interconnections

EC calls for CO2 cuts; NECP revisions, RES boost ahead

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The European Commission has announced a new European Climate Law proposal for even more ambitious CO2 emission cuts in the EU, calling for reductions of 55 percent by 2030, instead of the present goal of 40 percent. If adopted, this proposal will prompt further revisions of National Energy and Climate Plans and RES installation increases by EU member states.

Compared to previous NECP objectives, RES facilities in most parts of the EU will need to increase by levels of between 20 and 30 percent by 2030, while energy consumption must drop further, between 15 and 20 percent, if the new Brussels proposal is adopted, reliable sources have informed.

Adoption of the proposal will require greater green-policy effort by member states and much bigger investments.

CO2 emissions produced by vehicles and buildings could be taxed, while more generous subsidy programs could be offered for energy efficiency upgrades.

In Greece, a 55 percent CO2 emissions cut by 2030 would require a further increase in RES installations so that a 19-GW target, by 2030, included in the country’s current NECP may be exceeded.

This more ambitious objective will enable the actualization of a greater number of possible projects on stand-by, currently representing a capacity of 76 GW. However, bigger investments for network reinforcement, increased interconnections and energy storage facility installations will be needed.

 

RAE opts for north Aegean grid link over LNG alternative

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Power grid operator IPTO has included a grid interconnection project linking the north Aegean islands with the mainland to its ten-year development plan covering 2019 to 2028 following a recommendation from RAE, Regulatory Authority for Energy.

The authority was driven towards supporting the interconnection  plan by the results of a comparative study pitting the project against an LNG supply alternative for electricity generation on the islands Lesvos, Chios, Limnos and Samos.

RAE commissioned a team of experts at the National Technical University of Athens (NTUA) to conduct feasibility studies and was convinced by the results of a second report.

According to sources, the study recommends a grid interconnection from either Thrace, northeastern Greece, or Evia, Greece’s second-largest island slightly northeast of Athens.

RAE still needs to endorse the study so that procedures concerning the project’s plan and scheduling can commence.

IPTO favors incentives, not penalties, for interconnections

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IPTO, Greece’s power grid operator, as part of a consultation procedure staged with RAE, the Regulatory Authority for Energy, is looking at  forwarding a proposal entailing the introduction of incentives in place of penalty threats, as is the case at present, for the swift development of new island interconnection projects.

Development of island interconnection projects, which promise to reduce public service compensation (YKO) surcharges included on electricity bills and also increase the RES sector’s share of the country’s energy mix, stand as national objectives.

IPTO is examining incentives that would encourage the completion of interconnection projects ahead of their scheduled delivery dates included in ten-year development plans, operator officials told energypress.

Officials at the operator pointed out experiences of other EU member states, stressing that the implementation of bonus plans have proven more effective than the threat of penalties for swifter project development. Penalty threats are also viewed negatively by investors, local and foreign, the IPTO sources noted.

 

IPTO pressured to hasten interconnections, reduce fees

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IPTO, the power grid operator, currently preparing to submit its updated 10-year investment plan, covering 2019 to 2028, to local authorities around March, is believed to be facing pressure to deliver a more ambitious interconnections program and also reduce its network usage charges.

IPTO’s new network usage charges, which will apply for a four-year period, should be slightly reduced, given the current shape of certain factors, including the country’s investment risk factor, relatively better than in 2014, when network usage charges were last reset, for 2014 to 2017.

However, the preferences of SGCC, the State Grid Corporation of China, a strategic partner of IPTO since early last summer, following its acquisition of a 24 percent stake in the Greek grid operator, will also need to be taken into account. SGCC officials have already begun pushing for an increased rate of return (WACC) on the Chinese firm’s investment.

IPTO has avoided including in its business plan certain interconnection projects that still need to be developed but is expected to face pressure to incorporate one of these, such as the fourth stage of the Cyclades interconnection, or the Dodecanese interconnection. On the other hand, the cost of developing such interconnections at a swifter pace will need to be factored into the operator’s calculations determining the level of network usage tariffs to be paid by consumers.

Authorities are believed to be examining the prospect of establishing a special category for the island interconnection projects which would enable these to first be developed and launched before the operator begins retrieving costs.

Such a solution would prevent consumers from having to pay in advance. Instead, consumers would begin paying increased network usage fees once projects have been completed but, by that stage, the Public Service Compensation (YKO) surcharge, subsidizing high-cost electricity production on Greece’s non-interconnected islands, will have been drastically reduced, offsetting the network usage hike.

The interconnection projects promise to greatly reduce the cost of generating electricity on the islands. High-cost local plants are now being used on the non-interconnected islands.

 

IPTO board, shaping up for the future, makes series of decisions

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The board at IPTO, Greece’s power grid operator, has taken a series of strategic decisions, including moves concerning managerial posts at a number of divisions, the operator’s chief executive Manos Manousakis has announced.

As of today, Xinghua Shi, IPTO’s deputy chief, will supervise the information and telecommunications, system maintenance, and asset management divisions.

Giannis Margaris, the general manager and vice president of the board, will head divisions tasked with handling new projects, strategy and system development, and research and development.

Fellow general manager Giannis Kabouris will supervise divisions handling operational matters and system inspection, infrastructure and market management.

Chief financial officer Dayong Sun will supervise the finance and accounting services department, as well as the supply management division.

The IPTO board also decided to extend a voluntary retirement offer to employees, described by Manousakis, the operator’s chief executive, as part of “an initial bunch of decisions concerning the company’s future”.

Staff members eligible for retirement but still working will be offered remuneration packages worth 35,000 euros, net, for voluntary retirement according to the offer. Employees will maintain the right to reject the offer and keep working, Manousakis explained.

The CEO noted that the current average age of IPTO employees is 52 and will rise to 55 without young recruits.

According to Manousakis, these decisions, made at yesterday’s board meeting, aim to modernize IPTO by making the enterprise more flexible for greater challeges expected in the future, and also “protect the rights of employees, their salaries and work conditions.”

IPTO is expected to play a key role in the development of various interconnection projects needed in the near future.

 

 

Electricity interconnections insufficient, huge task for IPTO

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Certain EU member states may be reacting against a European Commission objective  calling for interconnections to represent 15 percent of Europe’s electricity network, but this EU policy stands as a key factor in an overall effort to bolster energy security, enable further renewable energy penetration, as well as the liberalization of EU electricity markets.

Though Greece was not pointed out in a recent Euractiv study, the Greek market is among the EU markets that are lagging behind on interconnection target matters.

The European Commission believes EU member states, operators and regulators need to take immediate action if one of three specific conditions are not being fulfilled.

Firstly, member states need to aim for the minimization of electricity wholesale price discrepancies. According to the European Commission, the development of new interconnections or reinforcement of existing ones needs to be made a priority in cases where regional price differences exceed a limit of 2 euros per MWh. Emergency measures need to be taken if price differences exceed this limit, according to the European Commission.

Secondly, member states must ensure that peak demand is covered under all conditions through combinations of domestic electricity generation and imports. If the capacity of local interconnections represents less than 30 percent of peak demand then alternatives for interconnection upgrades need to be considered.

Thirdly, further RES penetration in markets must not be inhibited by a lack of electricity export activity. RES production by member states must be able to be utilized by fellow member states. If the overall interconnection capacity of respective member states is less than 30 percent of their installed RES capacity then plans for interconnection boosts need to be examined.

At present, Greece does not meet at least two of these three criteria. The country’s electricity wholesale price discrepancy in the day-ahead market exceeds 2 euros per MWh, while the country’s interconnection capacity measures less than 30 percent of peak demand. It is debatable whether the RES-related criterion is fulfilled.

Taking these factors into consideration, IPTO, the power grid operator, faces a huge challenge. Besides needing to invest in the country’s island interconnections, the operator must also make plans to upgrade transboundary international interconnections.

The Greek-Bulgarian electricity interconnection has already been classified as a Project of Common Interest (PCI), which will enable EU funding. This status may also need to be achieved for other projects if Greece is to be taken off the list of EU member states not meeting electricity interconnection targets.

KEN official: ‘Let’s first utilize existing interconnections’

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Electricity interconnections reduce risk and prices but the country’s existing potential and interconnections are not being fully utilized, Yiannis Psarros, the crossboundary trade manager at independent supplier KEN, noted in an interview for local business news channel SBC’s Energy Week show, hosted by energypress journalist Thodoris Panagoulis.

“Let’s utilize these [existing interconnections] first and then look at developing new ones, such as the Cretan interconnection, Eurasia and Euroafrica,” Psarros remarked. “Our country depends greatly on interconnections,” he added.

Electricity suppliers in Greece are currently absorbing elevated wholesale prices but it remains questionable as to how long they can keep doing so, the KEN official explained.

Inadequate rainfall and an increase in oil prices have driven up wholesale electricity prices, compared to recent levels in Europe and the Balkans, Psarros pointed out.

Psarros described the NOME auctions – introduced in Greece slightly over a year ago to offer independent suppliers access to the main power utility PPC’s low-cost lignite and hydropower sources – as a transitional measure that cannot be relied on for favorable market conditions in the future.

Until now, NOME auctions have helped the market remain afloat but made minimal impact in terms of independent supplier growth through a contraction of PPC’s dominant market share, the KEN official remarked.

He admitted current market shares of independent suppliers would have been lower had NOME auctions not been introduced. Also, extraordinary situations such as last winter’s energy crisis would have proved devastating without the NOME auctions, he added.

Psarros described the bailout-required contraction target set for PPC as ambitious – given the measures implemented to date. PPC’s retail electricity market share, still at about 83 percent, needs to drop to less than 50 percent by 2020.

The KEN official expressed satisfaction with the newly emerged company’s performance over the past nine months. KEN now operates 19 retail outlets and is one of the two or three fastest growing suppliers in terms of new customer arrivals, stressed Psarros, who also made note of the independent supplier’s establishment of a crossboundary trade division.

He expressed reservations over next April’s target starting date for the Greek energy exchange but admitted serious work is being carried out for its launch.

“The energy exchange promises to introduce a futures market, in other words, each player will be able to buy and sell future-term energy. It’s a usefool tool,” Psarros said, adding consumers stand to benefit from the resulting competition.

 

Commercial interest suspicions raised over Italy power link problem

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Frequent problems disenabling the Greek-Italian grid interconnection to function for extended periods have raised suspicions that commercial interests, besides technical issues, may also be at play.

The interconnection’s latest breakdown, occurring at a time when crossboundary electricity trade is set to rise, has once again brought the issue to the fore. In response, RAE, Greece’s Regulatory Authority for Energy, and its Italian counterpart, have begun investigating the matter in an attempt to identify the causes behind the regular breakdowns.

The interconnection stopped operating in early October and is not expected to become available again until at least the end of the year.

RAE and Italy’s Terna informed of a technical issue at the Greek-Italian grid interconnection on October 9.

Inspections of the interconnection’s overhead segment in Greece did not reveal any issues, prompting Terna to focus its check on the submarine section, where a technical problem was reportedly identified. A specialized vessel was then recruited for the repair effort. According to initial estimates, work is expected to be completed by mid-December while the interconnection is seen working again within the last yen days of the year.

As a result of the disruption, a mechanism was activated on November 25 requiring RAE and Terna to cover Physical Transmission Rights (PTRs) until the damage is repaired.

Italy’s interconnections with France, Switzerland, Austria and Slovenia also encountered operational problems in October and November.

Grid capacities in the wider region are expected to be tested by extreme weather conditions this coming winter. All these factors combined could prompt a domino effect that may lead to electricity capacity issues in various parts of Europe and increase prices. If so, the adequacy of precautionary measures taken by RAE will be put to the test.

IPTO head expresses interest for more Chinese partnerships

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The strategic partnership recently established between IPTO, Greece’s power grid operator, and SGCC (State Grid Corporation of China), which acquired a 24 percent stake in the operator, has so far proved exceptional, IPTO chief executive Manos Manousakis told Chinese news agency Xinhua.

The results of this partnership are already apparent in IPTO’s improved performance, which is why the operator plans to seek further collaborations with Chinese partners, Manousakis noted.

IPTO recently signed a Memorandum of Understanding with CDB, the China Development Bank, one of the world’s biggest banking institutions. CDB has expressed an interest to finance companies and projects in Greece. IPTO hopes that CDB financing will provide impetus to the operator’s ambitious growth plan.

“We signed a very important memorandum of understanding with China Development Bank to explore the possibilities of financing our new projects and for the company’s capital,” Manousakis told the Xinhua agency. “Major interconnection projects on the Greek mainland and islands, as well as international interconnection projects in the Mediterranean all lie ahead,” he added.