independent electricity producers

Windfall profit tax worth €270m, PPC covering 70%

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The government will collect approximately 270 million euros from a windfall profit tax imposed on electricity producers for a six-month period covering October, 2021 to March, 2022, sources have informed. A 70 percent share of this tax sum concerns power utility PPC.

The tax payments to be provided by electricity producers are based on a formula ratified by the government. It was applied in a study conducted by RAE, the Regulatory Authority for Energy, whose results have been handed over to the government.

All discounts offered by electricity consumers to customers were deducted before the extraordinary tax, at a rate of 90 percent, was applied to windfall profits for the six-month period.

These deductions have more-than-halved an initial 590 million-euro tax revenue forecast that had been made by RAE to 270 million euros. PPC, covering 70 percent of the total, will pay a tax sum of approximately 190 million euros, while all other producers will pay further amounts totaling roughly 80 million euros, according to sources.

 

PPC’s rise prompts response of rivals over hydropower control

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The rising number of customers returning to power utility PPC is triggering a response from rival independent electricity producers and suppliers, some of which, according to sources, are set to raise competition concerns with Greek and EU authorities by noting the utility’s exclusive use of the country’s hydropower facilities puts it in an advantageous position as profit generated from this activity is, to a great extent, being utilized for an aggressive pricing policy, helping win back customers.

This is not the first time PPC’s exclusive use of Greece’s hydropower capacity is being brought to the fore. On the contrary, it has always been on the European Commission’s agenda, especially during the previous decade’s period of Greek bailout negotiations, and was incorporated in related reports.

However, concerns over PPC’s lignite monopoly and how this matter should be tackled, which led to the introduction of NOME auctions, now abolished, followed by a recent agreement for PPC lignite packages to rivals, have taken precedence.

It seems the hydropower matter has now reached the tipping point for PPC’s rivals, facing toughened market conditions shaped by the energy crisis.

A number of independent producers are believed to be set to forward market data to RAE, the Regulatory Authority for Energy, as well as the domestic and European Commission competition authorities, to highlight their disadvantageous positions and call for intervention.

PPC equity capital increase to reshape market, rivals on alert

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Power utility PPC’s plan, announced late last week, to proceed with a 750 million-euro equity capital increase, effectively a partial privatization that will result in a decrease of privatization fund TAIPED’s current stake in the company from 51 percent to 34 percent, promises to free the utility from restrictions imposed on state-controlled companies, boost its finances and enable the company to further consolidate its position as the dominant market player.

Rival players in the electricity and RES markets are closely following the developments, realizing the energy market map is headed for a major reshape if PPC’s equity capital increase is successfully completed.

PPC, as a transformed, independent corporation without state-company restrictions will be a much harder force to reckon with as it can be expected to charge ahead with an aggressive investment strategy in Greece and the Balkans, market players have commented.

Also, PPC, reshaping for a focus on green energy, will benefit from many advantages in the RES market, including the right to utilize its outgoing lignite areas for renewables, as well as priority grid dispatch rights given the strategic importance of its investments for the country, market officials have noted.

In response, rival players will now need to strengthen their capital standing and also consider strategic partnerships.

 

Grid faces new challenge today as heatwave persists

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The country’s grid stands to face yet another major challenge today as electricity demand could climb to a new record level, driven up by the sustained heatwave conditions, projected to reach levels of between 40 and 42 degrees Celsius.

Power grid operator IPTO projects electricity demand will reach 10,835 MW, which would be a new all-time high, following yesterday’s level of 10,662 MW.

Natural gas-fired power stations operated by power utility PPC and independent producers will once again contribute dominantly, exceeding 43 percent, according to energy exchange data.

PPC’s combined-cycle Lavrio IV will return to action today following the replacement of technical components at the unit, according to IPTO’s schedule for the day.

The overall input of renewable energy units is expected to rise marginally today, compared to previous days, and cover 16.5 percent of demand.

Electricity imports are also expected to cover 16.5 percent of demand today.

Lignite-fired power stations, including Megalopoli IV, back following repairs, are expected to represent 14.46 percent of the energy mix.

Major-scale hydropower facilities should cover a little over 9 percent of electricity demand.

The government’s crisis management team expects generation will reach required levels and, furthermore, could be boosted by greater output at wind-energy facilities as a result of stronger winds that have been forecast for today.

On the other hand, the prospect of stronger winds is unfavorable for firefighters seeking to subdue a number of fire fronts. Also, the risk of new fires is also higher. In such an event, the grid, under extreme pressure over the past ten days amid the sustained heatwave, would surely suffer further damages.

Distribution network operator DEDDIE/HEDNO crews are continuing efforts to restore power supply in fire-hit Varybobi, north of Athens. The northern section of Evia, northeast of Athens, and Pyrgos, northwest Peloponnese, have also been affected by power supply cuts as a result of fires in the regions.

Heatwave pushes up wholesale prices to over €100/MWh once again

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The latest rise in temperatures, prompting further heatwave conditions around Greece, is impacting the wholesale electricity market as the average clearing price in the day-ahead market has risen again to levels of over 100 euros per MWh, following days of more subdued levels, according to energy exchange data.

The average clearing price for today is up to 103.8 euros per MWh, up from yesterday’s level of 93.47 euros per MWh and Sunday’s level of 75.34 euros per MWh.

According to the day-ahead market figures, overall electricity generation today is planned to reach 167,437,017 MWh, with lignite-fired power stations covering just 11,172 MWh, natural gas-fired power stations providing 86,541,739 MWh, hydropower facilities generating 11,829 MWh and all other RES units providing 57,894,278 MWh. Electricity imports are planned to reach 16,159,231 MWh.

Today’s electricity demand is expected to peak at 12.30pm, reaching 8,580 MW, according to data provided by IPTO, the power grid operator.

Three of power utility PPC’s lignite-fired power stations, Agios Dimitrios III, Megalopoli IV and Meliti, will be brought into action today, while five of the utility’s natural gas-fired power stations, Aliveri V, Lavrio IV and V, Komotini and Megalopoli V, will also be mobilized, along with gas-fired units operated by the independent players Heron, ENTHES, Elpedison (Thisvi), Protergia and Korinthos Power.

Wholesale prices driven higher by heatwave, lignite units enter

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The heightened electricity demand prompted by the country’s ongoing heatwave is applying intense pressure on wholesale price levels. Given today’s grid requirements, expected to exceed 8 GW, the clearing price at the energy exchange is seen rising to over 100 euros for 16 hours, peaking at 9pm at a price level of €127.82/MWh.

According to a power grid operator IPTO forecast, the system’s demand peak is expected to exceed 8 GW for a three-hour period, reaching as high as 8,108 MW. Overall demand today is seen totaling 156,115 MWh.

In order to cover the grid’s electricity needs for today, IPTO, in addition to the natural gas-fired power stations operated by power utility PPC and independent players, has also recruited four PPC lignite-fired power stations, these being Agios Dimitrios I, II and IV and Meliti.

The RES sector is expected to cover 27,540 MWh of total demand, while natural gas-fired power stations and hydropower units are seen contributing 99,651 MWh and 10,449 MWh, respectively.

As for the natural gas-fired power stations recruited for today’s grid needs, the list is comprised of PPC’s Aliveri V, Lavrio IV and V, Komotini and Megalopoli V, as well as the independent units Heron, Elpedison Thessaloniki, Elpedison Thisvi, Protergia and Korinthos Power.

RAE summons suppliers for use of cost-increasing clauses

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RAE, the Regulatory Authority for Energy, has summoned electricity suppliers to offer explanations on their decisions to trigger, in recent times, clauses that have significantly increased electricity costs for consumers in the low and medium-voltage categories without any prior notice.

The country’s independent suppliers have activated wholesale price-related activated clauses, protecting them against wholesale cost increases, while power utility PPC, more recently, has taken unprecedented action by triggering a CO2 emission rights cost-related clause incorporated into its agreements with customers.

Consumers across the board have lodged numerous complaints, prompting RAE to take action. The authority will stage meetings with suppliers to examine if irregularities exist or whether consumers have been misled.

This series of meetings is expected to begin next Thursday with PPC, whose administration will need to justify its pricing policy. Meetings with independent players are expected to follow.

RAE will request detailed market data from all suppliers concerning the clauses they have implemented and also examine whether these initiatives are lawful or not.

The authority will aim to clarify what actions suppliers are permitted to take so that consumers may benefit from clearer pricing policies.

Market test on deal to end PPC lignite monopoly now underway

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The European Commission has just launched a market test concerning its recent agreement with energy minister Kostas Skrekas to end power utility PPC’s monopoly of lignite-based electricity production.

Interested parties – suppliers and traders – will, by February 15, need to respond to 15 questions looking to assess the agreement’s prospects.

Brussels’ questions focus on the agreement’s ability to generate competition in the wholesale and retail electricity markets, enable new market entries, and end PPC’s market dominance by 2023.

The agreement will apply until 2023, when state-controlled PPC plans to have gradually withdrawn its lignite-fired power stations as part of the country’s decarbonization effort.

Brussels’ questionnaire also includes a rough presentation of the pricing formula to be applied to lignite-based electricity amounts that PPC will be required to offer to holders of supply licenses through bilateral agreements, regardless of whether these companies operate in the Greek market or not.

PPC’s lignite-based electricity is planned to become available to rivals as of October this year. Market test participants, in one question, have been asked to clarify how much sooner they would need to know the terms and conditions.

As part of the agreement, PPC, in 2021, will need to make available 50 percent of its previous year’s lignite-based production to rivals, followed by 40 percent of the previous year’s output in 2022 and 2023.

In practical terms, based on these terms, independent suppliers will be able to purchase close to 3 TWh, in total, this year, and between 2 and 3 TWh in 2022.

Efforts to end PPC’s lignite monopoly had dragged on for 14 years prior to the recent agreement.

Target model balancing cost skyrockets, suppliers on edge

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Balancing costs in the electricity market have exceeded rational limits, skyrocketing to 57 million euros in the fifth week of the target model after totaling 71 million euros during the model’s first four weeks of operation.

Stubbornly high price levels in the wholesale electricity market have created perilous conditions that could lead non-vertically integrated suppliers to bankruptcy, while consumers, beginning with the mid-voltage category, now face tariff hikes as a consequence.

Balancing market costs between November 30 and December 6 doubled compared to a week earlier.

Despite energy minister Costis Hatzidakis’ warning of intervention to producers, whose overinflated offers have prompted this ascent, balancing market costs on December 5 and 6 exceeded 20 euros per MWh, well over levels of between 3 and 4 euros per MWh prior to the target model.

The target model, designed to ultimately homogenize EU energy markets into a single unified market, has been pitched by the Greek government as a price-reducing tool.

Though authorities have played down the price ascent of recent weeks, describing it as a nascent target model abnormality that will settle into place and not prompt consumer tariff hikes, suppliers, under severe pressure as a result of sharp cost increases, have called for immediate measures.

Suppliers have warned they will take legal action against all responsible parties in letters forwarded to the RAE, the Regulatory Authority for Energy, the energy ministry and power grid operator IPTO.

RAE held a meeting yesterday with major-scale producers, who defended their actions, according to sources. The authority limited its reaction to proposals, the sources added.

Lignite unit output up, target model overpricing a factor

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Power utility PPC’s lignite-fired power stations, temporarily covering for gas-fueled plants undergoing maintenance work and also favored by power grid operator IPTO as a result of excessive target model market prices demanded by independent producers, have made somewhat of a production comeback despite the urgency of the government and state-owned utility to withdraw these high-cost units as soon as possible.

On December 3, eight of the country’s ten remaining lignite-fired power stations operated throughout the day, most close to full capacity.

Agios Dimitrios I, III, IV and V, Kardia III and IV, Meliti and Megalopoli IV covered almost one third of the country’s total electricity demand, supplying over 40,000 MWh of the day’s 139,000 MWh to the grid.

In recent days, between six and seven lignite-fired power stations have been called into action.

Heron’s two gas-fueled power stations are currently sidelined for service work as are two such units respectively operated by Elpedison and PPC in Thessaloniki and Lavrio, close to Athens. Furthermore, overpricing in the day-ahead market by independent producers has prompted IPTO to seek lignite unit coverage.

PPC is still operating at least four lignite-fired power stations on a daily basis, despite related losses, to cover telethermal needs in cities of the west Macedonia and Megalopoli regions.

The power utility intends to hasten the withdrawal of its Megalopoli III, Kardia III and IV lignite-fired units, all set to close in 2021, according to an updated PPC business plan announced earlier this month.

Natural gas-fueled generation reaches energy-mix record share of 56.64%

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The energy mix contribution of natural gas increased to a record-level share of 56.64 percent in October, a latest energy exchange monthly report has shown.

This significant rise in the energy-mix share of natural gas – to a level never before reported since the full liberalization of Greece’s electricity market – has been attributed to a major slowdown of power utility PPC’s lignite-based generation.

Natural gas-fueled power stations operated by power utility PPC and independent producers further consolidated their place in the energy mix standings, stretching further ahead of other fuel categories.

October’s 56.64 percent energy-mix share captured by natural gas broke this fuel’s previous record of 53.76 percent, registered in August. The natural gas energy-mix share had dipped slightly to 51.74 percent in September before rebounding for October’s record-breaking result.

A year earlier, the natural gas energy mix share was below 50 percent, at 49.86 percent, while lignite’s share was at approximately 22 percent.

Returning to the latest energy-mix figures, natural gas was followed by the RES sector, capturing 33.86 percent, lignite’s share shrunk further to 4.25 percent, and hydropower followed with a 3.21 percent share.

PPC’s lignite-based generation could rise slightly in coming months to cover telethermal needs.

The role of natural gas in the ongoing energy transition towards renewable energy dominance is expected to play a pivotal role for the grid’s sufficiency and security.

Local gas-fueled generation up in response to high-cost power imports

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Higher electricity prices in neighboring countries, increasing the cost of electricity imports, have prompted power utility PPC to capitalize on the situation and operate its gas-fueled power stations at maximum capacity for satisfactory market prices.

In recent days, PPC’s natural gas-fueled units have covered between 35 and 40 percent of electricity demand.

Yesterday, the power utility’s gas-fueled power stations covered 40 percent of electricity demand at a price of 42.6 euros per MWh for ten hours.

Independent producers covered 19 percent of electricity demand at a price of 64.4 euros per MWh for one hour.

Electricity imports covered 14 percent of electricity demand for a price of 51.7 euros per MWh over 11 hours.

Renewable energy sources covered 24 percent of electricity demand yesterday, while the decreased lignite input continued on its downward trajectory, contributing 3.6 GWh.

In Bulgaria, the wholesale electricity price was 53.14 euros per MWh. In Italy, it was 51.93 euros per MWh. Romania registered a price level of 51.7 euros per MWh. The price in Serbia was 49.91 euros per MWh.

PPC CO2 emissions down 71.1%, lignite-fired output fades

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Power utility PPC’s CO2 emissions plunged 71.1 percent in the first half, from 1.97 million tons in January to 568,900 tons in June, reflecting the significantly diminished role of lignite in generation.

Lignite’s dominant energy mix role has been taken over by natural gas, supported by rising RES output and electricity imports.

Lignite-based electricity generation slid for most of the six-month period between January and June, dropping to 1.41 million tons in February, 882,240 tons in March, 730,970 tons in April and 564,900 tons in May before edging up to 568,900 tons in June.

CO2 emission right costs have been on an upward trajectory over the past couple of months, rising well over customary levels of about 20 euros per ton to reach as high as 29.66 euros per ton. Current levels appear to have stabilized at between 26 and 27 euros per ton.

Despite these higher CO2 emission right price levels, PPC’s operating costs are not expected to rise as a result of its big cutback on lignite-fired production.

PPC’s share of overall electricity production is projected to keep falling as independent producers and traders move in to fill the lignite void through natural gas and RES generation, plus electricity imports.

Industrial consumers preparing to leave long-time supplier PPC

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Three of eight industrial groups traditionally supplied high-voltage power by power utility PPC and holding contracts that expire at the end of this year are involved in advanced talks with domestic independent suppliers for new supply contracts, energypress sources have informed.

PPC dominates the high-voltage electricity market with a 97 percent share, but this figure could drop considerably if industrial consumers reach agreements with new suppliers.

Leading cement producers AGET Heracles and TITAN, as well as Macedonian Paper Mills (MEL), are the three industrial consumers involved in talks with independent suppliers for high-voltage contracts, the sources noted.

All three have never before held contracts with any other electricity supplier, but their shifts away from PPC, probably not concurrently, now appear highly probable. Such a development would signal the start of competition in Greece’s high-voltage electricity market.

Lower wholesale prices, which have widened profit margins, as well as lower natural gas prices lowering generation costs at gas-fired power stations operated by independent producers, are key factors behind the likely shifts of industrial consumers to independent suppliers.

Industrial producers, gearing up for the post-coronavirus era, are seeking lower energy costs but are not satisfied with the tariff levels offered by PPC, market officials have noted.

PPC, majors face 20% sale limit on output for bilateral contracts

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Vertically integrated electricity producers will be permitted to sell up to 20 percent of production through mutual agreements once the target model is launched, RAE, the Regulatory Authority for Energy, has decided, ultimately doubling a 10 percent limited proposed by the Greek stock exchange, energypress sources have informed.

RAE reached its decision to set the limit at 20 percent after considering arguments presented by producers and sector authorities during consultation.

The limit takes into effect power utility PPC, dominating the retail market, as well as all integrated producers with retail market shares of more than 4 percent – namely, as things stand, Protergia, Heron and Elpedison, all with over 4 percent for quite some time now.

This decision by RAE is one of the last pending issues concerning energy exchange markets, recently rescheduled to begin operating on September 17, if all goes according to plan from here on.

ESAI/HAIPP, the Hellenic Association of Independent Power Producers, had proposed a limit of between 5 and 10 percent for PPC’s mutual agreements and forward contracts, and proportional limits for vertically integrated electricity producers with market shares of more than 4 percent.

PPC, which, from the outset, pushed for a 20 percent limit, based its argument on a study by global energy consulting company ECCO International, according to which the sale limit on output should range between 10 and 20 percent.

 

Safety measures vital for target model markets, producers stress

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The introduction of energy exchange spot markets, in September, when they are scheduled to begin operating, without the adoption of safety measures facilitating competition and preventing manipulative methods, primarily by power utility PPC, the market’s dominant player, could lead to undesired results and strengthen the market’s monopolistic character, independent electricity producer representatives have told energypress.

The officials expressed their concerns as a monitoring mechanism being prepared by RAE, the Regulatory Authority for Energy, with consultancy support, may not be fully functional at the time of the target model’s launch.

The monitoring mechanism is considered the basic tool in the effort to ensure healthy competition in electricity markets as it will be used to collect data from power grid operator IPTO and the Greek energy exchange and identify any manipulative practices in the wholesale market.

Interventions needed, according to independent electricity producers, include restricting PPC’s ability to establish two-way agreements; offering support to the new target model market with a supplementary market offering capacity availability; and protecting markets, overall, through powerful, consistent and independent monitoring mechanisms.

 

Broader offsetting eligibility for operator, energy firm accounts

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The energy ministry intends to maximize the eligibility and coverage of an imminent plan designed to offset unsettled accounts between market operators and energy producers or suppliers.

A related ministerial decision is expected to be delivered by the energy ministry within the next fortnight.

The energy ministry’s upcoming measure, seen as crucial cash-flow support for energy-sector companies amid extraordinary times, will seek to make eligible – for offsetting – as many categories as is legally possible.

This essentially means that the offsetting plan’s terms to be included in the ministerial decision will be far more relaxed than those of a proposal delivered just days ago by RAE, the Regulatory Authority for Energy.

The energy ministry accepts a number of the observations made by RAE but is proceeding with its own appraisal and terms, sources informed.

Electricity demand down 12.6% in April, industrial use slumps 23.6%

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Electricity demand slumped 12.6 percent in April compared to the same month a year earlier, the biggest drop registered by high-voltage industrial consumers, forced to suspend or restrict output during the lockdown, power grid operator IPTO’s monthly report has shown.

Industrial electricity consumption in April fell sharply by 23.6 percent, the IPTO report showed.

The drop in electricity consumption linked to mining activity was even sharper, falling 55.5 percent in April. Besides the lockdown, this drop was also attributed to significant operational restrictions implemented at power utility PPC’s lignite-fired power plants.

Electricity generation in April fell by 3.2 percent, to 2,893 GWh compared to 2,990 during the same month a year earlier, according to the data.

This reduction was mild compared to major shifts observed in sources of generation. Lignite-based generation fell by 62.7 percent year-on-year, confirming, most emphatically, the commencement of PPC’s decarbonization effort.

High costs for lignite-based generation severely reduced the operational time of PPC’s lignite-fired power plants, limiting lignite’s share of the electricity production mix to just 10 percent in April.

On the contrary, the production share of interconnected RES facilities, benefiting from favorable conditions, rose sharply by 33.9 percent, year-on-year, to capture a market-leading 36 percent share of overall electricity generation in April.

Natural gas-fired power plants followed with a 30 percent share following an 11 percent year-on-year rise in output.

Electricity imports (grid interconnections) contributed 18 percent, while hydropower facilities increased their output by 19.8 percent to capture a 6 percent share in April.

PPC provided 951 GWh, or 56.6 percent of the production, while independent producers covered 43.4 percent.

Among the independent producers, Mytilineos led the way with 228.1 GWh, followed by Elpedison (210.4 GWh), Korinthos Power (154.1 GWh) and Heron II (136.3 GWh).

The IPTO data on generation highlights an increasing shift towards cleaner energy sources.

 

 

Brussels grants Athens demand response, TFRM extensions

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The European Commission has granted extensions for Greece’s demand response mechanism and transitory flexibility remuneration mechanism (TFRM), according to sources well-informed on the negotiations. They have dragged on for over seven months.

The development promises to offer energy-intensive industries and electricity producers crucial support given the period’s adverse conditions. Both mechanisms are vital for energy-cost savings.

The agreement also paves the way for the establishment of a permanent Capacity Remuneration Mechanism (CRM). The energy ministry plans to assemble a special committee comprised of various electricity market officials for work on the CRM details.

Greece’s demand response mechanism and transitory flexibility remuneration mechanism (TFRM) had both expired – the former three months ago and the latter in March, 2019.

Both mechanisms were extended by Brussels despite Greece’s pending implementation of the target model, now behind schedule.

Grid entry adjustment for PPC telethermal-linked lignite units

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The energy ministry is set to satisfy a power utility PPC request prioritizing the grid entry of its lignite-based production for telethermal support without factoring in this input to calculations determining the system marginal price, or wholesale price.

This requested procedure already applies for PPC’s compulsory hydropower input and RES units.

Under the current system, state-controlled PPC is incurring losses when entering into the grid lignite-fired units for telethermal needs in the west Macedonia and Megalopoli regions. More specifically, the utility is being forced to not operate its gas-fueled power stations, despite their lower operating costs, prompted by the large reduction in gas prices.

PPC’s LNG purchases, as a result, are not being utilized.

The ministry is now preparing a legislative act for the adjustment. It could apply for a limited amount of time to cover remaining telethermal needs in the post-winter season.

Independent producers have reacted against the plan. Some producers appear determined to take the issue to the EU competition authority, noting priority rule exemptions can only be made for RES, Combined Cooling, Heat and Power (CCHP) and hydropower units.

 

Electricity imports up, gas-fueled power stations running non-stop

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A significant drop in gas prices, especially LNG, as well as the availability of particularly lower wholesale electricity prices in neighboring countries have prompted major changes to the country’s Day Ahead Schedule.

Electricity imports via interconnections with Bulgaria, Italy, North Macedonia and Turkey have risen to represent just under 30 percent of overall consumption.

Demand for an even greater level of imports during certain time periods has not been met as a result of infrastructure capacity limits.

Renewable energy generation, also making considerable contributions to the grid’s needs, has, at times, exceeded 30 percent of total consumption.

Gas-fueled power stations operated by independent producers are now operating around the clock, not just during peak hours, as had previously been the case. Offers by these units are now very competitively priced.

Gas-fueled power stations are currently covering over 30 percent of total consumption and lowering wholesale prices.

On the contrary, power utility PPC’s production is covering smaller amounts of daily electricity consumption. The utility’s contribution, currently slightly over 10 percent, primarily stems from its lignite-fired power stations.

Cash-flow relief measures in the making for electricity suppliers

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Two cash-flow relief measures for electricity suppliers, one offering installment-based payments of regulated charges, the other, reduced guarantee costs for the right to operate on non-interconnected islands, are currently being prepared by the energy ministry.

Electricity suppliers collecting reduced customer payments will be able to service about 30 percent of their regulated charges through interest-free installments over a limited period of time.

Also, the level of guarantees provided by electricity suppliers to distribution network operator DEDDIE/HEDNO for the right to operate on 29 non-interconnected islands will be reduced for the six-month period running from April to September.

In other measures, the government yesterday announced a support framework for trade and distribution companies operating in the electricity and gas markets. Employees in these sectors will each be entitled to 800-euro allowances covering a 45-day period if their job contracts have been temporarily suspended. In addition, tax debt payments for these employees will be suspended for four months.

The establishment of a support fund for energy companies is also being examined.

Energy suppliers to receive Development Bank support

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Electricity and gas supply firms, pressured by the financial repercussions of the coronavirus pandemic, are among the country’s enterprises to be offered liquidity support by a prospective Development Bank that will operate as a guarantee fund.

The Ministry of Development and Investment intends to soon establish this new bank using EU National Strategic Reference Framework (NSRF) funds.

Talks are in progress for the establishment of a “guarantee mechanism, for electricity companies, providing working capital,” energy minister Costis Hatzidakis noted just days ago.

The plan was also discussed at a meeting between Development and Investment Minister Adonis Georgiadis, CEOs of Greek banks and the secretary-general of the Hellenic Bank Association.

The bank association is now expected to submit its observations on the plan’s draft law. According to the plan, Greek State guarantees will cover 80 percent of each loan granted, while banks will cover the remaining 20 percent.

Work needed for Athens-EC convergence on energy reforms

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Greek and European Commission positions on energy reforms for further market liberalization remain at opposite ends, despite January being previously billed as a key month, and will require great effort if agreements are to be reached, government sources have informed ahead of a series of meetings in Athens. Both Athens and Brussels want further market liberalization but their approaches differ.

A first round of meetings is scheduled to begin next week with the arrival of Brussels technocrats for preliminary talks with government and market officials. Top-level lender representatives will then follow up a week later.

The Greek government’s basic position is centered around a swift decarbonization process at state-controlled power utility PPC, which would eliminate the need for third-party access to PPC’s monopolized lignite sources, offering lower-cost electricity.

A government proposal for the establishment of SPV partnerships with private-sector companies that would facilitate purchases of high-voltage lignite-generated PPC electricity by industrial enterprises has only been entertained by the power utility, limiting the measure’s prospects for a market share reduction at PPC, still dominant.

In preceding negotiations, the country’s lenders have indicated that decarbonization alone does not suffice. The views of the lenders on the government’s SPV proposal also differ.

The European Commission’s Directorate-General for Competition has called for wider participation in the SPV that would effectively also take on board independent electricity suppliers, not just energy-intensive industrial enterprises, for purchases of lower-cost lignite-generated electricity produced by PPC.

Opposing views are seen requiring more work for convergence, which could be achieved by the end of the first half. The implementation of the target model promises to serve as a catalyst.

Two more rounds of talks in Athens are scheduled for March and May.

PPC must stabilize to service sums owed to operators

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Accumulated arrears owed by power utility PPC to two operators, the power grid operator IPTO and distribution network operator DEDDIE/HEDNO, currently totaling approximately one billion euros, will be serviced bit by bit until the end of next year, when PPC hopes its finances are sturdier to enable bigger and more frequent payments.

PPC, currently dealing with an unresolved annual cash deficit of around 900 million euros, is not in a position to add any further pressure to its strained finances.

An energy sector draft bill amendment was submitted to parliament yesterday to help stop a domino effect of unpaid sums concerning the two operators, PPC, electricity producers and suppliers.

Producers and suppliers owing the two operators network fees have refused to pay these amounts contending the operators owe them even bigger amounts as the latter are not receiving sums owed to them by PPC.

The amendment offsets pending accounts concerning the operators and electricity producers and suppliers.

EC report demands measures giving PPC rivals lignite access

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The European Commission has called for the immediate implementation of additional electricity market measures as it believes the Greek government’s current initiatives, including swift decarbonization, power utility PPC’s restructuring, and the sale of distribution network operator DEDDIE/HEDNO, are insufficient as they should deliver results in the long term.

This concern, along with key observations on PPC, the energy market’s liberalization, gas utility DEPA and the renewable energy sector, was raised in the European Commission’s fourth enhanced surveillance report on Greece, just released and accompanying the approval of a 767 million-euro installment in support of the Greek economy.

Despite positively reviewing the government’s initiatives, Brussels, in the report, lists a number of requirements that must be honored quickly, by the end of December, based on a 2018 agreement. They include energy market interventions, especially the electricity market.

The Greek government, bowing to pressure applied by the country’s lenders, has already promised to deliver alternative measures tackling PPC’s market dominance and exclusive access to the country’s lignite sources.

These measures will come as an addition to the government’s intention to push ahead with PPC’s withdrawal plan for its lignite units until full decarbonization is achieved.

Market data indicates PPC rivals are entering Greece’s retail and wholesale electricity markets, but the power utility’s ongoing dominant position and exclusive access to lignite continue to raise concerns, the report noted.

Brussels makes note of ongoing wholesale market distortions favoring PPC as a result of the utility’s exclusive access to lignite-generated electricity.

The Greek government is preparing alternative antitrust measures facilitating the entry of PPC’s competitors to lignite-based electricity generation, the report noted.

 

Chinese officials to table widespread energy investment interest

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Chinese investors are looking to, more or less, cover the Greek energy sector’s entire gamut.

Talks during a two-day visit, today and tomorrow, by a Chinese delegation headed by China’s President President Xi Jinping, are expected to cover energy cooperation in the installation of smart power meters and fiber optics to networks, investments in natural gas-fueled power stations, energy storage, as well as joint ventures for solar, wind and biomass energy projects.

This widespread Chinese investment interest, more or less covering the sector’s entire gamut, also includes financial support as well as the sale of all types of technology needed.

The interest of Chinese investors was made clear to power utility PPC chief executive Giorgos Stassis on a trip to China a week ago.

Talks between officials will include interest by State Grid Corp of China (SGCC) to build on its 24 percent stake of Greek power grid operator IPTO and enter the equity make-up of the operator’s subsidiary Ariadne, project promoter of the Crete-Athens electricity grid link.

Joint investments with PPC and other players in the renewable energy domain will also be explored.

HEDNO/DEDDIE’s plan for the installation of smart power meters is another topic of interest for the visiting Chinese investors.

The next chapter of preceding talks with PPC officials for the development of gas-fired power stations is also expected.

Fuel shift alternatives of the power utility PPC’s prospective Ptolemaida V power station, originally planned as a coal generator, will also be tabled.

Just days ago, PPC officials, led by Stassis, the CEO, held a range of meetings at the Shanghai International Import Expo 2019 with China Development Bank, Shanghai Electric and China Three Gorges, holding a stake in Portugal’s EDP Renovaveis.

China Intellectual Electric Power (solar), ZTE (telecommunications) and CHINT (smart power meters) are among other companies also believed to be seeking to secure investments in the Greek market, sources informed.

Independent energy players rushing to fill PPC lignite void

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The country’s major independent energy groups are forging ahead with well anticipated plans to cover prospective electricity generating voids that will be created by power utility PPC’s withdrawal of lignite-fired units, now expected sooner following a government plan for a swifter withdrawal of all lignite-fired power stations, monopolized by the state-controlled power utility.

Speaking at the UN Climate Action Summit in New York last week, Prime Minister Kyriakos Mitsotakis declared full decarbonization would be achieved in Greece by 2028.

The Prime Minister’s pledge for a lignite-free Greece in less than a decade has not taken domestic independent energy groups by surprise. As early as three to four years ago, they had foreseen an approaching end of the lignite era in Greece and around Europe.

So, too, had PPC’s leadership. But the corporation’s lignite monopoly, lignite dependence of local economies in lignite-rich areas, especially Greece’s west Macedonia region, as well as perpetual political interests attached to PPC over the years, have all played roles that have prevented the utility from turning to other energy sources such as natural gas and renewables.

Over the past year or so, major energy groups in Greece such as Mytilineos, GEK-TERNA, Copelouzos and Elpedison, as well as enterprises such as Elvalhalcor and Karatzis, have taken decisions to seek licenses for the development of new gas-fired power stations. The foundation stone of a Mytilineos unit in Boetia (Viotia), northwest of Athens, will be placed by the Greek Prime Minister at a ceremony scheduled for tomorrow.

A planned decarbonization process in neighboring Bulgaria, electricity needs in North Macedonia, and Greek power grid operator IPTO’s imminent upgrade of grid interconnections with Balkan neighbors, especially the aforementioned countries, are all creating further electricity export opportunities for Greek market players.

 

 

New gas-fired units reshaping electricity generation sector

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Independent electricity producers, sensing opportunities, are reshaping the sector by planning the development of new gas-fired power stations to replace the power utility PPC’s outgoing lignite-fired units. The independent producers are even replacing power stations of their own, launched about 15 years ago, as part of the overall drive.

The country’s required withdrawal of old lignite-fired power stations operated by state-controlled PPC, as well as the implementation of the target model, beginning in the summer of 2020 with a link of the Greek and Italian electricity markets, followed by a Bulgarian link as a second stage, have been cited as the two main factors bringing about this change of scene in the electricity production sector.

The independent producers GEK TERNA (Heron), Mytilineos (Protergia) and Elpedison, as well as new arrivals such as the Copelouzos and Karatzis groups, have all expressed an interest to acquire licenses for the development of new power stations.

PPC, heavily reliant on lignite-based production, is gradually losing grip of its dominance in the electricity generation sector.

Pushed higher by the EU’s environmental policy, rising CO2 emission right costs, now nearing 30 euros per ton after being worth approximately 5 euros per ton a year-and-a-half ago, are a key factor in the developments.

PPC’s CO2-related costs rose to 279.5 million euros in 2018 from 141.6 million euros a year earlier.

Greek power producers also eyeing Balkan export potential

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The country’s power producers are focusing on the market prospects of  neighboring countries along with a heightened interest in Greece’s electricity market as a result of the upcoming elections, seen bringing the main opposition New Democracy party into power for more decisive reform action at power utility PPC, and intensified market competition.

Investments plans by PPC, currently developing its Ptolemaida V power station, as well as by private-sector enterprises, which have announced plans for five new state-of-the-art units, are expected to create an overabundance of electricity, even of all these plans are not executed. This is one of three main factors turning the attention of power producers to neighboring markets.

Also, it has become clear that Balkan markets lack flexibility in electricity generation as they primarily depend on coal, while gas networks that could support flexible gas-fueled power stations in the region are insufficient.

A third factor contributing to the heightened the interest of local producers for energy-related business in the wider region is Greek power grid operator IPTO’s ongoing upgrade of Greece’s grid interconnections with neighboring countries, especially Bulgaria and North Macedonia, which promises to create greater export potential.

Besides the independent producers, PPC is also looking to capitalize on this export potential.