France

Colder weather a first test for European energy system

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Falling temperatures in Europe, particularly at central and western regions, have increased electricity and natural gas demand for household heating needs, representing a crash test for the European energy system, interlinked and influencing market conditions from one country to another.

Wholesale electricity price levels have risen to record levels in France and Germany, currently experiencing sub-zero Celsius temperatures.

Besides the sudden drop in temperatures, windless conditions are depriving the Netherlands, Denmark and Germany of wind-based generation, down by at least 15 to 20 GW today, according to market data.

Subsequently, the energy mix of these countries and the EU as a whole has increased in cost as the mix is now dominated by natural gas, on a record-breaking price surge in recent months.

This has prompted wholesale electricity price increases throughout Europe. In Greece, day-ahead market prices for today are at 281.03 euros per MWh, a new record for the country following a rise for a fourth consecutive day.

German wholesale electricity prices have also struck a new record level today, reaching 273.89 euros per MWh, up 13.9 percent in a day. Dutch wholesale electricity prices rose 15.5 percent in a day to reach 254.01 euros per MWh. In France, the average wholesale electricity price for today is 295.82 euros per MWh. The highest price level in Europe was recorded in Serbia, reaching 310.63 euros per MWh.

Meteorologists have forecast a heavy winter. Greek officials are awaiting energy price levels for the rest of November before they decide on whether to increase current electricity subsidy levels.

 

 

 

EU ministers to meet on carbon emission costs, causing alarm

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The EU’s energy ministers plan to meet in Ljubljana Wednesday in search of a solution to counter the relentless rise in carbon emission right costs, which, for some time now, have reached elevated levels that hang as a dark cloud over energy consumers, hundreds of suppliers and Europe’s energy transition strategy, breeding increasing Euroscepticism.

Carbon emission rights have been stuck at levels of no less than 60 euros per ton, prompting allegations of manipulation.

Last week, the European Commission submitted to European Parliament the EU’s more ambitious climate-change package, “Fit for 55”, aiming for a 55 percent reduction of carbon emissions by 2030, compared to 1990 levels. It is planned to lead to ETS mechanism revisions.

In response to accumulating messages of alarm from energy consumers and industrial enterprises from all over the continent, European MPs, at Wednesday’s meeting, are expected to push for stricter ETS rules.

Until now, governments of EU member states have been left to act independently for support measures whose extent is being determined by the capabilities of state budgets.

In Italy, the government, facing electricity cost increases of 40 percent, is lowering taxes linked to electricity bills. In France, low-income households stand to receive increased energy-cost coupon amounts, currently worth 150 euros annually.

The situation is far more dramatic in the UK. To date, seven electricity suppliers, under growing market pressure, have disrupted their operations, forcing over 600,000 customers to seek new suppliers. Bulb, one of the UK’s biggest electricity suppliers, serving 1.7 million customers, is on the verge of bankruptcy. A merger with a rival player is seen as the likeliest solution for this company.

 

Greece climbs up to 12th place in EU electricity tariff cost rankings

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Greece has climbed seven places, to 12th from 19th, in the EU rankings for retail electricity cost, pushed higher by a government decision reached last year to increase tariffs at state-owned power utility PPC, according to latest Eurostat data.

These tariff hikes at PPC were imposed by the government in August, 2019 to protect the utility from falling into bankruptcy.

The EU rankings concern electricity price levels for household consumption levels between 2,500 to 5,000 kWh, annually.

Electricity tariff increases for households in Greece rose by an average of 8.6 percent in the first half of 2020, compared to the previous half, when the country was ranked 19th.

The first-half tariff price for households averaged € 0.129 per KWh, not including taxes and surcharges, up from €0.1189 per KWh in the second half of 2019.

PPC remains Greece’s dominant supplier, representing 63 percent of electricity consumption.

The PPC tariff increase has made electricity more expensive in Greece than in countries with higher income per capita levels. Electricity is now more expensive in Greece than in France (€ 0.1247 per KWh), Finland (€ 0.1178 per KWh), Spain (€ 0.1178 per KWh) and Sweden (€ 0.1130 per KWh), all with higher income levels. Electricity is also more expensive in Greece than in Portugal (€0.1139 per KWh).

Despite the country’s rankings rise, electricity prices in Greece remain below the EU average (€0.1327 per MWh), a result of the competition generated by independent suppliers, subduing prices.

The biggest electricity tariff decreases in the first half of 2020, compared to the previous six-month period, were recorded by the Netherlands (-31%), Latvia (-12.8%), Slovenia (-11.4%), Sweden (-10%) and Estonia (-8.9%), the Eurostat data showed.

Electric vehicles bill to include production line incentives

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A draft bill being prepared by the government to promote growth for Greece’s embryonic electric vehicle sector will not only include incentives for buyers and users but also producers, energypress has been informed.

Producers establishing production lines for electric vehicle parts, including batteries, transformers and recharging units, will be offered incentives in the form of lower tax rates and reduced social security system contributions for employees, the sources said.

However, eligibility for these incentives will be conditional and require producers to establish their production facilities in either northern Greece’s west Macedonia region or Megalopoli in the Peloponnese, both lignite-dependent local economies headed for decarbonization.

The incentives are expected to include subsidies of between 4,500 and 5,000 euros for purchases of zero or low-emission electric cars, approximately 1,000 euros for electric scooters and 800 euros for electric bicycles.

Government officials plan to submit the draft bill on electric vehicles to Parliament in June.

Besides seeking to promote industrial development in current lignite areas, the master plan will also aim to make the most of early interest expressed by foreign investors.

One of these, Tesla, has, for months now, expressed interest to the Greek government for development of a fast-recharge network at Greece’s highways, a project budgeted at 10 million euros. This project is envisioned as part of a wider plan stretching from Portugal to Spain, France, Italy, Greece and Turkey.

RES auctions postponed throughout Europe

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Governments throughout Europe are postponing RES auctions as a result of the coronavirus pandemic’s impact on markets.

Germany, France and Ireland have already taken steps back to protect new RES projects, currently at various development stages, according to a Green Tech Media report.

Germany had planned seven RES auctions for this year. The country has so far offered 400 MW for solar energy projects and 675 MW for wind farms, while a further 2.9 GW for onshore wind farms and 1.4 GW for solar energy facilities remain pending. Strong investment interest had been expressed prior to the postponements.

In France, a RES auction for solar energy projects has been postponed by two months. In Ireland, a session that had been planned for April 2 has now been rescheduled for April 30. Portugal has also postponed a RES auction offering 700 MW for solar energy projects.

On the contrary, Dutch authorities intend to press ahead with a RES auction at the end of this month, offering 700 MW for wind farms. Swedish multinational power company Vattenfall’s Dutch subsidiary has announced it will not participate.

 

 

 

Athens wants greater French hydrocarbon engagement

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The government wants France’s Total to play a more active role in Greek offshore hydrocarbon exploration, Prime Minister Kyriakos Mitsotakis made clear during a meeting in Paris yesterday with the French group’s chief executive Patrick Pouyanné.

The potential of Greece’s hydrocarbon market, including offshore licenses south and southwest of Crete held by a Total-led consortium – it also features Exxon Mobil and Hellenic Petroleum (ELPE) – was the main focus of yesterday’s meeting.

Processing of seismic data collected from the Cretan offshore blocks has provided strong evidence of a deposit sharing similar attributes to Egypt’s Zohr gas field. However, this needs to be proved in practice. French officials have remained cautiously optimistic as they await initial drilling operations for a clearer picture.

Total’s plans for exploration within the Cypriot Exclusive Economic Zone, specifically at Block 8, for which Total shares a license with Italy’s Eni, were also discussed yesterday.

Turkish drillship Yavuz has sought to engage in illegal exploration activities in this area. French officials do not intend to intercept any Turkish moves at this stage but are expected to do so if the exploratory rights of Total and Eni are disputed once the companies decide to start exploring the area.

 

Energy deputy presenting NECP in Brussels, Paris, NYC

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The country’s newly unveiled National Energy and Climate Plan will also be presented in Brussels today by deputy energy minister Gerassimos Thomas at the council of EU energy ministers, the first stop in a series of presentations abroad.

Over the next few days, Thomas will also be taking the plan to Paris and New York for official presentations.

In Brussels, today, the Greek energy deputy will present the NECP’s ambitious targets to peers and intends to highlight that many of these goals will seek to exceed the expectations of the new European Commission.

The initial response to the NECP’s objectives, by Brussels and investors, has been extremely encouraging. The Greek plan is seen as far more ambitious than those of many other EU member states.

All EU member states will be presenting the key aspects of their respective NECPs at today’s council meeting.

The European Commission will then determine whether proposals made by Brussels last June have been adopted by member states for their NECPs, all revised.

The Greek energy deputy’s Paris sessions, later this week, include an International Energy Agency (IEA) event on the climate.

In New York, Thomas is scheduled to attend an annual Capital Link forum on Monday, whose latest edition is focused on Greece, for contact with investors, major investment banks and energy sector experts closely monitoring the Greek market’s developments.

Besides Thomas, a host of other Greek ministers and deputies, as well as leading officials of the country’s four main banks, are expected to participate at the New York event, titled “21st Annual Capital Link Invest in Greece Forum – Greece is Back”.

 

DG Comp lists Greek electricity market issues needing action

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Greece has been handed a list of pending electricity market issues, old and recent, requiring urgent government action at a meeting between the country’s finance minister Hristos Staikouras and European Commissioner for Competition Margrethe Vestager in Athens just over a week ago, sources informed.

The delay of a market coupling plan for the Greek and Bulgarian electricity markets, as well as uncertainty surrounding Greece’s operating schedule for lignite-fired power stations this coming winter and, by extension, its impact on natural gas-fueled units and the market’s liberalization, are among the urgent matters listed by Vestager.

The Danish politician will continue to head the DG Comp following last May’s European Parliament election.

In February, 2017, DG Comp officials had ambushed the Athens headquarters of power utility PPC and power grid operator IPTO to collect data for a market abuse investigation.

Brussels officials are continuing their probe with further questioning, it is believed. No findings have been released, but these will undoubtedly be published once Brussels deems the time is right.

The DG Comp moves methodically when dealing with such matters. In France, for example, the authority last week ordered Paris to open up the country’s hydropower production to competition after launching an investigation into French energy utility EDF’s market dominance back in 2015.

 

No signs of market pressure despite European heatwave

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Despite soaring temperatures in central Europe, expected to exceed 40 degrees Celsius in France and Germany, electricity markets have been spared of excessive pressure, as highlighted by day-ahead market price reductions prompted by strong wind forecasts, meaning that part of the additional electricity demand will be covered by wind energy generation.

In Germany yesterday, over-the-counter electricity prices fell by 5.25 percent to 37.9 euros per MWh, while in France, price levels of agreements for delivery today fell by 4.5 percent to 31.5 euros per MWh.

In France, peak-hour demand is expected to increase by 1.6 GW to 51.5 GW, while, in Germany, demand is seen remaining steady at 63.4 GW.

These trends can be partially attributed to wind energy production rises in both countries.

Likewise, day-ahead market data for Greece, where temperatures are forecast to drop, has shown no signs of pressure. Today’s demand level of 156,365 MWh is expected to be easily met by thermal production and the RES sector. The Greek system has programmed to export 22,768 MWh.

Environmental benefits offered by French demand response system

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A European Commission decision to approve a French demand response mechanism proposal is based on two main criteria, the mechanism’s positive impact on energy investments and the amount of time power stations are required to operate.

The demand response mechanism contributes to the security of supply, can help avoid the construction of new power stations and support the maintenance of existing facilities.

On a longer-term basis, until 2030, France’s demand response mechanism replaces the need for the construction of new flexible power stations while, in the short term, until 2023, the mechanism may encourage the termination of carbon-fired electricity generation, in accordance with an energy plan announced by France’s energy ministry. Subsequently, France’s demand response mechanism is expected to positively impact France’s electricity generation mix.

It is generally more environmentally friendly to reduce consumption than to produce additional electricity, and the mechanism can render the construction of additional power plants unnecessary.

The mechanism also promises to favorably impact the amount of time power stations need to operate as demand response operators may be able to react more quickly than electricity generators.

French energy privatizations echoing Greek developments

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France, like Greece, is undergoing a process of energy sector privatizations, but the scale and terms are vastly different.

By the end of this week, French president Emmanuel Macron’s administration plans to have finalized legislation enabling the privatization of state assets, the objective being to raise 10 billion euros in revenues.

The French state’s 24.1 percent stake in power utility Engie is one of the assets to be placed for sale. This sale is of particular interest for Greece as the firm maintains interests in the Greek market.

In 2009, Engie, the world’s biggest independent electricity producer and supplier, acquired a stake in Greek independent power company Heron. Engie, valued at over 36 billion euros, currently holds a 25 percent stake in Heron.

As is the case in Greece, France also appears to be facing European Commission pressure to privatize hydropower facilities, the objective being to intensify competition.

So far, the Greek government has managed to avoid including hydropower units in the state-controlled main power utility PPC’s bailout-required sale of units. The sale package for the PPC sale in progress is limited to lignite facilities.

Engie controls approximately 15 percent of France’s hydropower facilities. EDF owns roughly 85 percent of the country’s hydropower units.

Last month, CGT, France’s biggest union, condemned the French government for delivering a secret plan to Brussels for hydropower privatizations without any previous discussion with workers. At the time, the French administration refused to comment on the union’s reaction, which only intensified the concerns of workers.

CGT has taken strike action for such cases in the past and can be expected to act likewise in this latest instance.

These older union initiatives, however, failed to stop the liberalization process of France’s electricity market. The CGT threats also did nothing to stop the transfer of EDF and Engie stakes to private-sector investors.

All eyes on French energy system as Europe braces for colder weather

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Europe’s energy sector enters a crucial period today and for the next few days as a result of the cold winter weather that has been forecast combined with maintenance and operational issues troubling France’s nuclear power facilities, which could lead to energy supply shortages.

Temperatures in Greece and other parts of Europe are forecast to drop by as much as 10 degrees Celsius this week, which will sharply increase energy demand for heating.

Weather conditions are not expected to be as extreme as they were last winter. Authorities have assured necessary measures have already been taken to a large degree.

Even so, the ongoing situation in France is worrisome. Throughout 2017, the country’s output at nuclear power stations has registered the lowest levels since the millennium. Nuclear power station capacity in France yesterday managed to climb to a level of 52 gigawatts.

As reported by Platts, the French power utility EDF has declared five units will resume production this week but, even so, was forced, once again, to reduce its output forecasts as a result of delayed returns to the grid of units undergoing maintenance work.

EDF’s nuclear power stations have generated electricity at an average level of 50 gigawatts this month, while, for the fourth quarter, output has fallen 14 gigawatts short of forecasts, a quantity equivalent to 28 LNG shipments.

Given the magnitude of France’s electricity production, as well as last year’s domino effect of energy shortages experienced by a series of European countries, stemming from problems at French nuclear power stations, all eyes are now on France.

 

 

Total, ELPE chiefs to meet at economic forum in Athens today

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The head officials of ELPE (Hellenic Petroleum) and French petroleum giant Total are scheduled to meet in Athens today during an economic forum at the Stavros Niarchos Foundation, organized by Greek and French business leaders as part of French President Emmanuel Macron’s official two-day visit to Greece, concluding today. Both Macron and Greek Prime Minister Alexis Tsipras are scheduled to attend the forum.

Patrick Pouyanne, Total’s president, who is scheduled to meet ELPE boss Stathis Tsotsoros (photo), is visiting Greece for the second time this year. Pouynanne was also here in May for a European Round Table of Industrialists. The Total boss had met with Tsipras on that occasion.

Total and ELPE, along with ExxonMobil, make up a consortium taking part in an international tender for exploration and exploitation rights concerning two offshore Cretan blocks, one south of the island, the other southwest.

The tender, whose deadline expires in November, was launched by Greece’s hydrocarbon sector authority as a result of an interest expressed by the three oil companies in the aforementioned regions off Crete.

In comments offered yesterday to Greek daily “Ta Nea”, Pouyanne highlighted Total’s investment interest for the Ionian Sea and off Crete. The Total chief also expressed confidence of an imminent Greek economic recovery and satisfactory growth rates in the near future.

Total, which is currently conducting its first drilling venture off Cyprus, co-signed an agreement for Block 2 in the Ionian Sea last March with ELPE and Italy’s Edison. The investment trio is now awaiting Greek Parliamentary approval for this agreement by the end of the year before preliminary work is launched.

As for the two blocks off Crete, two ministerial decisions signed by Greek energy minister Giorgos Stathakis were published in the government gazette last month. These decisions detail the boundaries of both blocks, neasuring 19,868.37 and 20,058.4 square kilometers, respectively.

Appraisal procedures of the Cretan block bids will be completed no later than 60 days following the tender’s November deadline, while licensing agreements will be signed within 60 days of the appraisal’s completion, according to the international tender’s terms published in the government gazette.

 

 

 

French not interested in PPC’s lignite, EDF absence highlights

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The confirmed absence of any EDF representation whatsoever in a French business delegation joining French President Emmanuel Macron on his two-day visit to Greece this Thursday and Friday sends a clear message that the French energy company is not interested in main power utility PPC’s lignite-only unit sale package. A market test for the bailout-required sale is expected to be staged next month.

Though the sale list is still subject to revisions based on ongoing negotiations between the Greek government and the country’s lenders, it has now become perfectly clear, following previous indications, that EDF is not interested in PPC’s lignite-based investment offer.

Last April, on a visit to Athens, officials of Edison, an EDF subsidiary firm, had made clear to Greece’s energy minister Giorgos Stathakis that the approaching PPC unit sale package would need to include hydropower units in order to draw their investment interest.

At the time, Stathakis responded by informing the visiting French officials that the Greek government has made up its mind on the PPC sale and would only put up for sale lignite-related facilities.

CO2 emission restrictions in the EU and the costs that would be entailed in upgrading PPC’s lignite-fired units amount to a major disincentive for the French energy company.

The Greek government would like French participation – either by EDF, or through its subsidiary Edison – in the imminent market test, rather than just Chinese and east European interest, as this would add clout to the overall sale procedure.

Even if the French were to take part without any genuine investment intent, this would provide great support for the message the government is seeking to portray of itself as a business mover.

For months now, the energy ministry has sought to create a convincing impression of a strong lignite investment interest, the underlying reason being to gain time against the European Commission, pushing for the inclusion of hydropower PPC units to the sale package.

Offering consolation to the Greek government, French oil giant Total’s chairman and CEO Patrick Pouyanne will be a part of the French delegation to visit Athens this week. Greece’s energy ministry recently announced an international tender offering two offshore blocks southwest of Crete and west of Crete. The tender was prompted by an initial interest expressed for these areas by a consortium comprised of Total, ExxonMobil and ELPE (Hellenic Petroleum).

 

 

Gov’t to seek French support for PPC sale of lignite units

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The Greek government can be expected to seek France’s support for October’s market test concerning main power utility PPC’s unit sale package, to offer investors 40 percent of the utility’s lignite production capacity, when French President Emmanuel Macron heads a delegation for an official visit to Greece, scheduled for September 7 and 8.

French support would add clout to the market test if EDF or its subsidiary Edison express an interest in state-controlled PPC’s lignite units. The interest so far appears to be limited to firms from China and east Europe.

Greek Prime Minister Alexis Tsipras is expected to raise the issue to Macron during the French leader’s visit.

To date, efforts by Greece’s energy minister Giorgos Stathakis to lure Edison to the prospective PPC sale have failed to produce results. Echoing the thoughts of most pundits and market players, Edison officials have noted that hydropower units would need to be added to PPC’s lignite-only sale package.

Less than a fornight ago, Evangelos Mytilineos, the chief executive of the Mytilineos group, a key player in Greece’s energy market, noted that it will be particularly difficult for PPC to sell a lignite-only package that does not include hydropower units.

At this stage, the Greek government appears adamant on limiting the offer to lignite units, despite being fully aware of the fact that an EU policy for increased emission right costs is subduing investment interest in solid fuels.

At present, PPC lignite-fuled power stations generate electricity at a cost of around 50 to 60 euros per MWh. This cost is expected to skyrocket to about 100 euros per MWh by 2030. Such a prospect will surely keep investors back.

Even if French support for the PPC lignite package sale is limited to October’s market test, when investors will be invited to express non-binding interest, and is not followed up by actual offers in the ensuing international tender, the Greek government will have gained valuable support in its effort, over the past few months, to create a positive picture for the lignite-only sale. Athens could, as a result, contend that the inclusion of hydropower units into the PPC sale is not necessary and, ultimately, gain time against European Commission demands for electricity market reforms targeting PPC’s dominance.

This aim for a delay is the core issue at play. More time would help PPC maneuver and reshape for its future in a drastically changed electricity market. PPC is expected to reduce its retail electricity market share to less than 50 percent by the end of 2019, from a litle over 85 percent at present. The utility’s contraction has fallen behind schedule.

 

 

 

Cyprus drilling, now started, prompts flurry of diplomatic, military activity

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The West Capella drilling ship hired by a consortium comprised of Total and Eni launched its exploration work at Block 11 in Cyprus’s Exclusive Economic Zone (EEZ) last Wednesday, as was scheduled, amid heightened diplomatic and military activity, as anticipated by the Cyprus government.

Turkey has made clear its intentions to escalate the tension amid the intensifying competition for natural gas and other interests in the region.

The West Capella drilling ship, which has reached Block 11’s sea bed, at 1,698 meters below sea level and on a slight angle towards the southwest, has been given a 21 percent chance of discovering a natural gas field, a relatively high probability rating. Drilling is expected to reach 2,230 meters. The initial results are expected to be determined by mid-September.

As a result of Total’s involvement, France is keeping a close watch on the overall developments. The country’s defense minister Florence Parly, expected in Cyprus today, will visit French frigates that initially arrived in the wider area to contribute to the United Nations Interim Force in Lebanon (UNIFIL) before being moved to Larnaca, on the southern coast of Cyprus, over the past few days.

The visiting French defense minister, who is scheduled to hold talks with her Cypriot counterpart, Christoforos Fokaidis, may also visit Total’s drilling platform.

Besides the French frigates, Cypriot, US and Greek forces have also been deployed to protect the drilling activity and Total’s interests. The region already represents a crucial launching pad for operations in Syria and Iraq.

French President Emmanuel Macron is keeping an open line of communication with the Cypriot government. In addition, Cyprus’s Foreign Minister Ioannis Kasoulidis recently traveled to France for an official visit.

Making the current hydrocarbon exploration activity in Cypriot waters even more complicated, the West Capella drilling ship arrived to the country’s EEZ just days after the breakdown of the latest UN-backed Cyprus reunification talks.

In the lead up to the drilling at Cyprus’s Block 11, a US State Department official declared that the US recognizes Cyprus’s rights to develop sources within its EEZ, adding that Washington will continue to discourage any actions that may escalate tension in the region. This statement has been interpreted as a show of support for the Cypriot government and Total. Many pundits have linked the US support to the prospective interests of US energy giant ExxonMobil in Cyprus and Greece.

The State Department official also added that the US continues to believe that Cypriot oil and natural gas revenues need to be shared fairly between the divided island’s Greek and Turkish communities.

The Cypriot govermnent has declared that Turkey’s aggressive response comes as no major surprise. Fokaidis, the Cypriot defense minister, stressed there is no reason for alarm, adding that “the sooner we stop being involved with what’s happening at the drilling rig the better.”

However, he also admitted the situation is being closely monitored, adding that Cypriot officials are implementing plans they have been trained to implement, cooperating with all interested parties, and remaining focused – seriously and calmly – on the national objective, which is “to fulfil our energy plans.”