Wholesale prices in Greece well over European average in 3Q

Wholesale electricity prices in Greece during the third quarter of 2020 were three times over the €16/MWh European average, based on the Nord Pool power exchange, a European Commission report covering European electricity markets for this period has shown.

The report also traces the market’s 3Q rebound following a heavy slump in the preceding quarter.

Average prices rebounded at a slower pace in southeast Europe, compared to other regions, before reaching pre-pandemic levels in September as a result of weak demand and high production of wind energy and hydropower facilities, according to the Brussels report.

The average price in the third quarter rose by 43 percent, against 2Q, to €43/MWh, and was 30 percent lower, annually.

European price shifts in August moved in coordination, while the price gap between Greece and the European average narrowed significantly in 3Q as a result of the use of lignite-fired units and weak demand.

This gap vanished in September as a result of stronger wind energy output, which exceeded one TWh for the first time. As a result, prices in the region were between €46 and €47/MWh in September.

As for energy-mix developments, lignite-based production in Greece experienced a decreased share, captured by natural gas-fueled output.

In southeast Europe, the lignite-based output share contracted to 29 percent in 3Q from 35 percent in the equivalent period a year earlier; the gas-fueled sector’s production share rose to 20 percent from 18 percent; and the RES sector’s share of the energy mix increased to 34 percent from 30 percent.

Household electricity tariffs in Greece averaged €16.54/MWh (not including taxes and surcharges), while the country’s average for industrial tariffs was €10.62/MWh, the report showed.

Preliminary talks for 9th post-bailout review begin today

Power utility PPC’s lignite monopoly ordeal, the effort to ensure proper functioning of target model markets, the progress of privatization plans, and Greece’s decarbonization master plan for the lignite-dependent local economies of west Macedonia, in the country’s north, and Megalopoli, Peloponnese, are the key issues on the agenda of the ninth post-bailout review set to be conducted by the European Commission.

Preliminary review talks are scheduled to commence today between energy ministry officials and Brussels technocrats. These will be followed by higher-level talks involving technocrat chiefs and Greece’s newly appointed energy minister Kostas Skrekas.

Though his predecessors faced plenty of pressure, especially over PPC’s dominance, the new minister could be in for a hard time if pending energy-sector issues are not directly dealt with.

RAE, the Regulatory Authority for Energy, and power grid operator IPTO are still seeking solutions to tackle problems faced by the target model’s new markets. They got off to a problem-laden start in November, prompting a sharp rise in balancing market costs during the first few weeks.

As for energy-sector privatizations, the plan to offer a 49 percent stake in distribution network operator DEDDIE/HEDNO appears to be making sound progress and attracting strong interest, as exemplified by the participation of 19 participants in December’s market test.

On the contrary, the privatization plan for gas supplier DEPA Commercial could be destabilized by the company’s ongoing legal battle with ELFE (Hellenic Fertilizers and Chemicals) over an overcharging claim made by the latter. This battle could delay and affect the DEPA Commercial sale.

The Just Transition Plan for Greece’s decarbonization effort is now beginning to make some progress, but this unprecedented endeavor’s degree of complexity cannot be overlooked. Vast amounts of land controlled by PPC need to be repurposed, Brussels must approve investment incentives, and licensing matters need to be resolved, amongst other matters.

Brussels forwards new PCI list, to be finalized late this year

The European Commission’s fifth PCI (Projects of Common Interest) list in the electricity and natural gas sectors, being forwarded for public consultation, features, for now, a number of project additions and removals, compared to the previous edition.

Market officials and state authorities will have the opportunity to offer their views and observations over the consultation procedure’s twelve-week period before the European Commission adopts a finalized version of the fifth PCI list towards the end of 2021, based on an existing Trans-European Networks for Energy (TEN-E) framework, focused on linking the energy infrastructure of EU countries.

PCI projects are entitled to EU funding support. Brussels authorities introduced selection criteria revisions in December, ascertaining, however, that the impact of all projects, especially on CO2 emissions, will be appraised when finalizing the PCI list’s fifth edition.

The provisional list includes a number of electricity and gas sector projects concerning Greece.

Electricity-sector projects involving Greece include: a Bulgarian-Greek grid interconnection, expected to be completed in 2023; an Egyptian-Greek-Libyan grid interconnection headed by Green Power 2020 and scheduled for delivery in 2025; as well as three Egypt-Greece interconnections, two of these featuring Kykladika Meltemia SA as project promoter and expected to be respectively completed in 2025 and 2028, and a third headed by Elica SA and scheduled for completion in 2028.

An energy storage project planned by Eunice for Ptolemaida, northern Greece, and scheduled for completion in 2022 is a new entry on the PCI list.

In the natural gas sector, the PCI list includes: the Alexandroupoli FSRU (2022); a subsea pipeline between Greece and Italy, known as the Poseidon Pipeline (2025); EastMed, a pipeline planned to carry natural gas from the east Mediterranean to European markets, via Crete (2025); a compressor station in Thessaloniki’s Nea Mesimvria area (2022); a metering and regulating station in Megalopoli, Peloponnese (2025); a compressor station in Abelia, in Greece’s mid-north (2023); a compressor station in Kipoi, northeastern Greece (2024); a pipeline link for the Alexandroupoli FSRU (2022); a TAP pipeline capacity increase (2025); and the development of an underground gas storage facility (UGS) in the almost depleted natural gas field of “South Kavala” in northern Greece (2023).

Brussels RES tool to promote member-state collaboration

A financing mechanism adopted by the European Commission to financially support new RES projects and facilitate synergies, at financial and technical levels, between EU member states is moving closer to actualization.

Late in 2020, the European Commission established a related platform and invited EU member states to express interest in the mechanism either as hosts or contributors.

According to the mechanism’s plan, contributing member states will be able to invest in RES projects in other countries. This prospect will enable contributors to become involved in projects offering greater financial returns, compared to those of domestic projects, and also invest through RES technologies that cannot be implemented at home. For example, landlocked countries will be able to invest in offshore wind farms and countries with minimal sunshine will be able to invest in solar farms.

On the other hand, member states hosting projects linked to the new mechanism stand to benefit from improved energy supply and security, grid upgrades, investments and job creation.

Also, RES output generated by projects linked to the new mechanism is planned to be equally divided by participating states, contributing to their respective energy and climate targets.

The European Commission is currently examining the prospect of also opening up this initiative to private-sector firms. Brussels, gauging the level of investment interest, has invited private-sector companies to express their interest in the mechanism by February 15.

The private sector is playing a crucial role in successfully promoting RES projects in the EU, Brussels pointed out in a statement.

Decarbonization compensation effort locked in bureaucracy

A Greek decarbonization compensation request forwarded to the European Commission for power utility PPC’s need to keep operating lignite-fired power stations, nowadays loss-incurring units, from 2021 to 2023, has developed into a slow-moving ordeal locked in Brussels bureaucracy.

Though, until recently, the Greek request appeared to be headed towards approval, Brussels officials have since slowed down the case, extensively questioning the claim through a stream of emails to the energy ministry.

State-run PPC is seeking respective compensation amounts of 180, 150 and 200 million euros for the three-year period.

The European Commission has been relentless with its questioning despite appearing to recognize the validity of the Greek compensation request.

The Netherlands and Germany have both received similar decarbonization compensation amounts.

Greece, according to some sources, has not pursued the right strategy as it should have delayed the decarbonization compensation request case until the finalization of an older antitrust case concerning PPC’s lignite monopoly.

Though Greece and the European Commission reached an agreement last October, according to which 40 percent of PPC’s lignite-generated electricity production must be exclusively made available to independent suppliers at a pre-determined price, not below cost, the decision has yet to be implemented.

A market test still needs to be conducted to measure the market’s level of interest in this offer. Given the cost of lignite, independent players may not be interested.

Brussels unveils electricity, hydrogen project conditions for PCI status

The European Commission has just unveiled new criteria that need to be met by energy infrastructure projects concerning the electricity, and now, also hydrogen, sectors for Project of Common Interest (PCI) status.

Brussels presented these details as part of its wider plan concerning the financing and development of energy infrastructure. The European Commission will commit annual investments of 50.5 billion euros in the effort to meet 2030 climate-agreement targets.

Electricity transmission projects will need to increase trans-boundary capacities between EU member states by at least 500 MW, according to one of Brussels’ new criteria for PCI status, enabling favorable EU funding.

In energy storage, projects will need to offer capacities of at least 225 MW to secure their PCI status.

Smart meter installations must involve transmission and/or distribution operators of at least two EU member states and represent at least 5,000 users either producing or consuming 300 GW per year, including at least 20 percent from renewable energy sources.

As for hydrogen, projects must facilitate trans-boundary transmission between EU member states or boost storage capacities at borders by at least 10 percent.

RAE awaits Brussels response to Ariadne minority sale plan

RAE, the Regulatory Authority of Energy, is awaiting a response from the European Commission before approving a plan by power grid operator IPTO to sell up to a 40 percent stake in its subsidiary Ariadne Interconnection, established specifically for the development of the Crete-Athens interconnection.

RAE has consulted Brussels as the authority wants clarification on what the corporate structure of parent company IPTO and its subsidiary permits, based on EU law.

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

Ariadne Interconnection’s role will be strictly limited to the construction of the Crete-Athens interconnection, a concession agreement between IPTO and its subsidiary Ariadne Interconnection has specified. Once completed, IPTO will assume the project’s management.

Last October, IPTO forwarded a detailed plan to RAE concerning the sale of a minority stake in Ariadne Interconnection.

China’s SGCC, a strategic partner of IPTO holding a 24 percent stake, informed, some time ago, that it would be interested in acquiring a 20 percent stake of Ariadne Interconnection. European operators such as Italy’s Terna and Belgium’s Elia, as well as major investment groups, have also expressed interest.

The acquisition by investors of a minority stake in Ariadne Interconnection is linked to the development of major-scale RES projects on Crete.

Decarbonization strategy’s spatial planning enters crucial stage

The country’s decarbonization master plan is entering one of its most crucial stages, the establishment of spatial planning for a just transition, or establishment of new commercial activity in regions to be financially impacted by the country’s withdrawal of lignite units, now underway.

These spatial plans, which will need to be submitted to the European Commission for approval, will determine the speed and success of the overall effort as just transition mechanism funding approval will be based on them.

A just transition mechanism sum of 5 billion euros is expected to be utilized. However, Greek officials will need to present analytical spatial plans detailing the transitions in accordance with the National Energy and Climate Plan. These plans will be incorporated into the EU’s National Strategic Reference Framework funding program.

Power utility PPC, monopolizing the country’s lignite facilities, will obviously be involved in the process. The utility will keep some of the land hosting lignite mines to develop its own investment plans, including solar energy parks.

The lignite-dependent economies of west Macedonia, in the country’s north, and Megalopoli, in the Peloponnese, will need to be completely redeveloped as part of the decarbonization plan.

It remains unclear when Greece’s spatial redevelopment plans will be ready to be submitted to the European Commission. They are not expected to be ready any time before the new year.

Lignite antitrust case agreement subject to PPC compensation

The country will implement an antitrust case agreement reached in late October with the European Commission – based on a Greek proposal that would offer 40 percent of power utility PPC’s lignite-generated electricity to suppliers at a predetermined price not below cost – only if Brussels approves a Greek compensation request concerning the state-controlled utility’s ongoing withdrawal of lignite facilities for a satisfactory sum reflecting amounts offered to EU member states in other such cases, energy ministry officials support.

A European Commission report on the Greek economy, released yesterday, has called for the need of a market test to determine whether sufficient supplier demand exists for the Greek proposal’s implementation in 2021.

Given the views of energy ministry officials, Greece will only go ahead with the proposal’s market test if the lignite withdrawal compensation request is approved by Brussels.

The Netherlands and Germany have both already been compensated for lignite facility withdrawals.

“In any case, as has been pointed out in the past, an overall solution that would harm PPC cannot be accepted,” an energy ministry official noted yesterday.

The Greek government has requested a three-year compensation package for PPC offering the utility approximately 180 million euros in 2021, 150 million euros in 2022 and 200 million euros in 2023.

The European Commission could offer a response to the request by the end of this month, energypress sources have informed.

 

Industry still awaiting mid-voltage energy tax cut four months on

Industrial enterprises of the mid-voltage category are still waiting for the implementation of a special consumption tax (EFK) reduction more than four months after the measure was first announced by the government.

Though this tax cut would have minimal impact on the government’s tax revenue, it is important for a large number of companies – approximately 170 with annual energy consumption levels of more than 13 GWh.

Last July, Prime Minister Kyriakos Mitsotakis announced the special consumption tax for mid-voltage industrial firms would be lowered from 5 euros per MWh to 2.5 euros per MWh, the level imposed on high-voltage producers.

The measure’s total cost, estimated at 3 million euros, promises some energy-cost relief for mid-voltage industrial enterprises.

Producers have not received any further news on the consumption tax cut measure since it was announced in July, prompting concern and frustration among industrial circles.

Energy cost represents a considerable part of total production costs for energy-intensive producers.

Wholesale electricity prices in Greece are 47 percent higher than the EU average and nearly 70 percent higher than the lowest price level in the EU, according to official European Commission data.

PPC awaiting Brussels verdict on lignite unit exit compensation

The European Commission could reach a decision by the end of November on an energy ministry request seeking compensation for state-controlled power utility PPC’s plan to withdrawal lignite-fired power stations ahead of schedule.

The ministry has requested a compensation package of 180, 150 and 200 million euros for 2021, 2022 and 2023, respectively, for the power utility.

European Commission officials are currently closely examining the data and information accompanying the Greek application, energypress sources informed.

At best, a decision could be delivered in approximately three weeks, the sources estimated, adding that the Greek request has been favorably received.

Last May, the European Commission released a 52.5 million-euro compensation package to the Netherlands for the country’s premature closure of its Hemweg coal-fired facilities.

Greek officials had initially sought, quite some time ago, the approval of a cost recovery mechanism for PPC’s lignite-fired units, implemented in Germany as a strategic reserve capacity.

This proved too complex, prompting Greek officials to shift their focus onto the current compensation request for the country’s effort to decarbonize.

The European Commissioner for Competition Margrethe Vestager declared, in May, when the Hemweg compensation bid was approved, that EU member states must be compensated for their decarbonization efforts, adding that the Dutch compensation amount does not cause European market distortions.

PPC’s lignite unit losses are reported to have reached 300 million euros last year. The utility is seeking to limit such losses by closing such units sooner than planned.

PPC has announced its Megalopoli III facility will be shut down six months earlier, in the first half of 2021 instead of early 2022. If accomplished, this closure will represent PPC’s second PPC lignite unit withdrawal following Amynteo, closed down in May.

The utility intends to push for a swifter withdrawal of all other lignite-fired units, except Ptolemaida V.

NECP and efforts on the right track, Brussels report notes

The country’s efforts to reach objectives set in the National Energy and Climate Plan, shaped by long-term European climate and energy goals, as well as the domestic plan itself, have been favorably reviewed by the European Commission in a related report released yesterday as an appraisal of the finalized NECP submitted to Brussels by the Greek government.

The European Commission, which has reviewed the NECPs of EU member states and how they stand in connection with Europe’s energy and climate objectives, described the Greek plan and its progress as “satisfactory” and “sufficient”.

The Brussels review, however, pointed out that the country’s reforms concerning competition in the retail and wholesale electricity and gas markets, among other domains, require strengthening.

The report also called for an enhancement of Greece’s just transition plan concerning the post-lignite era. Greater detail in the assessment of the social and employment repercussions, as well as retraining requirements, in lignite-dependent areas where the lignite-fired power stations are planned to be withdrawn over the next three years is needed, it noted.

As for measures concerning the Greek economy’s pandemic-related recovery, at least 37 percent of recovery funds to be made available should be invested in climate-linked initiatives so that mid-term emission reduction targets are met, the report noted.

Cross-industry climate change effort emphasized by CEO Alliance

The CEO of multinational power company Enel, Francesco Starace,  and chief executives from eleven European companies, have joined forces for a zero-carbon future and a more resilient Europe, Enel has announced in a statement.

The European Union is committed to net zero emissions by 2050, which is in line with the CEO Alliance companies’ own decarbonization strategies, the statement noted.

All members support the Paris 2050 goals, the EU Green Deal and the ambition to raise EU climate targets. They represent different industries, generate a combined 600 billion euros in annual revenues and employ 1.7 million people. The CEO Alliance channels their decarbonization efforts: it connects sectors and strategies, identifies potential for collaboration, and fosters projects and investments for a sustainable economy and society.

At its inaugural meeting in Stuttgart, the cross-industry alliance underscored: “The climate targets of the European Union are feasible. Our industries do not block, but rather foster the shift toward a carbon-neutral economy. We see growth potential for all industries in the long run. If we manage this historic transformation successfully, sustainable development and new future-proof jobs will be the result. Together, we will support all efforts to reach a social consensus for more sustainability.”

With yesterday’s start, the CEO Alliance becomes an association of action that unites corporate strategies, industries and societies on the road to a carbon-neutral Europe.

All members believe the new climate targets of the European Commission, envisaging emission reductions of 55% by 2030, are manageable.

On the industry side, the CEO Alliance members have already pledged to invest more than 100 billion euros in their respective decarbonization roadmaps over the next years to help reach these targets.

Every member has defined its own strategy to address decarbonization, by reducing carbon emissions across the relevant value chains and by offering sustainable products and services to customers. For reaching the respective CO2 targets, each member and each sector is dependent on other members and sectors, which especially calls for cross-sector activities.

Collaboration potential of the Alliance was identified in six fields: in energy systems, renewable power generation must be scaled up rapidly and power grids must be modernized. In terms of mobility and transport, the EV charging infrastructure must be expanded and the low-carbon transport or shipping of goods intensified. Zero-impact production – in particular for renewable power generation components – and sustainable battery production are key aspects in manufacturing and industrial processes. In terms of buildings and urban environments, the focus is on zero-emission offices and sustainable green city planning. In regard to new business models, the focus is on carbon tracking with digital technologies in the supply chain. The field of sustainable finance will also offer new opportunities.

The members also agree that the transformation towards a net-zero carbon future needs to be based on a broad public consensus. The CEO Alliance is willing to contribute to this consensus, and to establish a social contract, by intensifying the dialogue between stakeholders from the private sector, public sector and civil society. At the same time, the members call on political leaders to create the necessary political support and incentives. At the inaugural meeting, the dialogue started with a discussion with Frans Timmermans, Executive Vice President of the European Commission.

The CEO Alliance is convinced that ambitious decarbonization and cross-sector collaboration require ambitious and cross-sector policy frameworks, for example carbon pricing with a minimum floor price in the EU Emissions Trading System, a reform of the energy taxation system, and driving demand for sustainable, innovative and digital solutions, among other things by using renewal schemes, public procurement and investments.

The CEO Alliance represents members from key industry sectors: ABB, AkzoNobel, Eon, Enel, Iberdrola, A.P. Møller Maersk, Philips, SAP, Scania, Schneider Electric, Siemens and Volkswagen.

Following an initial joint letter to the European Commission in June 2020, the first face-to-face meeting underscored the commitment to act fast and to recognize the urgency of the necessary transformation for future competitiveness.

Upper limit for non-auction PV units down from 500 to 200 KW

Local authorities have decided – in a proposal to be forwarded to the European Commission for approval – to lower to 200 KW from 500 KW a capacity upper limit requiring PV projects to participate in RES auctions for tariffs when this limit is exceeded, sources informed.

A satisfactory transitional period will be offered to investors to facilitate the actualization of scheduled RES projects up to 500 KW.

Greek officials expect to have finalized revising local RES auction rules within the next fortnight before submitting a plan to Brussels for an extension of competitive procedures.

Government officials have yet to decide on the duration of the RES auction extension to be requested as well as the total capacities for wind and solar energy to be auctioned.

However, the government officials have already taken initiatives to revise auction terms for greater bidding competition that would lower tariff prices for RES output.

Meanwhile, a prospective draft bill that would secure tariffs for RES units once they have been certified as ready by the distribution network operator DEDDIE/HEDNO, instead of when electrified, as is the case at present, will take some before being submitted to parliament.

 

 

PPC’s new image a prelude to revised business plan, imminent

Retail outlets to open for extended business hours, digital products and new services, swifter withdrawals of lignite-fired power stations, as well as an acceleration in the development of major-scale and smaller RES projects are among the factors contributing to power utility PPC’s new corporate image, showcased yesterday, during a 40-minute event, by chief executive Giorgos Stassis, who described the new image as a prelude to a revised business plan to be presented towards the end of the year.

The revised business plan, to have a three-year duration, will be a more ambitious and confident plan than last year’s version as, besides swifter lignite unit exits, it will feature bolder digitalization steps, a more aggressive retail market policy, aim for a RES portfolio well over 1 GW over the next three years, through a pool of prospective projects totaling 6 GW, and also feature network and personnel investments.

Next year, the company will aim to double 24 existing retail outlets – they begin operating for extended business hours as of today – as well as 75 service centers that may be visited by appointment only.

Yesterday’s announcements represent just part of the developments to be gradually announced by PPC, the most imminent being a new series of digital products, dubbed PPC myHome, to be launched within the next few days.

The new business plan’s level of ambition will also depend on external factors, Brussels being pivotal. Settlement of the country’s ten-year lignite dispute with the European Commission will offer state-controlled PPC greater leeway.

PPC is also hoping for a favorable Brussels response within November on a compensation request for 200 million euros, annually, for every year lignite-fired power stations in the west Macedonia and Megalopoli regions will need to keep operating.

PPC planning industrial tariff discounts, reflecting lower cost

Power utility PPC intends to offer discount tariffs, as generous as its finances can permit, to industrial consumers in a move that would represent key complementary support for the government’s plan to reduce industrial energy costs.

PPC’s ability to deliver on this industrial energy discount plan will very much depend on the fate of the corporation’s compensation request forwarded to the European Commission for the utility’s gradual withdrawal of its loss-incurring lignite-fired power stations between 2021 and 2023. PPC has requested compensation of 200 million euros, annually.

A Brussels decision on this request is not expected any sooner than late November. If this PPC initiative fails to produce a positive result, Greece’s ten-year dispute with the European Commission over the country’s continued reliance on lignite for electricity generation could drag on.

Greece cannot be expected to adopt a mechanism offering state-controlled PPC’s rivals access to lignite-based output if the European Commission refuses to approve cost-offsetting measures for the utility, as has been the case in other EU member states, local sources contend. Germany and Dutch energy companies have benefited from such offsetting measures in the past.

Whatever the outcome, state-controlled PPC seems determined to support the industrial sector by minimizing its profit margin for new electricity supply contracts, to come into effect January, 2021. However, the corporation has made clear it will not sell below cost to any industrial consumer.

Industrial enterprises believe a 10 percent tariff increase agreed to in March, 2019 for a three-year period covering 2018 to 2020, can no longer be justified as electricity production costs have since fallen, meaning tariffs must follow suit.

PPC lignite compensation effort key to Brussels negotiations

Greek authorities have taken to a higher European Commission level a compensation request by the state-controlled power utility PPC, seeking 200 million euros, annually, for the gradual withdrawal of its loss-incurring lignite-fired power stations between 2021 and 2023, hoping for a favorable outcome with the next two months.

If, however, the effort fails to produce a positive result, Greece’s ten-year dispute with the European Commission over the country’s continued reliance on lignite for electricity generation could drag on.

In this case, Greece will probably not agree to settle a long-running antitrust case that has prompted the government to offer PPC’s rivals 40 percent of the utility’s lignite-based generation until the lignite-fired power stations are withdrawn.

Greece cannot be expected to adopt a mechanism offering PPC’s rivals access to lignite-based output if the European Commission refuses to approve cost-offsetting measures for the utility, as has been the case in other EU member states, local sources contend.

Germany and Dutch energy companies have benefited from such offsetting measures in the past.

All issues will need to be resolved as one package deal or there will be no deal at all, sources said.

At this stage, a new European Court antitrust case against Greece, for PPC’s lignite monopoly, would make little, if any, sense as the country’s lignite-based generation will have greatly diminished by the time the case is heard.

Fast action needed for industrial emission cost offsetting tool

Greek authorities need to act fast in the coming months if industrial producers are to keep receiving CO2 emission-right cost offsetting support as of January 1, 2021 through a European Commission mechanism.

The European Commission has just announced new state aid directives concerning greenhouse gas emissions beyond 2021. EU member states will need to soon forward their offsetting mechanism plans to Brussels.

Certain revisions have been made. Copper has been added to the list of industrial sectors eligible for emission cost offsetting mechanisms, while the textile and fertilizer sectors have not been included.

Besides copper, the steel, aluminium and paper production sectors have also been included on the list.

The European Commission aims to counter non-EU competition, including Chinese, and prevent industry shifts to locations outside the EU.

EC calls for CO2 cuts; NECP revisions, RES boost ahead

The European Commission has announced a new European Climate Law proposal for even more ambitious CO2 emission cuts in the EU, calling for reductions of 55 percent by 2030, instead of the present goal of 40 percent. If adopted, this proposal will prompt further revisions of National Energy and Climate Plans and RES installation increases by EU member states.

Compared to previous NECP objectives, RES facilities in most parts of the EU will need to increase by levels of between 20 and 30 percent by 2030, while energy consumption must drop further, between 15 and 20 percent, if the new Brussels proposal is adopted, reliable sources have informed.

Adoption of the proposal will require greater green-policy effort by member states and much bigger investments.

CO2 emissions produced by vehicles and buildings could be taxed, while more generous subsidy programs could be offered for energy efficiency upgrades.

In Greece, a 55 percent CO2 emissions cut by 2030 would require a further increase in RES installations so that a 19-GW target, by 2030, included in the country’s current NECP may be exceeded.

This more ambitious objective will enable the actualization of a greater number of possible projects on stand-by, currently representing a capacity of 76 GW. However, bigger investments for network reinforcement, increased interconnections and energy storage facility installations will be needed.

 

Competitive procedures for island hybrid stations, EC says

The European Commission is demanding competitive procedures for the installation of energy storage units or hybrid stations on the Greek islands as a condition for the establishment and approval of a thorough support framework covering such investments, energypress sources have informed.

Energy ministry officials are currently engaged in talks with the European Commission on energy storage and hybrid station installations for the islands.

A universal pricing framework offering investors specific tariffs for all the islands will not be possible if the European Commission condition for competitive procedures is to prevail.

Greek officials are pushing for a universal pricing framework for non-interconnected networks, hybrid units with RES facilities, and energy storage units, on the grounds that these greatly contribute to grid sufficiency and security and can also offer major cost savings by eliminating the need for high-cost, high-polluting diesel-fueled power stations that operate on non-interconnected islands.

In particular, the energy ministry is seeking Brussels’ approval for a transitional framework to support hybrid units on islands with mature investment proposals and production licenses.

Speaking at an Economist conference yesterday, the energy ministry’s secretary-general Alexandra Sdoukou said a plan for such a support mechanism has been submitted to the European Commission.

“We hope to have a response from the European Commission by the end of the year so that we can soon complete the pricing framework and make possible the actualization of these projects,” Sdoukou noted.

Initiatives are also being taken for the development of offshore solar farms and hydrogen-run unit, she added.

“We will continue to shape policies that promote renewables and guarantee that we will be at the forefront of the European energy transition,” Sdoukou concluded.

Brussels considering PPC compensation for lignite units

Certain European Commission officials are believed to be considering a compensation request made by power utility PPC for its three-year phase-out, between 2021 and 2023, of all existing lignite-fired power stations, severely burdened by elevated CO2 emission right costs.

Brussels officials had flatly rejected a compensation request made by PPC nearly a year ago. However, a shift by Brussels has become apparent in recognition of the Greek decarbonization effort’s progress.

The European Commission has offered compensation elsewhere for lignite units withdrawals. Last May, Brussels made available compensation worth 52.5 million euros for the Netherlands as a result of the country’s premature closure of its Hemweg coal-fired facilities.

At the time, the European Commissioner for Competition Margrethe Vestager had declared EU member states may need to compensate companies for their efforts to end their coal reliance, adding that the Dutch compensation amount does not threaten to cause market distortions at a European level.

PPC officials expect European Commission developments on the issue during the final quarter of this year.

Taking into account Brussels’ handling of such issues in the past, PPC officials also believe an antitrust case concerning the Greek power utility’s lignite monopoly and the corporation’s compensation request could be resolved simultaneously.

Ministry preparing to request RES auctions extension

The energy ministry is preparing to submit an official request to Brussels for an extension of up to three years for RES auctions – both mixed and separate (solar, wind) technologies – a support system securing fixed 20-year tariffs for new wind and solar energy installations.

Greece’s current auction system expires at the end of this year. The energy ministry may seek an extension until the end of 2023, when RES auctions will no longer be available in the EU. A request for a shorter extension is also being contemplated at the ministry.

The energy ministry’s secretary-general Alexandra Sdoukou has called a meeting for September 18 to involve the participation of all related authorities for decisions before the official extension request is drafted.

A technical report published by global service provider GIZ, analyzing  Greece’s RES auctions over the past three years, RES market achievements during this period, as well as problems that have emerged, will serve as a base for the talks at the upcoming meeting.

The energy ministry wants to prevent any momentum drop in the RES market and believes fixed tariffs, through auctions, over extended periods are necessary as they secure financing for RES projects, and, by extension, their development.

On the other hand, the ministry does not want to overburden the market through excessive RES special account obligations.

Excessive cost, for PPC, of running lignite-fired units hastening exit plan

The financial burden on power utility PPC as a result of its continued use of lignite-fired power stations at a time when the EU is racing towards climate neutrality has prompted the utility to revise its lignite unit phase-out plan for power stations in northern Greece’s west Macedonia region and Megalopoli in the Peloponnese.

According to latest information, PPC’s administration is planning further premature withdrawals of lignite-fired power stations after announcing a precipitated exit of its Megalopoli III unit, as was reported by energypress yesterday.

The Megalopoli III unit will be shut down six months sooner, in mid-2021, instead of early 2022. This 250-MW lignite-fired facility has operated for just six hours since April.

The average variable cost of lignite-based energy generation is €0.80 per MWh, well over the System Marginal Price of €0.45 per MWh, according to data presented by energy minister Costis Hatzidakis.

According to some sources, PPC has once again raised, to the European Commission, a compensation claim for being required to keep operating high-cost power stations in order to secure grid sufficiency and security.

PPC will be forced to proceed with swifter lignite unit exits if this compensation request is not satisfied, pundits said.

Power grid operator IPTO has the final say on the assessment of energy security matters.

PPC’s lignite-fired power stations covered just 36.8 percent of the country’s overall electricity demand in the first half, its lignite units playing a diminished role.

 

Pending issues crucial for industrial energy cost savings

A series of issues concerning prospective industrial energy cost savings that have surfaced either as industrial-sector requests or government announcements remain unresolved, creating insecurity within industrial circles.

New industrial electricity tariffs, currently being negotiated but with much ground still to cover for convergence, are at the very top of this list for industrialists.

One energy-intensive industrial producer has already abandoned power utility PPC after rejecting the industrial electricity tariff prices the utility had to offer.

Industrialists also want a public service compensation (YKO) surcharge reduction.

On another front, the sector expects a special consumption tax rate for mid-voltage industrial consumers with annual consumption levels of more than 13 GWh to be equated with the special consumption tax rate offered to high-voltage industrial enterprises. This revision, concerning approximately 170 factories, has been announced by Prime Minister Kyriakos Mitsotakis.

Another matter for the industrial sector concerns exempting major-scale industrial units from a series of additional electricity supply surcharges, in accordance with European Commission directives.

Industrialists also want a special consumption tax exemption on electricity used for mineral processing in cement and glass production, which would align Greek law with an EU directive from 2003.

The industrial sector is also anticipating a new mechanism to offset CO2 emission right costs.

Prinos rescue plan may offer Greek State stake in Energean Oil & Gas SA

A government rescue plan for Prinos, Greece’s only producing oil field, in the country’s offshore north, will offer the Greek State a small stake in Energean Oil & Gas, the field’s operator, and provide state guarantees for 75 million euros in financing needed by the company in 2020 and 2021 for investments included in its business plan, according to well informed sources.

The government is believed to be just days away from announcing its finalized rescue plan for Energean’s Prinos field, hit hard by the pandemic and lower international oil prices, factors that have impacted the global upstream industry.

Greek government officials are currently discussing the Prinos rescue plan with the European Commission, whose approval will be required. Though alterations to the aforementioned solution cannot be ruled out, good news on the rescue plan appears imminent.

Energean Oil & Gas recently published a business plan that lists interventions needed for Prinos’ rescue as well as the field’s sustainability over the next 15 years. The plan’s measures include actions to reduce emissions and drastically reduce the company’s environmental footprint.

Energean has invested approximately 460 million euros at Prinos during the company’s 13 years of operations at the field, including 50 million euros between last September and May, to avoid the closure of offshore and related onshore facilities. Some 270 jobs have been protected.

Prinos field rescue effort now at the finance ministry

A government effort to rescue offshore Prinos, Greece’s only producing field, in the north, is now in the hands of the finance ministry following preceding work at the energy ministry, sources have informed.

The field, like the wider upstream industry, has been impacted by the pandemic and plunge in oil prices.

Deputy finance minister Theodoros Skylakakis is now handling the Prinos rescue case following the transfer of a related file from the energy ministry.

According to the sources, three scenarios are being considered. A financing plan through a loan with Greek State guarantees appears to be the top priority. A second option entails the utilization of an alternate form of state aid. The other consideration involves the Greek State’s equity participation in the Prinos field’s license holder, Energean Oil & Gas.

The European Commission will need to offer its approval to any of these options as they all represent forms of state aid.

Energy ministry sources have avoided offering details but are confident a solution is in the making.

EU recovery fund compromise cuts into JTF for lignite end

A significant contraction of the Just Transition Fund that has resulted from a major compromise deal just reached between the EU’s north and south for a huge post-coronavirus recovery package has raised questions about the decarbonization effort’s financing and ability to progress smoothly.

A sum of 30 billion euros initially planned by the European Commission to be offered to lignite-dependent EU members states for their transition to cleaner energy will be cut to 10 billion euros.

A variety of post-coronavirus recovery sub-funds have been reduced in size, including the JTF, established to support Europe’s decarbonization process.

Prior to the compromise deal, a European Commission proposal had been made to increase the JTF amount for the EU’s lignite-dependent members to 40 billion euros from an initial sum of 7.5 billion euros.

Subsequently, Greece now stands to receive a few hundred million euros for its  decarbonization policy following an earlier estimate for a sum of 1.7 billion euros. The loss for Greece is worth approximately one billion euros.

The recovery package talks over the past few days saw a split between nations hardest hit by the virus and “frugal” members who were concerned about costs.

The deal centers on a 390 billion-euro program of grants to member states hardest hit by the pandemic. Italy and Spain are expected to be the main recipients.

It is the biggest joint borrowing ever agreed by the EU. Summit chairman Charles Michel described it as a “pivotal moment” for Europe.