DEDDIE formula for required revenue approved by authority

RAE, the Regulatory Authority for Energy, has approved a formula determining the required revenue for electricity distribution networks, an important first step towards the finalization of distribution network operator DEDDIE/HEDNO’s regulatory framework, essential for its privatization procedure to offer a 49 percent stake, sources have informed.

A WACC level still needs to be set and approved for the operator. RAE intends to reach a decision by December 31 so that prospective buyers can have even greater clarity on the operator’s potential revenue.

Given the time required for the processing of related data concerning the operator’s regulated earnings and the network’s business development plan for 2021 to 2024, RAE should deliver a decision on the four-year period by March 31, 2021, which would be retroactively applied as of January 1, 2021.

The new framework includes two periods covering 2021-2024 and 2025-2028, offering investors a long-term picture of the investment’s potential yield.

According to sources, the authority intends to set a WACC level of just below 7 percent for 2021-2024, highly attractive for investors given levels of no more than 2.5 percent offered by equivalent distribution network operators around Europe.

RAE plans to launch a market test, to measure the level of investor interest in DEDDIE/HEDNO, next month.

Prior to the pandemic, Germany’s EON, Italy’s Enel, Enedis – an EDF subsidiary – as well as a number of Chinese companies, had expressed interest in the DEDDIE/HEDNO privatization plan.

DEDDIE wants PV connection-term review rules revised for swifter results

Distribution network operator DEDDIE/HEDNO has decided to push for a revision of evaluation criteria concerning connection term applications for solar energy projects following talks with sector professionals, the objective being to unblock thousands of project applications by next summer.

The operator is expected to forward to the energy ministry during the week – if it has not done so already – its proposal for revisions to a related ministerial decision implemented last March concerning prioritization and assessment methods for connection-term applications.

The proposed revisions would give DEDDIE/HEDNO flexibility to also examine applications on a more localized scale, at municipal level, not just on a bigger provincial level, as is the case at present.

In other words, DEDDIE/HEDNO wants connection-term application decisions to be based on the availability of grid capacity at a municipal level, as opposed to requiring investors to wait in line for approval by provincial authorities.

If the operator’s proposed changes are implemented, then thousands of PV connection-term applications could be processed, for approval or rejection, over the next ten or so months.

Current rules have prompted an accumulation of these applications at DEDDIE/HEDNO.

DEDDIE market test next month, rules framework soon

Goldman Sachs, the privatization consultant for power distribution network operator DEDDIE/HEDNO’s forthcoming sale, plans to stage a market test in November, barring unexpected pandemic-related developments, for a measure of the level of interest of prospective bidders.

This preliminary step in the sale procedure will attract major energy players from Europe and beyond, including funds seeking to invest in infrastructure offering high and stable returns, reliable sources have informed.

A February launch of the privatization by power utility PPC, DEDDIE/HEDNO’s parent company, is considered highly likely. Bidders are expected to be given a two-month period to submit binding offers. If so, officials will be in a position to announce the winning bidder in May, 2021.

Importantly, RAE, the Regulatory Authority for Energy, still needs to announce the distribution network operator’s new regulatory framework before the market test can be launched.

A formula determining the operator’s WACC, or yield, is expected to be announced by RAE this week, or, at the very latest, early next week. An official WACC figure, helping bidders shape their bids, should be set in December.

 

New bill arrears rule restricting electricity consumer switches

Several thousand electricity consumers were blocked from switching suppliers in September, a trend that has continued this month, following a rule revision enabling suppliers to stop their customers from switching to rivals if they have not fully settled outstanding energy bills, suppliers have informed energypress.

Distribution network operator DEDDIE/HEDNO implemented the new rule at the beginning of September following a request by RAE, the Regulatory Authority for Energy.

Though suppliers have sought closer monitoring of outstanding electricity bills linked with consumers preparing to switch companies, the new rule’s level of strictness is believed to even be impeding the mobility of punctual consumers with small and unintentional arrears left to pay.

Suppliers are now concerned about the measure’s impact on competition as even the smallest of bureaucratic obstacles can be enough to deter consumers from switching energy companies.

Consumer switches, both from power utility PPC to independent suppliers and from one independent firm to another, are currently high and would be even higher if the new restriction were not imposed, company officials noted.

Suppliers have protested that the rule revision was not preceded by public consultation.

DEDDIE’s WACC close to 7%, RAE framework approval soon

Distribution network operator DEDDIE/HEDNO’s new WACC level, determining the yield, required by potential buyers, will be set at just below 7 percent for a four-year period covering 2021 to 2024, energypress sources have informed.

This WACC level, well over rates of no more than 2.5 percent offered by respective European operators, is expected to be seen as a very attractive offer by investors.

RAE, the Regulatory Authority for Energy, has been given the green light by the energy ministry to hasten proceedings for a launch of the DEDDIE/HEDNO privatization, offering a 49 percent stake, in November, as promised by the ministry.

DEDDIE/HEDNO has awaited RAE’s approval of its new regulatory framework, including the WACC level, to launch the tender. This framework will include an option for a four-year extension, covering 2025 to 2028.

If the privatization is launched next month, it could be completed within the first quarter of 2021.

Market officials have forecast a DEDDIE/HEDNO selling price of close to 1.5 billion euros for the 49 percent stake.

The operator’s assets, essentially comprising networks totaling 239,000 kilometers in length, plus substations, are estimated to be worth 3.5 billion euros.

The DEDDIE/HEDNO business plan for 2021 to 2024, still subject to official approval, should excite investors. It features investments worth 2 billion euros and network 5G add-on potential for a wide range of telephony and internet services.

The prospective installation of 7.5 million digital power meters in place of conventional meters around the country, an upgrade budgeted at 850 million euros, is another strong selling point. Recovery funds will be sought for this project, energy minister Costis Hatzidakis recently informed. This would save the operator a considerable amount.

Germany’s EON, Italy’s Enel, Enedis, a subsidiary of France’s EDF, as well as a number of Chinese companies had showed interest, unofficially, in the DEDDIE/HEDNO sale well before the pandemic broke out.

 

 

Upper limit for non-auction PV units down from 500 to 200 KW

Local authorities have decided – in a proposal to be forwarded to the European Commission for approval – to lower to 200 KW from 500 KW a capacity upper limit requiring PV projects to participate in RES auctions for tariffs when this limit is exceeded, sources informed.

A satisfactory transitional period will be offered to investors to facilitate the actualization of scheduled RES projects up to 500 KW.

Greek officials expect to have finalized revising local RES auction rules within the next fortnight before submitting a plan to Brussels for an extension of competitive procedures.

Government officials have yet to decide on the duration of the RES auction extension to be requested as well as the total capacities for wind and solar energy to be auctioned.

However, the government officials have already taken initiatives to revise auction terms for greater bidding competition that would lower tariff prices for RES output.

Meanwhile, a prospective draft bill that would secure tariffs for RES units once they have been certified as ready by the distribution network operator DEDDIE/HEDNO, instead of when electrified, as is the case at present, will take some before being submitted to parliament.

 

 

Revision to ensure HEDNO framework for privatization

A legislative revision set to be submitted to parliament by the energy ministry will enable the implementation of a new regulatory framework for DEDDIE/HEDNO, the distribution network operator, as of January 1, 2021, as planned by a revised schedule.

The operator’s new framework, including two four-year periods covering 2021 to 2024 and 2025 to 2028, was initially scheduled to be approved by June 30 but this date was missed as a result of the pandemic’s impact and a leadership change at RAE, the Regulatory Authority for Energy.

Besides being crucial for the market’s operation, the new regulatory framework is a prerequisite for the announcement of the operator’s privatization, to offer prospective buyers a 49 percent stake.

The operator’s WACC rate is expected to be announced in the lead up, either this month or next, if no further delays hamper the overall procedure.

PPC, going green, to present transformation plan on Monday

Power utility PPC’s new three-year business plan, to transform the company from a lignite-centered utility into a RES-focused enterprise backed by a range of modern and digital commercial services, will be officially presented on Monday by the state-controlled company’s board, headed by chief executive Giorgos Stassis (photo), with Prime Minister Kyriakos Mitsotakis in attendance.

A new company logo symbolizing PPC’s shift from lignite to renewables will also be unveiled at the event along with the launch of the motto “PPC welcomes the future”.

PPC’s trademark lightning bolt-bearing logo that has featured for years at the façade of the company’s Athens headquarters has already been removed to make way for the the new logo, to be unveiled at Monday’s event.

On the day, PPC will present details on its plan to develop a RES portfolio with a capacity of between 2,000 and 3,000 MW over the next three years. This effort will coincide with the utility’s phase-out of lignite-fired power stations.

The privatization plan for the forthcoming sale of a 49 percent stake in subsidiary DEDDIE/HEDNO, the distribution network operator, expected to begin towards the end of this year, will also be presented at Monday’s event.

So, too, will an abundance of new services, including house repair and maintenance insurance.

PPC’s new three-year plan, at its core, will aim for high profitability and an annual EBITDA figure of between 700 and 900 million euros. It will also detail the company’s interest in DEPA Commercial, a new gas utility DEPA entity headed for privatization.

On Monday, PPC will also offer an update on ongoing talks with investors, including Germany’s RWE, for the development of solar farms worth 1.2 billion euros in northern Greece’s lignite-dependent west Macedonia region.

Funds of between 500 and 550 million euros stemming from PPC’s securitization of unpaid receivables will be used to help finance RES investments. The company is also considering a bond issue for the end of the year. Funds to be raised through the prospective DEDDIE/HEDNO sale will also be used for these investments.

Sensing a bright future at PPC, a growing number of institutional investors and hedge funds from abroad are considering the company’s share. They include Allianz Global Investors, Bell Rock Capital, Helm Investment Partners, Bluecrest Capital Management, Polygon, Fiera Capital, Zenon and Prince Street Capital.

 

 

 

DEDDIE sale launch awaiting RAE approval of framework

Distribution network operator DEDDIE/HEDNO is awaiting the approval of its new regulatory framework by RAE, the Regulatory Authority for Energy, needed for the launch of a tender concerning the operator’s privatization, to offer investors a 49 percent stake.

As things stand, RAE is expected to give the green light within October, energypress sources informed.

The operator’s new regulatory framework, to be valid for a four-year period, from 2021 to 2024, and feature an option for a four-year extension, was forwarded for public consultation in June, but a change of leadership at RAE early in July delayed the process.

The operator’s new WACC level, determining the yield for potential buyers, is expected to be announced in October or November so that the privatization’s tender can be announced before the end of the year.

At present, the operator’s annual revenue totals 800 million euros.

It remains to be seen if the overall plan will be carried out as planned as the framework’s approval is a complicated task requiring plenty of work, while RAE faces no legal obligation to deliver on schedule.

Last week, energy minister Costis Hatzidakis, speaking at an Economist conference, assured the DEDDIE/HEDNO privatization will begin in November. However, certain pundits contend the current schedule is overoptimistic.

The new DEDDIE/HEDNO business plan – envisaging an increase of investments to a level of between 350 and 400 million euros, annually, considerably higher than previous levels of around 150 million euros; as well as the recruitment of 1,000 staff members for technical posts – cannot be considered complete without a new regulatory framework.

PPC cautious with smart meter specifications following debacle

Power utility PPC is moving cautiously to set specifications for 7.5 million smart meters to be installed around the country following the debacle of a previous long-running effort, launched ten years ago, to no avail, for this mammoth project.

PPC and subsidiary DEDDIE/HEDNO, the distribution network operator, have been given authority by the energy ministry to prepare details of a new tender for the procurement and installation of smart meters that will replace conventional power meters throughout Greece.

A number of sub-tenders may be staged, given the size of the project, budgeted at approximately 850 million euros, sources said.

Authorities are likely to launch the new competitive procedure towards the end of this year or early next year.

The competitive procedure for smart meters is not linked to another procedure concerning the privatization of DEDDDIE/HEDNO, sources clarified in comments to energypress.

Regardless of its forthcoming privatization, DEDDDIE/HEDNO is carrying on with a company plan to modernize and upgrade its distribution network and infrastructure, the sources pointed out.

PPC improves payment rate for operator debt, down to €650m

Power utility PPC has increased its rate of payments for debt to operators, reducing the total amount owed from 900 million euros in July, 2019 to approximately 650 million euros at the end of last July, energypress sources have informed.

This debt, owed to power grid operator IPTO, distribution network operator DEDDIE/HEDNO and RES market operator DAPEEP, has fallen at an average of between 22 to 24 million euros per month.

PPC aims to reduce its debt to these operators by a further 100 million euros by the end of the year, which would reduce the figure to 550 million euros.

If the current payment rate is maintained, PPC’s debt to operators may drop to a level of between 260 and 270 million euros by the end of 2021.

The power utility’s improved operator-related debt performance, a turnaround compared to a year earlier, when company officials had warned better days along this front were a long way off, has, by extension, helped DAPEEP improve its payment record to RES producers for their output.

PPC’s annual deficit was at a level of approximately 900 million euros last year.

Cost-reduction initiatives and a suppression of energy commodity prices during the pandemic have helped PPC stabilize its finances.

The utility’s outlays for liquid fuels, natural gas, CO2 rights and electricity purchases fell by 33.7 percent, or 561.3 million euros, in the first half this year compared to the equivalent period a year earlier.

 

Tariff extensions for private PV units, problems acknowledged

The energy ministry intends to extend the validity of existing non-auction tariff prices for private solar energy facilities up to 500 KW and energy community units up to 1 MW in order to offer support to private RES producers who may not be able to electrify their projects by November 26, when a tariff revision is scheduled.

The extension of current tariff prices is expected to fall well short of a six-month period requested by Greek solar energy producers association Pospief, but it should be enough to cover producer needs.

The energy ministry has recognized difficulties faced by private producers not participating in RES auctions, the most significant of these being connection delays of completed projects by the distribution network operator DEDDIE/HEDNO, and, secondly, a market shortage of photovoltaic equipment, exacerbated by solar panel delivery delays.

In addition, some time may still be needed for the ratification of a draft bill that would enable RES projects to secure tariffs as soon as they have been certified as ready by DEDDIE/HEDNO, instead of at the time of their electrification, as is the case at present.

This revision has already been prepared by the energy ministry but its ratification faces delay as the matter is linked to the progress of a draft bill concerning spatial regulations for RES projects, still a long way off.

 

PPC business plan to include more ambitious RES goals

Power utility PPC’s new business plan, to be announced towards the end of the year, will feature a more ambitious transition towards the corporation’s RES objective of between 2,000 and 3,000 MW, as well as bolder steps concerning digital products, the retail electricity market, electromobility and the decarbonization schedule.

PPC, undergoing strategic changes, has decided to present three-year business plans that will be revised annually instead of its customary five-year plans.

This reflects the corporation’s determination to remain connected with rapid developments in the energy sector, capable of outdating business plans announced just a year earlier.

The new PPC business plan, expected in December, will aim for a RES portfolio of 2,000-3,000 MW within two years; swifter digitalization; increased collaboration with the private sector for electromobility development; greater emphasis on cost-reduction synergies; as well as revenue reinforcement through the application of new technologies in all fields.

The business plan will be complemented by a new regulatory framework for PPC’s privatization-headed subsidiary HEDNO, the distribution network operator, as well as European Commission negotiations, crucial for the new generation of retail products.

The new PPC business plan will offer fundamentals for the establishment of a corporation delivering annual operating profit of between 750 and 900 million euros between 2021 and 2023.

A smooth ride is not guaranteed. Fluctuations are possible. Gas and petroleum prices, currently low, will most likely rise over the next few months, PPC’s decarbonization plan represents an enormous challenge, while difficulties and delays in the absorption of amounts from the recovery fund are feared.

For the time being, the market is approving PPC’s approach. The company share has risen 187 percent over the past six months, up from 1.55 euros in March to 4.45 euros yesterday.

 

HEDNO preparing to announce latest smart meters tender

Distribution network operator DEDDIE/HEDNO is preparing to launch a latest tender, possibly within the next month, for the procurement and installation of 7.5 million smart power meters to replace conventional meters around the county.

The tender will also include a contract for the development of a telemetric center covering the entire country, sources informed.

Over the past decade or so, DEDDIE/HEDNO and parent company PPC, the power utility, have announced a series of tenders for the procurement and installation of smart meters, ultimately to no avail. They have either not taken place or not been completed.

The overall project, budgeted at 850 million euros, will mainly be funded through the recovery fund. The energy ministry has included the project with this fund.

DEDDIE/HEDNO and PPC are seeking to gain from various benefits offered by smart meters, including big cost savings for the corporate group, and added value to the operator’s facilities and distribution network ahead of a privatization planned by the government to offer a 49 percent stake.

The installation of smart meters also promises to help combat electricity theft and increase electricity market competition by enabling suppliers to charge customers based on real-time conditions with prices reflecting production and supply costs.

 

PV investors seeking fertile land installations stuck in bureaucracy

Many investors wanting to install photovoltaic systems at land rated as highly fertile report being stranded by bureaucracy as they seek to meet supporting document demands and tight deadlines set by DEDDIE/HEDNO, the distribution network operator.

Investors complain being stuck between contradicting requirements of DEDDIE and DAOK, the country’s Directorate of Agricultural Economy and Veterinary Services, despite not being at fault and having applied for all necessary permits.

Solar, wind project tariffs at time of project readiness

The energy ministry is preparing a legislative revision to secure tariff levels for solar and wind energy projects at the time of their certified readiness – by distribution network operator DEDDIE/HEDNO – not electrification, as is the case at present.

Energy ministry officials are convinced of this revision’s necessity as, in many cases, RES investors have completed the development of their projects but DEDDIE/HEDNO, for various reasons, cannot promptly offer grid connections for these projects, meaning tariff-related opportunities can be missed.

DEDDIE/HEDNO has expressed its support for the energy ministry’s planned revision. As part of the new procedure, the operator will conduct on-site inspections to confirm whether projects are ready for electrification before providing related certificates.

The overall revisions are expected to take two months to complete and be ready for implementation ahead of reference price changes scheduled for November 26. The energy ministry is expected to submit a legislative revision to Parliament within September.

Environmental permit exemption for PVs between 0.5-1 MW

A recent ministerial decision concerning the environmental classification of RES projects has been published in the government gazette, enabling the utilization of benefits offered by recent environmental legislation to photovoltaics between 0.5 and 1 MW, no longer requiring environmental permits.

There has been considerable confusion about environmental permit requirements for this RES category as regional authorities have been inconsistent with their policies. Some have exempted PV installations from the need for environmental permits while others have not.

To contain the confusion, the energy ministry had advised regional authorities not to offer environmental permit exemptions until the delivery of its related ministerial decision. Even so, a significant number of projects were offered permit exemptions prior to the ministerial decision.

It remains unclear how authorities will go about processing PV projects that were exempted from environmental permits but have remained stagnant following connection offer applications submitted to distribution network operator DEDDIE/HEDNO.

Remaining energy utility sales, DEDDIE and IPTO, nearing

The time is nearing for Greece’s two remaining energy utility  privatizations, those of electricity distribution network operator DEDDIE/HEDNO and power grid operator IPTO.

An energy ministry official yesterday updated journalists on the progress of both sales at a presentation of gas distributor DEDA’s five-year investment plan.

All details concerning the sale of a 49 percent stake in DEDDIE/HEDNO, a fully owned power utility PPC subsidiary, will be ready and finalized in September, enabling the announcement of a tender that month, according to the ministry official.

Preparations for this sale include the evaluation and transfer of assets used by DEDDIE/HEDNO from PPC to the operator.

As for the IPTO sale, talks between the operator and China’s SGCC – already holding a 24 percent stake in IPTO and first-offer rights in the event of the sale of a further stake in the operator – are still at an early stage.

The energy ministry is moving carefully in an effort to comply with fine details of EU directives concerning the entry of non-EU members into European enterprises and infrastructure.

Distribution network operator sale next big challenge for PPC

Power utility PPC’s next major challenge, following a second securitization package of unpaid receivables, will be the privatization of fully owned subsidiary DEDDIE/HEDNO, the distribution network operator, a procedure expected to be pitched to prospective bidders towards the end of the year before a tender is launched in the first quarter of 2021.

A plan to sell a 49 percent stake with increased managerial rights remains intact, but officials are also considering to lower the stake. In addition, some thought is being given to offering DEDDIE/HEDNO buyers the stake through two rounds, but the basic plan, to offer 49 percent as one sale package, remains likeliest.

A new regulatory framework for DEDDIE/HEDNO will need to be approved over the next few months, and, in addition, the government must also fine-tune the privatization’s details.

A leadership renewal at RAE, the Regulatory Authority for Energy, responsible for the operator’s new regulatory framework, has, not unexpectedly, delayed a series of matters on the authority’s agenda, including the new regulatory framework for DEDDIE/HEDNO. It was forwarded for consultation until June 19.

Revisions concerning the operator’s permitted earnings were proposed, while a four-year period is planned for the new framework, from 2021 to 2024, with an option for a four-year extension until 2028.

The new framework is expected to include bonuses for objectives achieved at the distribution network operator and vice versa. The DEDDIE/HEDNO business plan includes goals such as the replacement of conventional power meters with smart meters, as well as operating cost and electricity theft reductions.

Tesla managerial job posts for Greece signal market entry plan

Job classifieds for Greece recently posted by Tesla on the company website, including for the position of a sales and delivery manager, confirm the US hi-tech giant is planning to establish a local trading network for electric vehicles.

This prospect highlights the significant electromobility growth potential Tesla sees in the Greek market.

Tesla’s preparations for a trading division in Greece represent the third step in the company’s overall plan for Greek market entry following initiatives to establish an R&D department and develop a national recharging network.

Tesla has already established a Tesla Greece R&D division, expected to employ up to 50 specialized engineers once in full gear. This division’s current workforce figure remains well below the target, raising questions in the R&D community.

Tesla, since the beginning of the year, has been involved in talks with Greek government officials as well as representatives of distribution network operator DEDDIE/HEDNO and RAE, the Regulatory Authority for Energy, for the installation of recharging units on Greek highways.

However, speculation that Tesla could be seeking to develop a recharging network that would be compatible only for its electric vehicle models has raised concerns. It should be pointed out that the Tesla plan for Greece is still in the making. Clarity will be offered once the Tesla plan for Greece is finalized.

The energy ministry has introduced an electromobility law designed to attract investment in the sector.

DEDDIE not coping with RES connection term applications

Distribution network operator DEDDIE/HEDNO is struggling to keep up with an increasing inflow of applications for connection terms by investors behind solar energy projects, while, in many cases, many applications, when finally processed, are not being approved as a result of network saturation.

This problem mainly concerns smaller-scale investments whose capacity is not enough to warrant grid connections via the power grid operator IPTO. DEDDIE is not able to upgrade the network with substations, wherever this is technically possible.

Though the distribution operator has made considerable administrative progress it has not been enough to cope with the increased number of applications.

In the first half of 2020, DEDDIE responded, either positively or negatively, to a total of 1,500 connection term applications by RES investors representing a total of 580 MW, energypress sources informed.

This is almost double the inflow processed by DEDDIE in the second half of 2019 (730 applications, 245 MW), and triple the number the distribution operator processed in the first half of 2019 (520 applications, 165 MW).

Highlighting the scale of the problem faced by DEDDIE, some 7,000 applications arriving from various parts of the the country currently remain pending. Even at its currently faster pace, DEDDIE will require at least two years to get through these applications, joined constantly be new arrivals, many of these concerning energy communities, which are given priority.

 

RES project completion, without connection, to suffice for tariffs

The energy ministry is working to revise a rule that determines when development of RES projects is considered complete, which enables them to secure their tariff prices for output, either through competitive procedures or not.

Under the current rules, RES projects are considered ready once they have been connected to networks, not when their development has been completed.

This has proven to be a major problem for investors behind wind and solar energy projects completed on time but unable to secure tariff prices as a result of the inability of power grid IPTO or distribution network operator DEDDIE/HEDNO to offer connections when needed.

The matter is being worked on, the energy ministry’s secretary-general Alexandra Sdoukou noted during a virtual conference staged by the Hellenic-French Chamber of Commerce and Industry.

Final decisions have not been reached but the plan is to have authorities inspect and certify the completion of RES projects regardless of whether they have been connected, in order to secure tariff levels available at the time, sources informed.

The energy ministry is also striving to further simplify RES licensing procedures by merging or even eliminating certain steps or permits currently required, according to Sdoukou.

 

 

RAE wants HEDNO incentives for combating electricity theft

RAE, the Regulatory Authority for Energy, has proposed financial incentives for distribution network operator DEDDIE/HEDNO as a means of clamping down on electricity theft.

The regulatory authority estimates the annual cost of electricity theft at 139 million euros, based on data concerning 2018, or 4.1 percent of the grid electricity inflow total.

According to the data, electricity thefts are stealing electricity amounts of approximately 1.7 TWh per year, whose resulting cost is burdening consumers.

Adoption of the RAE proposal through its incorporation into a new regulatory framework would offer the operator greater incentive to counter electricity theft, the authority believes.

RAE forwarded its proposal as part of current consultation on a new formula for DEDDIE/HEDNO’s revenues between 2021 and 2024.

Power utility PPC’s administration has requested a new regulatory framework for the distribution operator, a PPC-owned subsidiary, ahead of its privatization to offer investors a 49 percent stake.

A new regulatory framework, seen as promising security for investors, would complete DEDDIE/HEDNO’s business plan for 2020-2028.

 

PPC picks Goldman Sachs as consultant for DEDDIE sale

The board at power utility PPC has reached a decision to hire US financial services company Goldman Sachs as privatization consultant for the sale of a 49 percent stake in distribution network operator DEDDIE/HEDNO, a subsidiary, sources have informed.

This appointment is seen as the first step in preparations leading to the partial privatization, while the choice of a heavyweight consultant reflects the importance of the sale for both the government and state-controlled PPC.

The prospective entry of an investor with a 49 stake raises hopes for a major network upgrade, including digitization. Modernized infrastructure will help intensify competition in the domestic electricity market. However, enormous sums are needed.  A project entailing the installation of smart meters, alone, is budgeted at one billion euros.

European operators as well as foreign funds investing in energy networks and infrastructure expressed strong interest in DEDDIE prior to the outbreak of the coronavirus crisis.

The operator’s regulated earnings and steady yield serve as a safe and profitable haven for capital investment, while DEDDIE’s tremendous asset base expansion potential adds to the appeal for investors.

RAE, the Regulatory Authority for Energy, and DEDDIE are currently working together to further modernize the operator’s regulatory framework.

Also, DEDDIE is currently finalizing a new business plan, covering 2020 to 2028. It envisions a gradual increase of annual investments to 350 million euros, more-than-double the current level of 150 million euros.

 

DEDDIE regulatory framework a prelude for new business plan

Distribution network operator DEDDIE’s new regulatory framework, featuring incentives for an achievement of goals designed to benefit the energy market and consumers, will be forwarded for consultation within the next few days by RAE, the Regulatory Authority for Energy.

The framework’s endorsement is seen as a prelude to the finalization of the operator’s new business plan, envisioning a major increase in investments and the recruitment of some 1,000 employees.

DEDDIE’s existing regulatory framework is designed to cover the operator’s costs through a cost-plus system, whereas the new proposal, a performance-based system, features incentives for improved performance.

The new framework will aim to create more favorable investment conditions, provide incentives promoting project upgrades and innovation for significant improvements to services, distribution network reliability and electricity quality, as well as a reduction of consumer costs.

Once endorsed, the framework will be valid for four years and also determine how the operator’s revenues will be calculated for a further four years.

Elefsis Shipyards, owing over €5m to PPC, faces power cut

Power utility PPC, taking supply-cut action against major debtors, appears set to add Elefsis Shipyards, owing the utility over 5 million euros in overdue power bills, to its hit list.

Over the past few years, Elefsis Shipyards has registered for a number of installment-based payback programs offered by PPC but repeatedly failed to meet deadlines. Its debt owed to PPC has continuously increased.

PPC is believed to be moving to forward an electricity-cut order to distribution network operator DEDDIE/HEDNO, against Elefsis Shipyards, within the next few days.

An Elefsis Shipyards restructuring plan envisioned by strategic investor Onex has run into a dead end. The inability of current shareholder Nikos Tavoularis and the investor to agree on a number of issues is a key reason behind the impasse.

Just weeks ago, the government intervened to secure a three-month extension for a recently expired contract between the shipyard and the Hellenic Navy.

This government initiative promises temporary financial relief for Elefsis Shipyards following the main shareholder’s failure to offer consent for the shipyard’s restructuring plan before March 31, which led to the contract’s expiration.

The Hellenic Navy contract extension will enable the shipyard to cover 70 percent of salaries to its 600 or so employees on the payroll during the current quarter but solutions for various creditors, including PPC, have yet to be found.

DEDDIE investments boosted to reach €350m, annually

Distribution network operator DEDDIE/HEDNO’s investment amounts concerning its business plan from 2020 to 2028 will be gradually boosted to reach annual levels of 300-350 million euros, up from 150-170 million euros, the operator has decided.

DEDDIE chief executive Anastassios Manos has presented the operator’s upgraded investment plan to board members.

It incorporates and fine tunes the distribution network strategy included in the business plan for power utility PPC, the operator’s parent company.

The upgraded DEDDIE business plan will be finalized once RAE, the Regulatory Authority for Energy, has cemented its regulatory framework.

DEDDIE’s investments have continuously dwindled in recent years.  Contrary to other EU operators, the company’s Regulatory Asset Base (RAB) value has subsequently diminished during this period of contraction as new investments each year have been outweighed by the depreciation levels of previous projects.

The operator’s new investments will focus on upgrading and expanding the network to facilitate the RES sector’s growing needs and broadened network presence, as well as ambitious electric vehicle targets.

The overall upgrade will include network digitization projects for advanced grid management and smart meter installations.

‘Firm steps for privatizations but pandemic’s impact considered’

Decisive steps are being taken for Greece’s energy-sector privatizations, representing two thirds of the country’s overall privatization program, but the pandemic’s impact on international markets will not be neglected, energy minister Costis Hatzidakis has pointed out in an interview with Greek daily To Ethnos.

There is no need to rush a plan to reduce the Greek State’s stake in Hellenic Petroleum (ELPE) as this sale is not one of restructuring character, the minister noted.

A government decision to sell stakes in DEPA Infrastructure and DEPA Trade, two new entities emerging from a split at gas utility DEPA, is moving ahead as planned, Hatzidakis informed.

First steps have been taken to reduce, below 51 percent, the Greek State’s share in power grid operator IPTO, “but this does not mean we will proceed tomorrow morning,” he said.

State-controlled power utility PPC is preparing terms of an international tender for the sale of at least 49 percent of distribution network operator DEDDIE/HEDNO, a subsidiary, the minister said. This procedure is scheduled to commence in the third quarter of this year, he added.

Ministry seeking to reignite stalled energy sector initiatives

The energy ministry is seeking to resume coronavirus-interrupted actions on a number of fronts, which, prior to the crisis, were expected to lead to major energy sector changes in 2020. These include the decarbonization effort, privatizations, green-energy infrastructure investments and a launch of the energy exchange.

The ministry’s strategic plan aiming to inject new impetus into these initiatives includes market liquidity protection through support mechanisms and bank loans for operators and key market players such as power utility PPC.

Efforts will also be made to accelerate decarbonization initiatives and keep alive pending energy sector privatizations, including those of gas utility DEPA’s two new entities, DEPA Infrastructure and DEPA Trade; the prospective sale of a 49 percent stake of distribution network operator DEDDIE/HEDNO, a PPC subsidiary; as well as an underground gas storage facility at a depleted offshore gas field south of Kavala.

Green energy investments, a key party of Greece’s revised and more ambitious National Energy Climate Plan, are expected to regain dynamic momentum as of 2021, following this year’s pandemic-induced disruption.

This is also the case for major infrastructure projects such as power grid operator IPTO’s grid interconnections for Crete, the south, west and north Cyclades and other areas. These interconnection projects require investments totaling more than 4 billion euros. These are expected to be completed by 2030.

Grid interconnection projects are also being worked on for the gas sector. Gas grid operator DESFA is looking to expand its network to cover 39 cities.