Energy minister calls emergency meeting, heatwave set to peak

Energy minister Kostas Skrekas is due to visit power grid operator IPTO’s control center in Athens today for an emergency meeting he has ordered to deal with grid sufficiency issues raised by the prolonged heatwave conditions, expected to become even more acute during the week.

Prime Minister Kyriakos Mitsotakis will participate in the emergency meeting along with the head officials of RAE, the Regulatory Authority of Energy, power grid operator IPTO, distribution network operator DEDDIE/HEDNO, and power utility PPC.

The grid is expected to face unprecedented conditions in coming days as electricity demand peaks to reach record levels, prompted by the extreme weather conditions.

The energy ministry has already urged the public to exercise restraint in electricity consumption over the next few days as a means of helping the pressured grid cope with the heatwave’s demands.

The energy minister also staged an emergency meeting yesterday morning with officials of the aforementioned energy sector companies.

Electricity demand today is expected to peak at 9,600 MW, at around 9pm, well over the average peak of 8,115 MW in the first half of 2021.

HEDNO’s Crete assets set for transfer to IPTO

An energy ministry legislative revision facilitating the transfer to power grid operator IPTO of distribution network operator DEDDIE/HEDNO’s assets on Crete, a pending issue needed for the launch of market activity concerning the island’s small-scale interconnection with the Peloponnese, has been submitted to Parliament for ratification, ending months of debate on the matter.

As of August 1, Crete’s entire package of high-voltage electricity grid assets will be transferred from power utility PPC, DEDDIE/HEDNO’s parent company, to IPTO, the new owner of these assets, taking on their operational management.

Until now, DEDDIE/HEDNO has been responsible for the management of Crete’s small-scale interconnection with the Peloponnese.

The price IPTO will need to pay for the acquisition of these Cretan grid assets will be determined by their market value, to be calculated over two stages.

The first will reflect the regulatory value of the assets. The second, to be calculated at a latter date, will concern the evaluation of the assets transferred to IPTO by an independent, specialized appraiser to be accepted by both IPTO and PPC.

 

Ministry bill for small-scale PVs without competition procedure

The energy ministry has submitted legislative revisions to Parliament facilitating the installation of small-scale PVs, up to 500 KW, without competitive procedures as long as interested parties do not already own two such units that have also been installed without competitive procedures.

The draft bill also includes a revision designed to rectify unfair terms of the past for small-scale PVs on non-interconnected islands by offering 10 percent tariff increases for their output.

Another article in the bill enables older RES projects with licenses including provisions for the installation of connecting cables to now be developed without cable links if the hosting island has been interconnected or is in the process of being interconnected.

The bill also transfers distribution network operator DEDDIE’s assets on Crete to power grid operator IPTO, a pending issue that must be resolved for the launch of market activity concerning the island’s small-scale interconnection with the Peloponnese.

RES investors in rush to avoid €35,000/MWh guarantee cost

Thousands of RES investors already holding producer certificates are racing against time to avoid letter-of-guarantee payments of 35,000 euros per MW, which will be avoided if they manage to submit complete applications for finalized connection offers by a February 28, 2022 deadline to distribution network operator DEDDIE/HEDNO or power grid operator IPTO.

This same deadline applies for imminent producer certificates to be issued through last month’s application cycle. RAE, the Regulatory Authority for Energy, has already begun processing these applications submitted in June. If these investors miss the February deadline for finalized connection offers, they too will also face letter of guarantee costs.

From the next cycle – in October – onwards, most applicants will need to submit letters of guarantee worth 35,000 euros per MW. Investors behind smaller projects with capacities of less than 1 MW, strategic investments, projects for public-benefit purposes, as well as projects developed by local authorities and foundations, will be exempted from the upcoming letter of guarantee requirement.

Its prospect is expected to increase the pressure on DEDDIE/HEDNO and IPTO, expected to face an increased inflow of applications over the next few months as investors scramble to meet the February 28 deadline.

The 35,000-euro per MWh letter of guarantee is being introduced to prevent saturation caused by applicants submitting bids but not following up with actual project development.

Tender relaunch for €1.6bn nationwide distribution network upgrade

Distribution network operator DEDDIE/HEDNO has relaunched a mammoth tender worth a total of 1.6 billion euros for the reinforcement and upgrade of the distribution network throughout Greece over a five-year period.

The tender was initially announced several months earlier but then withdrawn to take into account and adopt certain observations made by interested parties.

The relaunched tender concerns 37 contracts around Greece, 8 of these in the wider Athens area, 9 in the Macedonia-Thrace region, 7 in the Peloponnese and Epirus, 6 in central Greece and 7 at island locations.

DEDDIE/HEDNO aims to reinforce the distribution network for its role in the energy transition, while also protecting it against extreme weather conditions.

New wave of 100-KW solar farms planned for 4 regions

Energy minister Kostas Skrekas has announced a legislative plan to facilitate a new generation of small-scale solar energy farms of up to 100 KW in Crete, the Peloponnese, Evia and the Cyclades, which, through a new platform, would offer investors non-auction tariffs at relatively higher levels than existing tariffs for bigger projects.

Higher tariffs would be offered to investors as this smaller-scale solar parks face increased development costs, the minister noted.

The platform for applications concerning this new category could be ready to operate in October, a month beyond an initial intention, to give distribution network operator DEDDIE/HEDNO, its developer, and interested parties more time to prepare, the minister indicated.

Once ratified, the legislative revision will offer an 86-MW solar capacity for the Peloponnese, 45 MW in the Cyclades, 15 MW of which will be reserved for net metering, 40 MW for Evia and 140 MW for Crete, 40 MW of which will be for net metering.

HEDNO’s Crete assets transfer to IPTO based on market value

A legislative revision needed for the transfer to power grid operator IPTO of distribution network operator DEDDIE/HEDNO’s assets on Crete, a pending issue that must be resolved for the launch of market activity concerning the island’s small-scale interconnection with the Peloponnese, is close to being finalized, according to sources, informing that this transfer will be based on the commercial value, not book value, of assets.

The price of the transfer will be determined by the market value of DEDDIE/HEDNO, as shaped following offers by suitors in a privatization offering a 49 percent of the distribution network operator.

These offers are expected to be submitted very soon.

Asked yesterday on whether DEDDIE/HEDNO’s assets will be valued based on market price or book value, energy minister Kostas Skrekas said the matter is still being processed.

It is already considered certain that the fiber optics network will remain with DEDDIE/HEDNO, bolstering the capital base of parent company PPC, the power utility.

This essentially means that whichever consortium acquires a 49 percent stake in DEDDIE/HEDNO will not have control over the fiber optics PPC intends to install at its subsidiary’s networks, through deals such as one already established with telecommunication company Forthnet.

PPC eyes foreign investors with 7-year bond issue for €350m

Power utility PPC, Greece’s biggest electricity producer and supplier, has announced a 7-year, sustainability-linked bond issue intended to raise 350 million euros.

The decision was prompted by a current favorable climate surrounding the company as well as its need to partially cover existing loans and reduce the average borrowing cost to less than 5 percent as soon as possible. The offer’s roadshow begins today.

PPC is aiming for an interest rate of close to 3.5 percent, according to banking and finance sector sources, which would be slightly below a 3.875 percent interest rate of a preceding SLB-linked issue in March.

The utility intends to list the bonds on the Dublin Stock Exchange for trading on its Global Exchange Market, or, possibly, another EU trading platform.

A domestic bond issue would probably secure PPC a lower interest rate of roughly 2.5 percent, but the company’s administration is determined to further expose the utility to foreign institutional and real-time investors, a strategy seen lowering future borrowing rates to levels that could be achieved locally.

Also, borrowing from abroad is expected to offer further support for the company’s market share, whose price was 8.75 euros at the end of trading last Friday.

PPC, at the forefront of Greece’s energy market for more than 70 years, fully owns the country’s electricity distribution network, operated by DEDDIE/HEDNO, a fully owned subsidiary.

At least four binding bids seen in HEDNO 49% privatization

Four consortiums have been established involving most, if not all, of the nine participants through to the second round of a sale offering a 49 percent stake in distribution network operator DEDDIE/HEDNO, a subsidiary of power utility PPC, indicating that at least four binding offers can be expected, when these are submitted within August, sources monitoring the procedure have informed.

All nine qualifiers have been assessing DEDDIE/HEDNO’s technical and financial data, the sources said.

At its most recent session, PPC’s board approved a plan for the transfer of the group’s electricity distribution assets to DEDDIE/HEDNO.

Also, PPC has commissioned professional services company Grant Thorton for the asset evaluation process, expected in August.

The privatization’s nine second-round qualifiers are:

ARDIAN Infrastructure Funds

BCI – British Columbia Investment Management Corporation

BLACKROCK – BlackRock Alternatives Management, L.L.C

CVC Capital Partners – Advisers Company, S.a.r.l

F2i – Fondi Italiani per le Infrastructure SGR S.p.A

First Sentier Investors EDIF III GP S.a.r.l

KKR – Kohlberg Kravis Roberts & Co. L.P.

MACQUARIE Group Limited

OHA – Oak Hill Advisors LLP

Suppliers request revisions to alleviate cash-flow pressure

Electricity suppliers, facing steep and lasting wholesale electricity cost increases, which have resulted in cash-flow issues, are seeking revisions that could alleviate the pressure, in recommendations submitted to RAE, the Regulatory Authority for Energy.

Rising wholesale electricity costs have created major cash flow problems for non-vertically integrated electricity suppliers as they are being forced to pay increasing amounts for electricity and related guarantees ahead of payments, to them, by consumers.

Consumers have also felt the pinch as suppliers, seeking protection against the rising wholesale prices, have activated wholesale cost-related clauses incorporated into their supply agreements.

Solutions for both sides seem elusive at present as market forecasts do not see any price de-escalation ahead, only further increases.

In one of the recommendations forwarded to RAE, suppliers called for their cash collateral payments made to the Hellenic Energy Exchange, as a form of guarantee, to be replaced by letters of guarantee representing equivalent amounts.

Suppliers have also requested a reexamination of the clearing price and payment formula in the day-ahead and intraday markets.

They also requested extensions for surcharge payments to power grid operator IPTO and the distribution network operator DEDDIE/HEDNO.

 

PPC’s distribution network transfer to DEDDIE to pave way for 49% sale

The energy ministry is preparing a legislative revision for the transfer of power utility PPC’s distribution network-related assets to subsidiary DEDDIE/HEDNO, the distribution network operator, required for the sale of a 49 percent stake in the latter.

The board at PPC recently reached a decision on the matter, paving the way for the energy ministry to prepare the legislative revision.

As previously reported, PPC has commissioned professional services company Grant Thorton for the asset evaluation, expected in August.

The legislative revision for the transfer of distribution network-related assets to HEDNO/DEDDIE is required as, until now, PPC, by law, has been  permitted to incorporate the subsidiary’s financial results into the group results and also make balance-sheet entries of EBITDA figures concerning the operator.

According to the privatization’s schedule, the nine participating bidders, leading international funds, will submit binding offers within the first week of August.

Dates will then immediately be set for a general shareholders’ meeting for approval of the transfer of assets and the board’s approval of the preferred bidder.

Assuming procedures are not delayed, the sale of DEDDIE/HENO’s 49 percent should be completed within the third quarter of this year.

PPC’s board plans to focus on its international expansion strategy once this sale has been completed.

 

 

Revision for Crete assets transfer to IPTO this week

The energy ministry is set to submit to Parliament a legislative revision needed for the transfer to power grid operator IPTO of distribution network operator DEDDIE/HEDNO’s assets on Crete, a pending issue that must be resolved for the launch of market activity concerning the island’s small-scale interconnection with the Peloponnese.

The transfer of DEDDIE/HEDNO’s assets on Crete to IPTO is essential for the latter to take on the responsibility of the small-scale interconnection. IPTO cannot take on this task until a 150-kV transmission line remains under the control of power utility PPC, DEDDIE/HEDNO’s parent company.

The legislative revision will be submitted to Parliament by the end of this week, barring unexpected developments, as an attachment to a draft bill concerning waste management, energypress sources informed.

In a concurrent development, RAE, the Regulatory Authority for Energy, has approved an Energy Exchange proposal concerning the island’s entry into target model markets.

The authority and other agencies involved in this procedure presented a hybrid model that will remain valid until the completion of Crete’s major-scale interconnection with Athens.

 

Small wind turbine connection applications in early 2022

Local authorities are expected to have approved specific small-scale wind turbine models with capacities of up to 60 KW by the end of the year, paving the way for the market entry of endorsed models shortly afterwards, sector players anticipate.

Individuals interested in installing small-scale wind turbines are expected to be able to start lodging their connection-term applications to distribution network operator DEDDIE/HEDNO by early 2022.

Specific small-scale wind turbine models will need to be certified by KAPE/CRES, Greece’s Centre for Renewable Energy Sources and Saving as a condition for market entry. Many firms appear set to apply for KAPE/CRES certificates concerning various small-scale models.

The certification requirement for small-scale wind turbine models was included in a ministerial decision delivered last July, leading to the legislation of a licensing procedure covering installation and connection of such units.

The energy ministry has permitted a modest capacity for this RES technology. Individuals will be able to install small-scale wind turbine models for net metering, virtual net metering, as well as the sale of output to the network through fixed-tariff agreements whose price levels were determined by a ministerial decision in March, 2020.

This ministerial decision added small-scale wind turbines to RES unit categories for fixed tariff remuneration, at a price level of 157 euros per MWh for the technology.

This price level will be reduced by 3 euros for every 4 MW of small-scale wind turbines installed in Greece. Also, sale agreements will be suspended once this technology’s installed capacity has reached 20 MW.

PPC reducing debt to operators, but court cases still pending

Power utility PPC’s accumulated debt owed to market operators, which, along with amounts owed to contractors, exceeded 900 million euros two years ago, is now being brought under control, reduced to between 40 and 60 percent of previous levels on the strength of solid operating profit figures and improved electricity-bill collection records.

PPC is achieving a continual reduction of debt owed to power grid operator IPTO, distribution network operator DEDDIE/HEDNO, and RES market operator DAPEEP.

The power utility’s net debt owed to IPTO has now fallen to 50 million euros, from 140 million euros in December, 2019.

The corporation has been just as successful in its reduction of debt owed to DEDDIE/HEDNO, down 60 percent, but its reduction of debt owed to DAPEEP has been slightly milder, dropping nearly 40 percent, to 170 million euros from 270 million euros.

The debt figures may be improving but some time will be needed before the bigger picture is entirely cleared up as PPC faces a series of law suits filed by operators. The power utility has appealed many of these, but court hearings remain pending.

 

HEDNO boosting substation capacities for RES connections

Distribution network operator DEDDIE/HEDNO is installing new transformers at existing substations in an effort to exhaust the technical potential of existing infrastructure and boost capacity for new RES connections, primarily solar energy, as well as other technologies.

Over the past few weeks, the operator has been installing additional transformers at existing substation units in northern Greece’s west Macedonia region, as a pilot stage,  energypress sources have informed.

This reinforcement approach cannot be implemented at all substation facilities as some are not big enough to host additional transformers, technical staff at the operator explained.

Once the reinforcement effort has been completed in the west Macedonian region, DEDDIE/HEDNO crews will also begin working on networks in other parts of Greece.

 

PPC, to post solid 1Q results, recruiting after years of exits

Power utility PPC is set to recruit new technical staff after a number of years of personnel issues dominated by exits prompted by voluntary exit offers, early retirement packages and departures.

A total of 200 new recruits will be brought in for the utility’s technical departments, now understaffed, based on more flexible employment terms implemented in 2019, which do not guarantee new staff members permanent job status.

PPC subsidiary DEDDIE/HEDNO is severely understaffed, as was highlighted during an emergency situation last February, when a heavy snowstorm damaged power supply lines around the country and caused outages, some of these lasting a number of days.

At the end of 2020, DEDDIE/HEDNO’s workforce had shrunk to 5,700, from 6,000 at the end of 2019. Also, earlier this year, in February, the operator launched a new voluntary exit program for employees eligible for full pension rights.

PPC, the parent company, had 13,832 employees on its payroll at the end of 2020, down from 15,109 a year earlier, 7,113 of these employed at PPC, approximately 5,700 at DEDDIE/HEDNO, and 1,000 at other group subsidiaries.

PPC is aiming for a payroll of 11,500 employees by 2024, according to company announcements.

Besides the company’s retirement and voluntary exit programs, a portion of personnel, such as workers at the lignite-based units being withdrawn, is being transferred to other departments, a procedure requiring vocational retraining.

Meanwhile, PPC is today expected to announce satisfactory 1Q results. Analysts have forecast an operating profit figure of 211 million euros, up 16 percent compared to the equivalent period a year earlier.

HEDNO sale VDR now open to nine suitors, talks set to commence

Potential buyers of a 49 percent stake in power utility PPC subsidiary DEDDIE/HEDNO, the distribution network operator, have been given access to the operator’s video data room after signing confidentiality agreements.

PPC is now set to stage separate meetings with the suitors, nine in total, over the next 30 to 40 days, for talks, observations and negotiations leading to the establishment of a sale and purchase agreement as well as a shareholders’ agreement.

The shareholders’ agreement will stipulate the role of HEDNO’s minority partner, which, as has already been revealed, will offer the eventual buyer reinforced managerial rights, including proposal rights for the operator’s chief financial officer and chief operating officer posts on the board.

Given the pace of preceding privatizations in Greece, talks with the suitors are expected to last until the end of June, while officials are aiming for binding bids to be submitted within September.

The privatization’s nine second-round qualifiers have already begun talks for possible partnerships, between themselves and beyond.

US fund CVC Capital Partners, whose Greek portfolio has continuously grown, investments including three hospitals, Metropolitan, Iaso General and Ygeia, as well as anticipated deals for food production conglomerate Vivartia, dairy company Dodoni and insurance company Ethniki Asfalistiki, is engaged in talks with fellow US fund KKR and Australia’s Macquarie for the establishment of a consortium, it has been reported for some time now.

Abolition of non-binding grid connection offers proposed

The abolition of non-binding (preliminary) grid connection offers is among a list of legislative proposals made by the energy ministry’s RES licensing committee, the objective being to further simplify the RES licensing process.

As part of the overall effort, RES production licenses have been replaced by RES producer certificates, obtained through a simpler online process.

The proposal to abolish non-binding (preliminary) grid connection offers means that RES investors will be able to apply to the distribution network operator DEDDIE/HEDNO (if projects are up to 8 MW) or the power grid operator IPTO for finalized grid connection offers once they have obtained producer certificates and environmental permits.

In another committee proposal, DEDDIE/HEDNO, during its examination of grid connection offers, will no longer be responsible for land title audits in cases where land to be used for RES project installations is privately owned. This task, according to the proposal, will be taken on by external lawyers.

HEDNO VDR opening Tuesday, bidders in partnership talks

Power utility PPC plans to open a virtual data room concerning the sale of a 49 percent stake in subsidiary firm DEDDIE/HEDNO, the distribution network operator, on Tuesday, once confidentiality agreements with nine second-round qualifiers, and other documents, have been approved by the utility’s board, expected a day earlier.

All documents necessary for the sale procedure will be forwarded to the nine bidders for observations.

The VDR will offer bidders access to technical and financial data concerning DEDDIE/HEDNO.

As of next week, PPC and each of the nine second-round qualifiers, preparing to make binding bids, will begin separate talks, correspondence and negotiations that are expected to run for months, for the finalization of a shareholders agreement.

Given the width of second-round qualifiers, this privatization’s completion is anticipated towards the end of autumn.

The buyer’s board representation will reflect the minority 49 percent stake to be acquired, with 5 members on an eleven-member board, or 4 members if a nine-member board is chosen.

Some board members will be given reinforced managerial roles for the PPC subsidiary. Proposals for the chief financial officer and chief operating officer posts will be made by the buyer, according to sources.

Though the road ahead towards the DEDDIE/HEDNO sale’s completion is long, the nine second-round qualifiers have already begun talks for possible partnerships, between themselves and beyond.

One of the nine qualifiers, the US fund CVC Capital Partners – whose Greek portfolio is continuously growing, investments including three hospitals, Metropolitan, Iaso General and Ygeia, as well as imminent deal completions for food production conglomerate Vivartia, dairy company Dodoni, and insurance company Ethniki Asfalistiki – is engaged in talks with fellow US fund KKR and Australia’s Macquarie for the establishment of a consortium that would bid as one for a 49 percent stake in DEDDIE/HEDNO. KKR and Macquarie are among the nine second-round qualifiers in the DEDDIE/HEDNO sale.

EVIKEN: Medium-voltage surcharge costs excessive

Formulas applied to calculate system usage and distribution network surcharges for medium-voltage industrial consumers are now outdated, resulting in disproportionate overcharging for this consumer category, EVIKEN, the Association of Industrial Energy Consumers, has pointed out in a letter forwarded to RAE, the Regulatory Authority for Energy.

The association called for medium-voltage industrial consumer charging formulas to be harmonized with those used for high-voltage consumers, which offer incentives preventing excessive demand peaks.

EVIKEN also forwarded the letter to power grid operator IPTO and distribution network operator DEDDIE/HEDNO.

Public service compensation account deficit of €36m in 2020

The public service compensation account ended 2020 with a deficit of 35.96 million euros, according to latest data provided by distribution network operator DEDDIE/HEDNO.

The account’s deficit was greatly restricted by the settlement of transactions concerning 2017, which led to an additional influx of 72 million euros.

At the other end, a settlement of payments concerning 2012-2016, plus an additional settlement for 2014-2016, led to respective account outflow of 21.9 and 21.7 million euros.

The public service compensation account received a 116.7 million-euro injection from the state budget in 2020.

An extensive investment plan being carried out by power grid operator IPTO will greatly reduce the public service compensation account’s financial needs over the next few years, according to Thanassis Dagoumas, chief executive of RAE, the Regulatory Authority for Energy.

Public service compensation account (YKO) surcharges included on electricity bills are used to primarily subsidize high-cost electricity generation on Greece’s non-interconnected islands.

RAE is expected to soon reach a decision on YKO surcharges concerning 2019.

HEDNO sale bids to be delayed by 2 months, for September

The privatization plan for distribution network operator DEDDIE/HEDNO, whose sale is offering investors a 49 percent stake, is expected to be delayed by approximately two months as a result of the need for greater preparation time prompted by the large buyer turnout.

The operator’s parent company, PPC, the power utility, will now aim for a binding-bids deadline and finalization of the sale around September.

According to the sale’s original schedule, candidates were set a July deadline for binding bids.

Nine funds have qualified for the second, and final, round. They could be joined by energy market operators ahead of their binding bids.

PPC chief executive Giorgos Stassis plans to table the distribution network operator’s privatization at the parent company’s next board meeting.

Stassis will, yet again, inform the PPC board on the level of suitability of second-round qualifiers in terms of their energy infrastructure track records and, even more crucially, ability to meet the demands of DEDDIE/HEDNO’s investment plan, requiring 3 billion euros until 2028.

Separate talks are currently being held by the seller with representatives of each of the nine funds, in the process of signing confidentiality agreements for access to the operator’s virtual data room, containing technical and financial data.

RAE to intensify its operator monitoring, starting with gas

RAE, the Regulatory Authority for Energy, is gearing up to intensify its monitoring of the Greek energy market’s gas and electricity operators with the aim of minimizing operator surcharges for consumers and helping improve operator services, the authority’s chief executive, Thanassis Dagoumas, has told a news conference, reiterating the intention, also stressed during a recent presentation of its annual report.

The regulatory authority’s plan includes commissioning certified auditors to inspect the financial data of market operators.

Gas grid operator DESFA, gas distributors EDA Attiki, EDA THESS and DEDA, as well as the power grid operator IPTO and electricity distribution network operator DEDDIE can, as a result, expected closer inspections.

The authority intends to commence its intensified monitoring effort with the natural gas sector, where numerous new projects are planned for development, in an effort to ensure fair surcharge costs for consumers.

Dagoumas, at the news conference, reiterated that the operators, whose revenues are regulated, cannot enjoy wider profit margins than other market players.

Operators will be offered incentives for swifter completion of projects, which, combined with the stricter monitoring effort, will result in either bonuses or penalties, depending on the degree of progress made, the RAE chief highlighted once again.

RAE intends to introduce incentive-based policies, standard practice around Europe, for all energy market operators active in transmission and distribution.

 

Minority role for HEDNO buyer of 49%, cooperation promised

The prospective buyer of a 49 percent stake in distribution network operator DEDDIE/HEDNO is expected to be given minority rights, reflecting the acquired stake, in the company’s new management and board.

The ongoing privatization’s nine second-round qualifiers will be provided full details on the precise administrative model to be adopted and the sale procedure’s next steps in letters to be forwarded by state-controlled power utility PPC, the operator’s parent company, possibly on May 10.

The buyer is expected to be represented by five members in an 11-member board or four members should a nine-member board be favored. Some of the buyer’s board members are expected to have bolstered managerial roles.

In its forthcoming letters to the second-round qualifiers, PPC, to maintain majority control of DEDDIE/HEDNO, is expected to ensure that the eventual buyer will not face obstacles in crucial investment issues as the power utility will be a cooperative chief partner.

Once they have been updated on details by PPC, through its forthcoming letters, the nine second-round qualifiers are expected to sign confidentiality agreements offering access to the operator’s virtual data room.

A series of private meetings between bidder representatives and PPC will follow, ahead of their binding offers, expected to be submitted by September.

All nine qualifiers are believed to be considering partnerships ahead of their binding bids. In recent weeks, a well-known foreign fund already possessing a strong presence in Greece’s food market, as well as other sectors, has been involved in talks, for a minority role, with one of the US or Australian funds through to the second round.

Collectively, the second-round qualifiers in the DEDDIE/HEDNO sale manage over 10 trillion euros, while most have interests in utilities around the world.

HEDNO investments up 17% in 2020, binding offers for 49% in 3Q

Distribution network operator DEDDIE/HEDNO has reversed its trend of declining investments in recent years, increasing investments to a level of 175 million euros in 2020, a 17 percent increase compared to a year earlier, parent company PPC informed analysts yesterday during a virtual-conference presentation of the group’s 2020 results.

Part of these investments concerned the network’s expansion, whose total length increased by 808 km for medium-voltage networks and 661 km for low-voltage networks. Also, a further 538 low and medium-voltage transformers were installed.

As a result, the medium-voltage network’s length totaled 113,358 km at the end of 2020, the low-voltage network’s length totaled 128,211 km, while the network’s total number of installed transformers reached 165,290.

The network’s active users totaled 7,593,412 at the end of 2020, 12,668 of these in the medium-voltage category.

According to PPC’s group results, DEDDIE/HEDNO’s net profit fell to 20.3 million euros in 2020 from 70 million euros a year earlier.

Binding offers for PPC’s sale of a 49 percent share in DEDDIE/HEDNO are planned for the third quarter this year, PPC’s administration informed analysts during yesterday’s session.

Guaranteed revenues for operators ‘must not breed complacency’

Operators must not become complacent as a result of their guaranteed revenues but, instead, strive to keep improving their services, RAE (Regulatory Authority for Energy) chief executive Thanassis Dagoumas has stressed.

High yields secured by electricity and gas market operators active in Greece’s transmission and distribution networks are breeding complacency and prompting these companies to skip crucial investments needed for upgraded consumer services, the RAE chief has suggested.

The regulatory frameworks these operators are subject to, offering natural monopolies, result in considerable advantages compared to other sectors of the economy, Dagoumas noted.

It must be widely accepted, as a matter of principle, that perpetually high profit margins resulting from activities free of competition, without improved services in return, is not reasonable, the RAE chief noted.

Fair competition is a fundamental component of the EU itself, Dagoumas pointed out.

RAE plans to implement incentives for all operators, not just the electricity distribution network operator DEDDIE/HEDNO, and the gas distributors DEDA, EDA Attiki and EDA THESS, as is the case at present, Dagoumas disclosed.

DEDA, EDA Attiki and EDA THESS have been offered extra WACC returns for meeting gas penetration objectives and reducing overall distribution costs for consumers.

Peloponnese private RES limits to be lifted, 100 MW available

Current limits not permitting individuals to install new RES units in the Peloponnese, a region long regarded by authorities as saturated, can now be lifted according to power grid operator IPTO and distribution network operator DEDDIE/HEDNO.

Both operators have determined that vacant grid space has become available for new RES units, estimating the free space at approximately 100 MW.

For quite some time, small and big-scale RES investors have expressed tremendous interest to install new RES units, mainly PVs, in the Peloponnese, but have been held back by the limits set for the region.

In response to the latest news from the two operators, the energy ministry appears set to proceed with a legislative amendment that will also offer grid access to individuals, not just energy communities, in the Peloponnese, as is the case at present.

This however will previously require an official proposal by the two operators to RAE, the Regulatory Authority for Energy, which, in turn, will need to set new limits concerning RES capacity absorption in the Peloponnese.

Once completed, these actions will have paved the way for the energy ministry to proceed with the required legislative revisions, to also specify the technical profiles of units that will be able to utilize the available grid capacity.

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.