Firmest gas price cap backers in talks with German minister

The energy ministers of Greece, Belgium, Italy, Poland and Spain, representing the five EU member states most supportive of a price cap on natural gas, are scheduled to stage a teleconference with their German counterpart Robert Habeck today to analyze their price-cap proposal in an effort to overcome Germany’s resistance.

Berlin’s opposition to a European gas price cap and unilateral announcement of a 200 billion-euro national package for the energy crisis have disappointed many European governments, going into an informal EU meeting of heads of state this Friday with little hope of bold decisions.

EU member states are generally feeling increasingly frustrated by Germany’s refusal to back a collective European decision for the energy crisis, a stance Berlin will not be able to keep justifying.

According to sources, the group of five’s gas price cap proposal is set at a level that would ensure gas suppliers do not turn their backs on Europe and send their tankers to markets in Asia, where demand is set to rise in the lead-up to winter.

To guarantee supply to Europe, the continent’s price cap level will need to be set slightly higher than price levels at Asian energy exchanges.

 

European action taken to avoid energy-led bankruptcy crisis

Energy retailer bankruptcies in countries such as the UK and energy group nationalizations in France and Germany, worrying developments of recent months, have emerged as a severe warning that a 2008 Lehman Brothers-type bankruptcy crisis in Europe is possible.

The energy crisis in Europe has placed the entire economy in peril as it could prompt a series of devastating knock-on effects.

Concern is high as a result of the high exposure of energy companies to margin calls, serving as guarantees that exist to ensure that if one counterparty goes bankrupt, the other will collect money it is owed.

The problem is that wildly fluctuating electricity and natural gas prices have forced companies to drastically increase their guarantee sums, even if just temporarily, a demand greatly pressuring their finances.

Highlighting this increased pressure, Greek power utility PPC’s chief executive Giorgos Stassis recently noted that PPC needed – for the aforementioned reasons – to commit one billion euros one day in August before being reimbursed half this amount shortly afterwards, when prices eased.

Margin-call demands have a multiplying effect that could turn the energy crisis into a debt crisis, as was the case with the financial crisis of 2008. This explains why European governments are rushing to offer capital guarantees and liquidity to energy companies in an effort to avoid bankruptcies caused by an inability to meet current needs.

It is estimated that such support measures in Europe will cost in excess of 1.5 trillion euros and could reach as high as two trillion euros.

 

 

 

Windfall tax for oil and gas firms, government decides

Windfall profits earned in 2022 by petroleum companies, through their refineries, as well as by natural gas wholesalers, will be subject to an extraordinary solidarity tax, the government has decided, energypress sources have informed.

The money to be collected through this extraordinary tax will go towards the Energy Transition Fund to support the government’s energy subsidies offered to households and businesses.

The government’s plan to move ahead with this extraordinary tax is linked to a probable European-wide solidarity tax on windfall profits earned by fossil fuel companies.

The Greek plan will be shaped along the lines of a windfall tax model imposed on electricity producers.

This new windfall tax on oil and gas companies was discussed at last Friday’s emergency meeting of EU energy ministers. It was supported by Greek energy minister Kostas Skrekas, as well as his German and Spanish counterparts.

The Greek government appears determined to implement the windfall tax on oil and gas companies even if it fails to receive EU approval. Athens recently imposed a 90 percent windfall tax on electricity producers without EU approval.

 

 

European resolve for crisis solution containing gas prices

The growing resolve of European officials to find solutions that could contain gas prices is already producing results, as highlighted by a significant price reduction of just over 30 percent over the past week.

Germany appears to have changed stance by joining EU member states of the south in their call for a cap on natural gas, now being examined by the European Commission following a delay of many months.

Germany’s public admission that a single European solution is needed to counter the energy crisis, an acknowledgment coming after the country previously blocked proposals forwarded by Europe’s south, has swiftly impacted energy markets.

Yesterday’s news of a new Russian gas supply disruption through Nord Stream I, under the pretext of maintenance requirements, did not prompt a further increase in gas prices, as would be expected, but, instead, resulted in a price reduction. The TTF index fell yesterday to 239 euros per MWh, down from a record level of 346 euros per MWh on August 26, a 31 percent drop over the one-week period.

This reduction has filtered through to today’s wholesale electricity prices around Europe. They fell to 635 euros per MWh in France, 571 euros per MWh in Germany, 661 euros per MWh in Italy, and 582 euros per MWh in Greece and Bulgaria. The price level for Greece is approximately 100 euros lower compared to yesterday.

 

European gas storage units nearly 70% full, on course for October target

Europe’s gas storage facilities are estimated to be close to 70 percent full in early August, according to data provided by Gas Infrastructure Europe (GIE), representing the continent’s gas infrastructure operators.

Europe’s gas storage units continued being filled at a rapid rate in late July, despite the reduction of Gazprom’s gas supply through the Nord Stream I pipeline, now operating at just 20 percent of capacity.

Given the continent’s current gas storage levels, European authorities are confident an 80 percent objective can be achieved by early October. However, storage level discrepancies between EU member states remains a challenge that needs to be dealt with.

German gas storage units are now 70 percent full, while the level in Italy is higher, at 73 percent. On the contrary, gas storage facility levels are far lower elsewhere, registering 48 percent in Bulgaria, 24 percent in Ukraine and 53 percent in Croatia.

PM office emergency meeting over Nord Stream I fears

The country’s leading energy authorities have been summoned to an emergency meeting today at Prime Minister Kyriakos Mitsotakis’ office following yesterday’s troubling announcement by Kremlin-controlled energy giant Gazprom, which noted it could not guarantee the safe operation of the Nord Steam I gas pipeline because of doubt over the return of a turbine from Canada.

At today’s meeting, top officials representing RAE, the Regulatory Authority for Energy, the market operators, power utility PPC, and gas company DEPA will seek emergency solutions amid fears Russia’s dwindling gas supply cuts to Europe could worsen.

Nord Stream I, a subsea pipeline linking Russia with Germany through the North Sea, was shut down on July 11 for a 10-day period of maintenance work, according to Gazprom.

Should the pipeline not reopen next Thursday, turmoil in European energy markets would also impact the Greek market, both in terms of prices and supply sufficiency, as the development would prompt a drastic increase in electricity exports from Greece to interconnected neighboring countries.

Tourism boom revenue will help fund winter’s energy subsidies

The Greek tourism industry’s strong revenue figures being generated this summer, which could exceed those of the record-breaking summer of 2019 if July’s heightened activity is sustained through August, will prove invaluable in financing energy subsidies needed in coming months.

At the current rate, Greece’s tourism industry could contribute between 19 and 20 billion euros to the budget, well over the budget forecast of 16 to 17 billion euros.

International authorities, including Fatih Birol, executive director of the International Energy Agency, are warning of even tougher times ahead.

European countries greatly dependent on Russian natural gas are scrambling for solutions ahead of next winter. Germany is seeking nuclear-energy assistance from France. Chancellor Olaf Scholtz has reiterated energy prices will remain high for some time yet. Italian energy company Enel has warned customers that it cannot guarantee gas and electricity prices will continue to be offered under current agreements.

Latest calculations indicate that Greece’s electricity bill subsidies for households and businesses could soon exceed one billion euros per month.

The country’s electricity subsidy cost for August is expected to greatly exceed July’s figure of 722 million euros, which was based on a cost of 240 euros per MWh, now over 300 euros per MWh.

 

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.

Europe on edge as Russia limits supply, fiscal revisions needed

Emergency measures are being prepared around Europe, confronting reduced Russian gas supplies and fearing even greater cuts. It remains a mystery if the Nord Steam I gas pipeline – linking Russia with Germany, and by extension, other markets – will reopen on July 21. The pipeline was shut yesterday for a 10-day period to undergo maintenance, according to Russian officials.

Anything is possible from July 21 onwards. Russian gas supply through Nord Steam I could increase or may dry up completely.

In response, German officials are preparing to reactivate coal-fired power stations to make up for energy-source insufficiencies prompted by Russia’s reduced gas supply, while, energy-consumption restrictions, including an order urging household members to take fewer hot showers, could also be introduced, if needed.

In France, industries are turning to oil for energy, while Italian oil and gas company ENI has announced Gazprom will cut its gas supply by a further one third.

In Greece, the fiscal pressure caused by the months-long energy crisis, exacerbated by Russia’s war on Ukraine, is seen resulting in a budget deficit of 2 percent in 2022. A fiscal adjustment will be needed to transform this deficit into a 1 percent primary surplus in 2023.

Such a fiscal improvement, however, may not be possible given the current gas and electricity price levels. The government’s electricity-bill subsidy support for consumers is costing between 800 million and one billion euros a month.

 

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.

Europe on alert, energy futures surging, concerns grow in north

Intensifying fears of energy security dangers around Europe next winter are becoming apparent as energy futures continue skyrocketing to unimaginable levels.

Europe is now in a state of heightened alert as the continent’s north, better equipped with greater energy storage facilities, is showing clear signs of serious concern, which was not the case earlier this year, when members of the continent’s south, including Greece, were systematically underlining the dangers ahead at every EU summit.

EU energy ministers have lined up yet another extraordinary Council meeting for July 26 to seek solutions for the Russian-induced gas supply crisis anticipated for next winter.

Highlighting Europe’s growing concerns, French futures for the fourth quarter, the heart of winter, yesterday peaked at 1,000 euros per MWh.

The French government’s announcement of a plan to fully nationalize debt-laden energy giant EDF in order to help it ride out the European energy crisis and invest in atomic plants preceded this latest price surge. Half of EDF’s nuclear reactors are currently sidelined as a result of technical issues.

In Germany, futures for December, 2022 yesterday exceeded 455 euros per MWh, fueled by news that the country’s Ver.di trade union has asked the government to accelerate a rescue plan for the Uniper energy group. The company itself has ascertained that a lump-sum tax plan stands no chance of being imposed, adding that consumers will not be called upon to cover the cost of the energy group’s rescue plan.

In neighboring Austria, moves are being made to secure space at Haidach, one of Europe’s biggest storage facilities, as Russia’s Gazprom has not met rules requiring storage facilities to cover a minimum level.

 

 

 

EU on edge as gas supply falls, emergency action in Germany

As officials in Greece and Europe tentatively wait to see if the TurkStream pipeline will resume operating next week, following an announcement several days ago by Russia’s Gazprom that gas supply via both lines of its TurkStream pipeline would be temporarily suspended June 21 to 28 for scheduled annual maintenance, Germany has just moved into the second of its three-stage emergency gas plan after Russia slowed supplies to the country, intensifying concerns of a market collapse.

The TurkStream suspension comes amid major disruptions to Gazprom’s supplies to Europe. Natural gas flow through the Nord Stream pipeline, running from Russia to Germany and also supplying the rest of Europe, has been cut by more than half since last week. Gazprom cited an equipment hold-up in Canada as a result of sanctions over the Ukraine war.

With fears, over recent months, of a drastic slowdown in Russian gas supply to Europe, now confirmed, the EU and its member states, all on high alert, are laying out emergency plans ahead of next winter.

Germany warned the country’s energy crisis may trigger a “Lehman effect” across the utility sector as it moved one step closer to rationing natural gas. “The whole market is in danger of collapsing at some point — so a Lehman effect in the energy system,” German economy minister Robert Habeck admitted at a press conference.

Under the second stage of Germany’s emergency gas plan, utility companies can pass on price increases to customers. The government is holding back on triggering a clause preventing this for now.

 

Athens awaiting EU outcome for Gazprom payment stance

The Greek government’s stance regarding Moscow’s demands for ruble-currency payments to Gazprom for natural gas supply will depend on decisions to be taken by fellow EU members, government officials have told energypress.

Athens is expected to push for greater clarity on the matter and a common European stance on the issue at an emergency meeting of EU energy ministers called by the French EU presidency for next Monday.

An imminent payment expected to be made by German company Uniper will be pivotal in decisions to be made by EU member states on Moscow’s ruble-currency payment demand for Russian gas supply.

According to German media, Uniper intends to make a euro-currency payment to Gazprom, but, rather than make the payment to a European bank, as the company has done until now, it will instead transfer the related amount to Russia’s Gazprombank, not on the sanctions list.

As has been widely reported, Russian president Vladimir Putin has ordered countries deemed as adversaries to make gas payments through a specific procedure involving two Gazprombank accounts, a foreign-currency account and a ruble-currency account. Gazprombank will convert foreign-currency sums to rubles before transferring the resulting amounts to parent company Gazprom.

All eyes on Germany’s ruble payment stance for Russian gas

Greece and the entire EU are waiting to see if Germany will agree to Russia’s demand for Gazprom gas supply payments in the ruble currency.

Berlin’s next payment to Russia’s state-controlled Gazprom is due tomorrow. To date, Chancellor German chancellor Olaf Scholz has refused to bow to Moscow’s recent payment-term demands.

The decision to be reached by Germany on this dispute with Moscow is expected to serve as a guide for most EU members.

Berlin has officially noted that Russian president Vladimir Putin’s payment demand violates the terms of an agreement signed between the two sides.

Besides creating artificial demand and, subsequently, greater value for the ruble, which has been impacted by sanctions on Russia, Moscow’s demand for natural gas payments in its currency is also seen as a Russian show of strength aiming to force the EU to succumb to Russian demands.

The EU’s refusal, so far, to bow to Russia’s ruble-currency pressure for natural gas payments has contributed to keeping gas prices at high levels.

Greek officials who took part in an energy-security meeting yesterday, called by Prime Minister Kyriakos Mitsotakis, reportedly stated that the EU made a mistake to reject Russia’s ruble payment demand, made in late March.

The ongoing political tension and market turbulence, resulting in higher natural gas prices, is benefitting Russia’s gas revenues.

 

Major RES input lowers electricity price to near zero Sunday afternoon

Greatly increased renewable energy contributions – covering over 80 percent of demand – during yesterday’s weekend siesta hours of 2pm to 5pm pushed down the wholesale electricity price to virtually zero, or 0.09 euros per MWh.

RES input reached approximately 5 GW (wind and solar energy units), while demand was limited to just over 6 GW, enabling authorities to withdraw from the market lignite and gas-fired power stations.

On the same day, when RES input eventually fell and gas-fired power station contributions were brought back into the grid, the electricity price level rebounded to 283 euros per MWh by the evening.

The wholesale electricity price averaged 168.22 euros per MWh on Sunday, a 27 percent reduction compared to Saturday.

Similar price fluctuations were also recorded in other parts of Europe over the weekend. Negative prices were recorded in Germany and the Netherlands, at -2.49 euros per MWh, and they were even lower in Belgium, at -17.97 euros per MWh. These negative prices essentially mean that consumers are paid to use electricity.

Today, electricity market conditions are back to the ongoing energy crisis’ normal levels. The average wholesale electricity price is at 243.08 euros per MWh, up 44.5 percent compared to yesterday, despite RES input representing 51.1 percent of the energy mix.

Europe on edge, tested by Putin’s ruble payment demand

Tension in Europe has risen with signs of disorientation emerging over Russian president Vladimir Putin’s demand for ruble-currency payments to cover Russian natural gas supply.

German chancellor Olaf Scholz, according to Moscow, initially agreed on this payment term for Russian gas supply, but this was swiftly denied by the chancellery.

Italian prime minister Mario Draghi abruptly rejected Putin’s ruble-based payment plan for Russian gas supply, while Polish prime minister Mateusz Morawiecki has called on Europe to impose an embargo on Moscow and follow his country’s example by stopping all Russian energy imports until the end of the year.

Europe is on high alert. Reliance on Russian energy reaches as high as 80 percent in Austria. Germany’s dependence on Russian energy is also high, at 55 percent.

Both countries have taken steps for gas rationing over the payment stand-off with Russia, fearing, like all of Europe, a halt in energy deliveries from Russia because of the dispute over payments.

Robert Habeck, Germany’s federal minister for economic affairs and climate action, has called on citizens to use electricity as moderately as possible.

Should Putin take the dreaded step and cut energy supply to Europe, distribution of existing natural gas reserves, as well as supply from non-Russian sources, will need to be prioritized, with preference for hospitals, power stations and crucial industries, needed to avoid economic collapse.

If European governments are forced to announce a state of emergency, an electricity rationing plan will need to be implemented for all households. The UK was forced to adopt such an extreme measure, for fuel, during the oil crisis in 1973.

In Greece, a halt in Russian natural gas supply would stop economic activity in just a few days. The country’s daily gas consumption reaches approximately 200,000 MWh, of which 115,000 MWh is supplied by Russia.

Additional LNG shipments in April; the mooring of an FSRU at the Revythoussa islet LNG terminal, just off Athens, for a capacity increase; full-capacity generation at the country’s lignite-fired power stations; as well as an agreement with Italy to ensure storage capacity at the neighboring country’s gas storage facilities, for strategic reserves, are all necessary steps ahead of next winter.

It remains to be seen if Russia’s war on Ukraine will carry on into summer and require extreme measures, or end soon, to the relief of all.

The TTF gas exchange ended trade yesterday at 118 euros per MWh. Wholesale electricity prices in Greece today are at 222.38 euros per MWh.

In comments offered during yesterday’s opening day of the two-day Power & Gas Forum staged by energypress, Pantelis Kapros, Professor of Energy Economics at the National Technical University of Athens, estimated that natural gas prices, even if the war were to end now, will average between 50 and 70 euros per MWh this year.

 

 

 

South Kavala UGS tender’s final round not until early summer

The final round of privatization fund TAIPED’s tender for a prospective underground natural gas storage facility (UGS) at the almost depleted natural gas field of “South Kavala” in the Aegean Sea’s north will not be held until early this summer following a latest deadline extension by RAE, the Regulatory Authority for Energy, on consultation regarding the facility’s business pricing framework, sources closely following the project’s developments have informed energypress.

Prior to this deadline extension, the overall procedure was delayed by several months as a result of a disagreement between RAE and gas grid operator DESFA over supplementary investments that would enable the country’s grid to cater to the needs of the UGS.

Consultation for UGS pricing framework proposals and other details, including DESFA’s ten-year development plan, was to expire on March 14, but RAE has offered participants an extension until March 30.

It is believed RAE’s text forwarded for consultation has been deemed far from satisfactory by prospective investors. If no changes are made, the tender could fail to produce a result, despite its long duration.

Such a prospect threatens to leave Greece as Europe’s only country without a single UGS for many years to come.

Elsewhere, EU member states are rushing to fill their UGS facilities ahead of next winter, following an order issued by the European Commission as part of a plan to drastically reduce Europe’s reliance on Russian gas.

The EU has a total of 170 UGS facilities, offering a total capacity of 4.2 trillion cubic metres. Germany tops the list with 60 facilities that represent 42 percent of the continent’s UGS capacity. France follows with 16 UGS facilities, Italy has 13 functional facilities and 7 under construction, while Romania has 8 UGS facilities and Bulgaria one.

 

 

Markets challenged by nuclear withdrawals, gas crisis, demand

A series of unfavorable developments, including nuclear reactor withdrawals in Germany and Belgium, persistently high natural gas prices and strong energy demand threaten will further test the European grid, threatening to prolong the energy crisis.

The withdrawal of nuclear reactors in Germany and Belgium, combined with skyrocketing natural gas prices, will negatively impact Europe’s electricity market, even in countries where natural gas holds a small share of the energy mix, as markets are interconnected, enabling a knock-on effect.

Germany has announced a withdrawal, today, of nuclear reactors with a combined capacity of 4.25 GW and remaining capacities, totaling about 4.3 GW, by end-2022. Overall, this phase-out represents 12 percent of the country’s electricity supply.

In addition, Germany’s new coalition intends to reassess the country’s existing decarbonization plan, its phase-out of fossil-fuel plants running until 2038, with the aim of shortening this procedure t0 2030, if possible.

Belgium is headed in the same direction. The country’s nuclear reactor phase-out runs until 2025. The country’s Doel 3 facility is planned to shut down in October, 2022, followed by Tihange 2 in early 2023.

Electricity demand in ten European countries is forecast to increase by 2 percent, or 5 GW, on average, in 2022, according to a Platts Analytics projection.

North rejects wholesale price as reflection of energy mix cost

A French-led proposal aligning members of Europe’s south and calling for wholesale electricity prices to reflect the energy-mix cost, from now on, has been rejected by a nine-member bloc of the north, including Germany, which insists energy exchange markets are functioning well.

France joined forces with Greece, Italy, Romania and Spain at a council meeting of European energy ministers yesterday, during which Barbara Pompili, France’s Minister of Ecological Transition, tabled the proposal from the south.

Despite the energy crisis of recent months, which has driven up energy cost levels to unprecedented levels and placed consumers, including industry, under great pressure, Europe’s north, better equipped to handle adverse market conditions as a result of more diverse energy mixes and numerous grid interconnections, has remained adamant that markets remain rational.

Austria, Denmark, Estonia, Finland, Germany, Ireland, Latvia, Luxembourg and the Netherlands all refused to discuss the French-led proposal at yesterday’s council meeting, noting that natural gas must continue to shape wholesale electricity prices.

Colder weather a first test for European energy system

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

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

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

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

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

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

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

 

 

 

Electricity prices could be driven further 13% higher in December

Latest complications in the licensing procedure for the Nord Stream 2 gas pipeline running directly from Russia to Germany through the North Sea, as well as the EU’s deteriorated ties ties with Belarus, key transit territory for Russian gas entering the EU via Poland, appear set to push electricity price levels even higher in coming weeks.

Wholesale electricity in Greece averaged a price of 221 euros per MWh in the first half of November, up from 198 euros per MWh for October, overall.

If current conditions do not improve, suppliers estimate that retail electricity prices will reach nearly 300 euros per MWh in December, up 13 percent from the current November level of 265 euros per MWh.

Market players are being pushed to the edge. Some suppliers are waging survival battles, others are seeking to appease unsettled customers through campaigns offering energy-efficiency tips, while others are seeing their market strategies overrun by the continual flow of unfavorable developments.

Greek government officials are also jittery, realizing that household electricity subsidies of 39 euros per month offered for November and December for the first 300 KWh of consumption will not be enough.

 

 

Ministry official to hold strategic energy talks in Washington

Strategic opportunities emerging as a result of the Greek energy market’s ongoing transformation as well as the geopolitical significance of certain major projects, such as the Southern Gas Corridor, intended to diversify Europe’s gas sources and reduce the continent’s dependency on Russian gas, will be discussed by the energy ministry’s secretary-general Alexandra Sdoukou with American officials during her visit to Washington this week.

The Greek official, travelling to Washington today, plans to hold discussions covering the entire range of energy policy issues, from new RES technologies, hydrogen, the energy mix, as well as investments of geopolitical nature, including Balkan gas interconnections, the Alexandroupoli FSRU project in northeastern Greece, the underground gas storage (UGS) facility at the almost depleted gas field of South Kavala in the Aegean Sea’s north, as well as Greece’s role as a regional hub for energy source and route diversification.

Inevitably, the talks will also cover the current energy crisis troubling the world, especially Europe.

US Secretary of Energy Jennifer Granholm has directly criticized Moscow for deliberately subduing its gas supply to Europe in order to manipulate the energy market and pressure Brussels for approval of Nord Stream 2, an underwater gas pipeline directly connecting Russia with Germany through the North Sea.

Certain countries that stand to lose significant gas transit revenues oppose this new pipeline. It has also generated years of conflict between Berlin and Washington. Nord Steam 2 has almost been completed and is now undergoing trial runs.

Europe is heavily dependent on Russian gas, while some countries in central and eastern Europe, including the Balkans, are almost entirely dependent. The US is seeking the greatest possible share for supply of American LNG.

PPC to partially absorb power costs, Brussels action imminent

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

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

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

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

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

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

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

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

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

IPTO study backing PPC lignite compensation bid soon to EC

The energy ministry is preparing to forward to the European Commission a power grid operator IPTO study that underlines the ongoing necessity of the country’s lignite-fired power stations for grid sufficiency.

The IPTO study was requested by energy minister Kostas Skrekas to bolster a compensation request submitted to Brussels by state-controlled power utility PPC as a result of the grid’s ongoing need for lignite units, nowadays loss-incurring facilities due to elevated CO2 emission right costs.

PPC, Greece’s sole operator of lignite units, plans to phase out its lignite units over the next three years as part of the country’s decarbonization strategy.

The energy ministry expects to forward the IPTO study to the European Commission within the next fortnight. Greece is seeking compensation for PPC through a support mechanism for as long as these lignite units remain in use.

Last week, the European Commission began examining whether a similar German compensation request complies with EU rules and should be approved.

European Commission Executive Vice-President Margrethe Vestager suggested that the German plan theoretically complies with Europe’s green energy agreement and its goals.

“Within this context, our role is to safeguard competition by ensuring that compensation for premature withdrawal [of lignite units] is kept to a minimum,” Vestager commented. “The information available at this point is not sufficient to judge.”

EU hesitation to the German plan concerns a number of aspects, including the duration of the compensation period.

RES auctions postponed throughout Europe

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

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

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

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

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

 

 

 

RWE, to invest €1bn in Greek RES market, signing MoU today

German energy group RWE intends to invest approximately one billion euros in Greece’s renewable energy market over the next few years.

Details of the investment plan will be included in a Memorandum of Understanding expected to be signed today by the company heads of the German group and Greek power utility PPC at a Greek-German economic forum in Berlin.

RWE’s investment plan includes providing PPC expertise for its decarbonization effort. A prospective conversion of an existing PPC lignite-fired power station into a biomass facility, as well as joint investments in solar and wind energy projects with PPC subsidiary PPC Renewables are among the projects listed in the investment plan.

German renewable energy investment interest is focused on solar and wind energy projects. Other related technologies such as offshore wind facilities, as had been reported in the past, are not being considered.

RWE chief executive Rolf Martin Schmitz had informed Greek Prime Minister Kyriakos Mitsotakis of the German energy group’s interest to invest and provide knowhow at a meeting in Germany last October.

Between 2012 and 2018, RWE reduced its CO2 emissions by 60 million tons, a 30 percent reduction. The group, looking to be fossil fuel-free by 2040, will focus on further development in the RES and energy storage domains, an investment effort estimated at 1.5 billion euros. Germany has pledged to be carbon-free by 2038.

German players eyeing NECP opportunities ahead of Berlin forum

Greece’s major energy market opportunities, from the auto vehicle growth to decarbonization, renewable energy development, ambitious network investments and underwater cable interconnections are being eyed by German energy groups, preparing to participate at a high-level German-Hellenic Economic Forum next month.

The event, scheduled for March 9 in Berlin, is expected to be attended by Greek Prime Minister Kyriakos Mitsotakis and German Chancellor Angela Merkel, as a follow-up to a previous meeting between the two leaders in the German capital last August.

Greece’s new green agenda was tabled for the first time at that summer meeting, along with the idea to stage next month’s investment forum.

The Greek government, looking to execute an ambitious 44 billion-euro National Energy and Climate Plan by 2030, will gauge the level of German investor interest at the upcoming Berlin forum.

Leading German groups expected to participate at next month’s event include RWE, among the companies believed to be interested in supporting power utility PPC’s decarbonization effort, EON, eyeing opportunities at distribution network operator DEDDIE/HEDNO; as well as Enercon, seeking wind energy partnership. Prospective partnerships with Greek players such as PPC, Hellenic Petroleum (ELPE), Mytilineos and Terna Energy are expected to be discussed.

 

Terna

Gov’t to hasten hydrogen market development amid investment interest

Procedures leading to the establishment of Greek hydrogen market appear set to progress faster than expected, the government’s strategic decision for greater renewable energy penetration of the energy market, investment interest and Germany’s upcoming EU presidency being catalysts. The government will aim to implement related regulatory framework by July.

Hydrogen tariffs, sector support, technical prerequisites for the infusion of hydrogen into the natural gas network, as well as the determination of maximum mix levels for the two fuels are among the issues included in the new framework, to be accompanied by a sustainability study on related facilities.

Feasibility studies examining the level of competitiveness of such infrastructure as well as costs do not exist at present. They need to be conducted so as to enable authorities to determine the number of units that can enter the Greek market.

Hellenic Petroleum (ELPE) has publically expressed interest to develop the country’s first hydrogen refueling station for vehicles. Greek utility DEPA and Italy’s Snam have also expressed interest. Snam reiterated its interest at a New Year company event staged yesterday by Greek gas grid operator DESFA. Snam is a main shareholder, along with Enagas and Fluxys.

A recent McKinsey study commissioned by Snam for the Italian market showed that hydrogen can cover 23 percent of domestic energy demand in 2050 amid a 95 percent decarbonized market.

PPC claiming compensation for operation of coal generators

Power utility PPC is looking to claim compensation for keeping its loss-incurring coal generators in operation to help meet the country’s electricity needs.

The utility aims to seek compensation through an EU cost-recovery mechanism for as long as its existing lignite-fired power stations will need to keep operating until a planned withdrawal procedure for these units is completed by 2023.

A strategic reserve capacity being used in Germany is being looked at by state-controlled PPC.

PPC chief executive Giorgos Stassis made the request to the Greek government, which in turn has relayed the matter to Brussels.

European Commission officials, who have held talks on the matter with energy ministry officials, have not responded favorably to the Greek request. On the contrary, they believe Greece owes amounts related to the country’s insistence on using coal generators as a European Court decision has not been implemented.

PPC has also made note of a compensation plan for gas-fueled power stations on the islands that are expected to be interconnected. The power utility believes it will be entitled to compensation if the operation of these units is deemed necessary for grid emergency back-up reasons.

The power utility also claims it would be entitled to compensation for any unrecovered amount of its investment in these gas-fueled power stations if they happen to be withdrawn prematurely.