Consumption record expected, industry on switch-off standby

Electricity consumption today is expected to exceed yesterday’s level of 10,700 MWh, a ten-year high, and reach close to 11,000 MWh, which would represent an all-time high, as the prolonged heatwave peaks.

Industrial consumers are awaiting switch-off orders from power grid operator IPTO. Up until yesterday, they had yet to receive such instructions, but a number of industrial enterprises have already switched off voluntarily, while Prime Minister Kyriakos Mitsotakis has urged consumers to exercise restraint in electricity consumption.

Authorities are placing their hopes for grid sufficiency in strong summer breezes forecast for Thursday that should cool temperatures and significantly boost generation through the country’s wind energy facilities.

Though still too early to judge, the grid appears to have stood up to the heatwave’s challenge so far. Minor technical issues and brief outages in various parts of the wider Athens area, Larissa, central Greece, and Agrinio, in the northwest, have been reported.

Authorities remain on edge as the resilience of a largely outdated grid remains uncertain amid daily consumption levels of 9,000 to 10,000 MWh for days on end.

Lignite-generated input is playing a crucial role. It covered between 16 and 18 percent of consumption yesterday. Power utility PPC’s lignite-fired Megalopoli III power station, which has been sidelined for months as part of the country’s decarbonization phase-out plan, operated most of the day yesterday.

 

‘DAPEEP should manage PPAs platform, not energy exchange’

Preparations for the country’s Market Reform Plan, expected to soon be submitted to the European Commission for approval, have prompted a reaction from RES market operator DAPEEP, asserting it should be appointed operator of green-energy power purchase agreements (PPAs) instead of the energy exchange, as has been stipulated in the plan, now undergoing public consultation.

DAPEEP’s objection to the PPA plan, included in the Market Reform Plan, emerged at a meeting staged by RAE, the Regulatory Authority for Energy, uring discussion on the road map for domestic wholesale electricity market revisions.

DAPEEP’s operator’s chief official Yiannis Giarentis protested that the operator has supported the RES sector’s development for years, being at the helm of this market for 20 years, but has now been sidelined as green-energy PPAs, to facilitate bilateral agreements between RES producers and industrial consumers, are about to come into the picture.

RAE will now examine various proposals and views before taking a stance on the matter.

Green PPAs exchange platform, industrial subsidies in making

A Market Reform Plan being prepared by the government, to be submitted to the European Commission, includes provisions for the establishment of an energy exchange transaction platform concerning power purchase agreements (PPAs) between RES producers, as well as green aggregators, with suppliers and major-scale consumers.

The green PPAs, when concerning energy-intensive industrial enterprises, will receive state support, while a subsidy package for this category of agreements is also in the making, according to the plan.

Funds stemming from the recovery fund, the green fund as well as the RES special account will be used to fund the subsidy package, according to the government plan.

The aim of the effort is to ensure, in advance, the sale of prospective energy to be produced by new RES units, the intention being to  facilitate bank financing for their development given the fact that they will no longer be entitled to fixed tariffs, through auctions, over 20-year periods, as has been the case until now.

The plan is expected to result in lower-priced green energy for industrial consumers and also facilitate the development of new RES investments.

PPC-Aluminium of Greece agreement paves way for other major consumers

The forthcoming end of a long-lasting business association between Aluminium of Greece, a member of the Mytilineos group, and power utility PPC, announced at the former’s general shareholders’ meeting yesterday, marks the end of an era in the energy ties between the country’s biggest electricity consumer and the Greek market’s dominant supplier.

In 2023, Aluminium of Greece will no longer depend on PPC’s supply, a development concurrently marking the beginning of its goal to become the first eco-friendly aluminium producer.

The latest PPC-Aluminium of Greece agreement promises to pave the way for solutions in negotiations currently in progress between the power utility and other energy-intensive industrial producers.

Other than the fact that the duration of Aluminium of Greece’s new supply agreement with PPC will run until 2023, no other details have been disclosed. Its expiration in two years’ time will mark the end of a 60-year association between the two companies.

One thing already clear is that Aluminium of Greece, beyond 2023, will receive electricity from the Mytilineos group’s new natural gas-fired power plant being developed in the Agios Nikolaos industrial zone in Viotia’s Agios Nikolaos area, northwest of Athens, to be direct cable-linked to the Aluminium of Greece facility, as well as through RES production.

The combination of these two electricity sources will offer Aluminium of Greece greater energy-source flexibility, the group’s chairman and CEO Evangelos Mytilineos noted yesterday.

PPC’s administration, headed by chief executive Giorgos Stassis, displayed realism that will “help industry, as a whole, move ahead with the energy transition that is inevitably approaching,” Mytilineos acknowledged. “We can establish PPAs at good price levels, and we will play a significant role in this domain,” he added.

 

PPC hold of industry ending, energy groups entering picture

The approaching end of a 60-year business association between power utility PPC and Aluminium of Greece, a member of the Mytilineos group, announced yesterday by the group’s chairman and CEO Evangelos Mytilineos, marks the end of an era with wider implications, as all the country’s energy and industrial groups are heading in the same direction.

“In 2023, Aluminium of Greece will no longer depend on PPC. It is moving into a new era as, for the first time since its establishment, the company will be freed from PPC in terms of electricity supply,” Mytilineos announced at a general shareholders’ meeting.

The future belongs to the vertically integrated groups, smaller versions of the power utility, set to enter and cover market needs.

Some enterprises have already prepared and positioned themselves for the new era, in which major-scale electricity consumers will no longer depend on PPC, instead covering needs through PPAs.

Companies that have been slower to incorporate Greece’s energy transition into their strategies must now move fast if they want to remain on the map.

The developments offer a glimpse of the energy sector’s new era. A more efficient PPC will no longer be weighed down by dependencies and compromises, private-sector groups will be structured for greener policies, RES investors will not depend on tariffs at RES auctions, but, instead, establish PPAs with industrial consumers, and competition will intensify through the many changes coming into play, such as the target model markets and the Capacity Remuneration Mechanism (CRM).

Green-energy investments, breaking one record after another, now appear likely to achieve a 2030 objective aiming for eco-friendly energy coverage of the country’s total energy demand at a level of 63 percent.

This essentially means that RES facilities offering a total capacity of 17 GW will be operating by the end of this decade, lessening the need for natural gas-fired power stations, which will become unsustainable, in market terms, as a large proportion of energy exchange transactions will be covered by increasingly competitive RES units.

 

Brussels strategic reserve conditions discussed by RAE, IPTO, ministry

A new adequacy report and a new market reform plan, two conditions set by the European Commission for Greece’s adoption of a strategic reserve mechanism, have been discussed during an online meeting between RAE, the Regulatory Authority for Energy, power grid operator IPTO, and the energy ministry.

The European Commission’s Vice-President Margrethe Vestager, also Brussel’s Commissioner for Competition, during a preceding meeting, earlier last week, with energy minister Kostas Skrekas, called for a new adequacy report, in other words, an updated study proving the country’s need for a strategic reserve mechanism to cover actual grid needs.

The Brussels official also requested a new market reform plan detailing reforms designed to intensify competition in the wholesale electricity market.

Pantelis Kapros, Professor of Energy Economics at the National Technical University of Athens, has been asked to contribute to this new market reform plan, sources informed.

Besides the strategic reserve mechanism, RAE, IPTO and energy ministry officials also discussed details on prospective power purchase agreements (PPAs) between industrial enterprises and RES producers.

Vestager, at her meeting with Skrekas, the energy minister, recommended that Greece follow the examples of PPA models adopted by other EU member states, such as Spain.

PPC lignite electricity packages through futures market

State-controlled power utility PPC will soon begin offering rival suppliers lignite-generated electricity packages through the target model’s futures market, energy minister Kostas Skrekas and the European Commission’s Vice-President Margrethe Vestager, also Brussel’s Commissioner for Competition, have agreed at a meeting yesterday.

Vestager, during the session, also made clear that the balancing cost of a mechanism concerning power purchase agreements (PPAs) between industrial producers and RES producers cannot be subsidized, but, instead, will need to be aligned with terms that apply for other EU member states.

Athens expects to submit its PPA plan to Brussels in June for approval.

Also next month, the government plans to submit its support framework proposal for energy storage units.

As for the country’s Strategic Reserve Mechanism, the European Commission’s deputy requested a new proposal from Athens, in line with new EU directives.

Under the Strategic Reserve Mechanism, PPC and all other electricity producers opting to withdraw units from the market for back-up services, would be remunerated for sidelining these units for periods determined by IPTO, the power grid operator.

Vestager stressed that the country’s Strategic Reserve Mechanism cannot coincide with the wider Capacity Remuneration Mechanism (CRM).

The Brussels deputy also pointed out that a compensation request made by Greece for PPC’s redevelopment of lignite areas, part of the decarbonization effort, is legally baseless and cannot be pursued further.

Mechanisms, competition on Vestager agenda, here May 13

Energy minister Kostas Skrekas intends to present his case for the introduction of five support mechanisms encouraging energy-sector investments in Greece’s ongoing transition towards carbon neutrality to the European Commission’s Vice-President Margrethe Vestager, also Brussel’s Commissioner for Competition, on the occasion of the official’s upcoming visit to Athens, scheduled for May 13.

Vestager will be in the Greek capital with an agenda featuring two pending competition issues concerning state-controlled power utility PPC.

Greece has faced charges for PPC’s monopoly of the country’s lignite sources but an agreement was reached to end the case by introducing a mechanism offering the power utility’s rivals access to lignite-generated electricity.

A market test for this mechanism was completed some time ago but failed to attract any real interest from rival suppliers.

The percentage of lignite-based electricity made available by PPC, initially set at 50 percent of total lignite-fired output and then lowered to 40 percent, is viewed, by third parties, as too small for any real gains.

The second PPC-related matter to be discussed during Vestager’s visit concerns a recently initiated investigation by Brussels seeking to determine whether the power utility has engaged in activities impeding market competition.

Private-sector investors are pushing for a capacity remuneration mechanism (CRM) in order to go ahead with the development of natural gas-fueled power stations, needed as Greece heads towards a post-lignite era. Skrekas, the energy minister, has repeatedly said a CRM will be launched in June.

The minister also supports a strategic reserve mechanism to compensate PPC’s lignite-fired power stations, still needed for back-up services but nowadays loss-incurring as a result of higher CO2 emission right costs.

In addition, the government is seeking compensation for the premature closure of PPC’s lignite-fired power stations and related mines, being phased out until 2023.

The minister also supports a support framework for hybrid units on non-interconnected islands combining RES electricity generation and energy storage.

Skrekas is also striving to establish a mechanism that would subsidize RES producers for power purchase agreements (PPAs) with energy-intensive industrial enterprises as well as suppliers selling to major-scale consumers.

 

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

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

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.

EU lawmakers vote in favor of carbon levy on certain imports

EU lawmakers have adopted a resolution for a carbon levy on certain imports from less climate-ambitious countries, with 444 votes in favor, 70 against and 181 abstentions.

Through the adoption of a Carbon Border Adjustment Mechanism (CBAM), to be implemented in 2023, the aim will be to create a global level playing field and prevent carbon leakage, which could create competitive disadvantages for European industrial producers.

The resolution underlines that the EU’s ambitious climate change targets should not lead to carbon leakage as global climate change efforts will not yield results if European production simply relocates to non-European countries with less ambitious emission standards, European Parliament announced in a statement.

European lawmakers, therefore, are in favor of a carbon tax on goods from non-EU countries that have not set ambitious targets for tackling climate change, as the EU has done with its ETS emissions trading system.

Besides creating a level playing field worldwide, the resolution should also serve as an incentive for both European and non-European industries to accelerate decarbonization procedures in line with the Paris Climate Agreement objectives.

 

Revisions to permit energy storage for households, industry

A special committee assembled by the energy ministry to deliver a plan, by May 15, tackling energy storage licensing and operation issues, is working on revising an existing framework to facilitate, and make financially beneficial, battery system installations at homes, businesses and industrial facilities, energypress sources have informed.

The existing framework, particularly restrictive and, as a result, subduing related investments, limits energy storage system installations to 30 KW and permits usage to roof-mounted PV panels for self-production.

The ministry’s special committee, which has been working intensively for more than two months, is striving to make revisions that would  broaden the usage of energy storage systems, the sources noted.

Energy storage system installations are expected to be permitted regardless of whether respective consumers have installed RES systems. This promises to enable battery charging through the network for utilization of stored energy at times chosen by consumers.

The use of energy storage systems is nowadays widely acknowledged as an important contributing factor for support of electricity networks and prevention of grid instability issues, especially during hours when PVs are disconnected as a result of a lack of sunlight.

Industrial officials enraged by PPC energy-negotiation demands

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.

Foreign firms seeking local demand response service roles

Major European companies with considerable interests in energy exchanges abroad are now seeking to represent local industrial producers for demand response services in Greece’s balancing market.

Two major international players, currently assembling new related divisions in Greece, have already approached Greek producers to take on their representation.

Demand response system entry into Greece’s new balancing market is expected to begin within 2021, barring unexpected developments.

Once launched, foreign representatives will be able to assume demand-response, green-aggregator roles in Greece, offering balancing services to the system.

Power grid operator IPTO, in its effort to ensure grid stability, will be able to utilize the flexibility major-scale electricity consumers are capable of offering.

PPC extends industrial tariff negotiations until June

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.

Ministry planning support mechanism for green PPAs

The energy ministry is seeking to establish yet another support mechanism, one subsidizing electricity absorbed by energy-intensive industries and other enterprises from renewable energy stations, whose cost the ministry aims to incorporate into the recovery fund.

Power purchase agreements (PPAs) reached between major-scale RES producers or aggregators with industries and other energy-intensive enterprises need to be reasonably priced if they are to ultimately prove beneficial for companies. The support mechanism would come into play here.

Green energy prices can be low and beneficial for industries and energy-intensive enterprises as RES stations have minimal operating costs once installed. These units merely have to cover investment costs and eventually make a profit for investors, once launched.

However, balancing market costs in target model markets, which significantly increase the cost of green electricity, also need to be factored into the equation.

The energy ministry will seek to subsidize balancing market costs by using recovery fund money as part of the effort.

The plan promises to help achieve two key goals. Firstly, RES stations will ensure supply channels for their production and thereby cement long-term performance figures, creating favorable conditions for bank loans financing green-energy investments. This would gradually increase the number of RES installations around the country.

As for the plan’s second key goal, energy-intensive industries and other enterprises with elevated energy costs would be ensured low-cost, eco-friendly electricity, subsequently boosting their level of competitiveness.

The support mechanism planned by the energy ministry will need to be endorsed by the European Directorate for Competition.

The government has high expectations for the success of this support mechanism as it acknowledges energy cost is a burden for Greek producers and other enterprises, including in the tourism sector.

Retroactive enforcement of balancing market rules sought

Non-vertically integrated electricity suppliers are seeking retroactive implementation of measures introduced recently by RAE, the Regulatory Authority for Energy, to contain balancing market prices at rational levels.

Balancing market costs rose sharply in the weeks following November’s launch of new target model markets, prompting an escalation of wholesale electricity prices that severely increased the purchasing costs of non-vertically integrated electricity suppliers.

These suppliers are now determined to seek returns from RAE and power grid operator IPTO for additional outlays prompted by flaws in balancing market rules that were not detected until after the launch of new markets.

A set of new rules just introduced by RAE constitute recognition by the authority of the abusive behavior practiced by producers prior to the intervention, the suppliers contend.

Non-vertically integrated electricity suppliers are pushing for even stronger measures. They believe the new rules rely too much on the goodwill and cooperation of producers, still able to return to irrational behavior and consequently threaten the sustainability of firms and financially pressure consumers.

On the same wavelength, EVIKEN, the Association of Industrial Energy Consumers, has criticized RAE for backing away from its own proposals, noting industrial energy costs currently depend on whether balancing market participants will exercise pricing restraint.

Major gas distribution tariff cuts a boost for industry

EDA THESS premises in Thessaloniki were visited by the President of the Federation of Industries of Greece (SBE), Mr. Athanasios Savvakis where he was welcomed by the General Manager, Mr. Leonidas Bakouras and executives of the Company.

During the meeting, the General Manager informed about the approved Development Plan 2021-2025 amounting to ~ 156 million € which is already being implemented supporting the development of the areas of responsibility of EDA THESS. As part of this ambitious Program, the Company aims to integrate more and more industries in the gas distribution network. The expansion of natural gas use to energy-intensive production units leads to an increase in their energy efficiency, to a reduction in the energy cost while at the same time environmental performance is improved.

It is worth noting that in 2020, for the region of Thessaloniki the industries MEL SSA, MEVGAL SA, Souroti SA, Roka SA, Onassis SA, B. Maliouris SA and the new gas station using CNG of EKO SA in Thessaloniki signed a connection contract, while for Thessaly the companies HELLENIC DAIRIES SA, AGRODER IKE, VIOLAR SA, CVBTECH HELLAS MIK, D,KISSA BROS & CO OE.

At the same time, Mr. Bakouras pointed out that the critical decline of distribution tariffs derives from the development planning, consistent and full implementation of an integrated strategy with profitable investments, based on technical and economic criteria. From the 1st of January the weighted average distribution tariff of EDA THESS that has been approved by the Authority shows a further decline of 14.8% in Thessaloniki and 21.9% in Thessaly, compared to the previous regulatory period.

Even more impressive is the reduction for the industrial consumers, who now enjoy reduced distribution tariffs by 45% in Thessaloniki and 56% in Thessaly compared to the distribution tariff applied in the previous regulatory period.

For his part, Mr. Savvakis expressed his satisfaction for the shaping of distribution prices at lower levels. He stressed that such a development is quite positive for the productive base and acts as an accelerator in attracting new investments, turning the region into an investment hub. By this way, the interest of investors for the development of companies in the industrial sector is mobilized, as a healthier, more flexible, and competitive environment with low energy costs is established. In this direction, EDA THESS through targeted investments, further strengthens the perspective of infrastructure development both in Northern Greece and in other areas of its License.

In line with the National Plan for Energy and Climate objectives, EDA THESS achieves the increase of natural gas penetration, contributing to the boost of the productive restructuring.

Demand response service’s activation more probable, conditions tight

Power grid operator IPTO’s two final demand response auctions for the year, scheduled for December 29 and 30 and to concern the time period between January 1 and March 31, 2021, will be staged amid tight market conditions that resemble those of the country’s supply security crisis in 2017, making the operator’s activation of the demand-response mechanism, a key energy-saving tool for the industrial sector, more probable.

Major-scale electricity consumers such as industrial enterprises are compensated 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’s needs.

Capacities totaling 800 MW will be offered at the two upcoming demand response auctions, equally divided into 400-MW amounts for the two sessions.

 

 

Industry opposes bilateral contract restrictions

EVIKEN, the Association of Industrial Energy Consumers, has expressed opposition to an energy exchange proposal, delivered through public consultation, calling for the imposition of restrictions on bilateral contracts reached by suppliers.

In its letter, EVIKEN notes that an upper limit restricting supplier bilateral contracts to 20 percent of total sales, if suppliers hold a retail electricity market share greater than 4 percent, ensures conditions of liquidity in the day-ahead market and prevents a squeeze on prices.

The association, in its letter, proposes that this regulatory measure be abolished in the day-ahead market given the extremely high price levels registered, noting its maintenance over an extended period threatens to create oligopolistic conditions in the market.

Legal action, even at an EU level, could be taken over the matter, crucially important for the industrial sector, EVIKEN indicated.

EVIKEN chief warns of wholesale market crisis impact on industrial sector

The head official of EVIKEN, Greece’s Association of Industrial Energy Consumers, has warned of dangers faced by the industrial sector as a result of higher wholesale electricity prices and serious balancing market issues.

Balancing market costs have spun out of control amid the pandemic, whilst the market, as currently structured, enables players to achieve windfall profits by differentiating their offers in the day-ahead and balancing markets, Antonis Kontoleon, the EVIKEN chief, pointed out in comments to energypress.

Players are overstating grid needs or understating RES output projections, or doing both, a tactic that further increases the need for far greater energy quantities and leads to higher energy prices, Kontoleon warned.

 

Industry still awaiting mid-voltage energy tax cut four months on

Industrial enterprises of the mid-voltage category are still waiting for the implementation of a special consumption tax (EFK) reduction more than four months after the measure was first announced by the government.

Though this tax cut would have minimal impact on the government’s tax revenue, it is important for a large number of companies – approximately 170 with annual energy consumption levels of more than 13 GWh.

Last July, Prime Minister Kyriakos Mitsotakis announced the special consumption tax for mid-voltage industrial firms would be lowered from 5 euros per MWh to 2.5 euros per MWh, the level imposed on high-voltage producers.

The measure’s total cost, estimated at 3 million euros, promises some energy-cost relief for mid-voltage industrial enterprises.

Producers have not received any further news on the consumption tax cut measure since it was announced in July, prompting concern and frustration among industrial circles.

Energy cost represents a considerable part of total production costs for energy-intensive producers.

Wholesale electricity prices in Greece are 47 percent higher than the EU average and nearly 70 percent higher than the lowest price level in the EU, according to official European Commission data.

Producers seeking lower-cost industrial electricity alternatives

Industrial electricity consumers of the high and mid-voltage categories are securing lower-cost agreements with independent suppliers, while energy-intensive consumers, currently negotiating with power utility PPC for new tariffs to take effect January 1, are pushing for better deals.

These developments are reshuffling the industrial electricity market, previously dominated by PPC.

Independent energy company Heron and Macedonia Paper Mills (MEL) recently announced an electricity supply agreement that includes a package of services for energy efficiency, electromobility and RES coverage of the producer’s energy needs.

Cement producer Heracles had previously reached an electricity supply agreement with Protergia, a member of the Mytilineos group, paving the way for further agreements between producers and independent suppliers.

These developments have had a wider knock-on effect, including for mid-voltage supply, as demonstrated by an agreement between energy supplier NRG, a member of the Motor Oil group, with the country’s other cement producing giant, Titan.

Following losses in 2018 and 2019, PPC is believed to be turning its focus on more profitable sectors and is no longer interested in maintaining a high share of the industrial electricity market – both high and mid-voltage.

Industrial sector wants PPC’s older 10% hike scrapped, discounts kept

Industrial energy consumers, currently negotiating new tariffs with power utility PPC, want a ten-percent hike that was imposed in March, 2019 to be scrapped – also retroactively, from the beginning of 2018 – as they contend lower generation costs now enable price cuts.

The industrial sector is also demanding the maintenance of size and consumer profile-based discounts as well as a discount offered by PPC for punctual payments of electricity bills and advance payments.

In its ongoing negotiations with PPC for new tariffs, to come into effect January, 2021, the industrial sector has highlighted that wholesale electricity prices registered a record decline in the first eight-month period of 2020.

The System Marginal Price, or wholesale electricity price, fell to 42.88 euros per MWh in August this year following levels of 61.71 euros per MWh in 2018 and 64.37 euros per MWh in 2019.

CO2 emission rights, which have a neutral effect on energy-intensive industrial producers as a result of offsetting benefits, have averaged 23.83 euros per ton this year, slightly down from 24.87 euros per ton last year.

PPC has drastically reduced its high-cost use of lignite-fired power stations this year to 3,625 GWh, from 10,418 GWh last year.

The power utility appears willing to support the industrial sector by minimizing its profit margin but has made clear it will not sell below cost to any customer.

PPC planning industrial tariff discounts, reflecting lower cost

Power utility PPC intends to offer discount tariffs, as generous as its finances can permit, to industrial consumers in a move that would represent key complementary support for the government’s plan to reduce industrial energy costs.

PPC’s ability to deliver on this industrial energy discount plan will very much depend on the fate of the corporation’s compensation request forwarded to the European Commission for the utility’s gradual withdrawal of its loss-incurring lignite-fired power stations between 2021 and 2023. PPC has requested compensation of 200 million euros, annually.

A Brussels decision on this request is not expected any sooner than late November. If this PPC initiative fails to produce a positive result, Greece’s ten-year dispute with the European Commission over the country’s continued reliance on lignite for electricity generation could drag on.

Greece cannot be expected to adopt a mechanism offering state-controlled PPC’s rivals access to lignite-based output if the European Commission refuses to approve cost-offsetting measures for the utility, as has been the case in other EU member states, local sources contend. Germany and Dutch energy companies have benefited from such offsetting measures in the past.

Whatever the outcome, state-controlled PPC seems determined to support the industrial sector by minimizing its profit margin for new electricity supply contracts, to come into effect January, 2021. However, the corporation has made clear it will not sell below cost to any industrial consumer.

Industrial enterprises believe a 10 percent tariff increase agreed to in March, 2019 for a three-year period covering 2018 to 2020, can no longer be justified as electricity production costs have since fallen, meaning tariffs must follow suit.

Gas distributors want surcharge rebate decision cancelled

Gas distributors DEDA, EDA Thess and EDA Attiki will seek the nullification of a decision by RAE, the Regulatory Authority for Energy, requiring them to gradually reimburse industrial enterprises for increased network surcharges  between August 14, 2015 and December 1, 2016.

The RAE ruling was delivered following a complaint by EVIKEN, the Association of Industrial Energy Consumers.

The amount that needs to be returned by the three distributors to energy-intensive industries is estimated to be between 2.5 and three million euros.

As a first step, DEDA, EDA Thess and EDA Attiki will apply for the RAE decision to be nullified and, if unsuccessful, will then resort to legal action, including at the Council of State, Greece’s Supreme Administrative Court.

A bill ratified in 2015 enabled the gas distributors to impose a temporary network surcharge of 4 euros per MWh, prompting a reaction from energy-intensive industries.

EVIKEN argued that the increase in distribution charges did not reflect the costs of each distributor, was a disproportionate burden for certain categories of network users, while adding that distribution charges should be set by RAE, not through legislation.

According to the RAE decision, the gas distributors will need to introduce measures reimbursing industrial consumers for higher network surcharge payments over the aforementioned 16-month period. Payment of the reimbursements, to be determined by a specific formula, will be possible through installments over a period of as long as five years, according to the RAE decision.

Fast action needed for industrial emission cost offsetting tool

Greek authorities need to act fast in the coming months if industrial producers are to keep receiving CO2 emission-right cost offsetting support as of January 1, 2021 through a European Commission mechanism.

The European Commission has just announced new state aid directives concerning greenhouse gas emissions beyond 2021. EU member states will need to soon forward their offsetting mechanism plans to Brussels.

Certain revisions have been made. Copper has been added to the list of industrial sectors eligible for emission cost offsetting mechanisms, while the textile and fertilizer sectors have not been included.

Besides copper, the steel, aluminium and paper production sectors have also been included on the list.

The European Commission aims to counter non-EU competition, including Chinese, and prevent industry shifts to locations outside the EU.

Pending issues crucial for industrial energy cost savings

A series of issues concerning prospective industrial energy cost savings that have surfaced either as industrial-sector requests or government announcements remain unresolved, creating insecurity within industrial circles.

New industrial electricity tariffs, currently being negotiated but with much ground still to cover for convergence, are at the very top of this list for industrialists.

One energy-intensive industrial producer has already abandoned power utility PPC after rejecting the industrial electricity tariff prices the utility had to offer.

Industrialists also want a public service compensation (YKO) surcharge reduction.

On another front, the sector expects a special consumption tax rate for mid-voltage industrial consumers with annual consumption levels of more than 13 GWh to be equated with the special consumption tax rate offered to high-voltage industrial enterprises. This revision, concerning approximately 170 factories, has been announced by Prime Minister Kyriakos Mitsotakis.

Another matter for the industrial sector concerns exempting major-scale industrial units from a series of additional electricity supply surcharges, in accordance with European Commission directives.

Industrialists also want a special consumption tax exemption on electricity used for mineral processing in cement and glass production, which would align Greek law with an EU directive from 2003.

The industrial sector is also anticipating a new mechanism to offset CO2 emission right costs.

Industrial consumers rebated for gas network usage surcharge

RAE, the Regulatory Authority for Energy, has delivered an official decision vindicating the industrial sector, after a four year wait, in a dispute concerning temporary natural gas distribution surcharges imposed on consumers by ordering offsetting measures leading to rebates for the period in question, between August 14, 2015 to December 1, 2016.

EVIKEN, the Association of Industrial Energy Consumers, challenged the introduction of this temporary gas distribution surcharge for industrial gas consumers, deemed as a breach of EU rules. It burdened industrial gas consumers at a rate of 4 euros per MWh.

Industrial consumers will receive rebates, based on a specific formula, covering the aforementioned period, according to the RAE decision, published in the government gazette yesterday.

According to industrial sector estimates, the surcharge sum to be returned to industrial consumers is estimated between 2.5 million and thee million euros. The rebate may be distributed in installments over a period of up to five years.

This surcharge did not reflect the costs of operators, arrived as a disproportionate cost for certain consumer categories using the network, and should have been determined and introduced by RAE, not through a legislative procedure, EVIKEN argued in its case before being vindicated by RAE as well as the European Commission’s Directorate-General for Energy.

Discrepancies observed exceeded 100 percent for most energy-intensive industrial enterprises.

The industrial sector will not tolerate any breach of EU rules concerning the new market’s framework, Antonis Kontoleon, the head official at EVIKEN, stressed.

Brussels’ Directorate-General for Energy had supported EVIKEN on all aspects of the dispute through a surveillance report delivered in November, essentially preannouncing the RAE decision.

 

 

 

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.