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.

IPTO seeking active role in Cyprus, Israel, Egypt grid interconnections

Power grid operator IPTO is seeking an active role in the grid interconnections to link Greece with Cyprus and Israel, as well as Egypt, the company’s chief executive Manos Manousakis told yesterday’s Power and Gas Supply Forum, an online event staged by energypress.

Responding to questions as to whether IPTO is considering to acquire an equity stake in these projects, Manousakis noted that the operator’s role is to ensure the interoperability of the Athens-Crete and Crete-Cyprus power grid interconnections, a commitment made by the Greek government back in October, 2019.

The European Commission, engaged in ongoing exchange with IPTO in an effort to understand the level of maturity of these grid interconnection projects and, primarily, the interoperability of its systems, has mentioned that Brussels would be interested in the equity involvement of a European TSO, Manousakis informed.

Other priorities at IPTO include upgrading and expanding Greece’s grid interconnections with neighboring countries, which would boost cash flow in the domestic energy market through electricity exports, the chief executive noted.

A tender for the development of the local segment of a second transboundary grid interconnection linking Greece and Bulgaria, from Nea Santa, northeastern Greece, to Bulgaria’s Maritsa area in the south, will be completed this year, Manousakis informed.

New interconnections with Albania and North Macedonia are also being examined at present, he noted.

In addition, IPTO is close to signing a cooperation agreement with Italian operator TERNA for the development of a second Greek-Italian grid interconnection.

Furthermore, plans for an upgrade of the Greek-Turkish interconnection, a project linking the European and Turkish transmission systems, are also maturing, the IPTO chief informed.

 

 

Crete-Athens grid link omitted from Greek RRF proposal

A grid interconnection to link Crete with Athens has been omitted from a national plan containing 112 projects for which financial support will be sought through the European Commission’s Recovery and Resilience Facility.

It was the energy sector’s only surprise omission from the government’s plan for RRF support, to be submitted to Greek Parliament within the next few days for ratification before being forwarded to the European Commission.

Even so, progress of the Crete-Athens grid interconnection project, vital for Crete’s energy sufficiency without reliance on high-cost local power stations, will not be affected by the decision as a number of other financing options remain available, authorities have stressed.

These include the National Strategic Reference Framework and the Just Transition Fund.

The national RRF plan was discussed at a cabinet meeting yesterday ahead of its presentation, planned for tomorrow.

A proposal for a 200 million-euro injection into the RES special account, facing deficit territory, has been included in the national plan.

Other key features of the plans are: the country’s energy efficiency upgrade program for homes, businesses and public buildings; the decarbonization plan; installation of smart meters; upgrade and undergrounding of transmission lines; as well as development of electric vehicle recharging infrastructure.

Energean Prinos field support to include State participation

A financial support plan for upstream company Energean’s Prinos field, south of Kavala, just announced by the European Commission, will be 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. Greek Parliament still needs to approve the plan.

As part of the plan, the Greek State will appoint a representative to the Board of Directors of the company to monitor the utilization of this financing.

Also, the financial support terms for Energean’s Prinos field, under pressure in recent years as a result of deteriorated market conditions, include a series of key guarantees for the Greek State.

Besides Energean’s bank loan, to be repaid, with interest, to the participating bank, the company’s domestic subsidiary will also need to pay related fees to the Greek State for the latter’s provision of the loan guarantee enabling the company to borrow.

The financial support will be provided until December 31, 2021, will be used to cover Energean’s investment and working capital needs over the next 12 months, and will have a maximum duration of 8 years, according to the terms.

According to Energean sources, activities at the Prinos field in 2019 and 2020 resulted in losses totaling 120 million euros. Despite an improvement in oil prices, a lack of finances for investment has led to a further reduction in output at Prinos, which is expected to lead to a further loss this year, estimated at 40 million euros.

The financing support plan will ensure the completion of development at the Epsilon deposit, which Energean considers essential to ensure ongoing operations of Prinos, along with the implementation of administrative and organizational restructuring planned by the company with the aim of reducing operating costs and moving ahead with a series of new projects.

PPC compensation mechanism, market test talks at crucial stage

The European Commission is expected to show its cards next week on Greece’s quest for lignite compensation mechanisms supporting power utility PPC and the results of a market test concerning the utility’s availability of lignite-produced electricity to third parties.

These issues are expected to be discussed in detail by energy ministry and Directorate-General for Competition officials during a virtual meeting next week, following correspondence as well as a virtual meeting, on March 8, between energy minister Kostas Skrekas and the European Commission’s Vice-President Margrethe Vestager, also Brussel’s Commissioner for Competition.

State-controlled PPC has requested a strategic reserve mechanism for its lignite-fired power stations, still needed but nowadays loss-incurring as a result of higher CO2 emission right costs, as well as compensation for its premature closures of these units, currently being phased out until 2023.

All still appears to be vague on PPC’s market test for third-party access to its lignite-based electricity. The test was completed some time ago, failing 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.  Brussels has yet to comment on the market test’s result.

 

Brussels reiterates call for single energy, water authority

The European Commission has reiterated, in latest contact with the energy and environment ministry, a recommendation for the establishment of a single Regulatory Authority for Energy and Water as an independent monitoring body with a broadened task range, including regulation of rules for investments, management and pricing of water, especially drinking water, energypress sources have informed.

This time around, the recommendations by Brussels come as part of a strategy promoting the development of a circular economy and sustainable growth.

The European Commission was prompted to readdress the issue as it believes the existence of 120 or so municipal water supply and sewerage companies around the country – each applying their own and inexplicable, to a certain extent, pricing policies – does not contribute to rational water management.

Single regulatory authorities supervising the energy and water sectors have already been established in many EU member states, including neighboring Italy.

This country’s initiative was discussed, among other topics, at a meeting yesterday between energy minister Kostas Skrekas and Italy’s Ambassador to Greece, Patrizia Falcinelli, sources noted.

The establishment, in Italy, of a single regulatory authority for energy, water and wastewater has led to impressive social and economic benefits, the Italian diplomat is believed to have informed the Greek minister during their meeting.

The energy ministry is reportedly working on a plan designed to broaden the tasks of RAE, the Regulatory Authority for Energy, sources informed, stressing finalized decisions had yet to be taken.

Energean upbeat on support prospects for Prinos, 4-year extension granted

Upstream company Energean has received promising feedback from the finance and energy ministries in its effort to secure an EU support package to protect the sustainability of its offshore Prinos field, the country’s only producing unit, in the North Aegean.

The government has relayed that it is cautiously optimistic of a favorable outcome in its support-package application submitted to the European Commission.

Brussels appears to be concluding its exchange with Greek government officials handling the issue and could soon offer its approval, sources informed.

The effort has lasted nearly nine months from the time Greek government officials submitted a support request accompanied by Energean’s Prinos business plan, worth nearly 75 million euros.

The time taken in Brussels has been attributed to this essentially being the EU’s sole case concerning a support request in the hydrocarbon exploration sector.

Meanwhile, EDEY, the Greek Hydrocarbon Management Company, has granted Energean Oil & Gas, a member of the Energean Group, a four-year extension, until March 19, 2025, for exploration activities aiming to identify new fields in the Prinos and South Kavala areas, following a request submitted by the company.

European CEO Alliance backs ambitious climate strategy

100 billion euros of investment to decarbonize their companies by 2030, a gradual introduction of a cross-sector CO2 price and ambitious phase-out dates for coal: These are some of the key points of ten top managers from the energy, transport and technology industries issued in a joint position paper. Thereby, the leading European CEOs are calling for far-reaching climate protection measures at the occasion of the seventh international climate strike on Friday, March 19, 2021.

The ten business leaders Björn Rosengren (ABB), Thierry Vanlancker (AkzoNobel), Francesco Starace (ENEL), Leonhard Birnbaum (E.ON), Ignacio Galán (Iberdrola), Søren Skou (Maersk), Christian Klein (SAP), Henrik Henriksson (Scania), Jean-Pascale Tricoire (Schneider Electric) and Herbert Diess (Volkswagen) are members of the “CEO Alliance for Europe’s Recovery, Reform and Resilience”.

This CEO Alliance formed in 2020 against the backdrop of the Covid-19 pandemic and the historic decisions on the European Green Deal. Their common goal is to make the EU the world’s leading region for climate protection while unlocking investments, driving innovations in tomorrow’s technologies and creating future-proof jobs.

The top managers published a joint position paper with ambitious proposals. They state: “We firmly believe that the EU Green Deal and Next Generation EU will put Europe’s innovation and business ingenuity to the service of the global climate cause, will kick-start a wave of investments into sustainability and resilience and will create future-proof jobs across the EU.”

The CEOs encourage European policy makers to take bold steps towards climate neutrality such as “continuing to pursue a standardized cross-sector CO2 price” and “setting end-dates for carbon-intense technologies”.

The CEO Alliance considers itself an “Action Tank”, working together in concrete joint projects: Cross-EU charging infrastructure for heavy duty transport, integration of EU Power systems, digital carbon footprint tracking, sustainable healthy buildings, e-buses for Europe, green hydrogen value chain and rapid build-up of battery production.

The aspiration of the top managers is to work with their companies across sectors to find practical solutions for effective climate protection. In doing so, they strive for an ongoing constructive dialogue with the EU Commission. In a digital meeting just days ago, the Executive Vice President of the Commission Frans Timmermans and the CEOs discussed the progress on the implementation of the Green Deal and the interim status of the Alliance’s joint projects.

Executive Vice-President Timmermans stated: “Making Europe climate neutral by 2050 is a huge challenge. The European Commission will propose legislation to put sectors like transport and energy on the right track. Our long term plan includes investment in charging infrastructure, battery production, renovation and renewable energy production. The NextGeneration EU recovery fund will help make this possible. Our goal is not any transition, it’s a just and fair transition, leaving no one behind. I welcome the CEO Alliance’s commitment to Europe’s green recovery and share their conviction that their companies have what it takes to build a sustainable future.”

 

 

 

 

 

Ministry seeks recovery fund aid for west Macedonia gas pipeline

Development of a high-pressure gas pipeline in west Macedonia, in the country’s north, which would enable the country’s gas grid to be extended to the area, is among the energy ministry’s proposals for EU recovery fund inclusion.

Though still too early to tell if this project will become eligible for financial support through this fund, it should be pointed out that the European Commission is generally hesitant about backing natural gas-related projects.

The project’s inclusion, or not, in a national recovery and resilience plan being prepared by a special energy-ministry committee, currently filtering proposals by this ministry and other ministries, stands as a crucial test that could determine whether the west Macedonia gas pipeline project will become eligible for EU recovery fund support.

A national plan’s finalized list is expected within the next few days before it is forwarded, by early April, to the European Commission, whose approval will be needed.

The energy ministry is also seeking 300 million euros through the recovery fund for the redevelopment of the power utility PPC’s mining areas in west Macedonia, a lignite-dependent economy.

Regardless of whether the west Macedonia high-pressure gas pipeline plan will qualify for EU recovery fund support, gas grid operator DESFA appears determined to move ahead with the project, budgeted at 110 million euros and constituting part of the country’s decarbonization strategy.

The new National Strategic Reference Framework (NSRF) could serve as an alternative financing source, while DESFA will also consider company cash reserves and a bank loan if necessary.

 

DG Comp motives for restart of older PPC probe unclear

The European Commission has brought back to the fore a Directorate-General for Competition investigation of power utility PPC and power grid operator DEDDIE/HEDNO over market dominance abuse, despite major market changes that have taken place since 2017, when the probe began.

The direction the investigation’s restart remains unknown. Negotiations between Greece and Brussels for new mechanisms being negotiated could be impacted, some pundits suspect.

Also, the government and state-controlled PPC are currently seeking compensation for the power utility’s need to keep lignite-fired power stations and related mines operational for grid sufficiency needs.

No findings of the investigation’s first round have been released. The probe included raids by DG Comp officials, both local and Brussels-based, of the PPC and IPTO headquarters in Athens that lasted several hours, resulting in confiscations of USB flash drives, documents and hard drives.

PPC’s then-administration, in an announcement at the time, informed that the raid concerned a check on the utility’s “supposed” abuse of market dominance in the wholesale market for electrical energy produced from 2010 onwards.

Prior to the investigation, Brussels suspected levels of the wholesale electricity price – known as the System Marginal Price (SMP), at the time – were being manipulated by PPC through its lignite and hydropower facilities.

In 2017, PPC held an 87 percent share of the retail electricity market and 57 percent of overall electricity generation, now down to approximately 67 and 39 percent, respectively.

Four years ago, PPC’s lignite facilities still dominated the corporation’s portfolio and the energy exchange and new target model wholesale markets did not exist.

The current market setting bears little resemblance to back then. Lignite has regressed into an unwanted, loss-incurring energy source that is being phased out by PPC until 2023, while the energy market is undergoing drastic transformation, as was acknowledged by the European Commission Vice-President Margrethe Vestager, also Brussels’ Commissioner for Competition, in an announcement yesterday.

 

Recovery fund subsidies worth €400m for energy storage units

The energy ministry plans to allot 400 million euros of EU recovery fund money to the development of central electrical energy storage units. A related proposal by the ministry is headed for inclusion into the national recovery plan.

The aforementioned sum will be used to subsidize energy storage projects and will be made available to investors through a mechanism whose details are still being negotiated by government and European Commission officials.

Once the mechanism has taken final shape it will be forwarded to Brussels’ Directorate-General for Competition and Directorate-General for Energy for approval from both, necessary ahead of its implementation.

Though further details on the prospective support mechanism remain unknown, its subsidies are expected to be offered through a competitive procedure promoting selected projects.

At this point, developments have indicated both central energy storage technologies – pumped hydroelectric energy storage and accumulators (battery units) – will be eligible for subsidy support.

A study on central energy storage conducted by the National Technical University of Athens (NTUA) for RAE, the Regulatory Authority for Energy, has shown that a combination of these two technologies is the optimal solution, as each covers different needs.

Crete’s small-scale grid link headed for April completion

A second subsea cable needed for the grid interconnection to link Crete and the Peloponnese has been installed, with just a trial run by power grid operator IPTO now required for the completion and launch of the project, to cover approximately 30 percent of the island’s electricity transmission needs.

IPTO is aiming to conduct its trial run by the end of April. The Cretan interconnection project will eventually be complemented by a larger-scale link to Athens.

A trial run of the Crete-Peloponnese project’s first subsea cable has already been completed with success.

Despite various obstacles raised by the pandemic, work on this project has progressed swiftly, promising to soon end Crete’s energy isolation.

A variety of records have been set along the way. The Crete-Peloponnese subsea link, covering a 174km distance, is now the world’s longest subsea AC power connection, as well as the longest underwater high-voltage cable connection. Reaching up to 1,000 meters in depth, this subsea installation is also the world’s deepest high-voltage link.

A transitional hybrid model for Crete’s participation in target model energy markets – covering production and consumption and to be applied until the island’s full-scale grid interconnection to Athens is completed – is expected to be approved by the European Commission’s Directorate for Energy. The hybrid model’s regulatory framework is now ready and will soon be delivered to Brussels by the energy ministry.

EC examining compensation bid for PPC lignite closures

The government, determined to ensure compensation for state-controlled power utility PPC over its decision to prematurely close down its lignite-fired power stations, is seeking a solution through the European framework of options, an energy ministry announcement has informed.

The Greek State has submitted a compensation request to cover extraordinary costs related to the premature closure of four PPC lignite mines and lignite fired power stations, the ministry’s announcement noted.

European Commission Vice-President Margrethe Vestager, also Brussels’ Commissioner for Competition, has informed that the Commission views favorably the Greek initiative for a premature closure of these lignite facilities and is now examining the legal grounds of the compensation request, the energy ministry’s announcement added.

The Greek government wants compensation for PPC as the utility’s outgoing units have potential for a longer life, meaning PPC is being deprived of further earnings through these facilities.

A successful Greek compensation bid could also help cover extraordinary costs linked to the restructuring of lignite-dependent local economies.

The energy ministry is basing Greece’s compensation bid on a recent European Commission decision approving 52.5 million euros for the Netherlands as compensation for the premature closure of its Hemweg coal-fired power station.

The Netherlands has implemented law forbidding the use of coal for electricity generation beyond January 1, 2030.

IPTO study backing PPC lignite compensation bid soon to EC

The energy ministry is preparing to forward to the European Commission a power grid operator IPTO study that underlines the ongoing necessity of the country’s lignite-fired power stations for grid sufficiency.

The IPTO study was requested by energy minister Kostas Skrekas to bolster a compensation request submitted to Brussels by state-controlled power utility PPC as a result of the grid’s ongoing need for lignite units, nowadays loss-incurring facilities due to elevated CO2 emission right costs.

PPC, Greece’s sole operator of lignite units, plans to phase out its lignite units over the next three years as part of the country’s decarbonization strategy.

The energy ministry expects to forward the IPTO study to the European Commission within the next fortnight. Greece is seeking compensation for PPC through a support mechanism for as long as these lignite units remain in use.

Last week, the European Commission began examining whether a similar German compensation request complies with EU rules and should be approved.

European Commission Executive Vice-President Margrethe Vestager suggested that the German plan theoretically complies with Europe’s green energy agreement and its goals.

“Within this context, our role is to safeguard competition by ensuring that compensation for premature withdrawal [of lignite units] is kept to a minimum,” Vestager commented. “The information available at this point is not sufficient to judge.”

EU hesitation to the German plan concerns a number of aspects, including the duration of the compensation period.

PPC seeks IPTO support for EC lignite compensation request

Power utility PPC wants power grid operator IPTO to provide a statement declaring whether the power utility’s lignite-fired power stations, nowadays loss-incurring units as a result of elevated carbon emission right costs, are still necessary for the achievement of grid sufficiency, the utility’s objective being to gain support for a lignite compensation request submitted to the European Commission, not to immediately shut down its lignite units, sources have informed.

Brussels has been examining the PPC compensation request for months, initially as part of a package incorporating the European Commission’s lignite antitrust case against Greece, and more recently, following settlement of the latter, as a separate issue that has dragged on.

Throughout the entire period, officials in Greece have needed to respond to extensive Brussels questioning over PPC’s compensation request. Most recently, the European Commission is reported to have informed PPC, by email, that it would deliver a decision as soon as possible, once all information has been processed.

PPC, in its letter to IPTO, informs that it would be prepared to shut down the lignite units now if the operator considers them unnecessary for grid sufficiency as they are the cause of losses on a daily basis.

The power utility has planned a phaseout of its lignite facilities over the next three years, as part of the country’s decarbonization effort.

IPTO, in a grid-sufficiency study covering 2020 to 2030, conducted within the framework of the National Energy and Climate Plan, has stressed the period between 2021 and 2024 will be crucial as a result of PPC’s planned phaseout of lignite-fired power stations.

Subsequently, the grid’s sufficiency will depend on how soon three new gas-fueled power stations with a capacity totaling 2,150 MW – PPC’s Ptolemaida V, and units being developed by Mytilineos and TERNA – will be ready for launch, IPTO’s NECP-linked study noted.

Barriers, restrictions affecting power, gas market liberalization

Greece’s retail electricity and gas markets are moving towards full liberalization, but, in the course, needing to overcome major barriers and restrictions, a European Commission report for 2020 has highlighted.

Despite the progress made, obstacles in four key areas continue to obstruct the entry of new players in the country’s electricity and gas markets, the report noted.

Disincentives of regulatory nature, market inequalities, entrepreneurial and procedural barriers, as well as customer inaction were identified as the four key areas that need to be dealt with if full liberalization of the electricity and gas markets is to be achieved, the report found.

On the regulatory front, proposals offered by the European Commission focus on the need for a consistent framework offering long-term stability and security for market players.

Market surveillance and monitoring by authorities needs to be effective and accurate to prevent unfair competition behavior by market players, it added.

On market entry, the report recommends actions that would enhance the procedure’s reliability and uniformity.

As for customer immobility, signifying a market still not fully mature, the European Commission report proposes the provision of improved information to customers before supply agreements are signed, greater transparency, better price-comparing ability, as well as mechanisms protecting consumers against unprincipled actions by suppliers.

Weather effects lend credibility to PPC lignite compensation bid

The impact of last week’s heavy snowfall around Greece, prompting power outages in various areas, northern parts of Athens being hardest hit, has added credibility to state-controlled power utility PPC’s compensation bid to the European Commission for its need to keep using lignite-fired power stations.

Had IPTO, the power grid operator, not ordered the grid entry of PPC’s lignite-fired power stations, nowadays a high-cost option, widespread blackouts amid the adverse weather conditions would have been inevitable, making matters far worse, including at economic and political levels.

IPTO officials have stressed the country continues to need PPC’s lignite-fired power stations until their production capacity is gradually replaced by cleaner gas-fueled power stations. These are: PPC’s Ptolemaida V; a unit being developed by the Mytilineos Group in Viotia, northwest of Athens; and Terna’s prospective unit in Komotini, northeastern Greece, still at the planning stage.

The period between 2021 and 2024 will be crucial for the country’s power generating sufficiency as a result of the planned withdrawal of existing lignite-fired power stations, a related IPTO study has shown. The system’s sufficiency will depend on how swiftly the aforementioned gas-fueled power stations, totaling 2,150 MW, can be up and running.

If the planned completion dates for these three projects are maintained then there will be no reason to delay the withdrawal schedule of lignite-fired power stations, sources pointed out. The grid entry of PPC’s Ptolemaida V and Mytilineos’ Viotia unit, without the Terna unit, would suffice to cover the capacity gap to be left by the withdrawn lignite units, these sources added.

However, any delays in the completion of the new power stations could prompt Greek officials to request more time from the European Commission for the withdrawal of lignite-fired units, the sources said.

Second flexibility CATs auction cancelled due to lack of interest

A second and final auction offering flexibility CATs through a transitional mechanism that was endorsed last summer by the European Commission has been cancelled following insufficient interest displayed by gas-fueled producers, who deemed capacity amounts on offer were too small.

Authorities officially attributed the cancellation to a delayed ministerial decision that was needed for the second auction’s staging. But the lack of interest shown by producers with gas-fueled units in their portfolios was at the heart of the matter.

Some sector officials have contended that, given the limited capacities offered, the cost of participating in this second auction may have outweighed any prospective financial benefits.

The transitional mechanism’s second flexibility CATs auction was planned to cover the period running from January 1 to March 31.

According to regulations set for this transitional mechanism, flexibility auctions needed to be staged within the first seven working days in the month following the month of the balancing market’s launch.

Given that the balancing market was launched on November 1, as part of the target model launch, the second auction for flexibility CATs should have been staged by December 7, and, furthermore, a ministerial decision was due by November 7.

Offers submitted by the operators of gas-fueled power stations and hydropower stations fully covered a total capacity of 4,500 MW that was made available at the transitional mechanism’s first flexibility auction, held on October 29. Its flexibility services covered the period running from November 1 to December 31.

Suppliers unimpressed by plan ending PPC lignite monopoly

Independent electricity suppliers have remained unimpressed by measures taken to end stare-controlled power utility PPC’s exclusive access to lignite, noting resulting lignite-generated electricity amounts offered to third parties are too small to bring about changes to competition.

The country’s independent suppliers had until yesterday to respond to a 15-question questionnaire forwarded by the European Commission as part of a market test on the effectiveness of the measures, recently agreed on between Brussels and new energy minister Kostas Skrekas.

Certain respondents explained that low-priced lignite electricity purchases, even at levels well below day-ahead market price levels, would not offer benefits as they cannot offset extremely higher wholesale electricity prices, pushed up by increased balancing market costs.

Some of the vertically integrated suppliers, not facing problems by the wholesale price shifts, noted the measures would end the prospects of a futures market operating at the energy exchange any time soon.

Transitional hybrid plan for Cretan participation in markets

RAE, the Regulatory Authority for Energy, has decided on a transitional hybrid model for Crete’s participation in target model energy markets, covering production and consumption, once the island’s small-scale grid interconnection to the Peloponnese is soon launched.

The fundamentals of the transitional model – to be applied until Crete’s full-scale grid interconnection, all the way to Athens, is completed – have been agreed on by the participating market operators. But details still need to be worked out.

Power grid operator IPTO, distribution network operator DEDDIE/HEDNO and the energy exchange are currently shaping the finer details of the transitional plan, expected to be finalized over the next few days.

Under the transitional hybrid solution, Crete – whose grid will continue being managed by DEDDIE/HEDNO until IPTO takes on the responsibility when power utility PPC, DEDDIE/HEDNO’s parent company, has transferred its network ownership on the island to IPTO – will purchase electricity transmitted through the small-scale grid link at target model energy markets.

As for electricity flowing in the opposite direction, production of Cretan units will be represented by IPTO.

The transitional model, when ready, will be forwarded for public consultation. European Commission approval will be needed for the finalized plan. RAE has already briefed Brussels officials on its proposed transitional model.

Finding a solution for Crete has proven to be a challenge as the small-scale grid link to the Peloponnese will not fully cover the island’s energy needs, meaning it will not automatically cease to be a non-interconnected island once the small-scale grid link begins operating. However, a considerable part of Crete’s energy needs, approximately 30 percent, will be served by the small-scale interconnection.

Normally, when grid links for non-interconnected islands are completed, IPTO assumes 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.

Failure to find a transitional solution would threaten to leave the small-scale link unutilized.

Net metering framework to be revised, EC wants tougher rules

The implementation of a new EU directive for the RES sector promises to bring about many changes to the net metering framework, which, amongst other things, will offer incentives for maximum concurrence, or direct consumption of the greatest possible quantities of RES-generated electricity.

Overall, the directive, which needs to be incorporated into Greek law by June, 2021, will introduce tougher regulations, require the sale of excess energy quantities and offer reduced offsetting time periods.

As net metering represents a form of energy storage, beyond the power meter, the new framework’s preparations have been handed to a committee formed by the energy ministry to put together a legal and regulatory framework for energy storage units.

The new net metering formula will remunerate RES energy that is injected into the grid network for not being instantly consumed. This remuneration amount will need to reflect production value. As a result, officials are considering to base these remuneration calculations on the day-ahead market price.

The resulting net-metering balance will be based on the value of production and consumption, a completely different approach to the current system, for which offsetting is based on the quantities of electricity that have been produced and consumed.

Market test on deal to end PPC lignite monopoly now underway

The European Commission has just launched a market test concerning its recent agreement with energy minister Kostas Skrekas to end power utility PPC’s monopoly of lignite-based electricity production.

Interested parties – suppliers and traders – will, by February 15, need to respond to 15 questions looking to assess the agreement’s prospects.

Brussels’ questions focus on the agreement’s ability to generate competition in the wholesale and retail electricity markets, enable new market entries, and end PPC’s market dominance by 2023.

The agreement will apply until 2023, when state-controlled PPC plans to have gradually withdrawn its lignite-fired power stations as part of the country’s decarbonization effort.

Brussels’ questionnaire also includes a rough presentation of the pricing formula to be applied to lignite-based electricity amounts that PPC will be required to offer to holders of supply licenses through bilateral agreements, regardless of whether these companies operate in the Greek market or not.

PPC’s lignite-based electricity is planned to become available to rivals as of October this year. Market test participants, in one question, have been asked to clarify how much sooner they would need to know the terms and conditions.

As part of the agreement, PPC, in 2021, will need to make available 50 percent of its previous year’s lignite-based production to rivals, followed by 40 percent of the previous year’s output in 2022 and 2023.

In practical terms, based on these terms, independent suppliers will be able to purchase close to 3 TWh, in total, this year, and between 2 and 3 TWh in 2022.

Efforts to end PPC’s lignite monopoly had dragged on for 14 years prior to the recent agreement.

China’s SGCC lodges complaint over DEDDIE sale exclusion

State Grid Corporation of China (SGCC) has filed a complaint with the European Commission after being barred by Greek power utility PPC from the sale of a 49 percent stake in its subsidiary DEDDIE/HEDNO, the distribution network operator, over conflict-of-interest concerns.

The Chinese firm, a strategic partner of Greek power grid operator IPTO with a 24 percent stake, has forwarded a letter to Brussels claiming PPC’s block breaches EU law.

According to the sale’s terms and conditions, any company with direct or indirect control of IPTO or any of its subsidiaries cannot participate in the DEDDIE/HEDNO sale because of conflict-of-interest issues.

SGCC’s Brussels initiative highlights the Chinese company’s strong interest in acquiring a stake and role in the distribution operator’s network. The prospective installation of 7.5 million digital power meters at private properties around the country is the major draw for SGCC, sources noted. DEDDIE/HEDNO also plans to digitize and upgrade its outdated network.

PPC has extended its first-round expression of interest deadline to February 19. A considerable number of companies seem intent to participate.

 

Brussels once again scrutinizing PPC high-voltage market share

Power utility PPC’s solid market share, especially in the high-voltage category, is once again being scrutinized by European Commission officials as part of Brussels’ ninth post-bailout review.

According to sources, European Commission authorities are seeking explanations from Greek officials for the state-controlled power utility’s unabating market share in the high-voltage category.

Brussels officials appear to be holding PPC responsible for selling specially priced industrial electricity at extremely low levels. Industrial consumers, also contacted by European Commission officials as part of the review, have attributed their customer loyalty to a lack of competition in Greece’s industrial electricity market.

PPC has held on to virtually all of its industrial customers, except for AGET (Heracles General Cement Corporation). MEL (Macedonia Paper Mills) abandoned PPC for a short period but has since returned.

Brussels officials are also believed to have questioned PPC’s electricity price levels in the low and medium-voltage categories, suggesting that these, too, are low.

It remains to be seen if this overall probing by the European Commission will develop into any form of official pressure.

Just days ago, energy minister Kostas Skrekas reached an agreement with the European Commission to end a long-running anti-trust case against PPC by agreeing to gradually end the utility’s monopoly of lignite-based electricity production. Despite the development, a number of Brussels officials appear to be keeping PPC in the frame.

 

Athens ending PPC lignite monopoly, rival suppliers to gain

Newly appointed energy minister Kostas Skrekas has reached an agreement with European Commission authorities to gradually end power utility PPC’s monopoly of lignite-based electricity production, but a Greek effort aiming to secure compensation for the state-controlled electricity company as a result of its need to keep operating lignite-fired power stations for grid sufficiency will now be treated as a separate issue, reducing the probability of a successful compensation request.

The ministry, under Skrekas’ predecessor, Costis Hatzidakis, had bundled the compensation request with the lignite antitrust case, insisting Athens would only move ahead with the PPC lignite monopoly case – by staging a market test as a first step towards offering independent players access to PPC’s lignite-based electricity production – if compensation money was awarded to the power utility.

Greece appears to have sought 180, 150 and 200 million euros in compensation for 2021, 2022 and 2023, respectively.

The country’s lignite antitrust case has dragged on for 14 years. During this time, lignite has lost its advantage as a lower-cost energy source as result of high CO2 emission right costs. Even so, Brussels has kept the issue on the negotiating table, often attaching tough proposals to the matter.

Under the lignite monopoly agreement just reached between the energy ministry and Brussels, the power utility, through bilateral contracts, will offer rival suppliers small percentages of its lignite-based electricity production at prices slightly below day-ahead market prices over a three-year period.

These electricity amounts will gradually diminish over the three-year period as PPC plans to phase out virtually all of its lignite-fired power stations by 2023 as part of the country’s decarbonization effort.

The percentage of lignite electricity amounts to be made available to independent suppliers will be based on previous-year production. In 2021, PPC will sell 50 percent of its lignite-based electricity produced in 2020, while in 2022 and 2023, the utility will offer 40 percent of production in the respective previous years.

Given these terms, independent suppliers will be able to purchase a combined total of close to 3 TWh in lignite-based electricity this year and between 2 and 3 TWh in 2022.

Independent suppliers should benefit from the agreement given the wholesale electricity market’s higher price levels of late.