Gas heating most affordable option following new subsidy

The energy ministry has announced a natural gas-heating subsidy of 9 cents per liter, making gas heating the lowest-cost heating solution for households – compared to fuel and electricity – despite a 300 percent natural gas price increase compared to a year ago.

This gas subsidy comes as crucial support for the mass of households that took pre-crisis decisions to convert to gas heating over the past decade or so, only to see gas prices skyrocket in recent months.

Taking into account the gas subsidy, announced yesterday by energy minister Kostas Skrekas, gas heating will begin the winter season at 12 cents per liter (120 euros/MWh), below the cost of 13 to 14 cents per liter for heating fuel and 16 cents for electricity heating.

The gas heating subsidy level is based on the assumption, by gas companies, of TTF price levels of roughly 200 euros per MWh in coming months.

Given the aforementioned figures, the heating cost for a 100 square-meter apartment requiring 9,000 KWh for heating over a winter is 1,000 euros for gas heating, 1,250-1,300 euros for fuel heating, and 1,450-1,500 euros for electricity heating.

Without the gas heating subsidy, the resulting gas heating cost, priced at 21 cents per liter, would reach nearly 2,000 euros for a 100 square-meter property.

 

 

October tariffs slightly lower than September levels

Electricity tariff levels for October, to be announced late tonight by electricity retailers, are expected to be lower than September’s levels but still higher than August prices, energypress research has shown.

The anticipated retail electricity reduction has been attributed to a recent reduction in natural gas prices at the Dutch TTF hub.

Most suppliers are expected to set their tariffs for October at levels between 60 and 68 cents per KWh, while prices, by some suppliers, slightly below the level of 60 cents per KWh, have not been ruled out.

Under new market rules, electricity retailers must announce their tariffs for forthcoming months by the 20th of each preceding month.

September’s tariffs ranged between 68 and 80 cents per KWh, well over August’s levels of between 47 and 58 cents per KWh.

The government is seeking to stabilize prices for consumers through a latest subsidy package, whose amounts offered will be inversely related to consumption levels. It will be implemented as of October 1.

According to sources, highest subsidies will be offered to consumers making a low-consumption category, to be set at a maximum of 500 KWh per month. Slightly lower medium-category subsidies will be offered to consumers using between 501 and 1,000 KWh per month, while consumers exceeding 1,000 KWh per month will be offered the smallest level of subsidies, the sources added.

Higher-level energy consumers who succeed to reduce electricity usage by at least 15 percent compared to a year earlier will be transferred to the next-highest subsidy category, the sources informed.

Natural gas subsidies are expected to be universally applied.

 

 

‘EC intervention acceptance of energy market failure’

The European Commission has finally decided to adopt state intervention measures in energy markets, mainly electricity, after much delay, essentially accepting the failure of markets to produce desired results, Pantelis Kapros, Professor of Energy Economics at the National Technical University of Athens, has noted in an analysis.

Major energy price increases needed to spread throughout Europe for Brussels to decide to intervene, the energy expert noted.

Fixed price offers and price hedging contracts – which, in many countries, secured, over a considerable period, relatively stable retail electricity prices not reflecting rising electricity prices at energy exchanges – have become impossible to maintain as a result of the extended energy price crisis, the professor pointed out in his analysis.

Consumer prices are now skyrocketing virtually everywhere in Europe, increasing the risk of bankruptcies, a perilous situation that has prompted EU governments to push the European Commission for state intervention proposals, the professor underlined.

During this crisis, electricity markets have failed to achieve consumer prices at levels reflecting the true long-term average cost of electricity, as healthy competition would, the professor noted.

Given the exorbitant natural gas prices at present, green hydrogen would represent a lower-cost alternative, if infrastructure was in place, the professor noted, concluding green transition is the only positive way out of the problem, as has now been recognized by all.

Major industries turning to natural gas alternatives

Energy-intensive industries are abandoning, one after another, natural gas as an energy source and turning to alternatives in order to contain their operating costs.

Aluminium of Greece has switched to diesel for smelting procedures at its Agios Nikolaos facility in Viotia, northwest of Athens, while Motor Oil, has begun using naphtha for some of its energy needs, in place of natural gas, whose price levels have spun out of control.

According to sources, another major industrial player, ElvalHalcor, is also examining LPG as an alternative to natural gas, which the company uses for its aluminum and copper smelting furnaces.

However, this fuel switch cannot be carried out instantly as specialized studies focused on safety matters must precede the change. In addition, equipment needed for this fuel switch is not readily available. Also, ElvalHalcor is examining the extent of LPG availability in Greece as an industrial enterprise of its size would require big amounts.

European Commission energy crisis measures set to be announced, which will require energy savings and discourage the use of natural gas, are driving industrial players to seek energy source alternatives.

 

Brussels placing energy crisis hopes on windfall profits tax

The European Commission is placing its hopes on greater revenues to be generated by a windfall profits tax on refineries, wholesale gas companies and electricity producers as a solution to get the EU through the energy crisis.

According to the plan, the EU-27 will use these increased tax collections to subsidize, as widely and as generously as possible, electricity bills of European households and businesses.

Thoughts of imposing a price cap on natural gas from all sources, including Russia, have been abandoned, following objections raised by many EU member states at a recent meeting of EU energy ministers.

The windfall profits tax on oil, gas, coal and refining companies, to be announced today by European Commission president Ursula von der Leyen, could reach as high as 33 percent, according to Bloomberg. Drafts of this extraordinary tax measure do not include its tax rate.

 

Heating fuel subsidy boost for minimal electricity heating

Heating fuel subsidies will continue being offered universally in Greece this coming winter, but at a higher level, up to 20 cents per liter, or 25 cents per liter including VAT, along with more generous income criteria, as the government wants to make fuel-based heating the lowest-cost heating solution this winter in order to minimize the number of households turning to electricity for heating.

Increased electricity usage would mean increased demand for natural gas, the costliest energy source at present. Natural gas represents roughly 40 percent of overall electricity generation in Greece.

The new subsidy package for fuel heating is expected to enable all consumers to purchase heating fuel at a level of 1.30 to 1.40 euros per liter, instead of 1.60 euros per liter, the price level if supply were to start now.

Heating fuel subsidies in Greece were worth a total of 174 million euros last winter, a sum seen rising to 300 million euros this season.

The number of households eligible for heating fuel subsidies is expected to increase to 1.3 million from 800,000 last winter as a result of a planned income criteria revision widening the offer’s eligibility.

The offer’s personal income criterion is expected to increase to between 17,000 and 18,000 euros per annum from 14,000 euros at present for single-resident homes, while corresponding income criteria rises will be made for families.

 

No EU decision seen today for cap on Russian gas prices

At least ten EU member states oppose singling out Russia for a cap on its gas prices, warning that such a move could push Russian president Vladimir Putin to cut supplies to Europe completely, the Financial Times has reported.

The EU countries opposing action against Russia, alone, including Greece, Italy and Poland, want caps on gas prices for all suppliers.

The lack of consensus on a gas price cap means that the proposal is not expected to lead to a decision at today’s emergency meeting of EU energy ministers.

“Quite frankly the Russians will probably retaliate on this,” Nikos Tsafos, chief energy adviser to Greek prime minister Kyriakos Mitsotakis, told the Financial Times.

“Europe should have a loud voice and impose a reasonable price,” said Italy’s energy transition minister Roberto Cingolani, saying he too preferred a general cap. “It is a perfect storm against our citizens and companies.”

Moscow has threatened to stop all gas supply to Europe should the EU impose a gas price cap. Russian gas supplies to the bloc have been cut by about 80 per cent to about 84mn cubic meters a day since the start of Russia’s invasion of Ukraine.

 

 

Gas subsidy cut a disincentive considered for lower demand

Reduced natural gas consumption, not just in the industrial sector, but for households as well, is emerging as a key strategy in the government’s battle against the energy crisis as a very challenging winter approaches.

Government officials are looking to drastically reduce, or even eliminate, subsidies offered for natural gas – both state subsidies and gas utility DEPA subsidies – according to one proposal already being discussed.

Natural gas subsidies offered in Greece peaked in April at 40 euros per thermal MWh, double the level of the rate offered a month earlier. A total of 540,000 households, along with all business and industrial consumers, regardless of size, earnings or workforce, were eligible for these subsidies.

However, the country’s fiscal leeway has tightened, eroding the government’s ability for gas subsidy support packages worth 90 to 100 million euros per month.

At current gas price levels, support packages, as they stand, would exceed an annual cost of 15 billion euros, representing 7 percent of GDP.

Last April, when international gas prices were lower compared to current levels, the month’s gas subsidy support package – state and DEPA, combined – reached a total cost of 88.74 million euros.

Reducing or eliminating gas subsidies would serve as a disincentive for new gas connections, especially if gas prices remain high. However, such an initiative would place existing consumers under increased pressure, which could result in political cost. The next Greek legislative election will be held by July, 2023.

Government moves ahead with plan to reduce energy consumption

The introduction of energy saving measures, both compulsory and optional, for consumers has now become a priority for the government following growing shortage fears, throughout Europe, prompted by Russia’s indefinite closure of the Nord Steam I gas pipeline, supplying Germany and, by extension, central Europe.

At a meeting of government officials in Athens yesterday, Prime Minister Kyriakos Mitsotakis agreed to move ahead with measures intended to restrict electricity and natural gas consumption in an effort to avoid energy shortages during winter, sources informed.

The government will aim to decrease the amount of natural gas used for electricity generation by approximately 10 TWh, sector officials told energypress.

Annual natural gas consumption in Greece amounts to 70 TWh, of which 50 TWh is used for electricity generation.

An initiative was taken in early July, through a joint ministerial decision, to reduce electricity consumption at all public buildings, numbering 212,000, by 10 percent. The response, so far, has been poor, according to sources.

Campaigns raising the public’s awareness of the need to cut back on energy consumption will soon be launched by energy companies and operators. Citizens will be advised to keep heating temperatures at a maximum of 19 degrees Celsius and lights switched off in rooms not being used.

The government is also striving to limit electricity and natural gas consumption in the industrial sector.

Energy minister Kostas Skrekas met yesterday with key industrialists at the helms of Titan cement group, Viohalco and the Mytilineos group, whose subsidiaries include Aluminium of Greece, to discuss plans limiting energy consumption, as well as the replacement of natural gas with diesel as an energy source wherever possible.

 

 

IGB gas pipeline nearing launch, doubts dismissed

The prospective IGB gas pipeline linking Greece and Bulgaria is believed to be almost ready for its commercial launch, scheduled for October 1, despite recent doubts that were cast over the entire project.

Certain analysts recently questioned whether American LNG supply to Bulgaria, through the IGB pipeline, would go ahead, claiming the new Bulgarian government wants to renegotiate a supply agreement with Russia’s Gazprom.

ICGB AD, the consortium behind the IGB project has announced, in what is seen as a response to the scare, that an auction offering pipeline capacity to users will be held this Thursday through the online platform BALKAN GAS HUB EAD, from 9am to 12pm (Sofia time).

Greek construction company AVAX, developing the project, has set itself an end-of-August objective, which could be stretched to September 8, the latest, to complete pending work and obtain required permits from the Bulgarian authorities.

If all this goes according to plan, the IGB gas pipeline will be ready to operate on October 1.

Brussels preparing crisis action, natural gas price cap likely

The European Commission is preparing drastic action to counter the energy crisis in the form of a price cap on European wholesale gas prices to deescalate electricity prices around Europe.

According to energypress sources, details of the plan will have been finalized by around September 20 so that it can then be discussed by the EU’s energy ministers and heads of state.

Despite these necessary steps, the finalized plan could well be ready for implementation by the end of September as Brussels is seeking a swift procedure.

Highlighting the cruciality of the gas-cap plan for Brussels, European Commission president Ursula von der Leyen is being regularly updated on its progress by the European Commission’s Directorate-General for Energy.

The Directorate-General for Energy is believed to be examining two alternative plans, sources informed.

The first alternative, seen as the more probable option, would entail gas import disruptions for gas offered at prices over the cap to be implemented. Brussels authorities believe Europe’s considerable share of global fuel demand could help subdue gas prices if orders are stopped collectively. The second alternative would involve subsidy support for gas imports.

 

 

RAE approves energy crisis plans for winter sufficiency

The board at RAE, the Regulatory Authority for Energy, has approved preventive action and risk preparedness plans for the country’s electricity sector, two tools shaped in response to soaring gas and electricity prices, breaking records, in the energy crisis.

Though it is generally hoped they will be needless, the two tools could prove useful during what is expected to be a challenging winter throughout Europe, including Greece.

The preventive action plan was approved by RAE following certain revisions to the initial plan, concerning gas reserve requirements.

According to the plan, a new floating storage unit installed in June at the LNG terminal on the islet Revythoussa, just off Athens, will maintain 0.57 TWH in strategic reserves for electricity production, while 1.14 TWh in gas supplier reserves will be stored at an Italian storage facility.

However, the plan is non-binding as these gas reserves may also be stored at other facilities if preferred by players, who are required to maintain strategic gas reserves.

 

Adverse market conditions pushing gas prices to new record levels

Europe’s energy market appears all the more likely to remain stuck in an extended energy crisis of new record levels for natural gas prices, and, by extension, electricity prices, analysts are projecting

Yesterday, gas prices at the Dutch TTF exchange neared a six-month high, rising by over 48 euros in a day as a response to an upcoming three-day disruption of operations at Nord Stream I at the end of the month for maintenance work.

European officials fear an extended disruption of Nord Stream I, beyond the scheduled three-day period.

Gas futures contracts for September yesterday reached as high as 293 euros per MWh, the highest level since March 8.

The energy situation in the European Union in the coming autumn and winter is going to be extremely difficult, the SEB bank noted in a report.

Yesterday, investment bank Citigroup warned that the inflation rate in the UK may reach 19 percent in early 2023 as a result of skyrocketing gas prices, projected to rise almost fivefold compared to the beginning of this year.

Europe will need to compete with major Asian LNG importers such as China, Japan and South Korea to secure required LNG loads, not subject to long-term supply agreements.

LNG prices in Asia have exceeded 57 dollars per million BTU, some loads offered for nearly 60 dollars per million BTU.

FSU at Revythoussa LNG unit, Italy storage solution advances

An FSU has been licensed and installed at gas grid operator DESFA’s LNG terminal on the islet Revythoussa, just off Athens, boosting the facility’s overall capacity to 370,000 cubic meters.

The new floating storage unit’s installation at the Revythoussa terminal comes as part of the country’s energy security effort for protection should Russia disrupt its gas supply. In addition, it will also be used to serve the needs of neighboring countries.

Other steps are also being taken as part of the national energy security plan.

Greek and Italian officials have reached an advanced stage in talks for maintenance of Greek gas reserves at 1.14 TWh at an underground storage facility in the neighboring country. According to sources, the two sides are set to sign a related Memorandum of Cooperation.

The European Commission requires all EU member states without – or without sufficient – natural gas storage facilities, such as Greece, to store by November 1, gas quantities representing 15 percent of annual consumption at existing storage facilities maintained by fellow member states.

Electricity producers operating generators with dual combustion units (natural gas and diesel) are soon expected to take part in an energy ministry meeting to examine fuel-storage issues. This session could take place tomorrow.

 

 

DEDA awaiting biothemane operator license 7 months on

Gas distributor DEDA is still awaiting a license that would establish the company as a biomethane operator seven months it submitted a related application to RAE, the Regulatory Authority for Energy.

DEDA lodged its license application to RAE on December 6, 2021 as part of its effort to move ahead with the country’s first biomethane distribution pilot projects.

Over the past two years, DEDA has been working on procedures for the establishment of legal and regulatory frameworks needed for commercial utilization of biomethane through the distribution networks it operates.

DEDA has already signed memorandums of cooperation with two biogas producers entailing upgrades of their facilities for production of biomethane, to be injected into networks and distributed as a mix with natural gas.

The first biomethane distribution pilot project is planned for the Nigrita area in Serres, northern Greece, to primarily supply household and business consumers. A second project, in Alexandria, Imathia, also in the country’s north, is planned to supply mostly industrial consumers.

Furthermore, on July 4, DEDA submitted a complete proposal to the energy ministry for the development of a biomethane market in Greece, based on revisions to laws concerning biogas, renewables and natural gas distribution. This proposal puts the price of biomethane below that of natural gas.

Lignite-fired output to double, PPC sets conditions for return

State-controlled power utility PPC will double its lignite-fired electricity generation over the next 12 months for annual production of 10 TWh, from 5 TWh at present, an increase covering 20 percent of Greece’s annual electricity needs, energy authorities have agreed at an emergency meeting chaired by Prime Minister Kyriakos Mitsotakis.

The overall effort, reversing the country’s decarbonization plan in order to make up for dwindling Russian natural gas exports and help counter skyrocketing gas costs, will include the development of new lignite mines.

The government’s recently introduced price caps for power generation, set at different levels for respective production technologies, will be applied to this emergency lignite plan.

A price cap of 208 euros per MWh has been imposed on lignite-fired electricity production, meaning the additional 5-TWh amount to be generated by PPC will be worth roughly one billion euros. This additional 5-TWh in production would have been worth 1.8 billion euros if current energy exchange price levels were applied. The wholesale cost of lignite-generated electricity at present is 341.17 euros per MWh.

PPC, controlling all the country’s lignite facilities, has set a series of conditions for the return of lignite-fired power stations, including the abolishment of a rule requiring the company to commit 50 percent of the previous year’s lignite-based output to the futures market.

The power utility has also demanded a 150 million-euro guarantee from the government  should Russia’s war on Ukraine end and energy prices deescalate, which would end the need for the emergency lignite-fired production boost. In setting this condition, PPC has taken into account investments it will need to make to double its lignite-fired generation over the next year.

The government appears to be willing to satisfy the conditions set by PPC, which has disinvested in lignite over the past couple of years.

 

Lignite units back in full force, 34% of energy mix in June

The country’s return to full-scale, lignite-fired electricity generation, an initiative taken to limit the use of natural gas, whose cost has surged amid the energy crisis, increased lignite’s share of the Greek energy mix to 34 percent in June, up from 19.9 percent in May.

Prior to the energy crisis, Greece’s existing lignite-fired power stations, environmentally unfriendly, were headed for withdrawal by 2023 as part of the country’s decarbonization effort.

The duration of their return will now depend on the length of the energy crisis. Ptolemaida V, a new lignite-fired power station planned to be converted to natural gas in the near future, will soon bolster the country’s lignite initiative. This facility’s launch is planned for October or November.

Many questions remain unanswered. The amount of lignite deposits available for extraction at mines is unclear. Also, Greece’s lignite mines and lignite-fired power stations could be short of personnel following the execution of voluntary retirement programs in recent years, as part of the decarbonization drive. In addition, the ability of these lignite units to operate continuously and fully cover a total disruption of Russian gas supply, including during winter, is questionable.

Continual use of the lignite-fired power stations could lead to technical problems. This, at present, is the biggest fear concerning their return.

Government officials contend current lignite deposits can cover the country’s needs until 2030, while new lignite mines could be created, if needed. Staff levels are also sufficient, the officials added.

 

Brussels report highlights EU’s alarming energy cost increase

The cost of wholesale electricity in the EU rose by over 400 percent in the first quarter of 2022, compared to the equivalent period a year earlier, while gas imports during this period cost the EU a total of 78 billion euros, of which 27 billion euros concerned Russian natural gas quantities, a report published by the European Commission’s Directorate-General for Energy has shown.

Households and businesses across the continent have faced unprecedented natural gas cost increases following Russia’s invasion of Ukraine in February. Consequently, the TTF index skyrocketed to peak at 212 euros per MWh on March 7.

The EU adopted a series of sanctions primarily concerning the energy sector as a result of the Russian attack, the report noted. Also, in May, the EU approved its REPower EU plan, designed to gradually end Europe’s reliance on Russian fossil fuels, bolster the continent’s energy security, and support the green-energy transition.

Imports of Russian gas fell by 71 percent via Belarus and 41 percent via Ukraine in the first quarter of 2022, compared to the equivalent period a year earlier. Gas inflow from the Nord Stream pipeline linking Russia with Germany fell by 60 percent in early June.

Europe’s wholesale electricity price averaged 201 euros per MWh in the first quarter of 2022, 281 percent higher than the equivalent period in 2021, the report noted.

Spain and Portugal registered the highest wholesale electricity price increases during this period, a 411 percent rise, followed by Greece (343%) and France (336%), the report noted.

LNG overtakes natural gas as leading energy source import

LNG overtook natural gas as the country’s primary energy source import in the first half of 2022, capturing a 45 percent share of Greece’s energy-source imports, a result of reduced Russian natural gas imports, data provided by gas grid operator DESFA has shown.

During the equivalent period last year, LNG imports represented less than 25 percent of Greece’s total energy-source imports.

DESFA’s LNG terminal on the islet Revythoussa, just off Athens, is currently the country’s main gateway for gas imports. The facility is operating at 90 percent of full capacity.

Gas exports to Bulgaria increased considerably in the first half of 2022, reaching 3 bcm to cover the neighboring country’s entire demand, according to authorities. Russia has completely cut off its gas supply to Bulgaria.

Russian natural gas supply to Greece fell to 35 percent of overall energy-source imports in the first half, down from 42 percent last year, a trend highlighting LNG’s growing role as a result of Russia’s dwindling natural gas supplies.

Demand for natural gas in Greece increased in the first half, the data showed.

Italian gas storage up to 2 TWh from October for 5 months

Greek authorities are taking steps to prepare for a gas-storage solution ahead of next winter in neighboring Italy, in accordance with EU rules, requiring all member states without – or without sufficient – natural gas storage facilities, such as Greece, to store, by November 1, gas quantities representing 15 percent of annual consumption, based on last year’s level, at existing storage facilities maintained by fellow member states.

Based on this requirement and the country’s consumption level last year, Greece will need to store a total of approximately 900 million cubic meters of gas, or 8 TWh, of which up to 2 TWh will be stored at Italian facilities from October for a five-month period.

Storage costs for such a quantity are expected to reach 250 million euros, under favorable conditions.

A related proposal forwarded by RAE, the Regulatory Authority for Energy, will undergo consultation before final decisions on the country’s gas storage plan are made.

 

Nord Stream I maintenance closure sparks unrest in Europe

Europe today enters a ten-day period of heightened energy-crisis suspense as Moscow’s real intentions over the Nord Steam I gas pipeline, just closed for annual maintenance, will not be known until July 21, when the subsea pipeline, running from Russia to Germany, is scheduled to reopen.

European leaders are worried the pipeline’s ten-day closure could develop into an indefinite closure, the worst-case scenario. Natural gas prices, as a result, are continuing to escalate.

In France, the country’s power utility EDF will be nationalized to help the company ride out the European energy crisis and invest in atomic plants. In Germany, the emergency effort includes electricity consumption restrictions as well as rescue plans for beleaguered companies, among them the Uniper energy group.

All is possible should the Nord Steam I pipeline not reopen on July 21, from a deep recession in Germany, an intensified energy crisis throughout Europe, company bankruptcies, electricity and natural gas rationing, and further cost-of-living increases.

Two in ten enterprises around Europe are currently battling to stay afloat, according to the European Investment Bank.

DEPA Chief: ‘Holistic approach to energy matters needed more than ever’

Mr. K. Xifaras, CEO of Public Gas Corporation of Greece (DEPA) SA., writes for International Energy Exhibition of Greece 2022

DEPA Commercial is Custodian of Greece’s energy security and of the smooth operation of the domestic energy market. Today, the energy sector, both in Greece and worldwide, is faced with a series of challenges and unforeseen factors which highlight, now more than ever, the need for a holistic approach to energy matters. The need to contain energy costs and support the society, on one hand, and the process of energy transition, on the other, have created a situation in which the market needs to find a balance which will ensure both the country’s energy efficiency and its survival in sustainable terms.

While trying to solve this difficult equation, the role of natural gas, as a bridge, fuel proves to be decisive for shaping the future of the energy market, given the diversification of energy sources and routes of supply and transport, as well as the expansion of storage capacity. DEPA Commercial, which consistently serves these strategic priorities, has been developing a multi-level strategy for the last three years that has proven to be particularly effective. A strategy with double focus: the verticalization and expansion of corporate activities, and the seamless transition to “green” energy, both of which are national goals described in the National Energy and Climate Plan and the European Green Agreement, enhancing our country’s role as a regional energy hub for the wider Southeast European region.

In order to cover the country’s immediate energy needs and to shield its energy security, DEPA Commercial is increasing the supply of LNG either through current contracts or through the spot market, while having already secured long-term agreements on more favorable terms. At the same time, the company is investing in important infrastructure projects and programs, which are drastically reshaping the energy status quo of the region and are contributing decisively to the process of Europe’s independence from Russian gas, such as the Greek-Bulgarian pipeline – IGB and the offshore LNG terminal (FSRU) in Alexandroupolis. Both, projects which will significantly increase the capacity of supply and storage of both Greece and the neighboring countries it serves.

TAP, Poseidon and EastMed are equally important pipeline projects, with the latter returning dynamically to the forefront as a result of the energy crisis, since it will enable the transport of natural gas from the fields of the Eastern Mediterranean to Europe. To that direction, DEPA Commercial is currently in advanced discussions with trading companies from Israel and Egypt.

In this way, a safety net is established regarding the security of supply in the wider region, which upgrades Greece’s geopolitical status by transforming it into a regulatory factor in the energy landscape.

Simultaneously, given the enhanced importance of natural gas, we have designed a comprehensive strategy aiming, on the one hand to expand the use of natural gas, both geographically and in terms of uses, and on the other hand to create the conditions for the development and utilization of renewable and alternative forms of energy. Keeping this in mind, DEPA Commercial is leading the developments towards the transition to a greener economy by designing and implementing initiatives that promote the further penetration of natural gas in the country’s energy mix, as a transitional fuel on the way to cleaner energy forms. The company also contributes substantially to the promotion of gas mobility and the use of cutting-edge technologies, such as Small-Scale LNG and CNG, thus expanding even further the natural gas network and ensuring distribution even in the most inaccessible areas. At the same, time, emphasis is placed on the development of a sustainable and efficient LNG supply chain for maritime transport that will increase the growth prospects of the Greek shipping sector.

With its sights on the future, DEPA Commercial is already active in the field of Renewable Energy Sources by creating a “green” portfolio that exceeds 200 MW of photovoltaic parks, and is also developing projects, infrastructure and technologies which will be able to serve in the future even “greener” energy such as hydrogen and biomethane.

Moreover, at DEPA Commercial we have proven that we operate always considering pertinent societal issues and, for this reason, with a true sense of responsibility we are contributing decisively to the absorption of a significant percentage of the rise in international gas prices, through the implementation of targeted market interventions aimed at supporting households and businesses, in full cooperation with the Ministry of Environment and Energy.

With a solid vision and through hard work, DEPA Commercial is today an integrated energy company, with strong bases, operating vertically and according to modern corporate governance terms. We are meticulously planning our next steps and we are creating the conditions to successfully meet the ever-changing needs of the market and the economy.

 

IGB moves close to launch, ICGB consortium certified

The Greek-Bulgarian IGB gas pipeline has moved a step closer towards its launch, expected around the end of this month, following the completion of a certification procedure for the ICGB consortium behind the project.

The European Commission, according to information made available, has approved a certification application submitted by the Greek Regulatory Authority for Energy, RAE, and its Bulgarian counterpart, EWRC.

Greek Prime Minister Kyriakos Mitsotakis and Bulgarian leader Kiril Petkov will both attend the project’s inauguration ceremony in Komotini, northeastern Greece, this Friday, ahead of the project’s commercial launch towards the end of the month.

The two leaders are expected to highlight this project’s contribution to the EU’s ongoing effort to end the continent’s reliance on Russia’s Gazprom.

The IGB gas pipeline will offer an alternative natural gas route into Bulgaria, initially via the TAP route and, from autumn onwards, through Greece’s gas grid. From 2023, the IGB will serve as a gateway for LNG imports from coastal FSRUs in the region. LNG quantities will reach Bulgaria, Romania, even Ukraine, through pipeline interconnections.

Energean license for South Kavala gas deposit set for further extension

The government has submitted a draft bill to parliament for a further extension to an agreement, from 1999, between the Greek State and Energean Oil & Gas for exploitation of the “South Kavala” natural gas field in the Aegean Sea’s north.

According to the draft bill, the license, expiring on November 23, 2022, can be further extended either through a ministerial decision following an agreement with the license holder, or, once again, through a ministerial decision, up to and including the starting date of a license granting investors the right to use, develop and exploit the “South Kavala” natural gas field, almost depleted, as a prospective underground natural gas storage facility (UGS).

A tender staged by Greece’s privatization fund TAIPED for this latter license has reached the final round. Energean and a partnership bringing together gas grid operator DESFA and construction company GEK Terna are the final-round qualifiers.

 

 

Gov’t faces fiscal battle for manageable energy bill costs

The government faces a tough fiscal battle to keep energy bill costs within the reach of consumers, a continuously growing challenge given the persistent rise in the price of natural gas, a key source for electricity generation, as a result of escalated tensions between the West and Russia over the latter’s war in Ukraine.

The continual rise in energy prices threatens to derail the government’s support plan for energy consumers and producers.

Last Friday, the price of wholesale natural gas ended trading just under 150 euros per MWh. Its cost rose by 70 percent between June 1 and July 1, from 87 euros per MWh to 147.5 euros per MWh.

The government is searching for fiscal leeway to limit energy prices, compensate producers and subsidize consumer energy bills.

As part of the effort, energy minister Kostas Skrekas has pledged to raise close to 6 billion euros over the next 12 months by taxing windfall profits of producers. This sum is expected to be boosted further by contributions from the Emissions Trading System (ETS), budget and European funding programs.

It remains unclear if the overall amount to be raised will be enough. The cost of electricity and gas bill subsidies in 2022 could exceed 6 billion euros. The cost in the first half of the year reached 2.4 billion euros, while 3.6 billion euros have been budgeted for the second half of the year.

 

Strategic reserve mechanism application to be withdrawn

The energy ministry intends to withdraw its application submitted to the European Commission for a strategic reserve mechanism as a result of the government’s recent decision to revise its withdrawal plan for the country’s lignite-fired power stations in order to permit operations until 2028 instead of 2025, as was planned.

Under the original plan, the strategic reserve mechanism would have been introduced to maintain lignite-fired power stations under the control of power grid operator IPTO for energy contributions during periods of high demand.

Within the framework of these developments, the government is also considering to withdraw a compensation application for power utility PPC’s premature withdrawal of lignite-fired power stations.

PPC’s plan entailed shutting down all existing lignite-fired power stations by the end of 2023.

However, the government is being forced to delay its decarbonization strategy as a result of the steep rise in gas prices prompted by Russia’s war on Ukraine.

Natural Gas Infrastructure at the core of the Energy Transition

The General Manager of EDA THESS, Mr. Leonidas Bakouras, answers  whether the energy crisis marks the end of Natural Gas.

 Interview of the General Manager, Mr. Leonidas Bakouras, to energypress.gr 

Recent geopolitical developments do not affect the role of natural gas, since in all the realistic scenarios that have been put on the table, gas will continue to be the fuel delivering reliability to the energy system of Greece and Europe for the coming years. This is what the General Manager of EDA THESS, Mr. Leonidas Bakouras pointed out in his interview, adding that the role of natural gas will therefore be sustained and will not be relegated by the RePowerEU plan for reducing energy dependence on Russia.

According to Mr. Bakouras, an important reason is that – taking into account the increasing penetration of RES in the power generation mix  – natural gas is the most efficient solution for power adequacy,  while at the same time it is a reliable source of energy for industries, providing multiple advantages. As a result, along with its increasing use in the residential sector, it will continue to catalyze the achievement of targets set for climate change mitigation (fit-for-55).

In this context and given that Greece has received gas late compared to the rest of Europe, there is an urgent need to increase its penetration throughout the country, through the investments for the development of new distribution networks that are in progress. Moreover, he added, the same distribution networks that are currently accommodating natural gas, will in the future act as multipliers for the penetration of renewable gases into the final energy mix, accelerating its decarbonization.

The General Manager of EDA THESS also pointed out that along with the investments in new networks, there should be incentives in order for the citizens in the new areas to switch to the use of natural gas. Also, energy saving programs for existing consumers (such as household condensing boilers that reduce consumption by 25-30%), could partially offset high prices. 

  1. After three months of warfare in Ukraine and following the “response” of the EU through the REPowerEU plan, is the role of gas relegated in your opinion?

 The transitional role of gas will be sustained and will not be relegated by the RePowerEU. On the contrary, in all the realistic scenarios that have been put on the table, natural gas will be the fuel that will offer reliability to the energy system of Greece and Europe for the coming years.

The REPowerEU plan provides for a number of actions to diversify gas supply sources, save energy and further develop renewable energy sources. Natural gas is the cleanest fossil fuel, its CO2 emissions amounting to only half of the emissions from coal combustion. Replacing coal with natural gas reduces total emissions by hundreds of millions of tonnes annually in Europe.

There is no question of relegating the role of gas but it is necessary to replace polluting fuels such as lignite and coal. Νatural gas will support the country’s power generation with alternative supply sources (LNG), covering peak loads and helping to meet the demand that RES are unable to address due to intermittent production and the lack of large-scale storage.

Especially for industry, gas is a reliable form of energy that is always available as it is continuously supplied through the grid, without need for storage tanks and without supply outages. It thus allows industries to plan and manage their productive activity in the optimal way. At the same time, the supply and combustion of natural gas can be regulated with high precision, which makes it an ideal solution for immediate adaptation to the various operational needs of the production process.

The transitional role of natural gas in our country is reflected on the total consumption, which has increased by 10% from 2020 to 2021 and by 6.18% in the first quarter in 2022 compared to the corresponding period last year.

The critical importance of natural gas is reinforced by the large infrastructure projects currently implemented in the country, securing and diversifying energy supply. Projects such as the upgrade of the Revythousa Terminal, the construction of floating LNG storage and regasification units (FSRU), the underground gas storage facility in South Kavala and the cross-border pipelines that have been put into operation (TAP) or will be put into operation soon (IGB), safeguard the adequacy of supply and at the same time, turn Greece into a Liquefied Natural Gas Hub for the Balkans (as supplies are already directed to Bulgaria and Romania) but also for the whole of Europe.

 Emissions reduced by 50% in cities supplied by gas 

  1. Do you believe that the recent geopolitical developments will negatively affect the deployment of new distribution networks in Greece? 

To achieve RePowerEU’s energy goals and aspirations, one must consider the different starting point and maturity of each EU Member State.

Greece, unlike other European countries, welcomed natural gas late. At the moment, a large investment program in new distribution networks is underway, in order to supply natural gas to 70% of the territory, which to date does not have access to gas. It is worth noting that with the distribution network covering the rest of the country, the number of gas delivery points (meters) – which today exceeds 500 thousand – is expected to double, reaching 1 million by 2030.

The same networks, being widely dispersed, will in the future act as multipliers for the penetration of renewable gases into the final energy mix, accommodating and circulating renewable gases (biomethane, hydrogen, synthetic methane) to end consumers currently connected.

If our country really wants to drastically reduce greenhouse gas emissions and achieve the NECP targets, natural gas must first penetrate all areas and replace conventional fuels – namely fuel oil in industries and heating oil in households. This will lead to the immediate reduction of the carbon footprint and the improvement of the environment throughout the country. As I have pointed out in the past, in every new city where gas penetrates, greenhouse gas emissions are reduced by 50%.

The main transitional fuel in Greece for at least another 25 years 

  1. In the context of revised National Plan for Energy and Climate, do you think that the geographical expansion of natural gas in our country will remain a priority?

Europe’s ambition to zero carbon emissions must ensure that the transition to climate neutrality is financially sustainable, socially just and that it safeguards the countries’ security of supply. Existing and planned energy infrastructure are important assets that policy makers must utilize to avoid huge investments that will disproportionately burden end consumers. In the same context, the EU financial tools should be used to the maximum, taking into account the know-how of the Operators, who are the connecting links between consumers and the energy market.

The revision of NECP, in addition to the frontloaded goals it will set for the increase of RES and the production of renewable gases, should strengthen the role of natural gas as the main transitional fuel of our country for at least the next 25 years. Both the NECP and the financial programs and tools should convey the appropriate signals to the market in order for the networks to be deployed throughout the territory, and on the other hand, for the infrastructure to enhance the adequacy of supply and the resilience of the country’s energy system, strengthening the role of Greece as a “gateway” of natural gas for the wider region.

In this regard, the quantified target set for the 50% increase of natural gas use in the end consumption sectors by 2030 compared to 2017 should be preserved in the revised NECP. Funding for the development of gas infrastructure should remain as the top priority; dual-benefit infrastructure, which on the one hand will contribute to achieving the goals of tackling climate change (fit-for-55) and on the other hand, will accelerate the transition to RES and the carbonization of the energy mix.

  1. How do you assess the measures that the Commission has taken to diversify sources of supply and to strengthen security of supply and price competitiveness? Do you think that more drastic measures could be taken to decelerate prices? 

The diversification of the gas import routes achieved in our country through the infrastructure I mentioned, guarantees the resilience of the energy system and the adequacy of supply for all consumers.

In the same context, the obligation to fill gas storage facilities by 90% throughout the EU by next winter, will further enhance security of supply.

With regard to price formation, the voluntary joint procurement mechanism (EU Energy Platform) can enable Member States to jointly negotiate more competitive prices. However, the most drastic measure proposed by both the Greek State and several other European states is the price cap on the wholesale market at least until the end of the war. A measure that will decouple prices from the upstream reference markets (TTF), in order to reduce the effects of price pressures and to adjust the price charged to end consumers according to the fluctuation of supply and demand.

If this proposal is adopted by the European Commission, prices charged to end consumers are expected to gradually decelerate. Let us not forget that, despite the fact that we are in the middle of the summer season and household consumption is limited, energy-intensive industries are still faced with high energy prices affecting their sustainability, competitiveness and the implementation of planned investments.

Triple benefit from biomethane injection

  1. Going back to the changes in the energy mix that are promoted for the coming years, what should be the role of biomethane in the NECP? In countries like Greece, what is the potential for creating a biomethane supply chain?

The injection of biomethane in the distribution networks is a challenge that will bring a triple benefit for our country. Initially, it will help achieve the 35 bcm biomethane target set under REpowerEU. Furthermore, it will contribute to the decarbonisation and greening of the distribution networks, while strengthening the country’s circular economy.

The biggest advantage of biomethane is its full compatibility with the existing distribution networks; networks which, due to their geographical dispersion in urban and interurban areas, will allow the cost-effective connection of production and injection facilities. Therefore, biomethane is a “key” asset for the country, as it will directly help reduce over-reliance by replacing part of Russian gas, while also making distribution networks sustainable.

Today in our country there are about 40 biogas production units which – due to the lack of regulatory framework – are used exclusively for power generation. However, injecting biomethane into the grid is more energy efficient than using biogas to generate power. About 90% of energy is preserved when injected into the grid, compared to only 65-70% when biogas is burned to generate electricity. The first step is to submit proposals for the introduction of the appropriate legal and regulatory framework in line with the European directives, to support appropriate incentives for business initiatives to thrive. In particular, the NECP targets on the production of renewable gases in line with the REpowerEU plan should be made binding. In this regard, it is advisable to apply Feed-in Tariff / Premium mechanisms for producers as well as to establish a framework for Guarantees of Origin.

Energy saving as a “counterweight” to cost

  1. 6. As a measure to reduce reliance from Russian gas imports, REPowerEU also includes energy savings to reduce consumption. What measures could be implemented? 

Together with the REPowerEU plan, the Commission presented the EU communication to promote immediate energy saving by citizens and businesses through changes in consumer behavior and strengthening medium- to long-term structural energy efficiency measures.

The key strategic question for Europeans is what we should do to stop wasting energy. Especially for heating, solid and coordinated efforts by all involved bodies are required in order to take full advantage of the benefits delivered by natural gas as well as the various technological solutions available.

In this context, the State should continue to provide incentives for potential consumers to switch to natural gas, by introducing subsidy schemes for replacing oil heating systems with natural gas systems. These schemes should be granted in all Regions throughout the territory.

For existing residential consumers using Natural Gas, funding should be provided for the replacement of the old burner – which in many cases dates back to 2000 – with modern natural gas condensing boilers; a measure that will directly contribute to energy savings by at least 25-30% while improving the environmental footprint of consumers.

In the same context, the competent bodies that manage the municipal and public buildings should raise their awareness, so that saving programs such as “Electra”, include actions to modernize the installations and the boilers that have been used for more than 20 years and are now considered obsolete, their energy efficiency being lower than 60%. Modern gas boilers with compensation control systems can achieve an efficiency of up to 100%.

Similar programs should be introduced for the upgrading of industrial facilities with technologically advanced equipment that will result in higher energy efficiency and the rationalization of resource management while ultimately promoting their competitiveness and environmental sustainability. It is therefore obvious that energy savings can offset some of the high energy prices.

Distribution networks are also key for the decentralized production of “green” hydrogen

                         It is said that the final answer for the decarbonization of hard-to-electrify activities will be given through the development of a “green” hydrogen economy. What is your opinion? 

Greece has recognized the role of hydrogen in the green transition, highlighting the strategic position of our country as a future producer of green hydrogen for European markets. Moreover, Greece’s potential in RES energy production paves the way for the development of large green hydrogen production projects such as the White Dragon that is expected to be completed in 2029 with a planned production amounting to 250,000 tons of hydrogen / year.

Despite the promising potential, there is currently no production of “green” hydrogen in Greece. The main challenges concern the development of hydrogen demand both for existing uses (heavy industry, refineries) and for new uses (electricity, residential heating). The development of a hydrogen value chain will also depend on the successful completion and connection of production, transmission, distribution, storage and end-use infrastructure. This requires coordinated investment by all actors along the value chain.

As evidenced by other European projects (Ready4H2) that have been piloted, gas distribution networks – with appropriate modifications – will be able to accommodate quantities of hydrogen mixed with natural gas and biomethane in the future. This means that hydrogen will be incorporated in the mixture supplied to the end consumer, utilizing the existing infrastructure and the already implemented investments.

In the future, the biomethane production model I mentioned can be replicated for “green” hydrogen, where Gas Distribution Network Operators will collect and circulate the decentralized production of hydrogen from “small-scale” electrolytes to their networks, utilizing local RES power surplus; a surplus that, in fact, if not converted to hydrogen and introduced into the gas distribution system, will not be exploited. This is a cost that Europe cannot bear if it wants to meet its target of 20 million tonnes of hydrogen annually by 2030 to regain its energy independence and achieve its environmental ambitions.

In this context, we plan long-term investments for the upgrading, repurposing and digitization of infrastructure with new technologies and automatic control systems, so that the networks are ready for the future injection and accommodation of renewable gases.

Realistic goals for a just and smooth energy transition 

  1. What do you think should be done to promote your proposals at National and Community level?

It is easily understood that distribution networks and Operators now play a pivotal role in accelerating the achievement of the RepowerEU goals for energy independence, diversification of resources and the protection of the right of consumers to access affordable energy, which is now one of the key challenges to address.

In this context, we, the Operators, should be able to participate in the Energy Committee – as is the case in the rest of Europe – as through our experience and familiarity with market conditions, we can highly contribute to the drafting of policies and plans that will link the theoretical objectives with realistic and readily applicable solutions for the benefit of end consumers, of the society and the environment.

One of the key issues for energy transition is the revision of the 3rd energy gas package. In this context, the Gas Distributors for Sustainability GD4S – of which EDA THESS is a member -, actively participate in the consultations for the shaping of a framework on the biomethane, hydrogen and decarbonated gases market (Gas Decarbonization Package). To this end, it is appropriate to incorporate the binding objectives of REpowerEU into the Community Directive under consultation and to set the horizontal and vertical separation rules for Operators, to enable them to operate renewable gas networks, supplying initially biomethane and in the distant future, hydrogen.

By raising its voice at Community level, GD4S rightly advocates the creation of a separate EU Gas DSO Entity for natural gas, biomethane and later hydrogen, in order to achieve the objectives I mentioned, utilizing existing Natural gas infrastructure. Thus, the role of Distribution Network Operators is taking hold in the context of European planning.

In a transitional period with intense ambiguity, where on the one hand the gas market tends to stabilize, while on the other, the long-term goal at Community level is to reduce and finally eliminate the use of fossil fuels, it is obvious that realistic objectives for a just and smooth energy transition should be set at both European and national level. In this sense, not only has the end of Natural Gas not come but now its momentum is at its highest, as the role of Natural Gas is being upgraded and acting as a catalyst, it can be the bridging fuel for the achievement of Community goals.

 

 

 

RAE delivers grid emergency action plan, listing 16 dangers

RAE, the Regulatory Authority for Energy, has forwarded, for consultation, an emergency action plan for Greece’s electricity sector, listing a total of 16 possible danger scenarios, two of which, a disruption of Russian natural gas supply and cyberattacks at crucial energy infrastructure, are regarded as highly probable and intolerable.

The aforementioned dangers, along with natural disasters, such as extreme weather conditions, would prompt extended outages, putting lives at risk and resulting in a leakage of information crucial for national security, according to the action plan, which RAE prepared with support from power grid operator IPTO.

Other dangers included in this list include equipment failure, floods, heat waves, snow storms, forest fires and human error.

The action plan’s proposed responses, to avoid grid collapse or even destruction, include load reductions, pumped storage station and electricity export disruptions, activation of reserve solutions and consumption-reduction mechanisms, and, as a last resort, electricity supply disruptions for businesses and households.

DG Energy chief in Athens for talks on range of key projects

The European Commission’s Director-General for Energy Ditte Juul-Joergensen will be discussing a range of issues with the energy ministry’s leadership at a meeting in Athens today, including Greece’s role in the Balkans, western Balkan interconnection projects, natural gas reserves ahead of next winter, as well as Greece’s list of projects related to REPower EU, Europe’s plan for an end to the continent’s reliance on Russian energy sources.

Athens’ plan for wholesale electricity market intervention through a mechanism designed to subdue price levels is also expected to be discussed. It still needs to be approved by the European Commission, according to government sources.

The energy ministry is confident this mechanism will be approved by Brussels following a related agreement reached by its leadership during a visit to Brussels in late May. Market officials have remained uncertain.

Greece is expected to seek funding support estimated between 7 and 8 billion euros through the REPower EU initiative for a total of 14 projects supporting energy efficiency and security.

These projects include an upgrade of the gas grid; installation of a new floating storage unit at the islet Revythoussa, just off Athens; the Dioryga Gas FSRU in Corinth, west of Athens; an FSRU at Alexandroupoli, in Greece’s northeast; the Blue Med hydrogen project; the prospective underground natural gas storage facility (UGS) at the almost depleted natural gas field of “South Kavala” in the Aegean Sea’s north; IGB and TAP capacity boosts; as well as Greek-Egyptian and Greek-Bulgarian electricity grid interconnections.

PPC awaits Brussels energy strategy to decide on Ptolemaida V

Power utility PPC will wait for the European Commission’s finalized decisions on a strategic plan intended to end the EU’s reliance on Russian fossil fuels before it decides on the operating and conversion details of its prospective Ptolemaida V power station in northern Greece, to be launched as a lignite-fired facility before being converted to natural gas.

The PPC board is now expected to decide on Ptolemaida V’s conversion date towards the end of this year, according to sources.

Ptolemaida V, expected to undergo a trial run in the second half of the year before being launched late in the year or early in 2023, will be introduced as Greece’s last lignite-fired power station.

Early in April, prime minister Kyriakos Mitsotakis announced extensions to withdrawal dates for older lignite-fired power stations that were originally headed for closure prior to 2025. At the time, the prime minister also informed that Ptolemaida V could now operate as a lignite-fired unit until 2028.

Revisions to the country’s decarbonization plan have been prompted by energy security concerns following Russia’s invasion of Ukraine and the exacerbation of the preceding energy crisis as a result of this war.

The Greek government has decided to increase lignite mining output as a safety measure should Russia interrupt its natural gas supply.

A year ago, PPC had announced it intended to convert Ptolemaida V into a natural gas-fired facility as of 2025, but the latest energy security concerns froze this plan.