EU leaders hesitate to take energy crisis action

EU leaders, disunited by conflicting interests, have hesitated to take any decisive energy crisis action at a summit of the 27 member states in Brussels, whose agenda includes the energy crisis. The leaders have opted to defer the issue until October 26, when EU energy ministers are scheduled to meet.

The EU’s member states of the south, short on storage infrastructure for green energy, are pressing for solutions to the energy crisis, while Europe’s north, better equipped to weather the storm, sees no real need for urgent action, despite the exorbitant energy price levels.

Industrial producers in the south, consequently disadvantaged and under greater pressure, are calling for intervention.

Russian president Vladimir Putin, pressuring for EU approval of the new Nord Stream 2 pipeline running to Germany via the North Sea, yesterday informed that gas supply to Europe could only be increased via this new pipeline route. Russia’s reduced supply is a key factor of the current energy crisis.

In Greece, the only possible solution for the short term would entail reducing fuel taxes, an option the government may adopt to soften the effects of the energy crisis, which, if left unattended, will lead to political repercussions.

As for longer term solutions, EU member states could agree, at the upcoming meeting of energy ministers, on the prospect of placing joint natural gas orders as protection against future crises. This would send a signal to markets that Europe possesses the political will to stand up to crisis situations, which could prompt some degree of price de-escalation.

Gov’t also working on support measures for gas consumers

The government is seeking further energy crisis support measures that would also facilitate energy consumer categories not included in relief measures announced so far to deal with the crisis.

The administration’s latest support effort, commented on yesterday by government spokesman Giannis Economou on SKAI TV, is believed to concern natural gas consumers and could entail offering this category installment-based payments for bills.

The administration has already announced subsidies for electricity consumers and, to date, not offered gas consumers any support.

However, the government’s plan, which could also include support measures for the mid-voltage category, is believed to still be at a preliminary stage.

Athens is seeking to mobilize EU member states for the establishment of an EU fund that would compensate energy consumers and ease the cash flow concerns of suppliers. EU leaders will focus on the energy crisis at a summit meeting this week.

Energy minister Kostas Skrekas has just announced an increase of a sum, from 10 million to 40 million euros, to be made available for funding electricity supply reconnection costs of low-income households facing supply cuts as a result of their inability to cover energy bills.

 

EDA THESS general manager: Italgas arrival decisive in further network digitization, development of renewable gases

The important role of natural gas for the promotion and success of energy transition was underlined by the General Manager of EDA THESS, Mr. Leonidas Bakouras, during his speech yesterday at the Renewable & Storage Forum organized by energypress (October 13-14).

The promotion and utilization of renewable gases, as well as the digitalization and sustainability of the networks were the main topics of his address. Mr. Bakouras stressed that natural gas is transforming through the necessary changes and adjustments in light of the green energy transition. In this context, he suggested that the recent undertaking of the Greek gas networks by Italgas will highly contribute – thanks to its advanced knowhow – to the further digitization of the networks and the development of renewable gases.

Renewable gases: The future of the distribution networks

Identifying the perspective of renewable gas integration (biomethane, SNG and hydrogen) in the energy mix of the next decades, EDA THESS is adjusting its networks to achieve energy transition, without however compromising energy security of its customers. As Mr. Bakouras mentioned, biomethane can replace more than 20% of the current natural gas demand.

In this context, EDA THESS has started performing research and studies revealing high potential for biogas and biomethane production in the areas of EDA THESS.

The existing wide geographic dispersion of the distribution networks, in conjunction with the deployment of new networks near agricultural waste production units, are favoring the sustainability of green networks. Another factor in the “equation” is the cost-effective connection of the injection points for the integration of renewable gases, that enhances circular economy and creates opportunities for the generation of additional income from waste recovery.

Network digitization 

A central pilar in the strategy of EDA THESS is the digitization of the networks. As a distribution network operator, the company has already taken important steps to this end, the General Manager of the Company said.

Among others, the digitalization of the networks allows for:

  • The introduction of new Participants, further enhancing the production of renewable gases
  • The monitoring and management of the gas mix quality for the optimal integration of renewable gases
  • The rapid transformation of the energy markets, upgrading the market and launching new products.

All this results in increased necessity for bilateral real-time information exchange. In this scope, EDA THESS is using smart sensors, smart meters and digital communication technologies.

EDA THESS: member of the European organization GD4S

Finally, the General Manager talked about the membership of EDA THESS in the powerful European organization “Gas Distributors for Sustainability” GD4S, where the Company is cooperating with the leading energy companies of Europe.

The President of the Organization is Paolo Gallo, CEO of Italgas, which is expected – as Mr Bakouras mentioned-  to highly contribute to the further digitization of the networks and the development of renewable gases after its recent introduction in the Greek market.

As for its membership in the international organization, EDA THESS promotes – both at the European and national level:

  • The strategic importance of the development of natural gas infrastructure as an activity harmonized with the taxonomy of sustainable investments
  • The crucial role of the distribution networks in energy transition
  • The establishment of the legislative and regulatory framework for the integration of renewable gases (biomethane, hydrogen) in the distribution networks.
  • The exchange of best practices and know-how

Mr. Bakouras also talked about the role of the Distribution Systems’ Operators. The priorities are the following:

  • Guaranteed stability of the distribution system
  • Cooperation between all the stakeholders of the system
  • Assurance of the gas mix quality
  • Application of technological innovations reducing the methane and pollutants’ emissions
  • Optimization of the networks’ capacity management

With regard to the company, EDA THESS serves more than 400 thousand consumers and distributes 5.1 million MWh annually. The strategic plans of the company include 8.8 million euro investments for the digital transformation of the company, rising the digital maturity index of its main business operations from 48% in 2020 to 75% in 2025.

 

Fears of energy market unpaid receivables rebound growing

Government as well as electricity and natural gas company officials appear increasingly concerned about a rebound in unpaid receivables at energy firms as a result of exorbitant energy price increases faced by consumers.

The scale of the ongoing energy crisis plus the inability of analysts to make confident price projections has government officials scrambling for solutions, including through EU action, that could lessen the energy cost burden for consumers and protect supplier cash flow.

During a meeting yesterday with European Commission Vice-President Margaritis Schinas, Greek Prime Minister Kyriakos Mitsotakis reiterated a European Commission proposal for revisions that could enable energy bill payments through installments.

According to sources, the Greek government could insist on a proposal made by energy minister Kostas Skrekas for the establishment of an EU transitional compensation fund, supported by CO2 emission right revenues, distributing amounts to member states as energy-crisis aid.

The Prime Minister suggested this proposal during his meeting with the European Commission deputy, who did not offer a direct response but indicated that a European solution would be sought during an EU summit scheduled for next week, sources said.

Support for energy consumers would also help the finances of suppliers, who, as a result, would be in a better position to offer energy bill payments through installments.

 

Natural gas strategic reserve among EU thoughts for crisis

A series of measures to be announced today by the European Commission to help EU member states counter the energy crisis may include a strategic reserve for natural gas, complementing respective supply contracts, for abnormal periods such as the current energy crisis affecting the world, especially Europe.

EU member state participation in this strategic reserve would be optional. The initiative, still at a preliminary stage, is being examined. No decisions have been taken.

The EU’s energy market integration and transboundary grid interconnections have helped avoid even more extreme developments in the current crisis, Brussels has observed.

Measures taken by member states at a national level will need to comply with EU law and not contravene Europe’s energy transition towards renewables, Brussels has made clear.

The European Commission has defended its views on the causes of the energy crisis, insisting that increased natural gas prices have been primarily responsible, while noting that the EU’s Emission Trading System (ETS), through which carbon emission right prices have been driven higher, has played a lesser role.

Leonidas Bakouras: “Global Energy Crisis – High Natural Gas Prices”

The volatility of the natural gas wholesale market around the world is unprecedented, as prices reached an all-time high. The current situation is due to a multifactorial equation with contextual factors acting simultaneously, leading to extended price surge. However, the General Manager of EDA THESS, Mr. Leonidas Bakouras endorses the forecasts of analysts talking about a transient increase in prices.

The final price charged to the End Consumer is normally shaped by the sum of the Transmission Tariff, the Distribution Tariff and the Competitive Supply Charge, directly linked to the prices of the International Natural Gas trade and imports. Contrary to the natural gas supply prices, the distribution and transmission prices are regulated and invariant during each year of the regulatory period.

In its 21-year history, natural gas has been proven to be the safest, most user- and environmentally friendly conventional fuel offering multiple benefits to the society, the economy and the environment.  Similar circumstances in the past had led to a significant increase in the prices of natural gas due to the large-scale transient surges of winter 2008-2009. However, natural gas maintains, over time, the trust of consumers who enjoy the benefits stemming from its use, as the price of natural gas was and still is significantly lower and more competitive than the rest of the conventional fuels.

Consumer’s trust is depicted on the high penetration of natural gas, as more than 385.000 families and households are supplied by the Distribution Network in the License areas of EDA THESS. Despite the current energy crisis, the interest of consumers for their transition to the use of natural gas continues since, only in October, more than 170 new connection contracts are signed daily.

The General Manager stated to this effect: “Despite circumstantial changes in prices, natural gas remains the only sustainable and prompt solution. As the cleanest fuel, it is clearly the main instrument for the transition to the decarbonization of the country. At the same time, it will continue contributing to the energy security of the country and of the EU member-states.

I am certain that the measures taken at the European and national level will partially absorb the impact of the price surge in the upstream market to the benefit of the consumers. Pursuant to the recent statements of the State, the heating allowance rises, and the inclusion criteria are expanded, covering – among others – part of the natural gas consumption cost.” 

In this context and in view of the upcoming winter season, EDA THESS encourages consumers to:

  • Ensure a rational management of natural gas consumption.
  • Proceed to the timely regular maintenance of their natural gas installations by licensed and certified technicians, to ensure the efficient operation of their equipment and thus, uninterrupted use, higher saving, and higher safety.
  • To receive regular updates by the 17 natural gas suppliers active in the License areas.

Summarizing, the General Manager stated that the measures announced by the state in conjunction with the contribution of consumers through prudent consumption management will create a safety net of constant value against transient price surges.

Suppliers commend power bill subsidies, disapprove DEPA Commercial support

Energy suppliers have commended the government’s subsidy support package for electricity bills, stating the initiative is headed in the right direction, but, on the contrary, disapprove government intervention offering support to state-controlled gas supplier DEPA Commercial that will enable the company to absorb 15 percent of the natural gas cost increase.

This support offered to DEPA Commercial affects competition and the market’s overall functioning, rival gas suppliers protested. “DEPA Commercial may be a state-controlled company but this does not spare the firm from having to comply with free market and competition regulations,” a rival company official remarked. “The government’s move raises competition issues,” the official added.

As for the electricity bill subsidies, these will protect consumers from having to carry the entire burden of the surge in prices, while, on the other hand, suppliers will benefit from some cashflow relief as they will be requiring greater capital amounts at present and in the mid to long term, suppliers added.

 

 

 

Three-part energy crisis plan to begin with €500m in subsidies

A government plan aiming to soften the effects of the energy crisis, which could last well into 2022, will be comprised of three stages, beginning with a 500 million-euro support package including double the amount of previously announced subsidies for electricity, as well as natural gas and heating subsidies.

The plan, whose details are expected to be announced later today, will then continue with a second support package for low-income households around Christmas time.

The third part of the plan, whose details will be announced at a latter date, is expected to entail the establishment of a mechanism absorbing extraordinary energy costs.

For its three-part plan, the government presumes the energy crisis, caused by an unfavorable combination of international factors, will last well into 2022. Some analysts believe the crisis could persist throughout next year.

Consumers throughout Europe are facing exorbitant electricity and natural gas costs that have increased multifold over the past few months.

 

 

Power bill subsidies increased, gas cost support also expected

The energy ministry is preparing to increase an electricity-cost subsidy package to between 280 and 300 million euros, from a 200 million-euro sum announced last month by Prime Minister Kyriakos Mitsotakis at the Thessaloniki International Fair, as a result of the continuing surge in energy costs, which, if not combated, could have political ramifications.

The ministry’s response comes following the announcement of September’s increase in the wholesale electricity price average, the latest in a series of monthly rises. Wholesale electricity prices averaged 134.73 euros per MWh in September, up from 121.72 euros per MWh in August and 101.86 euros per MWh in July, all well over the January average of 52.52 euros per MWh.

Finalized decisions on the subsidy support package have yet to be taken but officials have already agreed to draw the amount to be provided to consumers from the Energy Transition Fund.

The expected subsidy increase for electricity consumption would result in support worth between 40 and 45 euros per MWh, instead of 30 euros per MWh, effectively resulting in a monthly electricity bill reduction of 14 to 15 euros for consumers.

The government is also looking to subsidize natural gas bills through an additional support package expected to be worth roughly 150 million euros. Retail natural gas prices have risen by approximately 500 percent since the beginning of the year.

More energy price hikes feared as Europe searches for solution

Another round of record-breaking energy price increases throughout the continent could be looming. Europe is primarily placing its hopes on an increase of Russian gas supply, which would greatly ease the ongoing price ascent, but, for the time being, energy prices are continuing to rise at unfathomable rates.

Under the currently alarming conditions, shaped by an unfavorable combination of international market trends, including main supplier Russia’s subdued gas supply to Europe, Dutch TTF hub futures for November contracts are set to once again reach levels of 160 euros per MWh. This would skyrocket wholesale electricity prices to 350 euros per MWh, a 70 percent increase on the current record level of 204 euros per MWh and 300 percent higher than a year ago.

Russia has cut back on its gas supply to Europe as a means of pressuring the EU for approval of its Nord Stream 2 gas pipeline, running through the North Sea to Germany. The project is opposed by some EU members as they would lose significant sums in transit revenues.

The EU has been left without a Plan B and greatly dependent on Russian gas supply for a number of reasons, including a gas reserve drop in many countries due to the summer’s prolonged heatwave, as well as increased LNG demand in Asia.

In Greece, roughly 50 percent of the country’s electricity generation is produced by natural gas-fired power stations, meaning gas price levels directly impact electricity prices.

 

Doubled gas prices for winter start, electricity cost soaring

Energy consumers of all categories are heading into the winter season facing doubled natural gas prices compared to a year ago, a growing problem for the government that could have political repercussions.

EU leaders are scrambling for solutions to quell an unfavorable combination of factors in international markets that have sparked this extreme situation, pushing the energy market beyond control.

Indicatively, one of the country’s major natural gas suppliers has just set retail tariffs at around 9 to 9.5 cents per KWh, up from 4.5 cents a year earlier. Things could get worse in the winter.

The situation is also alarming in the electricity market where retail price increases of approximately 40 percent in October could rise by just as much in the next few weeks.

The wholesale electricity price for today is at 178.29 euros per MWh. The November price surge for natural gas futures contracts, up 20 percent in just one day, yesterday, would increase next month’s wholesale electricity prices to levels of 255 euros per MWh if the overall situation remains unchanged.

 

Brussels hesitant on hedging mechanism for energy prices

A Greek proposal for the EU’s adoption of a temporary hedging mechanism as a means of easing the burden of sharply risen energy costs on consumers, to be tabled at a Eurogroup meeting of EU finance ministers today, will be met with hesitancy as the European Commission would not want to bring to the negotiating table issues linked to the Emissions Trading System, fearing any potential need of a compromise with member states opposed to the ETS, such as Poland, well-informed sources anticipate.

The European Commission has fought hard to establish the ETS as a means of combating climate change.

The temporary hedging mechanism would draw funds from the Emissions Trading System’s auctions of CO2 emission rights.

The hedging mechanism was proposed several weeks ago by Greek energy minister Konstantinos Skrekas and will be officially presented by Greek finance minister Hristos Staikouras to his European counterparts at today’s Eurogroup meeting.

The EU finance ministers will be focusing on the alarming increase in energy prices, prompted by a combination of international factors, though finalized decisions at this session are considered unlikely.

ELPE begins group restructuring plan to feature new subsidiaries

Hellenic Petroleum ELPE has begun preparations for the establishment of a new subsidiary as part of the group’s wider restructuring plan, dubbed Vision 2025. The subsidiary will be attached to a holding company to serve as an umbrella for subsidiaries representing the group’s activities.

As a first step, ELPE’s administration has decided to establish a new division for its refining, supply and petroleum and petrochemicals sales.  ELPE plans to offer 130.1 million new shares for 10 euros each, which results in a total value of 1.3 billion euros for this new subsidiary.

The restructuring plan is expected to be completed by the end of the year with the establishment of all other subsidiaries, representing Commerce (EKO, BP), ELPE Upstream, ELPE Renewables, as well as a subsidiary hosting the group’s electricity and natural gas interests.

The Vision 2025 plan includes investments worth 4 billion euros to facilitate the group’s entry into the renewable energy sector and support new technologies for cleaner energy production.

Crisis Management Committee to examine supply security

The Crisis Management Committee is expected to meet within the first fortnight of October to examine the overall situation in the energy market, driving price levels up to exorbitant levels for consumers of all categories.

The committee’s members will discuss the issue of supply adequacy and security for meeting electricity generation needs, primarily.

Electricity, natural gas and CO2 emission prices are skyrocketing, while natural gas shortages are now emerging in EU markets, all as a result of an extraordinary combination of developments in European markets.

For the time being, Greek energy sector authorities – RAE, the Regulatory Authority for Energy; DESFA, the gas grid operator; and IPTO, the power grid operator – have remained reassuring. Yesterday, RAE president Athanasios Dagoumas noted: “We are not in a state of alarm but are vigilant.”

Overall natural gas consumption is expected to increase in 2021. Consumption was 14 percent higher in the first half compared to the equivalent period a year earlier, DESFA data has shown.

Gas demand rose in July and August to meet increased electricity generation needs and is also expected to be elevated this coming winter.

In Greece, approximately 60 percent of natural gas consumption results from electricity generation. The ongoing withdrawal of coal-fired power stations and greater reliance on fluctuating RES output is expected to lead to a further increase in demand for natural gas.

Local authorities have pointed to Greece’s natural gas source diversification, made possible by the Revythoussa LNG terminal and TAP, both offering alternative solutions, as crucial in the effort to manage the current energy crisis.

EU energy ministers to discuss consumer protection measures

EU energy ministers plan to discuss the alarming increase in energy prices on October 6 at a session expected to take into consideration a proposal made by Greek energy minister Kostas Skrekas for a temporary hedging mechanism that would be linked to the EU’s Emissions Trading System (ETS) as a means of protecting consumers against the overall energy cost ascent, caused by a combination of unfavorable factors, internationally.

Higher energy costs, which have energy consumers, including industrial, bracing for a challenging winter, will also be a key issue at a EU Summit meeting on October 21 and 22.

Natural gas prices yesterday climbed to 85 euros per MWh, several times over levels registered earlier in the year, oil prices exceeded 80 dollars per barrel, and CO2 emission rights, on a record-breaking streak, reached 62 euros per ton.

Besides these price rises, energy sufficiency issues are also beginning to emerge around Europe, as well as in China, for a variety of reasons.

In Greece, the combination of higher prices for primary and secondary materials, greater transportation costs, given the country’s location on the edge of Europe, plus the increase in energy prices, threatens to paralyze the industrial sector.

The country’s energy-intensive consumers are calling for a revision to supply rules. In the domestic retail electricity market, suppliers are being forces to revise prices. Some have so far resisted but are battling against narrowing profit margins. Customer shifts by disgruntled customers are already being observed.

 

EDA THESS chief: 64% of Thessaly, Thessaloniki population has contributed to energy transition

“In our 20 years of operation, 64% of the population in Thessaloniki and Thessaly has been engaged in energy transition, when in Europe it took 25 years for the 50% of the population to do so,” underlined Mr. Leonidas Bakouras, General Manager of EDA THESS, speaking at the Thessaloniki International Fair’s Oikonomikos Tachydromos (OT) stand.

The full interview, filmed, with English subtitles, follows:

Interview of the General Manager, Mr. Leonidas Bakouras on ot.gr

 

Industrial players paying price for energy supply agreement delays

Industrial producers who have prolonged their energy-supply negotiations and delayed signing new agreements now face drastically deteriorated conditions prompted by an alarming price surge.

Highlighting the unfavorable turn in market conditions, one small-scale industrial consumer is believed to have just signed a new high-voltage supply agreement at a price level of approximately 120 euros per MWh, about 30 percent higher than levels of just a few months ago and considerably higher than supply agreements reached early in the summer.

Power utility PPC managed to move fast enough to incorporate hedging agreements to these deals as protection against price rises, a crucial decision given the current conditions.

A number of large-scale industrial players have yet to reach electricity supply agreements, finding themselves fully exposed to the sharp price rises, caused by a combination of unfavorable factors in international markets.

Mid-voltage industrial producers find themselves in even more discomforting positions as electricity price rises for this category have been even steeper, reaching levels of 125 euros per MWh in July and 150 euros per MWh in August.

The adverse market conditions help explain Hellenic Petroleum ELPE’s recent decision to not sign a new supply agreement with PPC, turning instead to group member Elpedison for its electricity needs.

Increased electricity and natural gas costs are severely impacting the competitiveness of industrial producers, expected to pass on these increased costs to their product prices.

 

DEPA Comm., ELFE appeals this week, key for privatization

An Athens Court of Appeal will, on Thursday, hear three appeals submitted by gas utility DEPA and fertilizer industry ELFE following a Court of First Instance verdict in 2019 concerning an ongoing legal dispute between the two companies.

ELFE is seeking 302 million euros in compensation from DEPA, contending the gas company overpriced gas supply between 2010 and 2015.

DEPA has also filed a case seeking 86.7 million euros from the fertilizer producer, based in Kavala, northern Greece, in overdue amounts. The Court of First Instance had issued a verdict trimming this amount to 60 million euros. It is now the turn of the Athens Court of Appeal to decide.

Much attention is being paid to this case as, should it drag on, it could impact the ongoing 100 percent privatization of DEPA Commercial. In addition, a decision vindicating ELFE can be expected to also prompt other gas consumers to file overpricing cases against DEPA.

If the legal battle is prolonged, TAIPED, the privatization fund, could temporarily shelve the privatization until a final legal decision is reached. Another option being considered by the government is for the Greek State to cover any resulting compensation claims if ELFE is vindicated, as a form of guarantee for the prospective buyers.

The Greek State’s 65 percent stake is being offered by TAIPED, the privatization fund, and Hellenic Petroleum ELPE is also selling its 35 percent stake.

Natural gas prices double last year’s levels, alarm widespread

Retail gas prices are seen increasing by at least 100 percent in October, compared to a year earlier, the lowest level at present being 40 euros per MWh, double the level of a 20-euro per MWh price in the equivalent month last year.

The situation, caused by an unfavorable combination of factors in international markets, is truly alarming as market officials admit not being able to forecast any limit to the upward trajectory.

Natural gas prices at the pivotal Dutch TTF platform yesterday reached 75 euros per MWh, up from 40 euros per MWh in July, 50 euros per MWh in mid-August and 60 euros per MWh in the first ten days of September.

The price surge appears set to come as a shock for natural gas consumers between October and December. It places many gas companies, especially smaller ones, under extreme pressure, and is a major headache for the government, which could need to deliver a new round of subsidy support measures as a follow-up to initial 150 million-euro support action offered to help consumers combat higher electricity prices.

Gas company officials insist that, even under such extreme market conditions, gas will remain a lower-cost option compared to heating fuel.

 

Halliburton also joins Energean for Israel drilling, beginning 1Q in ‘22

Two of the world’s biggest companies, in their respective fields, will participate in Energean’s new drilling program for Israel, scheduled to begin in the first quarter of 2022, an effort through which the company hopes to discover hydrocarbons the equivalent of one billion barrels of oil, primarily as natural gas.

American multinational Halliburton, one of the world’s biggest oil field service companies, has announced an agreement with Energean for three to five drilling procedures offshore Israel, following four drilling efforts completed in 2019 on behalf of Energean in the area, which led to the discovery of the Karish North gas field, set to begin production in 2023, one year after production at Karish, the main field.

Energean has already selected another major global player, Stena Drilling, for the supply of drilling equipment.

According to official announcements, confirmed drilling procedures to be completed in 2022 are: 1) Karish North, containing 33 billion cubic meters of natural gas and 31 billion barrels of certified liquid hydrocarbon (2P) stocks, with first gas production set for the second half of 2023; 2) Karish Main-04, to seek additional hydrocarbon quantities at the main Karish field, estimated at an equivalent of 166 million barrels of oil; 3) at Block 12, for an exploratory drill dubbed Athena, between the Karish and Tanin fields, aiming for 20 billion cubic meters of natural gas and a further 4 million barrels of liquid hydrocarbons.

 

Brussels fears electricity prices could reignite Euroscepticism

The European Commission is pressing for an antidote to counter the sharp rise in electricity prices around Europe, fearing a prolonged period of escalated prices could spark a new wave of Euroscepticism that would put EU citizens at odds with the continent’s energy transition plan, a key Brussels climate-action strategy.

Allegations of market manipulation and doubled CO2 emission right prices since the beginning of the year, at 59.43 euros per ton yesterday, have reinforced the overall reaction against the EU’s energy policy, placing governments under pressure and fueling unrest.

With fears growing of a resurgence in France’s yellow vest movement, the European Commission is seeking to convince citizens that the Emissions Trading System (ETS), a cornerstone of the EU’s green-energy transition policy, is not the cause of the electricity price rises, instead laying the blame on natural gas and fossil fuels.

European Commission president Ursula von der Leyen, in her State of the Union Address, delivered yesterday, was clearly distressed by the situation, offering strong support for the European Green Deal. But, judging by the overall response, she has not appeased the concerns about rising energy prices.

The president’s thinking was reiterated by her deputy Frans Timmermans, in charge of the European Commission’s climate action portfolio, according to whom, only one-fifth of the electricity price increases can be attributed to the elevated CO2 emission rights prices.

 

 

Energy privatizations exceed forecasts, raising nearly €3bn

Two major energy-sector privatizations whose bidding procedures were completed last week, the 100 percent sale of gas company DEPA Infrastructure and 49 percent sale of electricity distribution network operator DEDDIE/HEDNO, exceeded even the most optimistic of expectations, resulting in total revenue, from both sales, of 2.849 billion euros, well over initial projections of 2.2 billion euros.

Australian fund Macquarie’s 2.116 billion-euro winning offer for 49 percent of DEDDIE/HEDNO, being offered without managerial control, stands as a record sum for Greek privatizations.

The DEDDIE/HEDNO sale’s amount will be used by power utility PPC, the parent company, for network modernization, RES growth, and improved customer services.

Italy’s Italgas secured 100 percent of DEPA Infrastructure with an improved follow-up offer of 733 million euros. Thus sum is expected to exceed 800 million euros once the buyer’s bid for a 49 percent stake in distributor EDA THESS, covering the Thessaloniki and Thessaly areas, is submitted and added to the tally.

According to the DEPA Infrastructure sale’s terms, the winning bidder must also purchase EDA THESS’s 49 percent stake, held by Italy’s Eni gas e Luce, wanting to sell.

The favorable outcomes of the two privatizations highlight the country’s improving investment climate as well as the confidence of foreign institutional and strategic investors in the prospects of the Greek economy, Prime Minister Kyriakos Mitsotakis noted. This improvement is also confirmed by yet another upgrade of the Greek economy, this time by Scope Rating, he added.

Besides signaling good news for the Greek economy, the DEDDIE/HEDNO and DEPA Infrastructure privatizations also send an upbeat message on the prospects of the domestic energy market.

 

Energy bill unpaid receivables set to rebound, survey shows

The level of energy bill unpaid receivables appears destined to rise again, a survey conducted by GSEVEE, the Hellenic Confederation of Professionals, Craftsmen and Merchants, has shown.

According to its results, 16.5 percent of small and medium-sized enterprises have warned they will not be able to meet energy bill demands over the next six months.

This figure is slightly higher than the 15.2 percent of enterprises that have left behind bad debt for energy suppliers, meaning the overall level of unpaid receivables appears headed for a new rise.

The GSEVEE survey reported even more worrying results from the hospitality sector as it showed that roughly one in three eateries, or 30.9 percent, declared they expect to not be able to cover electricity or natural gas bills over the next six months.

Recent energy cost increases by suppliers and the threat of further hikes as a result of a combination of various factors in international markets threaten to place energy consumers under even greater pressure.

The energy cost hikes will have a knock-on effect throughout the market, increasing food, raw material and fuel prices, and, as a result, reducing disposable incomes and making payment of energy bills even more demanding.

The unpaid receivables issue that has troubled the domestic market over the past decade or so of recession had begun easing off prior to the pandemic.

Power utility PPC, holding the lion’s share of the retail electricity market, has carried the heaviest unpaid receivables burden, which, at one point, had even exceeded three billion euros.

 

Big week for energy privatizations, approaching finales

It is a big week for the country’s energy privatizations with gas company DEPA Infrastructure’s tender set to reach a concluding stage tomorrow and that of distribution network operator DEDDIE/HEDNO also approaching its finale as its binding bids are scheduled to be opened on Friday.

Italgas, Italy’s biggest natural gas distribution company and the third largest in Europe, has, according to sources, submitted the highest bid in the DEPA Infrastructure sale, offering an 100 percent stake, and is the only bidder to which the privatization fund TAIPED has extended a request for an improved offer, by tomorrow.

The Italgas offer is believed to be close to 700 million euros, a figure expected to rise further, and well above an offer submitted by rival bidder EPH from the Czech Republic.

As for the privatization of DEDDIE/HEDNO, a power utility PPC subsidiary, four binding offers, for a 49% stake, have been submitted by major international funds CVC Capital Partners Group, First Sentier Investors Group, KKR Group, and the Macquarie Group. This level of participation could boost bid levels. Offers of over 1.5 billion euros, or even 1.7 billion euros, could be unveiled, sources have anticipated.

The rebounding economy, potential of Greece’s energy market, as well as the statures of all five suitors involved in the two sales could result in two of the country’s most lucrative privatization agreements, in all sectors.

EDEY: Greece has 30 years to utilize natural gas resources

Taking into account that 2050 is often presented as the carbon-neutral target year, Greece has a 30-year period of opportunity to utilize the country’s natural gas resources and generate revenue, plus the additional potential provided by the role of gas in blue hydrogen production, EDEY, the Greek Hydrocarbon Management Company, has noted in a report accompanying its financial results for 2020.

EDEY posted a total turnover reduction to 2.8 million euros for 2020, down from 5.5 million euros in 2019, as well as a drop in profit after tax to 1.7 million euros in 2020 from 4.3 million euros in the previous year.

Greece continues to have a window of opportunity to create revenue from natural gas resources through efforts that do not contravene the country’s ambitious green-energy transition now in progress, EDEY noted, highlighting that carbon emissions released by natural gas are 50 percent lower than those of fossil fuels and the National Energy and Climate Plan’s objective (NECP) for a natural gas energy mix share of 40 percent by 2030.

 

PPC to partially absorb power costs, Brussels action imminent

Power utility PPC has decided to pursue a policy that will partially absorb electricity market price increases prompted by a volatile combination of unfavorable factors.

The utility plans to limit the impact of carbon emission costs and not pass on the entirety of their effect to consumers.

Competitors will either have to follow suit and subdue price hikes, which will hurt their financial results, or risk suffering market share losses.

The response of PPC’s rivals remains unclear at this stage. Marker players are now trying to estimate the duration of this unfavorable period of elevated prices.

Natural gas prices have surged, driven by Russia’s decision to slow down gas supply to Europe, presumably to pressure Brussels into brushing aside its reservations about a new Nord Stream pipeline from Russia to Germany. Also, CO2 emission costs have continued to rise.

CO2 emission cost futures contracts for December are stuck at levels of between 61 and 62 euros per ton, while analysts forecast levels of 65 euros per ton over the next few months, or possibly longer.

Given these factors, analysts believe it is a matter of time before the European Commission intervenes in an effort to deescalate market price levels by subduing CO2 emission costs and increasing its pressure on Moscow for a return to normal gas supply levels to Europe.

Otherwise, market conditions will become increasingly volatile with social repercussions, especially in countries experiencing extreme price increases that have been even greater than those in Greece.

In Bulgaria, for example, wholesale electricity prices have skyrocketed to more than 100 euros per MWh, well over the country’s usual levels of about 30 euros per MWh.

New regulatory framework for oil product, natural gas facilities

The energy ministry is planning to upgrade the regulatory framework for petroleum product and natural gas facilities, regarded as necessary in order to align the framework with modern technological developments and optimal solutions. Also, through the upgrade, the energy ministry will also introduce new regulations for areas not covered by national legislation.

The energy ministry has announced a related tender for a specialized consultant to be  tasked with designing and delivering technical regulations in the form of a regulatory framework.

Issues to be covered by the upgrade include defining technical specifications, configuration, design, construction, inspections, safe operation, maintenance and fire protection of hydrocarbon extraction facilities, including the sealing of wells, as well as for overland pipelines transporting crude and petroleum products and subsea pipelines carrying crude, petroleum products, natural gas and hydrocarbon extraction.

An 18-month contract will be offered to the winning participant in the tender for the regulatory framework upgrade, budgeted at 304,838 euros. Based on the current schedule, the framework’s upgrade will be completed by 2023.

Factors pushing up gas prices, economic activity threatened

A combination of market conditions and structural matters has unbalanced natural gas markets throughout Europe, driving prices higher, which is severely impacting electricity prices.

Recovering economies following pandemic-induced flatness, combined with a policy applied by Russia, Europe’s main supplier, to significantly restrict gas outflow to the continent, has created energy crisis conditions.

In mid-August, Russian gas outflow through the Yamal pipeline, running across Russia, Belarus, Poland and Germany, has not exceeded 20 million cubic meters per day, following levels of as much as 49 million cubic meters per day just weeks earlier, still well under usual levels averaging 81 million cubic meters per day.

According to analysts, this reduction has been attributed to Gazprom’s preference to supply Russian gas through the Nord Stream 2 pipeline, bypassing Ukraine and Poland.

LNG supply to Europe has also fallen in recent times as Asian countries appear more willing to pay higher prices.

In addition, prices are also being impacted by EU climate-change policies designed to limit the use of fossil fuels, lignite as well carbon emissions, all of which has greatly increased demand for natural gas, not only in Europe, but Asia and the US, too, pushing up prices to levels of 48 euros per MWh in recent days.

Natural gas shortages have driven wholesale electricity prices higher. In Germany, for example, wholesale electricity prices have risen by 60 percent over the past year. In Spain, the government has reduced energy consumption taxes in an attempt to subdue the wave of price rises.

The situation in the energy market is extremely worrying as it affects economic activity and is placing millions of households at risk of finding themselves in energy poverty.

Energy transition proving to be expensive, 30% price hike seen

Unprecedented price rises in the wholesale electricity market, up by as much as 80 percent between July 1 and August 8 and tripled since the beginning of the year, will inevitably impact consumers with imminent increases of approximately 30 percent, market officials have told energypress.

The average wholesale electricity price for this year has been estimated at between 80 and 90 euros per MWh, up 30 percent compared to levels in 2019, used as the base year as price levels in pandemic-hit 2020 were distorted by the unprecedented conditions.

Households and businesses should soon expect elevated electricity bills as a result of wholesale-related clauses triggered by suppliers in response to the sharp wholesale electricity price increases recorded since early July.

These developments, largely attributed to European Commission policies implemented to combat climate change, have prompted comments by key energy market officials, including Evangelos Mytilineos, chairman and chief executive of the Mytilineos group, who recently warned “the energy transition will be expensive.” Another official noted this is a “new era of higher-priced electricity.”

CO2 emission right costs have more than doubled since the beginning of the year, reaching levels, at present, of between 54 and 55 euros per ton.

Natural gas prices have doubled since January at the TTF Dutch trading platform, to 42 euros per MWh.

Greek market officials widely acknowledge the country has no other option but to gradually end its reliance on lignite and fossil fuels, while stressing, however, the need for swifter legislative revisions facilitating quicker RES penetration and energy storage development.

 

 

DEPA Commercial turnover down 47.8% due to pandemic

Gas company DEPA Commercial has forecast an increase in natural gas volume-based sales of over 20 percent in 2021 following a pandemic-induced total turnover reduction of 47.8 percent last year, down to 396.5 million euros from approximately 760 million euros in 2019.

As a result, DEPA Commercial’s profit after tax in 2020 fell to 37.5 million euros from 67.9 million euros in the previous year.

Despite the reduction, DEPA Commercial offered shareholders – privatization fund TAIPED (65%) and Hellenic Petroleum ELPE (35%) – dividends totaling 6.6 million euros.

The company attributed its turnover drop to international market conditions shaped by the pandemic during the first half of 2020, which suppressed prices at international hubs, creating purchasing opportunities at spot markets, before price levels partially rebounded.

These conditions conduced opportunistic gas orders by major-scale consumers in Greece, who have usually covered a great part of their natural gas needs through DEPA, based on long-term supply contracts, the company explained.

In terms of volume, DEPA’s gas sales in 2020 totaled 25.5 TWh, down 6.7 percent compared to 2019, primarily as a result of the aforementioned factors.