industrial energy costs

PPC close to signing first PPAs with industrial consumers

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Power utility PPC and a number of industrial players are examining a series of details, including legal matters, before signing the country’s first round of power purchase agreements (PPAs) for supply of lower-cost green energy.

PPC and industrial consumers are aiming to sign PPAs by Monday, though it remains uncertain if this target will be achieved, energypress sources have informed.

Procedures leading towards the country’s first PPAs between PPC and industrial groups have moved rapidly since a recent announcement by RAE, the Regulatory Authority for Energy, exempting PPAs from a wholesale electricity market price cap. This measure comes into effect as of tomorrow.

The PPAs involving PPC and industrial consumers are planned to have ten-year durations. Industrial consumers will need to be supplied electricity through thermal power stations for the first two years of these ten-year periods, providing energy supply coverage until new and required RES facilities being developed by the power utility are up and running.

PPC’s launch date of new solar farms, which will ensure green energy supply to industrial consumers, is a key matter in the final-stage talks before PPAs are signed. According to sector officials, these RES projects are expected to be launched in 2025.

Some of these RES facilities have already obtained connection terms from power grid operator IPTO, but most have not, preventing absolute certainty of their launches in 2025, as projected.

Revisions aim to reduce energy cost for most consumers

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The energy ministry is moving ahead with three revisions intended to lighten the burden of electricity bills for most consumers. Two of the changes were included in a draft bill submitted to Parliament late last Friday night, while a third revision has been attached to a RES-sector draft bill forwarded for consultation.

These measures include a new formula changing the way a special levy imposed on electricity producers is calculated. It is planned to now be calculated as 5 percent of the average TTF gas index price, an initiative that should lessen the levy’s cost for electricity companies and, by extension, the cost of electricity for consumers.

This special levy on electricity producers was introduced in November at a fixed rate of 10 euros per MWh.

Also, several low and medium-voltage consumer categories – including industrial consumers and farmers – will be exempted from a public service compensation (YKO) charge included in electricity bills.

In addition, a legislative revision is planned to pave the way for power purchase agreements (PPAs), offering industrial consumers renewable energy supply agreements over long-term periods.

Legislative revision for PPAs submitted to Parliament tomorrow

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A legislative revision exempting energy bilateral agreements from a wholesale market cap, which will pave the way for PPAs promising industrial players fixed energy costs over long-term periods, is scheduled to be submitted to Parliament tomorrow ahead of a vote on Tuesday.

Once ratified, the new law, to either be introduced the very next day, on March 1, or by March 10 at the very latest, will enable the establishment of the country’s first PPAs.

Metal manufacturer Viohalco and building materials producer TITAN, the country’s two most energy-intensive industries, are expected to be the two first corporations to sign PPAs with power utility PPC.

Industrial energy cost support activity heightened

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Power utility PPC appears to have reached an advanced stage in talks with metal processing company Viohalco, one of Greece’s biggest electricity consumers, for a green-based power purchase agreement (PPA), which, if sealed, would be the power company’s first, sources have informed.

Also, on a wider scale, the Greek government, in response to considerable pressure from industrial associations, is believed to be preparing an energy-cost support package for industrial firms.

This support is expected to be offered in the form of subsidized electricity over a one-year period. A related legislative revision is being prepared. Budget money will be needed to fund this support.

Returning to PPC and Viohalco, the two sides are discussing a long-term supply agreement at a fixed price and have agreed on exclusive electricity supply from specific solar farms for the industrial player, the sources added.

Such an agreement promises to cover the industrial player’s energy needs at a subdued cost.

Manufacturers have been unsettled by expiring and expired electricity supply agreements with PPC, which, for decades, up until the energy crisis, had been able to offer low-cost energy supply deals.

PPC, like all energy suppliers, has been forced to abandon such deals, now unprofitable, and instead turn to PPAs.

PPC negotiating long-term PPAs with 3 industrial players

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Power utility PPC is holding talks with two, possibly three, industrial players for new electricity supply agreements in the form of long-term power purchase agreements (PPAs) of up to ten years following the expiry, on January 1, of high-voltage supply deals.

PPC and the industrial enterprises involved in these negotiations are currently discussing the details of terms and fixed price levels, sources informed.

The energy ministry’s intention to exempt electricity producers from a wholesale electricity market cap, as long as they have established PPAs with energy-intensive consumers for physical delivery of power quantities, has served as a catalyst for the ongoing negotiations.

Energy minister Kostas Skrekas is awaiting the European Commission’s approval for this exemption.

The industrial players discussing prospective PPAs with PPC cannot fully cover their energy needs through their own electricity production facilities, sources noted.

The current energy crisis highlights the energy-price volatility risk faced by industrial players and the importance of fixed electricity prices for stability and security to their operations, officials pointed out.

PPAs promise to offer industries energy-cost stability during times of great uncertainty, they added.

 

Factories closed as a result of high energy costs, PPAs urgently needed

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A ministerial decision exempting power purchase agreements (PPAs) from a wholesale electricity market cap, a revision that would help resolve major energy-cost issues faced by the industrial sector, is expected to be signed by February 1, according to sources.

Industrial players, concerned about certain factors regarding this revision, have expressed uncertainty as to whether the ministerial decision, alone, will suffice for the exemption to be implemented or whether a legislative revision, needing more time, will also be needed. At present, a number of factories remain closed as a result of high energy costs.

Industrialists also want clarification on whether any intervention concerning operations at the energy exchange will be needed before PPAs can be exempted from the wholesale electricity market cap. If so, this would delay the revision’s implementation by a further four months, at least. Such a delay would prove devastating for industrial units, battling to deal with high energy costs.

Factories currently closed will remain shut until at least January 15. Their owners have yet to decide if they will reopen in the ensuing period. Industries that are still operating are being supplied electricity at regular wholesale prices, negatively impacting their production costs and competitiveness.

Preliminary PPA agreements up, 2.5-3 GW in extra grid space

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An energy ministry decision offering incentives for RES projects incorporating power purchase agreement (PPAs) plans has led to a flurry of such preliminary agreements between RES producers and industrial energy consumers.

Applications representing over 6 GW in RES projects incorporating PPA agreement plans have been submitted to power grid operator IPTO. This group of projects has been offered priority status for grid connections, through a ministerial decision reached in August.

On the other hand, PPAs with RES producers are crucial for industrial enterprises, pressured by higher energy costs. Many industrial enterprises face expiring supply agreements with power utility PPC that were established at prices well below current levels.

The energy ministry aims to further establish the dissemination of bilateral contracts between renewable energy investors and large-scale consumers or electricity suppliers by easing capacity limits on RES projects incorporating PPAs. This move will offer additional grid capacity of between 2.5 and 3 GW for such projects.

It remains unclear if this higher capacity for RES projects incorporating PPAs will be made gradually or through one step. A decision on this detail is expected imminently.

 

Mytilineos highlights energy cost woes faced by industry

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Leading industrialist Evangelos Mytilineos, chairman and CEO of the Mytilineos group, has pointed out the energy-cost challenges faced by group member Aluminium of Greece ahead of its expiring electricity supply agreement with power utility PPC.

The power utility has already made clear it cannot continue offering favorable electricity supply agreements to industrial consumers, especially under the current market conditions.

Aluminium of Greece’s electricity supply agreement with PPC expires in 2023. Other energy-intensive industries are also under pressure to resolve their energy-cost issues. For some, the problem is even more acute as their supply agreements with PPC end at the end of this year.

PPC, in negotiations with industrial consumers, has remained adamant on its position, insisting it cannot keep offering favorable terms, especially given the adverse market conditions and a current wholesale market model that  severely restricts profit margins of electricity producers and transfers excess revenues to the Energy Transition Fund for financing of household support measures.

In response, the government is now looking for solutions that would offer incentive for power purchase agreements (PPAs) between renewable energy producers and industrial enterprises, the objective being to ease the energy-cost burden on industries.

Energy minister Kostas Skrekas recently sat in at a meeting staged by SEV, the Hellenic Association of Industrialists, which called for urgent action that could resolve the energy cost concerns faced by industrial enterprises.

 

Incentives sought for PPAs between renewable energy producers, industry

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The government is urgently looking for solutions that would offer incentive for power purchase agreements (PPAs) between renewable energy producers and industrial enterprises, the objective being to ease the energy-cost burden on industries, facing, within the first half of 2023, expiring energy supply agreements that were established with power utility PPC prior to the energy crisis at prices well below current levels.

Government officials are working on the issue with increased urgency following energy minister Kostas Skrekas’ participation at a meeting held by SEV, the Hellenic Association of Industrialists.

SEV members, at the meeting, pressed for an energy supply solution offering competitive prices as protection against the threat of industrial unit closures, already occurring in central Europe.

Industrial enterprises in Greece are currently under enormous pressure as a result of elevated energy costs. PPC has already made clear it cannot continue to offer industrial firms new supply agreements at favorable prices, as has been the case over recent decades.

PPAs with RES producers appear to be the only solution for industrial enterprises as such agreements would secure competitively priced energy over extended periods.

 

Subsidies planned to ease industrial energy cost burden

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The government’s financial team has decided to subsidize industrial-sector electricity following related arrangements with power utility PPC in response to the latest surge in energy prices, energypress sources have informed.

Electricity prices have risen to 400 euros per MWh and natural gas at the TTF benchmark is up to 135 euros per MWh.

The government’s support funds planned for the industrial sector will be far greater than amounts required to subsidize electricity for households and businesses.

According to estimates, the total cost of industrial electricity in 2023 will reach 1.5 billion euros, assuming prices are at 300 euros per MWh.

Given the energy market’s adverse conditions, government support for industrial energy costs is crucial and will need to be delivered fast.

Supply agreements between PPC and major-scale industries, established prior to the energy crisis, at prices well below current levels, will gradually expire in 2023, within the first half of the year.

 

Industrial energy-saving incentives auction next month

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An inaugural auction offering compensation amounts to high and medium-voltage industrial consumers for reduced electricity usage is set to take place in December as part of the country’s effort to limit energy demand by 5 percent during peak hours, a European Commission order that needs to be met by all EU member states.

Industrial consumers – high and medium-voltage – submitting the lowest compensation bids at monthly auctions will be offered energy savings through monthly auctions.

Separate auctions will be held for high and medium-voltage industrial consumers, energypress sources informed.

The compensation amounts to be offered to successful bidders will stem from the Energy Transition Fund.

A legislative revision facilitating these auctions has just ratified in parliament. However, other legislative and regulatory matters still need to be settled before the inaugural auction can go ahead, December being the target.

The Greek government has set the three-hour period from 6pm to 9pm, including weekends, as the country’s peak time for energy.

Industry back to pre-pandemic levels despite energy crisis

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The country’s industrial sector is proving to be resilient amid the energy crisis, judging by its energy consumption patterns, up 3.2 percent in November, compared to the equivalent month a year earlier, according to data provided by power grid operator IPTO in its monthly report.

Overall high-voltage electricity demand in November reached 555 GWh, almost to the pre-pandemic level of 563 GWh that had been recorded in November, 2019.

Export activity by the heavy industry sector has risen, reflecting these electricity demand figures. However, industrial players have had to deal with rising energy costs over the past few months. Producers are inevitably passing on increase energy costs to consumers.

 

 

EVIKEN: Energy crisis monthly cost for medium-voltage industry at €150m

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Medium-voltage industrial energy costs have risen by 150 million euros per month during the energy crisis and require structural intervention, not temporary measures, Antonis Kontoleon, president of EVIKEN, the Association of Industrial Energy Consumers, has told an online event organized by SVSE, the association of mainland Greece industries, on the impact of the energy crisis on industry.

Industry, in recent times, has faced electricity costs that have quadrupled and natural gas prices five times over normal price level, increasing overall production cost by levels of between 20 and 40 percent, a rise that cannot be passed on to consumers, the EVIKEN president noted.

Producers in Greece are disadvantaged compared to rivals in other parts of Europe as they are not able to purchase energy in advance or adopt hedging polices through long-term contracts in order to secure specific cost levels, Kontoleon stressed.

In other European markets, just 20 percent of energy consumed is traded through energy exchanges and 80 percent stems from contracts established between producers or suppliers and consumers, the EVIKEN head noted.

Greek industry found itself trapped, without tools, in an energy crisis that has highlighted the market’s distortions, he added.

 

Industry may be spared of public service compensation cost

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Energy minister Kostas Skrekas has, for the first time, in public comments, left open the possibility of industrial enterprises being spared of paying public service compensation (YKO) amounts for a five-month period covering November to March, as part of an effort to reduce industrial energy costs.

“We will assess the public service compensation account’s revenues and, if deemed necessary following the five-month period, will gradually impose these charges,” the minister noted at an event focused on industrial energy cost.

Speaking at the same event, Giorgos Xirogiannis, deputy general manager of SEV, the Hellenic Association of Industrialists, underlined the problems faced by industrial producers as a result of the sharp rise in energy costs.

Greek industry is currently 20 to 30 percent less competitive than European industrial enterprises, the SEV deputy noted.

He raised a series of energy cost-related issues that need to be addressed, including the YKO surcharge added to electricity costs, distribution costs and energy taxes.

Investments in renewable energy infrastructure and networks need to be accelerated in coming years for the achievement of a favorable energy mix balance, the SEV official added.

Also, the impact on the cost of energy of the EU’s “Fit for 55” package, aiming for a 55 percent reduction of carbon emissions by 2030, compared to 1990 levels, needs to be discussed, the SEV deputy added.

 

Industrial players paying price for energy supply agreement delays

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Industrial producers who have prolonged their energy-supply negotiations and delayed signing new agreements now face drastically deteriorated conditions prompted by an alarming price surge.

Highlighting the unfavorable turn in market conditions, one small-scale industrial consumer is believed to have just signed a new high-voltage supply agreement at a price level of approximately 120 euros per MWh, about 30 percent higher than levels of just a few months ago and considerably higher than supply agreements reached early in the summer.

Power utility PPC managed to move fast enough to incorporate hedging agreements to these deals as protection against price rises, a crucial decision given the current conditions.

A number of large-scale industrial players have yet to reach electricity supply agreements, finding themselves fully exposed to the sharp price rises, caused by a combination of unfavorable factors in international markets.

Mid-voltage industrial producers find themselves in even more discomforting positions as electricity price rises for this category have been even steeper, reaching levels of 125 euros per MWh in July and 150 euros per MWh in August.

The adverse market conditions help explain Hellenic Petroleum ELPE’s recent decision to not sign a new supply agreement with PPC, turning instead to group member Elpedison for its electricity needs.

Increased electricity and natural gas costs are severely impacting the competitiveness of industrial producers, expected to pass on these increased costs to their product prices.

 

PPAs soon as measure against higher industrial energy costs

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A model for green-energy power purchase agreements (PPAs) will be preannounced to the European Commission by the end of next week in an effort for a swift approval, energy minister Kostas Skrekas told a news conference yesterday, held for an update on measures being prepared to lessen the burden of increased energy costs for consumers.

The minister offered an update on the green PPA plan when asked about government measures that could protect large enterprises against increased energy costs.

The energy ministry sees the green PPAs as a cost-reduction tool for industrial energy as industrial consumers will be able to cover a significant percentage of their energy needs using RES-based electricity, a lower-cost option. The effort is expected to be based on a Green Pool model.

 

 

European producers anxiously await CBAM details in ‘Fit For 55’ plan

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European industrial producers are anxiously awaiting the details of the European Commission’s Carbon Border Adjustment Mechanism (CBAM), part of the “Fit For 55” climate-change package of measures being presented today, which could greatly influence their energy costs.

Whether the introduction of the CBAM system – designed to introduce transboundary taxes on non-EU countries regarded as making a lesser effort, than the EU, to combat climate change – will be combined with a continuation of free carbon emission rights for certain industrial categories, or spell their end, is a crucial detail for producers active in sectors such as aluminium, cement and steel.

The latter scenario would prompt a sharp increase in energy costs for many energy-intensive producers, and could lead to further closures of industrial plants in Europe.

Latest reports suggest free carbon rights for selected industrial categories, as a cost-offsetting measure, will be maintained until at least 2025 or 2026.

The termination of the carbon cost-offsetting measure would require EU industrial producers to cover emission right costs for their entire production, in other words, sales within the EU and exports beyond, a dreaded prospect that would devastate European industry exports.

In the aluminium sector, for example, the termination of carbon emission cost offsetting measures would result in a 60 percent increase for every ton produced, making business beyond the EU impossible.

PPC, industrial consumers nearing 2021-23 supply deals

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Power utility PPC’s ongoing negotiations with industrial consumers for new two-year supply deals covering 2021 to 2023 are making progress in a number of cases, where deals are close to being finalized, while, in others, work is still needed to bridge gaps.

Tariff increases of approximately 20 percent are expected, while discounts for punctual payments by customers will not be incorporated into the new two-year deals, it has become apparent.

The talks are now focused on other matters, still unresolved, including the method applied by the power utility to shape customer profiles influencing respective tariff levels.

The percentage of a take-or-pay clause to be applied on monthly electricity consumption levels, or discrepancies from agreed consumption levels, is another matter that remains unresolved.

At this stage, PPC appears likely to accept a more flexible solution compared to its initial proposal.

PPC has already reached an agreement, until 2023, with the vertically integrated Mytilineos group’s Aluminium of Greece, the final deal in a 60-year association.

As of 2023, PPC’s pricing policy for energy-intensive consumers will change as tariffs will no longer be fixed but linked to wholesale electricity costs.

Medium-voltage suppliers seek higher-priced deal revisions

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A sharp rise in medium-voltage energy costs over recent times, resulting from higher wholesale prices, threatens to damage the competitiveness of Greek manufacturers, Antonis Kontoleon, president of EVIKEN, the Association of Industrial Energy Consumers, has told energypress.

Rallying CO2 emission right prices as well as persistently higher prices in the day-ahead and balancing markets have prompted electricity suppliers to seek revised medium-voltage agreements as protection against loss-incurring sales.

Electricity suppliers, maintaining business to business agreements with medium-voltage consumers have increased – by 20 percent compared to just recently – their number of requests forwarded for new supply agreements.

More crucially, suppliers are asking their customers to accept upward price revisions.

In many cases, suppliers have forwarded letters to customers informing that they will no longer be able to service existing supply agreements unless prices per KWh are raised.

Low-voltage consumers also face increased electricity bill costs following the activation, by suppliers, of cost-protection clauses.

Independent suppliers have activated wholesale price-related clauses, incorporated in their supply agreements, while power utility PPC has triggered, for the first time, a CO2 emission rights cost-related clause.

RAE, the Regulatory Authority for Energy, has summoned PPC’s administration to offer an explanation on this decision, at a meeting today. The authority is also expected to soon summon independent suppliers.

Wholesale electricity price ascent a major concern for industry

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Wholesale electricity market prices have made further increases in recent times, driven by rising carbon emission right prices, which have exceeded 50 euros per ton.

Over the past few days, not including Sunday, the wholesale market’s day-ahead price rose well above 60 euros per MWh on energy exchange, reaching as high as over 72 euros per MWh last Thursday.

Besides the impact of increased carbon emission right prices, the energy market is also being pressured by higher gas prices, driven by greater usage of natural gas-fueled power stations being anticipated.

Natural gas prices have risen from 16 to 23 euros per MWh over the past few days.

This increase in wholesale electricity prices is directly impacting the retail electricity market, energy-intensive industrial consumers, both in the medium and high-voltage categories, already feeling the effects.

Given the energy market’s current uncertainty, suppliers are limiting the duration of contracts offered to three months.

The industrial sector is voicing concern about ambiguity ahead and rising energy costs that threaten to severely undermine the competitiveness of producers.

The activation, by suppliers, of carbon emission cost clauses included in agreements have increased industrial electricity prices by as much as 20 euros per MWh in recent times.

Though the industrial sector is compensated for this additional cost, compensation calculations are based on the previous year’s price levels, meaning industrial enterprises will end up covering a large percentage of the recent electricity cost increase.

Based on latest calculations, industrial enterprises will be compensated just 9 euros per MWh for the recent 20 euro per MWh hike.

Network usage surcharge cut for energy-intensive consumers

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Network usage surcharge revisions soon planned by RAE, the Regulatory Authority for Energy, to apply for 2021, are expected to reduce surcharge costs for industrial consumers and, on the contrary,  increase those of households.

Power grid operator IPTO, responding to a RAE request, has forwarded its recommendation on the matter following a related study that examined whether leeway exists to reduce network usage surcharges for high-voltage industries and energy-intensive enterprises of the medium-voltage category – consumers with annual consumption levels exceeding 13 GWh.

The IPTO study concluded that surcharges can be reduced for energy-intensive industries to levels that apply for major-scale consumers in other European countries, including Germany, France and the Netherlands.

IPTO’s guaranteed annual earnings do not change, meaning that a network usage surcharge reduction for industrial consumers will automatically prompt an increase for all other consumer categories, namely medium and low-voltage consumers.

The energy ministry is pursuing a policy aiming to reduce energy costs for the industrial sector.

Network usage costs are also expected to be revised in 2022 as IPTO is preparing a new formula to determine the distribution of surcharge costs based on latest data concerning electricity consumption shares in the high, medium and low-voltage categories. The latest data favors major-scale consumers, sources informed.

EVIKEN: Medium-voltage surcharge costs excessive

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Formulas applied to calculate system usage and distribution network surcharges for medium-voltage industrial consumers are now outdated, resulting in disproportionate overcharging for this consumer category, EVIKEN, the Association of Industrial Energy Consumers, has pointed out in a letter forwarded to RAE, the Regulatory Authority for Energy.

The association called for medium-voltage industrial consumer charging formulas to be harmonized with those used for high-voltage consumers, which offer incentives preventing excessive demand peaks.

EVIKEN also forwarded the letter to power grid operator IPTO and distribution network operator DEDDIE/HEDNO.

Reducing industrial energy costs a key aim of new gov’t committee

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High energy costs and a discouraging, for investments, amortization status, are two main factors holding back Greek manufacturing and placing it in a disadvantageous position compared to those of rivals, Michalis Stasinopoulos, president of industrial body Hellenic Production, stressed during yesterday’s inaugural session of a new government committee for the industrial sector.

The assembly of a government committee for industrial matters has been welcomed as a  positive step by the industrial sector, hoping the committee can contribute to needed coordination between various political offices as the fragmentation of responsibilities and absence of an industry ministry has not helped counter issues faced by the manufacturing sector, Stasinopoulos pointed out.

The new government committee’s line-up includes ministers covering industrial matters, namely development and investment minister Adonis Georgiadis, finance minister Christos Staikouras, environment and energy minister Kostas Skrekas, labor and social affairs minister Kostis Hatzidakis, digital governance minister Kyriakos Pierrakakis, and education and religious affairs minister Niki Kerameus, represented at yesterday’s session by her deputy, Zetta Makri.

The industrial sector was represented by SEV, the Hellenic Association of Industrialists, SBE, the Federation of Industries of Greece, Hellenic Production, the Athens Chamber of Commerce and Industry, IOBE (Foundation for Economic and Industrial Research), and the Association of Greek Regions.

Plan for subsidized lower-cost RES power to industry explored

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The energy ministry is working on a transitional state-support mechanism that would offer industrial consumers lower-cost electricity stemming from renewable energy sources.

The European Commission offers conditional approval to state aid resulting in green-energy access for energy intensive consumers.

The energy ministry’s effort to establish such a mechanism comes following the exclusion, from a government list of proposals for EU recovery fund support, of a plan envisaging power purchase agreements (PPAs) between industrial enterprises and RES producers.

The ministry’s new effort is expected to be a variation of the plan not included in the government’s list of proposals seeking support through the European Commission’s Recovery and Resilience Facility.

The ministry acknowledges that, under present conditions, direct and mutually beneficial agreements between energy-intensive industrial consumers and RES producers cannot be achieved, unless such deals concern companies belonging to vertically integrated groups.

The plan being explored would ensure RES producers remuneration for a percentage of their output absorbed,  through the state-support mechanism, at fixed tariffs and extended periods.

PPC reluctance ‘stalling talks with high-voltage customers’

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Power utility PPC’s decision to further extend its negotiating period with industrial producers for new high-voltage tariff agreements is futile, EVIKEN, the Association of Industrial Energy Consumers has suggested in a statement, indicating the utility has no interest to compromise.

EVIKEN contended PPC’s reluctant tactics are stalling its negotiations with high-voltage customers.

PPC officially informed industrial customers of its decision to extend the negotiating period for new high-voltage tariff agreements until June 15, but, even so, as of today, has unilaterally revised existing terms, greatly reducing punctuality and advance-payment discounts offered to this consumer category.

These revisions promise to increase energy supply costs for PPC’s industrial customers by levels of between 4 to 12 percent, depending on respective profiles, according to estimates.

A preceding PPC extension for its negotiations with high-voltage customers, offering an additional two months, expired on February 28.

The power utility’s demands include increases that would result in energy-cost hikes of up to 40 percent, the cancellation of nighttime tariffs for steel industries, imposition of a clause linked with balancing market cost, as well as restrictions effectively obstructing industrial loads from market participation, the industrial energy consumers association noted in its announcement.

Despite the impasse prompted by its demands, PPC is now offering its industrial customers a new ultimatum in an effort to force them to accept unfavorable terms for new supply contracts, EVIKEN stated.

The key question is whether PPC ultimately wants constructive dialogue with industry to avoid a negotiation deadlock, which would be detrimental to all parties involved, EVIKEN noted.

The sector’s prolonged uncertainty over energy costs is hampering plans for production increases and new investments, greatly impacting the competitiveness of the country’s major producers, the association stressed.

Industrial officials enraged by PPC energy-negotiation demands

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Industrial producers are reacting against terms and demands tabled by power utility PPC in ongoing negotiations for new high-voltage tariffs and agreements that take into account new market conditions ushered in by the target model.

Energy-intensive producers, not appeased by PPC’s recent decision to extend its negotiating period by three months – thereby extending the validity of existing agreements with industrial customers until June – claim the power utility is not making any effort to achieve compromise solutions.

The industrial sector is already in crisis, and, furthermore, the recent disruption of operations at steel producer Halyvourgiki and state-controlled nickel producer Larco, leaving PPC with enormous unpaid electricity bills, illustrates the power utility is not adopting government policies for a strategic recovery of the country’s industrial sector, officials at energy-intensive industrial enterprises have complained.

Although industrial energy costs are already too high, PPC is proposing high-voltage tariff increases in the range of 40 to 50 percent, industrial firm officials have noted.

Despite their obvious feelings of discontent, officials at energy-intensive consumers appear willing to keep negotiating with PPC in search of solutions that can enhance the competitiveness of industries.

However, some industrial sub-sectors, such as heavy industry, appear to be far less tolerant. Officials at iron, copper, cement and steel industries believe their proposals are not being considered at PPC.

They want balancing cost and take-or-pay clauses removed from any new agreements. Heavy industry cannot assume such risks and, at the same time, remain productive and competitive, officials stressed.

PPC extends industrial tariff negotiations until June

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Power utility PPC has extended by three months its negotiating period for new high-voltage industrial tariffs following a request by a number of energy-intensive producers, energypress sources have informed.

The negotiating sides acknowledge pandemic-related problems have prompted the need for additional time, during which  compromise solutions will be sought.

PPC had given industrial enterprises until February 28 to accept a new high-voltage tariff pricing formula. The previous system’s validity expired December 31.

Industrial electricity charges for the first two months of 2021 have been based on the terms of expired agreements.

According to sources, tariff levels are of secondary importance in these negotiations, the prime concern being a new pricing system sought by PPC, which, if implemented, would bring an end to fixed tariffs and volume discounts.

PPC contends that the target model and its accompanying energy exchange markets, such as the balancing market, need to be taken into account for new pricing formulas.

The negotiating sides appear determined to reach agreements that would bolster the competitiveness of industrial producers without obligating the state-controlled power utility to supply high-voltage electricity at below-cost levels.

EDA THESS network expansion lowers distribution cost up to 56%

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Gas distributor EDA THESS, covering the Thessaloniki and Thessaly regions, has, besides boosting its total revenue, managed to reduce distribution costs shared by consumers as a result of the company’s swift and well-planned distribution network expansion.

The gas distributor’s household, business and industrial consumers in Thessaloniki and Thessaly are now benefitting from significant distribution cost reductions that have reached as much as 56 percent, as the network expansion is enabling EDA THESS to impose smaller distribution charges on an increased number of consumers.

Since January 1, the company’s distribution costs dropped a further 14.8 percent in Thessaloniki and 21.9 percent in Thessaly, compared to the previous regulatory period.

The company’s industrial consumers have benefited most as their distribution costs have fallen by 45 percent in Thessaloniki and 56 percent in Thessaly, compared to distribution costs up until November, 2020.

“Our job is to distribute gas to as many regions as possible and broaden its use as much as possible,” EDA THESS general manager Leonidas Bakouras told energypress in response to a related question.

Looking ahead to further expansion, EDA THESS has begun implementing a new development plan for 2021 to 2025, estimated to be worth 156 million euros.

SBE, the Federation of Industries of Greece, in a related statement, welcomed this considerable distribution cost reduction.