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

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

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

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

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

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

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%

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

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

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

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

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

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

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

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

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

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

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 Elvalhalkor 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

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

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.

Grid prepared for demand peak of first heatwave this summer

Given the day-ahead market’s indications, the country’s first heatwave of this summer, expected to increase temperatures to levels of between 37 and 38 degrees Celsius today and tomorrow, should not cause any problems for the grid.

The system is prepared for daily demand levels of 150,760 MWh at a System Marginal Price (SMP), or wholesale price, of 73.549 euros per MWh.

Renewable energy is programmed to cover 21,584 MWh of daily demand and hydropower facilities a further 8,156 MWh.

As for the country’s lignite-fired power stations, power utility PPC’s Kardia II, III and IV, Agios Dimitrios III and IV and Megalopoli III and IV will all be called into action.

So, too, will gas-fueled power stations operated by PPC and private-sector electricity producers (Aliveri V, Lavrio IV and V, Megalopoli V, Heron, ENTHES, Protergia, Corinth Power).

Electricity exports totaling 21,350 MWh have also been planned. Demand is forecast to peak at 2pm, reaching a level of 7,622 MW.

In a statement released yesterday, Greek gas utility DEPA ascertained the country’s gas needs will be covered this summer, as will supply needs for customers in Greece and Bulgaria.

Total gas demand in Greece last year between June 15 and August 15 reached 8.1 TWh and is expected to rise to 9.2 TWh for the equivalent period this summer, according to DEPA.

Gas grid operator DESFA’s incoming LNG shipments for this period this summer will amount to 7.3 TWh, dramatically up from a 2.4 TWh total unloaded at the Revythoussa terminal on the islet off Athens during the summer period last year, according to the operator.

 

 

Independent producers set to lose €80m in CATs for flexibility

The country’s independent electricity producers are on the verge of missing out on annual remuneration worth 80 million euros and offered through a temporary CAT mechanism rewarding flexibility as a result of a new European Commission term setting the implementation of target model regulations as a prerequisite.

A temporary CATs auction scheduled for March 20 was cancelled after Brussels determined that Greek authorities failed to fully deliver on revisions that would have enabled demand response operators to participate at these auctions.

The loss of these temporary CATs will directly impact private-sector electricity producers. Natural gas-fueled power stations and hydropower facilities were anticipating an influx of flexibility CATs by the end of March, the mechanism’s first period, while the second period, beginning April 1 and running until the end of the year, was planned to include demand response operators and energy storage facilities.

Acknowledging the problem, energy ministry officials have noted that a last-ditch effort is being made to deliver revisions that would enable flexibility CAT eligibility for demand response operators.

Edison, ELPE preparing offer for Ellaktor’s Elpedison stake

Hellenic Petroleum (ELPE) and Edison, holding an equally divided 75.78 percent share of electricity producer and supplier Elpedison, are preparing to make an offer for a 22.74 percent share held by construction firm Ellaktor.

Ellaktor has announced a decision to withdraw from Elpedison. ELPE and Edison, both holding preferential buying rights for Ellaktor’s stake, would want to buy it and prevent any rival from become part of Elpedison’s equity line-up.

ELPE and Edison have a limited time period to prepare an acceptable offer. It will need to be made within the summer. If the duo’s offer fails to satisfy Ellaktor, the latter will have the right to seek another buyer.

The current talks between the three companies have been described as positive.

Halcor, the copper tubes division of copper producer ElvalHalcor, holds Elpedison’s remaining 1.48 percent.

Elpedison, whose retail electricity market share was last measured at 3.73 percent, in March, operates two gas-fueled power stations offering a combined production capacity of at least 810 MW. The investment cost for the two units exceeded 500 million euros.

Ellaktor’s decision to withdraw from Elpedison was prompted by a revised business plan shaped by its new administration, whose new focus includes renewable energy.

 

 

PPC, State blamed for power market’s competition rut

Independent electricity producer and supplier representatives participating in yesterday’s Power & Gas Supply Forum in Athens have attributed the lack of progress in an ongoing effort to fully liberalize Greece’s electricity market to a lack of political will and a variety of decisions that have helped the state-controlled main power utility PPC maintain its dominant market position.

“Neither the State nor PPC want the market to be opened up,” Dinos Benroubi, the Mytilineos group’s energy division chief, one of many highly-ranked officials representing independent electricity producers and suppliers at yesterday’s event, told the forum.

His comments sum up complaints expressed by various officials who sought to explain why the domestic electricity market has been unable to truly open up to competition, despite years of related legislative amendments and private-sector investments in the energy domain.

PPC has continued to maintain a culture of tolerance that has enabled customers to avoid repercussions for not paying bills on time, which, by extension, has stopped PPC from servicing its required payments to the market, Benroubi pointed out.

“Competitors can’t attract new customers amid market conditions such as these,” the Mytilineos group official supported.

Remarks offered by the Heron energy company’s Giorgos Kouvaris were just as scathing. “Our market is appropriately designed to not be able to open up under any government. Any investors who have moved against the market [forces] have suffered bad outcomes,” Kouvaris noted.

Unfair burdens persevered by electricity producers as a result of various market distortions; an inconsistent regulatory framework affecting investments; lack of competition in electricity production; and the failure of PPC’s pricing policy to reflect costs, were among other factors cited by forum participants as problems obstructing the market from opening up.

 

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.

 

 

 

 

 

Finalized CAT agreement expected within fortnight

Greece and the European Commission are no more than a fortnight’s time away from reaching a deal on the country’s CAT mechanism, reliable sources closely following ongoing negotiations on the matter between the energy ministry and Brussels officials have informed.

Once an agreement is finalized, Brussels will deliver its notification, in other words a finalized list of observations on the Greek CAT plan. Its finalized look, to emerge following any needed adjustments, could be announced by the end of March, barring unexpected developments.

A certain period of time, depending on the pace of bureaucratic procedures in Brussels, will then be needed for the plan’s approval by the European Commission. This will enable preparations for the first CAT auction, expected, without a doubt, within 2019.

The nucleus of the Greek CAT plan, based on an Italian model that has already been endorsed, complies with EU directives, the European Commission has already recognized. Brussels officials have apparently requested revisions from Greece that will result in a CAT mechanism version sharing an even greater amount of similarities with its Italian equivalent.

Greece’s new CAT plan mainly concerns private-sector thermal electricity producers and the main power utility PPC as it will greatly shape their operating conditions over the next decade.

Investors considering PPC’s Megalopoli and Meliti power stations included in an ongoing bailout-required disinvestment of lignite units are also monitoring developments as the resulting CAT plan will greatly determine the earning potential of these units.

The PPC’s Ptolemaida V power station, now under construction, is expected to be among the units to qualify for CAT remuneration.

RAE inspecting legality of supplier clauses in fine print

RAE, the Regulatory Authority for Energy, is examining the legality of terms relegated to fine print in agreements offered by independent electricity suppliers.

A System Marginal Price (SMP) clause facilitating price hikes in the event that wholesale electricity prices exceed certain levels is a key concern.

The authority was prompted to conduct its inspection after the main power utility PPC announced its intention to follow suit and also implement clauses of its own concerning SMP and CO2 emission right price shifts.

Consumers have lodged complaints arguing such clauses remain vague,  making it unclear as to when they can be rightfully applied. Also, consumers argue they should not have to remain aware of the possibility of tariff shifts in their electricity supply agreements.

RAE is concerned electricity suppliers may be using such terms as a pretext for price hikes. The transparency of such moves is in question.

The energy authority has yet to reach any conclusions or decisions but an outcome is believed to be near.

RAE is also examining the lawfulness of a one euro print-and-mail surcharge just introduced by PPC for all of its electricity bills delivered through the conventional postage system.

The authority appears to share consumer group views seeing this new PPC surcharge as a mere electricity bill hike rather than an incentive for a switch to e-billing.

RAE has yet to also decide on this matter but authority officials have already suggested PPC should not have introduced the charge but, instead, deducted a one-euro amount from electricity bills of consumers opting for e-bills.

Potential PPC unit buyers propose six-year partnerships

A number of the possible buyers of main power utility PPC’s lignite units and mines included in a bailout-required sale representing 40 percent of the corporation’s lignite capacity have proposed a form of co-ownership with the state-controlled power utility for a period of six years, the equivalent number of years potential buyers would be committed to maintain all current jobs at the units sold as a result of related legislation ratified by the government.

Potential buyers have calculated that three power stations in Meliti and Megalopoli included in the disinvestment package each incurred losses of more than 30 million euros during the first half of the year and, presumably, could be expected to incur respective losses of around 60 to 70 million euros for the year.

PPC and potential buyers would share risks entailed and losses and profit over the six-year period, according to the proposals forwarded by possible investors, who want incentives. before making offers.

The power utility has already set an SPA term that would ensure the corporation receives 30 percent of CAT remuneration amounts should the units placed for sale qualify for the mechanism, as providers of grid sufficiency.

First CAT flexibility auction expected in September

A new transitional CAT mechanism model compensating electricity generation flexibility, to soon be implemented in Greece, is expected to be valid for less than a year, all the way up to the implementation of the target model, seen occurring in the first half of 2019.  The target model is aiming for a single European electricity market.

The first auction for the CAT flexibility mechanism, taken on by the government as a fourth-review bailout commitment, will not be staged any sooner than September, despite initial efforts for a launch by July, energypress sources have informed.

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.

If no major changes are made to the CAT flexibility mechanism plan ahead of its implementation, then it 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’s 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.

 

Brussels: Lignite vital for Greek market, wider access needed

Lignite-based electricity production continues to play a vital role in Greece’s wholesale electricity market and is crucial for the country’s energy supply security, while, given the prevailing market conditions, the current level of lignite-based output remains necessary to keep the Greek wholesale market balanced and will, therefore, continue offering a comparative advantage, the European Commission has noted in a report linked to the main power utility PPC’s bailout-required sale of lignite power stations and mines representing 40 percent of the corporation’s overall lignite capacity. This report, prepared in mid-April, has just been published.

According to the latest report, PPC’s bailout-required lignite disinvestment plan is appropriate to counter competition issues that had been identified by Brussels officials in an older examination of the Greek electricity market a decade earlier. It had produced measures. The current disinvestment plan has replaced these.

PPC’s lignite units included in the sale package are highly competitive, the report pointed out.

The report also noted that market-test questionnaires sent out by the European Commission to 80 prospective investors in order to measure the sale’s level of interest – recipients included enterprises operating beyond Europe in regions such as Asia and North America – prompted 30 responses, included 15 expressions of interest.

Some of the market test’s participants stressed that the sale would be far more alluring with the addition of hydropower units to the package.

PPC plans to commission an independent evaluator, previously endorsed by Brussels, to determine the market values of the lignite assets headed for disinvestment.

The Greek wholesale and retail electricity markets continue to be affected by the same market distortions identified by the European Commission a decade earlier, the latest report reminded, noting that high concentration levels have not changed as PPC =controls and exploits the country’s entire lignite and hydropower production capacity, totaling 7,085 MW.

Independent players will need to be given greater access to these electricity generation sources if market competition is to intensify, the report noted.

 

 

 

 

 

Local investors subdued over PPC lignite units for sale

Local investors appear reserved, if not even more disinterested, in a package of lignite-fired power stations and mines to soon be offered through the main power utility PPC’s bailout-required sale of such units, following a renewed request made yesterday by the power utility’s CEO Manolis Panagiotakis to possible buyers, including industries.

The power utility’s rise in operating costs, in 2017, following an increase of lignite-fired electricity generation, a development framed in the power utility’s latest financial results posted just days ago, has further unsettled the negative thoughts of many investors over the future prospects of PPC’s lignite units.

One major local player, among a group of investors who have not entirely abandoned the possibility of participating in PPC’s sale of lignite units, stressed that authorities should understand there is far less money to be made in the lignite sector.

The outlooks of other leading Greek investors were even more negative. “We will not invest in lignite even if the units are offered to us for free,” one investor pointed out.

A PPC board meeting that had been planned for yesterday – to launch the lignite disinvestment procedure and endorse the hirings of consulting firms already selected – did not take place as the power utility’s main union, Genop, occupied the company headquarters. This meeting has now been rescheduled for Monday as a teleconference in order to disenable further Genop intervention.

Panagiotakis, PPC’s boss, yesterday promised to offer investors a detailed presentation of all related figures and prospective benefits. He reiterated that contact is being maintained with Greek industrialists. The industrial sector, in particular, has further incentive to participate in the sale and secure steady tariffs amid the changing electricity market environment, the PPC chief pointed out.

The sale’s announcement will be made in late May, as scheduled, despite the Genop resistance, Panagiotakis noted, adding that creditors, especially banks, will be offered a one-month period for any reaction.

The aim is to make an announcement for final offers by late June or early July, the PPC chief informed.

Responding to concerns of a low sale price for the units as a result of the EU’s environmental policies, Panagiotakis insisted that independent valuators, taking all factors into account, will determine the sale package’s worth.