PPC, facing local contractions, eyes hydropower, RES units in Turkey

Facing bailout requirements leading to electricity market share contractions, at production and retail levels, the main power utility PPC is seeking to increase its presence abroad, including in Turkey, a market possessing particular interest for the utility, especially its hydropower and RES sub-sectors.

The efforts of PPC Elektrik Tedarik ve Ticaret Anonim Sirketi, PPC’s wholly owned subsidiary in Turkey, will be pivotal in the utility’s Turkish market aspirations.

The recent appointment of PPC Renewables managing director Ilias Monaholias as the Turkish subsidiary’s deputy chief reflects PPC’s intentions in the neighboring market.

PPC is moving fast in its effort to gain a presence in the Turkish market. Earlier this week, the Greek power utility’s board endorsed PPC Elektrik’s business plan for 2017 to 2019, including its participation in a tender concerning Turkey’s Manyas hydropower facility (photo).

The 20-MW capacity Manyas facility is one of ten Turkish hydropower plants EUAS, the state power utility, plans to privatize. Their overall capacity amounts to 256.4 MW. Bidders face an August 21 deadline for the tender offering the Manyas hydropower unit, located in the Marmara region.

It remains to be seen whether PPC will submit new bids for the Menzelet and Kilavuzlu units, possessing respective capacities of 124 MW and 54 MW and included in Turkey’s sale package of ten hydropower units.

Both these facilities were also put up for sale through unfinalized tenders last year. PPC had taken part in both sale prodecures. No reasons were announced for their interruption.

PPC is also exploring investments in Turkey’s RES sector, currently experiencing robust growth. “Our objective is not only the exchange of knowhow, but, primarily, the penetration of PPC Renewables into new emerging markets,” noted Monaholias, the PPC Renewables chief, adding that an extremely ambitious investment plan has also been prepared for the Greek market.



No alternatives included in Greek lignite-only PPC unit sale proposal

A Greek proposal for the bailout-required sale of main power utility PPC units, received by Brussels officials last week, apparently contains just one proposal, not various combinations, as has been previously reported.

The PPC sale package proposed by Greek authorities is comprised of Meliti I (330 MW), in Florina northern Greece, a license for Meliti II (450 MW), a planned new unit, two Amynteo units (550 MW), as well as the mines feeding these units – Amynteo, despite the recent landslide that affected operations, Lakkia and Vedi.

No other alternatives have been delivered to Brussels, sources involved in the procedure told energypress. This means that PPC’s Megalopoli units, and Ptolemaida V, under construction, do not feature in the Greek sale package proposal.

The units included in the package represent 36 percent of PPC’s lignite-fired power stations and 42 percent of the utility’s lignite-related mining capacity.

The package proposed by Greek officials is the result of separate studies conducted by the consulting firms McKinsey and Lazard, commissioned by PPC and the country’s energy ministry, respectively.

Ir remains to be seen whether the lignite-only proposal made by Greece will be enough to attract investors. A market test is scheduled for October.

Unofficial talks have taken place with investors but their participation in the upcoming market test remains a murky prospect.

Three Chinese firms, including CMEC and Shenhua, the Czech Republic’s CEZ, and one German company have been approached. It remains unclear whether another firm based in Poland, a country that is heavily reliant on coal, will hold talks with PPC over a possible bid.

Italy’s Edison has rejected any involvement in the sale procedure unless hydropower units are also included in the package.

The Greek government remains confident that the current package will suffice to draw investors and insists hydropower units will not be offered under any circumstances.

Overall, investors have remained very reserved and are not disclosing any intentions.


DG Comp spots hydropower unit manipulation practices at PPC

A formula determining when main power utility PPC’s hydropower units are brought into play for contributions to the grid has been tampered with to influence the System Marginal Price (SMP), the European Commission’s Directorate-General for Competition has found, according to Greek daily Kathimerini.

This finding is linked to a probe conducted by DG Comp officials at the headquarters of main power utility PPC and IPTO, the power grid operator, following invasions earlier this year to examine whether the utility is manipulating its wholesale electricity prices.

It is believed that PPC has been informed of the findings by the European Commission and expected to deliver explanations.

Officials in Brussels are now already writing up a decision, based on the DG Comp findings, which is expected to be finalized in autumn. This decision will coincide with the market test concerning the bailout-required list of PPC lignite-fired units to be offered for sale. Hydropower stations will also be added to the sale list if investor interest in the lignite-fired units is insufficient.

According to sources, the DG Comp will take action against PPC for its market manipulation practices, which could result in fines representing as much as 10 percent of the utility’s turnover.

PPC will not be able to shoulder such a burden, given its current strain, and, as a result, will be forced to add hydropower units to the sales list, sources have informed.

Following their ambush of the PPC and IPTO headquarters in February, DG Comp officials returned to PPC’s headquarters earlier this month.



Low hydropower unit water levels may spark summer energy crisis

Low water levels at hydropower station reservoirs in many European countries threaten to cause a series of electricity supply problems around the continent. A repeat of the past winter’s energy crisis cannot be ruled out if extremely high temperatures prevail and various emergency cases arise.

As was pointed out in a recent article published by the Argus media group, current water reservoir shortages are altering European electricity market dynamics and the situation is expected to extend into the long term.

Extremely low temperatures experienced around Europe in December and January prompted energy shortages and forced authorities to increase their reliance on hydropower stations. This development severely depleted water reserves.

Greece was no exception. The energy crisis that affected the country between December 19 and February 13 significantly lowered Greek reservoir water levels.

In January, the country’s hydropower stations needed to increase their electricity generation by 66 percent, compared to the equivalent month a year earlier. Hydropower output during the first month of this year reached 658 GWh, up from 396 GWh in January last year.




‘Market test to shape future of PPC’s hydropower plants’

Despite previous denials, the government is now making increasingly clear the prospect of main power utility PPC hydropower stations being added to the bailout-required package of PPC unit sales should an upcoming market test, to be held around September or October, indicate insufficient investor interest in the utility’s coal-fired power stations alone.

Energy minister Giorgos Stathakis tried as best he could to allude to the prospect of hydropower stations being added to PPC’s sales package in comments last Friday, during a visit to the country’s north, where the demand by lenders for utility unit sales is a particularly politically sensitive issue. Much of PPC’s coal-fired producing capacity is located in the wider region.

Stathakis, responding to reporter questions, informed that a three-way plan for a sale package made up of coal-fired power stations would be established between the government, lenders and the state-controlled utility within the next few months. The minister added that if this plan fails to make it through the upcoming market test then the “threat of additional structural measures will exist.”

Pundits believe that investors anticipate the initial plan’s failure and are already focusing their attention on the addition of hydropower stations to the PPC sales package. Coal-fired power stations alone, analysts contend, will not attract investors as such units generate electricity at a cost of between 50 to 60 euros per MWh at a time when electricity may be purchased through the NOME auctions for no more than 37 euros per MWh.

NOME auctions were introduced last October to provide independent traders access to PPC’s low-cost carbon and hydropower sources.

The country’s lenders want 40 percent of PPC’s coal-fired production capacity to be placed for sale. The details remain vague and will need to be clarified during the upcoming three-way negotiations between the government, lenders and PPC.

The three sides will need to agree on whether the 40 percent figure will apply to PPC’s capacity as it stood in 2015, this year’s capacity figure, which has contracted as a result of unit withdrawals, or the prospective figure of 2020, when PPC’s coal-fired production capacity is expected to have shrunk further. It also remains unclear whether coal mines will be included in the package.




China’s CTG visit linked to likely PPC hydropower unit sales

Officials representing Chinese energy giant China Three Gorges Corporation (CTG), a state-controlled enterprise behind the construction and operation of the world’s biggest hydropower project, the Three Gorges Dam project, were in Athens yesterday to explore investment opportunities, including the prospective sale of main power utility PPC hydropower units, sources noted.

It looks like Greece’s state-controlled PPC utility will eventually need to sell hydropower units, ongoing bailout negotiations between government officials and Greece’s lenders for the second review’s conclusion strongly indicate.

CTG officials were included in a visiting delegation of Chinese entrepreneurs who held a meeting in Athens yesterday with key Greek officials.

Members of the Chinese delegation held talks with deputy economy and development minister Stergios Pitsiorlas as well as officials representing Enterprise Greece, a state-sponsored investment support group, to discuss investment opportunities offered by the Greek market and establish ties with related ministries.

SGCC, the State Grid Corporation of China, which has agreed to acquire a 24 percent stake of power grid operator IPTO, a subsidiary of main power utility PPC, and  CMEC, which has signed an MOU with PPC for the development of a second power station at Meliti in northern Greece’s Florina area, were not represented by the visiting Chinese group.

CTG is responsible for the construction and operation of the world’s biggest hydropower project, the Three Gorges Dam project, possessing a 22,500 MW-capacity, almost double Greece’s total power-generating capacity.

Present in 40 countries, CTG is ranked the world’s biggest hydropower producer. The total capacity of Chinese power hydropower stations under its control measures over 46,300 MW. Adding CTG’s investments beyond China takes the firm’s installed capacity figure to 100 GW.

In 2014, CTG generated 201.2 TWh of electricity, approximately five times the energy produced and used in Greece, for revenues of 10.1 billion dollars and a profit of 3.3 billion dollars.

Late in 2011, CTG participated in the privatization process of Portugal’s power utility Energias de Portugal, acquiring a 21.35 percent stake for 2.69 billion euros.


PPC submits bids for two Turkish hydropower stations

PPC, the main power utility, has submitted a bid to acquire two Turkish hydropower stations with a total capacity of 178 MW, confirming preceding energypress reports.

Both facilities, owned by Turkey’s state-controlled power corporation, are located in the country’s central region of Kahramanmaras and are fed by the Ceyhan River.

Turkey’s privatizations authority OBI announced a plan in June to privatize five hydropower stations, including the two aforementioned units, Menzelet and Kilavuzlu, possessing capacities of a 124 MW and 54 MW, respectively.

A September 30 deadline had been set for first-round offers. PPC’s offer was submitted through the corporation’s Turkish subsidiary, PPC Electrik Tedarik ve Ticaret Anonim Sirketi. Binding bids will follow in the sale’s second stage.

PPC to vie for two Turkish hydropower units through subsidiary

The board at main power utility PPC has decided to take part in the sale of two hydropower stations in Turkey, through the utility’s Turkish subsidiary, energypress have been informed.

Both hydropower stations, among a total of five Turkish hydropower stations up for sale, are located in the country’s central region of Kahramanmaras. Both are fed by the Ceyhan River.

PPC’s board, at a meeting held just over a week ago, unanimously decided to take part in due diligence procedures for the two Turkish hydropower stations, Menzelet and Kilavuzlu, possessing capacities of a 124 MW and 54 MW, respectively. A September 30 deadline has been set for offers concerning both units.

At the same meeting, the PPC board also reached a decision to establish a new subsidiary in Albania, where the utility plans to pursue business ventures as part of wider plan aiming to compensate for expected bailout-required market share losses in retail and production.

Turkey’s privatizations authority OBI announced a plan to privatize five hydropower stations, including their respective properties, in June.

PPC’s Turkish subsidiary, PPC Electrik Tedarik ve Ticaret Anonim Sirketi, was established in May, 2014. The company began cross-border electricity trade about four months later, after acquiring an operating permit from the country’s regulatory authority for energy. The subsidirary, formed as part of the utility’s wider southeast Europe strategy, is wholly owned by PPC.

The utility recently signed an agreement with China’s CMEC for development of a new power station in northern Greece.



PPC eyes Albania’s hydropower potential to offset contraction

Main power utility PPC intends to pursue investment opportunities in neighboring Albania by taking on hydropower station construction projects that may utilize the country’s energy-producing potential in this area.

The utility’s top officials will be in Tirana tomorrow for a conference sponsored by PPC to focus on Albania’s hydropower potential. PPC’s chief executive Manolis Panagiotakis will be the event’s key speaker.

PPC’s administration sees major hydropower potential in the Albanian market and, in response, intends to utilize its knowhow and combine this with the experience of Greek construction firms in hydropower project development. Certain Greek construction firms will be represented at tomorrow’s Tirana conference.

The natural conditions in Albania, similar to Greece’s, offer hydropower potential that could support projects with capacities of 1,000 MW.

PPC’s business interest in Albania comes as part of a wider effort being pursued by the utility to generate earnings from new sources given the certainty of revenue and market share losses in Greece’s retail electricity market, irrespective of how long this contraction takes.

The utility faces Greek bailout-related obligations designed to reduce PPC’s market shares in electricity production and supply to less than 50 percent by 2020.

Responding to the prospect, PPC has already made clear its interest to take on major energy projects in Greece and the wider region over the next few years.

These include the submarine cable interconnection of Crete with mainland Greece, a project being planned by the country’s power grid operator IPTO, still under PPC’s control as a subsidiary firm but headed for a bailout-required breakaway.

PPC also wants to develop renewable energy source (RES) units through PPC Renewables, a wholly-owned PPC subsidiary, beginning with two major wind-energy parks, as well as geothermal and biomass projects.

PPC will also seek to be commissioned study or maintenance contracts for energy projects in countries such as Turkey, Egypt and Iran. The utility’s engineers possess considerable experience in this field.

On another front, PPC is determined to enter the rapidly growing electric car market, expected to provide major commercial potential in Greece over the next few years.

Panagiotakis, PPC’s chief, recently admitted that the utility has no choice but to be an entirely different corporation in a few years time. He has told company officials to be prepared for market share losses in electricity supply. The corporation’s slow but steady electricity retail market share contraction cost it 108 million euros in 2015. The figure is expected to exceed 250 million euros in 2016.

Hydropower output needs to be offered for lower NOME starting price

Judging by the government’s current negotiations with creditor representatives, the NOME auction plan, intended to provide third parties with access to main power utility PPC’s low-cost lignite and hydropower sources, is no longer being viewed as the basic tool that will reduce the utility’s retail electricity market share by 25 percent in the short term and 50 percent by 2020.

Even so, the NOME model prepared by the energy ministry, which includes revisions proposed by the country’s lenders, appears likely to be legislated, even if just for a brief period of time.

In order to make NOME auctions appealing to suppliers, they will apply for the short term, while starting prices will be set at current System Marginal Price (SMP) levels, possibly even lower, energypress sources have informed. A starting price of about 40 MWh is likely to be set, following discussions yesterday between energy ministry officials and the creditor representatives.

If this starting price level is to be achieved, then PPC will need to accept assumptions concerning its operating costs, which it has rejected to date. Various authorities believe the utility is overpricing its operating costs. PPC will also need to offer electricity produced by its hydropower facilities, not just lignite-fired power stations, if lower NOME auction starting prices are to apply.

Electricity demand hovers as industry cuts back activity

On this first day of July, normally a time of heightened summer-related electricity demand, the subdued overall activity amid the confines of capital controls imposed at the beginning of the week has prompted a drastic drop in demand for power, forcing the electricity market to make necessary adjustments.

Electricity demand peaked at 6.7 MW and, for many hours, has hovered at even lower levels, primarily as a result of the cutback, even stoppage, of operations by a considerable number of energy-intensive industrial enterprises.

The marginal price level has also dropped sharply to 49.942 euros per MWh, falling below the level of 50 MWh for the first time in many years.

The main power utility PPC’s lignite-fired power stations are operating at full capacity. The facilities at Agios Dimitris, Kardia, and Melitis facilities, and one unit at Amyndeo, have been programed to operate at full capacity today. As for gas-fueled electricity stations, the PPC facilities in Aliveri and Megalopoli, as well as a facility run by Epledison in Thessaloniki, currently suffice to cover the subdued electricity demand.

Electricity imports have also fallen, while hydropower plants are also being employed.

PPC has assured the grid is adequately equipped to remain sustainable, while according to CEO Manolis Panagiotakis, the utility is sufficiently stocked with fuel and lignite deposits to cover needs.

PPC chief assures smooth power supply for the nation

All precautionary measures have been taken at PPC, the main power utility, to ensure smooth electricity supply in Greece for as long as necessary, the corporation’s CEO, Manolis Panagiotakis, noted today in response to the introduction of capital controls.

According to sources, PPC officials, who held an extraordinary meeting last night, have begun processing data based on the new conditions, the main objective being to protect local energy sources – lignite and hydropower facilities. Power stations are already stocked up with lignite, while conditions at hydropower stations are sound, sources said.

It is believed that electricity imports may be reduced and replaced by production at local natural gas-powered electricity facilities. Natural gas imports will continue as normal. Mazut supplies needed at stations are also available, sources said.

Officials noted that electricity supply on the islands is guaranteed for the entire summer, at least, as PPC maintains emergency fuel supplies for ninety days. A shipment of 40,000 tons of fuel has been scheduled for July 13.

The sources noted that meetings will be held on a daily basis for continual assessment and management of power production as well as PPC’s liquidity situation. Further cash-flow problems are anticipated at PPC as a result of the capital controls imposed.

Panagiotakis, the CEO, noted the corporation is prepared to cover payments to suppliers and creditors, as well as a deposit payment for the construction of Ptolemaida 5, a new power station planned for development in Ptolemaida, northern Greece. The PPC head noted that a construction permit for the project may be issued within the current week, or possibly next week. The corporation is able to cover the deposit payment needed for work to begin, he highlighted.


Consultation launched on hydropower variable costs

RAE, the Regulatory Authority for Energy, has launched a new round of public consultation for revisions to the method applied for calculating variable costs of hydropower plants, used to determine tender lower limits.

The method to be used will be implemented following RAE approval. Issues to be examined before settling on an updated version include reservoir safety concerns and more realistic assessment of thermal production replacement costs.

Interested parties may submit their views to elecmarket@rae.gr until January 15. Following this date, RAE will publish a catalogue listing the consultation’s participants and their views or proposals, unless they issue instructions for their interventions to remain unpublished.

TERNA in major hydroelectric deal with China’s Sinohydro

A deal between Terna and Chinese firm Sinohydro is expected to be launched on the island of Crete with construction of a large 50MW-capacity hydroelectric facility in Amari, close to Rethymno. At present, Terna holds the largest portfolio of hydroelectric development projects in Greece, through its subsidiary firm, Terna Energy. A number of small 15MW facilities are already operating, while projects amounting to 4,360MW of prospective hydroelectric production await approval. In recent years, the Terna group has submitted over ten applications for approval of large hydroelectric projects totaling over 1,500 MW.

Chinese firm Sinohydro ranks as the world’s 14th largest firm in its field, while it is ranked sixth among Chinese construction firms, based on annual turnover. The firm is active in 55 countries, while its earnings figure in 2012 reached 20.4 billion dollars. At present, the firm’s unexecuted orders list is comprised of 486 projects in 70 countries, worth a total of 42 billion dollars.

The deal between Terna and Sinohydro includes the participation of the Industrial & Commercial Bank of China (ICBC), one of the world’s largest banks.