IPTO, Terna plan Greek-Italian link boost of up to 1,000 MW

Power grid operator IPTO is taking initiatives to upgrade Greece’s interconnections with neighboring countries, acknowledging transboundary grid link insufficiencies are having a negative impact whose consequences include market functional disorders and higher electricity prices.

The operator has formed working groups with all of Greece’s neighboring countries to examine the prospect of constructing or reinforcing existing interconnections.

These associations include cooperation with Italian operator Terna. The two sides, prepared to consider both an upgrade of the existing system or the development of a new one, estimate that the Greek-Italian grid interconnection requires a capacity increase of between 500 and 1,000 MW.

According to sources, IPTO and Terna have agreed to proceed with related studies for an optimal solution as soon as possible. The operators intend to reach a decision within the next few months. Any selection will need to be approved by the Greek and Italian regulatory authorities of energy.

IPTO intends to include this project in its ten-year development plan covering 2022 to 2031, expected to be presented at the end of the year.

The existing Greek-Italian electricity grid interconnection, a 163km subsea cable with a 500-MW capacity in operation since 2002, will be used to facilitate the target model’s next stage, market coupling, beginning on December 15 with the aim of harmonizing the energy markets of the two countries.

ENTSO-E, the European Network of Transmission System Operators for Electricity, has pointed out that a Greek-Italian grid interconnection boost will be needed for an effective bridging of prices between the two countries.

Greek-Italian market coupling, soon, target model’s next step

Domestic market players and officials are eagerly awaiting to see how the target model’s next stage, Greek and Italian day-ahead market coupling, scheduled for December 15, will influence wholesale electricity prices.

Wholesale electricity prices in the day-ahead market and, especially, the balancing market, have escalated since the target model launch in Greece a month and a half ago.

Greece’s market coupling with Italy will be a crucial step as it promises to take Greece to the essence of the target model effort, namely gradual unification of national energy markets – electricity and gas – into one common European market.

Once market coupling is established between Greece and Italy, energy will flow from the country with lower energy prices to the higher-cost country – to the extent permitted by grid interconnection capacities – until price discrepancies have evened out.

All preliminary work for next week’s Greek-Italian market coupling launch has been successfully completed. An ongoing dry-run procedure involving simulated trading will continue until December 12.

The market coupling launch, three days later, is on schedule, the Greek energy exchange has informed RAE, the Regulatory Authority for Energy.

Market coupling of Greece and Italy’s balancing markets will take place at a latter date, while Greek-Bulgarian market coupling is planned for early in 2021.

RAE, concerned by target model delay, requests report

RAE, the Regulatory Authority for Energy, concerned about Greece’s delayed implementation of the target model, aiming for market coupling, or harmonization of EU wholesale markets, has requested a detailed progress report from the Energy Exchange and power grid operator IPTO.

The authority also wants the two bodies to deliver a binding finalized schedule detailing when this preparatory work will be completed for the new model to be ready to operate.A series of target model deferrals have raised concerns at RAE, now preparing to apply increased pressure, sources noted.

According to the latest schedule, the electricity market’s new model, which should have been launched in 2015, is now expected to be ready to operate in the second half of 2020.

A tender for logistics required in the market coupling procedure between the Greek and Italian markets is expected to be completed by this date.

Delays have also been identified in the establishment of three spot markets at the energy exchange – intraday, day-head and balancing markets.

New energy exchange market, coupling date delays likely

Greek and Italian officials representing grid operators, regulatory authorities and the energy exchanges of both countries believe targets dates set for the launch of new energy exchange markets and coupling of the Greek and Italian markets are too immediate and not achievable, it was determined at a recent meeting in Athens.

A target model agreement between Greece and the country’s lenders has set April 1, 2019 as the starting date of new energy exchange markets and June 1, 2019 for market coupling of the Greek and Italian markets.

Even if all market regulations, platforms and other details are ready for an April 1 launch of new energy exchange markets, some time would still be needed for real-condition training purposes of participants, officials taking part in the Athens meeting agreed. A launch about two months later, in July, 2019, would be more realistic, they noted. During this period, preparations for Greece’s coupling with the Italian market would be concurrently pushed ahead.

It became apparent at the Athens meeting, staged in July 12, that Italian and other European market officials to be impacted by the Greek-Italian coupling plan are not prepared to move ahead unless systems have previously been tested and operated on a trial basis for a satisfactory period of time. This essentially means that Greece’s coupling plan with the Italian market is not possible any sooner than the end of 2019.

New market conditions concerning the time it will take to implement the target model are expected to be presented at a related local event tomorrow.

It remains unclear how Brussels will react to any schedule revisions beyond Greece’s bailout period, ending next month. Lender representatives showed some flexibility during their most recent visit to Athens as they also acknowledged the initial plan’s dates are premature. At the other end, Greek officials have presented solid proof of a dedicated effort and progress made until now.

The country’s lenders, especially the European Commission, may maintain this more tolerant stance if Greek officials manage to convince that all possible efforts have been made.

Any delays to the new energy exchange market and Greek-Italian coupling dates will create further uncertainty with respect to NOME auction revisions that will enable the incorporation of these auctions into futures markets.

This uncertainty and various other market factors drove prices higher at a NOME auction held yesterday.