DG Energy initial assessment of PCI/PMI list projects April 21

At least seven prospective interconnections concerning Greece and other major domestic projects for which PCI/PMI list inclusion is being sought by local officials are expected to be assessed by European Commission authorities following this weekend’s Greek Easter break.

These projects are among hundreds of energy infrastructure projects around Europe which related officials hope will be given the green light by Brussels’ Directorate-General for Energy for inclusion onto the PCI/PMI list, promising EU support funds. The list’s coverage was expanded this year to include projects also concerning non-EU countries.

Brussels officials are expected to make an initial assessment of PCI/PMI list candidate projects on April 21 before announcing a short list of candidates in June. A finalized list is scheduled to be announced in November.

As part of the initial assessment procedure, DG Energy officials will hold talks with contractors behind projects as well as government and regulatory officials for related information.

The Greek-Egyptian GREGY Interconnector, a project being promoted by Elica, a subsidiary of the Copelouzos group; an update of the Greek-Italian power grid interconnection, a project involving Greek power grid operator IPTO and Italy’s Terna; the EuroAsia Interconnector, planned to link the Cretan, Cypriot and Israeli electricity grids; an Egyptian-Cretan grid interconnection planned by the Eunice group; development of a crucial power transmission line from Filippoi to Nea Sanda in northern Greece; a pumped-storage station in Amfilohia, northwestern Greece, planned by TERNA Energy; as well as a power grid interconnection upgrade by IPTO between Meliti in northern Greece to Bitola in North Macedonia, are the seven Greek and Greek-related projects for which PCI/PMI list inclusion is being sought.

 

Wholesale electricity cap deadline extension sought

The energy ministry has taken action aiming to secure extensions for two energy-crisis protection measures, a wholesale electricity cap and freeze of indexation clauses, beyond approaching deadlines.

As part of the effort, the ministry has lodged an application to the European Commission for an extension of a recovery mechanism concerning windfall profits gained by electricity producers in spot markets.

If this application is approved by Brussels, day-ahead and intraday market inflow into the Energy Transition Fund will be maintained. However, this ETF inflow has, in more recent months, been limited by significantly lower wholesale electricity prices. Inflow in March was limited to 56 million euros, just a fraction, for example, of an 878 million-euro amount generated by the windfall profit recovery mechanism for the ETF last August.

Brussels’ approval of the application would pave the way for the suspension of an indexation clause concerning retail tariffs throughout 2023.

The European Commission has already given the green light to Spain and Portugal for extensions, until the end of 2023, of measures taken by the two countries to contain wholesale energy prices. The validity of these measures was due to expire in March.

Under current terms, Greece’s mechanism enabling the recovery of windfall profits gained by electricity producers is set to expire on June 1.

 

Brussels evaluating PPC lignite antitrust mechanism

The European Commission is evaluating the performance to date of an antitrust mechanism that was introduced last year to promote competition in Greece’s electricity market by ending power utility PPC’s lignite-sector monopoly through  lignite-generated electricity packages offered to rivals.

Market players have largely remained disinterested in lignite-based electricity packages offered by PPC.

Although Brussels’ inspection of the mechanism is focused on performance and not intended to offer criticism, the procedure will also pinpoint gaps and obstacles and result in revisions to the original plan, sources informed.

It remains unclear if this evaluation process was prompted by the energy crisis’ extraordinary conditions or the mechanism’s failure to produce desired results.

Numerous functional difficulties are believed to have already been identified. Offering these lignite-generated electricity packages on the European Energy Exchange, primarily, as well as the Greek Energy Exchange, despite the fact that these exchanges do not involve the participation of all Greek energy market players, has already been deemed a fundamental mistake as the packages are  intended for Greek electricity suppliers and producers but likelier to be purchased by buyers abroad.

According to the mechanism’s rules, PPC, this year, is required to offer three-month lignite-fired electricity packages amounting to 40 percent of the power utility’s lignite production levels in the corresponding quarters last year.

EU’s RES goals need ‘measures, major grid, storage investment’

European Commission REPower EU targets aiming for additional RES capacities of 510 GW in wind energy and 592 GW in solar energy by 2030 cannot be achieved without a new framework of measures and incentives supporting PPAs and ambitious investments for network upgrades and energy storage installations, a new report by sector association Eurelectric, representing the common interests of the electricity industry at a European level, has highlighted.

Highlighting the extent of the effort needed, the Eurelectric report notes that, compared to the sum of installed EU capacities in 2020 – 175 GW for wind energy and 100 GW for solar energy – wind energy installations must increase by 191 percent and solar energy installations need to grow by 492 percent if the 2030 targets are to be achieved.

The Eurelectric report, a proposal focused on market design the European Commission ought to adopt to ensure the continent’s green-energy RES targets are met, was presented in Brussels just days ago. It was delivered as the association’s contribution to consultation staged by the European Commission for a new market design in the EU.

Greece to back gas usage cut extension at Energy Council

Greek energy minister Kostas Skrekas is expected to back a European Commission proposal for a 12-month extension of a measure supporting a 15 percent reduction of natural gas usage at today’s Energy Council of EU energy ministers.

The group of 27 energy ministers will seek to reach a political agreement on the measure’s proposed extension, from April 1, 2023 to March 31, 2024, so that Europe may also be prepared for next winter should EU member states face gas supply issues or even disruptions.

This measure, first introduced on August 1, 2022, is set to expire in a few days’ time, on March 31. It called for a 15 percent reduction of gas usage during this period, compared to the previous five-year average during the equivalent eight-month periods. Greece exceeded the measure’s target by reducing its natural gas usage by 20.9 percent.

The measure’s gas usage restrictions are voluntary but would become binding should higher-alert conditions come about.

Europe’s natural gas savings stand to reach 60 billion cubic meters over the next twelve months if the EU’s 27 energy ministers agree on a one-year extension of the measure for an annual 15 percent reduction of natural gas usage.

Skrekas, Greece’s energy minister, also plans to present, at today’s Energy Council, the country’s proposal for an EU power grid capacity boost and expansion to facilitate electricity flow from south to north, as part of a wider plan envisaging RES flow from north Africa to Greece and the rest of Europe, via the western Balkans.

 

Short-term measures sought to contain any new energy crisis

Energy minister Kostas Skrekas, who believes that recent European Commission proposals to further counter the energy crisis are on the right track but remain too timid, intends to call for firmer, more immediate action aimed at containing any new crisis at tomorrow’s Energy Council of EU energy ministers.

The energy minister is expected to express support of Brussels’ approach at tomorrow’s Energy Council but also underline major challenges faced by Europe, especially next winter, when, according to many analysts, a sharp rise in energy demand will not be able to be covered by existing LNG supply levels, and, as a result, bring about a new round of sharp price rises.

In a recent report, Goldman Sachs reminded that the structural deficit in European gas balances caused by the interruption of Russian gas supply has not yet been addressed.

Any sharp increase in energy demand during the lead-up to next winter, when Russian gas quantities that filled European energy storage facilities last year will have to be covered by the LNG market, could, according to Goldman Sachs, double current wholesale gas prices back up to levels of at 100 euros per MWh, as supply remains limited.

International projects currently being developed to boost global LNG supply are not expected to emerge and offer results before 2025.

Greek officials are seeking the establishment of a new European fund that could provide state guarantees for CfDs and other possible measures included in the European Commission’s set of proposals, such as hedging.

Athens believes that, without some form of support, prospective benefits of measures proposed by the European Commission will be limited to EU member states possessing fiscal leeway and marginalize the rest.

 

Brussels calls for supplier strategies mitigating market risk

The European Commission, as part of a series of EU electricity market revisions proposed just days ago, has called on energy regulators to ensure that suppliers implement adequate hedging strategies to mitigate the risk of wholesale market changes by maintaining good liquidity levels and corresponding price signals in short-term markets.

This requirement would be met through a statement from EU electricity suppliers to their respective regulatory authorities setting out measures taken, sector experts have told energypress, noting, however, that it would be a useful yet fairly soft obligation of limited effect.

Apart from its reference to an “adequate compensation strategy” by electricity suppliers, the European Commission’s text does not provide further details on how this could be ensured. Consequently, any monitoring by authorities will not, it appears, be based on measurements and specific indicators.

RES energy sharing for consumer teams among Brussels proposals

A plan empowering energy consumers by giving them an active market role through RES energy sharing is part of a broader European Commission proposal for a new market model, to be presented this week.

All households, small and medium-sized enterprises and public-sector entities will be able to participate in RES energy sharing as active consumers, according to the Brussels proposal.

Such consumers, teamed up in groups, will be able to share energy produced by RES units based on private agreements, within an installed capacity limit of 100 MW.

The plan would also permit representatives to undertake the installation, operation, metering and maintenance of RES or storage facilities on behalf of energy-sharing consumer groups.

According to the Brussels proposal, active consumers who either own or rent a power generation facility will have the right to share excess generation and empower other consumers to do the same, or to share renewable generation or storage through co-owned facilities, either directly or through third parties.

RES energy sharing will enable collective consumption of self-generated or stored energy that is fed into the grid by active consumers who operate collectively, the proposal notes.

EC proposes pre-determined RES, nuclear output prices

Two-way Contracts for Difference (CfDs) for low-carbon emitting power plants that are in any way subject to state support are one of the most central reforms in the European Commission’s proposal for revisions to wholesale electricity markets.

Brussels’ proposal, to be officially presented tomorrow, has already sparked some criticism from market officials, citing ambiguities and lack of ambition.

A draft of the proposal obtained by energypress indicates there will be no fundamental changes to the EU electricity market’s structure.

The proposal includes measures aimed at establishing a mechanism that would absorb short-term fluctuations in wholesale markets from consumer bills, especially through wider use of long-term contracts.

CfDs, two-way Contracts for Difference, would be central to such an initiative as they could become mandatory for all low-carbon electricity generation technologies (RES, nuclear, hydro, geothermal) that benefit from state support.

In practical terms, all new investments belonging to categories requiring long-term contracts would be remunerated for output based on pre-determined rates, guaranteed by member states. Therefore, RES and nuclear facility prices for output would not be traded at energy exchanges as they would be pre-set.

 

Brussels proposals include PPA priority, RES growth support

A series of European Commission proposals for the EU electricity market do not call for any major changes to its structuring but make note of the need for mild revisions to the current model through the implementation of various market tools.

A draft of the proposals, obtained by energypress ahead of their official presentation, scheduled for March 14, highlights the need for industry to be provided obstacle-free access to long-term tools, such as PPAs; consumer rights for fixed tariffs and improved market information; and long-term markets offering investment support for RES development.

Also, revisions must ensure that the benefits of renewables reach consumers, the draft notes, placing emphasis on the functioning of the intraday market and its improved liquidity.

It also calls for transmission operators to develop a market tool limiting consumption peaks during the most challenging times of the day as a means of better managing demand and limiting prices.

The European Commission, according to the draft, continues to support the existing market model, stressing “it has provided a well-integrated market, allowing Europe to reap the economic benefits of the single energy market under normal conditions, assuring adequacy of supply and decarbonization”.

However, it admits that “in the midst of the crisis the current model has shown certain major weaknesses related to elevated and volatile fuel prices and short-term electricity markets that have exposed consumers to significant price increases”.

 

Greek-Egyptian grid link prospects gaining ground

A prospective Greek-Egyptian subsea grid interconnection, 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, while also bolstering energy security in Europe, has gained further ground on a number of key fronts.

Political support has been expressed, progress is being achieved on the project’s engineering study, and the Copelouzos group, seeking to develop the project, is in talks with potential investors.

As for the technical side, agreements are being worked on for a detailed engineering study as well as a feasibility study for the project, whose cable installation will reach as deep as 2.7 kilometers at certain sections.

A Copelouzos group team headed by its president, Dimitris Copelouzos, has held talks in Cairo with Egyptian president Abdel Fattah El-Sisi and other leading Egyptian officials on regions where wind and solar farms could be developed to feed the Greek-Egyptian subsea cable.

The focus of these talks, also involving Egypt’s minister of electricity and renewable energy Dr. Mohamed Shaker El-Markabi, was on developing wind energy facilities in areas offering wind speeds of more than 10 meters per second. Such speeds are exceptional, well over those of locations hosting Greece’s best-performing wind energy facilities, where wind speeds reach 6.5 to 7 meters per second.

As for the solar energy sector, production tariffs of between 15 and 17 dollars per MWh offered at previous auctions in Egypt, a country offering flat land, are extremely competitive compared to prices in the Greek and Italian markets, even if energy transportation costs to Europe are taken into account.

Solar and wind energy investments offering a total capacity of 9.5 GW are planned to be developed in Egypt by the Copelouzos group, with partners, at a cost of approximately 8 billion euros. European, US, Middle East and Japanese companies have expressed interest to join the Copelouzos group for these projects.

Though investor interest for the Greek-Egyptian grid interconnection is strong, the European Commission’s stance will be crucial as it will be called upon to decide on the project’s inclusion in the projects of common and mutual interest (PCI/PMI) list, which would ensure EU funding support.

The Copelouzos group submitted its application last December. Brussels is expected to release PCI/PMI short lists in June, followed by finalized decisions in November.

Fluctuating fuel prices paint volatile picture, gasoline nears €2 per liter

Fluctuating crude oil prices in international markets have shaped a very volatile domestic fuel market, the instability raising gasoline prices to more than 2 euros per liter on a number of Greek islands, which has prompted questions as to whether such levels will spread to pumps  throughout the country.

Two key developments have unsettled suppliers and consumers, the first being further EU sanctions imposed on Russian petroleum products, to come into effect February 8. The latest measure will ban Russian oil exports to the EU. Brussels is also examining a price cap for Russian oil sold to non-EU members.

A second factor making impact concerns China’s return to energy markets following the country’s departure from a zero-Covid policy and whether the subsequent increase in Chinese demand will lead to shortages.

Analysts have remained indefinite on the possible effects of both these factors.

According to Greece’s monitoring center for liquid fuel prices, unleaded gasoline rose by 0.076 euros per liter between January 1 and January 29, to 1.918 euros per liter.

The rise in heating fuel prices in Greece was steeper, escalating by 0.162 euros per liter during the same period to reach 1.301 euros per liter. A government subsidy cut on heating fuel was the main factor behind this price increase.

The price rise for auto diesel was milder, increasing by 0.026 euros per liter, to 1.821 euros per liter, between January 1 and January 29.

Refineries have begun reducing their wholesale fuel prices as a result of a recent de-escalation in international prices, since January 20, to be passed on to the domestic retail market in coming days. But the duration of this price de-escalation remains unknown.

Gas orders through collective EU platform to be discussed

An energy ministry meeting scheduled for tomorrow will focus on a European platform introduced to facilitate collective natural gas orders next winter, the session’s objective being to determine gas quantities Greek market players would be prepared to order through this platform, promising collective-bargaining benefits expected to result through deals struck between the EU and international suppliers.

Tomorrow’s meeting, organized by the energy ministry, will involve the participation of the country’s four electricity producers, gas company DEPA Commercial, as well as industrial-sector officials.

A key objective of this new European platform will be to prevent competition between EU member states in international markets for natural gas orders, a consequence of the reduction in Russian gas supply to Europe that has escalated prices.

EU energy ministers approved the European platform for collective gas orders in mid-December.

EU member states equipped with gas storage facilities will be required to place gas orders – though the new collective platform – representing at least 15 percent of their respective gas demand when refilling storage facilities for next winter.

The European Commission has set an objective for EU gas storage facilities to be 90 percent full by next November.

At present, Greece does not possess gas storage facilities. Domestic market players may place orders through the new platform on a voluntary basis.

 

Zero electricity subsidies for high-level usage considered

Electricity subsidies for high-level usage could be greatly reduced, even zeroed out, in February as a result of recent Eurogroup pressure applied on Greece for revisions to the country’s subsidy model.

Energy minister Kostas Skrekas, admittedly working his way through an extremely busy schedule this week, has delayed announcing electricity subsidy levels for next month, suggesting revisions cannot be ruled out.

Subsidies are revised monthly, depending on nominal retail tariffs for each forthcoming month announced by suppliers on the 20th of each preceding month.

One thing for certain, the government’s electricity subsidies for low-voltage consumers will be reduced in February as a result of a sharp drop in wholesale electricity prices.

Subsidies will not need to exceed 5 to 6 cents per KWh to ensure retail power prices are contained at a level of between 14 and 16 cents per KWh, the government’s goal.

Power utility PPC, the dominant retail player whose monthly nominal tariffs subsequently shape electricity subsidies set by the state, has announced a nominal tariff rate of 19.9 cents per KWh for monthly household electricity consumption of up to 500 KWh in February, 60 percent below the utility’s nominal retail price for January.

Energy ministry officials are believed to even be considering zero subsidies for high-level consumers, though it is still unclear whether this category would be defined as monthly consumption exceeding 500 KWh or 1,000 KWh.

For some time now, the European Commission has applied pressure on Greece to revise its electricity subsidies model, applied universally. Brussels has called for a two-tier system benefiting lower-level electricity consumption.

Brussels looking to revise network expenses formula for operators

The European Commission, in conjunction with ACER, Europe’s Agency for the Cooperation of Energy Regulators, has begun preparing market revisions that, amongst other things, will change how market operator expenses are calculated.

The initiative’s aim is to establish new market rules that will support energy demand management, energy storage and also lift regulatory obstacles.

A related European Commission document points out that although existing legislation enables operators to provide flexibility services such as demand management, regulatory frameworks in most EU member states separate the capital cost (CAPEX) of operators from their operating expenses (OPEX), ultimately restricting investments and standing as a disincentive.

An approach through which both capital cost and operating expenses would be taken into account for a so-called TOTEX sum is now being looked at by the authorities.

This would help operators move more freely when committing capital to develop their networks and provide flexibility services, especially demand management, the ultimate goal being to increase renewable energy penetration.

 

Suppliers hit by move for extra subsidies to businesses

An energy ministry decision, reached earlier this month, offering additional electricity subsidies to enterprises in categories up to 35kVA and all bakeries, regardless of energy consumption levels, without having been given the green light to do so by the European Commission, has led to major financial issues for suppliers, caught up in a situation where, among other things, they must either seek reimbursement from their customers or accept having lost these amounts by sacrificing funds through no fault of their own.

European Commission approval for additional electricity subsidies to these consumer groups expired in November.

This measure was launched in April, 2022, when the energy ministry asked suppliers to provide extra subsidies to these consumer groups, retroactively, from January, 2022. These additional subsidies have been offered on a monthly basis, following related monthly updates from the energy ministry to suppliers.

Brussels’ approval, last April, was offered under the condition that the additional-subsidies measure would only cover enterprises consuming up to 35kVA and all bakeries as long as they had not previously received state support exceeding specific limits. This means some recipients of these extra subsidies in 2022 may not have been eligible.

Making matters even more complicated for electricity suppliers, the energy ministry’s decision to keep offering additional electricity subsidies to these consumer groups will force suppliers to check customers for any excess state funds.

 

Brussels electricity subsidy proposal on Eurogroup agenda

An electricity subsidy proposal put forth by the European Commission, essentially seeking to replace universal subsidies offered by EU member states such as Greece with a two-tier system prioritizing subsidies for low-income households, is on the agenda of a Eurogroup meeting in Brussels today.

According to the Brussels proposal, any electricity tariff increases will be fully covered through subsidy support offered to consumers in the top-tier subsidy category for low-income households.

The second-tier subsidy group, which would include medium and high-income consumers, would offer gradually increasing subsidies, as long as consumers have proven records of reduced energy consumption.

The Greek government has implemented an electricity subsidy system based on energy consumption levels. Subsidy amounts for households are reduced if monthly energy consumption levels exceed 500 MWh.

This consumption-based system was chosen by Athens as a result of low income levels in general and higher electricity prices in Greece compared to many other EU member states.

Acceptance and implementation of the Brussels proposal would result in higher electricity costs for medium-income groups. However, the Brussels proposal faces major obstacles as each EU member state has its own subsidy-related electricity market conditions to deal with.

Greek energy minister Kostas Skrekas, in comments offered to media over the weekend, ascertained the country’s existing electricity subsidy program for households and businesses will continue to apply until at least July.

RAE prepares list of crucial industries for gas rationing exemption

RAE, the Regulatory Authority for Energy, has prioritized industrial enterprises for a ranking system exempting the most crucial players from natural gas rationing in 2023, should such an emergency measure be necessary.

This list of prioritized industries is needed so that a revised emergency plan for 2023, prepared by gas grid operator DESFA and approved by RAE, can be implemented, if needed.

The European Commission requires all EU member states to deliver lists prioritizing industries for the year as part of an EU’s emergency plan designed to weather extreme energy market conditions.

In Greece, a total of 104 industries have been divided and prioritized in eight groups. Industries belonging to the highest-ranked group would be the first to be subject to rationing, while industries in the lowest-ranked group are least likely to be subject to gas rationing.

Industries in the highest-ranked group could convert to alternative fuels and second-tier industries could reduce gas consumption without any major impact on their operations.

PPC negotiating long-term PPAs with 3 industrial players

Power utility PPC is holding talks with two, possibly three, industrial players for new electricity supply agreements in the form of long-term power purchase agreements (PPAs) of up to ten years following the expiry, on January 1, of high-voltage supply deals.

PPC and the industrial enterprises involved in these negotiations are currently discussing the details of terms and fixed price levels, sources informed.

The energy ministry’s intention to exempt electricity producers from a wholesale electricity market cap, as long as they have established PPAs with energy-intensive consumers for physical delivery of power quantities, has served as a catalyst for the ongoing negotiations.

Energy minister Kostas Skrekas is awaiting the European Commission’s approval for this exemption.

The industrial players discussing prospective PPAs with PPC cannot fully cover their energy needs through their own electricity production facilities, sources noted.

The current energy crisis highlights the energy-price volatility risk faced by industrial players and the importance of fixed electricity prices for stability and security to their operations, officials pointed out.

PPAs promise to offer industries energy-cost stability during times of great uncertainty, they added.

 

IPTO: At least 3 new gas-fired power stations will be required

At least three new gas-fired power stations will be needed to ensure energy sufficiency within the next few years, but these new facilities will require a support mechanism to remain sustainable, a study conducted by power grid operator IPTO, looking ahead to the period between 2025 and 2035, has determined.

This IPTO study, whose findings have been unofficially handed over to the energy ministry, is essentially transitional as its outlook regarding the increase in RES and energy storage installations falls short of announcements made recently by energy minister Kostas Skrekas for the country’s updated National Energy and Climate Plan.

IPTO will make related revisions to the study once an upgraded NECP is officially approved.

Even so, two fundamental issues raised by the IPTO study appear unlikely to change. Firstly, the growing presence of wind and solar energy units in the energy system will need to be accompanied by the installation of more thermal plants, especially gas-fired power stations, given the existing capabilities of energy storage technology, in order to ensure electricity sufficiency.

Besides the new Ptolemaida V power station, now gearing up for a full-scale launch by the end of February – initially as a low-emitting lignite-fired power station before eventually converting to natural gas – at least three big gas-fired power stations will also be needed.

The IPTO study’s second fundamental finding unlikely to change concerns the need for support mechanisms to ensure the sustainability of both new and old power stations, given the concurrent installation of new RES units, energy storage facilities and gas-fired power stations. The energy ministry, as a result, will need to seek European Commission approval of Capacity Remuneration Mechanisms (CRM).

The IPTO study takes into account two RES penetration scenarios, one based on the existing NECP, established in 2019, forecasting RES installations of 15.5 GW and energy storage installations of 1.8 GW by 2030. The other scenario, more ambitious, assumes RES installations of 24 GW and energy storage installations of 3 GW by 2030.

Suppliers, traders reject PPC lignite power packages for ’23

Energy retailers and traders have shunned lignite-fired electricity packages offered by power utility PPC through the energy exchange for the first, second and third quarters of 2023, as part of an antitrust agreement between Greece and the European Commission, energypress sources have informed.

Commenting on the lack of interest in these packages, market analysts noted they were not surprised given the high risk involved and the financial pressure felt by energy retailers as a result of the energy crisis.

The agreement, designed to end PPC’s monopoly in the lignite sector, required the power utility to offer, by October 31, lignite-fired electricity packages for Q1, Q2 and Q3 in 2023, their quantities representing 40 percent of lignite electricity production in the corresponding quarters this year.

According to the agreement, shaped by a legislative revision brought forward by the energy ministry, PPC must also offer lignite-fired electricity packages for Q4 next year by January 31, 2023.

Greece has submitted a request to the European Commission to have the antitrust agreement abolished. If not scrapped, the measure appears set for major revisions.

EU member states divided on gas price cap level

A European Commission proposal for a gas price cap of 275 euros per MWh will be strongly opposed at today’s meeting of the EU’s twenty-seven energy ministers by representatives of fifteen EU member states, including Greece, fearing this proposal could result in higher gas prices.

The fifteen energy ministers are expected to demand a lower price cap level of between 150 and 200 euros per MWh, which they view as the only possible solution that could secure lower prices.

Their approach, however, is opposed by a small yet powerful group of four EU member states, comprised of Germany, the Netherlands, Sweden and Finland, who fear a low price cap level could repel LNG suppliers and send them away to non-European markets.

Besides Greece, other EU member states in favor of a lower gas price cap level include Belgium, Bulgaria, France, Italy, Latvia, Lithuania, Poland, Romania and Spain.

A final decision on the issue is not expected at today’s meeting and will most likely be deferred until the next Council meeting of EU energy ministers, scheduled for December 19.

 

‘Environmental assessments undermining green transition’

At a time when the European Commission is urgently promoting renewable energy growth, development in the Greek RES sector is being held back by special environmental assessment requirements for projects that threaten to undermine the country’s green energy transition, ELETAEN, the Greek Wind Energy Association, has underlined in a statement.

The delay in the energy transition poses a threat for the environment, perpetuates the country’s dependence on fossil fuels, and does not allow for a reduction in energy prices, the association added.

Special environmental assessments are being demanded too easily and for extensive areas, prohibiting RES project applications from making progress, the association pointed out.

 

 

Brussels proposes gas price cap for extreme pricing situations

A price cap on gas, to serve as a market correction mechanism, will only be activated under certain combined conditions, according to a draft proposal sent by the European Commission to the EU’s 27 energy ministers.

A first round of negotiations took place yesterday between representatives of member-state delegations, ahead of an informal Council of energy ministers on November 24, when a first attempt will be made to reach an agreement on the price cap plan.

According to well-informed sources, Brussels’ draft proposal, seeking to reconcile two opposing EU blocs, one comprising Greece, Italy, Poland and Belgium, and the other, Germany, the Netherlands, Austria and Hungary, will not lead to consensus at next week’s Council of energy ministers and, as a result, will be referred to their ensuing meeting.

Brussels’ draft proposal is intended to act as an effective tool against excessive and extremely high gas prices. The plan is to trigger it into action only if prices reach extremely high levels (compared to international markets), the objective being to avoid significant disruptions in supply contracts, which could lead to serious risks concerning security of supply.

Industrial energy-saving incentives auction next month

An inaugural auction offering compensation amounts to high and medium-voltage industrial consumers for reduced electricity usage is set to take place in December as part of the country’s effort to limit energy demand by 5 percent during peak hours, a European Commission order that needs to be met by all EU member states.

Industrial consumers – high and medium-voltage – submitting the lowest compensation bids at monthly auctions will be offered energy savings through monthly auctions.

Separate auctions will be held for high and medium-voltage industrial consumers, energypress sources informed.

The compensation amounts to be offered to successful bidders will stem from the Energy Transition Fund.

A legislative revision facilitating these auctions has just ratified in parliament. However, other legislative and regulatory matters still need to be settled before the inaugural auction can go ahead, December being the target.

The Greek government has set the three-hour period from 6pm to 9pm, including weekends, as the country’s peak time for energy.

European effort for energy cost solutions well underway

European discussion for electricity market reforms that could lead to permanent solutions for lower-cost energy by detaching the cost of electricity from natural gas is well underway.

European Commission authorities, institutions, major enterprises and other electricity market players are currently putting forward proposals until December, when Brussels is expected to issue its own proposal for consultation, as has just been noted by Mechthild Wörsdörfer, deputy director general for the European Commission’s Directorate-General for Energy.

Discussion for longer-term reforms is planned to continue in February and March. Reforms will need to be approved by the European Parliament, as well as by the Energy Council of Ministers, in order to become binding.

The overall approach is based on a proposal forwarded by Pantelis Kapros, Professor of Energy Economics at the National Technical University of Athens, supporting the need for remuneration of renewable energy, as well as electricity production generated by other low-emission technologies, such as nuclear, to be based on actual cost through long-term agreements rather than through the day-ahead market, whose levels are determined by wholesale market prices.

According to Kapros’ proposal, wholesale market prices should be used to determine remuneration levels for fossil fuel-based energy production technologies (coal, lignite, natural gas) as well as hydropower facilities with water reserves and energy storage units.

RAE clarifying criteria for key industries to avoid rationing

RAE, the Regulatory Authority for Energy, is working on clarifying the selection process for a list of vital industries to continue being given priority status for natural gas supply should gas imports be subject to major disruptions.

RAE, conducting related consultation, needs to assemble this list following a European Commission order requiring all EU member states to name their respective industries of vital social and economic importance. These enterprises would be exempted from natural gas rationing, if such an extreme measure needs to be adopted.

However, the selection criteria for this list remain ambiguous, preventing Greek authorities from proceeding with the selection process.

A total of 104 industrial enterprises operating in Greece have submitted applications for inclusion on this special-status list. To date, no member states have put together a special-status list.

North-South gap remains, crisis solution unlikely soon

All developments suggest Europe may need to cope without a common energy solution this coming winter as there is nothing to suggest authorities are close to reaching an agreement at the extraordinary Council of Energy Ministers on November 24.

If so, any decision making will be postponed until the regular Council of Ministers, scheduled for December 19, or passed on to the Swedish EU rotating presidency, which will succeed the Czech presidency on January 1.

Even though the European Commission is reportedly speeding up procedures for a temporary gas cap, following a warning by 15 member states to veto the overall energy package, the chances of a gas cap being ready by the forthcoming meeting of energy ministers are very slim.

Disagreement between the EU 27 remains, dividing Europe’s north and south. Germany insists the introduction of even a flexible price cap could drive gas suppliers out of European markets.

The willingness of European authorities to take action has weakened as the risk of an out-of-control energy crisis has receded. The continued de-escalation of gas prices (just under €114/MWh yesterday) may be good news for households and businesses, but it has led the EU towards a general complacency.

 

New European LNG benchmark to be shaped by EU-27 prices

Europe’s new LNG benchmark will be determined by LNG price-level data presented by the EU’s 27 member states, the objective being to offer a broader, better-balanced and more reliable pricing formula than the existing one, shaped by the Dutch TTF index, sources have informed energypress.

ACER, Europe’s Agency for the Cooperation of Energy Regulators, will present a preliminary plan for this new market correction mechanism at a meeting in Brussels today to be attended by the EU’s permanent representative committee, Coreper, involving all EU member states.

The new European LNG benchmark, promising a more accurate reflection of international prices for LNG, the dominant global energy source at present, will not affect existing agreements, officials have pointed out.

EU officials are striving for an imminent launch of this new LNG pricing tool, the aim being to have it introduced by early 2023. Last month, the European Commission noted it wants the new LNG benchmark to be ready by March 23.

On a wider scale, although the European Commission hopes EU member states can resolve differences for a common solution to the energy crisis, there have been no indications of possible consensus. On the contrary, the North-South divide remains and expectations for a common European approach to the issue this winter are extremely low.