Greece in common with other countries where such alternatives are already pursued for some years now in the onshore wind and solar photovoltaic sectors, and recently also in the offshore wind sector. However, such structures are hardly suitable or bankable during the early days of a new sector development like offshore wind.

Optionally, individual aid without an auction process is also possible for renewable energy projects (including offshore wind) exceeding 250 MW or clusters of projects exceeding 250 MW and sharing common interconnection with the transmission system according to the said guidelines on State aid and Article 4 para 12 of Law 4414/2016. Individual aid requires prior notification to and approval from the European Commission. An implementing ministerial decision is still pending (para 12 was added to Article 4 of Law 4414/2016 in end-2019) for all renewable energy projects or clusters of such scale and importance for national and EU renewable energy targets, but it is reasonably expected soon. This option is reasonably considered more suitable, especially for floating offshore wind projects, and certainly more bankable at the early stages of any new renewable technology.

Moreover, Greece could consider when developing its national recovery and resilience plan in the context of the EU Recovery and Resilience Facility possible priority actions in order to facilitate the development of offshore wind projects in the country.

Grid connection

However, unlocking the great wind potential of the Greek seas and islands depends on the development of some critical interconnections, some of which are expected in the short to medium term. The anticipated completion of the interconnection of the island of Crete with the high-voltage system in the Athens metropolitan area by 2023 and of all Cycladic islands by 2024 will enable the significant development of new wind power capacity on these islands but also in the sea areas around them covering a significant part of the south Aegean Sea.

Moreover, ADMIE, the Greek TSO, has included in its current ten-year development plan the progressive interconnection of all other major islands in the south-eastern and north Aegean Sea, such as the islands of Rhodes, Kos, Karpathos Lemnos, Lesvos, Samos and Chios by 2029,  covering therefore though such plan the remaining of the Aegean Sea.

ADMIE is actively participating in the discussions held for the formulation of the offshore-wind specific framework and clearly, one of the key issues which need to be addressed therein is the interlink of any offshore wind investment projects with ADMIE’s development plan and its role in the design, construction and financing of the necessary grid expansion and reinforcement works.

Strategic investments programme and offshore wind

Since 2011, Greece has had in place an investments facilitation programme whereby productive investments (private or public ones, foreign or domestic) which generate quantitative and qualitative results of major significance for the national economy (including other criteria on investment budget, employment creation, innovation and sustainability) are qualified by an inter-ministerial committee as ‘strategic investments’ and are entitled to one-stop-shop and fast-track licensing and development procedures, including environmental and spatial planning ones as well as land expropriation related ones and dispute resolution provisions.

Part B of Law 4608/2019 on attracting strategic investments aims at modernising, improving and enhancing the scope of application and the fast-track licensing and development procedures in favour of strategic investments. These new provisions include: special spatial plans on project basis; tax benefits (as individual State aid subject to applicable EU regulations); one-stop-shop and fast-track licensing within 45 calendar days per licence, permit, opinion or approval (subject to special EU law provisions and procedures, e.g. public awareness on environmental matters), and overall within three (3) years from the MoU between the strategic investor and the Minister of Finance and Development on the time schedules and mutual obligations; cash grants for research and development (R&D) projects, and a UNCITRAL arbitration clause for disputes relating to the said MoU. On the other hand, applications for qualification under the new programme can be filed until the end of 2023.

Greece’s strategic investments programme has facilitated to some extent the spatial planning and licensing of a number of investments, mainly in tourism and other commercial sectors including some solar photovoltaic and solar thermal projects of scale and clusters of onshore wind projects. However, it has been limited to licensing aspects thereof and it does not address operating aid or other economic support aspects. Furthermore, it captures urban or onshore (including seashore) spatial planning, but it does not capture offshore aspects and maritime spatial planning that is still pending as described above. Therefore, account taken of the end-2023 current deadline for applications under the new programme, it is yet to be considered in more detail how the new programme for strategic investments in Greece could facilitate offshore wind. A recent positive development though is the special benefit conferred now under the programme to innovative renewable projects, amongst which offshore wind projects, in relation to their priority for grid connection over other projects using more typical renewable energy technologies, such as onshore wind and solar photovoltaic projects.

The way forward    

Experience from other jurisdictions has shown that formulating a comprehensive and appropriate legal framework for offshore wind in any given country is a challenging multi-disciplinary exercise. Structured public discussions with interested investors and stakeholders are ongoing in Greece during and have been for the last couple of years. Specific proposals are also being put forward for public consultation by stakeholders like the Hellenic Wind Energy Association but also from major global offshore wind developers. The Ministry of Environment and Energy has also announced that it will present a legislative proposal for offshore wind by mid-2021 taking into account the particularities of the Aegean Sea and international experience in offshore wind industry and technologies. We are confident that the ongoing process will result in a comprehensive legislative proposal for an offshore wind-specific framework. However, time and planning are of the essence for long lead capital intensive infrastructure investments like offshore wind to materialise within a certain time schedule, e.g. by 2030, on legally sound and commercially sensible and therefore bankable conditions in order to pursue successfully the national and EU energy, climate and environmental policies.

 

Mechanisms, competition on Vestager agenda, here May 13

Energy minister Kostas Skrekas intends to present his case for the introduction of five support mechanisms encouraging energy-sector investments in Greece’s ongoing transition towards carbon neutrality to the European Commission’s Vice-President Margrethe Vestager, also Brussel’s Commissioner for Competition, on the occasion of the official’s upcoming visit to Athens, scheduled for May 13.

Vestager will be in the Greek capital with an agenda featuring two pending competition issues concerning state-controlled power utility PPC.

Greece has faced charges for PPC’s monopoly of the country’s lignite sources but an agreement was reached to end the case by introducing a mechanism offering the power utility’s rivals access to lignite-generated electricity.

A market test for this mechanism was completed some time ago but failed to attract any real interest from rival suppliers.

The percentage of lignite-based electricity made available by PPC, initially set at 50 percent of total lignite-fired output and then lowered to 40 percent, is viewed, by third parties, as too small for any real gains.

The second PPC-related matter to be discussed during Vestager’s visit concerns a recently initiated investigation by Brussels seeking to determine whether the power utility has engaged in activities impeding market competition.

Private-sector investors are pushing for a capacity remuneration mechanism (CRM) in order to go ahead with the development of natural gas-fueled power stations, needed as Greece heads towards a post-lignite era. Skrekas, the energy minister, has repeatedly said a CRM will be launched in June.

The minister also supports a strategic reserve mechanism to compensate PPC’s lignite-fired power stations, still needed for back-up services but nowadays loss-incurring as a result of higher CO2 emission right costs.

In addition, the government is seeking compensation for the premature closure of PPC’s lignite-fired power stations and related mines, being phased out until 2023.

The minister also supports a support framework for hybrid units on non-interconnected islands combining RES electricity generation and energy storage.

Skrekas is also striving to establish a mechanism that would subsidize RES producers for power purchase agreements (PPAs) with energy-intensive industrial enterprises as well as suppliers selling to major-scale consumers.

 

Greek enterprises face April 27 date for hydrogen project proposals

Leading Greek energy players are gearing up to participate in a European Commission effort concerning the development of the continent’s first major investments in eco-friendly hydrogen production, a key aspect in Brussels’ decarbonization drive.

Interested parties face an April 27 deadline to submit proposals concerning a number of categories, including PCI-supported sustainable low-emission hydrogen production, the emphasis placed on RES-generated hydrogen.

The White Dragon project, as it has been dubbed, has brought Greece’s biggest industrial corporations closer, as they prepare to jointly bid for project categories Brussels will subsidize in the context of the Hydrogen Europe program.

The White Dragon project provides for investments of 2.5 billion euros in electrolytic hydrogen production by means of solar energy from photovoltaic parks with a capacity of 1.5 GW. They are planned for northern Greece’s west Macedonia region, a lignite-dependent economy.

Gas utility DEPA, gas grid operator DESFA, petroleum group Motor Oil, the Mytilineos group, Terna, Hellenic Petroleum ELPE, Polish company Solaris, as well as the Demokritos National Center for Scientific Research and the Center for Research and Technology Hellas (CERTH) are taking part.

The hydrogen to be produced will be used for district heating, fuel to be exported via the Trans Adriatic Pipeline, and as fuel for large vehicles such as lorries and buses.

 

Transitional plan for Cretan small-scale link sent to Brussels

Technical and other preparations are now being made to enable Crete’s imminent small-scale power grid interconnection, to the Peloponnese, to cover, for the time being, approximately 30 percent of the island’s electricity needs.

The energy ministry has forwarded to the European Commission its proposal for a transitional model concerning Crete’s participation in the target model’s new wholesale markets.

Also, the energy ministry has prepared a draft bill needed for the transfer, to power grid operator IPTO, of distribution network operator DEDDIE/HEDNO’s assets on Crete. This will enable IPTO to assume responsibility for the island’s small-scale interconnection.

Normally, when grid links for non-interconnected islands are carried out, IPTO takes on the responsibility of their electricity networks. However, Crete, Greece’s biggest and most populous island, represents a much bigger interconnection project that is being developed over two stages. The project’s second stage, to reach Athens, is anticipated in 2023.

The transitional plan, shaped with the assistance of consultant Reed Smith, includes the sale, by power utility PPC, DEDDIE/HEDNO’s parent company, to IPTO, of a 150-kV transmission line on Crete, running from Hania to Lasithi, based on decisions reached by RAE, the Regulatory Authority for Energy, concerning management of Crete’s grid for the island’s small-scale interconnection.

The transitional model, to expire once the island’s full-scale interconnection has been completed, will allow Crete to purchase electricity transmitted through the small-scale interconnection at the target model’s new wholesale markets.

EastMed alliance broadens, eight countries express support

Support for the EastMed pipeline, planned to transport natural gas from offshore Levantine Basin gas reserves in the southeast Mediterranean to Greece and further into Europe, is growing in numbers with an initial Greek-Israeli-Cypriot alliance promoting this project now joined by five additional partners, Bulgaria, Romania, Hungary, Serbia and North Macedonia.

Energy ministers representing these eight countries forwarded a letter of support for the EastMed project to the European Commissioner for Energy Kadri Simson late last week, Greece’s energy and environment minister Kostas Skrekas has told local media.

The pipeline, to be developed by IGI Poseidon SA, a 50-50% joint venture between Greek gas utility DEPA and Italian gas utility Edison, is planned to cover a 1,470-km distance.

IGI Poseidon plans to develop EastMed all the way to Italy via Cyprus, Crete, the Peloponnese, mainland Greece and Epirus, the country’s northwestern flank.

This latest move, bringing the eight energy ministers together for the joint letter, was initiated by Skrekas, Greece’s energy minister, sources informed, following an initiative taken two months earlier by his Israeli counterpart Yuval Steinitz to organize a joint virtual conference involving ministers of all eight countries.

In their letter to Simson, the EU energy commissioner, the eight ministers highlight the importance of EastMed, noting the project promises to contribute to the wider region’s energy security and offer benefits to consumers as a result of increased competition and reduced natural gas price levels.

Regional gas interconnections, including the Greek-Bulgarian IGB, Bulgarian-Serbian IBS, Bulgarian-Romanian IBR and the Romanian-Hungarian IRH would be utilized to extend EastMed’s reach, the letter notes.

Greece and North Macedonia are currently planning a new gas pipeline interconnection whose Greek segment is being promoted by gas grid operator DESFA.