Diesel-fueled power facilities on interconnected islands to go

Power utility PPC’s old diesel-fueled power facilities generating electricity on the Cyclades until this group of islands was interconnected with the mainland grid via subsea cable will soon be completely withdrawn, the current status of these facilities, as back-up units, deemed costly and unnecessary by RAE, the Regulatory Authority for Energy.

No changes will be made this coming summer but the withdrawal of the units, as back-up systems, is expected as of next year, once certain legal and administrative issues are settled.

The interconnecting subsea cables, inflowing and outflowing and offering the Cyclades islands electricity input from two sides, have rendered the back-up units unnecessary as this back-up service is provided by the cables themselves, according to RAE sources.

Islands in the wider region still being supplied electricity through just one subsea cable continue to require back-up, but this service does not need to be provided by the high-cost diesel power units, RAE believes.

RAE has not approved a related proposal submitted by power utility PPC, firstly because of their high cost, and secondly, as compensation of the units, for their strategic back-up services, would need the European Commission’s approval.

Instead, RAE appears to favor a solution entailing the use of portable generators that could be transferred from one island to another, wherever and whenever needed. These generators would be leased by the distribution network operator DEDDIE/HEDNO, a PPC subsidiary, while their cost would be incorporated into the operator’s operating expenses.

Meanwhile, RAE’s board is soon expected to approve a PPC lease plan for generators offering 58 MW, to be installed on Crete as back-up for the busier summer months of July and August.

HEDNO bidders to next stage of sale with regulatory ambiguities

Second-round qualifiers of a privatization offering a 49 percent stake of distribution network operator DEDDIE/HEDNO, a subsidiary of power utility PPC, are entering the procedure’s next stage without a clear picture on the company’s regulatory framework, still not established, despite a March 31 deadline.

Though related talks began well in advance, RAE, the Regulatory Authority for Energy, is still awaiting all the details it requires from the operator on its regulated earnings and network development plan before the authority can reach a decision on the regulatory framework.

The operator’s regulatory framework is crucial for the privatization as it concerns pivotal matters such as extra wacc for certain projects, as well as Opex, Capex settings, amongst other details.

Once established, DEDDIE/HEDNO’s new regulatory framework will be applied retroactively, as of January 1, 2021.

Though its delivery date still remains unclear, it will include two periods, covering 2021 to 2024 and 2025 to 2028, which will give potential buyers a long-term perspective on the returns to be offered by the investment.

RAE has already decided on a formula calculating required earnings from the distribution network as well as the wacc level.

Second-round qualifiers are expected to be given access to DEDDIE/HEDNO’s virtual data room within the next few days for an assessment of the operator’s financial standing as part of due diligence.

PPC planning telecom entry with fiber optic installations

Power utility PPC is preparing to take its first steps into the telecommunications infrastructure sector by installing fiber optics, as a pilot program in certain parts of the country, with the aim of entering the wholesale telecoms market.

The power utility, as a first stage of a gradual five-year plan, estimated to require investments estimated between 700 and 800 million euros, intends to install fiber optics at certain segments of the 242,000-km network controlled by subsidiary firm DEDDIE/HEDNO, the distribution network operator.

PPC plans to add these fiber optics as installations to DEDDIE/HEDNO’s existing overhead electricity networks, a swifter and lower-cost option compared to going underground.

The power utility will aim to offer internet connections with speeds of around 1,000 Mbps.

The PPC plan, for its first stage, entails leasing the network to telecom companies.

This project, recently approved by the PPC board, features in the corporation’s new business plan, unveiled last December at an Investor Day event.

 

Consumers owing at least two bills to face switching block

Electricity suppliers will have the right to prevent consumers from switching supplier if owing two or more overdue power bills without having registered for any installment-based payback plan, according to a proposal forwarded by RAE, the Regulatory Authority for Energy, following two rounds of public consultation on the matter.

Suppliers will have the right to submit power supply cut requests to the distribution network operator DEDDIE/HEDNO for consumers owing at least two months of overdue and unattended power bills, according to the RAE proposal, which has received the backing of all electricity suppliers.

A debt-flagging system to blacklist customers behind on at least two electricity bills will also be incorporated into the measure as a collective system accessible by all suppliers and the distribution network operator.

In the event that consumers with overdue electricity bills register for installment-based payback plans with their supplier, then move to a new supplier but stop servicing the payback program, the previous supplier will have the right to request power supply stoppages, even for pending amounts as little as 50 euros, sources informed.

RAE will now need to relay its proposal to the energy ministry for a ministerial decision enabling a revision of the country’s electricity supply code.

 

PPC set to sign securitization agreement with Pimco

Power utility PPC is set to sign a large-scale securitization agreement with international investment company Pimco for unpaid receivables of over 90 days.

PPC will receive approximately 200 million euros of 300 million in total, sources said.

This securitization package was preceded by a small-scale agreement with JP Morgan late last year for unpaid receivables of up to 60 days. PPC received 150 million euros in a deal worth a total of 200 million euros.

PPC and Pimco have both approved this latest securitization agreement, a 14,000-page text, with just their signatures pending, the sources informed.

The 350 million-euro sum coming from PPC’s two securitization agreements, along with 775 million euros raised by the corporation through two recent bond issues, represents major cash flow relief worth 1.2 billion euros that promises to facilitate the utility’s upcoming investments and cover operating costs.

In addition, funds to come from the anticipated privatization, in the second half, of a 49 percent stake in PPC subsidiary DEDDIE/HEDNO, the distribution network operator, promise to further boost the power utility’s investment ability.

Transitional plan for Cretan small-scale link sent to Brussels

Technical and other preparations are now being made to enable Crete’s imminent small-scale power grid interconnection, to the Peloponnese, to cover, for the time being, approximately 30 percent of the island’s electricity needs.

The energy ministry has forwarded to the European Commission its proposal for a transitional model concerning Crete’s participation in the target model’s new wholesale markets.

Also, the energy ministry has prepared a draft bill needed for the transfer, to power grid operator IPTO, of distribution network operator DEDDIE/HEDNO’s assets on Crete. This will enable IPTO to assume responsibility for the island’s small-scale interconnection.

Normally, when grid links for non-interconnected islands are carried out, IPTO takes on the responsibility of their electricity networks. However, Crete, Greece’s biggest and most populous island, represents a much bigger interconnection project that is being developed over two stages. The project’s second stage, to reach Athens, is anticipated in 2023.

The transitional plan, shaped with the assistance of consultant Reed Smith, includes the sale, by power utility PPC, DEDDIE/HEDNO’s parent company, to IPTO, of a 150-kV transmission line on Crete, running from Hania to Lasithi, based on decisions reached by RAE, the Regulatory Authority for Energy, concerning management of Crete’s grid for the island’s small-scale interconnection.

The transitional model, to expire once the island’s full-scale interconnection has been completed, will allow Crete to purchase electricity transmitted through the small-scale interconnection at the target model’s new wholesale markets.

HEDNO suitors all real-money investors with long-term views

All nine qualifiers through to the second round of a tender offering a 49 percent stake of distribution network operator DEDDIE/HEDNO possess extensive experience in infrastructure management around the world and are long-term, real-money investors.

The tender’s shortlist, announced yesterday, includes Blackrock, the world’s biggest investment fund, back in the Greek picture after subscribing to a bond issue staged last month by the operator’s parent company PPC, the power grid operator.

Blackrock has based these investment decisions on Greece’s economic prospects beyond the pandemic as well as common business principles shared with PPC.

The capital managed by the nine qualifiers is worth 10.2 trillion euros. More importantly, the qualifiers are backed by formidable profiles, their portfolios carrying investments in utilities, infrastructure and energy companies.

France’s Ardian, managing assets worth over 100 billion euros, Canadian investment corporation British Columbia Investments (BCI), handling a 100 billion-euro portfolio, the American funds Blackrock, managing assets worth 9 trillion dollars, CVC Capital Partners (120 bn), KKR (250 bn) and Oak Hill (50 bn), Italy’s infrastructure fund F21, as well as Australia’s Macquarie (420 bn) and First Sentier (180 bn) are all long-term investors.

BCI and Macquarie have jointly engaged in a series of takeovers, beginning in 2012 with German networks company Open Grids Europe, and following up, in 2014, with US electricity firm Cleco, and networks company Endeavour Energy in 2017. BCI also controls Chilean power distributor Transelec as well as Canada’s Corix.

Blackrock controls US corporation Hearthstone Utilities and the UK’s Kelas Midtream and Calisen PLC, active in smart meters.

America’s KKR acquired New Jersey water management company Bayonne Water and Wastewater Concession in 2012 and Middletown Water in 2014.

Macquarie’s portfolio includes Spain’s Viesgo, Germany’s Open Grid Europe, and the portfolio of First Sentier (previously First State) includes the UK’s Electricity North West and Anglian Water.

PPC’s 2020 results, out April 20, to reflect company ascent

Power utility PPC, planning to announce its financial results for 2020 on April 20, is expected to release robust figures confirming its positive course, including, according to analysts, an EBITDA level of approximately 900 million euros.

Given the corporation’s 618 percent EBITDA surge in this year’s nine-month period, up to 696 million euros from 96.9 million euros a year earlier, PPC should register operating profit well above the 2019 level, when its recurring EBITDA ended the year at 333.6 million euros.

Sharply declined fuel costs and wholesale electricity prices during the first three quarters, as well as the continual limitation of PPC’s lignite-fired power stations, now loss-incurring as a result of higher CO2 emission rights, have been the driving forces behind the 2020 EBITDA forecast of about 900 million euros.

An EBITDA objective of one billion euros by 2024 now appears achievable sooner, possibly as early as next year.

The company’s capitalization is currently at 2.11 billion euros.

PPC, needing to push ahead with RES investments, will require capital for the effort. An ongoing privatization offering a 49 percent stake in distribution network operator DEDDIE/HEDNO, a subsidiary, is expected to raise capital for PPC’s investment plans, including in renewable energy, and also lower the company’s debt level.

The shortlist of qualifiers into the second round of the DEDDIE/HEDNO sale is expected to be announced today.

HEDNO 49% privatization shortlist set to be announced tomorrow

A short list of qualifiers through to the second and final round of a privatization offering a 49 percent stake of distribution network operator DEDDIE/HEDNO is expected to be announced tomorrow, when endorsed by the board of the operator’s parent company PPC, the power utility.

The qualifiers will be given access to confidential data stored in the tender’s video data room.

Though PPC has not offered details on the first-round participants, informing only that the bidders, eleven in total, are strategic investors, network infrastructure operators and funds, banking officials have leaked their identities, revealing the turnout of leading international investors.

They include US fund Blackrock, the world’s biggest investment fund, as well as fellow American funds KKR, Oak Hill Advisors and CVC Capital Partners, the recent buyer of insurance company Ethniki Asfalistiki.

One of Europe’s biggest funds, France’s Ardian, two Australian funds, Macquarie and First Sentier, Italy’s infrastructure fund F21, Canadian investment corporation British Columbia Investments (BCI), Chinese consortium China South Power Grid – China Three Gorges, and fellow Chinese firm Guangzhou Power make up the other seven first-round entries.

DEDDIE/HEDNO’s new business plan, covering 2021 to 2024 and carrying investments totaling 3.5 billion euros, is a key driver behind the considerable interest, as is a yield rate of approximately 7 percent offered by the operator.

Standout features of the operator’s new business plan include an 850 million-euro project entailing the installation of 7.5 million digital power meters around the country, whose tender is nearing; an addition, to networks, of fiber optics for telecommunication and 5G services; as well as projects for undergrounding, upgrading and modernizing networks in anticipation of mass investments in RES units.

PPC staging tender for generators as back-up on Crete this summer

Power utility PPC has just announced a tender for leasing contracts concerning power generators with a total capacity of 58 MW for Crete, to serve as back-up for grid sufficiency on the island during July and August, in anticipation of the tourism-related peak in electricity demand.

The generators, to be installed at PPC’s power station at Atherinolakkos, southeastern Crete, are intended to back an imminent subsea grid interconnection linking the island with the Peloponnese – the first step of a bigger interconnection project to reach Athens – which will have only been in operation for a few months when summer arrives.

The Crete-Peloponnese power grid interconnection is expected to be ready for launch in late April.

PPC’s plan for generators, budgeted at approximately 4 million euros, has been divided into two sections, one for 23 MW, the other for 35 MW. Participants can only submit offers for one of the tender’s two sections.

According to the tender’s terms, PPC will maintain the right to extend the lease contracts for all or some of the generators by a month, also covering September, if needed.

Distribution network operator DEDDIE/HEDNO has estimated that Crete will need between 75 and 80 MW in additional capacity this summer. Besides the 58 MW to be provided by the generators through the tender, PPC will secure the required remainder through back-up solutions already possessed by the power utility.

If all goes according to plan, PPC’s rented generators, mobile units running on high-cost diesel, will not need to be used at all while stationed on the island, meaning the initiative’s total cost would be limited to the value of the lease agreements.

New network expansion model to support PV investments

A new formula just introduced by the distribution network operator DEDDIE/HEDNO for the expansion of medium-voltage transmission lines promises to restart the development of small-to-medium scale solar energy projects by providing a viable way for investors to cover the cost of network projects.

This new approach comes as an effort to end investment stagnancy in the RES sector by enabling RES producers to overcome local network saturation issues that have prevented the development of their project plans.

The new formula entails the issuance of connection terms for clusters of independent PV units, for which the operator will temporarily cover the cost of network expansion projects concerning units that will not pay immediately.

The plan was introduced by the operator last Friday, beginning with the issuance of connection terms for a first batch of three PV clusters.

It comes at a time when, according to data processed by SPEF, the Hellenic Association of Photovoltaic Energy Producers, the percentage of RES applications rejected by DEDDIE/HEDNO has reached a level of 80 percent.

This heightened level of rejections has, more recently, prompted the intervention of sector agencies, highlighting the fact that investor interest in RES investments, especially small-and-medium sized photovoltaics, has come to a standstill.

 

DEDDIE network expansion plan held up by internal dispute

Though the distribution network operator DEDDIE/HEDNO, encouraged by the energy ministry, appears to have decided to move ahead with plans for an expansion of its medium-voltage network, the decision is not being implemented as a result of disagreements, within the company’s ranks, on the plan.

According to sources, rival factions have been formed at the operator over the project, holding it back. Officially, the operator’s regional services, which have completed all required preliminary work, have yet to be given the green light.

Clarity on the network expansion plan is crucial for certain investors, especially solar energy investors, facing a March 22 deadline set by RAE, the Regulatory Authority for Energy, for a forthcoming RES auction in May.

The energy ministry has been informed of the deadlock at the operator and is expected to intervene to settle the dispute.

RES spatial plan to be delivered within 2021, Action Plan notes

The completion of a RES sector spatial plan within the current year has been included in an energy ministry Action Plan for 2021, just published along with the respective action plans of all other ministries.

The energy ministry’s action plan lists interventions planned for 2021 in nine areas under its authority, including energy-sector privatizations, energy market reforms, support for decarbonization and recycling, adoption of circular economic principles, greenhouse gas emission reduction, the tackling of climate change effects, as well as green energy transition.

RES sector measures this year will help cut down the time needed by new RES projects for licensing procedures to two years, the ministry anticipates in its action plan.

It also expects the installation, by the end of the year, of at least 2,000 recharging units for electric vehicles in public areas, including along highways, and at private properties, including domestic and commercial.

On the privatization front, the energy ministry expects all seven energy privatization plans to have been completed or reached an advanced stage by the end of the year.

On energy market reforms, the adoption of a remuneration mechanism for grid sufficiency, to replace a transitional mechanism remunerating flexibility, is a standout feature.

The energy ministry also intends to adopt, as Greek law, an EU directive promoting energy storage and demand response systems.

The ministry’s action plan also anticipates the signing of agreements this year for distribution network development and RES penetration support. It also expects DEDDIE/HEDNO, the distribution network operator, to announce a tender for the installation of smart power meters within the current year.

Taking into account plans by DEDDIE/HEDNO and power grid operator IPTO, the ministry expects investments in distribution and transmission networks to reach one billion euros this year.

Investments for gas network upgrades and expansion are expected to reach at least 300 million euros, primarily driven by projects planned by gas distributor DEDA, covering all areas around the country except for the wider Athens, Thessaloniki and Thessaly areas.

On international projects, the action plan notes that a Greek-Bulgarian gas pipeline project, the IGB, promising to significantly diversify Greece’s gas sources, will be completed by the end of 2021.

A latest edition of the Saving at Home program subsidizing energy efficiency upgrades of properties, budgeted at one billion euros, will stimulate work on 80,000 buildings in 2021, according the energy ministry’s action plan.

This activity will contribute to a National Energy and Climate Plan objective for an improvement, by 2030, of energy efficiency at buildings by 38 percent, reducing energy consumption to levels below those registered in 2007, the action plan notes.

 

PPC, on solid ground, set for SLB issue, possibly next week

Power utility PPC is set to issue – any day now, possibly during the upcoming week – a 500 million-euro Sustainability-Linked Bond, through which it would commit, to investors, to a specified carbon emission reduction.

Given the heightened activity of late by the corporation and its advisors for this issue, it appears PPC believes now is the right time to head to the bond market, as long as no big changes occur on the wider economic front.

The prospective SLB would mark PPC’s return to capital markets following a seven-year absence. It also promises to make the company the country’s first to issue a bond incorporating sustainability terms.

Until just a few weeks ago, PPC was aiming to make its SLB move within the year’s first half, but the company’s prospects have improved further, as reflected by a recent BB- rating from Fitch.

The power utility is now getting started on the implementation of a business plan aiming for a green-energy transformation at PPC.

SLBs differ to green bonds as they are associated with specific indices, including CO2 emission reduction figures throughout an issuing company’s business plan.

PPC does not necessarily expect any great interest rate improvement through the anticipated SLB issue. Instead, looking further ahead, a solid performance by the utility’s SLB in secondary-market trading would enable the corporation to borrow at a lower cost should it return to capital markets at a future date.

PPC’s share price has risen by more than 170 percent over the past year, from 3.28 euros yesterday, representing a market capitalization value of 761 million euros, to yesterday’s closing price of 8.87 euros per share, putting the utility’s market capitalization value at 2.057 billion euros.

Besides the bond issue, investors are also expecting a list of second-round qualifiers, from 11 possible suitors, in the sale of a 49 percent stake of distribution network operator DEDDIE/HEDNO, a PPC subsidiary. Second-round qualifiers are expected to be announced once PPC has completed its qualification process, seen requiring a few more weeks.

PPC awaiting right time for €500bn Sustainability-Linked Bond

Power utility PPC is all set and waiting for the right time to issue a 500 million-euro Sustainability-Linked Bond, through which it would commit, to investors, to a specified carbon emission reduction.

According to sources, PPC, keeping details on the issue under wraps, has not planned to market an SLB in March, but could, theoretically, do so at any given moment from here on if it deems market conditions are ripe.

An SLB issue by PPC promises to make the company the country’s first to issue a bond incorporating sustainability terms.

Companies that issue SLBs promising carbon emission reductions over an extended period of time represent lower-risk propositions for investors, enabling issuers to achieve better borrowing terms.

PPC does not necessarily expect any great interest rate improvement through an SLB issue, financing officials have pointed out, but, looking further ahead, a solid performance by the utility’s SLB in secondary-market trading would enable the corporation to borrow at a lower cost should it return to capital markets at a future date.

The company’s profile has greatly improved in the eyes of investors. PPC’s share price climbed to €9.05, its highest level since October, 2014, last Thursday, on the eve of the first-round deadline for bids in the sale of a 49 percent stake in subsidiary firm DEDDIE/HEDNO, the distribution network operator.

Operator DEDDIE 49% sale first-round bids submitted today

State-controlled power utility PPC and the government will be hoping today’s first-round, non-binding deadline for expression of interest in the 49 percent sale of the utility’s subsidiary DEDDIE/HEDNO, the distribution network operator, can attract a solid turnout of formidable bidders.

An onslaught of criticism against DEDDIE/HEDNO over the past few days following widespread power outages caused by Medea, as the extreme weather system was dubbed, certainly has not been good for the operator’s reputation.

On the other hand, the network’s deficiencies, exposed by extensive weather-related damages in the wider Athens area, lends tremendous support to the need of a powerful investor ready to finance the network’s badly needed upgrade, expected to cost 3.5 billion euros.

Expectations of a solid investor turnout have been high in the lead-up to today’s first-round deadline. PPC plans to announce this sale’s first round participants during the day.

Many prominent funds have shown interest in the sale but the identities of those that will follow through and participate have remained unclear. It also remains unclear if any of these funds will establish partnerships – for the DEDDDIE/HEDNO sale – with European network operators.

A market test staged in December, as well as contact with interested parties, has indicated that the American funds KKR and Blackrock, Australia’s Macquarie Group, and France’s Ardian, could participate in the sale.

The managerial rights to be attached to the minority 49 percent stake will be bolstered to not block potential buyers from crucial decisions.

DEDDIE/HEDNO possesses a regulated asset base worth over 3 billion euros, networks totaling 242,000 km in length, 240 high-voltage substations, 163 low-voltage substations, a 5,800-member workforce, and a client base numbering 7.5 million.

The company caters to annual demand of 43.194 TWh and 57,752 RES units with a total capacity of 3,926 MW.

Network repairs almost done, 60,000 reconnections made

Repairs to medium-voltage power line networks in the wider Athens area, damaged during the heavy snowstorm earlier in the week, especially in the capital’s north, have almost been completed, with just small sections remaining, distribution network operator DEDDIE/HEDNO updated this morning.

Operator crews have needed to work overtime, focusing their efforts on the capital’s northern areas Ekali, Dionysos, Agios Stefanos, Kryoneri, Anixi, Drosia and Kalamos, all hit especially hard by Medea, as the snowstorm was dubbed.

Some 60,000 households and businesses of 70,000 that were disconnected from the network during the extreme weather conditions have had their electricity supply restored, the operator informed last night.

DEDDIE/HEDNO, in its updates, has urged the public to stay away from any fallen power lines or utility poles.

The operator has also requested households still disconnected from the network to contact the operator through any of the following: 11500, 2111900500, MyDEDDiE app (Android), iOS (mobiles), or www.deddie.gr.

DEDDIE/HEDNO has reinforced its Athens crews with a further 60 technicians brought in from the Peloponnese, Epirus and central Greece areas, where repair work has been completed.

Network damages remind of need for system upgrade

Power outages in many parts of Greece, including hard-hit Athens, as a result of collapsing trees that damaged overhead power lines during heavy snowfall earlier this week, have triggered discussion about the need for underground distribution networks and the network’s overall reinforcement and improvement.

Also, the installation of 7.4 million smart power meters, a project budgeted at 800 million euros, is a priority, distribution network operator DEDDIE/HEDNO officials stressed in the wake of network damages inflicted by the snowstorms.

Distribution network investments have fallen behind over the past eight years, sliding from approximately 280 million euros in 2012 to 123 million euros in 2017 and 2018 before slightly rebounding to 135 million euros in 2019 and an unconfirmed 178 million euros in 2020.

This reduction in network investments by DEDDIE/HEDNO has stemmed from poor financial performances by parent company PPC, the power utility, during the aforementioned period.

“Ten years of economic crisis in Greece has led to slight infrastructure regression,” the recently appointed energy minister Kostas Skrekas noted late last night, while crews were working overtime to restore damages caused by Medea, as the extreme weather system was dubbed. “We have allotted 200 million euros of recovery fund money for underground cable investments,” the minister added.

Speaking at an energy conference yesterday, the ministry’s secretary-general Alexandra Sdoukou said government plans for an upgrade of the country’s power distribution network would result in investments anticipated to total 3.5 billion euros over the next decade.

Two funds submit DEDDIE interest ahead of sale’s preliminary deadline

Two undisclosed funds have jumped the gun to submit non-binding, first-round expressions of interest for the sale of a 49 percent stake in distribution network operator DEDDIE/HEDNO three days before a February 19 deadline, highlighting the heightened level of buyer interest that surrounds this privatization.

European and US investment teams, more so than network operators, have shown particular interest in the DEDDIE/HEDNO sale during its lead-up.

A market test in December revealed that 19 potential bidders include New York-based Blackrock, the world’ biggest investment fund, managing capital worth 7.8 trillion dollars; American giant KKR, handling 220 billion dollars; as well as French fund Ardian, one of Europe’s most dynamic, with involvement in over 150 enterprises and capital management worth more than 100 billion dollars.

Though it remains unknown if any of the aforementioned players were early birds, it has become very clear that funds will play a big role in this sale.

In an effort to add to the sale’s appeal, power utility PPC, DEDDIE/HEDNO’s parent company, has decided to bolster the 49 percent minority rights by offering potential buyers equal powers with PPC over crucial network operator decisions.

Between four and seven investment teams have displayed the greatest level of interest in the DEDDIE/HEDNO sale. Some of these teams are believed to be engaged in negotiations to establish new formations for this sale.

Lignite-unit grid input rises, re-electrification a challenge

Virtually all of the country’s power generating facilities will be called into action today, even if below full capacity, to help meet grid needs and cover greater demand anticipated as areas disconnected during heavy snowfall over the past couple of days are gradually re-electrified, putting the system to the test.

Officials are confident the country’s power generating facilities will not have problems covering the day’s electricity demand.

According to power grid operator IPTO’s grid schedule, a significant number of lignite-fired power stations – Agios Dimitrios III and IV, Kardia III and IV, and Meliti – will operate today.

Also, given heightened electricity demand levels, expected to reach 8,190 MW, natural gas-fired power stations will be on stand-by for grid entry.

Power utility PPC’s Aliveri V, Lavrio IV and V, Komotini and Megalopoli V, plus a number of independent gas-fuelled units, Heron III, Elpedison’s units in Thessaloniki and Thisvi, and Protergia and Korinthos Power units, will be ready to contribute if needed.

RES output is expected to reach 27.185 GWh, while hydropower output is planned to total 36.132 GWh.

Overall production for the day is expected to reach 166.685 GWh, a lower level compared to yesterday.

Network distribution operator DEDDIE/HEDNO crews are working overtime to repair transmission lines that were damaged by hundreds of collapsing trees during heavy snowfall around the country over the past couple of days. This repair effort could require days to complete.

Some 400 DEDDIE/HEDNO technicians in Athens, bolstered by colleagues brought in from other parts of Greece, are currently working to re-electrify affected areas in the capital.

Blackout threat remains, operator staff shortage exposed

The country’s power transmission and generation systems have met heightened electricity demand prompted by extreme weather conditions, including heavy snowfall around the country over the past couple of days, but the threat of power outages still remains.

The weather system, bringing some of the heaviest snow seen in Greece in years, exposed a personnel shortage at distribution network operator DEDDIE/HEDNO, whose medium and low-voltage networks suffered extensive damages caused by collapsing trees.

The operator’s personnel have struggled to cope with the challenge of repairing numerous damaged transmission lines. Approximately 1,000 trees reportedly collapsed onto power lines in Athens, causing power cuts at thousands of homes in the city’s north and east.

Between 500 and 600 experienced technical staff members have left IPTO over the past three years without being replaced, which has left the operator vulnerable to extreme conditions, union members have pointed out.

IPTO crews are currently working around the clock to meet repair demands, while 60 of the company’s technicians stationed in other parts of Greece have been brought into Athens to reinforce crews covering the capital.

Energy minister Kostas Skrekas yesterday visited power grid operator IPTO’s national control center where he was updated on the transmission system’s current situation, electricity generation levels, as well as the operator’s projections for the next few days.

“So far, the transmission system has responded well to the challenges of the Medea storm front,” IPTO’s chief executive Manos Manousakis informed the minister. “But the duration of the extreme weather conditions carries dangers,” he added.

DEDDIE bidders shaping teams as first-round deadline nears

Investors preparing to participate in the 49 percent sale of power utility PPC’s subsidiary DEDDIE/HEDNO, the distribution network operator, a procedure whose deadline for non-binding expressions of interest expires on February 19, are busy negotiating the details of their partnerships.

Between five and seven existing formations involving European system operators and funds, all appearing extremely interested in the sale, are seen reshaping into approximately three investment teams ahead of this week’s deadline, according to sources.

The investment interest is serious and lives up to the operator’s investment plan, estimated at 2.3 billion euros, for the next five-year period, sources said.

Meanwhile, sources at PPC have confirmed that investors will be offered a one-off 49 percent stake in the distribution operator following thoughts of a two-stage sale resulting in this stake.

The managerial rights to be attached to the minority 49 percent stake will be bolstered to give potential buyers equal powers with PPC over the operator’s new business plan and company expenses, PPC sources informed.

DEDDIE/HEDNO possesses a regulated asset base worth over 3 billion euros, networks totaling 242,000 km in length, 240 high-voltage substations, 163 low-voltage substations, a 5,800-member workforce, and a client base numbering 7.5 million.

The company caters to annual demand of 43.194 TWh and 57,752 RES units with a total capacity of 3,926 MW.

 

 

Transitional hybrid plan for Cretan participation in markets

RAE, the Regulatory Authority for Energy, has decided on a transitional hybrid model for Crete’s participation in target model energy markets, covering production and consumption, once the island’s small-scale grid interconnection to the Peloponnese is soon launched.

The fundamentals of the transitional model – to be applied until Crete’s full-scale grid interconnection, all the way to Athens, is completed – have been agreed on by the participating market operators. But details still need to be worked out.

Power grid operator IPTO, distribution network operator DEDDIE/HEDNO and the energy exchange are currently shaping the finer details of the transitional plan, expected to be finalized over the next few days.

Under the transitional hybrid solution, Crete – whose grid will continue being managed by DEDDIE/HEDNO until IPTO takes on the responsibility when power utility PPC, DEDDIE/HEDNO’s parent company, has transferred its network ownership on the island to IPTO – will purchase electricity transmitted through the small-scale grid link at target model energy markets.

As for electricity flowing in the opposite direction, production of Cretan units will be represented by IPTO.

The transitional model, when ready, will be forwarded for public consultation. European Commission approval will be needed for the finalized plan. RAE has already briefed Brussels officials on its proposed transitional model.

Finding a solution for Crete has proven to be a challenge as the small-scale grid link to the Peloponnese will not fully cover the island’s energy needs, meaning it will not automatically cease to be a non-interconnected island once the small-scale grid link begins operating. However, a considerable part of Crete’s energy needs, approximately 30 percent, will be served by the small-scale interconnection.

Normally, when grid links for non-interconnected islands are completed, IPTO assumes responsibility of their electricity networks. However, Crete, Greece’s biggest and most populous island, represents a much bigger interconnection project that is being developed over two stages. The project’s second stage, to reach Athens, is anticipated in 2023.

Failure to find a transitional solution would threaten to leave the small-scale link unutilized.

Four teams, backed by funds, display strong DEDDIE interest

Prospective bidders considering power utility PPC’s sale of a 49 percent stake in subsidiary firm DEDDIE/HEDNO, the distribution network operator, have flooded the seller with a stream of enquiries ahead of a February 19 deadline for non-binding expressions of interest.

Interested parties had until February 5 to make enquiries before they can officially express interest in the sale later this month.

Interest in the distribution network operator is definitely strong. Questions received at PPC indicate that four investment teams, with the involvement of major funds, are maintaining the strongest interest in the DEDDIE/HEDNO sale.

Prospective buyers lodged enquiries on a range of issues, including the sale’s rules for funds, whether participating funds will need to submit their equity line-ups in full detail, and if supporting documents can be submitted in languages other than English.

A market test for the upcoming partial privatization staged by Goldman Sachs in December disclosed that interested parties include New York-based Blackrock, the world’s biggest investment fund managing capital worth 7.8 trillion dollars, US giant KKR, backed by capital worth 220 billion euros, as well as French fund Ardian, one of Europe’s strongest, linked with over 150 enterprises and capital management worth more than 100 billion dollars.

In an attempt to strengthen the sale’s appeal, PPC will guarantee the strategic investor holding a 49 percent stake in DEDDIE/HEDNO no obstacles in decisions concerning crucial matters.

However, the minority rights for DEDDIE/HEDNO’s prospective 49 percent stakeholder will not be as strong as they are for power grid operator IPTO’s Chinese strategic partner SGCC. DEDDIE/HEDNO will retain the operator’s managerial control.

Authorities had considered a two-stage sale of DEDDIE/HEDNO’s 49 percent, beginning with a stake of about 30 percent and a further 19 percent at a latter date, when market conditions may have improved, before opting for a one-off procedure.

Athens, Peloponnese power supply reinstated after fire damage

Power supply to Athens and Peloponnese areas affected late last night by a fire that broke out at a key grid facility west of Athens, in the Aspropyrgos area, was swiftly reinstated after power grid operator IPTO technicians along with distribution network operator DEDDIE/HEDNO crews took action to repair damages at the grid facility.

Earlier today, the ministry assured that the environment had not been impacted after a team of environmental authorities visited the fire-damaged facility in Aspropyrgos to measure the amount of pollution in the air.

Electricity supply to Athens areas was mostly reinstated within 40 minutes while power transmission to the Peloponnese was back within 55 minutes.

The cause of the fire at the Aspropyrgos power facility is still being investigated.

Central Athens, suburbs in the west and south, as well as areas on the capital’s western outskirts, all experienced blackouts late Sunday night. In the Peloponnese, Corinth, Nafplio, Tripoli, Sparta and Kalamata were all affected. Three islands close to Athens, Aegina, Poros and Agistri, also had their electricity supply cut.

DEDDIE/HEDNO crews are still working intensively to reinstate medium-voltage supply at isolated locations in the areas that were affected.

 

 

Suppliers summoned to explain overdue surcharge transfers

RAE, the Regulatory Authority for Energy, has summoned power utility PPC and six independent electricity suppliers to hearings for explanations on overdue surcharge amounts they have yet to transfer to three market operators.

The authority had initially requested related data and explanations from suppliers and has now taken a further step by deciding to stage hearings for PPC and two other suppliers, followed by supplementary hearings involving a further four suppliers.

The three market operators, power grid operator IPTO, distribution network operator DEDDIE/HEDNO and RES market operator DAPEEP, will also be called upon by the authority to offer data on the overdue surcharge transfers by suppliers.

According to sources, RAE authorities are examining a variety of surcharges, including network transmission, distribution network and RES-supporting ETMEAR surcharges, up until October, 2020.

These surcharges, included in electricity bills and paid by consumers as part of their electricity bills, must then be handed over by suppliers to respective operators within a specific time period.

Conditions have recently deteriorated for electricity suppliers, primarily as a result of considerably higher wholesale costs since November’s launch of the target model’s new markets.

Electricity suppliers contend that amounts owed to them by the operators outweigh their unpaid surcharges and, as a result, want accounts offset. RAE has rejected this request.

PPC, backed by positive news, on standby for bond issue

The Greek State’s recent bond-market outing for an unprecedented, in the country’s history, borrowing cost of less than 1 percent paves the way for power utility PPC to follow suit.

This low yield and strong attraction of institutional investors, who ended up with over 95 percent of the Greek State’s bond issue, combined with a steady interest by foreign investors in PPC’s portfolio are believed to be pushing the power corporation towards a more aggressive financing policy for a return to bond markets following a six-year absence.

However, PPC has yet to decide on when to make its move. The corporation has not planned a bond issue for this month or next, sources have informed energypress. Even so, a sudden decision cannot be ruled out, they added.

PPC has been contemplating a bond-market outing since late December, when Fitch Ratings delivered a positive credit rating. The US firm included, for the first time, PPC on the list of enterprises it rates and offered a BB ranking, two times better than a preceding B ranking delivered by S&P in November.

At the time, despite the good news, company sources insisted PPC’s objective to head to capital markets in the first half of 2021 remained unchanged.

But a wave of favorable news, which, besides the BB rating from Fitch Ratings, includes PPC’s securitization packages for unpaid receivables; the achievement of profit figures for a fourth successive quarter; a new business plan; the launch of a privatization procedure for distribution network operator DEDDIE/HEDNO; and an upcoming partnership agreement with Germany’s RWE for RES investments in Greece; has generated momentum for PPC.

A bond issue would help finance many of the company’s project plans, primarily in the RES sector, as well as distribution network investments. It will also enable PPC to restructure older debt for lower-cost borrowing terms.

DEDDIE seen assuming Crete network responsibility

RAE, the Regulatory Authority for Energy, appears to have reached a decision requiring distribution network operator DEDDIE/HEDNO to assume management responsibility of Crete’s network when a small-scale grid interconnection linking the island with the Peloponnese is soon launched.

Subsequently, power grid operator IPTO will not need to take on this responsibility until it becomes the owner of the island’s network, RAE appears to have decided.

Just days ago, IPTO made clear it should not assume responsibility for Crete’s electricity network until it acquires this asset from power utility PPC, the current owner. RAE appears to have agreed with this IPTO argument.

The authority held a virtual meeting yesterday with the two operators in search of a solution following the unwillingness, at present, of both to assume management responsibility of the Cretan network.

Normally, when grid interconnection projects for non-interconnected islands are completed, IPTO assumes responsibility of their electricity networks. However, Crete, Greece’s biggest and most populous island, represents a much bigger interconnection project that is being developed over two stages. The project’s second stage, anticipated in 2023, will reach Athens.

It remains unclear how Crete’s electricity system will participate in the target model’s new energy markets once the island’s small-scale interconnection is launched.

The Crete-Peloponnese line will not fully cover Crete’s load, meaning the island may not lose its non-interconnected island status. On the other hand, a considerable 30 percent share of the island’s energy needs will be transmitted through the small-scale interconnection.

An older recommendation by RAE to the energy ministry noted that Crete’s non-interconnected island status should be ended once the small-scale interconnection begins operating for a connection with the mainland grid.

Crete network responsibility rift may delay new link’s utilization

Though Crete’s small-scale grid interconnection, to reach the Peloponnese, appears set for a late-March launch, as planned by the project’s developer, the power grid operator IPTO, a dispute with distribution network operator DEDDIE/HEDNO over the point in time at which management responsibility of this link should be transferred from DEDDIE, currently responsible for Crete’s network as the island is classified as a non-interconnected island, to IPTO, threatens to delay the vital grid link’s full utilization.

Normally, when grid interconnection projects for non-interconnected islands are completed, IPTO assumes responsibility of their electricity networks.

However, Crete, Greece’s biggest and most populous island, represents a much bigger interconnection project that is being developed over two stages. The project’s second stage, anticipated in 2023, will reach Athens.

IPTO, in a letter forwarded to RAE, the Regulatory Authority for Energy, and DEDDIE/HEDNO, contends it cannot assume management responsibility of networks that it does not own, such as Crete’s high-voltage network, which belongs to the power utility PPC group.

PPC will need to swiftly sell to IPTO the Cretan network, a 150-kV transmission line running from Hania to Lasithi, before the operator assumes its responsibility, the operator noted.

PPC does not appear quite ready to make such a move at present. As a result, IPTO insists DEDDIE/HEDNO needs to maintain responsibility for the Cretan grid from the moment the island’s small-scale interconnection is completed until ownership of the Cretan grid is transferred to IPTO.

On the contrary, DEDDIE/HEDNO, citing technical reasons as the main factor, believes IPTO should take on management responsibility of Crete’s grid as soon as it completes the small-scale link.

For the time being, RAE is consulting both sides in search of a solution. If PPC moves slowly on the transfer of ownership of the Cretan network to IPTO, then the new infrastructure’s full commercial utilization could be delayed.