Ministry, PPC, fearing changes, want fast lignite sale relaunch

The energy ministry and state-controlled PPC are keen to relaunch the power utility’s failed bailout-required disinvestment of lignite units as soon as possible hoping this swiftness will prevent demands for major changes to the overall offering, the worst fear being the inclusion of hydropower units into an upgraded sale package.

The energy ministry is expected to forward, early today, an update to the European Commission’s Directorate-General for Competition informing of the lignite unit sale package’s failure to produce a result last week, when the deadline for binding bids expired. Brussels should offer its initial response just as swiftly, possibly within the day, it is anticipated. Decisions are not expected at this stage. Instead, Brussels, as a first step, will seek to identify the causes of the sale’s debacle.

The DG Comp terms for PPC’s sale of lignite units, ratified as law, stipulate that the scope of action is currently restricted to lignite, the aim being to reduce imbalances between PPC and its competitors caused by the power utility’s exclusive access to the country’s lignite resources, which it utilizes for electricity production. Hydropower units are not mentioned in the existing sale terms. This explains the eagerness of PPC and the energy ministry to push ahead with a renewed sale attempt.

PPC has declared it will be ready for a sale relaunch by May. Earlier reports claiming fast-track procedures would lead to a March relaunch have remained unconfirmed.

 

Brussels questions PPC over market manipulation suspicions

The main power utility PPC, suspected by the European Commission’s Directorate-General for Competition of abusing its dominant position and manipulating Greece’s energy market through its hydropower units, has been asked to provide thorough responses to a list of questions forwarded by Brussels, investigating the utility’s practices.

The DG-Comp, which has delivered an initial report, began investigating the Greek power utility two years ago after invading its headquarters in Athens, as well as those of the power grid operator IPTO in February, 2017, for information concerning the probe. Brussels officials already possessed some PPC-related information prior to their walk-in and also accumulated further details following the invasion.

The probe has been an underlying threat for PPC ever since the DG-Comp invasion. The effort’s initial report has emerged at a bad time for the power utility, hot on the heels of its failed attempt to sell lignite units, a bailout requirement.

Speculation has already begun as to what the follow-up demands on PPC could be. The energy ministry, doing its utmost to keep intact as much of the state-controlled power utility’s corporate make-up as possible, fears Brussels may start applying pressure for the inclusion of PPC’s hydropower plants into an upgraded sale package.

The set of questions forwarded by the DG-Comp, a procedure required once initial reports have been completed, could represent the first step in a process leading to EU law infringement charges against PPC and Greece.

Though not confirmed, the data collected by the Brussels officials from the PPC and IPTO Athens offices is believed to include details suggesting wholesale price manipulation by the power utility through overstated capacities concerning its hydropower units, as well as overstated unit capacities of other PPC units not actually available at the time, the objective being to sideline facilities operated by rival electricity producers.

On a recent visit to Greece, as part of a post-bailout review, lender representatives, hinting at what the DG-Comp had in store, adamantly questioned whether market- abuse restrictive measures have been enforced.

 

 

 

 

 

PPC fate in hands of Brussels, hydropower units addition a fear

The main power utility PPC’s future corporate make-up, following the apparent debacle of its bailout-required disinvestment of lignite units, now lies in the hands of the European Commission, whose intentions are soon expected.

Even if the Mytilineos group does submit an improved follow-up offer today, as has been requested, for PPC’s Meliti facility in Florina, northern Greece, and the unit is sold, the country’s commitments to the European Commission will not have been fulfilled.

Two units of PPC’s Megalopoli facility failed to attract investors, meaning the sale’s objective of reducing PPC’s lignite market share by 35.6 percent cannot be attained.

The initial offer made by the Mytilineos group for Meliti is believed to be well under the price tag set by an independent evaluator for the facility.

Another offer made by Seven Energy and Terna, for Megalopoli, was apparently rejected for not meeting terms, while the sale’s third contender, a team comprised of the Copelouzos group and CHN Energy, ended up not submitting any offers.

The crucial question, as things have turned out, is whether Brussels will bring Greece’s hydropower units into the picture, as an addition to the lignite package.

The energy ministry is definitely worried about such a prospect and insists this remains a red-line issue for energy minister Giorgos Stathakis.

Greece will be under considerable pressure should Brussels and the country’s other lender institutions decide to associate the lignite unit sale’s apparent debacle with Greece’s slow progress in opening up the retail electricity market to competition.

Data provided by the energy exchange for December showed PPC’s retail market share rose to 80.29 percent from 78.63 percent in a month. According to bailout terms on the matter, PPC’s market share at the end of 2018 was supposed to have dropped to 62.24 percent before reaching 49.24 percent by the end of 2019.

 

 

PPC lignite units sale stands little or no chance of success

Latest developments concerning the main power utility PPC’s ongoing effort to sell its Megalopoli and Meliti power stations strongly suggest the sale stands little or no chance of attracting even just one offer by tomorrow, when the procedure’s extended binding bids deadline expires.

Indicative of the friction that has simmered between the seller and buyers, PPC’s chief executive Manolis Panagiotakis, speaking yesterday at a company event for the New Year, remarked: “We don’t expect private-sector investors to offer amounts that will take 25 years to recover, as has been the case with PPC. Let them recover these amounts in half the time.”

The utilization of electricity quantities promised by the acquisition outweighs the importance of profit margins, the PPC boss contended.

“In markets and countries of far greater maturity and economic development enterprises do not rely on big profit margins but product quantity,” Panagiotakis said.

PPC will do whatever possible for a successful outcome in the sale, he stressed, thereby suggesting the power utility should not be held accountable if the procedure fails to produce a result.

PPC may need to deal with European Commission pressure for the inclusion of hydropower facilities into an expanded sale package if the current effort sinks.

Potential buyers have adamantly pushed for improved sale terms in the lead-up and remain dissatisfied, reminding that Megalopoli and Meliti are both loss-incurring units.

 

 

Government, PPC, Brussels examining lignite sale options if effort fails

The main power utility PPC’s ongoing effort to sell its Megalopoli and Meliti power stations as part of a bailout-required disinvestment of lignite units seems headed for failure, as suggested by the lack of interest of investors in a teleconference staged by the utility last Friday.

Possible buyers either did not take part or emerged expressing disappointment following the session, held just days ahead of this week’s extended February 6 deadline for binding bids.

Only a further deadline extension, seen as highly unlikely, could save or delay the sale effort from a seemingly inevitable debacle.

The government, state-controlled PPC and the European Commission are believed to be working on alternatives given the subdued mood of participants.

In Athens, officials are making an effort to avoid any undesirable developments such as a new call from Brussels for the inclusion of hydropower units into the sale.

Government officials are also seeking to gain as much time as possible in the hope that the forthcoming European Parliamentary elections, to be held May 23-26, will intervene.

PPC’s sale of lignite units was agreed to with the European Commission following a European Court decision setting measures aimed at ending the power utility’s exclusive access to the country’s lignite deposits.

The government is clearly banking on the presumption that it will not be held accountable for a disinterest or obstruction of the PPC disinvestment package, should the current procedure fail. In this case, new talks for new plans will be needed.

Not to be neglected, the European Commission’s Directorate-General for Competition is currently conducting a study examining Greece’s utilization of hydropower reserves and units. DG Comp officials invaded PPC and power grid operator IPTO offices in Athens over a year ago.

 

PPC lignite units sale given extension amid negative news

Investors considering the main power utility PPC’s bailout-required sale of lignite units were granted a last-minute deadline extension for their binding bids yesterday afternoon, a development that resets the date for February 6 instead of today.

In the lead-up, the sale’s prospects were seen as unfavorable by the government and state-controlled PPC, while the country’s lender representatives, scheduled to meet tomorrow with Greek energy minister Giorgos Stathakis, have also added to this negativity.

Participants who were rumored, as late as yesterday, to be preparing to submit competitive bids, eventually made it clear they would not take part under the disinvestment’s current conditions, seen as unfavorable.

Judging by the developments, Greece’s lender representatives appear to have prepared for alternative solutions, as part of a wider effort to make the Greek electricity market more competitive, in the event of a debacle of the current sale effort. If so, the sale of hydropower facilities, a taboo subject dreaded by the government, could end up entering the picture.

 

 

 

Salzburg’s Renexpo Interhydro event to focus on European hydropower sector

Renexpo Interhydro, a European trade fair and congress for hydropower scheduled to take place November 29 and 30 in Salzburg will offer an overview of the current political situation concerning the hydropower sector in Europe.

Representatives from hydropower associations from individual European countries are expected to meet for the 3rd time at the Salzburg event to define common interests and take further steps in improving the market conditions for the hydropower sector.

Hydropower is a major contributor to generating renewable power in the European Union. More than 50% of the electricity generated from renewable energy sources stems from hydropower plants.

However, hydropower development in EU member states is often thwarted by the provisions of the Water Framework Directive, the event’s organizers noted, adding the ongoing evaluation process of this EU legislation offers a chance for the European hydropower sector to promote its interests and key demands.

For more than three years now, EU member states and institutions have developed and negotiated the EU’s Energy Union which foresees a fundamental transformation of Europe’s energy system towards a system based on renewable energy, energy efficiency and a climate policy.

The legislation on the new electricity market design will be finalized by the end of 2018 under the Austrian EU Presidency and implemented as of 2020.

The objective of the “3rd European Association Meeting”, planned for November 29, will be to update representatives on the political opportunities at EU and national levels, promote the interests of the European hydropower sector and illustrate what national associations can do to support this.

Dr. Mario Bachhiesl, VGB Power Tech, Dirk Hendricks, European Renewable Energy Federation (EREF) and Martin Schönberg, Eurelectric will inform about joint policy work at EU and national levels with a special focus on the water Framework Directive as well as the Horizon 2020 project Hydropower-Europe and its importance for the hydropower sector.

The meeting will not only improve the international networking, but also bring together the large and the small hydropower sector.

On November 30, the interactive Workshop “Clean Energy Package and its impact on the hydropower sector”, organised by the EREF Small Hydropower Chapter, will provide an overview on the new legislation and its impact on the EU hydropower sector, especially on the operation modus of hydropower plants and potential new business models. The revised Renewable Energy Directive and new governance scheme as well as interim results of new European electricity market design will be discussed.

At the trade fair, well known companies will be presenting the whole value chain – all types of turbines, generators, gaskets, pipes and further components of hydropower plants, power plant regulation, project handling, maintenance and plant optimizing, measuring and controlling equipment, as well as power trading and direct marketing.

The event has been organized to cater to the interests of all parties active in the hydropower field – trade and industry, authorities and municipalities, politics and science – as well as universities and academic institutions from all over the world. About 125 exhibitors, 500 congress attendees, and 2,500 visitors are expected.

Further information: http://www.renexpo-hydro.eu/en/home-en/.

RES benefits for economy more than €12bn over next decade

Overall RES electricity production investments to be made between 2020 and 2030 are expected to add more than 12 billion euros to the value of the national economy, according to the National Energy and Climate Plan, forwarded yesterday by the energy ministry for public consultation.

The plan also projects the creation of over 15,000 full-time jobs for the ensuing 25-year period.

Wind energy installed capacity is seen almost tripling to 6.4 GW in 2030 from 2.4 GW in 2016, as is PV capacity, to 6.9 GW from 2.6 GW in 2016, while hydropower capacity, including the main power utility PPC’s big units, is forecast to achieve a milder increase to 3.9 GW from 3.4 GW in 2016.

The wind energy sub-sector’s production is expected to increase to 14,933 GWh in 2030 from 5,146 GWH in 2016, PV output is forecast to rise to 10,514 GWh from 3,930 GWh in 2016, and hydropower production should grow to 6,269 GWh from 5,603 GWh in 2016, according to the plan.

Brussels reserved over PPC lignite unit sale prospects

The European Commission appears subdued in its expectations of a successful sale of main power utility PPC lignite units, as required by the bailout, judging by the comments of a highly-ranked Brussels official.

“If the sale fails, we will first analyze why it did not succeed also what needs to be done for it succeed, and then make decisions,” the official told Greek journalists in Brussels yesterday but stopped short of stating that a sale plan concerning PPC hydropower facilities could again be brought to the fore. “If the current model doesn’t work we will need to see what went wrong,” the official added.

When asked if Brussels is troubled by state-controlled PPC’s financial standing, the official made note of recent favorable developments for the power utility as a result of government decisions ending a electricity supplier surcharge and lignite tax. An effort is being made to restructure PPC, as long as the corporation, itself, wants to be helped, the official pointed out.

Greek energy minister Giorgos Stathakis has noted binding offers for PPC’s lignite units, representing 40 percent of its lignite capacity, will be submitted by December 15, but admitted the bailout-required disinvestment would enter uncharted territory if the current procedure fails to deliver results.

RES sector’s 2020 targets out of reach, solar the exception

With the exception of the solar energy sector, Greece’s renewable energy targets for 2020 appear to be unattainable, latest official industry data has shown.

A 2020 target figure of 2,200 MW set for the photovoltaic sector has already been reached with existing installations totaling 2,250 MW.

However, the wind energy sector, including offshore stations, is well behind on its 2020 target of 7,500 MW. Installations currently total 2,770 MW.

It is a similar story for the biomass sector, currently totaling 67 MW and with a long way to go before reaching the 2020 target of 350 MW.

Installed hydropower capacity in August was measured at 3,450 MW, not only well under a 2020 target figure of 4,650 MW but also still below an objective of 3,700 MW that had been set for 2014.

High-voltage power demand hits 18-month high, overall demand slips 1.9%

Electricity consumption in the country’s high-voltage category reached 655,583 MWh in July, the highest level registered since the beginning of 2017, data included in a monthly IPTO (power grid operator) report has shown.

As the high-voltage category is comprised of industrial and large-scale consumers, the development suggests total turnover and business activity struck an 18-month high in July.

However, overall electricity consumption, for all sectors, fell by 1.9 percent in July compared to the equivalent month a year earlier. Electricity self-consumption fell by 11 percent.

On the contrary, high-voltage consumers and mines registered electricity consumption increases of 6 and 15.2 percent, respectively.

Overall electricty generation between January and July in 2018 fell by 4 percent compared to the equivalent seven-month period a year earlier,  according to the IPTO data.

Electricity output at conventional power stations dropped by an overall 6 percent. More specifically, output in the lignite, natural gas and the “other fuel” categories dropped by 11, 17 and 28 percent, respectively.

On the contrary, hydropower production rose by 63 percent and renewable energy output increased by 4 percent.

Lignite-fired electricity production provided the biggest contribution to the grid’s overall mix, a 38 percent share. Natural gas followed with a 31 percent share. The RES sector was ranked third with 19 percent and hydropower fourth with 11 percent.

 

 

 

Major hydropower event in Salzburg scheduled for November 29-30

Hydropower sector technical innovations and current challenges in the industry as well as energy storage and water-ecological aspects, economic viability, direct marketing and e-mobility are among the subjects to be addressed at Renexpo-Interhydro, a conference scheduled for later this year, on November 29 and 30, in Salzburg.

Producing more than 342 TWh per year, around 35.5 percent of the electricity generated by renewable energy sources, the hydropower sector is significantly contributing to achieving the EU target of 34 percent of electricity generation from renewable energy sources by 2020.

Hydropower is not only a reliable, climate-friendly and very efficient renewable energy source, but also Europe’s frontrunner in the generation of electricity from renewable energy sources, playing a promising and multifunctional role as an enabler of the energy transition, the event’s organizers stressed.

The trade fair and conference in Salzburg promises to offer a unique platform for presentations and knowledge exchange as well the opportunity to create new contacts.

Participants will also have the opportunity to take part in an excursion to the Lehen hydroelectric power station.

The Renexpo-Interhydro event will cater to hydropower sector figures with trading and industrial interests, authorities, municipalities, as well as universities and academic institutions from all over the world.

Over 125 exhibitors, 500 congress attendees, and 2,500 visitors are expected.

Further information can be found at: http://www.renexpo-hydro.eu/en/home-en/.

CAT flexibility mechanism’s publication to pave way for auctions

Greece’s new CAT mechanism model compensating electricity generation flexibility, a bailout demand taken on by the government during the fourth review, will be uploaded to the EU’s official website either today or tomorrow and is then expected to be officially endorsed soon after.

According to energypress sources, the European Commission gave permission for the Greek plan’s publication a few days ago, once adjustments it had requested were made.

The European Commission is expected to officially approve the new CAT flexibility mechanism soon after it is published, sources informed.

Then, Greek authorities are expected to push ahead with procedures leading to the first auction. Though it is not yet clear how long this could take, environment ministry officials are confident the first CAT flexibility mechanism auction could be staged in July. Preliminary work needed to set up the auctions has already begun ahead of the plan’s anticipated approval in Brussels, the ministry officials noted.

The new CAT flexibility mechanism will operate transitionally until the implementation of the target model, expected towards the end of the first half next year.

Independent electricity producers are keen to see the new CAT flexibility mechanism up and running as its previous version expired in April, 2017. This has prompted financial issues at production units.

Hydropower facilities, natural gas-fueled power stations, as well as RES units will be eligible to take part in these auctions and be compensated for their short-term notice electricity supply to the grid. Compensation for RES units will be limited to output not remunerated through renewable energy support mechanisms.

Assuming no major changes have been made to the plan, the new CAT flexibility mechanism should offer compensation for 4,263 MW of annual output. Hydropower facilities are expected to be entitled to compensation for output totaling 750 MW, up from the previous model’s amount of 582 MW. Starting prices at the CAT flexibility mechanism descending-price auctions are expected to be set at 39,000 euros per MW, higher than 25,000 euros per MW originally planned.

The demand response mechanism (interruptability) – compensating major-scale consumers, such as industrial enterprises, when the TSO (IPTO) asks them to shift their energy usage (lower or stop consumption) during high-demand peak hours, so as to balance the electricity system needs – will not be incorporated into the new CAT flexibility mechanism.

 

Lenders propose NOME auction lignite phase out by April, 2019

A NOME auctions adjustment proposal prepared by the country’s lenders and forwarded to Greek government officials recommends a phase out of lignite production contributions to the sessions by April, 2019 and a small increase of hydropower input.

Greek energy minister Giorgos Stathakis is scheduled to meet with troika officials this Wednesday.

The lignite phase-out proposal is based on the condition that the main power utility PPC’s bailout-required disinvestment of lignite power stations and mines, representing 40 percent of the utility’s lignite capacity, will be completed as envisioned and on schedule.

A road map proposed by the lenders would require an announcement of an international tender offering PPC’s lignite assets within May.

If this part of the procedure is staged as planned, then a certain penalty expected to be imposed on PPC, following a June review, for its failure to meet bailout-required retail electricity market share contraction targets will be halved.

PPC’s market share has dropped to 82 percent, behind schedule, and needs to fall to 62.24 percent by the end of the year, an objective already ruled out as impossible.

Another road map condition requires the announcement of a preferred bidder by this coming September.

Also, sales and purchase agreements for two lignite packages to be offered, one carrying assets in the north and the other assets in the south, will need to be signed by October.

New owners will need to complete payments and take over the assets for sale by February, 2019, according to the road map.

In addition, a futures market for energy products will need to begin operating by April, 2019.

Greek government officials do not appear to oppose these conditions. If all goes according to plan, legislation for the new NOME model could be prepared within the first fortnight of June.

The prospective end of lignite-dominated NOME auctions is expected to have a huge impact on market conditions, especially non-vertically integrated smaller independent suppliers.

The first NOME session following the lignite units sale will probably be staged in April, 2019. It appears that, by then, the NOME auctions will be left with hydropower-sourced electricity, which currently represents 6 percent of the total NOME offering to auction participants.

Since their introduction to the Greek market about a year and a half ago, NOME auctions may have generated higher price levels than those needed by independent suppliers to compete more fiercely against PPC, the dominant player but, even so, price levels have clearly remained below System Marginal Price (SMP) levels, offering some degree of security to independent suppliers.

A number of pundits believe the increased retail market pressure to be faced by smaller suppliers will lead to takeovers and mergers.

 

NOME auction lignite exclusion ominous for smaller players

The country’s smaller, non-vertically integrated independent electricity suppliers stand to face increased retail market pressure that could lead to takeovers and mergers given the anticipated end of lignite’s input to NOME auctions early in 2019.

NOME auctions will be reshaped if all goes acording to plan with the upcoming bailout-required sale of main power utility PPC lignite units, representing 40 percent of the utility’s lignite capacity.

The energy ministry and the country’s lenders are believed to have already reached an agreement on the future shape of NOME auctions as a follow-up plan to the PPC sale of lignite units, energypress has been informed.

If the sale of PPC lignite units is completed as planned and their new owners begin operating the units early in 2019, lignite will be excluded from ensuing NOME auctions.

The first post-sale NOME session will probably be staged in April, 2019. It appears that, by then, the NOME auctions will be left with hydropower-sourced electricity, which currently represents 6 percent of the total NOME offering to auction participants. This is expected to bring about significant market changes and difficulties for suppliers, especially the smaller players.

Since their introduction to the Greek market about a year and a half ago, NOME auctions may have generated higher price levels than those needed by independent suppliers to compete more fiercely against PPC, the dominant player. Even so, NOME price levels have clearly remained below System Marginal Price (SMP) levels, offering some degree of security to independent suppliers.

NOME auctions offer independent players access to PPC’s lower-cost lignite and hydropower sources.

PPC board to meet via teleconference, union aims to stop lignite units sale

The main power utility PPC board’s members, unable to meet today at the company headquarters, currently occupied by the Genop union, will stage a teleconference session for a vote on a bailout-required split-and-sale plan of lignite units representing 40 percent of the utility’s lignite capacity.

The power utility’s chief executive Manolis Panagiotakis will present the plan’s details before board members express opinions and cast their votes. The PPC board’s decision to resort to a teleconference for such a significant company matter is unprecedented at the utility.

Over the past few days, the Genop union has sought ways to stop today’s board meeting. Though any intervention that could obstruct today’s teleconference is seen as difficult to achieve, the union is capable of conjuring up surprises.

Most likely, Genop will aim to delay a series of PPC board decisions leading to the announcement of the sale’s tender, scheduled for May 31. This essentially means that the power utility’s board will, from now on, need to grow accustomed to the idea of staging its lignite unit sale meetings as teleconference sessions.

The board will need to convene again on May 23 to reendorse terms concerning the split of lignite units and related accounting matters, and, most importantly, launch the tender.

A PPC general shareholders’ meeting on June 26 is an obvious target date for the union. On this day, shareholders are scheduled to meet and endorse the split plan, establish statutes for two new subsidiaries – carrying the lignite units – to be offered to investors, and also endorse representatives involved in the procedure.

PPC and the government will find themselves under bailout-related pressure if the international tender is launched in June or July, rather than May 31, as is scheduled, following Genop delays.

Contracts concerning the split plan and company statutes are planned to be signed a few days after the June 26 general shareholders’ meeting. This will end the first chapter of events targeted by the Genop union.

The union can then be expected to take aim again late in the year, when the international tender is scheduled to be completed – assuming investors do participate and meet the price tag to be set by valuators.

A third round of action by the union should be expected once the new owners of the lignite units arrive to take over. Genop has pledged it will prevent any new owners from operating the facilities.

It should be noted that if the international tender proves fruitless then Brussels officials will enter the picture and retable the idea of including PPC hydropower units to the sale. This is a dreaded thought for the government, which, in such a case, will seek to apply delay tactics, with reliable support from Genop. Next year’s pre-election period could seriously rattle the overall sale effort if it is delayed.

 

 

PPC union aims to intensify resistance against lignite sale

Genop, the main power utility PPC union, appears determined to derail the corporation’s bailout-required sale of lignite units, warning that yesterday’s occupation of PPC’s headquarters, which prevented the board from meeting to launch the lignite disinvestment procedure and endorse the hirings of consulting firms already selected, was just a prelude of action to come.

The union aims to delay, as much as possible, the announcement of the sale’s international tender, scheduled for May 31, and, generally, intimidate the PPC board by forcing it to work on the effort through teleconferences.

A series of steps and meetings are needed, as has just been detailed in a road map of the sale, including a board meeting on May 23, whose agenda includes endorsing terms concerning the split, from PPC, of lignite units to be sold, and also officially inviting investors to express interest.

Genop is also expected to intervene at a PPC shareholders’ meeting on June 26, when the overall sale plan is scheduled to be approved.

The union action may delay the sale’s developments but the procedure cannot be stopped. However, the announcement of the international tender in June or July, for example, rather than May 31, as is scheduled, would represent a setback.

PPC’s boss CEO Manolis Panagiotakis appears determined to complete the sale procedure as soon as possible but prospective investors do not seem prepared to offer major amounts for lignite units, fearing their business prospects are not good amid the current conditions shaped by the EU’s environmental policies.

Genop insists it will do all that it can to delay the sale. If the union succeeds and PPC misses its lignite unit sale deadlines, then hydropower facilities could consequently be brought into the sale picture, a dreaded throught for both the government and state-controlled PPC.

 

 

 

 

 

High hydropower, RES output, exports prompt SMP swings

The Greek electricity wholesale market’s System Marginal Price (SMP) has fluctuated wildly over the past three days, ranging from zero to 75 euros per MWh, key driving factors being the need to lower overfilled water reservoirs at hydropower facilities, increased RES sector output, as well as elevated electricity prices in Italy, which has spurred exports to the neighboring market.

Hydropower facilities have steadily provided 30,000 MWh over the past three days, while, during this period, RES output has risen to as much as 41,000 MWh, meaning the two sources have covered over half the country’s daily electricity needs.

Electricity imports rose to levels ranging from approximately 10,000 to 16,000 MWh over the past three days, while high prices in Italy have prompted electricity exports of roughly 9,000 MWh per day. This export activity has impacted Greece’s SMP during certain hours.

Last Sunday, for nine hours in total, the SMP was down to zero, whch lowered the day’s average SMP to just 29.41 euros per MWh. The increased contributions to the system by the hydropower and RES sectors left no room for imports, leading to the day’s zero-level SMP.

A day later, on Monday, the SMP rose sharply to 53.7 euros per MWh, and, for two hours, climbed even higher to over 75 euros per MWh, a level shaped by high-priced electricity exports to Italy.

A similar picture has prevailed today with the average SMP level positioned at slightly below 51 euros per MWh, as well as high-priced exports to Italy, which took the SMP to 71 euros per MWh for an hour.

The higher average SMP registered yesterday and today led to an increase in thermal production, reaching 52,000 MWh.

SMP plunges amid need to lower hydropower reservoirs

The oversupply of water at the main power utility PPC’s hydropower facilities, resulting from recent periods of heavy rainfall, is significantly impacting the market as a subsequent need to increase the use of these hydropower facilities, the intention being to lower water reserve levels and avoid any overflow-related threats, is drastically limiting contributions to the system by thermal units (lignite and gas-fired power stations).

Wholesale electricity prices have plunged as a result of these unusual conditions. Water reserves at PPC’s hydropower facilities now exceed the maximum level by 15 percent and offer a capacity of 2,835 GWh. The maximum level permitted, for this time of the year, is 2,460 GWh.

As a result, PPC will need to generate 375 GWh of electricity with its hydropower facilities to bring water levels at reservoirs back down to normal. A further influx of water into the power utility’s reservoirs is soon expected once snow coverage begins to melt.

The duration of PPC’s water reservoir emptying period remains unknown. Future rainfall and snow melting rates will obviously play a role.

This excess water supply, along with renewable energy output, has priority dispatch rights. The current conditions are subsequently limiting contributions to the system by thermal units.

Day-ahead market data released for today by LAGIE, the Electricity Market Operator, noted that hydropower and RES facilities would cover 55 percent of total electricity demand. Hydropower facilities were planned to provide 33,508 MWh of the 136,596 MWh total, while RES facilities would dispatch 41,674 MWh. A further 10,000 MWh was planned to be imported, bringing the total to just over 85,000 MWh. This left about 51,000 MWh for the thermal units to cover.

The impact on the market is immense. According to the LAGIE data, the System Marginal Price (wholesale price) was set at 2 euros per MWh early in the day and later in the evening, and at 5 euros per MWh for a further three hours during the day. All this resulted in an extremely low SMP average for the day, at 32.18 euros per MWh. The maximum price for the day reached 50.46 euros per MWh.

Four of the five PPC Agios Dimitrios lignite-fired power station units, as well as the power utility’s Kardia IV, Megalopoli III, Amynteo II and Meliti were called into action for the lignite-fired electricity supply to the grid.

As for the natural gas-fueled units, PPC’s Aliveri V and Megalopoli V were called into action along with private-sector units, for limited periods, operated by ENTHES, Elpedison, Protergia and Korinthos Power.

 

 

 

Flexibility mechanism offering 750 MW to hydropower plants

An energy ministry plan submitted to the European Commission for approval and concerning the participation of hydropower facilities in the new flexibility remuneration mechanism proposes a level of approximately 750 MW, a middle-of-the-road solution above the previous mechanism’s level of 582 MW and below the 1,000 MW level proposed by RAE, the Regulatory Authority for Energy.

The new flexibility remuneration mechanism for electricity producers is planned to apply until the target model, a process entailing the electricity wholesale market’s harmonization with EU law, and a permanent CAT mechanism are adopted.

If applied, this energy ministry proposal will reduce the CATs to be received by independent natural-gas fueled power stations compared to payments they were entitled to through the previous flexibility remuneration mechanism, which expired last April.

These natural-gas fueled power stations also stand to lose from an auction starting price limit of 30,000 euros per MW imposed on the new flexibility remuneration mechanism, down from the previous mechanism’s 45,000-euro level. The capacity to be auctioned has also been reduced to 4,263 MW from the previous mechanism’s 4,994 MW.

These factors are expected to intensify competition not only between main power utility PPC units and private-sector units, but also between independent producers, which could test their sustainability.

Following a public consultation process staged by RAE, the Regulatory Authority for Energy, the new flexibility mechanism will offer producers three-hour-notice flexibility compensation for a maximum of 4,263 MW through one auction in 2018, not two as was initially considered.

Hydropower and natural gas-fired electricity generation units as well as Combined Heat and Power High Performance (CHP) stations will be entitled to take part in flexibility mechanism auctions. CHP units will have the right to seek payment for any output not remunerated through existing RES payment mechanisms.

Also, natural gas-fired electricity producing units will need to be able to run on alternative fuel (diesel) or possess natural gas reserves to be eligible for the flexibility mechanism’s auctions. This essentially means producers will need to hold additional supply contracts or be able to cover the cost of temporary LNG storage solutions, either directly or indirectly, as was proposed by DEPA, the public gas corporation.

Emergency check in Feb may spark hydropower unit sales

The electricity market will be subject to a comprehensive emergency assessment in February, which could prompt the need for further “structural measures”, or, more specifically, a plan for the sale of additional state-controlled main power utility PPC units, according to a term included in the bailout agreement following its third review.

This emergency assessment, to be conducted as an extra measure in addition to inspections already agreed to for every six months, will examine whether NOME auction terms require revisions, the progress made with the target model – a process entailing the electricity wholesale market’s harmonization with EU law – as well as other matters.

In previous bailout-related matters, the term “structural measures” was applied as a soft, indirect reference to the possibility of PPC lignite units, a procedure now underway, and is being used again to imply the sale of PPC hydropower units, widely seen as a taboo subject by Greek government and PPC officials.

The Greek government firmly opposes any talk of prospective PPC hydropower unit sales.

However, PPC has fallen way behind in its bailout-required retail electricity market share contraction targets. The utility’s market share currently stands at around 84 percent, well above the 75.24 percent target level set for the end of 2017. In the longer term, PPC needs to reduce its market share to less than 50 percent by 2020.

These figures indicate the NOME auctions may have offered some support to keep independent electricity suppliers afloat but have failed to produce the required market share contraction results at PPC. The situation is expected to spark talks for more structural measures.

Electricity amounts offered through the NOME auctions, introduced slightly over a year ago to provide independent suppliers with access to PPC’s low-cost lignite and hydropower sources, are expected to be reduced as PPC’s lignite unit sale plan progresses. A market test is scheduled to take place in January ahead of the sale’s launch early in the summer.

On another crucial front, the European Commission’s Directorate-General for Competition’s is currently investigating whether PPC has abused its dominant market position. DG Comp officials raided the headquarters of PPC and IPTO, the power grid operator, a few months ago. A decision against PPC would entangle hydropower facilities, being monopolized by the utility.

 

Grid already pressured ahead of winter, SMP level high

Though still only autumn, the country’s grid is already beginning to feel growing pressure, as reflected by yesterday’s elevated System Marginal Price (SMP), which exceeded 90 euros per MWh. A similar trend is expected today.

The pressure being felt by the grid has been attributed to the excessive use of the country’s hydropower stations during the energy crisis last winter. Hydropower station reservoirs have yet to be refilled.

Conditions could prove difficult in the winter if weather conditions are acute and the grid is subject to any unexpected input problems.

At present, all private-sector power stations are available for grid contributions, while, as for the main power utility PPC, its Komotini and gas-fired Megalopoli V units are undergoing maintenance work, Agios Dimitrios II and V are being upgraded, and Kardia I and IV have issues.

Yesterday evening, between 7 and 9 pm, Terna’s small Heron unit was called into action for contribution to the grid. This unit had remained inactive for an extended period prior to yesterday.

Also yesterday, SMP levels were impacted by extremely elevated hydropower price levels for three hours. PPC’s Platanovrisi hydropower facility came into use last night to help cover the grid’s needs at price levels of as much as 91 euros per MWh.

Greece’s hydropower station reservoirs are currently at the second-lowest level since 2005.

Yesterday’s grid contributions also included several hours of input from the Former Yugoslav Republic of Macedonia (Fyrom) grid, at price levels of more than 70 euros per MWh.

According to forecasts, the electricity market will continue operating amid such conditions for as long as Megalopoli V is sidelined by the ongoing maintenance work.

 

 

High NOME prices to reraise PPC hydropower unit sale talk

The lofty prices generated at yesterday’s NOME auction, reaching as much as 45.25 euros per MWh, the highest level since the auctions were introduced to the Greek market a year ago, has alarmed officials and raised questions as to what more needs to be done to further liberalize the country’s retail electricity market and break the main power utility PPC’s dominance.

A drastically increased electricity amount of 717 MWh/h offered at yesterday’s auction, the final session for the year – it lasted about 13 hours and ended  late in the night – was not enough to prevent a bidding war among the participants, who pushed for purchases in anticipation of higher electricity prices this coming winter.

The bulk of the electricity amount offered at yesterday’s auction was sold for 45.15 and 45.20 euros per MWh/h. The top price paid was 13.2 euros over the auction’s starting price.

The factors behind yesterday’s elevated price levels have yet to be determined.

The auction’s result severely dampens, if not makes impossible, the prospect of any spectacular market share shifts in the foreseeable future as it leaves independent suppliers with insufficient profit-margin leeway to pursue aggressive pricing policies.

Quite clearly, yesterday’s session confirmed that the NOME auctions, alone, are not enough to bring about major changes in Greece’s retail electricity market.

Pressure by the country’s lenders for structural changes can now be expected to enter the picture, including demands on the Greek government to add PPC hydropower units to PPC’s bailout-required sale package, whose content is still being negotiated. The government has, so far, adamantly refused to discuss adding hydropower units to state-controlled PPC’s sale package, and, instead, is insisting on a lignite-only sale package that includes ageing units requiring revamps.

The issue is now expected to surface in the immediate future. Energy minister Giorgos Stathakis is scheduled to meet with lender representatives tomorrow.

NOME auctions were introduced to offer independent suppliers access to PPC’s lower-cost lignite and hydropower sources. Yesterday’s auction was seen as crucial for retail electricity market developments in 2018.

 

Unfinished, long-delayed Epirus hydropower project moving again

A decisive step appears to have been taken in a long-running and unfinished effort to develop a hydropower facility at Metsovitikos River in the Epirus area of northwestern Greece, a recent decision by main power utility PPC to endorse a tender awarding the project’s development to the Terna Energy Group has indicated.

The Metsovitikos River hydropower facility is planned to possess a 2X14.5 MW capacity. Terna Energy Group was named the winning bidder with an offer of approximately 14 million euros.

Work on an initial stage of this hydropower project, carried out by Mihaniki AE, began in the mid-90s and was completed in 2000.

Then, a second stage of the project was taken on by a three-member consortium comprised of Vioter, Edrasi Psallidas and Proodeftiki. This team managed to complete just 31 percent of stage two, until January, 2007. The project has since remained stagnant.

In December, 2014, PPC decided to nullify an intermediate tender, citing bank guarantee issues as the motive behind the decision.

PPC hopes the project will be completed within 28 months of the new agreement’s signing, as stated in the project’s terms.