Lignite-fired generation cost overtakes CCGT in March

Lignite-fired power station generation price levels have risen above those of combined-cycle gas turbine (CCGT) power plants for the first time since the introduction of a temporary recovery mechanism, prompting market officials to declare the end of lignite as an energy source that can be relied on for lower-cost energy production.

RAE, the Regulatory Authority for Energy, set a regulated price of 227.27 euros per MWh for lignite-fired power stations for March, above the price level of 191.73 euros per MWh for CCGTs.

These figures, reflecting the operating costs of the two power-generating technologies, show that lignite-fired plants now cost more to run than gas-fueled power stations.

RAE, in setting its prices, has also taken into account a surcharge of 10 euros per MWh imposed on natural gas intended for electricity generation.

Just months ago, in January, the regulated price for lignite-fired power stations was set at 216.27 euros per MWh, well under that for CCGTs, at 343.64 euros per MWh.

Regulated prices levels for the two power-generating technologies converged in February. They were set at 205.61 euros per MWh for lignite-fired power stations and 210.44 euros per MWh for CCGTs, before a complete overturn in March.

Shipowner renews interest for power station at Skaramangas

Billionaire shipowner George Prokopiou, the new owner of Hellenic Shipyards at Skaramangas, west of Athens, has rekindled his interest for the development of an LNG-fueled power station at the grounds of the shipyard, Greece’s biggest, energypress sources have informed.

The shipowner held exploratory talks with major Japanese companies active in this domain during his recent visit to Japan, as part of a business delegation accompanying Prime Minister Kyriakos Mitsotakis on his official visit to the country, the sources noted.

Legislation ratified last year on property-usage matters concerning Hellenic Shipyards permits additional uses of the shipyard grounds, including installation of facilities for production, storage and transmission of electricity and natural gas.

Hellenic Shipyards are strategically placed at a coastal front close to the LNG terminal on the islet Revythoussa.

The shipyards’ transfer of ownership to Prokopiou is currently being completed. Local authorities have reacted strongly against the prospect of a power station being developed in the Skaramangas area.

Gas prices tumble, lignite close to regaining price-setting role

Wholesale natural gas prices have fallen by 80 percent since last August’s peak of approximately 350 euros per MWh, to levels of nearly 50 euros per MWh at the TTF index in recent days, a development that has brought the cost of natural gas-fueled power stations just above that of lignite-fired power generation.

Any further drop in the price of natural gas would reestablish lignite-based power generation as the technology determining electricity prices, based on a formula adopted by the EU and the Greek energy exchange.

Increased lignite-fired electricity generation in Europe has, in recent times, pushed up carbon emission right prices (ETS) to nearly 95 euros per ton following a descent to levels of about 75 euros per ton.

Last Friday, lignite-based generation captured a 22 percent share of Greece’s energy mix, much higher than levels recorded in recent times. Over the past 30 days, lignite’s share of the energy mix averaged 15.6 percent, according to the Greek energy exchange.

PPC retail electricity market share at 63.3% in December

Power utility PPC’s captured a retail electricity market share of 63.29 percent in December, followed by the Mytilineos group’s Protergia, at 7.6 percent, Heron, at 7.03 percent, and Elpedison, at 6.09 percent, a latest report published by the Hellenic Energy Exchange has shown.

Day-ahead market prices in December rose 22 percent, averaging 276 euros per MWh compared to 227 euros per MWh in November, while electricity demand increased to 4,488 GWh from 4,109 GWh, the Energy Exchange data showed.

As for December’s energy mix, natural gas-fueled electricity captured the greatest share, 37 percent, followed by renewables, at 24 percent, electricity imports, at 19 percent, lignite-fired generation, at 15 percent, and hydropower, at 3 percent.

December gas energy-mix share up to 43%, RES input falls

Natural gas usage for electricity generation increased in December to represent 43 percent of the energy mix, up from 37 percent in November.

At 43 percent, natural gas-fueled electricity captured the biggest share of the energy mix in December, followed by renewable energy sources – wind, solar and biomass – at 26 percent, lignite, at 17 percent, net electricity imports, at 10 percent, and major-scale hydropower plants, at 4 percent.

Combing the RES and hydropower contributions, the renewable energy sector’s share of the energy mix in December essentially reached 30 percent.

Natural gas-fueled generation and RES generation reached 1,645,055 MWh and 1,012,485 MWh, respectively, in December, while lignite-fired output for the month totaled 656,157 MWh.

In 2022, overall, natural gas’ share of the energy mix increased by one percent, while the RES sector’s share shrunk by 8 percent.

Energy demand increased in December, reaching 4,013,598 MWh, following four successive months of decline.

Decarbonization plan delayed by 2 years, greater lignite focus

The government has asked power utility PPC to extend its lignite-fired electricity generation by two to three years, as a means of cutting back on the use of natural gas, now a high-cost energy source as a result of Russia’s greatly reduced supply to Europe.

The government request, representing one of several energy-crisis measures it has put forth, will delay the country’s decarbonization plan by at least two years.

Lignite currently represents over 10 percent of the country’s energy mix, double its 5 percent share not too long ago, which resulted in annual production of 2.5 TWH. The government is aiming for a lignite energy mix representation of between 17 and 20 percent, or 9 TWH of electricity production, annually.

Increasing lignite-fired generation by approximately 6 TWH will require a natural gas reduction of 12 TWH, which is double the gas cut requested by the European Commission.

Energy minister Kostas Skrekas believes lignite’s 20 percent energy-mix target can be achieved within the first half of 2023.


North Macedonia involvement in key Alexandroupoli projects

North Macedonia plans to help cover its energy needs through an involvement in two Greek-based projects, the prospective FSRU in Alexandroupoli, northeastern Greece, and, in the same region, a gas-fueled power station to run on LNG stemming from the floating LNG terminal.

Much progress has been made on the neighboring country’s interest in these two projects since a meeting in Athens last September between Greek Prime Minister Kyriakos Mitsotakis and his North Macedonian counterpart Zoran Zaev. The partnership also represents a strategic decision for the Greek government.

It is considered certain that a state-owned North Macedonian company will soon enter the Alexandroupoli FSRU project’s equity pool with a 10 percent stake, energypress sources have informed.

This project’s five current partners – Copelouzos group, Gaslog, Greek gas utility DEPA, Greek gas grid operator DESFA and Bulgartransgaz – are expected to each offer small portions of their respective 20 percent stakes to make available a 10 percent stake for the state-owned North Macedonian company in the Alexandroupoli FSRU.

The project’s development is not expected to be impacted by any equity reshuffles.

Two international tenders staged by Gastrade, a company established by the Copelouzos group for the development and operation of the Alexandroupoli FSRU, have been successfully completed. One of the two tender concerns the FSRU’s construction. The other concerns the installation of pipelines linking this facility to the national gas grid.

The Alexandroupoli FSRU consortium is expected to make a final investment decision in late February, sources informed.

On the other front, ESM, North Macedonia’s state electricity company, is expected to acquire a 25 percent stake in a gas-fueled power station to be developed by Damco Energy, a Copelouzos group subsidiary, in Alexandroupoli’s industrial zone.

The initiative will secure 200 MW of the facility’s 800-MW capacity for North Macedonia. The country currently has an electricity deficit of approximately 2 GWh.

Bulgarian state-owned electricity company NEK EAD also appears interested in acquiring a stake in the Alexandroupoli power station. Bulgaria has projected an electricity deficit a few years from now as the country must phase out major lignite-fired power stations. European Commission exemptions extending the lifespans of these units are expiring.

Natural gas-fueled generation reaches energy-mix record share of 56.64%

The energy mix contribution of natural gas increased to a record-level share of 56.64 percent in October, a latest energy exchange monthly report has shown.

This significant rise in the energy-mix share of natural gas – to a level never before reported since the full liberalization of Greece’s electricity market – has been attributed to a major slowdown of power utility PPC’s lignite-based generation.

Natural gas-fueled power stations operated by power utility PPC and independent producers further consolidated their place in the energy mix standings, stretching further ahead of other fuel categories.

October’s 56.64 percent energy-mix share captured by natural gas broke this fuel’s previous record of 53.76 percent, registered in August. The natural gas energy-mix share had dipped slightly to 51.74 percent in September before rebounding for October’s record-breaking result.

A year earlier, the natural gas energy mix share was below 50 percent, at 49.86 percent, while lignite’s share was at approximately 22 percent.

Returning to the latest energy-mix figures, natural gas was followed by the RES sector, capturing 33.86 percent, lignite’s share shrunk further to 4.25 percent, and hydropower followed with a 3.21 percent share.

PPC’s lignite-based generation could rise slightly in coming months to cover telethermal needs.

The role of natural gas in the ongoing energy transition towards renewable energy dominance is expected to play a pivotal role for the grid’s sufficiency and security.

Extraordinary conditions push SMP as high as €105 per MWh

Extraordinary conditions resulting from coinciding temporary closures of various power facilities, both in Greece and abroad, have pushed up the System Marginal Price, or wholesale electricity, to levels of as much as 105 euros per MWh, as was the case yesterday.

Four domestic gas-fired power stations – Enthes (Elpedison), Heron CC, Lavrio IV and Protergia – were out of order yesterday, for different reasons.

Problems beyond the Greek border have made matters worse. Bulgaria’s 1,000-MW Kozloduy nuclear power plant is currently out of order. The Greek-Bulgarian line serves as a transit route towards North Macedonia as a line linking Bulgaria and North Macedonia is out of order. So, too, is a line linking Greece with Italy.

Power stations that rarely operate, such as an open-cycle Heron unit, needed to be called into action as a result of the problems on these various fronts. Their necessary contributions pushed the SMP to far higher levels.

Three power utility PPC lignite-fired power stations, Agios Dimitrios II and III and Melitis, along with PPC’s gas-fired power stations Aliveri V, Lavrio V, Komotini, Megalopoli V, as well as units run by the independent energy firms Heron, Thisvi and Corinth Power, all needed to be called into action to cover the grid’s needs.

The market appears to have normalized for today. SMP levels are down to relatively satisfactory levels, averaging 44.49 euros per MWh, primarily as a result of significant RES contributions, covering more than 50 percent of the overall demand, 123.993 GWh.

The lignite-fired power stations used yesterday – Agios Dimitrios II and III and Melitis – will remain closed today.

Gas-fired, RES generation high in July, gas-based output boost at PPC

Electricity demand fell by 2 percent in July compared to the equivalent month a year earlier, while gas-fired and RES generation remained high, according to a latest energy exchange report.

Demand in July peaked at 9,033 MW, on July 31 at 2pm, while the month’s lowest level of electricity demand was 4,290 MW, recorded on July 12 at 7am, the report informed.

Domestic electricity demand represented 97.27 percent of the month’s total demand while exports represented 2.72 percent, according to the data.

Natural gas-fueled generation covered 41.21 percent of electricity demand in July, RES production covered 26.05 percent, electricity imports covered 20.01 percent, hydropower output contributed with 6.76 percent and lignite-fired generation followed with 5.97 percent.

Production by natural gas-fueled power stations in July was up 8 percent compared to the same month a year earlier, the data showed. Electricity imports were down 10 percent this July and exports rose by 14 percent.

Lignite-fired generation dropped considerably, by 64 percent, hydropower output registered a milder reduction of 4 percent, while RES output increased significantly by 49 percent.

As had been anticipated, a rise in production at PPC’s Megalopoli V unit increased the corporation’s overall gas-fired production in July, both compared to June and preceding months.

PPC’s gas-fired electricity production reached 942,613 MWh in July compared to 512,292 MWh in June.


Low-cost gas driving down wholesale electricity prices

The abundance of low-cost natural gas, enabling electricity producers operating gas-fired power stations to offer extremely competitive prices, is reshaping the wholesale electricity market.

Highlighting this development, the average level of the System Marginal Price, or wholesale electricity price, today, a day of strong demand, is expected to be contained below 40 euros per MWh, at 39.551 €/MWh.

Today’s electricity demand is expected to peak over 8.3 GW with total consumption reaching 168,674 MWh. The wholesale price during the peak hours will not exceed 38.850 €/MWh.

The market conditions for today are not an isolated incident but part of a wider trend that has developed during the week.

Yesterday’s average SMP was just 35.961 €/MWh despite a peak of 8,105 MW and total electricity consumption of 162,777 MWh.

On Wednesday, when demand peaked at 8,072 MW and overall consumption totaled 162,492 MWh, the SMP was 39.243 €/MWh.

The SMP exceeded the 40 €/MWh level just once this week, on Tuesday, reaching 40.689 €/MWh, a day whose peak was below 8000 MW.

The week started with Monday’s SMP average at 39.277 €/MWh, a lower peak of 7,649 MW, and total consumption for the day of 152,716 MWh.

SMP prices have been falling to even lower levels during weekends. Last Sunday, the average SMP was just 30.629 €/MWh with the peak down to 6,370 MW and the day’s consumption at 134,563 MWh.

The grid relied on just one lignite-fired power station, Agios Dimitris III, last Sunday. Demand was primarily covered by gas-fired generation, as well as renewable energy sources, hydropower units and electricity imports.

Power demand dives 14.61% in June as tourism slumps

Electricity demand slumped 14.61 percent in June, compared to a year earlier, despite the month’s lifting of lockdown measures, latest Greek energy exchange figures have shown.

June’s drop in power demand, attributed to the unprecedented decline in tourism activity, was even bigger than the declines registered in April and May, 13 percent and 9 percent, respectively.

Numerous hotels and other tourism industry units have not opened for business. Also, flight bans were essentially not lifted until the beginning of this month.

Responding to the drop in electricity demand, energy producers have restricted output by 16 percent.

Natural gas and renewables dominated electricity generation in June. Natural gas-fueled generation covered 36.56 percent of demand, while RES production covered 26.43 percent, the energy exchange’s June report showed. Electricity imports covered 23.93 percent, hydropower 7.43 percent and lignite-fired production 5.64 percent.



GEK TERNA set to develop new 660-MW thermal unit

GEK TERNA is expected to finance its development of a gas-fueled power station with a 660-MW capacity in Komotini, northeastern Greece, through bond funds totaling 500 million euros, sources have informed.

In a company statement, GEK TERNA noted it intends to use 400 million of 500 million euros in bond funds to finance the group’s investment program, which includes gas-fueled power generation.

GEK TERNA is close to reaching an investment decision on this facility, the sources added. It would represent the third thermal unit involving the group.

GEK TERNA, which has the potential to play a key role in renewable energy through Terna Energy, is not overlooking thermal-unit developments.

Greece’s decarbonization strategy and the dominance of natural gas as the main fuel during the energy transition are two factors creating major opportunities for the GEK TERNA group.

Other vertically integrated electricity producers are also preparing new thermal facilities. The Mytilineos group is already constructing an 826-MW gas-fueled power station in the Boetia area, slightly northwest of Athens. This unit is expected to be launched next year.

A licensing procedure by Elpedison, also for an 826-MW facility, in Thessaloniki, is maturing.

In addition, the Copelouzos group is making progress on licensing for a 660-MW facility in Alexadroupoli, northeastern Greece. Company official Kostas Sifneos recently said this facility’s launch is scheduled for 2022.

The country’s big energy players are also continuing to eye Balkan markets for electricity exports, pundits informed.

Natural gas provides half of domestic generation in May, RES also on the rise

Natural gas’ share of overall electricity generation in Greece reached 50.1 percent in May, a 29 percent increase compared to the same month a year earlier, highlighting that the country’s energy transition is well and truly in motion.

Renewable energy output is also on the rise, increasing by 30 percent between May this year and last May.

On the contrary, lignite-fired electricity production plummeted 87 percent year on year.

Gas-fueled power station generation covered 38.5 percent of the grid’s needs in May, RES production captured a 29.62 percent share, electricity imports contributed 23.14 percent, hydropower output provided 6.07 percent and lignite units just 2.66 percent.

In the RES sector, wind energy led the way with a 49.82 percent share of this sector’s grid contribution in May, solar energy followed with 40 percent, small-scale hydropower facilities were next with 4.68 percent, biomass-biogas was represented with a 3.68 percent share, and CCHP (combined cooling, heat and power) with 1.81 percent.

Electricity imports and exports are an emerging sector with an increasingly important role in balancing national grids, a prospect that is attracting market players, data covering the year’s first five months has shown.

Electricity imports into Greece via the interconnection shared with Italy captured a 42.38 percent share of overall imports in May, a sharp rise from the previous month’s 32.35 percent share through this link.

Electricity imports from Bulgaria fell to 8.38 percent of the overall amount in May from 23.1 percent in April. Minor changes, between April and May, were registered for Greek imports from interconnections with Albania, North Macedonia and Turkey.

Greek electricity exports to Italy fell sharply to 7.56 percent of the overall total in May from 49.51 percent in April.

The country’s electricity exports to Turkey and Bulgaria rose significantly. Exports to Turkey represented 39.47 percent of Greek power exports in May, up from 17.38 percent a month earlier. Electricity exports to Bulgaria represented 25.69 percent of Greece’s total in May, much higher than April’s 6.17 percent through this interconnection.


Wholesale electricity prices rising, up to €47.30/MWh today

Wholesale electricity prices, determined by the System Marginal Price, are rebounding following a significant drop over the past few weeks.

The rise is being fueled by an anticipated increase in demand. A sidelined 600-MW line linking Greece with Bulgaria, depriving the system of electricity imports via this route, as well as a disruption in operations at an Elpedison power plant in Thessaloniki are two other contributing factors.

In addition, the Revythoussa LNG terminal just off Athens is not under any pressure, a factor subduing gas-fired unit bids and subsequently lowering the SMP.

Based on grid orders placed for today, the SMP has climbed to 47.30 euros per MWh, up from a level of around 30 euros per MWh five days earlier and 14.20 euros per MWh on May 1. Bidding by units has gradually risen since early May.

Demand, today, for domestic consumption and exports is estimated to reach 127 GWh, 40 percent of which is planned to be covered by natural gas-fired power stations, 30 percent by RES and hydropower plants, 23 percent by electricity imports, and 7 percent by lignite-fired power stations.

The SMP level will be determined by gas-fired power stations for 22 hours today, lignite-based generation will shape the price for one hour and imports for the remaining hour.

Coal electricity not competitive, Megalopoli facility workers told

Lignite-fired power stations are becoming a far less competitive electricity generation option by the day as a result of rising operating costs, workers at the power utility PPC’s Megalopoli III and IV units have been told by the energy ministry’s leadership.

Megalopoli, a lignite-dependent local economy in the Peloponnese, will receive some 25 million euros from a lignite withdrawal compensation fund, deputy energy minister Gerassimos Thomas told concerned Megalopoli workers.

The government has announced a plan to withdraw all existing lignite units over the next three years.

The operating time of lignite units is currently being kept to a minimum, the only justifiable reason to keep them running being the continued provision of telethermal needs, the workers were told.

Lignite-produced electricity, including CO2 emission costs, has steadily ranged between 80 and 90 euros per MWh, compared to 55-60 euros per MWh for gas-fueled power stations and a System Marginal Price (SMP), or wholesale price, of 59-60 euros per MWh, according to December figures, deputy energy minister Gerassimos Thomas told PPC’s Megalopoli workers.

In the renewable energy sector, latest auctions staged by RAE, the Regulatory Authority for Energy, produced wind energy prices from 55.8 to 58.3 euros per MWh and solar energy prices at 53.8 euros per MWh.

The Megalopoli workers were not convinced by the ministry’s arguments and, citing desulphurization investments worth 140 million euros at the power station in recent years, remained adamant on the sustainability of the Megalopoli III and IV lignite-fired units.

A special steering committee assembled to coordinate a fair national transition plan towards the post-lignite era for Megalopoli and west Macedonia, Greece’s other lignite-dependent area in the country’s north, is scheduled to hold its inaugural session later this week.



US renewable energy giant Invenergy to open Athens office

Invenergy, one of the six biggest owners of wind energy parks in the USA and the leading wind energy developer in North America, is preparing to set up an office in Athens for renewable energy investments in the Greek market.

An international player also operating in Mexico, Latin America, Japan, the UK and Poland, Invenergy has developed some 150 projects with a total capacity of 24,100 MW, covering the electricity needs of 4.77 million households, according to the company website.

The Chicago-headquartered company, which employs 950 staff members at posts around the world, had opened up an Athens office in the past but it was eventually shut down as a result of a lack of domestic activity in the RES sector.

Invenergy maintains a diverse and rapidly growing portfolio which, besides wind energy, also includes solar energy, natural gas-fueled power stations and energy storage.

The company is currently looking to recruit an international development manager for its Athens office with responsibilities including development of renewable energy and gas projects, mainly in Greece, as well as business growth support for southeast Europe and, possibly, other regions, Invenergy posted on its website just days ago.

Development minister Adonis Georgiadis, commenting shortly after Prime Minister Kyriakos Mitsotakis’ recent trip to Washington, noted – without naming – that one of the USA’s biggest renewable energy companies was preparing to enter the Greek market for battery production.

Elvalhalcor given green light for gas-fueled power station

Elvalhalcor, the Hellenic Copper and Aluminium Industry, has been given approval by RAE, the Regulatory Authority for Energy, for a prospective 566-MW gas-fueled power station in Thisvi, Boetia, slightly northwest of Athens.

The industrial enterprise now intends to continue with its licensing procedure, which will require time, before making a final investment decision later on.

Factors to determine the investment decision include the outcome of a measure offsetting industrial carbon emission costs, currently being looked at by the European Commission; the shape of a CAT remuneration plan for gas-fueled power stations; as well as the target model’s implementation method and schedule.

PPC is also considering such factors ahead of a decision on the development of a gas-fueled power station, either independently or through a partnership.

“Capacity exists for one or two gas-fueled power stations in the country’s overall energy mix, but these will require financial support,” noted PPC chief executive Giorgos Stassis. “At this point, conditions are not clear. We’re all waiting for the regulatory framework.”

Elvalhalcor power plant decision in first half of 2020, RES options considered

Elvalhalcor, the Hellenic Copper and Aluminium Industry, anticipating an imminent approval of its license application for gas-fueled electricity production, will decide whether it will develop a power plant during the first half of 2020, sources have informed.

This plan, however, could be put on hold if Elvalhalcor ends up deciding to pursue renewable energy options, either through acquisitions of existing units or development of its own.

Reduced RES installation and equipment costs have attracted the attention of Elvalhalcor officials, currently examining the company’s options.

Elvalhalcor’s application for a gas-fueled electricity production, submitted to RAE, the Regulatory Authority for Energy, last July, caught the market by surprise, pundits, until then, believing the construction of new power plants would be limited to energy groups.

The Elvalhalcor power plant, if developed, would be constructed in Thisvi, Boetia, slightly northwest of Athens, as a 566-MW facility, to cover the industrial enterprise’s sizable energy needs.

Greece’s heavy industry has been driven towards electricity production as a result of high energy costs – wholesale energy in Greece is Europe’s most expensive – delays in the implementation of the target model, power utility PPC’s most recent failure to sell lignite units, and Europe’s political turn to cleaner energy sources.

PPC’s new strategic business plan, expected soon, as well as Greece’s revised National Energy and Climate Plan, to shape the country’s energy-sector developments over the next decade, will both be pivotal factors in Elvalhalcor’s decisions.


Four-pronged solution likeliest to avert Crete energy shortage

Currently examining options to prevent a looming energy shortage on Crete as of next year, when outdated high-polluting power stations will need to cease operating, RAE, the Regulatory Authority for Energy, appears most likely to settle for a four-pronged solution involving facility conversions, the introduction of a new gas-fueled unit, additional renewable energy output and energy storage.

The package, constituting one of several plans researched by the National Technical University of Athens (NTUA), is seen as an optimal solution as it combines energy sufficiency, economy and environmental protection.

Crete faces an energy sufficiency alert between 2020 – when older units will cease operating and a small-scale grid interconnection linking the island with the Peloponnese is launched – and 2023, when a large-scale interconnection linking the island’s grid with Athens is expected to be completed.

The NTUA proposal includes converting 100-MW diesel-fueled units at Atherinolakkos to a gas-fueled facility; installing a new 100-MW unit, preferably gas fueled; development of new RES facilities with a total capacity of between 100 and 150 MW; and, in an unprecedented move for Greece, the installation and incorporation into the grid of energy storage systems (high-tech batteries) with a capacity of 30 to 40 MW.

Development of this four-pronged solution has, in effect, already begun but details still need to be discussed with energy ministry officials, the IPTO and DEDDIE/HEDNO operators, and power utility PPC.


Elpedison enters race for new gas-fueled power station

Elpedison has submitted an application to RAE, the Regulatory Authority for Energy, for an electricity production license concerning an 826-MW combined cycle gas-fueled unit in the Thessaloniki area, next to an existing company unit.

The investment plan, estimated to be worth 400 million euros and requiring about two years to complete, is the fifth application submitted by as many companies for a gas-fueled power station.

The companies still need to make final business decisions to proceed with these investment plans. The country’s grid capacity is believed to have space for one or two new gas-fueled power stations over the next few years.

Production licenses have already been granted by RAE for some of the other four applications while the processing of the others is believed to have reached an advanced stage.

The Mytilineos group has applied for a 650-MW unit at the corporation’s energy hub at the Viotia (Boeotia) area’s Agios Nikolaos location, slightly northwest of Athens. The Copelouzos group submitted an application for a 660-MW unit Alexandroupoli, northeastern Greece; Gek-Terna is looking to develop a 660-MW gas-fueled power station in Komotini, in the north; and the Karatzis group, owner of the KEN electricity company, aims to develop a 665-MW in the country’s mid-north, in Larissa.

CO2 prices seen rising further in 2019, ICIS analyst projects

During the past few months, the European market has experienced a substantial rise in the price of emission rights, a development that has brought tremendous change in the viability of conventional power producers. Marcus Ferdinand, Head of EU Power & Carbon Analytics at ICIS, a global carbon market intelligence provider, shared his views in an interview with energypress.

Where do you see CO2 prices at the end of 2018 and one year from now?

With our fundamental market model we see prices finishing 2018 at €21.60/t and 2019 at €25.00/t. We see the market stability reserve (MSR) as the main driver behind prices at the moment, resulting in a tight market balance as of next year. At the moment, we see several market participants frontrunning the effect of the MSR by taking speculative positions in anticipation of the price rising.

Apparently, in places like Germany, the short term view is positive for coal plants because of favorable competition to natural gas. However, talking about the mid to long term and in light of the EU electricity market reform and capacity mechanisms, is there a path towards survival available to them? What CO2 strategy must they follow in order to stay afloat?

With the higher carbon price we see coal generation being squeezed more and more, leading to additional fuel switching from coal to gas generation across Europe. Some utilities with a large coal portfolio have started to hedge the risk of higher carbon prices by building additional financial hedges to virtually lower their exposure to a high carbon price environment. We foresee this behavior, which we also see as one driver behind higher carbon prices at the moment, to allow these participants to maintain running their plants for a bit longer than suggested by the market. However, we currently also see more and more investments in gas and renewable energy sources and traditional utilities to adapt their business model, a step that seems inevitable in a decarbonizing world.

Apart from the rise of CO2 prices, we have also witnessed a new volatility in the emission rights market. In recent days there were significant ups and downs with many analysts talking about greater numbers of speculators influencing volumes and prices. Does this mean that the market is maturing and starting to resemble more traditional commodities markets? What are the dangers from speculative activity and how can power producers prepare themselves for a more volatile CO2 market in terms of available tools, hedging etc?

The volatility in the recent days has in my view largely been caused by speculative positions. First, some market participants holding bullish speculative positions expecting additional price gains tried to squeeze the lemon until the last drop and pushed the price above the €25/t level. This has likely caused some market participants to realize profits and by unwinding positions and pushing these allowances to the market. In such a situation, the market showed some herd behavior with other market participants following in selling their positions. This resulted in additional volume being pushed to the market, increasing the traded volume and causing the carbon price to fall-off a cliff. With the sharp correction, the Dec-18 contract is back in the upward-pointing channel that guided the price development since January 2018. I believe that the past six trading sessions were an exceptional test of the market regarding its ability to absorb a larger volume of speculative, non-compliance positions.

I think that yesterday’s correction has largely neutralized the effect of the more aggressive positions seen affecting the market over the past week with the EUA Dec-18 contract falling back in its long-term upwards-pointing trend channel witnessed since the start of the year. Overall, I believe that the time until the start of the MSR as of 1 January 2019 could remain highly volatile.

The carbon market is still a compliance-driven market where compliance operators receive a signal for what it costs to abate one ton of emissions. This has not changed with additional non-compliance players being active. However, it has caused some of the compliance operators to re-think their approach to the market. Speculative activity per se is not harmful to the market as it increases liquidity which is required to find a fair price for carbon allowances. In order to assess the impact of such positions it depends on the time frame of these investors and when the allowances return to market.

Power producers are usually protected against these price swings as they tend to hedge their power production on the futures market, meaning they sell power up to four years in advance and buy carbon allowances and the required fuels (coal and gas) at the same time. By doing so, using financial contracts, power producers know exactly how much they earn with their power plants in the future and are not bound to day-to-day volatility. I think for the power sector it is more the long-term implications of a higher carbon price that could be of concern in the case where producers have a coal-dependent portfolio. In such a case, it will likely trigger more structural changes and strategic decisions on how to protect against higher carbon prices.

In case you have been following developments in the Greek market, especially the sale of the main power utility PPC’s plants, do you believe the tender is going to have a successful result or not and why?

I am not too familiar with the process and would prefer not to comment.


Protergia decision to develop 650 MW gas-fueled power station explained

A decision by Protergia, a member of the Mytilineos corporate group, to develop a 650 MW natural gas-fueled power station is primarily based on long-term trends projected for the domestic energy market over the next 10 to 15 years, Dinos Benroubi, the energy division head at the Mytilineos group, informed participants at a conference staged by HAEE, the Hellenic Association for Energy Economics.

“We have made certain decisions and will push ahead with a new 650 MW gas-fueled power station,” Benroubi remarked.

Electricity demand is expected to significantly increase beyond 2025, while the European trend is headed towards decarbonization and a turn to renewable energy, according to projections made by IPTO, Greece’s power grid operator, the official explained.

By 2022, when the new Protergia gas-fueled power station is expected to begin operating, thermal units totaling 1,060 MW are expected to be added to the system while between 1,600 and 1,900 MW will be withdrawn by 2025, Benroubi noted.

He explained that, based on IPTO forecasts, a capacity sufficiency issue will emerge as of 2022.

“Acting together, we will all resolve this issue for the years 2020 and 2021 but, from then on, thermal output will be needed, it has become apparent,” Benroubi remarked.

According to Eurelectric, the sector association representing the common interests of the electricity industry at a European level, 1 MW of thermal capacity is needed for every 1 MW of wind energy capacity, the Mytilineos group’s energy head told.

Thermal output currently suffices to cover present RES levels, Benroubi explained, while questioning whether reduced thermal output will be enough to cover increased RES levels in 2025.

The corporation has estimated that, in 2025, a lignite-fired power station would generate electricity at a cost of 105 euros per MWh and a natural gas-fueled unit would produce at a cost of 67 euros per MWh, the official pointed out.

The development of a new natural gas-fueled unit is needed both in terms of grid needs and sustainability.

Natural gas-fueled electricity generation in north Aegean examined

The feasibility of a plan entailing natural gas supply to the non-interconnected islands in the north Agean for the purpose of electricity generation is being examined by RAE, the Regulatory Authority for Energy.

Officials at the authority are considering the development of small-scale facilities that could run on LNG or CNG.

RAE established a committee in 2015, based on an EU directive, to study the feasibility of such a plan. The interest expressed appears to be growing.

Both the main power utility PPC and gas utility DEPA have previously jointly examined the possibility of using CNG for electricity generation on the islands with the prospect of a partnership in mind.

RAE has endorsed a sum of 42,000 euros to support a related study’s completion, expected to be delivered in three months.