Industrial PPAs, offering faster RES connections, in demand

Industrial PPAs are in demand as a new legislative revision submitted to Parliament yesterday by the energy ministry promises swifter connection terms for RES producers.

The ministry’s proposed amendment includes provisions giving connection-term priority to RES projects that have established, or are set to establish, PPAs for their production with energy-intensive industrial consumers.

Taking into account the grid’s capacity limitations highlights how coveted PPAs have become for RES producers as, once the legislative revision has been ratified, capacity available to these producers is expected to further diminish and make even more challenging their ability to connect new RES projects to the grid.

In comments offered to energypress, a number of market officials admitted no clarity exists as to how easy or not it could become for RES producers to ensure connection terms beyond the legislative revision.

Power grid operator IPTO’s deputy chief Giannis Margaris recently informed that 12.5 GW in RES facilities are currently operating, adding that leeway exists for an additional 6 GW without any saturation issues.

Concerns being considered at present are about the future, as connection terms already issued, along with RES projects in operation, total nearly 30 GW, the IPTO deputy pointed out. The ongoing discussion has to do with the ability to offer connection terms in the future, he pointed out.

 

 

 

Bill on connection-term priority for PPAs headed to Parliament

A legislative revision promising connection-term priority to RES projects whose output is  intended for long-term PPAs with industrial and agricultural consumers is ready and set to be submitted to Parliament, possibly even today.

The revision is expected to be attached to a finance ministry bill concerning a 15 percent minimum tax rate on multinationals, expected to be voted on early next week.

The government’s decision to attach the energy-related legislative revision to a bill that does not concern the energy sector highlights its urgency to push ahead with a plan  offering support to the agricultural and industrial sectors, lower-cost electricity being a key part of this effort.

Though the legislative revision covering connection-term priority will not contain any specific information on capacity-related figures – this will be specified through an ensuing ministerial decision – it is expected to facilitate roughly 1,300 MW in PV projects that have established PPAs with agricultural and industrial consumers, 700 MW for the former and 600 MW for the latter.

Lower-cost energy for farmers to alter connection-term order

A government initiative promising lower-cost electricity for farmers stands to alter the ordering of a connection-term waiting list by elevating to the the top of this list RES projects planned to supply farmers through PPAs as well as domestic industrial consumers who have established such agreements.

A ministerial decision will be needed for this revision, which breaks the energy ministry’s unwavering stance for absolute adherence to priority concerning assessments of grid connection-term applications.

With the exception of consumers in the agricultural and industrial sectors who will be moved to the top of this waiting list, the ordering of all other consumer categories will be kept unchanged.

This ordering revision favoring farming and industrial PPAs could be made ahead of increased grid-injection restrictions planned by the government as part of a wider plan aiming to free up grid space.

Therefore, farming and industrial PPAs to be elevated to the top of the connection-term waiting list would secure current grid-injection restriction levels, before these restrictions are increased.

Energy transition cost a ‘risk for EU industrial competitiveness’

The possibility of European industry facing persistently higher energy costs compared to the US and other global and regional players as the energy transition proceeds could become a bigger threat  than the energy crisis itself, according to a study on EU competitiveness conducted by Brussels-based think tank Bruegel.

The study, presented yesterday to the EU’s 27 finance ministers during a Eurogroup meeting, gives rise to a range of issues, from taxation and regulated tariffs to competition between big and small countries, while also making note of considerable energy quantities required to develop green technologies.

The first and main question raised by the study enquires whether the recovery of energy-transition costs should continue to be made through electricity tariffs or via general tax policies of EU member states.

A second question considers whether the tax distribution balance between households and industry should be altered. The study also explores the need for a tax redistribution between energy-intensive and non energy-intensive enterprises.

It also notes that, in the context of the single market, energy-consumption increases by large countries come at the expense of countries with smaller energy needs.

A fifth main point raised by the Bruegel study questions whether it makes sense to invest in renewable energy technologies such as solar panels, for example, when the production of polysilicon, a key component in the production of solar panels, requires extremely large amounts of energy.

According to the study, the anticipated prevalence of renewables will lead to a decrease in electricity prices but part of the decline will be offset by cost increases concerning a range of tariffs, fees and various policies.

Industry calls for greater share of CO2 emission right revenues

Energy-intensive industries eligible for compensation through a mechanism offsetting elevated energy costs have called for an upward revision concerning 2022 and 2023, warning that a current formula and rate, offering industry an 11 percent share of revenues generated at CO2 emission right auctions, would not suffice.

EVIKEN, the Association of Industrial Energy Consumers, has called for an increased share of at least 17 percent, so that deficits resulting from current rates can be avoided.

The compensation sum offered to energy-intensive industries for 2021 was based on total electricity consumption of eligible industries, including the refining sector, as well as the CO2 EUA (European Union Allowance) price of 24.8 euros per ton in the previous year, 2020.

Available data has indicated that the amount to be required for compensation in 2022 will be close to 200 million euros. However, an 11 percent share of CO2 emission right auctions in 2022 is estimated to produce a sum of 146 million euros, 54 million euros less than the required amount.

The deficit appears to be even more acute for compensation needs covering 2023. An EUA price of 81 euros per ton results in a sum of over 300 million euros, while an 11 percent share of CO2 emission right auctions results in a sum of 160 million euro, a 140 million-euro deficit for 2023.

Industry troubled by PPA terms, seen as ‘out of touch’

Greek industrial players are expressing strong reservations about the prospects of green power purchase agreements (PPAs), which have been delayed by well over a year, their terms now considered out of touch.

Industry’s concerns have arisen as the energy ministry seeks to find a solution that would unblock the development of 2.5 GW in solar energy projects under contract for their supply to industrial consumers.

When talks had first begun on the introduction of PPAs, the now-delayed associated RES projects were expected to be operational in 2025. But it now appears they will not be ready to operate until 2027.

Ten-year PPAs already signed offer fixed energy prices to industrial players, who agreed on these deals anticipating the considerable energy-cost benefits of the first few years would eventually fade out towards the end of their ten-year period.

Industry deems latest PPA price levels on offer as excessive, greatly increasing the entrepreneurial risk involved.

EVIKEN, the Association of Industrial Energy Consumers, in a letter forwarded to energy minister Thodoris Skylakakis, has called for measures that would help industrial producers establish PPAs. The association has recommended cutting the duration of new PPAs to two years from ten years at present.

EVIKEN reminds of delayed surcharge rebates for industry

EVIKEN, the Association of Industrial Energy Consumers, has called for the removal of all legislative and regulatory obstacles preventing DAPEEP, the RES market operator, from clearing RES-supporting ETMEAR surcharge reimbursements to industry for 2022.

The association made its request in a letter forwarded to energy minister Thodoris Skylakakis.

EVIKEN, in the letter, also requested a reduced ETMEAR surcharge – it is included in electricity bills – for eligible industries through a new scheme to be forwarded to the European Commission for approval as a reduced public service compensation (YKO) surcharge for industry that had been anticipated no longer appears likely.

The association reminded that a state-support mechanism designed to offer selected energy-intensive industries reduced ETMEAR rates came into effect January 1, 2019.

The reduced ETMEAR rate for eligible industries was set at 2.55 euros per MWh with leeway for a further reduction. But industrial consumers are paying ETMEAR surcharges of 8.78 euros per MWh ahead of the reimbursements.

ETMEAR reimbursements to eligible industries have been completed for 2019 and 2020, while procedures leading to returns for 2021 are underway. However, industrial energy consumers have yet to receive any news on ETMEAR returns for 2022 and 2023.

 

Support plan for Greek-made energy transition equipment

A special support scheme for domestic industries active in the production of equipment concerning the country’s energy transition is expected to be included in a new development law to be announced in the near future by the Ministry of Development and Investment.

This new provision in the development law, to follow a “Produce e-Green” initiative launched by the previous leadership of the energy ministry, will aim to support and encourage domestic industry to become active in the energy transition sector, producing equipment and products for the country’s green transformation.

A number of companies have already shown interest for such an initiative, development and investments minister Kostas Skrekas told the recent 5th Renewable & Storage Forum in Athens. The minister mentioned Elefsina Shipyards, capable of manufacturing floating wind turbine bases, as an example.

The development ministry is determined to take significant steps in linking research and innovation with industry for production of equipment used for the country’s energy transition.

Ministry working to resolve PPA issues faced by industry

The energy ministry is working on a plan that would allow industrial enterprises to use green-energy power purchase agreements (PPAs) as a means of gaining long-term visibility on energy costs, while keeping supply prices at internationally competitive levels.

As part of the effort, the ministry is seriously considering the possibility of requiring RES projects that secure tariffs at future RES auctions to sign bilateral contracts with industrial consumers for a share of their overall power output.

Though a first round of green-energy PPAs involving energy-intensive consumers have already been established, challenges have been encountered, a key problem being a drastic reduction in grid capacity availability.

One solution being worked on by the energy ministry entails increasing an injection limitation for new photovoltaics to 50 percent of output, as well as making battery installations compulsory for new solar farms.

NECP investments of €192bn until 2030 promise GDP surge

The revised National Energy and Climate Plan, boosted to include more ambitious targets for 2030, anticipates investments worth 192 billion euros – primarily in transport – which promise to provide unprecedented momentum for the Greek economy.

Of this 192 billion-euro total, an amount of approximately 100 billion euros is expected to be injected into the electromobility sector, for which an NECP target figure of 460,000 electric vehicles has been set by 2030.

This leaves a further 92 billion euros, still an enormous amount, for investments in other sectors. Energy-related modernization of household equipment and appliances, as well as building energy-efficiency upgrades, are seen capturing the biggest share, with nearly 50 billion euros in investments forecast over the next seven years.

Replacement of outdated household equipment with new, more efficient systems is expected to mobilize close to 42.4 billion euros, according to the revised NECP. A further 6 billion euros in spending is expected for energy-efficiency upgrades to buildings.

The numbers are staggering and highlight a prospective boom in construction and related sectors, as long as households are ensured substantial aid and financing.

Subsidy programs supporting home energy-efficiency upgrades and electric vehicle purchases will need to be doubled, even tripled, annually, compared to previous years, as pointed out in the revised NECP, if abounding theories contending that the green transition is costly and financially harmful are to be proven wrong.

The percentage of GDP for spending on all types of energy-related products and services is seen rising from 19.4 percent in 2021 to 21.6 percent in 2030, before sliding to 17 percent.

Investments in all forms of cleaner electricity production, from solar farms to onshore and offshore wind farms, are ranked third. The revised NECP anticipates investments totaling 11.9 billion euros until 2030 in this domain.

Grid development is ranked fourth with anticipated investments of 6.5 billion euros by 2030, followed by much smaller amounts for energy-efficiency improvements in industry, natural gas and oil systems and other alternative fuel-related expenditure.

Energy firms dominate Fortune 500 Europe list’s top spots

European energy firms have bounced back, as highlighted by their dominant rankings on the first-ever Fortune 500 Europe list, published yesterday.

The Fortune 500 Europe list dispels myths about the continent and also reads like a throwback to the 20th century, when energy and automotive industries were the prime players in the global economy – and companies were led by men.

The list’s top spot is held by British energy giant Shell, with six energy companies and three automotive companies featuring in the top 10. This is starkly different to the US list, where three Big Tech companies—Amazon, Apple, and Alphabet—feature in the top 10. In Europe, the largest pure tech company is SAP, at No. 114, followed by 1990s powerhouses Ericsson (No. 141) and Nokia (No. 147).

One would have to go back to the late 1990s to find a Fortune 500 akin to what the Fortune 500 Europe looks like today. Twenty-five years ago, GM topped the US list with Ford and Chrysler not far behind, and Exxon, Mobil (and GE, to a lesser extent) representing the energy sector in the top 10.

The list of Europe’s largest companies, based on revenue, includes four Greek energy companies, Motor Oil, at No, 213, Helleniq Energy, formerly Hellenic Petroleum (ELPE), at No. 243, power utility PPC, at No. 298, and Mytilineos, at No. 444.

On the diversity front, too, Europe lags the US. Just 7 percent of Fortune 500 Europe companies are led by a woman, compared to 10 percent on the US list, a statistic that questions the continent’s progressive image.

The Fortune 500 Europe list includes companies from 24 different countries, ranging, in size, from Germany’s MTU Aero Engines, with revenues of $5.6 billion, at No. 500, to London-based oil and gas giant Shell ($386.2 billion) at No. 1.

Combined, the 500 European companies generated $13.94 trillion in revenue in the most recent fiscal year.

 

Prinos CCS state aid talks with European Commission begin

Prinos CCS, a carbon capture and storage project being promoted by upstream company Energean as Greece’s first CCS facility, at a depleted underwater Prinos field, south of Kavala, is approaching the stage of development.

The Greek ministry has pre-notified the European Commission on a relevant support scheme, within the framework of Climate, Energy and Environmental Aid Guidelines, allowing exceptions to an EU ban on state aid in the climate, environment and energy sectors.

The ministry’s pre-notification is expected to initiate consultation between the two sides for the formation of a support scheme that will need to be appraised and approved by Brussels.

Greek officials have also submitted a funding request for 50 million euros through the REPowerEU facility.

Prinos CCS has been included in a sixth edition of a PCI/PMI list, which was given the green light yesterday by a relevant Brussels committee but still needs to be approved by European Parliament and the European Council.

PCI/PMI status would facilitate financing for the CCS project’s development plans through the Connecting Europe Facility, the EU fund supporting infrastructure investments in transport, energy, digital and telecommunication projects. This status could also lead to favorable borrowing terms for the project.

Greek gas grid operator DESFA is supporting the effort to secure PCI/PMI status for the Prinos CCS project.

DESFA’s role in the project’s development would entail constructing a network for collecting CO2 quantities. Industries operating in the wider Athens area would be connected to this network.

CO2 amounts would be liquefied and temporarily stored at a facility near the port of Elefsina, west of Athens, then loaded onto CO2 tankers and shipped out to the Prinos CCS.

Energean holds a license for the Prinos facility, currently running until August, 2024. As a next step, the company will need to secure a social and environmental impact study. Its approval would enable Energean to take a next step and apply to EDEYEP, the Hellenic Hydrocarbons and Energy Resources Management Company, for a CO2 storage license, which would make the company its operator.

Energean plans to start operating the Prinos CCS in late 2025 or early 2026 at a first-phase level for storage of up to 1 million tons of CO2 per year.

 

Energy-intensive industry owed compensation of over €400m

Compensation funds owed to domestic energy-intensive industries through an offsetting mechanism intended to mitigate the impact of high energy costs and support competitiveness have now remained unpaid over a three-year period, with no payment clarity in sight, and reached a sum of more than 400 million euros.

The country’s energy-intensive industries are entitled to receive approximately 100 million euros for 2021, 140 million euros for 2022 and over 165 million euros for 2023.

These amounts stem from emission right auctions, the proceeds of which are distributed to cover various needs based on a ministerial decision that is issued annually.

For 2023, Greece’s emission right auctions revenues are estimated to reach 1.5 billion euros, of which 11 percent, or 165 million euros, should be injected into the compensation mechanism for energy-intensive industries.

 

Brussels rejects Greek proposal for Green Pool model

The European Commission has rejected a Greek proposal for a Green Pool model intended to keep green-energy PPA prices at competitive levels for the country’s energy-intensive industries.

Though Brussels’ Directorate-General for Competition has yet to announce its rejection of the plan, it informed the Greek energy ministry of its decision late last week, energypress sources informed.

Evaggelos Mytilineos, President and chief executive of the Mytilineos group, expressed his disappointment over the decision during a TV interview on CNBC.

“Unfortunately, on Friday, we heard the bad news that the Green Pool plan, which is a combination of a carbon exemption and support for energy-intensive industries, has been rejected by the European Commission after a year of negotiations. Every country, every economy, is trying to achieve economies of scale. It’s really difficult,” Mytilineos commented.

Negotiations on the Green Pool plan began soon after the Greek government had forwarded its proposal to the Brussels authority in September, 2021.

The European Commission is believed to have rejected the plan on the grounds that it could be regarded as a tool subsidizing electricity generated by fossil fuels.

Industrial sector PPAs with PPC enter unchartered waters

An energy ministry intention to offer licensing priority to new photovoltaic parks with batteries behind the meter threatens to greatly impact green-energy PPAs reached between industrial players and power utility PPC.

Off-takers are already experiencing delays as connection-term offers for RES units in Group B, including PPC’s solar farms intended for PPAs, have essentially been put on hold until the energy ministry reaches a final decision on the licensing-priority details for new PVs with batteries.

Delays could become even longer if the energy ministry decides to establish an additional category for PVs with batteries securing tariffs through auctions.

Worse still, if the PPAs need to be combined with storage units, to enable more efficient usage of grid capacity, then the financial aspects taken into consideration by PPC and industrial consumers for their green-energy PPAs will no longer be valid as the addition of batteries would increase the development cost of projects.

Focus on germanium, antimony mining, vital mineral resources

The Greek government, along with its Ministry of Environment and Energy, is placing significant emphasis on harnessing the potential of the country’s mineral resources, with particular attention directed towards the utilization of germanium and antimony elements, both vital for industry and the energy transition.

Rockfire Resources plc, a UK-based exploration company focusing on precious metals, base metals, and critical minerals – its subsidiaries include Hellenic Minerals I.K.E. – revealed last year that it had identified germanium deposits at the Molaoi mine in southeastern Peloponnese. The company is currently awaiting EU funding to progress with the development and utilization of these resources.

The European Union’s Environment Agency has identified germanium as one of the top 20 raw materials considered critical metals by the European Commission, given the potential risk of supply shortages.

Germanium is an important semiconducting material, while its compounds are used, among other things, for telecommunications optical fibres, as polymerization catalysts and in photovoltaics, while it is also widely used in various sectors of the chemical industry and metallurgy.

Germanium holds significant importance as a semiconducting material. Its compounds find application in diverse areas, including telecommunications optical fibers, photovoltaics, and serve as polymerization catalysts. Furthermore, germanium plays a crucial role in various sectors of the chemical industry and metallurgy.

As for the country’s antimony deposits, Greece possesses great potential, Theodoros Skylalakis, the Minister of Environment and Energy, highlighted at a recent EU energy council meeting.

The EU is willing to support European antimony extraction efforts as 87 percent of the world’s production of this mineral resource hails from China.

Antimony is used in the production of refractory materials, dyes, as well as in the glass industry, batteries and semiconductors.

Deputy Minister of Environment and Energy Alexandra Sdoukou, speaking at a recent conference titled “Greek specific issues: new raw materials industrial projects in Greece”, announced the launch of a tender for the lease of a mining site in order to determine the existence and exploitation of antimony, a mineral included in all EU lists from 2011 to date as a critical strategic metal.

PPC’s share of electricity production slides to 37%

Power utility PPC’s share of electricity production fell sharply to 37 percent in the first half of the year, a 6 percent drop compared to a year earlier.

The company’s administration, which has just presented the energy group’s first-half results, mainly attributed this contraction to reduced output at its natural gas-fueled power stations, driven lower by a slump in PPC’s high-voltage market share, down from 90.1 percent to 53.8 percent over the past year.

During this period, three major industrial consumers, Aluminium of Greece, Helleniq Energy, formerly named Hellenic Petroleum (ELPE), and metal processing company Viohalko, ended supply deals with PPC and established new agreements with rival producers.

However, Viohalko, one of Greece’s biggest electricity consumers, will reestablish an association with PPC in 2025, when a green-energy power purchase agreement (PPA) between the two is set to commence.

PPC believes it can regain, over the next few years, some of the high-voltage market share it has shed by offering industrial consumers competitively-priced green energy.

This is a key reason behind PPC’s current push towards developing a sizeable RES portfolio, whose target for 2026 has been set at 5 GW.

 

Energy-intensive electricity demand down in Europe

The International Energy Agency has issued a report projected a drop in global electricity demand this year, especially in Europe, where demand is seen falling for a second consecutive year to a two-decade low.

The agency expects electricity demand in the EU to drop by 3 percent in 2023, the rate at which it had also fallen in 2022.

IEA’s anticipated electricity demand reduction for the EU indicates Europe’s energy-intensive industries have yet to make a recovery following last year’s drop in production levels, as highlighted by a 6 percent slump in the EU’s overall electricity demand during the first half of 2023.

The IEA report notes that a drop in high-voltage industrial electricity demand, not milder weather conditions, is the main factor behind the EU’s reduction in power demand.

Many industrial producers reduced or stopped production in 2022, the IEA report noted. Primary aluminium (-12%), crude steel (-10%), paper (-6%) and chemicals (-5%) were among the energy-intensive sectors that significantly reduced production in 2022 due to plant closures and production cuts, according to the IEA report.

Declining domestic chemical production led to Europe becoming a net importer of chemicals in 2022, as key industry players such as BASF and OCI reduced production in the region.

The fertilizer industry is also experiencing a sharp decline with major European producers such as Yara and Grupa Azoty cutting back production of ammonia, urea, nitrates and NPK (nitrogen, phosphorus and potassium) fertilizers.

Steel production in Europe has fallen significantly as companies such as ArcelorMittal have temporarily closed furnaces in France, Poland, Spain and Germany.

Aluminium producers have been severely affected by increased electricity prices given the industry’s electricity intensity, with several companies such as Speira GmbH and Alro reducing production.

 

Direct power lines promise to rid producers of grid issues

A regulatory framework for direct electricity lines linking producers and customers has been finalized after a series of necessary revisions were approved by the board at RAAEY, the Regulatory Authority for Waste, Energy and Water.

A direct line, according to the authority’s framework, refers to an electricity line that connects an individual generating plant to an individual customer, or an electricity line that connects an electricity producer with an electricity supply company, which, in turn, directly supplies its own facilities, subsidiaries and eligible customers.

Major-scale consumers such as industrial producers hope direct electricity lines may offer solutions that would overcome grid issues and end their reliance on the grid, thereby ensuring smooth operations for their production plants.

RES contract suspension right, enabling PPAs, reexamined

The details of a formula included in a recent legislative revision, permitting RES project investors to suspend, for two years, their project operating contracts with RES market operator DAPEEP in order to engage in direct market participation or establish PPAs, will be reexamined from scratch by the next government’s new energy minister. The general election’s second round of voting takes place this Sunday.

The previous government’s energy ministry had indicated the two-year suspension right would only apply to RES projects that had not been connected to the grid until the revision’s date of ratification.

Energy ministry officials and other sector authorities remain split on the legislative revision’s specifics. The decision on which approach will be adopted has, as a result, been passed on to the next energy minister.

Once a decision has been reached, a related circular will be forwarded to DAPEEP so that the new formula can be applied.

Advanced negotiations between RES producers and industrial enterprises for the establishment of two-year PPAs have stagnated as a result of the indecision over the legislative revision’s details.

Industrial players push ahead with Green Pool plan details

Industrial players are moving full steam ahead to help shape a finalized Green Pool model whose purpose will be to keep green-energy PPA prices at competitive levels for the country’s energy-intensive industries, energypress sources have informed.

The new government to emerge from the general election’s second round of voting on June 25 should be be handed a Green Pool plan ready for consultation. The plan is expected to be fine-tuned and finalized by September or October before it is forwarded to the European Commission for approval.

Brussels has offered its tentative approval of the plan but details that emerged following negotiations still need to be shaped and incorporated into the Green Pool’s finalized version.

Though developments have remained stagnant at political and institutional levels as a result of the general election procedure’s two rounds of voting, industrial consumers, who will represent the bulk of the Green Pool, have tasked the Grant Thornton consultancy group with studying plan details, including the share of cost for participants.

The state, according to the plan’s current shape, would cover 85 percent of the Green Pool’s cost, while market participants would cover the other 15 percent. If cost-related changes are eventually made, they will not be dramatic and could be revised for an 80-20 division.

Viohalco third energy-intensive producer to leave PPC

Metal processing company Viohalco, one of Greece’s biggest electricity consumers, has become the third industrial producer to move away from power utility PPC after establishing an electricity supply agreement with independent producer Heron, company sources have told energypress.

Viohalco’s decision to part ways with PPC as its supplier follows departures by ELPE (Hellenic Petroleum) and the Mytilineos group’s Aluminium of Greece, though this latter company’s move away has not yet been completed.

ELPE was the first energy-intensive producer to leave PPC after the two sides failed to reach a supply agreement in 2021. ELPE ended up establishing a supply agreement with Elpedison, in which it holds a 50 percent stake as part of a 50-50 venture with Edison.

Aluminium of Greece, the country’s biggest electricity consumer, is primarily supplied its energy needs by group subsidiaries Protergia and Watt+Volt. The producer aims to have completely ended its reliance on PPC for energy supply by 2024.

An existing supply agreement between PPC and Aluminium of Greece remains valid but is the last following a 60-year association, a development aligned with the Mytilineos group’s green-energy goals for its production of aluminium.

Meanwhile, other major producers, among them some of the country’s biggest energy consumers, have reached advanced talks with PPC to establish 10-year, green-energy power purchase agreements, through PPC subsidiary PPC Renewables.

 

PPC, industrial players close to establishing 10-year PPAs

Power utility PPC and energy-intensive industries, most notably metal manufacturer Viohalco and building materials producer TITAN, the country’s biggest energy users, appear to have hit the final stretch in negotiations for PPAs promising lower-cost green-energy supply over ten-year periods.

PPC and industrial customers have agreed on most details concerning prospective PPAs but still need to converge on certain legal issues and terms, sources have informed.

Energy-intensive industries are looking to establish PPAs as soon as possible as they remain exposed to the volatility of the wholesale electricity market, which has often increased their energy costs to loss-incurring levels.

As has already been disclosed, PPC, for the first two years of these ten-year agreements, will price its PPA supply deals based on its existing lignite and natural gas-sourced energy basket, while, beyond this period, the company will price its PPAs based on the generation costs of solar and wind energy farms it plans to have developed, by then, in order to supply industrial energy users.

Additional lower-cost energy alternatives appear to be on the horizon for energy-intensive industries, especially since a recent legislative revision enabling RES producers who have already secured tariffs to put aside these agreements for two years and seek better terms and prices in the market, presumably through PPAs.

According to sources, industrial players and RES project investors have already entered negotiations for such deals, which could benefit both sides by offering lower-cost energy for industry and higher tariffs for RES producers.

Brussels proposals include PPA priority, RES growth support

A series of European Commission proposals for the EU electricity market do not call for any major changes to its structuring but make note of the need for mild revisions to the current model through the implementation of various market tools.

A draft of the proposals, obtained by energypress ahead of their official presentation, scheduled for March 14, highlights the need for industry to be provided obstacle-free access to long-term tools, such as PPAs; consumer rights for fixed tariffs and improved market information; and long-term markets offering investment support for RES development.

Also, revisions must ensure that the benefits of renewables reach consumers, the draft notes, placing emphasis on the functioning of the intraday market and its improved liquidity.

It also calls for transmission operators to develop a market tool limiting consumption peaks during the most challenging times of the day as a means of better managing demand and limiting prices.

The European Commission, according to the draft, continues to support the existing market model, stressing “it has provided a well-integrated market, allowing Europe to reap the economic benefits of the single energy market under normal conditions, assuring adequacy of supply and decarbonization”.

However, it admits that “in the midst of the crisis the current model has shown certain major weaknesses related to elevated and volatile fuel prices and short-term electricity markets that have exposed consumers to significant price increases”.

 

PPC close to signing first PPAs with industrial consumers

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.

Wholesale electricity prices up over past week

Wholesale electricity price levels rose over the past week, the average market clearing price rising by 4.76 percent compared to the previous week to 151.95 euros per MWh, with upper and lower levels reaching 218.35 and 80.16 euros per MWh, respectively.

The past week’s highest average market clearing price was recorded on March 2, reaching 160.60 euros per MWh.

During the same period, wholesale electricity price levels in other parts of Europe ranged from 136 to 195 euros per MWh, while prices yesterday ranged from 141 and 167 euros per MWh.

Electricity demand remained low, for this time of the year, while lower RES and hydropower unit output led to a slight increase in prices at the Hellenic Energy Exchange, according to an analysis by IENE, the Institute of Energy for Southeast Europe.

RES units averaged a daily output of 36 GWh for an energy-mix share of 29 percent over the past week, official data showed. RES output totaled 251 GWh for the week, an 11 percent reduction compared to a week earlier.

Hydropower facilities covered 2 percent of demand, injecting just 16 GWh into the grid, 14 percent less than a week earlier. Natural gas-fueled power stations generated 286 GWh over the past week, covering 33 percent of demand, while lignite-fired power stations produced 145 GWh to cover 17 percent of electricity demand.

Electricity demand remained virtually unchanged over the past week, at 897.131 MWh, compared to 897.306. It peaked at 138.128 MWh last Thursday, while the week’s low was recorded on February 27, at 107.471 MWh.

The low-voltage category, including households, represented 56 percent of electricity demand over the past week, the medium-voltage category represented 19 percent of demand, the high-voltage category, or energy-intensive industry, represented 17 percent, 5 percent concerned the Cretan grid, while electricity losses of 3 percent were also recorded.

Legislative revision for PPAs submitted to Parliament tomorrow

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.

Net metering only via energy communities for smaller industries

An energy ministry proposal, in ongoing consultation, calling for a drastic reduction of a net-metering upper limit to 100kW from 3 MW, was made with the grid’s capacity limits in mind after power grid operator IPTO and distribution network operator DEDDIE/HEDNO informed the ministry that the network would not be able to cope should RES self-producers simultaneously inject generation into the system during times of heightened production, a move most probable from smaller producers not equipped with energy storage units.

Energy ministry proposals included in a draft bill now undergoing consultation essentially aim to virtually eliminate small and medium-sized industries from net metering through the plan to reduce its upper limit to 100kW from 3 MW.

The prospect has sparked a reaction from industries, viewing net metering as an import tool for energy-cost reduction, especially for medium-sized industries as bigger industrial enterprises consume far greater energy quantities and seek other solutions offering more effective cost-reduction potential, such as long-term supply deals.

However, the proposed 100kW upper limit for net metering could be overcome if at least fifteen enterprises join forces to establish an energy community, according to the energy ministry proposal.

Revision lifting PPA barriers for industry headed to Parliament

The energy ministry is seeking a bill already in Parliament to table  an amendment designed to lift barriers currently preventing the establishment of bilateral power purchase agreements (PPAs) between power producers and large-scale consumers.

The amendment’s details were finalized at a meeting earlier this involving the participation of officials representing the energy ministry, RAE, the Regulatory Authority for Energy, the industrial sector and power utility PPC, sources informed.

Once the bill has been ratified, negotiations between PPC and energy-intensive industries for PPAs will be able to recommence after stalling as a result of the existing legal barriers.

“This intervention will ensure supply of competitively priced electricity [for energy-intensive industries]. Quantities will concern physical deliveries, while industries will be able to seek agreements with power producers for RES-generated electricity supply,” energy minister Kostas Skrekas was quoted as telling local business news publication Ikonomikos Tahidromos (OT) yesterday.

The amendment will primarily pave the way for PPC, the Greek electricity market’s dominant player, to sign PPAs with energy-intensive industries over long-term periods of between eight and ten years.

As has been previously reported, PPC is currently engaged in talks with the country’s two most energy-intensive industries, building materials producer TITAN and metal manufacturer Viohalco.

Revision exempting PPAs from wholesale market cap nearing

February has so far been a good month for the industrial sector as, following Brussels’ approval of a remuneration mechanism worth 1.36 billion euros as compensation for a carbon tax, the first wave of green-energy power purchase agreements (PPAs), which promise to reduce energy costs for industrial producers, are not far away.

A legislative revision exempting green-energy bilateral agreements from a wholesale market cap is now on the final stretch. This exemption will pave the way for PPAs promising industrial players fixed energy costs over long-term periods.

The legislative revision’s final shape is just about ready, while its ratification in parliament is expected within the next few weeks, energypress sources have informed.

For quite some time now, power utility PPC has been involved in PPA talks with metal manufacturer Viohalco and building materials producer TITAN, the country’s two most energy-intensive industries.

However, these negotiations have been held back by the need for the legislative revision exempting energy producers from the wholesale market price cap for supply of PPA-related electricity quantities to energy-intensive customers.