Norton Rose Fulbright Athens team advises on largest interconnection project

Global law firm Norton Rose Fulbright has advised IPTO/ADMIE, the owner and operator of the Greek electricity transmission grid, on the concession of the Crete – Attica HVDC interconnection project, to ADMIE’s subsidiary, Ariadne Interconnection. It is the largest electricity grid infrastructure project ever developed in the country and one of the longest subsea electricity links (328kms) developed so far globally.

The project includes the construction of a bipolar high voltage direct current (HVDC) cable, linking the island of Crete with the transmission grid in the Athens metropolitan area (Attica), with a rated power of 1 GW (2 x 500 MW), as well as the construction of electrode stations, AC/DC converter stations and onshore (underground) high voltage lines in Crete and Attica. The project is expected to be commissioned in 2022 and its estimated budget is €1 billion.

Advice included the drafting of the concession agreement and also extended to the consultation of the concession agreement with the national regulatory authority for energy (RAE) and credit institutions which are interested in financing the implementation of the project.

The Norton Rose Fulbright team was led by Athens-based partner Vassilis Koroxenidis with assistance from senior associate Sergios Karotsieris. Dimitris Assimakis, head of the firm’s Greek energy practice, assisted the team on the national and EU regulatory and public procurement issues relevant to the project.

Dimitris Assimakis commented: “We are delighted to have assisted ADMIE, the Greek electricity TSO, with the implementation of this emblematic electricity interconnection project. This project illustrates ADMIE’s strong commitment to the further expansion of the transmission grid to the Aegean Sea islands. This contributes not only to the improvement of a reliable power supply and the economic growth of these regions but, most importantly, helps combat their environmental degradation and enables the addition of new renewable capacity from the islands into the national grid.”

Cyprus wants unchanged cost agreement for link with Crete

Though a new application submitted by EuroAsia Interconnector, a consortium of Cypriot interests, to the EU’s Connecting Europe Facility for funding support concerning an electricity grid interconnection project to link the Greek and Cypriot systems has yet to be examined or reciprocated by the European Commission, Greece and Cyprus have already begun talks on how to divide the remainder of the project’s costs not covered by the CEF.

The Cypriot side, which took the initiative for these talks, appears determined to ensure that Greece will stick to its share of the cost under the terms agreed to when the project also included the Athens-Crete link as part of a wider plan to interconnect the Greek, Cypriot and Israeli systems.

EuroAsia Interconnector head the wider Greek-Cypriot-Israeli plan. Greek power grid operator IPTO withdrew the Athens-Crete segment and is now working on it as a national project. IPTO is aiming for swifter progress on this section, urgently needed to resolve Crete’s pressing energy sufficiency issues.

Cyprus’ Regulatory Authority for Energy, RAEK, has forwarded to its Greek counterpart RAE a text presenting its cost-related views. RAEK wants to ensure that a Cross Border Cost Allocation agreement signed by the two sides late in 2017 for the Greek-Cypriot link, running from Crete to Cyprus, remains valid, despite Greece’s withdrawal of the Athens-Crete section.

According to the CBCA agreement, Cyprus will take on 63 percent of the cost of the Crete-Cyprus link and Greece will be responsible for the other 37 percent, under the condition that 50 percent of the total cost will be covered by EU funds, through the CEF.

The Crete-Cyprus interconnection is budgeted at 1.5 billion euros, meaning Greece’s share will be approximately 280 million euros.

This amount will be incorporated into IPTO’s accounts and need to be recovered through network surcharges included in consumer electricity bills, seen as a delicate matter by the Greek government.

Greek authorities have yet to respond to RAEK’s initiative as they await news from the European Commission on the CEF request.

Natural gas, electricity imports most influential for Greek SMP levels

Natural gas and electricity imports are playing an increasingly important role in shaping System Marginal Prices, or wholesale prices, while the influence of more traditional energy sources is waning, latest monthly data provided by the Greek energy exchange has shown.

Natural gas’s influence on SMP levels grew between January and May this year, compared to other fuels and electricity imports and exports, the data showed.

Throughout the five-month period, natural gas-fueled power stations consistently ranked first in number of hours used for SMP levels, peaking in May with 491 hours. Electricity imports consistently followed as a the second most influential factor for all five months.

Lignite-fired power stations, previously a key factor for SMP levels, are now limited to a marginal role, their lowest contribution, one hour in an entire month, recorded in April, the January-to-May figures showed.

Greece’s international grid interconnections are playing an increasingly influential role in shaping the country’s SMP as well as covering energy demand, the data showed.

Power grid operator IPTO has increased capacities for electricity imports via Greece’s grid interconnections in the north.

IPTO, ministry, RAE seeking common ground for Ariadne tender

Officials at power grid operator IPTO, the energy ministry and RAE, the Regulatory Authority for Energy, are seeking common ground that would pave the way

a tender to offer a minority 39 percent share in IPTO subsidiary Ariadne Interconnector, an SPV established for the development of the Athens-Crete electricity grid interconnection.

IPTO is looking to attract an investor, or investors, for a minority stake in Ariadne as financial support for the costly project.

IPTO wants to maintain a majority stake in its subsidiary as the operator is determined to control the construction of a project it will eventually operate.

State Grid Corp of China (SGCC), holding a 24 percent stake of IPTO, is expected to participate in the tender. The Chinese company has already expressed interest for a 20 percent stake in Ariadne and has signed a related memorandum with IPTO.

If SGCC’s interest is limited to a 20 percent stake, then a second equity package carrying a further 19 percent is likely to be offered to other investors.

EuroAsia Interconnector, a consortium of Cypriot interests heading a wider PCI-classified project planned to link the Greek, Cypriot and Israeli grids, was expected to acquire a 39 percent in Ariadne. However, a dispute with IPTO over control of the wider project’s Crete-Athens section has distanced EuroAsia.

Energy minister Costis Hatzidakis and IPTO chief executive Manos Manousakis are both confident concerns raised by RAE over the tender’s procedure will be overcome and enable a launch of the competition within the first months of this year.

RAE is worried about complications that could arise and trouble the tender as a result of SGCC’s stake in IPTO. If not handled appropriately, the tender could spark protests from rival bidders claiming unfair competition, RAE fears. Also, the authority is well aware of Brussels’ sensitivity to the prospect of a wider Chinese presence in EU infrastructure.

 

Euroasia takes Crete grid link case to supreme court

Euroasia Interconnector, a consortium of Cypriot interests heading a PCI-status grid interconnection to link the Greek, Cypriot and Israeli systems, has escalated its legal action against Greek power grid operator IPTO amid their dispute for control of the Greek segment’s development, planned to link Crete with Athens.

Euroasia has stepped up its legal action by filing a case to the Council of State, Greece’s Supreme Administrative Court, following a rejection by AEPP, the Authority for the Examination of Preliminary Appeals, reliable sources have informed energypress.

The Cypriot consortium is seeking to have an AEPP verdict overturned, which would disrupt related project tenders currently being held by Ariadne Interconnector, an IPTO subsidiary.

The case is scheduled to be heard on September 5, the sources noted, adding Greek authorities are in the process of making their legal preparations.

The recently appointed Greek energy minister Costis Hatzidakis has already made clear his intentions to not alter the project’s ongoing procedures, while also indicating a willingness for greater cooperation with the Cypriot side.

 

 

Greek power producers also eyeing Balkan export potential

The country’s power producers are focusing on the market prospects of  neighboring countries along with a heightened interest in Greece’s electricity market as a result of the upcoming elections, seen bringing the main opposition New Democracy party into power for more decisive reform action at power utility PPC, and intensified market competition.

Investments plans by PPC, currently developing its Ptolemaida V power station, as well as by private-sector enterprises, which have announced plans for five new state-of-the-art units, are expected to create an overabundance of electricity, even of all these plans are not executed. This is one of three main factors turning the attention of power producers to neighboring markets.

Also, it has become clear that Balkan markets lack flexibility in electricity generation as they primarily depend on coal, while gas networks that could support flexible gas-fueled power stations in the region are insufficient.

A third factor contributing to the heightened the interest of local producers for energy-related business in the wider region is Greek power grid operator IPTO’s ongoing upgrade of Greece’s grid interconnections with neighboring countries, especially Bulgaria and North Macedonia, which promises to create greater export potential.

Besides the independent producers, PPC is also looking to capitalize on this export potential.

RES targets, sector investments of €8.5bn at risk, officials warn

Greece needs to move swiftly to simplify renewable energy licensing procedures, ratify energy storage regulations and push ahead with electricity grid interconnections, especially the Dodecanese project, if RES objectives set for 2020 is are to be met and investments made, two key RES sector associations have stressed.

An objective aiming for RES-generated energy consumption of 40 percent by 2020 will be difficult to achieve, officials of ESIAPE, the Greek Association of Renewable Energy Source Electricity Producers, and ELETAEN, the Greek Wind Energy Association, have highlighted at a news conference.

RES-generated electricity represented 26.5 percent of total consumption in 2018, they noted.

Major bureaucratic issues continue to plague the sector despite significant steps taken both at an international level and locally, through the implementation of new terms, the respective chiefs of ESIAPE and ELETAEN, Giorgos Peristeris and Panagiotis Ladakakos, pointed out.

RES storage and grid interconnections investments worth 8.5 billion euros and planned for over the next five years, according to a related study, are in danger of not been executed, Peristeris warned. These promise to provide a 1.5 percent GDP boost, the ESIAPE president added.