Brussels rejects Greek proposal for Green Pool model

The European Commission has rejected a Greek proposal for a Green Pool model intended to keep green-energy PPA prices at competitive levels for the country’s energy-intensive industries.

Though Brussels’ Directorate-General for Competition has yet to announce its rejection of the plan, it informed the Greek energy ministry of its decision late last week, energypress sources informed.

Evaggelos Mytilineos, President and chief executive of the Mytilineos group, expressed his disappointment over the decision during a TV interview on CNBC.

“Unfortunately, on Friday, we heard the bad news that the Green Pool plan, which is a combination of a carbon exemption and support for energy-intensive industries, has been rejected by the European Commission after a year of negotiations. Every country, every economy, is trying to achieve economies of scale. It’s really difficult,” Mytilineos commented.

Negotiations on the Green Pool plan began soon after the Greek government had forwarded its proposal to the Brussels authority in September, 2021.

The European Commission is believed to have rejected the plan on the grounds that it could be regarded as a tool subsidizing electricity generated by fossil fuels.

Brussels approves PPC takeover deal for ENEL Romania

The European Commission’s Directorate-General for Competition has approved power utility PPC’s 1.26 billion-euro takeover agreement for Italian group ENEL’s Romanian subsidiary ENEL Romania, sources have informed.

Though it would be possible for all sides involved to compete this acquisition before the end of summer, it will most likely get over the finish line around September as the second round of Greece’s general election, held yesterday, will delay the procedure by a month. The ruling center-right New Democracy party, which held on to power, is reshuffling personnel at ministerial posts.

PPC’s chief executive Giorgos Stassis and his administration are working intensively to update the corporation’s business plan, which could be presented to investors and analysts in October.

The plan will include PPC’s takeover of ENEL Romania as well as other key investment initiatives taken recently by the company such as its development of a CCGT facility in Alexandroupoli, northeastern Greece.

According to sources, PPC will raise its financial goals as a reflection of the company’s growth in size.

PPC is scheduled to hold a general shareholders’ meeting on June 29. The CEO, sources said, could set a date for the corporation’s return to dividend payouts.

 

Response to Brussels offshore wind farm questions in June

Energy ministry officials are preparing a response, this month, to a first round of questions from the European Commission’s Directorate-General for Competition on the ministry’s support plan for prospective offshore wind farm installations in Greek marine territory.

The energy ministry had submitted its remuneration proposal, a high-level design package, for the offshore wind farm sector to Brussels in April and received an initial set of questions last month.

The plan forwarded by the energy ministry essentially describes a formula for operational aid to offshore wind farms, based on a related bill ratified last summer for the sector’s development.

Tariffs to be secured by offshore wind farm investors will be determined through competitive tendering procedures. Holders of offshore plot licenses will be eligible to participate in these tenders.

However, tariffs for pilot projects totaling 600 MW off Alexandroupoli, in the country’s northeast, are an exception, as these will be offered administratively.

Green Pool talks for PPA price containment enter third round

Local authorities are striving for imminent approval, by the European Commission, of the Green Pool, intended to contain price levels of prospective green-energy power purchase agreements (PPAs) established between industrial producers and energy producers, so that it may be implemented early in 2024.

Negotiations between Greece’s energy ministry and the European Commission’s Directorate-General for Competition, launched roughly a year ago, have now entered a third round of talks.

It began early this year and is now taking place as talks between local industrial players and RES producers for the country’s first ever PPAs have ripened.

The process continued this month with a Greek response to a new set of questions forwarded by Brussels.

A recent exemption of bilateral contracts from wholesale market caps has paved the way for the establishment of PPAs.

Authorities are striving for Brussels’ imminent approval of the Green Pool so that it may be implemented early in 2024, a year during which the pool is expected to be eased into the system as a pilot program before green-energy quantities supplied to industrial energy users become considerably bigger.

Officials fear local infrastructure impact of Turkish-Bulgarian gas deal

A Turkish-Bulgarian gas supply agreement reached last month is troubling Greece’s energy players at institutional and market levels as its impact could affect the role of Greek infrastructure, officials have told energypress.

Local officials are mostly concerned about the deal’s gas supply quantity eventually growing in size rather than the small gas quantities it currently involves, as they only cover a small percentage of Bulgaria’s gas needs.

The majority of Bulgaria’s gas needs are still planned to be covered by LNG shipments coming in through the LNG terminal at Revythoussa, close to Athens, while the prospective Alexandroupoli FSRU in Greece’s northeast will, no doubt, contribute to cover Bulgarian gas demand, once the project is launched.

Turkey and Bulgaria, represented by their respective state energy companies, Botas and Bulgargaz, signed a 13-year gas supply agreement on January 3, according to which Turkey is required to supply Bulgaria an annual gas quantity of 1.5 bcm.

EFET, the European Federation of Energy Traders, wants the Turkish-Bulgarian agreement investigated by the European Commission’s Directorate-General for Energy and Directorate-General for Competition, contending European regulations and the overall institutional framework defining the operation of gas infrastructure within the EU and access to interconnection points have been breached.

Hybrid RES station support for non-interconnected islands

The energy ministry is preparing to legislate a framework approved by the  offering operational support for hybrid RES stations on non-interconnected islands. The initiative is planned to provide support for the development of hybrid stations representing a total capacity of 264 MW by the end of 2026.

Hybrid stations on non-interconnected islands will be divided into three sub-categories, based on how they will secure tariffs, energypress sources informed. One category will exclusively carry projects based on Crete, a second category will group together small islands not planned to be linked to the mainland grid through power grid operator IPTO’s grid interconnection projects, while a third category will concern islands being interconnected.

Regardless of category, all hybrid stations eligible for the new operational support system will receive support for 20-year periods. The support system will offer funds totaling 1.4 billion euros.

On Crete, the support system is expected to provide support for the development of hybrid power stations representing a total of 120 MW, including 84 MW in hybrid RES projects already at advanced licensing stages.

These specific projects have been granted priority status, a move endorsed by the Directorate-General for Competition, to help cover Crete’s energy insufficiency issues until a grid link from the island to Athens is completed.

 

Big auction capacity boost planned for RES projects with energy storage

The energy ministry plans to greatly boost capacities offered at auctions for RES projects with energy storage systems from 200 MW to 1 GW as part of its effort to strengthen the role played by RES units with behind-the-meter storage in mitigating local grid-congestion problems.

This revision will require approval from the Directorate-General for Competition. In preparation, the energy ministry is already engaged in related talks with the Brussels authority.

These talks are believed to have progressed but work still needs to be done before the Greek side can send a formal request to Brussels.

The energy ministry is confident that renewable energy systems with storage units can significantly contribute to optimal use of available electrical capacity and, as a result, increase green energy’s share of the energy mix.

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.

 

PPC’s rise prompts response of rivals over hydropower control

The rising number of customers returning to power utility PPC is triggering a response from rival independent electricity producers and suppliers, some of which, according to sources, are set to raise competition concerns with Greek and EU authorities by noting the utility’s exclusive use of the country’s hydropower facilities puts it in an advantageous position as profit generated from this activity is, to a great extent, being utilized for an aggressive pricing policy, helping win back customers.

This is not the first time PPC’s exclusive use of Greece’s hydropower capacity is being brought to the fore. On the contrary, it has always been on the European Commission’s agenda, especially during the previous decade’s period of Greek bailout negotiations, and was incorporated in related reports.

However, concerns over PPC’s lignite monopoly and how this matter should be tackled, which led to the introduction of NOME auctions, now abolished, followed by a recent agreement for PPC lignite packages to rivals, have taken precedence.

It seems the hydropower matter has now reached the tipping point for PPC’s rivals, facing toughened market conditions shaped by the energy crisis.

A number of independent producers are believed to be set to forward market data to RAE, the Regulatory Authority for Energy, as well as the domestic and European Commission competition authorities, to highlight their disadvantageous positions and call for intervention.

Negotiations ongoing for Strategic Reserve, CRM

Energy ministry officials are engaged in ongoing talks with the European Commission’s Directorate-General for Competition and ACER, Europe’s Agency for the Cooperation of Energy Regulators, to determine the shape of Greece’s proposals for a Strategic Reserve Mechanism and a Capacity Remuneration Mechanism (CRM) before their plans are officially submitted to Brussels for approval.

Greece still needs to deliver an Adequacy Report before the two mechanism plans can be pushed forward. Three indices – CONE (Cost of New Entry), VOLL (Value of Lost Load) and Reliability Standard – need to be factored into calculations before the Adequacy Report can be completed.

According to energypress sources, RAE, the Regulatory Authority for Energy, has already completed work on the VOLL calculations and expects to have all required data needed for the Reliability Standard calculations during the week. RAE will then forward a related report to the energy ministry.

The Greek mechanism requests are expected to be submitted soon so as to enable the European Commission to respond by late November or early December.

The Strategic Reserve Mechanism, planned to remunerate power-generating units made available by electricity producers for grid back-up services is expected to be launched early in 2022 for a duration until 2023 before it is succeeded by the CRM.

 

Minister calls for swifter Brussels support on new RES auctions plan

Energy minister Kostas Skrekas has requested swifter support from the European Commission, in the form of a comfort letter, on a plan concerning Greece’s new RES auctions, as well as auctions for the installation of hybrid stations on islands.

The minister made the request to European Commission deputy Margrethe Vestager, also Brussel’s Commissioner for Competition, during an online meeting between the two officials on Friday.

During the session, Vestager is believed to have expressed satisfaction over Athens’ implementation of a plan offering third parties access to state-controlled power utility PPC’s lignite-fired power production, an issue that had remained unresolved for many years.

PPC sold a first electricity package at a discount price on Friday, as part of the government’s agreement with the European Commission.

Greece’s energy minister also urged for efficient cooperation with the Directorate General for Competition on an ongoing effort aiming for the introduction, by the end of the year, of a Strategic Reserve mechanism.

The mechanism is planned to compensate PPC for its maintenance, as grid back-up, of lignite-fired power stations headed for withdrawal. The availability of these units is still needed to ensure grid sufficiency and stability.

 

 

PPC industrial supply deals last act ahead of market share dive

Power utility PPC’s latest supply agreements with industrial consumers, finalized just days ago with steel producer Viohalco, Titan cement and building materials group, as well as all other industrial players, following a preceding deal with Aluminium of Greece, a member of the Mytilineos group, represent, barring unexpected developments, the final act ahead of major market changes that will dramatically reduce the utility’s market share beyond December 31, 2023, when these new high-voltage supply agreements expire.

They are PPC’s last industrial supply agreements offering fixed tariffs. As of 2024, PPC will offer indexed tariff prices that will be pegged to the wholesale electricity market’s monthly clearing price in the day-ahead market.

This change will most likely prompt industrial consumers to seek alternative electricity supply solutions.

Aluminium of Greece has already done so, as it plans to receive electricity from the Mytilineos group’s new natural gas-fired power plant being developed in the Agios Nikolaos industrial zone in Viotia’s Agios Nikolaos area, northwest of Athens, to be direct cable-linked to the Aluminium of Greece facility, as well as through RES production, ending a 60-year association with PPC.

At present, PPC sells an annual electricity amount of between 63 to 64 TWh, of which approximately 5 TWh concern high-voltage electricity. If energy-intensive consumers leave PPC from 2024 onwards, to avoid indexed tariffs, the utility’s electricity sales will drop to between 58 and 59 TWh, and, by extension, its retail market share will contract to about 50 percent from 64 percent at present.

This is the state-controlled utility’s aim as an evenly divided electricity market in which PPC will hold a market share of about 50 percent and the independent suppliers the other 50 percent will end the DG Comp’s frequent interventions over the utility’s excessive retail market share.

The energy ministry is aiming for green-energy power purchase agreements (PPAs) to cover 20 percent of industrial electricity demand by next year.

 

Italgas, Czech Republic’s EPH bid for DEPA Infrastructure

Italy’s gas network operator Italgas and the Czech Republic’s EP INVESTMENT ADVISORS (EPH) met yesterday’s deadline to submit binding bids for the 100 percent sale of gas company DEPA Infrastructure, bringing this privatization to its final stretch.

TAIPED, Greece’s privatization fund, will now need to check if the files submitted by the suitors are complete before opening up their respective financial offers.

The privatization fund’s board will inspect the first-stage files, carrying legal documents, at its next meeting, sources informed. If the files are complete, TAIPED will proceed to the next step of opening up the financial offers, but not before some time has elapsed to allow for possible objections.

If the price difference in the financial offers is no more than 15 percent, TAIPED will request improved follow-up bids from both bidders.

The preferred bidder is expected to be announced by the end of August or early September. DG Comp and DG Energy approval will then be required before an agreement can be signed for the transfer, to the winning bidder, of TAIPED’s 65 percent stake control of DEPA Infrastructure and the 35 percent stake held by Hellenic Petroleum (ELPE).

The sale of DEPA Infrastructure, controlling the distribution networks of EDA Attiki, covering the wider Athens area, EDA Thess, covering Thessaloniki and Thessaly, as well as DEDA, covering the rest of Greece, will spell the end of the Greek State’s control of the country’s low and medium-pressure natural gas pipelines.

Ministry, DG Comp continuing talks on new RES auctions

The energy ministry and Brussels’ Directorate-General for Competition are continuing negotiations aiming to shape Greece’s new RES auctions from 2021 to 2024, the attention of these talks focused on details of the Greek proposal, not its overall structure.

Ministry officials are hoping the Brussels authority will offer its endorsement of the plan within the summer so that the first session of the new-look RES auctions can be announced in September and staged within 2021.

No changes to the fundamental structure of the Greek plan are expected. The ministry has proposed six mixed RES auctions (wind and solar) by 2024 and 350-MW capacities on offer at each session.

In its effort to ensure a balance in the opportunities for wind and solar projects at these mixed RES auctions, the ministry has proposed that either technology secures no less than 30 percent of the tariff agreements at each session.

Such a term is deemed necessary as protection for wind energy projects, facing far higher equipment costs than solar energy projects, and, as a result, unable to follow PVs along a path of reduced tariff offers. No wind energy projects secured tariffs at the most recent RES auction, last month.

Greece’s proposal for the inclusion of an additional 1 GW capacity into the new RES auction format, as a reserve amount for auctions to concern a series of special RES categories, is one of the aspects being negotiated.

Details, not structure, holding back RES auction plan talks

Ongoing negotiations between the energy ministry and the European Commission’s Directorate-General for Competition for Greece’s new RES auction system are currently being held back by Brussels concerns over certain details of the Greek proposal, not its overall structure.

The energy ministry is prepared, if needed, to remove aspects causing issues so that negotiations on the new RES auction plan can be completed as swiftly as possible, sources have informed.

The new RES auction plan could be approved within the current summer, according to the more optimistic of forecasts, while the first RES auction under the new framework could be staged towards the end of this year.

At present, local officials are awaiting comments from Brussels following a Greek response to questions prior to Greek Orthodox Easter a couple of weeks ago. Ministry official are hoping Brussels’ comments will be kept to a minimum, which would pave the way for the RES auction plan’s approval.

According to the new RES auction plan, six combined solar and wind energy RES auctions will be staged until 2024, offering a total capacity of 350 MW at every session, for an overall capacity of 2.1 GW.

DESFA’s Alexandroupoli FSRU entry awaiting DG Comp OK

Gas grid operator DESFA’s agreement, last November, for the acquisition of a 20 percent stake in Gastrade, the company established by the Copelouzos group for the development and operation of the Alexandroupoli FSRU, a floating LNG terminal planned for Greece’s northeast, requires, as its final step, approval from the European Commission’s Directorate-General for Competition, to officially make the operator the consortium’s fifth member.

DG Comp approval of DESFA’s agreement is needed as the operator, managing Greece’s gas transmission system, is entering an independent gas system through its agreement to buy a Gastrade stake.

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

A finalized investment decision by Gastrade for the development of the Alexandroupoli FSRU is expected this spring. The unit’s launch is scheduled for the first half of 2023.

The FID will enable the procurement procedure for the project’s equipment to go ahead, beginning with the floating unit, for which a Gastrade tender has already been completed.

A preferred bidder has also been declared for the FSRU’s subsea-and-overland pipeline, to link the floating unit with the country’s gas grid.

Bids for a tender offering a contract for the design, procurement and construction of the project’s fixed mooring system were submitted in late-February.

Talks are still in progress, at a diplomatic level, for the possible entry into the Alexandroupoli FSRU by North Macedonia’s state gas company, through the acquisition of a 10 percent stake from Gastrade. The outcome of these talks will not affect the project’s development.

DG Comp motives for restart of older PPC probe unclear

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

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

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

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

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

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

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

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

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

 

Recovery fund subsidies worth €400m for energy storage units

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

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

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

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

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

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

Ministry planning support mechanism for green PPAs

The energy ministry is seeking to establish yet another support mechanism, one subsidizing electricity absorbed by energy-intensive industries and other enterprises from renewable energy stations, whose cost the ministry aims to incorporate into the recovery fund.

Power purchase agreements (PPAs) reached between major-scale RES producers or aggregators with industries and other energy-intensive enterprises need to be reasonably priced if they are to ultimately prove beneficial for companies. The support mechanism would come into play here.

Green energy prices can be low and beneficial for industries and energy-intensive enterprises as RES stations have minimal operating costs once installed. These units merely have to cover investment costs and eventually make a profit for investors, once launched.

However, balancing market costs in target model markets, which significantly increase the cost of green electricity, also need to be factored into the equation.

The energy ministry will seek to subsidize balancing market costs by using recovery fund money as part of the effort.

The plan promises to help achieve two key goals. Firstly, RES stations will ensure supply channels for their production and thereby cement long-term performance figures, creating favorable conditions for bank loans financing green-energy investments. This would gradually increase the number of RES installations around the country.

As for the plan’s second key goal, energy-intensive industries and other enterprises with elevated energy costs would be ensured low-cost, eco-friendly electricity, subsequently boosting their level of competitiveness.

The support mechanism planned by the energy ministry will need to be endorsed by the European Directorate for Competition.

The government has high expectations for the success of this support mechanism as it acknowledges energy cost is a burden for Greek producers and other enterprises, including in the tourism sector.

Prinos field threatened by poor results, decline projection

Operations at the Prinos field, Greece’s only producing oil field, in the country’s offshore north, are in great danger of being disrupted following poor production figures in 2020 and a further decline predicted for 2021, a wider company update just delivered by Energean Oil & Gas, the field’s license holder, has suggested.

In 2020, production at the oil field reached just 1,800 barrels per day, while its inferior-quality output was sold at a discount price, between 7 to 8 dollars below Brent levels.

This level of output represents less than 4 percent of Energean’s overall production, which, last year, reached 48,000 barrels – mostly natural gas.

Output at the Prinos field is projected to drop below 1,500 bpd in 2021 as, even if a rescue plan for the facility is approved, related investments needed at the facility will take time to complete.

The rescue plan, announced last June by Energean and dubbed Green Prinos, envisions an adjustment for eco-friendly operations through a series of investments worth 75 million euros.

Energean’s administration, in its company update to analysts, expressed hope that a solution can be found in the first quarter of 2021 for its rescue plan, submitted to the Greek government, which then forwarded the plan to the European Commission.

The rescue plan has remained stuck at the European Directorate for Competition, whose approval is required.

Energean is considering the development of a carbon capture and storage project at its Prinos field, which would be the first in Greece, promising new life for the project, along with the support of investments at field E, whose development depends on the outcome of a financing bid, company officials informed.

Overall, the news for the Prinos field is not good. Losses incurred by this unit since September, 2019, when its crisis began before being further aggravated by the pandemic, have exceeded 100 million euros.

This loss, however, has not affected the overall financial results of Energean, generating significant earnings in Egypt, primarily. Israel, too, could become a major source of earnings for the company as of next year.

Suppliers, alarmed by higher balancing market cost, respond

Non-vertically integrated electricity suppliers, badly hit by sharply increased balancing market prices, as much as five times higher than pre-target model levels, will hold a virtual meeting today with officials at the European Commission’s Directorate-General for Competition to point out the target model’s negative impact on electricity market competition.

Power grid operator IPTO and RAE, the Regulatory Authority for Energy, have taken action and market officials are awaiting results.

Last Friday, RAE’s leadership held a series of meetings with supply company representatives.

Some non-vertically integrated suppliers have already taken legal action while others are expected to follow suit.

RAE had initially received requests by suppliers for temporary measures entailing an immediate suspension of their balancing market financial obligations. The authority did not respond, prompting suppliers to lodge a complaint with RAE against IPTO for a breach of obligations.

Suppliers, through their complaint, are demanding revisions from IPTO, with retroactive effect, as well as the imposition of a fine on the operator that corresponds to the losses incurred by non-vertically integrated suppliers since the target model’s launch of new markets over a month ago.

 

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.

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 proposal seen ending PPC lignite monopoly case

Independent electricity retailers would be entitled to lignite-generated electricity supply from power utility PPC at a predetermined price, definitely not below cost for the utility, in quantities constituting 40 percent of each lignite-fired power station’s production, to be distributed to suppliers in proportion to their respective retail electricity market shares, until 2023, when  lignite-fired units are expected to have been phased out as part of the country’s decarbonization plan, according to a finalized proposal forwarded by the energy ministry to the European Commission’s Directorate-General for Competition a fortnight ago in an effort to resolve a long-running antitrust case.

Energy ministry officials are confident this formula will end the antitrust dispute, now a decade long, concerning’s PPC’s lignite sector monopoly.

Back in 2010, lignite dominated Greece’s energy mix but there is now much less at stake as lignite-fired power stations are being phased out over the next three years.

PPC’s lignite-fired electricity generation dropped 47.8 percent in the first half, diving 70 percent in the second quarter, the utility announced just days ago when presenting its first-half results.

PPC’s lignite-based output totaled 3,000 GWh in the first half and just 756 GWh in the second quarter.

Energy ministry officials believe the Directorate-General for Competition will not resist accepting the Athens proposal as a rejection would take the dispute back to European Court, meaning a case would not be heard any sooner than late-2021. By then, PPC’s lignite-fired power stations Kardia III and IV and Megalopoli III will have all been withdrawn, according to the latest schedule announced by energy minister Costis Hatzidakis earlier this week.

 

Flexibility surcharge improper, suppliers complain to Brussels

A CAT surcharge imposed on electricity suppliers to support the flexibility mechanism was adopted without proper consultation via a procedure that was not fully substantiated, ESEPIE, the Hellenic Association of Electricity Trading and Supply Companies, has charged in a letter forwarded to the European Commission’s Directorate-General for Competition and Directorate-General for Energy.

Consultation on the matter lacked a detailed study by power grid operator IPTO on current flexibility needs, the association protested in the letter, forwarded to the Brussels authorities just weeks ahead of the launch of target model markets in Greece.

The flexibility mechanism’s details are based on a study conducted years ago but current flexibility needs concerning production and demand have since changed drastically, the association noted.

A transitional mechanism is not needed given the current conditions in Greece’s energy market, especially if the pandemic-related drop in electricity demand is taken into consideration, ESEPIE noted. State aid or any other form of support for energy producers offering flexibility is unnecessary, the association stressed.

Suppliers have been asked to cover flexibility-related surcharges, beginning August 15, at a rate of approximately 3 euros per MWh. This is burdening their finances, especially in the mid-voltage market, where heightened competition has severely narrowed profit margins.

Flexibility CATs, it should be noted, do not impact independent, vertically integrated suppliers as the corporate groups they belong to collect the flexibility surcharge payments for their production.

Energy companies actually benefit from the surcharge if their retail electricity market shares are smaller than their shares of production. This is not the case for PPC, whose retail market share is considerably bigger than its share of electricity generation.

 

Alexandroupoli FSRU investment decision later in ’20

Investors behind the Alexandroupoli FSRU are expected to make final decisions on the project’s development in the final quarter of this year.

Two pending issues, the completion of a regulatory framework for the project, as well as approval by the European Commission’s Directorate-General for Competition of the project and funding via the National Strategic Reference Framework (2014-2020), are expected to be resolved by the final quarter.

Also, RAE, the Regulatory Authority for Energy, is soon expected to reach a preliminary decision exempting the FSRU from compulsory access to third parties as well as tariff adjustments every three to four years. This decision, needed for the project’s regulatory framework, is expected by late October or early November, when the European Commission’s approval is anticipated.

The Directorate-General for Competition will also need to give the green light for NSRF funding.

Once these pending issues are all resolved, investors will be able to decide on the project’s development, expected to require two years to construct. Investors envision a launch in 2023.

Yesterday’s anticipated entry of Bulgartransgaz, for a 20 percent stake, highlights the project’s regional prospects. This regional dimension will be highlighted even further if ongoing Romanian interest is materialized.  Talks that have been going on for some time were disrupted by the pandemic.

For the time being, Greek gas utility DEPA, Gaslog and Bulgartransgaz each have 20 percent stakes, while the Copelouzos group holds a 40 percent share. The entry into the project of Gastrade, as a fifth partner, remains pending.

Most crucial for the project’s prospects, a market test completed in March showed that the Alexandroupoli FSRU is sustainable. The test prompted a big response from Greek and international gas traders, who placed capacity reservation bids for a total of 2.6 billion cubic meters per year.

US interest for LNG supply via the Alexandroupoli FSRU is strong. Last year, Cheniere sold a big shipment to Greek gas utility DEPA, while a further ten American shipments have been made so far this year.

Ministry awaiting Brussels nod for demand response, TFRM

The energy ministry, anticipating the European Commission’s approval of Greek government proposals for a demand response mechanism and a transitory flexibility remuneration mechanism (TFRM), has decided to sign related ministerial decisions, possibly even today, so that the mechanisms can be immediately implemented once Brussels has given the green light.

Though the two sides have come closer on the mechanisms, it still remains unclear when the European Commission will go ahead with its approval.

Over the past few days, government officials have needed to respond to a series of questions from Brussels, seeking explanations and clarification on details concerning both mechanism plans.

The European Commission’s Directorate-General for Competition is treating both mechanism proposals as one package.

Domestic energy-intensive industries are urgently awaiting the package’s approval in the hope that Greek power grid operator IPTO can stage a demand response auction before July is out.

Under terms agreed to so far, IPTO will be permitted to offer up to 800 MW through demand response auctions, down from 1,030 MW allowed through the preceding plan.

Also, the demand response mechanism will be made accessible to a greater number of companies, including smaller players, through a reduction of a consumption lower limit.

In addition, the demand response mechanism is expected to be valid for a one-year period, not two years, as was requested by EVIKEN, the Association of Industrial Energy Consumers.

The TFRM is expected to be divided into two stages, the first running until the launch of target model markets, scheduled for September 17, under the same terms that applied for a mechanism that expired in March, 2019.

The TFRM’s second stage is seen running from the launch of the target model until a permanent flexibility mechanism is introduced. Its capacity is expected to be drastically reduced to 750 MW from 4,500 MW. Remuneration levels are also expected to drop.

 

Ministry preparing for Brussels demand response, TFRM approvals

Anticipating the European Commission’s approval of government proposals for a demand response mechanism and a transitory flexibility remuneration mechanism (TFRM), the energy ministry is preparing ministerial decisions for immediate signing once Brussels has given the green light.

These decisions will need to be signed by Greek officials before the two mechanisms can be implemented. The ministry is preparing the ground to have both mechanisms launched as soon as possible.

Brussels and Athens have reached an agreement on the mechanisms, prompting the energy ministry to deliver a finalized version of the demand response plan to the European Commission’s Directorate-General for Competition, ahead of this mechanism’s reintroduction.

The energy ministry expects power grid operator IPTO to be able to stage its first auction for demand-response capacities in July.

According to the agreement reached with Brussels, IPTO will be permitted to auction demand response capacities of up to 800 MW, below the previous limit of 1,030 MW.

Also, a greater number of participants will be eligible as enterprises with capacities of at least 2 MW will be able to take part, down from 3 MW in the previous mechanism. Troubled nickel producer Larco will not be excluded.

In addition, the new mechanism will run until September 30, 2021, not for two years as had been requested by EVIKEN, the Association of Industrial Energy Consumers.

As for the TFRM, it will remain valid until the implementation of a permanent CAT mechanism, which the energy ministry expects to launch in March, 2021.

The TFRM will be divided into two stages, the first running until the launch of target model markets, scheduled for September 17, under the same terms that applied for a mechanism that expired in March, 2019.

The TFRM’s second stage will run from the launch of the target model until a permanent flexibility mechanism is introduced. Its capacity is expected to be drastically reduced to 750 MW from 4,500 MW. Remuneration levels are also expected to drop.

Gov’t examining pandemic’s impact on Prinos oil field

The pandemic’s financial impact on offshore Prinos, Greece’s only producing oil field, south of Kavala, is being closely examined by government officials and specialized advisors, energypress sources have informed.

Conclusions have yet to be reached on the extent of the financial damage to the Prinos oil field, licensed to Energean Oil & Gas, but it appears the government will seek financial support for this venture through the European Commission’s Directorate-General for Competition.

Though it is still considered too early for any decisions, the government has apparently already recognized the damage inflicted on Prinos by the pandemic and subsequent drop in demand and oil prices.

The Greek government has pledged production continuity and job protection for Prinos, as was recently highlighted by deputy energy minister Gerassimos Thomas.

Limits have been exhausted to keep Prinos operating, Energean Oil & Gas officials have pointed out, stressing the cost burden on the company.

 

Mixed RES auctions extension sought, ‘vital for grid stability’

The energy ministry is preparing to seek approval from the European Commission’s Directorate-General for Competition for an extension of at least two years for current RES auction regulations enabling separate auctions for wind and solar unit installations, as well as mixed sessions.

The current format is valid until the end of this year. If the DG-Comp rejects the ministry’s bid, then Greece will only be permitted to stage mixed RES auctions, until 2024.

Officials at the energy ministry and RAE, the Regulatory Authority for Energy, agree that RES auctions for separate technologies have been particularly effective and fruitful and should be given more time.

Energy ministry officials are currently preparing Greece’s application with supporting arguments.

In its extension bid, the ministry will stress that both major-scale wind and solar energy installations are necessary for grid stability.

It will also note that the characteristics of Greece’s landscape offer solar projects a competitive advantage, meaning that staging mixed RES auctions, only, would result in solar-project dominance and little capacity for wind energy tariffs.

Also, the ministry, in its quest, will insist that grid stability requires the development of smaller RES units at various network points and close to consumption centers. This, it will contend, cannot be achieved through mixed auctions, typically dominated by large-scale projects.