industry

PPC close to signing first PPAs with industrial consumers

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

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

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

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

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

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

Wholesale electricity prices up over past week

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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

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

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

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

Net metering only via energy communities for smaller industries

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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

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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

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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.

Green bilateral deals platform combined with industry PPAs

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An energy exchange platform for green energy bilateral agreements is planned to operate in tandem with power purchase agreements (PPAs) for industry. RAE, the Regulatory Authority for Energy, will, as a next step leading to this prospect, forward to the Energy Exchange comments accumulated through a related consultation procedure.

Authorities need to decide which of three platform alternatives will be adopted. One of the three options included in the consultation procedure is believed to have been rejected by all participants.

The aim is to bring together a platform for green energy bilateral agreements with another being developed by the energy ministry to facilitate PPAs for industrial consumers in place of supply agreements they held, until recently, with PPC, the power utility.

Prospective legislation to exempt bilateral contracts involving physical delivery from caps on fees for all electricity producers in wholesale electricity spot markets is central to the effort.

This exemption will enable RES producers to be remunerated at the market clearing price. Otherwise, electricity purchases and sales made through the Energy Exchange would not be able to take place at price levels agreed to between buyers and sellers.

PPC talks for first PPAs with industries concern thermal-green mix

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Power utility PPC’s ongoing negotiations with two energy-intensive industries for power purchase agreements (PPAs) entail ten-year electricity supply agreements at fixed prices, beginning with supply through thermal (lignite and gas) power stations for the first two or so years followed by RES-generated electricity, exclusively, for the rest of the agreement’s term, sources have informed.

According to latest information, metal manufacturer Viohalco and cement and building materials producer TITAN, the country’s two most energy-intensive industries, now without energy supply agreements as their previous deals expired at the beginning of the year, are the two industries discussing PPAs with PPC.

The power utility and the two energy-intensive industries are believed to now be discussing the fine details of prospective PPAs.

Any breakdown in these PPA talks is regarded as highly unlikely as the prospect of energy-cost stability over a ten-year period, at times of intense market volatility, is extremely appealing for the energy-intensive industries involved in the talks.

PPC negotiating long-term PPAs with 3 industrial players

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

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

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

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

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

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

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

 

Ministry working on decision facilitating PPAs for industry

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The energy ministry and European Commission are nearing an agreement that would exempt electricity producers from a wholesale electricity market cap as long as they have established power purchase agreements (PPAs) with energy-intensive consumers for physical delivery of power quantities.

The ministry is moving in this direction as it is seeking a subsidy-free solution for energy-intensive industrial consumers, facing urgent energy-cost issues as a result of expired or expiring power supply agreements, in 2023, with power utility PPC. The power utility has ruled out any chance of renewing supply agreements with industrial consumers under favorable terms, as had been the case until now.

For most industries, PPC supply contracts expired at the end of 2022, while the remainder face expiring contracts in 2023.

Energy minister Kostas Skrekas is preparing a ministerial decision that will pave the way for the establishment of PPAs between electricity producers and high-voltage industries, sources informed.

Both electricity producers and consumers will need to present detailed schedules of physical power deliveries to be eligible for PPAs.

The minister pledged, last month, to deliver a related ministerial decision while participating at a meeting held by SEV, the Hellenic Association of Industrialists.

PPAs will reportedly initially be applicable between industries and lignite and gas-fired power plants, followed by industries and RES producers.

Industrial sector sources told energypress they have yet to receive news of any specific decision by the energy ministry, recalling that most industrial plants are being billed at wholesale electricity market prices as of January 1, noting PPC does not intend to renew their supply contracts under previous terms.

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

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

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

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

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

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

 

Industrial power usage cut auction set for January 18-19

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An auction offering compensation amounts to high and medium-voltage consumers for electricity usage reductions of 5 percent during peak hours, an order that needs to be met by all EU member states this winter, will be launched on January 18 and 19 by power grid operator IPTO, the operator has announced.

Industrial consumers submitting lowest compensation amounts requested in return for their electricity consumption cuts will qualify for this mechanism, which will remain valid until March 31, 2023, when a commitment made by all EU member states to limit respective industrial electricity demand during peak hours will expire.

Greek authorities have defined the evening hours between 6 pm and 9 pm as the country’s peak hours.

Compensation amounts to be awarded to the winning bidders are planned to stem from the Energy Transition Fund.  An upper limit of 400 euros per MWh has been set for the mechanism’s bidding process.

 

 

Incentives sought for PPAs between renewable energy producers, industry

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

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

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

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

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

 

RAE clarifying criteria for key industries to avoid rationing

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RAE, the Regulatory Authority for Energy, is working on clarifying the selection process for a list of vital industries to continue being given priority status for natural gas supply should gas imports be subject to major disruptions.

RAE, conducting related consultation, needs to assemble this list following a European Commission order requiring all EU member states to name their respective industries of vital social and economic importance. These enterprises would be exempted from natural gas rationing, if such an extreme measure needs to be adopted.

However, the selection criteria for this list remain ambiguous, preventing Greek authorities from proceeding with the selection process.

A total of 104 industrial enterprises operating in Greece have submitted applications for inclusion on this special-status list. To date, no member states have put together a special-status list.

Net metering expanded to high-voltage category

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The energy ministry is taking initiatives to soon also make net metering available for high-voltage consumers as a means of helping reduce the energy costs of Greek industrial enterprises, currently facing soaring energy costs.

Net-metering capacity upper limits for high-voltage consumers have yet to be determined, but it is believed they will be over 3 MW, the level also set for medium-voltage consumers.

Exorbitant energy costs faced by Greek industrial enterprises are impacting their competitiveness and ability to establish sales strategies.

The overwhelming majority of industrial consumers are expected to swiftly adopt net-metering solutions, given their potential energy-cost savings.

Monthly auctions for industrial energy-saving compensation

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Industrial consumers – high and medium-voltage – will be offered energy-saving incentives through monthly auctions offering compensation for bids with the lowest compensation levels, it has been decided at an extraordinary meeting yesterday involving the energy ministry, RAE (Regulatory Authority for Energy), distribution network operator HEDNO/DEDDIE and power grid operator IPTO.

The session was staged ahead of tomorrow’s meeting of EU energy ministers, whose agenda will include talks for the establishment of a formula reducing electricity usage.

The European Commission has prepared a plan for 5 percent reduction of electricity consumption during peak hours, but, following negotiations over the past few days, this reduction rate could be cut to 3 percent. Member states are expected to seek flexible terms.

Electricity consumption restrictions, in Greece, between 6pm and 9pm are seen as a certainty following yesterday’s meeting of Greek officials. Also, an additional hour during non-peak hours will most likely be introduced, but it remains unclear whether this hour will be set in the morning, from 9am to 10am, or in the evening, from 9pm to 10pm.

Energy saving compensation for industry, incentives for households, businesses

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Industrial enterprise compensation packages, offered through auctions, in exchange for lower energy consumption, and energy-saving incentives for households to be announced at the end of this month, have been included in a Greek plan aiming to achieve a European Commission order for a 5 percent reduction of electricity usage by all EU member states.

It will be up to each EU member state to decide on the details of respective formulas achieving the crisis measure’s objective set by the European Commission.

The Greek plan is greatly relying on industrial players to embrace compensation packages to be offered through auctions.

Reduced energy usage by households and businesses will be optional as, contrary to other EU countries, smart meters, offering immediate online information on energy consumption, have yet to be installed in Greece.

A promotional campaign encouraging households and businesses to use less electricity will be launched at the end of this month, immediately after the energy ministry has announced subsidy-related incentives.

 

Major industries turning to natural gas alternatives

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Energy-intensive industries are abandoning, one after another, natural gas as an energy source and turning to alternatives in order to contain their operating costs.

Aluminium of Greece has switched to diesel for smelting procedures at its Agios Nikolaos facility in Viotia, northwest of Athens, while Motor Oil, has begun using naphtha for some of its energy needs, in place of natural gas, whose price levels have spun out of control.

According to sources, another major industrial player, ElvalHalcor, is also examining LPG as an alternative to natural gas, which the company uses for its aluminum and copper smelting furnaces.

However, this fuel switch cannot be carried out instantly as specialized studies focused on safety matters must precede the change. In addition, equipment needed for this fuel switch is not readily available. Also, ElvalHalcor is examining the extent of LPG availability in Greece as an industrial enterprise of its size would require big amounts.

European Commission energy crisis measures set to be announced, which will require energy savings and discourage the use of natural gas, are driving industrial players to seek energy source alternatives.

 

Eurometaux: Crisis measures needed to ease pressure on struggling industry

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Europe needs to take emergency energy-crisis action to ease the growing pressure on the industrial sector, a letter forwarded to the European Commission by European industry association Eurometaux has underlined.

The letter was signed by representatives of 40 major industrial enterprises and associations, including three leading Greek industrial players, Evangelos Mytilineos, head of Mytilineos group, Panos Lolos, ElvalHalcor’s Copper Segment general manager, and Antonis Kontoleon, president of EVIKEN, the Association of Industrial Energy Consumers.

Aluminium and zinc production in Europe has been forced to drop to 50 percent of capacity as a result of high energy costs, while the copper and nickel sectors are also facing serious problems, the Eurometaux letter notes.

Reasonable electricity and natural gas prices are necessary for production of metals, the letter underlines.

Europe cannot have a successful energy and raw materials strategy if electricity and gas prices remain at current levels for an extended period of time without relief, the letter says.

The crisis requires a comprehensive package of solutions, while no option should be disregarded during such unprecedented conditions, the association notes.

An improved temporary framework for state support as well as incentives for electricity purchase agreements with RES producers are among several proposals listed by Eurometaux in its letter to Brussels.

Key industrialists asked to cut down on energy consumption

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Energy minister Kostas Skrekas has asked a group of leading Greek industrialists to reduce energy consumption at their production facilities as a means of greatly contributing to the country’s wider energy-crisis effort ahead of what could be a challenging winter, energypress sources have informed.

The minister’s request, a response to Russia’s latest closure of the Nord Steam I gas pipeline, which, according to Moscow, was necessary for repairs, represents the start of the government’s gradual implementation of an emergency plan that factors in the possibility of a complete cut in Russian gas supplies.

The energy minister met last Friday with three industrialists, Dimitri Papalexopoulos, chairman of the executive committee at Titan cement group, Nikolaos Stasinopoulos, president of Viohalco, and Evangelos Mytilineos, chairman and board of the directors at the Mytilineos group, whose subsidiaries include Aluminium of Greece.

The minister, through this initiative, is striving for energy savings of approximately 15 percent as the production facilities of the three industrial groups are the country’s biggest consumers of electricity and natural gas.

Implementation of the minister’s plan is expected to help prevent power cuts to households and businesses. The three businessmen were also asked, by the energy minister, to avoid incorporating job cuts into their energy saving strategies.

 

 

PPAs through Green Pool, state subsidies to be set at 85%

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A Green Pool model forwarded by the energy ministry for European Commission approval ahead of an envisaged launch at the beginning of 2023 will have the dual goal of setting energy costs for eligible industries at competitive price levels and bolstering green-energy generation through power purchase agreements.

The energy ministry hopes its plans will be given the green light as soon as possible so that industries can, immediately afterwards, establish PPAs for green energy, with state subsidies set at 85 percent.

This would enable industries to partially cover their energy needs as of the beginning of 2023 at competitive prices and also reduce their carbon footprints.

The Greek proposal was forwarded to the European Commission’s Directorate-General for Competition early this month, the aim being to make energy-intensive industries more environmentally friendly and facilitate the energy-mix entry of new RES facilities.

Rising PPA interest expressed by major-scale consumers

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Major-scale energy consumers are expressing growing interest in power purchase agreements with RES producers, but supply currently remains subdued.

Banks are playing a key role in this development as they are encouraging customers to establish PPAs by offering low interest rates as an incentive, a new banking offer, as was noted by a sector official at the recent Athens Energy Dialogues conference.

Banks, increasingly acknowledging that PPAs are the way forward, prefer ten-year PPAs, deemed as agreements that protect from dangers and risks, while also being suitable for the Greek market, according to sector officials.

Market players are already seeking professional PPA advice from consulting firms to prepare for their entry into this new territory.

 

Ministry continuing talks with Brussels for green PPAs

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Energy ministry officials are intensifying talks with the European Commission for its approval of a support mechanism concerning green PPAs to be established between industrial producers and RES producers through green pools.

The energy ministry recently responded to an initial set of questions forwarded by Brussels and is expected to stage a teleconference with European Commission official within the next week or two for further clarification of issues concerning the green PPAs.

According to sources, the initiative’s main objective is not to bolster the industrial sector but to help transform industrial players into greener players and also facilitate the entry of new RES units into the country’s energy mix.

Officials are striving to announce the green pool plan this coming summer.

 

Brussels seeks clarification on green PPAs for industry

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The European Commission, in ongoing exchange with the energy ministry, is seeking clarification on the functional details concerning green PPAs planned as a supportive measure for the industrial sector.

Aspects for which Brussels wants further details include how the entity to be tasked with managing the PPA mechanism will purchase additional energy required and how it will sell excess green energy.

Brussels has also asked if the regulating body will have responsibilities in the balancing market and how the mechanism’s Green Pool will interact with and influence the balancing market.

The energy ministry forwarded a group of responses to Brussels’ first set of questions at the end of last week. A teleconference in early December had preceded the European Commission’s questions.

According to insiders, clarity on the support measure’s launch schedule is expected in approximately two months. In the meantime, two or three more rounds of questions from Brussels are anticipated.

Industry back to pre-pandemic levels despite energy crisis

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

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

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

 

 

Producers expecting €8.83m surcharge return from gas distributors

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RAE, the Regulatory Authority for Energy, has determined the size of network usage surcharges all large-scale consumers stand to be handed back by natural gas distributors to offset across-the-board surcharges imposed on industrial enterprises between August 14, 2015 to December 1, 2016. The amount to be returned by the gas distributors totals 8.83 million euros.

Gas distributor EDA Attiki, covering the wider Athens area, will need to return to large-scale consumers a total of 1.44 million euros, EDA Thess, covering the Thessaloniki and Thessaly areas, must return 3.26 million euros, and DEDA, covering the rest of Greece, needs to return 4.13 million euros.

The 8.83 million-euro amount that will need to be returned by the three gas distribution companies is expected to be offered in 36 monthly installments from November, 2021 to October, 2024.

Large-scale consumers were universally charged a network usage surcharge of 4 cents per MWh over a 16-month period, based on a bailout term from 2015, which prompted EVIKEN, the Association of Industrial Energy Consumers, to forward an official complaint to the European Commission.

Industry opposes RES surcharge as competitive pricing component

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Energy-intensive industrial producers strongly oppose an energy ministry plan to change the status of a RES-supporting ETMEAR surcharge included in electricity bills from a  regulated to competitive fee by having it incorporated into the pricing policy of suppliers, EVIKEN (Association of Industrial Energy Consumers) sources have informed energypress.

The industrial producers have cited two key reasons for their disapproval. Firstly, changing the ETMEAR surcharge into a competitive component of supplier pricing policy would terminate the ability of industrial consumers to receive related compensation as, based on EU state aid directives, compensation is permitted for regulated charges but not competitive charges.

In addition, industrial consumers oppose an ETMEAR status change as a new energy exchange platform promises to offer strong incentive for new RES units to participate in competitive procedures to secure agreements with energy suppliers. This essentially means that fewer, if any, RES units will remain available for bilateral agreements with industrial producers, who are counting on such arrangements for an urgently needed reduction of energy costs in the medium term.

The resilience of manufacturers is already being seriously tested by recent energy price increases brought about by the energy crisis.

Balancing cost leap the latest concern for suppliers, industry

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A sharp rise in balancing market costs, which have reached 20 euros per MWh, comes as an additional headache for suppliers and the industrial sector, already facing exorbitant wholesale electricity costs amid the energy crisis.

Balancing costs have risen since the end of September, from 12.25 euros per MWh to 20.04 euros per MWh for the week covering October 11 to 17.

This upward trajectory further increases the cost of electricity for industrial consumers and non-vertically integrated suppliers at a time when market clearing prices have skyrocketed.

On Monday, when renewable energy dominated grid input with a 48 percent share of the country’s energy mix, the market clearing price eased to 189.30 euros per MWh before bouncing back up to 218.06 euros per MWh yesterday and 205.6 euros per MWh today. The average wholesale price for October is currently at 200.3 euros per MWh.

Should the balancing cost settle at the currently heightened level of approximately 20 euros per MWh, domestic industrial players will face even greater sustainability challenges, while retail electricity prices will rise further.

Suppliers and industrial enterprises are troubled as, under the current energy market conditions, there is no leeway for an increase in the balancing cost, which, even at previous lower levels of around 10 euros per MWh, was one of Europe’s highest.

 

 

Medium-voltage sector affected by wholesale price clause

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Medium-voltage consumers face further power cost increases following the introduction of a wholesale price-related clause by power utility PPC, the main supplier to this category, which includes super markets and retail chains.

PPC was also forced to introduce a wholesale price-related clause for the low-voltage category in August, as a result of skyrocketing wholesale electricity prices.

Unlike rival power suppliers, who have adopted wholesale price-related clauses, the power utility had previously only included a CO2 emission rights clause in its supply agreements.

This latest energy cost increase could end up overwhelming some of the medium-voltage category’s energy-intensive consumers, defined as enterprises with energy costs representing at least 30 percent of their total business costs.

Costs for producers in Greece have risen by levels ranging between 20 and 40 percent, according to industry association Hellenic Production. The energy crisis is making stronger impact on producers in Greece as wholesale market negotiations for electricity are conducted through the intraday market, whereas most energy deals in other European markets are based on bilateral agreements at fixed prices, the association noted.

Even so, the energy crisis is being felt by industrial players throughout the continent. A group of eleven major producers representing various sectors, including steel and cement production, have urged EU leaders to take emergency action to counter the extreme energy cost increases, a major threat to post-pandemic economic recovery.

 

EU energy ministers to discuss consumer protection measures

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EU energy ministers plan to discuss the alarming increase in energy prices on October 6 at a session expected to take into consideration a proposal made by Greek energy minister Kostas Skrekas for a temporary hedging mechanism that would be linked to the EU’s Emissions Trading System (ETS) as a means of protecting consumers against the overall energy cost ascent, caused by a combination of unfavorable factors, internationally.

Higher energy costs, which have energy consumers, including industrial, bracing for a challenging winter, will also be a key issue at a EU Summit meeting on October 21 and 22.

Natural gas prices yesterday climbed to 85 euros per MWh, several times over levels registered earlier in the year, oil prices exceeded 80 dollars per barrel, and CO2 emission rights, on a record-breaking streak, reached 62 euros per ton.

Besides these price rises, energy sufficiency issues are also beginning to emerge around Europe, as well as in China, for a variety of reasons.

In Greece, the combination of higher prices for primary and secondary materials, greater transportation costs, given the country’s location on the edge of Europe, plus the increase in energy prices, threatens to paralyze the industrial sector.

The country’s energy-intensive consumers are calling for a revision to supply rules. In the domestic retail electricity market, suppliers are being forces to revise prices. Some have so far resisted but are battling against narrowing profit margins. Customer shifts by disgruntled customers are already being observed.