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.

First demand response auction in July, TFRM validity to get extra month

The energy ministry, anticipating the European Commission’s imminent approval of Greek government proposals for a demand response mechanism and a transitory flexibility remuneration mechanism (TFRM), has signed related ministerial decisions so that the mechanisms, vital tools for industrial energy costs, can be implemented immediately once Brussels has given the green light.

Official approval of the plans by the European Commission is expected within the next few days.

Power grid operator IPTO has been informed by the ministry so that it can prepare the first demand response auction, seen taking place within July. IPTO announced a registration procedure yesterday, setting a July 23 deadline for applicants.

The TFRM’s validity is expected to run for an additional month, compared to the initial term agreed to by Athens and Brussels, to make up for its delayed delivery.

Over the past few days, Greek authorities have needed to respond to numerous questions forwarded by Brussels officials, seeking explanations and clarification on both the demand response and flexibility mechanisms.

 

Ministry awaiting Brussels nod for demand response, TFRM

The energy ministry, anticipating the European Commission’s approval of Greek government proposals for a demand response mechanism and a transitory flexibility remuneration mechanism (TFRM), has decided to sign related ministerial decisions, possibly even today, so that the mechanisms can be immediately implemented once Brussels has given the green light.

Though the two sides have come closer on the mechanisms, it still remains unclear when the European Commission will go ahead with its approval.

Over the past few days, government officials have needed to respond to a series of questions from Brussels, seeking explanations and clarification on details concerning both mechanism plans.

The European Commission’s Directorate-General for Competition is treating both mechanism proposals as one package.

Domestic energy-intensive industries are urgently awaiting the package’s approval in the hope that Greek power grid operator IPTO can stage a demand response auction before July is out.

Under terms agreed to so far, IPTO will be permitted to offer up to 800 MW through demand response auctions, down from 1,030 MW allowed through the preceding plan.

Also, the demand response mechanism will be made accessible to a greater number of companies, including smaller players, through a reduction of a consumption lower limit.

In addition, the demand response mechanism is expected to be valid for a one-year period, not two years, as was requested by EVIKEN, the Association of Industrial Energy Consumers.

The TFRM is expected to be divided into two stages, the first running until the launch of target model markets, scheduled for September 17, under the same terms that applied for a mechanism that expired in March, 2019.

The TFRM’s second stage is seen running from the launch of the target model until a permanent flexibility mechanism is introduced. Its capacity is expected to be drastically reduced to 750 MW from 4,500 MW. Remuneration levels are also expected to drop.

 

Brussels grants Athens demand response, TFRM extensions

The European Commission has granted extensions for Greece’s demand response mechanism and transitory flexibility remuneration mechanism (TFRM), according to sources well-informed on the negotiations. They have dragged on for over seven months.

The development promises to offer energy-intensive industries and electricity producers crucial support given the period’s adverse conditions. Both mechanisms are vital for energy-cost savings.

The agreement also paves the way for the establishment of a permanent Capacity Remuneration Mechanism (CRM). The energy ministry plans to assemble a special committee comprised of various electricity market officials for work on the CRM details.

Greece’s demand response mechanism and transitory flexibility remuneration mechanism (TFRM) had both expired – the former three months ago and the latter in March, 2019.

Both mechanisms were extended by Brussels despite Greece’s pending implementation of the target model, now behind schedule.

Suppliers also given lignite access by DG-Comp agreement

The Greek government and European Commission’s Directorate-General for Competition appear close to reaching an agreement that would give the country’s independent electricity suppliers access to state-controlled power utility PPC’s lignite-based production through a transitional mechanism running until 2023, when most of the utility’s lignite units are expected to cease operating.

This prospect comes hot on the heels of an agreement between Athens and Brussels enabling extensions of Greece’s demand response mechanism and transitory flexibility remuneration mechanism (TFRM).

PPC has monopolized Greece’s lignite sources and generation, but an agreement offering lignite access for all would open the door for independent suppliers as well as industry.

For quite some time, the DG-Comp has criticized PPC for not complying with a European Court decision requiring lignite access to third parties.

Settlement of the lignite dispute would leave just one pending energy-sector matter, the target model’s implementation.

Talks between Athens and Brussels on Greece’s energy sector matters have dragged on for at least seven months.

Athens and Brussels also appear to have drawn closer for an agreement on how lignite-based electricity will be priced.

Industrial slowdown seen impacting electricity demand

Electricity consumption level forecasts are bleak as the coronavirus pandemic is now also impacting the country’s energy-intensive industrial sector after devastating the economy’s tourism and retail sectors.

The widening problem will inevitably affect overall demand and the financial results of retail electricity suppliers.

A number of industrial enterprises have suspended their operations. These include steel company Sidenor, which has put a halt on production at five units, as well as four textile firms.

More industrial companies are likely to follow suit as the ongoing lockdown keeps much economic activity grounded. As a result, overall electricity demand is expected to drop considerably over the next few months.

The pandemic’s impact on low-voltage electricity demand has, for the time being, remained subdued. Considerably lower consumption levels in the retail and trade sectors have been offset by higher household demand driven by the government’s stay-at-home orders.

Low-voltage electricity demand in March fell by a level of between one and two percent, according to power grid operator IPTO sources. A sharper decline of approximately five percent is expected in April.

However, sharper drops over the next few months cannot be ruled out, as has been the case in other parts of Europe.

In recent weeks, electricity demand in Italy was down by 20 percent. Belgium recorded a drop of 17 percent, French electricity demand fell by 12 percent and Spain’s drop registered at 10 percent.

 

 

Industrial sector needs delayed demand response mechanism

The country’s energy-intensive industrial enterprises are keen to accept a solution that would also offer independent electricity suppliers access to power utility PPC’s lignite-based generation, acknowledging that delays in the government’s ongoing negotiations with the European Commission on across-the-board lignite issues will consequently delay Brussels’ approval of Greece’s request for an extension of the demand response mechanism, a key energy-saving tool for the industrial sector, and threaten the sustainability of a number of producers.

EVIKEN, the Association of Industrial Energy Consumers, recently informed the energy ministry of its position in writing.

Greece’s lignite-issue negotiations with the European Commission have dragged on for some time. Athens has received a list of new questions after responding to a dense set of previous questions.

The government’s proposal for an extension of the demand response mechanism was forwarded to Brussels late December following lengthy consultation with European Commission officials to ensure its details would be aligned with Brussels’ directives.

Even so, Greece’s industrial enterprises have been left without the support of demand response mechanism since February 7. Worse still, a new measure promising to reduce the cost, for industry, of a RES-supporting ETMEAR surcharge, has yet to be implemented.

As a result, certain industrial sectors, namely steel and cement, have slid further in terms of competitiveness while, in some cases, sustainability and job maintenance are also at stake.

Pundits believe Brussels has bundled together all of Athens’ pending energy sector issues.

New lignite access proposal offered ahead of Brussels talks

Electricity suppliers could be granted access to power utility PPC’s lignite-related electricity production until 2023, when all the utility’s existing lignite units are scheduled to have been withdrawn, according to a new proposal forwarded by Greek authorities to the European Commission’s Directorate-General for Competition, energypress sources have informed.

The energy ministry delivered this transitional mechanism proposal to Brussels last week after a previous plan appears to have been blocked.

The initial proposal, delivered last December, called for the formation of an SPV by the country’s energy-intensive industrial enterprises to be supplied satisfactory electricity amounts from PPC’s lignite-fired power stations.

However, this proposal appears to have been rejected by Brussels as it focused entirely on industry and excluded retail suppliers, seen as a breach of competition rules because it would not help further open up Greece’s electricity market.

The new Greek proposal is expected to serve as the basis of a new round of talks with the European Commission, scheduled to begin around mid-March. It remains unclear if the new proposal stands a chance of being approved by Brussels competition authorities.

Brussels officials, for quite some time now, have made note of Greece’s failure to comply with a European Court ruling on lignite access for third parties, directly linking this shortcoming with the country’s commitment to a retail electricity market share contraction target at state-controlled PPC to a level of less than 50 percent this year.

The European Commission wants alternative measures implemented between now and 2023 as a result of Greece’s failure to sell PPC lignite units and unilateral termination of NOME auctions.

Limit on target model electricity contracts, consultation soon

An upper limit is expected to be imposed on the amount of electricity production companies will be entitled to negotiate for target model contracts, according to a decision by authorities to be forwarded for public consultation within the next few days.

The implementation of an upper limit restricting the amount of electricity a company is permitted to negotiate in the futures market is foreseen in the target model plan. The remainder of electricity will need to be channeled into the day-ahead market to ensure that necessary amounts are available.

For months now, officials have speculated about the level of the upper limit. A clearer picture is expected within the next few days, when terms are forwarded for consultation.

Power utility PPC and independent companies have offered differing views. PPC has insisted on an elevated maximum level, an opinion shared by industrial figures, including EVIKEN, the Association of Industrial Energy Consumers, who believe low-level limits would not enable them to establish contracts with PPC for electricity amounts fully covering their needs.

Work still needed for demand response, flexibility approvals

European Commission officials of the Directorate-General for Competition have questioned various aspects of a Greek proposal seeking a two-year extension of the country’s existing demand response mechanism, a key energy-saving tool, as well as a proposal for a transitional mechanism rewarding flexibility.

Despite the hesitation, a series of meetings held Wednesday between the energy and environment ministry’s secretary-general Alexandra Sdoukou and DG Comp officials have been described as constructive.

Brussels officials appear to be gradually overcoming reservations stemming from Greece’s failure to meet previous commitments.

The energy ministry plans to address the DG Comp’s concerns on the demand response and flexibility mechanisms in a response to be forwarded today.

Sdoukou is scheduled to travel to Brussels in about two weeks for further talks.

Industry experts believe Greece’s demand response mechanism proposal stands a solid chance of being approved as it is based on a power grid operator IPTO study determining that a real need exists for the mechanism.

However, any chance of an approval by February 6, the expiry date of the existing demand response mechanism, has been ruled out. The industrial sector will be left without a demand response mechanism for a period of at least two months, it is estimated.

European Commission approval of the flexibility mechanism is seen as a less likely prospect as units offering flexibility to the grid face less of a financial strain and, moreover, flexibility will soon be rewarded within the framework of the target model.

Lignite unit exit ‘must not be influenced’ by EU directives

The implementation of new EU directives concerning state support amid the EU’s Emissions Trading System framework must not affect the rate of progress of the lignite unit withdrawal schedule decided on by the government and power utility PPC, market authorities have noted.

According to latest EU directives, CO2 emission cost recovery levels for eligible energy-intensive industrial producers will not depend on their energy supply sources, be they polluting or green, but, instead, on an independently determined constituent resulting from the national electricity production mix of the previous year.

This effectively means industrial producers will be eligible for CO2 emission cost recovery even if supplied green energy.

The new EU directives are intended to counter industrial facility relocations to territories beyond the EU as a result of increased European electricity production costs, driven higher by costlier CO2 emission rights.

Though EU state members are theoretically free to shape their own CO2 cost offsetting mechanisms as support for energy-intensive producers, these mechanisms must be approved by Brussels ahead of implementation. Ultimately, the European Commission would not endorse any mechanism that does not comply with its EU directives.

The new EU directives concerning state support within the ETS framework were forwarded for public consultation on January 14. They will be applied in 2021 and are expected to remain valid until 2030. The current system expires at the end of this year.

 

CO2 cost coverage up to 100% for 8 industrial categories

New EU directives concerning CO2 emission cost coverage for industrial enterprises could lead to significantly increased support that may fully offset this cost.

The directives, planned for the period between 2021 to 2030, have just been forwarded for public consultation.

This greater carbon emission cost offsetting support is expected to enable power utility PPC to extend the operating period of at least one of its lignite-fired power stations for continued electricity supply to energy-intensive industries eligible for the offsetting measure.

The European Commission proposal aims to increase the offsetting percentage of CO2 emission costs for aluminum and steel industries until 2030 to a level of as much as 100 percent.

The number of eligible industrial categories is expected to be reduced from 14 at present to eight, according to the Brussels proposal.

Aluminum, iron, steel and ferroalloy production are among the categories proposed for carbon emission cost offsetting eligibility.

EC insists on third-party access to PPC’s lignite-fired electricity

The energy ministry, locked in an intense yet unpublicized battle with the European Commission over the state-controlled power utility PPC’s lignite monopoly and wider reforms for the electricity market’s further liberalization, has prepared a new proposal for Brussels entailing the establishment, by the country’s energy-intensive industries, of an SPV to which PPC would supply considerable lower-cost lignite-generated electricity amounts.

This electricity amount could, for example, be 40 percent of PPC’s lignite-fired production until 2023, when the power utility plans to have withdrawn all existing coal generators.

A European Court decision calling for access to third parties of 40 percent of PPC’s lignite-based electricity production has not been honored.

The government’s recent decision to abolish NOME auctions has angered Brussels, which expressed firm opposition to the prospect last summer, as the introduction of the auctions about three years ago, along with an instruction for the sale of PPC’s Meliti and Megalopoli coal generators, constituted an agreement of equivalent worth to the court decision.

Greece’s energy ministry has strongly resisted the continuation of NOME auctions or any other lignite-related auction procedure, arguing this is a loss-incurring procedure for PPC, which, worse still, has not helped reduce the power utility’s market share towards a contraction target of 50 percent.

The energy ministry is now looking to discuss its SPV plan with Brussels to see if it is feasible. A similar model had been applied in France in the past, prior to the country’s adoption of NOME auctions.

Elvalhalkor given green light for gas-fueled power station

Elvalhalkor, the Hellenic Copper and Aluminium Industry, has been given approval by RAE, the Regulatory Authority for Energy, for a prospective 566-MW gas-fueled power station in Thisvi, Boetia, slightly northwest of Athens.

The industrial enterprise now intends to continue with its licensing procedure, which will require time, before making a final investment decision later on.

Factors to determine the investment decision include the outcome of a measure offsetting industrial carbon emission costs, currently being looked at by the European Commission; the shape of a CAT remuneration plan for gas-fueled power stations; as well as the target model’s implementation method and schedule.

PPC is also considering such factors ahead of a decision on the development of a gas-fueled power station, either independently or through a partnership.

“Capacity exists for one or two gas-fueled power stations in the country’s overall energy mix, but these will require financial support,” noted PPC chief executive Giorgos Stassis. “At this point, conditions are not clear. We’re all waiting for the regulatory framework.”

Demand response mechanism to be extended ahead of bid for new plan

The energy ministry has decided to extend a December 31 deadline concerning the country’s demand response mechanism (interruptability) into February, and, during this additional period, apply for a new two-year replacement.

A ministerial decision to facilitate this extension adheres to provisions offered by the European Commission, energypress sources informed.

This action will secure uninterrupted demand response mechanism coverage for the industrial sector. Power grid operator IPTO may stage one more demand response mechanism auction in January based on the support system’s existing terms.

The application for Greece’s new demand response mechanism, a key energy-saving tool for industry, will be along with another application for a temporary mechanism compensating flexibility.

Both mechanisms are considered crucial for the market’s proper functioning, a recent IPTO study determined.

The demand response mechanism compensates major-scale electricity consumers 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.

 

IPTO delivers study needed for Greek demand response extension bid

A supportive study needed by the Greek government to submit an application to the European Commission for an extension of the country’s existing demand response mechanism (interruptability), a pivotal energy cost-saving tool for industry, has been delivered to the energy ministry by power grid operator IPTO, tasked with preparing the additional study, energypress sources have informed.

The existing demand response mechanism is valid until December 31, following an approval last February. Industry is looking for a three-year extension.

Industrialists fear the effort to extend the demand response mechanism’s validity risks being rejected if it does not precede or coincide with notification concerning the flexibility mechanism.

The demand response mechanism compensates major-scale electricity consumers such as industrial enterprises when the TSO (IPTO) asks them to shift their energy usage (lower or stop consumption) during high-demand peak hours, so as to balance the electricity system’s needs.

On another front, IPTO will have completed all studies related to Greece’s new decarbonization and RES targets before the end of the year, the operator’s deputy chief Yiannis Margaris noted during last week’s Renewable & Storage Forum in Athens, staged by energypress.

These studies will enable technical and financial assessments concerning the updated National Energy and Climate Plan for an estimate of the cost of infrastructure required to reach the new decarbonization and RES objectives, the IPTO deputy official explained.

Industry to react if demand mechanism request is rejected

An application submitted by Greece to the European Commission for an extension of the country’s existing demand response mechanism (interruptability), a pivotal energy cost-saving tool for industry, faces the risk of being rejected if the mechanism does not precede or coincide with notification concerning the flexibility mechanism, industrial sources have warned.

A strong industrial sector reaction can be expected if the demand response mechanism extension request is rejected, the sources added.

An extension of the demand response mechanism is needed for two basic reasons, the sources said. Firstly, this mechanism is necessary for countering grid sufficiency issues during emergency situations, periods of high electricity demand, as well as non-availability of RES sources due to unfavorable weather conditions – either separately or combined.

Also, the demand response mechanism is the only dynamic currently giving demand an electricity market role.

Even when the target model is launched, much time will still be needed before the new market framework is fully implemented and mature enough to ensure demand is offered fair participation in the market’s dynamics, the sources explained.

Larco stops PPC payments, power cut threat reemerges

Power utility PPC appears set to cut its electricity supply to troubled Larco as the state-controlled nickel producer, PPC’s biggest debtor, has stopped making payments to the utility for quite some time now, breaching terms agreed to in February as a condition for sustained power supply.

The terms imposed on Larco by PPC had been approved by the nickel producer’s board at a meeting just four months ago.

PPC, also state-controlled, is expected to take action within the next few days that would result in a power cut for Larco if the producer stays put, power utility officials have indicated.

Though PPC would need to notify power grid operator IPTO, the supply cut could be implemented in a day, according to the agreement reached between PPC and Larco in February.

Other terms listed in the PPC-Larco agreement include a commitment for monthly cash payments of 2.5 million euros; Larco’s retreat from demand response mechanism (interruptability) rights; monthly supply of 24,000 tons of lignite from the Kozani area in northern Greece; as well as credit guarantees should Larco exceed specific consumption levels.

Larco’s debt to PPC was registered as having reached 309.8 million euros last December.

 

Industry: Demand response, target model needed for CATs

The implementation of the target model and demand response mechanism are necessary for the acceptance of a permanent CAT mechanism for capacity, energy-intensive industrial enterprises have underlined.

The industrial sector’s views on the matter, presented through public consultation held by the energy ministry, were reiterated yesterday by EVIKEN (Association of Industrial Energy Consumers) official Antonis Kontoleon at an IENE (Institute of Energy for Southeast Europe) conference.

Industrial sector sources raised questions as to why authorities are currently pushing to implement the CAT mechanism by December, ahead of the target model, at a cost of 400 million euros for consumers.

Substantiated energy ministry details on the problems the proposed CAT mechanism is meant to resolve are insufficient, industrial sector officials noted, while questioning whether alternatives offering equivalent results have been thoroughly examined.

 

Viohalco electricity deal with PPC sets standard for industry

Leading metal processing company Viohalco, Greece’s second-biggest electricity consumer, has reached an electricity supply agreement with the main power utility PPC following many months of negotiations, achieved following concessions by both sides and the constructive role of two crucial factors that set standards for the wider industrial sector.

Viohalco accepted a 10 percent tariff increase in exchange for an extended three-year agreement, from 2018 to 2020, offering clarity and foreseeable electricity costs until the end of this period, the biggest benefit of the deal. The industrial enterprise’s electricity consumption reaches 1.2 TWh, representing a considerable part of its overall expenses.

A government pledge, expressed publically, ensuring Viohalco energy cost-savings and competitive electricity tariffs through an extension of Greece’s demand response mechanism (interruptability), was a second crucial factor leading to the industrial player’s three-year deal with PPC.

The measure compensates major-scale electricity consumers 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.

Demand response mechanism time extension a ‘top-priority issue’

A time extension for Greece’s demand response mechanism (interruptability), a pivotal energy cost-saving tool for industry, stands as a top-priority government matter for 2019, sector officials have pointed out.

This measure – compensating major-scale electricity consumers such as industrial enterprises when the TSO (IPTO) asks them to shift their energy usage (lower or stop consumption) during high-demand peak hours, so as to balance the electricity system’s needs – concerns the entire manufacturing sector and can serve as a base for the development of an industry-friendly policy, sector sources

The government must prioritize its application to the European Commission for a time extension of the measure as an independent tool rather than as part of an energy sufficiency mechanism, officials noted.

An extension of between three and five years needs to be sought by the government if it intends to follow up on promises of support to the manufacturing sector, sector officials stressed.