independent electricity producers

Grid prepared for demand peak of first heatwave this summer

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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.

 

Lenders favor end to variable cost lower limit for producers

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The country’s lenders favour the scrapping of a variable cost lower limit imposed on electricity producers for sale prices of their output, but the prospect has raised concerns among Greece’s independent producers who regard the lower limit as a safety net, energypress sources have informed.

Greece’s independent producers fear that the main power utility PPC could go as far as to offer electricity production for zero amounts, in order to sideline the independent producers, if the existing cost lower limit is abolished.

Talks are currently in progress for the shaping of new energy exchange-related markets – day-ahead market, intraday market, balancing market and term products market.

The independent producers have proposed that the cost lower limit be maintained until the market begins operating in accordance with European standards.

The lenders also favor offers to the intraday market by entire portfolios of producer units, not just individual electricity production units, as has been planned until now by RAE, the Regulatory Authority for Energy.

The troika is also aiming to introduce strict market monitoring measures to keep a close watch, on a daily basis, of market player moves.

Limited impact on grid expected from PPC strike action

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Strike action organized by the main power utility PPC union Genop to protest parliament’s discussion of a draft bill concerning a bailout-required sale of lignite units is planned to begin late Sunday night.

PPC workers are determined to make consumers more aware of the sale plan, representing 40 percent of the utility’s lignite capacity, the union has announced.

Given the grid’s picture for today, all of PPC units would need to be withdrawn and nightime wind energy supply, when photovoltaics are not producing, must be insufficient, if an electricity shortage is to be prompted by the strike action.

Judging by today’s electricity plan, any problems that may arise in coming days will be limited and will concern evening peak hours between 8 and 11 pm.

According to today’s day-ahead market plan, total electricity demand amounts to 127,619 MWh, of which 50,600 MWh will be provided by thermal units. The rest of the demand will be covered by imports, renewable energy sources and hydropower units.

Slightly over half the aforementioned thermal supply, or nearly 33,000 MWh, will be provided by PPC units – three Agios Dimtrios units, two Kardia units, one Megalopoli unit, one Amynteo unit and one Aliveri unit.

Facilities operated by independent producers will contribute approximately 18,000 MWh.

Imports of up to 1,700 MW, depending on the System Marginal Price (SMP), could stem from Italy. Hydrpower facilities may provide between 1,000 and 1,500 MW. Renewable energy source input, when photovoltaic facilities are connected to the grid, can exceed 2,000 MW.

IPTO, the power grid operator, will be responsible for deciding whether supply shortages exist. If so, the operator will ask HEDNO/DEDDIE, the electricity distribution network operator, to proceed with supply cuts.

 

Any supplier surcharge extension ‘would affect competition’

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Any decision to prolong the current RES-supporting supplier surcharge covered by electricity suppliers, as suggested in various media reports, would hurt electricity market competition and represent a step back in the effort to truly liberalize this market, industrial-sector officials have warned.

Industrialists plan to officially present their concerns to the government within the next few days.

In comments to energypress, industrial sector officials noted that an extension of the supplier surcharge would affect competition as no independent supplier can continue absorbing this additional cost indefinitely, meaning that it will eventually need to passed on to consumers.

RAE, the Regulatory Authority for Energy, is working on an alternative plan to replace the existing RES-supporting supplier surcharge at the beginning of 2019. LAGIE, the Electricity Market Operator, is concurrently working on another plan.

The supplier surcharge was imposed a year and a half ago. The main power utility PPC, still dominating the retail electricity market, has chosen to absorb this cost, forcing its rival independent suppliers to act likewise.

The supplier surcharge, which increases the cost of electricity by 7 euros per MWh for suppliers, is negatively impacting the effectiveness NOME auctions, industrial sector sources also noted. NOME auctions were introduced late in 2016 to offer independent suppliers access to PPC’s low-cost lignite and hydropower sources.

PPC facing forward contracts limit; steady price terms for industry

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The ability of electricity producers and major-scale consumers to establish forward contracts stands as one of the big changes promised by the introduction of the target model, whose aim will be to harmonize the electricity wholesale market with EU standards.

Forward contracts will enable electricity producers and suppliers to perform direct transactions, through the prospective energy exchange, at specific prices that have been agreed to, thereby offering stability and security to both producers and large-scale consumers.

Producers will be able to secure absorption of their output while industrial consumers will be offered protection against any price fluctuations for part, if not all, of their electricity needs.

However, the target model’s prospect of forward contracts also threatens to create smaller day-ahead and spot markets, representing just a small fraction of overall electricity production and demand. Such a development would increase the risk of destablizing the new market’s structure and newly formed energy exchange, to be responsible for the market’s functioning.

According to energypress sources, a consulting firm commissioned to establish target model terms has proposed the imposition of a limit on forward contracts which, on the one hand, will offer producers, suppliers and major-scale consumers steady terms covering the bulk of their needs, while, on the other hand, securing liquidity and competition for the market and energy exchange.

According to the consulting firm’s proposal, the main power utility PPC, the market’s dominant producer, will not be able to offer more than 40 percent of electricity output for forward contracts.

Reacting to the proposal, PPC contends that no forward contract limits should be imposed while independent electricity producers favor even stricter terms, at least until the market has found its footing.

According to sources, RAE, the Regulatory Authority for Energy, intends to adopt the consulting firm’s proposal, but could offer even tougher terms limiting forward contracts to  30 percent of overall supply.

 

Lifting purchase price restrictions would trouble power producers

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Target model positions supported by energy-intensive industrial energy consumers in a public consultation procedure staged by LAGIE, the Electricity Market Operator, have brought to the fore a proposal calling for the abolishment of minimum-price limits on electricity purchases.

The abolishment of minimum-price limits on electricity purchases has raised concerns over the sustainability of independent electricity producers.

LAGIE’s proposal entails setting a minimum price limit on electricity  purchase offers that is equal to the variable costs of each electricity producer.

Though all sides acknowledge that restrictions will eventually be lifted amid the new market model, certain players support that minimum purchase price limits are currently needed to protect market liquidity.

The operator and certain market players contend that the market is not yet mature enough for restriction-free offers, which, they believe, would threaten the sustainability of independent electricity producers.

According to sources, market authorities want to maintain minimum purchase price limits as their abolishment would reduce the System Marginal Price (SMP) by 10 euros per MWh, a study has indicated.

Such a development would be favorable for the main power utility PPC, which, as the market’s biggest supplier, purchases significant electricity amounts to cover its needs.

Consumers, especially major-scale consumers such as steel industries, would also benefit as their energy costs could be significantly reduced during low-demand hours, especially at night.

The target model is aiming to harmonize the electricity wholesale market with EU standards.

 

 

 

Electricity producers in fierce battle for grid contributions

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Independent electricity producers are waging an intense wholesale electricity market battle, between themselves and against the main power utility PPC, for maximum contributions of their natural gas-fueled power plants to the grid.

This intensified competition could prove decisive for the sustainability of plants. PPC’s diversified electricity production portfolio gives the utility the upper hand in this battle as it lends support to the offers it can make.

Market data indicates that electricity producers are battling for every additional hour of participation.

In the first nine days of 2018, PPC captured a 33.1 percent share. The utility was closely followed by Mytilineos, capturing 31.8 percent. Elpedison was next with 24.2 percent and Heron fourth with 10.8 percent.

Data provided by LAGIE, the Electricity Market Operator, covering the months of September, October and November, showed month-to-month fluctuations in the shares captured by producers operating natural gas-fueled power plants.

PPC’s share of this market ranged between 33 and 49 percent during the three-month period. Mytilineos’s share ranged between 29.5 and 42.1 percent. This independent producer’s share surpassed PPC’s contribution in October. Elpedison captured shares ranging between 14.5 and 25.33 percent and Heron’s contribution to the grid ranged between 4.4 and 10.8 percent from September to November. Maintenance work at its facilities during the three-month period subdued Heron’s share.

In terms of installed gas-fueled power plant capacity, PPC holds a 46.6 percent share, Mytilineos and Elpedison follow with 24.9 percent each, and Heron is ranked fourth with 11.8 percent. The country’s overall gas-fueled power plant capacity totals 4,813.6 MW.

 

 

Brussels raises concerns over competition in local energy market

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Despite the bailout progress made in nearing the third review’s finalization, the European Commission has identified a series of problems and delays concerning competition in Greece’s energy market, according to energypress sources.

An existing natural gas supply agreement between PPC, the main power utility, and DEPA, the public gas corporation, is one of the issues troubling Brussels authorities as it is believed to contain favorable terms benefiting the power utility. This agreement, for instance, does not include any terms leading to additional costs for PPC should its gas consumption exceed contracted amounts.

As for the electricity supply market, European Commission officials believe a supplier surcharge imposed on suppliers by the Greek government has absorbed 70 percent of discounts gained by independent suppliers at auctions.

Brussels officials have also noted that discounts made available to electricity suppliers through NOME auctions cannot be capitalized on the islands, where markets are affected by additional obstacles and existing tariffs do not offer profit margins.

A delay of about year in establishing a new flexibility remuneration mechanism in Greece is another matter preoccupying Brussels officials. This delay has led to benefits for PPC estimated to be worth between 120 million and 170 million euros.

A 15 percent discount offered by PPC to customers paying their electricity bills on time has also drawn the attention of Brussels officials as this intiative has forced independent suppliers to take similar action in an effort to remain competitive despite not having the leeway to do so. Market newcomers face elevated network development costs and other investment expenses not burdening PPC, the perennially dominant power utility.

In the Greek electricity production market, Brussels officials have concluded lignite-fired power stations remain active even amid loss-incurring conditions with the aim of preventing independent plants from operating.

Questions have also been raised as to whether PPC is benefiting from IPTO (power grid operator) decisions concerning the level of RES production permitted into the country’s energy system.

On a more general scale, Brussels also fears energy sector reforms currently being implemented may not be completed by August, when the country’s bailout agreement concludes. As a result, a new mechanism ensuring the continued implementation of these reforms could be needed once the bailout agreement has concluded.

A team of European Directorate for Competition officials had raided the PPC and IPTO a year about a  year ago as part of their investigation.

 

Megalopoli, Meliti units deliver positive signs to investors

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November proved to be a solid month, in terms of electricity grid utilization and output, for PPC units included on the bailout-required sale of lignite facilities, according to data provided by IPTO, the power grid operator.

The utilization rate at Megalopoli IV reached 78 percent, the highest among all lignite-fired units, Meliti I followed with 77 percent, and Megalopoli III was next with 75 percent.

PPC units covered 75.4 percent of the energy system’s overall output for the month, while Mytilineos, the country’s second biggest electricity producer, captured a 14.9 percent share – this includes a share registered by Korinthos Power, a venture in which the Mytilineos group holds a 65 percent stake – Elpedison followed with 7.5 percent, and Heron was ranked third for the month with 2.1 percent.

PPC provided 70.7 percent of the energy system’s overall output in October and 73.6 percent in September.

The power utility also enjoyed a high overall utilization rate in November. All of PPC’s conventional units, except for Lavrio IV, Komotini and Megalopoli V, registered utilization rates of more than 60 percent during November.

More specifically, the utilization rate at Agios Dimitrios ranged between 69 and 75 percent, Amynteos achieved a rate of 59 to 60 percent, Kardia registered utilization rates of between 64 and 70 percent, and Lavrio V struck 64 percent.

The utility’s natural gas-fuelled power plant in Aliveri registered the highest utilization rate in November, this being 83 percent.

As for units operated by independent producers, Energiaki Thessalonikis led with a utilization rate of 69 percent, followed by Protergia (64%) and Korinthos Power (62%).

In terms of energy sources used for electricity generation, lignite was ranked first in November with a 54 percent share and total output of 1.53 million MWh, ahead of natural gas, which registered a 41 percent share and output of 1.52 million MWh.

Various PPC unit sell-off issues holding back local players

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As the market test held for the main power utility PPC’s bailout-required sell-off of lignite units, representing 40 percent of ts lignite capacity, gradually approaches completion, the reactions of major Greek energy groups should be interpreted as firm positions.

The market test, supervised by the European Commission’s Directorate-General for Competition, is intended to measure the level of investor interest and clarify queries.

Two major local players indicated they are considering taking part in the sale but are remaining cautious as a result of concerns.

A source at an independent electricity producer expressed concerns over mines and licenses of units included in the sale package, noting that, in the country’s north, three mines linked to the Meliti 1 power station and a construction permit for Meliti II, these being Vevi, Klidi and Lofi, are currently closed.

As for the Megalopoli III and IV units in the Peloponnese, prospective investors have expressed concerns over license issues at associated facilities.

Production capacities, existing payrolls and financial data concerning units included in the sale are also being closely examined by prospective investors.

Some market sources noted that investors are being called upon to make crucial entrepreneurial decisions despite a lack of clarity on the Greek electricity market’s future look.

 

Grid proving resilient amid growing winter season pressure

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The country’s grid has so far managed to cope with the gradual decline in temperatures around the country and subsequent rise in electricity demand, the lack of major pressure on wholesale prices has indicated.

Over the past week, wholesale electricity prices have ranged between 40 and 63 euros per MWh with demand levels reaching 7,000 to 7,900 MW, data concerning the day-ahead market, the main arena for trading power, has shown.

The additional contribution to the grid that has resulted from the return of one of two main power utility PPC units at the Agios Dimitrios power station, which were temporarily sidelined for revamp work, has proven crucial to the price stability achieved.

At present Agios Dimitrios 1, III, IV and V are operating but Agios Dimitrios II, one of the facility’s two units that had been withdrawn for the revamp, remains sidelined.

Also, PPC’s two Amynteo and two Kardia units are feeding the grid for many hours per day.

Just days ago, PPC’s chief executive Manolis Panagiotakis, speaking at the American-Hellenic Chamber of Commerce’s annual “Greek Economy Conference”, warned that the grid’s current need for heightened contributions from the Amynteo and Kardia lignite-fired units is burning up their remaining lifespan hours, which increases the urgency of a request submitted by the utility to the European Commission for lifespan extension of both. Otherwise, the grid will face serious equilibrium issues within the next few years, the PPC boss stressed.

As for the independent electricity producers, all but one of their units are fully available at present. A Heron unit contributed for just one day over the past week. Hydropower production has been greater on certain days, but has used up existing water reserves. RES production has produced at its usual mild rate. Electricity imports have also been subdued.

Flexibility mechanism’s public consultation a further delay

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A decision by RAE, the Regulatory Authority for Energy, to launch a public consultation procedure this week addressing the fundamentals of Greece’s forthcoming flexibility remuneration mechanism for gas-fired power units adds further delay to the mechanism’s re-establishment, needed to reward the output of gas-fired electricity producers who have been left without a flexibility mechanism since April, when the previous model’s validity expired.

RAE is also currently engaged in discussion with European Commission authorities over the new flexibility mechanism, expected as an extension of the previous temporary CAT plan before a fixed system is eventually adopted.

RAE’s public consultation procedure, based on a flexibility study conducted by IPTO, Greece’s power grid operator, is expected to last a fortnight. A finalized proposal will then be forwarded to the European Commission for approval.

According to sources, the RAE plan is expected to leave certain issues open, including an option for one or two flexibility products to be remunerated through the temporary CAT system, as well as the terms defining which technologies provide flexibility to the grid.

One thing for certain is that the new flexibility mechanism will be offered to producers through auction procedures. An upper limit will also be set at the auctions at a level well below the current level of 45,000 euros per MWh.

Sources have also infomed that RAE’s proposal will not include terms satisfying the European Commission’s insistence for the inclusion of a demand response feature in the temporary mechanism.

RAE attributes this decision to two main factors. Firstly, the authority believes that, in practical terms, a mechanism with a demand response feature will not be able to be implemented. The other reason is that the incorporation of a demand response feature to the mechanism will further delay its arrival and ultimately deprive the temporary CAT system of ever getting off the ground.

 

Elpedison posts losses, delayed flexibility mechanism cited

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ELPE, the Hellenic Petroleum group, may have announced record profit figures yesterday but a closer look at the results does hide one important and unfavorable development, the performance of Elpedison, an associated company in which ELPE holds a 50 percent stake, which incurred losses and presented a reduced energy production level.

Elpedison’s EBITDA registered at €1m in 2Q17, down from six million euros a year earlier, while its EBIT stood at a loss of six million euros. Company officials, in comments offered to analysts, cited the delayed re-establishment of the flexibility remuneration mechanism for gas-fired units as the key reason affecting its electricity division.

This cannot be viewed as an isolated incident as all other independent electricity producers are also being affected by the flexibility remuneration mechanism’s delayed re-establishment.

Market officials have expressed concerns that the transitional mechanism, whose adoption has already been delayed, will take longer to implement. RAE, the Regulatory Authority for Energy, which still appears a long way off from sending its mechanism plan to the European Commission for approval, has contributed to the problem.

According to energypress sources, a public consultation procedure has been planned for the first half of September as a means of examining the views of interested parties. The sources added that RAE will not present a full and  completed plan for its upcoming public consultation procdure.

Despite the obstacles, Elpedison did manage to increase its electricity production in the first quarter, which was enough to deliver a 14 percent overall increase in the first half. Second-quarter electricity production at Elpedison fell to 464,000 MWh from 540,000 MWh.

From a wider perspective, the country’s gas-fired electricity units are contributing to the grid for longer hours, compared to the past, but being deprived of CAT payments, which is affecting their operating profits and sustainability.

 

 

Gradual progress being made on flexibility mechanism

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RAE, the Regulatory Authority for Energy, and IPTO, the power grid operator, are currently focusing on the technical aspects of a transitional flexibility mechanism being prepared by Greece for imminent delivery to the European Commission.

Ongoing talks between officials in Athens and Brussels are gradually providing shape to the Greek proposal. At the same time, Greek officials are seeking to make necessary legal revisions concerning the electricity market that will ensure electricity producers of payments they are entitled to.

The European Commission’s Directorate-General for Competition and Directorate-General for Energy both demand that all required electricity market legal revisions are made prior to the implementation of any capacity mechanisms covering market needs.

The revisions required in Greece primarily concern compensation methods for electricity producers offering supplementary services to the grid.

As for the country’s transitional mechanism for electricity producers offering flexibility, the Greek plan appears to be settling for two products to be offered through auctions. The first of these, offering producers three hours notice, will require roughly 1,600 MW. The second, giving producers a one-hour notice, will require a capacity of between 2,500 and 2,600 MW.

Local officials are pushing to have the plan endorsed by the European Commission as soon as possible as the previous mechanism expired in April, leaving electricity producers without CAT payments.

Authorities are currently examining issues such as the technical feasibility of the current plan, which production units would be entitled to participate in auctions for the two aforementioned products, and their order of entry.

The procedure determining the level of compensation for units offering flexibility to the system (new transitional CATs) will be tendered. Two pre-determined upper limits are expected to be set for the two aforementioned products. The upper limit is expected to be higher for the product giving electricity producers a one-hour notice.

 

 

Retail electricity competition ‘needs production competition’

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The absence of fair competition in the electricity market, at a production level, will also deprive the market of true competition at a retail level, Dinos Benroubi, the chief official at independent electricity supplier Protergia, stressed last night during a roundtable discussion titled the Impact of Fluctuating Oil and Energy Prices on the National Economy, organized by the Greek Energy Forum, an international thinktank.

Benroubi, who noted that annual electricity costs for the country’s household and industrial sectors amount to 6.5 billion euros, also addressed the hefty grid-connection costs faced by Greece’s electricity consumers.

The Protergia official asserted that only half the electricity bill amount paid by consumers concerns production costs. Transmission and distribution costs represent another part of the overall cost, while about a third concerns other surcharges, Benroubi remarked.

The public service compensation (YKO) surcharge added to electricity bills, an amount paid by mainlanders in order to equate electricity costs for the country’s islanders, as Benroubi explained, needs to be resolved through the interconnection of the Greek islands with the mainland, he highlighted.

Though the benefits promised by this interconnection would cover its investment cost in no more than three years, development of its two sub-projects, concerning the Cyclades and Crete, is being severely delayed, Benroubi noted.

The Protergia head also stressed that Greece needs to focus on pursuing EU goals concerning decarbonization, RES targets, energy efficiency, energy storage and a trend towards presuming [electricity production by electricity consumers through PV generation, etc]. Instead, Benroubi added, the focus is on maintaining a state-controlled monopoly holding an 87 percent share of the retail electricity market and battling to regain lost ground, Benroubi added, referring to the main power utility PPC.

 

Market operator’s upcoming supplier surcharge amounts may trouble PPC

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LAGIE, the Electricity Market Operator, will, at the end of this month, calculate and invoice total surcharge amounts expected from electricity suppliers for March plus any outstanding amounts since October 1, 2016, when the supplier surcharge was introduced.

These calculations, issued monthly, as required by RAE, the Regulatory Authority for Energy, factor in an upper limit of 15 euros per MWh.

Independent suppliers more or less know what to expect, given the monthly amounts already covered, but the surcharge amount could provide yet another challenge for PPC, facing cash flow issues as well as bailout-related market share contraction and production unit sale requirements.

The utility decided to stop paying the surcharge at the beginning of this year before RAE stepped in to take action. Even so, PPC appears to have been underpaying its expected surcharge amounts.

The respective retail electricity market shares of suppliers are taken into account when determining surcharge levels. This means that PPC, which still maintains a dominant market share of just under 90 percent, is responsible for suppling the bulk of the surcharge.

Surcharge levels moved within normal range in March, as had been initially calculated by an Aristotle University of Thessaloniki study conducted prior to the surcharge’s introduction.

The surcharge averaged 6.59 euros per MWh between March 1 and 19 with the upper limited imposed. Without it, the average would have been just marginally higher, at 6.94 euros per MWh.

Authorities needed to impose an upper limit after the electricity supplier surcharge level greatly exceeded anticipated levels. The surcharge averaged 8.83 euros per MWh in February with the upper limit intact. Had it not been imposed, that month’s average would have reached 24.32 euros per MWh.

Independent power units to also protect against blackouts

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Energy system problems experienced recently as a result of a considerable electricity shortage and an ensuing natural gas shortage appear to have mobilized authorities to better protect the grid against similar situations in the future.

A move by RAE, the Regulatory Authority for Energy, requiring all independent electricity producing units to declare how they plan to fulfill a term included in their operating licenses for uninterrupted operation over five-day periods whenever needed by the grid, represents one of the initiatives taken by authorities.

Having taken this regulation into account, certain units – Elpedison’s two units and a small facility operated by Heron – are already technically equipped to alternate between natural gas and fuel in order to ensure continual production.

Until several years ago, other units had committed themselves to maintaining, at their own cost, natural gas reserves equivalent to the amounts stored at the LNG terminal on Revythoussa, an islet just off Athens. However, this demand was scrapped when authorities determined that the Revythoussa facility’s storage capacity was insufficient.

All independent electricity producing units must now provide technical and financial details demonstrating how they plan to ensure continual electricity generation over five-day periods, and, within this framework, the cost of converting their existing power stations so that may be able to run on both fuel and gas.

Acknowledging the high cost of such conversion projects, authorities are also looking into ways to provide greater LNG support when a third tank at the Revythoussa terminal becomes available.