Swift Brussels approval sought for energy market measures

The energy ministry’s leadership will seek swift approval of a national plan for two-pronged intervention in the wholesale and retail electricity markets, intended to subdue energy prices, at a meeting with European Commission officials in Brussels today.

Energy minister Kostas Skrekas and the ministry’s secretary-general Alexandra Sdoukou will discuss the country’s plan with DG Energy technocrats. The government has announced the measures will be implemented July 1.

The measures include a suspension of wholesale electricity price adjustment clauses included in retail electricity bills as well as a wholesale price-cap mechanism.

These measures, however, will not necessarily keep tariffs steady. On the contrary, suppliers will, after informing customers, be able to adjust kilowatt hour prices based on their wholesale electricity purchase costs.

According to sources, Greece’s plan stands a strong chance of being approved by the European Commission as it essentially does not affect the target model and also includes a taxation measure for windfall profits earned by electricity producers, a measure repeatedly proposed by the European Commission.

REPowerEU details unveiled, RES acceleration a key aspect

The European Commission has unveiled details of its REPowerEU plan, a road map intended to eliminate Europe’s reliance on Russian energy sources.

Brussels’ road map will aim to eliminate Russian gas, oil and coal imports into the EU by 2027. The renewable energy sector is planned to play a key role in this effort. The European Commission has increased the RES sector’s energy-mix target to 45 percent, up from 40 percent, by 2030 and will seek to accelerate RES investments.

Solar energy utilization will be a pivotal factor of this strategy, to be promoted through the European Solar Rooftop Initiative, part of the REPowerEU plan.

The wider plan will push for an energy savings increase of 13 percent by 2030, up from the present objective aiming for a 9 percent increase in savings.

The European Commission estimates investments totaling 210 billion euros will need to be made by 2027, as an addition to the previous Fit for 55 plan, which set a target for a 55 percent reduction of carbon emissions by 2030, compared to 1990 levels.

Brussels promoting energy savings, consumer support extension

The European Commission is expected to present a plan tomorrow including proposals for energy savings, an end to Europe’s reliance on Russian energy sources, as well as support measures for consumers.

The consumer support measures could need to be extended for a longer period, stretching beyond June 30, 2022, according to the proposals.

A draft of the plan, obtained by the Athens-Macedonian News Agency, notes that a reduction in energy demand as a result of a voluntary change in consumer habits, as well as through energy-efficiency fast-track measures, promises to lessen the shortage of Russian oil and gas should Moscow decide to disrupt supply to Europe.

For the short term, the Brussels proposals focus on cooling options concerning households as well as transportation choices, all voluntary. Reduced reliance on private vehicles, lower driving speeds, as well as avoidance of air-conditioning system usage in rooms not in use are among the proposals.

Emphasis is also placed on the use of solar energy at buildings, now more critical than ever before, the Brussels proposals note.

The European Commission’s proposals will be discussed at an EU summit on May 30 and 31 in an effort by leaders to reach common decisions.

 

 

Gov’t confident Brussels will approve wholesale market plan

Government officials are confident the administration’s two-pronged intervention plan for the wholesale and retail electricity markets will soon be approved by the European Commission, enabling implementation as of July 1, despite some reservations expressed over the past few days, government sources involved in the process have told energypress.

Athens’ plan was forwarded to the European Commission’s Directorate-General for Energy and Directorate-General for Competition last Friday, following consultation on technical details between Greek government officials and Brussels.

Details of the Greek proposal are expected to be discussed over the next few days through a teleconference meeting involving technocrats , sourced noted.

Energy minister Kostas Skrekas could also hold talks this week with the head officials of the Directorate-General for Energy and Directorate-General for Competition, to elevate the effort to a political level. A written response to the Greek plan from these Brussels bodies is believed to be imminent.

The Greek government is confident its energy-crisis plan will be approved by Brussels for two reasons. Firstly, Athens’ decision to eliminate, through a related tax, windfall profits earned by electricity producers during the energy crisis is one of the tools proposed by Brussels. Secondly, the Greek plan is not expected to affect transboundary trade as import-export prices will continue to be shaped by wholesale market forces.

 

Russian gas payments by Greek companies due next few days

Greek companies that have imported Russian natural gas supplied by Gazprom and face installment payment deadlines expiring between May 20 and 25 are expected to accept Moscow’s ruble-currency demands as part of a wider EU approach that still remains unclear.

Even so, the European Commission, appearing set to revise EU directives concerning payment procedures by member states for Russian gas, is believed to be adjusting to Moscow’s ruble-currency demands.

Greek companies that have imported Russian gas believe the dispute will soon be resolved and are awaiting EU directives and related signals from the Greek government before proceeding with installment payments, sources informed.

The Greek government and the country’s energy players are continuing to observe emergency plans as energy supply security remains a threat as long as Russia’s war on Ukraine continues.

 

 

Electricity market emergency plan presented to Brussels

Energy ministry officials will today present, for the first time, the government’s package of energy-crisis measures to the European Commission’s Directorate-General for Energy.

Brussels’ approval of the package is needed despite the Greek government’s claims that the measures, intended to subdue energy market prices, are within the framework of the European Commission’s RePowerEU plan, also aiming to combat the crisis.

Although details of the Greek package are still in progress, its basics appear to have been finalized.

The day-ahead market, according to the plan, will continue to operate normally, and, as a result, electricity import and export prices will not be impacted. However, the clearing price formula will be revised so that each electricity production technology (lignite, natural gas, hydropower, renewables) is paid for output based on its respective variable cost plus a fair profit, rather than the system marginal price.

According to the plan, electricity suppliers will purchase energy from the domestic market at the lowest prices resulting from the new clearing price formula.

In addition, a wholesale price adjustment clause included in electricity bills will be suspended for the entire duration of emergency measures.

The government wants to avoid characterizing as a tax a plan intended to retroactively collect 90 percent of excess profits earned by electricity producers in recent months. If classified as a retroactive tax, the measure could end up being challenged in court if deemed to be unlawful.

With this danger in mind, the government is presenting its tax plan as a universal fee for solidarity contributions or solidarity dividends.

The government aims to implement its energy-crisis emergency plan by July 1. Swift progress in Athens’ negotiations with Brussels will be needed if this target date is to be achieved.

 

Spain, Portugal price cap agreement to guide Greek plan

Spain and Portugal’s agreement with the European Commission for the implementation of a temporary cap of 50 euros per MWh on reference prices for natural gas and coal used by power plants, effectively detaching wholesale electricity market prices from the cost of these generation sources, promises to serve as a guide for Greece’s negotiations with Brussels for intervention in the country’s wholesale electricity market.

Spain and Portugal had requested a temporary cap on reference prices of 30 euros per MWh, for one year.

The price of electricity in Spain and Portugal will be the same as that applicable for transactions with the rest of the EU, via France, El Pais reported.

The limited capacity of the Iberian Peninsula’s electricity grid interconnections with France will restrict electricity exports from Spain and Portugal. Otherwise, lower electricity prices resulting from the temporary cap would have prompted a sharp rise in electricity exports from Spain and Portugal.

Though the Greek government is on standby for a European price-cap solution to the energy crisis, Athens has already begun regulatory and legislative preparations for domestic market intervention.

Swift moves for Revythoussa capacity boost, FSU by July 30

Gas grid operator DESFA’s plan to boost the capacity of its LNG terminal on the islet Revythoussa, just off Athens, with the addition of a floating storage unit (FSU), is in full progress, the target date for its mooring being no later than July 30.

DESFA is now preparing to stage a related tender for this plan and, as a first step, is researching the international market to check on the availability of an FSU matching Revythoussa’s requirements, factors including the installation’s period, should a lease solution be chosen, and storage capacity.

RAE, the Regulatory Authority for Energy, is soon expected to decide on whether the FSU should be purchased or leased.

The authority is expected to hold a meeting today with DESFA officials to discuss the plan’s details.

DESFA has indicated it could lease an FSU for a period of between 12 to 18 months and, as part of this plan, would receive the vessel between May 1 and July 30.

The operator is moving fast as the European Commission has requested all EU natural gas storage facilities be filled to 80 percent of capacity by November 1. In addition, the danger of a Russian disruption of gas supply to Europe also requires swift action, as does the higher energy demand anticipated during the summer season.

 

Unpaid receivables rising, prompting vicious cycle

The level of electricity bill unpaid receivables is rising as a growing number of households and businesses struggle to keep up with extremely higher energy costs, a detrimental factor for the cash flows of suppliers, who, in turn, are finding it increasingly difficult to relay regulated fees – included in electricity bills – to the market operators.

A growing number of consumers are lodging complaints to RAE, the Regulatory Authority for Energy, over exorbitantly priced electricity bills they are encountering.

The government’s electricity subsidies being offered to consumers as energy-crisis support appear to be insufficient.

The vicious circle of events is challenging the energy market as a whole. In an effort to ease the overall pressure, the government intends to ratify legislation for the implementation of a price ceiling in the wholesale electricity market, but not until the European Commission makes an announcement covering the EU, expected next month.

 

 

Gov’t plan aims for electricity prices at first-half ’21 average

The government will pursue a strategic target aiming to reduce retail electricity prices to the average level recorded in the first half of 2021, through the implementation of a price ceiling in the wholesale electricity market and state compensation packages for electricity producers covering the price difference.

However, it remains unclear how this ambitious measure, worth at least 4 billion euros amid the current conditions, will be financed.

The government’s plan will be carried out in coordination with any proposals that may be announced by the European Commission.

Announcements, by the Greek government, are not expected before May 18, when Brussels could deliver energy-crisis proposals for member states.

The price of natural gas in coming weeks, an unknown factor, adds risk to the government’s support plan. Gas prices could further escalate if Russian president Vladimir Putin decides to disrupt supply; if Russia’s war in Ukraine intensifies; or if any other unfavorable factor comes into play.

At present, a best-case scenario would result in a price tag of at least 4 billion euros for the Greek government’s strategic plan to reduce electricity prices.

Three different financing sources could be considered: the Energy Transition Fund, currently financing monthly energy subsidies; a 900 million-euro surplus from a supplementary budget submitted to parliament a fortnight ago; and Recovery and Resilience Facility (RRF) money.

 

 

Egyptian grid operator team in Athens for Greek grid link talks

A team of highly ranked officials from the Egyptian Electricity Transmission Company (EETC), headed by president and CEO Sabah Mashali, is in Athens for two days of talks, beginning today, on the development of the Greek-Egyptian grid interconnection.

The EETC officials are scheduled to meet today with a team of Greek power grid operator IPTO officials, headed by president and CEO Manos Manousakis, for a discussion on technical details concerning the grid interconnection.

Tomorrow, the EETC team is scheduled to meet with Greece’s energy minister Kostas Skrekas as well as development and investment minister Adonis Georgiadis.

A first step for the project was taken last October when the Greek and Egyptian energy ministers signed a related Memorandum of Understanding. As part of the agreement, the power grid operators of both countries have assembled a working group to conduct necessary preliminary work.

The group’s responsibilities, according to the MoU, include technical coordination to ensure the grid interconnection’s compatibility; facilitating the project’s licensing matters; as well as providing support for the project’s classification as an EU Project of Common Interest, which would ensure EU funding support.

The Greek-Egyptian grid interconnection is planned to exclusively transmit green energy from Egypt to Greece as a means of increasing the energy-mix share of renewables in Greece and the wider region and also bolstering energy security in Europe, prioritized following Russia’s invasion of Ukraine.

Prime Minister Kyriakos Mitsotakis, during a recent meeting with European Commissioner for Energy Kadri Simson, stressed the importance of the Greek-Egyptian grid link, noting it should receive European backing.

 

South Kavala UGS facing delay, war prompts need for cost-benefit update

The final round of privatization fund TAIPED’s tender for a prospective underground natural gas storage facility (UGS) at the almost depleted natural gas field of “South Kavala” in the Aegean Sea’s north appears set for a latter date as authorities believe the project’s cost-benefit analysis needs to be updated as a result of Russia’s war on Ukraine.

TAIPED was aiming to stage the tender’s second round late in May, but officials at the energy ministry and RAE, the Regulatory Authority for Energy, believe the UGS project’s cost-benefit analysis now needs to be updated.

More specifically, at current gas price levels, it would cost 500 million euros to fill the UGS with gas, once its conversion from a depleted gas field has been completed. The conversion’s cost is also estimated at 500 million euros, meaning a total sum of one billion euros would currently be required to develop and fill the facility.

The project’s existing cost-benefit analysis, based on data prior to the war, is now out for consultation. It has already received two extensions.

It remains unknown if a recent European Commission decision requiring EU member states to maintain gas reserves representing 15 percent of annual consumption will be restricted to the war’s duration or become a permanent obligation.

Also, the project’s reexamination will most probably also need to take into account related domestic developments such as a plan for a gas network capacity increase.

 

EU’s Fit for 55 revisions to include reduced gas use

The European Commission is preparing to present, in May, details of its Repower EU program, a strategy aiming to greatly reduce Europe’s reliance on Russian energy. Until now, the plan has been limited to objectives, without specifics on how these targets could be achieved.

Further revisions of the EU’s energy and climate policy – as presented in the recent Fit for 55 package, which set a target of a 55 percent reduction of carbon emissions by 2030, compared to 1990 levels – will be needed, through legislative revisions and directives.

The revisions could include greater tolerance for lignite and gas infrastructure, until recently treated strictly, as well as measures for an acceleration of RES and energy storage development.

As was pointed out at the recent energypress Power & Gas Forum by Pantelis Kapros, Professor of Energy Economics at the National Technical University of Athens, the EU’s energy policy, concurrently managing economic, energy security and environmental concerns, is now shifting towards greater emphasis on energy security as a result of Russia’s invasion of Ukraine and the move’s wider repercussions.

Even so, the Fit for 55 objectives for 2030 are expected to be maintained, while RES targets may be raised to more ambitious levels.

The EU will also look to reduce natural gas consumption for electricity generation and heating through the use of biomethane quantities in excess of 35 billion cubic meters by 2030, green hydrogen quantities of 20 million tons by 2030, as well as energy storage system development, noted Professor Kapros, one of the architects of the EU’s energy policy.

The EU’s Fit for 55 package had originally planned for 164 bcm of Russian gas imports in 2025 and 131 bcm for 2030, but these quantities are now expected to be greatly reduced to 74 bcm and 33 bcm, respectively.

September target for first energy storage support competition

An energy ministry plan for a competitive procedure to offer investment support for energy storage facilities with capacity between 800 and 900 MW has been approved by the European Commission, the ministry’s secretary-general Alexandra Sdoukou noted during a speech yesterday on the opening day of the two-day Power & Gas Forum, staged by energypress.

The energy ministry is working towards staging a first competitive procedure for this investment support in September, to offer between 400 and 450 MW, or half the planned total capacity, according to sources.

Talks with the European Commission on the matter ended successfully earlier this week, Sdoukou told the forum, adding that an official announcement will be released within the next few days.

Interested investors will be invited to lodge applications confirming their participation in the competitive procedure for investment support in the lead up.

A sum of 200 million euros in support funds is expected to be offered through Greece’s recovery and resilience plan, expected to cover approximately 40 percent of the energy storage unit costs.

Investment interest is high for energy storage development. RAE, the Regulatory Authority for Energy, issued licenses for 120 units representing a total capacity of 9,641 MW until the end of January.

 

EU states without gas storage must use facilities of fellow members

EU member states without natural gas storage facilities, such as Greece, will be required to store gas quantities representing 15 percent of annual consumption at existing gas storage facilities maintained by fellow member states by November 1, the European Commission has just announced.

In the lead-up, Brussels had issued an order requiring all EU member states with gas storage facilities to fill these at 90 percent of full capacity by November 1, in preparation for next winter. The EU is now taking steps to drastically reduce its reliance on Russian gas.

Governments in respective member states are responsible for the achievement of this objective and can impose fines and sanctions, according to the announcement.

The European Commission has notified it will conduct inspections to determine whether intermediate storage-capacity goals have been achieved. Warnings will be issued if discrepancies are found to be over two percent, followed by related talks with the respective member states. Lack of action a month after these talks have taken place will result in decisions from the European Commission, which the member states in question will need to adopt.

 

Joint EU gas purchases only solution, Brussels points out

The European Commission, in an announcement detailing the cost and effects of various emergency measures considered as remedies for the energy crisis, has singled out joint EU gas purchases that would cover all member states as the only solution that would not prompt side effects.

The announcement was made ahead of today’s summit of EU leaders, expected to examine a variety of measures proposed to tackle the energy crisis. Once conclusions are reached, directives will be issued.

European Commission officials have already concluded that all options come with costs and drawbacks.

Differing energy mixes, market structures and interconnection capabilities of EU member states complicates the task as no single measure would be ideal for all, the European Commission has pointed out in its announcement.

A proposed price ceiling on wholesale electricity prices would require compensation for electricity producers and complicate transboundary energy trade. In addition, this measure would also depend on the fiscal endurance of respective member states.

A price ceiling on gas, or the establishment of lower and upper limits, would need to be implemented throughout Europe to drastically reduce natural gas prices, and by extension, electricity prices, the Brussels announcement noted. Also, an optimal level would need to be set. If the upper limit, for example, is set too low, Europe would have trouble securing bigger gas orders. Also, low price limits would generate higher demand.

Greece skips Brussels’ RES hosting funding mechanism

Greece has opted to not express interest in a new RES funding mechanism prepared by the European Commission enabling EU members, as RES hosts, to receive funds provided by fellow member states for construction of RES projects in exchange for 80 percent of the nominal project capacities, which would be counted in climate-target figures of the countries financing the projects.

Member states faced a March 15 deadline to express interest in this RES funding mechanism.

Greece’s decision to not participate in this mechanism, for the time being, does not mean the country is not interested, highly ranked energy ministry officials have pointed out, adding that priority, at this early stage of the decade, needs to be given to the achievement of national objectives.

A clearer picture of the country’s RES sector development over the next few years will enable Greece to reach a more accurate decision on whether it should declare a capacity for this funding mechanism, and, if so, its quantity, the ministry officials indicated.

Also, Greece does not face financing problems for new RES capacity, which is essentially what this mechanism offers, the officials added.

EU RES synergies are becoming increasingly important as Europe strives to achieve more ambitious green energy targets by 2030, the European Commission has noted.

EU headed for joint energy supply plan, challenges faced

The EU appears headed towards adopting a strategy for joint supply of natural gas, LNG and hydrogen, along the lines of a policy implemented for joint Covid-19 vaccination orders at the height of the pandemic, to combat skyrocketing energy prices, a draft prepared ahead of tomorrow’s summit, bringing together the EU’s 27 leaders, has indicated.

Governments of Europe’s south, hit harder by the energy crisis, and European consumers across the continent are anticipating measures that can help contain sharply increased gas, electricity and oil prices.

The joint supply plan’s implementation would come as a bold initiative by the EU, taking steps to greatly reduce its reliance on Russian gas, but various obstacles will need to be overcome.

Joint energy orders will be far trickier for the EU to execute than the mass orders it had placed with pharmaceutical companies for Covid-19 vaccinations back in June, 2020, as the former are commodities traded in fluctuating markets.

LNG suppliers such as the USA, Qatar and Algeria would have to redirect to Europe quantities usually shipped to Asian markets at highly profitable prices. Also, the reaction of China, America’s number one buyer of LNG, remains unknown.

The joint-supply strategy would be combined with the establishment of an energy safety reserve, as the European Commission has ordered EU member states to fill underground gas storage (UGS) facilities to 90 percent of their capacities by November 1, in preparation for next winter.

This would resolve energy sufficiency concerns but currently elevated prices are an issue. Also, many European UGS facilities have, until now, been managed by Russia’s Gazprom. It remains unclear if the Russian gas giant would be legally obliged to abandon these facilities.

The joint-supply strategy has been on the negotiating table since last year but held back by disagreements.

 

 

Gas price ceiling not seen, focus on low-interest lending

A proposal for a European price ceiling on natural gas is regarded, by European Commission officials, as an energy-crisis measure that cannot be implemented, while other proposals, concerning the electricity sector, such as taxation of excessive profits and an earnings limit per MWh produced, appear more likely to be considered at this week’s European summit in Brussels, scheduled for March 24 and 25, energypress sources have informed.

A decision on a new support package offering subsidies to EU member states, along the lines of the Recovery and Resilience Facility (RRF), designed to support economies through the pandemic, is not expected to be reached at this stage, the sources noted.

Instead, summit officials are expected to focus on a low-interest lending program for EU member states, as a means of funding energy-crisis support packages, echoing the SURE job-protection program offered at the peak of the pandemic.

Low-cost borrowing certainly promises energy-crisis support, however, such a course ultimately still adds to public debt, a concern for a country such as Greece, still being continuously monitored by markets as a result of the country’s debt figure, at 355 billion euros, resulting in one of the world’s highest debt-to-GDP ratios.

South Kavala UGS tender’s final round not until early summer

The final round of privatization fund TAIPED’s tender for a prospective underground natural gas storage facility (UGS) at the almost depleted natural gas field of “South Kavala” in the Aegean Sea’s north will not be held until early this summer following a latest deadline extension by RAE, the Regulatory Authority for Energy, on consultation regarding the facility’s business pricing framework, sources closely following the project’s developments have informed energypress.

Prior to this deadline extension, the overall procedure was delayed by several months as a result of a disagreement between RAE and gas grid operator DESFA over supplementary investments that would enable the country’s grid to cater to the needs of the UGS.

Consultation for UGS pricing framework proposals and other details, including DESFA’s ten-year development plan, was to expire on March 14, but RAE has offered participants an extension until March 30.

It is believed RAE’s text forwarded for consultation has been deemed far from satisfactory by prospective investors. If no changes are made, the tender could fail to produce a result, despite its long duration.

Such a prospect threatens to leave Greece as Europe’s only country without a single UGS for many years to come.

Elsewhere, EU member states are rushing to fill their UGS facilities ahead of next winter, following an order issued by the European Commission as part of a plan to drastically reduce Europe’s reliance on Russian gas.

The EU has a total of 170 UGS facilities, offering a total capacity of 4.2 trillion cubic metres. Germany tops the list with 60 facilities that represent 42 percent of the continent’s UGS capacity. France follows with 16 UGS facilities, Italy has 13 functional facilities and 7 under construction, while Romania has 8 UGS facilities and Bulgaria one.

 

 

Athens, Europe’s south hoping for brave crisis decisions

Athens, along with other EU administrations, especially in Europe’s south, will be hoping for a brave European response to the energy crisis’ exorbitant prices at this week’s summit of EU leaders, scheduled for March 24 and 25.

Prime Minister Kyriakos Mitsotakis has joined forces with his counterparts from Italy, Spain and Portugal ahead of this week’s summit. The four leaders are hoping action, rather than just good intentions, as expressed by Europe’s north during an unofficial meeting a fortnight ago, will be taken.

That session highlighted a lack of agreement on the issue of a Eurobond as a common solution to help consumers in Europe cope with extremely higher energy prices.

Some analysts believe long negotiations could be needed at the forthcoming summit, as was the case in 2020, when European leaders worked for five days to eventually approve the Recovery and Resilience Facility as a means of helping economies bounce back from the impact of the pandemic.

Other analysts fear US president Joe Biden’s participation in the concurrent EU-NATO conference will overshadow talks for energy market intervention, postponing needed action for a next session.

 

 

Nation’s power cost massive, even in best-case scenario

Worth 1.1 billion euros, the government’s triple-dimensioned support package designed to help consumers deal with exorbitant energy prices is not negligible. The big question at this stage is how many more times will such support need to be offered to consumers in 2022?

Energy price projections are frightening as Russia’s war on Ukraine enters its fourth week. The political world will need to intervene and set market rules, as noted by Greek Prime Minister Kyriakos Mitsotakis. Smaller EU member states with less fiscal leeway, such as Greece, face serious danger should the European Commission not intervene and offer a central European solution.

If the situation unfolds favorably and the war ends soon, wholesale electricity prices could average 100 euros per MWh in 2022, well below today’s level of 240.32 euros per MWh, but nearly double Greece’s pre-crisis wholesale electricity average of 55 euros per MWh.

At a wholesale electricity price average of 100 euros per MWh in 2022, the country’s annual electricity consumption, totaling 55 TWh, would cost 5.5 billion euros.

This figure is 2.2 billion euros more than the 3 billion euros, or so, for Greece’s pre-crisis annual electricity cost, resulting from a wholesale electricity average of 55 euros per MWh.

To put this additional 2.2 billion-euro amount for electricity into perspective, it is just below the 2.58 billion euros collected by the state in 2021 through ENFIA property tax.

Government now fully encouraging upstream activity

The Greek government is now fully encouraging foreign and domestic upstream companies to continue their hydrocarbon exploration activities at licenses held in the country for discovery and production of natural gas deposits.

In comments offered yesterday, Prime Minister Kyriakos Mitsotakis, while referring to the government’s latest energy-crisis support package for households and businesses, spoke of the country’s need to utilize its natural gas deposits as part of a national effort to achieve energy sufficiency.

Europe’s need to drastically reduce its reliance on Russian natural gas, as highlighted by the repercussions of Russia’s invasion of Ukraine, has prompted the Greek government to reassess its energy policy and, once again, turn to the country’s hydrocarbon potential.

The European Commission has prioritized swifter development of renewable energy sources in the EU, but cover will be needed from other energy sources during the transition, expected to last many years.

Brussels is now backing the further maintenance of European nuclear and coal-fired power stations, as well as extraction of oil and natural gas for a longer period.

Aris Stefatos, chief executive at EDEY, the Greek Hydrocarbon Management Company, has, on a number of occasions, estimated that Greece’s natural gas deposits could be worth 250 billion euros.

Brussels examining gas, electricity market interventions

The European Commission is considering major interventions for the natural gas and electricity wholesale markets ahead of an upcoming EU summit scheduled for March 24 and 25, but has yet to receive the backing of Germany, the Netherlands and other EU member states of the north.

Should the objections raised by such member states be overcome, the European Commission will, for the first time, proceed with major intervention in the energy market, leaving final decisions for the EU-27 leaders.

In addition, the European Commission is expected to soon announce further details on its toolbox of energy market measures that will be available to EU member states for individual application.

The European Commission is currently examining whether market speculation is driving up prices at Europe’s biggest gas hub, the Dutch TTF, and to what extent participants are trading with physical quantities or titles. The EU is considering to eliminate participants from any trading activity at this exchange if they do not possess actual gas quantities.

Brussels is also considering market interventions in wholesale electricity markets so that producers are not paid in accordance with marginal price levels but based on prices linked to their variable costs. If introduced, this measure will not be applied universally. Instead, it will be up to individual EU member states to decide on whether to adopt it or not.

The European Commission is also looking to temporarily tax windfall profits and emissions trading system (ETS) earnings.

Brussels may also detach electricity prices from gas prices, as has been proposed by Greek Prime Minister Kyriakos Mitsotakis.

 

 

Brussels draft backs urgent gas storage refill for next winter

EU member state leaders are expected to back a European Commission draft calling for an immediate refill of gas storage facilities throughout the EU, in preparation for next winter, when they meet at a summit next week, scheduled for March 24 and 25.

“Refilling of gas storage across the Union should start now. Member States and the Commission will urgently coordinate measures necessary to ensure adequate levels of gas storage before the next winter”, notes a draft prepared for the imminent summit, Reuters has reported.

The European Commission will propose rules by next month requiring EU countries to collectively ensure gas stores are at least 90 percent full by October 1 each year. The EU’s current gas storage facilities are currently 26 percent full.

The European Commission plans to present, in May, a detailed roadmap to EU member states for a drastic reduction of Russian natural gas, oil and coal imports by 2027.

A preliminary plan announced last week includes measures such as an increase of LNG imports, as well as tripled wind and solar energy capacity, installed, in the EU by 2030.

 

 

RES producer certificate applications up in February

RES producer certificate applications rebounded in the February cycle to reach a total of 221 for a capacity of 3,196 MW, more than three times the capacity of the previous cycle, last October, whose slowdown was prompted by a new regulation requiring letters of guarantee worth 35,000 euros per MWh to accompany applications.

Net-metering and green PPA prospects are believed to be the main driving forces behind this elevated RES interest.

A total of 127 RES producer certificate applications representing a total capacity of 960 MW were submitted in October.

Of the February cycle’s 221 applications, 73 concern solar energy projects representing a total capacity of 1,833 MW. These applications include a number of exceptionally big projects, such as a 300-MW solar energy park in Thessaly, central Greece, as well as a 250-MW project in the mainland.

Wind energy projects followed with 70 applications totaling 1,118 MW. A prospective 315-MW wind energy farm planned for the Peloponnese is the biggest among these applications, followed by a 147.5-MW facility in Greece’s northeast.

Small-scale hydropower unit applications also figured prominently in the February cycle, reaching 66 for a total of 52.8 MW.

The February cycle also included 7 applications for hybrid RES units totaling 124 MW, as well as 5 applications for biomass units with a total capacity of 18.5 MW.

EU south, uniting, anticipates drastic energy cost measures

Europe’s south is pushing for drastic European Commission action in the hope that soaring energy prices can be countered as the endurance of consumers in less robust European economies continues to diminish,  prompting fears of an increase in unpaid receivables, energy company closures, even social unrest, if prices do not de-escalate within the next few months.

The European Commission, gearing up for its next summit, on March 24 and 25, is believed to be preparing to present a series of measures intended to tackle skyrocketing energy prices.

If decisive, these European Commission measures would be embraced by EU member states, especially in the south. If the measures remain half-hearted, in the hope of favorable market developments during spring, they will prompt disappointment, possibly even rebellion, within the EU.

The leaders of Greece, Italy, Spain and Portugal plan to meet in Rome either this week or next to establish a common line ahead of the upcoming EU summit.

The precise nature of the European Commission’s upcoming measures has yet to be disclosed. Wholesale natural gas market intervention, with or without price ceilings, as Greek Prime Minister Kyriakos Mitsotakis has proposed, is a possibility. A detachment of electricity prices from natural gas prices, as proposed by Athens and Madrid, is another possible measure that could be announced by Brussels.

The likelihood of a Eurobond issue to help cover the energy needs of consumers in the EU appears to have faded following recent talk of such a solution.

Strategic reserve procedure for PPC lignite units hastened

The energy ministry, driven by the EU’s decision to end its reliance on Russian natural gas as soon as possible, is striving to hasten procedures aiming for European Commission approval of a strategic reserve mechanism concerning power utility PPC’s lignite-fired power stations.

The ministry is now completing certain required studies and pending procedures in preparation for Athens’ official application to Brussels.

Even so, government officials remain adamant that Athens’ decision to end all lignite-based electricity generation by the end of 2028 does not need to change, and must not change, even though the EU now appears more tolerant towards the use of coal.

The government officials also believe that no revisions are needed for an even more ambitious lignite phase-out plan set by PPC, according to which all the utility’s lignite facilities will be withdrawn by 2023, except for a new unit, Ptolemaida V, planned to switch from lignite to natural gas in 2025.

Power grid operator IPTO plans to deliver an energy sufficiency study to the energy ministry within the next ten days, while the ministry may be ready to submit its package of prerequisites to Brussels by the end of the month.

This would pave the way for Athens to lodge an official application for a strategic reserve mechanism, as well as a capacity remuneration mechanism.

East Med regains attention as EU reshapes gas strategy

The energy crisis, skyrocketing natural gas prices, and the EU’s new energy policy, aiming to end the continent’s reliance on Russian gas as soon as possible, are developments creating bigger prospects for the East Med pipeline, whose development could upgrade Greece’s role in the energy sector as well as geopolitically.

Importantly, higher gas prices have boosted the feasibility of the East Med pipeline project, a prospective 2,000-km pipeline planned to carry natural gas to Europe via Greece, Cyprus, Israel and Italy, as was supported yesterday by Edison CEO Nicola Monti.

The US withdrew its support for the project in January, citing technical and commercial sustainability concerns. Many analysts have forecast gas price levels will remain elevated for an extended period, which could make East Med a profitable investment for companies that construct and operate the pipeline.

Earlier this week, the European Commission announced its ambitious Repower EU roadmap, prioritizing the search for alternative natural gas sources and supply routes as a means of ending the continent’s reliance on Russian gas.

East Mediterranean gas deposits are well positioned, close to European markets. It remains unclear as to whether it would be more beneficial to transport these gas quantities in the form of LNG or via the East Med pipeline.

Given the bolstered bargaining power of gas producers and LNG exporters, the EU could be better off pursuing a pipeline solution. Also, Shell’s forecast of an LNG shortage in international markets from 2025 onwards should be kept in mind.

EU exploring ways to counter skyrocketing natural gas prices

The EU is preparing drastic energy policy changes in response to the economic impact prompted by Russia’s war on Ukraine. Europe’s determination for change is highlighted by a series of initiatives that have already surfaced, including the Repower EU package, announced this week, aiming to severely limit Europe’s reliance on Russian gas and limit gas consumption in general; proposals for price ceilings; and other measures, all of which will be discussed at an informal summit in Paris today.

Until now, measures called for by Europe’s south as means of tackling exorbitant energy prices pushed higher by the energy crisis of previous months, have been largely overlooked by the continent’s north.

However, more attention to these calls is now being paid by the north as the crisis drags on, exacerbated by Russia’s invasion of Ukraine, which has pushed energy prices through the roof and begun to also trouble consumers in the north.

A proposal forwarded by Greek Prime Minister Kyriakos Mitsotakis, who has called for price ceilings at the Dutch TTF exchange, as a response to record-high gas prices, is one of the subjects expected to be discussed at today’s meeting in France.

The Greek leader yesterday reminded of the wholesale gas price level just over a year ago, in February, 2021, at 30 euros per MWh, which, in Greek market terms, translates to wholesale electricity prices of 90 euros per MWh, about a quarter of the current level, at 349.80 euros per MWh.