Italy

PPC, Mytilineos €2bn RES deal converges company strategies

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Power utility PPC has reached a 2 billion-euro deal with the Mytilineos group for the purchase of a renewable energy portfolio containing roughly 2 GW of solar-farm projects at various stages of development in Bulgaria, Croatia, Italy and Romania.

The deal secures major benefits for both sides. It greatly expands PPC’s RES portfolio and offers the company firmer standing along the Balkan corridor, a position promising to serve its strategic goal of becoming a leading player in green energy, key infrastructure and services in southeast Europe.

As for the Mytilineos group, the 2 billion-euro cash influx from this sale agreement, consisting of 90 solar farm projects, underlines the success of the company’s strategy to develop and sell RES projects, a strategy chosen by its management from the outset and designed to seize on energy-transition opportunities.

Mytilineos will develop, for PPC, ready-to-use solar farms covering the energy needs of 320,000 households in Bulgaria, Croatia, Italy and Romania.

Besides expanding PPC’s presence in the Balkans, the deal, a show of the once-troubled company’s financial strength, also offers entry into a new market, Italy, which the power utility has been eyeing for quite some time. Italy is the EU’s second biggest economy and Europe’s biggest electricity importer.

The nature of the agreement is unprecedented as two fellow Greek corporate groups have combined to secure major growth for both abroad.

 

GREGY Interconnector plans split route to also serve Italy

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Elica, a subsidiary formed by the Copelouzos group to promote the Greek-Egyptian GREGY Interconnector, promising transportation of Egyptian renewable energy production to Europe, plans to add Italy as a direct recipient in addition to Greece.

The idea behind this revision, or addition, is to ensure even more promising commercial prospects for the project by making available renewable energy from northeast Africa to a wider part of Europe.

The revised route being considered by Elica would split into two in the sea area southwest of Crete. From there, two subsea lines, each offering a capacity of 750 MW, would carry on for the wider Athens area and a further two subsea lines, also 750 MW each, would reach the sea area off Greece’s northwest and connect with an existing grid interconnection linking Greece and Italy.

This revised route would enable direct export of Egyptian renewable energy to Italy, as an additional recipient, via the GREGY Interconnector. Greece and Italy would each be able to receive capacities of 1,500 MW through the two lines.

Under the original plan for the GREGY Interconnector, four cables beginning from Egypt and possessing a total capacity of 3,000 MW would have all ended up in the wider Athens area.

Elica, the Copelouzos group subsidiary promoting the project, appears to have informed the Greek and Italian governments, as well as Greek power grid operator IPTO and Italy’s power grid operator TERNA of its planned route revision.

RES projects with a total capacity of 9.5 GW are planned for development in Egypt to feed renewable energy into the GREGY Interconnector.

Greek industrial consumers, seeking low-cost energy, are among the main potential recipients of the 1,500 MW to end up in the wider Athens area. A share of the renewable energy brought in from Egypt may also be exported to other Balkan countries through electrical grid links with Greece.

Italy, whose electricity import needs are among the highest in southern Europe, would cover a considerable proportion of these needs through the GREGY Interconnector, at a low cost.

 

 

Copelouzos holds Balkan, Italy talks for GREGY Interconnector

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Copelouzos group president Dimitris Copelouzos has been involved in a series of meetings with leading energy-sector officials in the Balkans and Italy to explore the level of interest by energy groups and funds for investments concerning the Greek-Egyptian GREGY Interconnector and development of 9.5 GW in RES projects in Egypt, sources have informed.

Meetings held by the Greek entrepreneur with the energy ministers of Bulgaria, Romania and Serbia in their respective capitals, as well as in Italy with Italian Deputy Prime Minister Matteo Salvini and top-ranked officials of Italian energy company Enel, have indicated a strong interest by all for renewable energy production from Africa’s north, as well as the establishment of PPAs.

The Copelouzos group recently founded a subsidiary named Elica to  promote the Greek-Egyptian GREGY Interconnector, a link that would facilitate transportation of Egyptian RES production to Europe.

The next few months will be crucial for GREGY Interconnector’s progress on a technical level as documents for related tenders are currently being prepared. Tenders will be staged to select consultants and designers who will undertake four main studies estimated to cost between 35 and 40 million euros, of which 50 percent will be sought through EU funds.

The series of tenders, expected to begin in April and May, will include a technical study, a geophysical and geotechnical study, as well as a seabed mapping study, the most challenging of all, covering a 954-km route in the eastern Mediterranean.

Highlighting the significance of the GREGY Interconnector and RES projects to be facilitated by this link, the EU and Egypt have issued a joint statement.

“Given the new energy and geopolitical reality, the EU and Egypt recognize the need to strengthen energy security, and, therefore, have agreed to intensify their cooperation with a focus on renewable energy, energy efficiency, as well as other low-carbon technologies, building on Egypt’s significant potential for more efficient expansion of renewable electricity generation through projects such as the GREGY Interconnector,” the joint statement noted.

Electricity exports surge in January, driven by lower prices

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Lower wholesale electricity prices in Greece led to a surge in electricity exports in January, up 323.17 percent compared to a month earlier.

Wholesale electricity prices have been on a downward trajectory in Greece since the beginning of the year, making the country Europe’s 8th most expensive, in this specific market, from 3rd most expensive in 2023.

Integrated energy markets enable energy to flow from lower-cost to higher-cost markets. The majority of Greece’s electricity exports have headed to Italy.

Up until the energy crisis, Italy was Europe’s most heavily dependent country on natural gas. Though this exposure has since been limited, the neighboring country’s electricity prices are still influenced by natural gas prices.

Interestingly, the current month provided a snapshot of the future as, according to official data, renewables covered 68 percent of Greece’s day-ahead market load on February 11, the second highest coverage rate since the launch of the target model three years ago.

The all-time high was recorded on September 10, when renewables covered 70.75 percent of the country’s load.

 

GREGY gaining momentum, investment decision early ’25

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Elica, a subsidiary of Greece’s Copelouzos group established to promote the Greek-Egyptian GREGY Interconnector, is preparing to push ahead with studies that will determine the project’s cost and also establish sites and partners for the development of 9.5 GW in RES projects.

All these aspects are crucial factors ahead of a final investment decision, expected to take a year. GREGY Interconnector, initially budgeted at 4.2 billion euros, promises to facilitate renewable energy exports from Egypt to Europe via Greece.

Greek Prime Minister Kyriakos Mitsotakis and Egyptian President Abdel Fattah Al Sisi in El Alamein focused on the GREGY Interconnector at a recent meeting that was also attended by Dimitris Copelouzos, chairman and managing director of the Copelouzos group, which has encouraged all parties involved to move faster.

At the meeting, the Egyptian President stressed that cooperation should be accelerated and procedures streamlined, while noting any obstacles that may arise must be cleared.

The Egyptian leader’s words essentially encourage closer ties between Egypt’s electricity and renewables ministry, the Egyptian power grid operator EETC, and the Copelouzos group for swift progress on the project’s studies, expected to be awarded in February and completed, barring unexpected developments, towards the end of the year.

A total of four studies – a technical study; environmental impact study; geophysical-geotechnical study; and seabed mapping, the most challenging of the four, to be conducted at a depth 954 km in the East Mediterranean – are needed. Their total cost is estimated at between 35 and 40 million euros. Investors will seek to cover half this cost through EU funding support.

The Copelouzos group should be ready to announce a final investment decision on the GREGY Interconnector in early 2025.

Italy has corresponding plans with the Italian-German Green Vein project for a line facilitating renewable energy transmission from Egypt to Italy.

This project’s planned capacity matches that of the GREGY Interconnector, at 3 GW, but Green Vein’s subsea cable would be three times longer than that of the GREGY Interconnector’s 954 km. This will definitely weigh heavy on the Green Vein’s cost, still not announced.

Plans for a detailed feasibility study concerning Green Vein were announced by UAE’s K&K Group, Italy’s CESI and the Prysmian group, and Germany’s Siemens Energy at the recent COP28 in Dubai.

 

Doubled TAP capacity by 2030, not 2027 as initially planned

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A Trans Adriatic Pipeline (TAP) plan to double the pipeline’s capacity to 20 billion cubic meters by 2027 now appears likely to be delayed until 2030, Stefano Venier, CEO of Italian energy infrastructure company Snam, one of the TAP consortium shareholders, has indicated.

The ability to double the pipeline’s capacity depends more on the availability of gas in Azerbaijan than on demand, the Snam chief executive noted during a presentation of the company’s business plan until 2027.

The aim is to increase capacity gradually so that the pipeline can operate at full capacity sometime between 2027 and 2030, the latter being most probable, the official noted.

In previous announcements, the TAP consortium, in which Snam holds a 20 percent stake, had said the pipeline’s capacity would be doubled by 2027.

Participants in a market test being staged to measure whether demand is sufficient face a January 31 deadline to submit binding bids.

TAP, an 878-kilometer link crossing Greece, Albania and the Adriatic Sea to Italy, is developing from a pipeline of strong Italian and Greek interests to one with a crucial pan-European role as a result of the energy crisis of the last two years, a condition that has further highlighted the importance of energy security and gas supply, Snam noted.

 

ENTSO-E: Greece key for harnessing offshore wind potential in southeast Europe

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ENTSO-E, the European Network of Transmission System Operators for Electricity, has, amongst other matters, underlined Greece’s importance in the exploitation of offshore wind potential in the Eastern Mediterranean region in its Offshore Wind Farm Interconnection Infrastructure Development Plan for the Eastern Mediterranean.

ENTSO-E held a meeting in Brussels earlier this week, where the development plan was presented. Greek power grid operator IPTO took part.

Italy is the region’s only country to have developed offshore wind farm projects thus far, but ambitious targets, given the current situation, for 2040 and 2050 will be achieved with countries such as Italy and Greece at the forefront, ENTSO-E noted.

The Eastern Mediterranean region’s South and East Offshore Grids will require energy transmission infrastructure totaling 8.7, 19.2 and 28.3 GW in 2030, 2040 and 2050, respectively, ENTSO-E has estimated, adding that investments needed by 2050 could reach 15 billion euros.

Environmental studies ahead of offshore wind farm projects may face fewer challenges and problems than corresponding onshore projects, ENTSO-E pointed out.

The Eastern Mediterranean region possesses strong wind potential and new offshore wind farms can help the electricity sector meet 2050 targets and become a zero-emission industry both in this region and the EU as a whole, ENTSO-E supported.

The development plan for offshore wind farms in the Eastern Mediterranean and Black Sea regions includes Greece, Bulgaria, Croatia, Cyprus, Italy, Romania and Slovenia.

Greece, Cyprus, Croatia, Italy and Romania have all set official offshore wind farm development targets, while Bulgaria and Slovenia have yet to do so.

Southeast European bodies launch single-market effort

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Regulatory authorities, operators and energy exchanges active in southeast Europe have begun informal preparations for the establishment of a single electricity market in the region, energypress sources have informed.

These bodies, which had signed a Memorandum of Understanding in mid-November, launching their single-market preparations, are conducting preparatory work at two levels.

Southeast European regulators, headed by the Albanian regulatory authority, placed at the group’s helm, have joined forces to coordinate on high-level preparatory work.

A second team has brought together the region’s operators and energy exchanges. Its participants appointed the North Macedonian energy exchange as group leader.

The participating bodies have scheduled their next meeting for February, in Pristina, where the group will plan its next steps.

Establishing a single southeast European electricity market represents an extremely challenging task that will require time and critical intervention of market structures, experts have pointed out.

The regulatory authorities, operators and energy exchanges working on this single-market project intend to submit an application to the European Commission within 2024, making their endeavor official.

Traders are monitoring the effort’s developments as a prospective market unification would enable cross-border trade in an intraday market, currently not possible.

The unification process will be modelled on the coupled markets of Greece with Italy and Bulgaria.

EastMed boosted by ENI discovery, Cypriot leader’s comments

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Italian multinational energy company Eni’s discoveries at block 6 of the Cypriot EEZ and favorable comments by Cypriot President Nikos Christodoulides have come as a boost for the development prospects of the natural gas pipeline EastMed, planned to transport natural gas from fields in the eastern Mediterranean to Italy and central Europe via Cyprus and Greece.

The Cypriot president, in comments made just days ago, linked Eni’s recent findings at block 6 of the Cypriot EEZ with the revival of the pipeline.

According to sources, ENI, which has rights to seven of ten licensed blocks at the Cypriot EEZ, estimates that it will be able to shape a development plan for the field and proceed with its exploitation early in 2024, once drilling confirming the discovery is conducted, most probably in January.

If the plan is confirmed, the block will be the first to be developed in the Cypriot EEZ since 2011, when Aphrodite was discovered, followed by four more discoveries.

In an interview last Thursday with Italian newspaper La Repubblica, the Cypriot president, citing ENI’s discovery, noted that EastMed “has always been one of the strategic options for the implementation of an energy corridor linking the Eastern Mediterranean with Europe, facilitating the export of energy resources through Italy”.

 

Balkan potential highlighted by IPTO’s interest in MEPSO

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Greek power grid operator IPTO’s interest, for some time now, to acquire North Macedonia’s grid operator MEPSO, either through a strategic agreement or a share capital increase, points to the existence of opportunities for energy infrastructure upgrades in the neighboring country as well as the growing role to be played by electricity networks and corridors in the wider region.

As the energy transition progresses, electricity networks and corridors will no longer merely serve as electricity transmission lines, but promise to gradually replace oil and gas pipelines.

Greece, at present, remains sorely absent from the wider Balkan energy-sector activity. IPTO has yet to make any big moves beyond the country’s frontiers.

Though the western Balkans are currently experiencing a green-energy boom with RES investment growth having reached double digits in some countries, regional networks are outdated and insufficient to support this robust investment interest.

Though it is vitally important for Greece to assert itself as an influential energy-sector player in the Balkans, the flow of energy from the region towards central Europe is currently being controlled by Italy.

Italy’s influence, on energy matters, over the Balkans was expanded in recent years with Montenegro as a base and Italian power grid operator in a leading role, as highlighted by its acquisition of a 22 percent stake in Montenegrin power grid operator CGES.

Identifying the pivotal energy role of the Balkans early on, Italy took a strategic decision for the development of a first route linking the western Balkans and Europe in the form of a 445-km line – 423 km of it as an underwater Adriatic Sea crossing – from Pescara, on Italy’s east coast, to Kotor, on Montenegro’s Adriatic coast.

The small Balkan country has since become a bridge of energy exchange between eastern and western Europe as this Adriatic link has interconnected Italy’s network with those of Bosnia and Herzegovina, Serbia, Kosovo, Albania, and, by extension, Bulgarian and Romania.

Italian power grid operator Terna is now examining the prospect of boosting this line’s transmission capacity from 600 MW to 1,200 MW. Giuseppina Di Foggia, CEO at Terna, recently held talks in Rome with Montenegro’s new president, Jakov Milatovic, about this project.

 

Subsea survey for Greek-Italian cable capacity boost early 2024

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A project aiming to triple the capacity of the Greek-Italian electrical grid interconnection is set for a challenging stage that entails thorough mapping of the seabed along the existing line’s 220-km route.

Survey work for this project is planned to begin in early 2024 following an agreement reached earlier this week at a wide-ranging Athens meeting between Giuseppina Di Foggia, CEO at Italian grid operator TERNA, and Manos Maousakis, the chief executive at Greek power grid operator IPTO.

The TERNA chief was joined by a team that included the company’s CFO as well as the head of major projects and international development.

Greece is under growing pressure to establish new export outlets for the country’s excess renewable energy. The country’s electricity exporting activity is becoming more frequent during midday hours. Also, Italy, it should be pointed out, is Europe’s biggest electricity importer.

According to sources, the Greek and Italian power grid operators are exploring all options, based on the respective experience of each company, to boost the capacity of the Greek-Italian subsea cable link from 500 MW to 1,500 MW as swiftly and efficiently as possible.

At this week’s meeting, held Tuesday, IPTO and TERNA also agreed on the need for new corridors transporting RES production from southern to central Europe.

TERNA, Europe’s biggest operator, is a highly influential market player operating 26 international interconnections and present on three continents.

 

EastMed pipeline market test in early 2024, project feasible

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A market test for the EastMed gas pipeline, planned to transport natural gas from fields in the eastern Mediterranean to Italy and central Europe via Greece, will be held in the first quarter of 2024, energypress sources have informed.

Market players are already expressing interest in the project ahead of the anticipated market test, expected to take about one month to complete.

Both producers and suppliers interested in utilizing the prospective pipeline to transport gas quantities from the east Mediterranean to European markets via Greece are expected to submit offers to the market test.

Though the test’s initial round will be non-binding, its outcome will help shape the project’s developments prospects, which have fluctuated for a number of years.

Competent sources note that the technical feasibility of the pipeline – to offer an annual 21 bcm capacity and cover 2,000 kilometers, of which over 1,400 kilometers will run underwater – has been proven and clarified through a number of studies.

However, questions linger over the project’s cost. Its budget, estimated at 6.1 billion euros, is likely to increase as development costs have risen considerably since the previous evaluation.

Discussions on EastMed date back nearly fifteen years. The project has been on the EU’s PCI list since 2013, a status it is expected to retain when the new and revised list is soon officially present, most probably within November.

 

Grid links key to wholesale price convergence, PPC notes

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Grid interconnections play a significant role in determining wholesale electricity prices in coupled markets, power utility PPC has noted, among other things, in a letter submitted to Parliament as a response to a question posed by the main opposition leftist Syriza party, which called for an explanation on Greece’s consistently higher wholesale electricity prices, compared to markets in Europe’s north.

PPC noted that wholesale electricity prices are shaped by domestic energy mixes and demand, as well as grid interconnections shared with neighboring countries, and, by extension, their energy mixes.

PPC, in its response, supported that it makes no sense to compare Greece’s wholesale electricity prices with those of distant European countries that are not directly linked and which have very different energy mixes.

Greater price convergence between Greece, Italy and Bulgaria has been observed ever since the implementation of the Target Model in Greece, roughly three years ago, and especially since the coupling of Greece’s day-ahead market with those of Italy and Bulgaria.

Greater capacities of grid interconnections linking two countries lead to greater convergence in their wholesale electricity prices.

The completion of a second grid interconnection between Greece and Bulgaria, as well as another to offer a capacity boost to the link between Greece and Italy, are two developments that promise to offer even greater price convergence between these countries, PPC noted in its statement.

DEPA Commercial tender soon for PV parks totaling 495 MW

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Gas company DEPA Commercial aims to announce, by the end of the year, a tender for the design, procurement and development of its first renewable energy projects, energypress sources have informed.

The tender will concern two projects totaling 495 MW, most of this capacity, 400 MW, for solar energy farms in Kozani, northern Greece, plus 95 MW for solar energy farms in Viotia, slightly northwest of the wider Athens area.

DEPA Commercial, which has shaped a new company strategy striving for vertical integration by also becoming an electricity producer, last year acquired New Spesconcept, holding a 222-MW RES portfolio, and North Solar, possessing a RES portfolio of 500 MW.

Besides its entry into the RES sector, with prospective solar energy projects totaling approximately 730 MW, DEPA Commercial also intends to partner with power utility PPC and the Copelouzos group in a new 840-MW combined-cycle power plant being planned for development in Komotini, northeastern Greece.

Also, DEPA Commercial, as part of its new strategy, has undertaken initiatives to expand its wholesale trading activity in foreign markets. This effort has significantly intensified over the past two years.

At present, DEPA Commercial is active in the Austrian, Hungarian, Romanian and Italian markets and has signed agreements to supply gas to Moldova and Albania.

DEPA Commercial, it should be noted, is the first Greek gas company to have become a member of the Hungarian Energy Exchange (CEEGEX).

The Hungarian market represents a pivotal gas trading hub in central Europe and is also located at the northern end of the prospective Vertical Corridor, a route running from Greece to Bulgaria, Romania and Hungary that will be created by interconnecting the transmission systems of these four countries to enable two-way transport of fuel between south and north.

RES penetration to be aided by 15-minute trading products

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The introduction of 15-minute continuous trading products in the day-ahead market, preparations for which are in full swing, according to energypress sources, would reduce balancing costs and also offer better terms for the renewable sector’s penetration of the energy mix.

However, the transition to 15-minute continuous trading products in the day-ahead market, planned to take place simultaneously across Europe in 2025, promises to be a demanding task for all parties involved.

The Greek Energy Exchange, as a key player in the domestic implementation of the project, has already begun relevant preparations to adapt and improve all its systems in order to be able to support related transactions.

Power grid operator IPTO will need to take similar action for its infrastructure, and at grid interconnections, to ensure transactions flow smoothly amid conditions in which 15-minute products will play dominant roles in the day-ahead and intraday markets.

Indeed, Greece’s unique position with both coupled (Bulgaria, Italy) and non-coupled (Albania, North Macedonia, Turkey) neighboring electricity markets presents a challenge that requires special provisions.

Special attention will be needed so that 15-minute continuous trading products can also apply for non-coupled markets, otherwise the Greek market will be obliged to maintain 60-minute products, as is the case at present, in order to trade electricity in the day-ahead market with non-coupled markets.

 

 

 

Energy crisis brings fossil fuels back to the forefront

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The energy crisis has brought about a revival of the hydrocarbons sector, as highlighted by a growing number of energy companies that have decided to reactivate exploration and production projects that had been put on hold as a result of climate-target pressure. Much of this reignited upstream activity is occurring in Europe. Greece must not be left behind.

Yesterday, French oil and gas giant TotalEnergies announced it would boost fossil fuel output over the next five years, a contrast to its reduced production in recent years.

Earlier in the week, on Wednesday, the UK’s North Sea Transition Authority approved plans for production at the new Rosebank oil and gas field in the North Sea, estimated to contain approximately half a billion barrels of oil.

Norwegian upstream giant Equinor, holding the biggest stake in the Rosebank field, estimates production will begin in 2030, with initial investments seen reaching roughly 3.8 billion dollars before totaling approximately 10 billion dollars by 2051.

Two two months earlier, UK Oil & Gas Plc had announced it would recommence production at its Avington oil field, estimated to contain 60 million barrels. Production at this field had been disrupted at an embryonic stage six years ago, with output having reached just several hundred thousand barrels.

In late August, Norway, which has captured the biggest share of Russia’s lost natural gas supply to the EU, announced that a latest round of tenders for licenses at 92 locations, 78 in the Barents Sea and 14 in the Norwegian Sea’s northwest, had attracted interest from 25 companies, including majors such as Shell, ConocoPhillips, Equinor and Aker BP.

The heightened interest expressed by majors highlights a turnaround of their green-focused investment policies of recent years. Shell, for instance, has announced it will disrupt an investment cutback plan of between 1 and 2 percent, annually, until 2030, adding it will increase investments in natural gas.

The hydrocarbons sector is also making a comeback in regions closer to Greece, Italy being a prime example. Italy had stopped issuing new licenses for many years but took a turn in November, when officials announced the country will be holding tenders offering ten-year licenses that offer total production potential of 15 bcm in natural gas from deposits in the Adriatic Sea.

Quite soon, companies operating in Greece will receive results from seismic surveys conducted west and southwest of Crete (ExxonMobil – HelleniQ Energy); Gulf of Kyparissia (Helleniq Energy); Ionian Sea (HelleniQ Energy); and Northwest Ionian (Energean – HelleniQ Energy).

In addition, Energean is awaiting an environmental permit to proceed with exploratory drilling in the Zitsa area, close to Ioannina, northwestern Greece.

Given the international developments and Greece’s energy needs – 6 bcm of natural gas a year and 300 barrels of oil per day – imported at lofty prices, the Greek State must facilitate, it has become clear, the endeavors of companies seeking to move ahead with their projects.

Greek wholesale electricity prices fourth highest in Europe

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Greece’s wholesale electricity prices were ranked fourth highest in Europe during the year’s first eight-month period, behind those of Italy, Malta and Ireland, according to data presented to Greek Parliament by RAAEY, the Regulatory Authority for Waste, Energy and Water, in response to a question raised by the left-wing main opposition Syriza party.

The authority primarily attributed Greece’s high European electricity price ranking to lofty prices recorded in January, when they peaked at 201 euros per MW/h as a result of a delayed implementation of natural gas prices in the Greek market, in contrast to other parts of Europe.

Subsequently, a natural gas price peak to 119 euros per MWh in December, 2022 made immediate impact on wholesale electricity prices in other parts of Europe but did not influence electricity prices in Greece until a month later, when prices had begun falling elsewhere on the continent.

Wholesale electricity prices in Greece were Europe’s highest in January. However, several months later, in June and July, the setting had changed drastically, with Greek wholesale electricity prices ranked 15th among 32 European countries, RAAEY noted.

Italy aiming for CO2 exports to Prinos facility by early 2030

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Italy is focusing on efforts to export captured CO2 quantities for storage in Greece starting early next decade.

A joint carbon capture and storage (CCS) project involving Greece, Italy and France, also open to the participation of other countries in the future, was presented earlier this year in the neighboring country’s revised National Energy and Climate Plan, as part of the TEN-E regulation, offering guidelines for cross-border energy infrastructure.

Rome is seeking to channel CO2 quantities to Greece for storage at the depleted Prinos field. According to Italy’s NECP, facilities with a capacity of 3.6 million tons per year will be built in Italy to offer export potential to Greece from the first half of 2030.

As a next step, Italy needs to complete a regulatory framework for carbon capture, before establishing related bilateral contacts with Greece.

The underground Prinos storage facility is planned to be operational no sooner than three years from now, with an initial CO2 storage capacity of between 0.5 and 1 million tons, which could be boosted in the future.

The project has been included in the Recovery and Resilience Facility (RRF), while an application has also been submitted for EU Innovation Fund support.

Wholesale power highest in Europe at €154.63/MWh

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Greece’s wholesale electricity prices have risen sharply today, up 34.68 percent to an average of 154.63 euros per MWh from yesterday’s level of 114.81 euros per MWh, making them Europe’s highest.

The minimum price in Greece today will fall to an average of 96 euros per MWh, while the highest will peak at 377.18 euros per MWh.

Romania has registered Europe’s second-highest wholesale electricity price today, at 150.69 euros per MWh, followed by Bulgaria, at 150.13 euros per MWh.

Meanwhile, major European markets have registered significantly lower wholesale electricity prices today. Italy’s average wholesale price today is at 120.36 euros per MWh and Germany’s is 118.67 euros per MWh.

Norway has registered Europe’s lowest wholesale electricity price today, averaging 40.21 euros per MWh, followed by Turkey, at 82 euros per MWh, Sweden, at 87.6 euros per MWh, and Spain and Portugal, both registering an average of 89.66 euros per MWh.

As for Greece’s energy mix, natural gas-fueled power stations will cover 42.26 percent of the country’s energy needs today, followed by renewables, at 21.56 percent, electricity imports, at 20.26 percent, hydropower, at 7.91 percent, and lignite-fired power stations, at 2.62 percent.

The country’s electricity demand today is projected to reach 161.213 GWh, peaking at 7,946 MW at 12.30 pm.

 

ESIAPE: IPTO’s RES grid injection cut plan deviates from EU rules

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A set of rules proposed by power grid operator IPTO on RES unit injection cuts concerning the Greek electricity system deviates from European regulations and practices followed in other European countries, according to ESIAPE, the Greek Association of Renewable Energy Source Electricity Producers.

Expressing its views in related consultation staged by RAAEY, the Regulatory Authority for Waste, Energy and Water, ESIAPE noted that Greece’s regulatory framework does not provide for any compensation when RES unit grid injection cuts are ordered, which runs contrary to regulations and practices followed by other European countries.

The current regulatory framework in Greece creates conditions that lead to potential distortions of competition, ESIAPE noted.

In its intervention, ESIAPE offered, as a comparison, detailed presentations of practices followed by five other European countries – France, Germany, UK, Spain and Italy – all offering compensation for RES unit grid injection cuts, when requested by authorities, to prevent grid overloading.

Collective gas orders increase in second purchasing round

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A second round of collective European gas purchases, through a platform similar to one established for vaccine orders during the pandemic, has resulted in natural gas orders totaling nearly 12 bcm, well over a quantity ordered during the procedure’s first round in May.

However, the EU initiative fell short of attracting full participation. Second-round orders were delivered to twenty European grid entry points, the majority of quantities at entry points in the Netherlands, France, Italy, Bulgaria and Germany, as well as Ukrainian storage facilities, Sefcovic noted.

“The positive results of this second round illustrate that there is a need and clear added value to join forces, pool our demand and work together to guarantee stable and affordable gas supply to the EU market,” noted the European Commission’s Vice President Maros Sefcovic, who oversees the platform, named AggregateEU.

It was established by the EU following Russia’s invasion of Ukraine to prevent bidding wars between fellow member states and utilize their collective bargaining power potential for competitively priced energy supply as an alternative to Russian natural gas.

Approximately 5.5 bcm, or 45 percent, of the second round’s orders, totaling 11.98 bcm, were made for LNG, well over this energy source’s share of orders in the first round, below 20 percent of the total. Pipeline gas represented all other collective orders made through the platform in the second round.

A third round is expected to be staged in September and is planned to be followed by two further rounds before the end of the year.

Italy gas storage injections of no use, DESFA auctions show

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Gas grid users have fully reserved the capacity offered at the country’s Nea Mesimvria entry point in the north after expressing great interest in gas grid operator DESFA’s annual auctions, staged on July 2 and requiring over 24 hours to be completed as a result of the big turnout.

The capacity reservation level at the gas grid’s Nea Mesimvria entry and exit point is crucial for gauging, with clarity, natural gas amounts Greece should store away at Italian storage facilities ahead of next winter as, in the event of disruptions to Greece’s gas import schedule, the stored quantities could only be used if free capacity exists at the aforementioned entry point.

Last year, Greece had resorted to an uncommitted capacity at the Nea Mesimvria entry point in its negotiations with the European Commission for a gas-storage rule exception. It enables EU member states with a shortage of gas storage facilities, such as Greece, to keep storage requirements at 15 percent of the average consumption level over the past five years.

Uncommitted capacity at the Nea Mesimvria entry point last year worked out to 7,522 MWh per day, which resulted in a viable gas storage total in Italy of 1.14 TWh, from the start of November until the end of March.

This year, given the country’s fully reserved capacity at Nea Mesimvria, the prospect of storing gas in Italy would offer Greece no help in meeting domestic needs in the event of disruptions to the country’s gas supply.

Next mixed RES auction offering Europe’s lowest starting prices

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RES auction starting prices in Greece have, contrary to other European markets, remained unchanged at levels set earlier this year ahead of a  session in September and, as a result, are currently the continent’s lowest.

Several months ago, local authorities set RES auction starting prices of 54 euros per MWh for solar energy and 63 euros per MWh for wind energy.

The energy crisis and its escalated wholesale electricity prices prompted – in more recent times – countries such as Germany to offer investors generous increases in RES auction starting prices.

These rises were offered in parts of the continent after European RES auctions held in 2022 failed to attract the anticipated level of interest from investors, leaving significant amounts of unwanted capacities, including in Greece.

Berlin raised its RES auction starting price for solar energy to 73 euros per MWh from 60 euros per MWh for a session in March. The initiative drew a satisfactory number of participants.

Serbia, preparing for its inaugural RES auction, is offering a starting price of 105 euros per MWh for wind energy and 90 euros per MWh for solar energy to attract investors.

Italy, for its most recent RES auction, in May, set a starting price of 65 euros per MWh for solar energy, the same level set by Spain for its most recent RES auction.

The UK recently offered a starting price of 54.8 euros per MWh for solar energy and 61.9 euros per MWh for wind energy.

Returning to Greece, it remains to be seen if the de-escalation in electricity prices of late will prompt investors to choose RES auctions for their project tariffs or instead opt for other solutions such as PPAs.

 

DESFA market test for network expansion offers positive signs

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A market test staged by gas grid operator DESFA for a prospective expansion of the country’s gas transmission network has delivered positive first signs, attracting, according to energypress sources, a satisfactory level of participants for its first round of non-binding bids.

The market test is being conducted with the aim of shaping a list of projects to cover existing and future needs of gas network users, as the system’s capacity at present is well below levels required by current demand.

The process will be used by DESFA to gauge the level of interest of international and domestic players for the development of projects facilitating greater gas transmission within and beyond Greece.

The first round of the market test ends tomorrow. Barring unexpected developments, an extension is not on the cards.

DESFA will then assess first-round bids submitted before launching a second round in September, a binding stage expected to last until the end of spring in 2024.

Market trends have indicated that, in the forthcoming years, the country’s gas transmission system will need to supply new residential areas (western Macedonia in the north as well as Greece’s west) and also serve new interconnections with neighboring countries (North Macedonia, Bulgaria and, via TAP, Albania and Italy.

EU’s RES installations in ’22 climb to record level

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Wind and solar energy installations reached a record level in the EU last year, adding 57 GW to the continent’s grid, a 16 percent year-on-year rise, according to a European Commission report for the fourth quarter in 2022.

These increased RES installations helped renewable energy capture an increased share of the EU’s energy mix in 2022, rising 39 percent, up from 38 percent in 2021, the Brussels 4Q report showed.

Solar energy output rose by 26 percent in 2022, offering an additional 41 TWh, onshore wind farm generation increased by 10 percent, or 33 TWh, while offshore wind farm production grew by 4 percent, delivering an additional 2 TWh to Europe’s grid.

Solar and wind energy’s combined output in 2022 rose by 14 percent, offering an additional 76 TWh, according to the report.

Hydropower generation fell by 17 percent, or 61 TWh, as a result of dominant drought periods in a number of European countries during 2022.

Nuclear energy generation was also down in the EU last year, falling 17 percent, or 118 TWh, as a result of disruptions and facility maintenance delays in France.

The European Power Benchmark, the continent’s average wholesale baseload electricity price, rose 121 percent in 2022 compared to a year earlier, reaching 230 euros per MWh, the 4Q report showed.

Italy recorded Europe’s highest average wholesale electricity price in 2022, at 304 euros per MWh, followed by Malta, at 294 euros per MWh, Greece, at 279 euros per MWh, and France, at 275 euros per MWh, the European Commission report noted.

Gas firms requested to store away 7.5 TWh total this year

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RAE, the Regulatory Authority for Energy, has requested natural gas suppliers to start storing away gas quantities ahead of next winter, based on EU energy-security provisions, energypress sources have informed.

The authority aims to encourage companies to make the most of current favorable terms in international gas markets. Gas price levels are currently far lower than they have been during the energy crisis, so quantities required for storage can be secured at competitive prices.

RAE is believed to have informed gas companies that a total of 7.5 TWh will need to be stored away in 2023. The country’s gas importers, DEPA Commercial, Mytilineos, Elpedison, Heron, power utility PPC and Prometheus Gas will need to take on the responsibility of securing this 7.5 TWh quantity.

An EU regulation set last year requires member states without – or without sufficient – domestic gas storage facilities to store away gas quantities representing 15 percent of the previous five-year average of annual gas usage by November 1 at existing storage facilities maintained by fellow member states.

Bulgaria’s underground Chiren gas storage facility appears to be short of space to accommodate Greek gas orders, meaning Greek importers will need to turn to costlier Italian and French alternatives, along with the FSU on the islet Revythoussa, just off Athens.

Annual gas usage in Greece averaged 61.1 TWh between 2018 and 2022, meaning that a 15 percent proportion works out to 9.2 TWh. RAE deducted 1.7 TWh for alternate purposes, resulting in its 7.5-TWh figure set for this year.

Contrary to last year, companies are not expected to be compensated for any leftover gas quantities. Also, gas companies will need to assume all gas transportation and storage costs, to ultimately be passed on to consumers.

Gas companies have already expressed complaints, calling the storage requirement and its related obligations an unfeasible, high-cost plan. They are seeking revisions.

 

Energean plc: 2022 Full-Year Results  

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London, 23 March 2023 – Energean plc (LSE: ENOG, TASE: אנאג) has announced its audited full-year results for the year ended 31 December 2022 (“FY 2022“).

Mathios Rigas, Chief Executive of Energean, commented:

“2022 was a year of transformation for Energean – where a long-held vision became an operational reality. It was a year of positive delivery. We commenced production from the only FPSO in the strategically vital Eastern Mediterranean region, paid dividends to our shareholders, and laid the foundation for our future growth through the discovery and de-risking of new natural gas resources adjacent to our infrastructure. Energean was the sole owner-operator of five deepwater wells, which drove a 20% increase in our reserve base, and marked the 15th consecutive year of reserve and resource base increases for Energean. We are proud to be on track to deliver between 4.5 and 5.5 bcm of gas into the Israeli domestic gas market this year, contributing towards the security of energy supply of the region and improving the living conditions of the Israeli public through the reduction of emissions from the displacement of coal-fired power generation.

“The first quarter of 2023 has continued the positive trend. Production from Karish is in line with our expectations, and in February we supplied the first Israeli hydrocarbon liquids export cargo to international markets. In Egypt, we achieved first gas at NEA/NI with three further wells due to come onstream during the year. In Italy, we are the third largest producer of natural gas and look forward to increasing our contribution towards the country’s energy supply. And in Greece, we are continuing our efforts to explore the untapped resources of the country.

“The remainder of 2023 will see us present the development concept for the Olympus Area, offshore Israel, and increase the capacity of the Energean Power FPSO to 8 bcm/yr. This is alongside delivery of production in line with guidance and deliver on-target returns, as promised, to our shareholder base. Through our gas contracting strategy we are in a unique position to have a very predictable and stable cashflow despite turbulence and challenges in the international financial markets.

“We are committed to investing in projects where we can create value for all stakeholders. The global energy crisis is not over – the global gas market remains dangerously tight and benefitted from a mild European winter, but thousands of industrial jobs are now at risk not just to price but also to availability. We therefore hope that governments understand the value of enhanced domestic and regional energy production, that can only be delivered through long-term investment.”

Highlights

  • Delivered first gas from Karish in October 2022
    • Production and ramp up in line with expectations
    • Energean is now sequentially notifying gas buyers that the commissioning period under the gas sales and purchase agreements (“GSPAs”) has ended and the start date for commercial obligations has commenced. It expects to have completed this process for all gas buyers by the end of March 2023
  • Initiated hydrocarbon liquid exports from Karish field to international markets
  • Delivered first production from NEA/NI, Egypt, in March 2023
  • On track to deliver 200 kboed production target in 2H 2024
  • Confirmed year-end 2P reserves of 1,161 mmboe (+20% increase versus end-2021) representing a reserve replacement ratio of 1400%
    • Including the addition of 31 bcm (approximately 206 mmboe) of 2P reserves in the Olympus Area, offshore Israel, that have now been certified by Energean’s reserve auditor, Degolyer and McNaughton (“D&M”)
  • Delivered strong financial performance, underpinned by strong commodity prices
    • 2022 revenues of $737.1 million, represented a 48.3% increase (2021: $497.0 million)
    • 2022 EBITDAX of $421.6 million, represented a 98.8% increase (2021: $212.1 million)
    • 2022 profit-after-tax of $17.3 million, was an improvement on last year’s loss (2021: $(96.2) million). Profit after tax was negatively impacted by $119.4 million of windfall taxes in Italy[1], which are expected to have been applied on a one-off basis
    • Group cash as of 31 December 2022 was $502.7 million (including restricted amounts of $74.8 million) and total liquidity was $720.0 million. In March 2023, Energean signed a $350 million term loan providing additional financial flexibility
  • Announced dividend strategy and initiated dividend payments
    • Cumulative dividends paid of 60 US$ cents with a further $30 US$ cents declared and not paid, representing an annualised yield of approximately 9%[2].
  • Carbon Disclosure Project (“CDP”) rating increased to A- (from B), outperforming the global average for E&Ps of C

Outlook

  • 2023 production guidance confirmed at 131 – 158 kboed, including 4.5 – 5.5 bcm of gas from Karish
  • Mid-term targets now considered near-term: on track to achieve production, financial targets, and leverage targets in 2H 2024[3] through execution of key development projects
    • Karish growth projects to increase the capacity of the Energean Power FPSO are on track for year-end 2023, following which Israel production is expected to be more than 140 – 155 kboed
    • Three additional wells to be brought onstream at NEA/NI by year-end 2023, following which production in Egypt is expected to be more than 40 kboed
    • Cassiopea expected to deliver first gas in 2024, following which production in Italy is expected to be approximately 20 kboed
  • Communication of development concept for the Olympus Area expected in the coming months
  • Orion X1 well, Egypt, (Energean 30%, expected to farm down to 18%) expected to spud in late 2023, slightly delayed due to rig availability
  • Declaration of quarterly dividends in line with previously communicated policy
    • $50 million per quarter initially, rising to $100 million per quarter following achievement of near-term targets
    • Cumulative dividends of at least $1 billion by end-2025
    • Post-2025 target to maintain a progressive dividend policy, underpinned by existing reserve volumes

Financial Summary

 

    FY 2022 FY 2021 % Change
Average working interest production kboed 41.2 41.0 0.5%
Sales and other revenue $ million 737.1 497.0 48.3%
Cash Cost of Production $ million 284.3 261.6 8.7%
Adjusted EBITDAX[4] $ million 421.6 212.1 98.8%
Profit/(loss) after tax $ million 17.3 (96.2) 118.0%
         
Capital expenditure $ million 728.8 403.5 80.6%
Exploration expenditure $ million 141.0 48.7 189.5%
Decommissioning expenditure $ million 8.9 2.7 229.6%
         
Cash (including restricted amounts) $ million 502.7 930.5 (46.0%)
Net debt – consolidated $ million 2,518.2 2,016.6 24.9%
Net debt – plc excluding Israel $ million 143.8 102.6 40.2%
Net debt – Israel $ million 2,374.4 1,914.0 24.1%

 [4] During 2022, Italy introduced: 1) a windfall tax in the form of a law decree which imposed a 25% one-off tax on profit margins that rose by more than 5 million euros between October 2021 and April 2022 compared to the same period a year earlier. The amount of the windfall tax paid by Energean Italy was $29.3 million and 2) In November 2022, Italy introduced a new windfall tax that imposed a 50% one-off tax, calculated on 2022 taxable profits that are 10% higher than the average taxable profits between 2018-2021. This amount has a ceiling equal to 25% of the value of the net assets at end-2021. Based on this, Energean would be required to pay an additional one-off tax of €87 million in June 2023.

[4] Based on 21 March 2023 share price of GBp 11.00

[4] On an annualised basis

[4] Adjusted EBITDAX is calculated as profit or loss for the period, adjusted for discontinued operations, taxation, depreciation and amortisation, share-based payment charge, impairment of property, plant and equipment, other income and expenses, net finance costs and exploration and evaluation expenses.

GAP Interconnector promising additional Greek-Egyptian grid link

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The GAP Interconnector project, planned to link Egypt with Greece, via Crete, promises to serve as a further step towards transforming Greece into an exporter of green energy to the rest of Europe, officials of the Eunice Group, heading the project, budgeted at 1.3 billion euros, have highlighted at a news conference.

It represents an additional Greek-Egyptian grid interconnection project, following the GREGY Interconnector, a 3.5 billion-euro project being promoted by Elica, a subsidiary of the Copelouzos group.

The GAP Interconnector project promises to reinforce Greece’s geostrategic role, making it a transmission hub to the rest of Europe for RES-generated electricity from Egypt, Andreas Borgeas, the project’s chief executive and a former California Senator, told journalists.

A feasibility study has already been conducted for the GAP Interconnector, as have oceanographic studies to map the areas concerning the project’s route, the Borgeas informed.

Two cables to offer a 2,000-MW capacity and run from coastal Matruh in Egypt to Crete’s Atherinolakko, a distance of approximately 450 kilometers, will serve as the project’s backbone. Converter stations will be installed at both these locations.

The project, whose subsea cable installations will reach as deep as 4,445 meters off Crete and 3,500 meters off Egypt, was described as “challenging” by Borgeas, the project chief, who added advanced deep-sea cable installation technology is now available.

The aim is to establish a multinational consortium for the GAP Interconnector project and induct, as a first step, the US company McDermott, one of the world’s biggest developers of subsea projects, Borgeas informed. French, Greek and Italian companies are also expected to soon join this consortium, the official added.

The GAP Interconnector project and the GREGY Interconnector are not rival projects but they will compete for points concerning PCI-PMI lists, Borgeas pointed out.

A direct, straight-line connection from Egypt to Crete planned for the GAP Interconnector offers it a comparative advantage as it is shorter and subsequently lower in cost, Borgeas noted, adding the project lies entirely within the boundaries of the Greek-Egyptian exclusive economic zone (EEZ).

It is planned to be complemented by the Southern Aegean Interconnector (SAI), a 1.5 billion-euro project to connect Athens, the Dodecanese islands, and Crete.

Greek-US energy agenda focused on 3 projects

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Three energy infrastructure projects, the Alexandroupoli FSRU in Greece’s northeast, an oil pipeline running from the Alexandroupoli port to Burgas, on Bulgaria’s Black Sea coast, and a Greek-Egyptian grid interconnection, were focal points in talks yesterday between Greek and American officials, as part of US Secretary of State Anthony Blinken’s official visit to Athens.

The two sides, meeting for the 4th round of a Greece-US Strategic Dialogue, appeared determined to push ahead with the three projects, propelled by Russia’s war on Ukraine, which has prompted Europe to move in a direction ending its reliance on Russian fossil fuels.

It was agreed that Athens and investors need to accelerate efforts for the aforementioned projects to further marginalize Russian energy supply to Europe.

Besides offering full support for the three energy infrastructure projects, US officials also expressed satisfaction about the recent launch of the Greek-Bulgarian IGB gas pipeline as well as ongoing plans for a pipeline to run from Greece to North Macedonia.

However, the US officials kept a distance from the discovery of gas deposits by Israel, Cyprus and Egypt in the east Mediterranean, as well as the East Med gas pipeline plan – which would connect Israel, Cyprus and Greece before crossing to Italy visa the Poseidon pipeline – presumably to avoid upsetting Turkey, despite problems that have weighed down US-Turkish ties of late.

 

US subdued on East Med plan despite anticipated revival

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US Secretary of State Anthony Blinken has praised Greece’s leading role concerning the region’s energy transition in his opening remarks at the start of the 4th round of the Greece-US Strategic Dialogue, while underlining that the US is grateful for Greece’s unwavering support for Ukraine.

“Greece’s transition is a model for the region,” Blinken stressed, recalling that renewable energy sources such as wind and solar have, in recent times, provided half of Greece’s electricity needs, which he said was equivalent to taking 3 million cars off the roads.

The US Secretary of State also praised Greece’s role in supporting neighboring countries to diversify their energy sources by reducing their dependence on Russia, such as Bulgaria.

However, the US appears unmoved by Israel’s renewed interest for the development of the East Med gas pipeline, which would connect Israel, Cyprus and Greece before crossing to Italy visa the Poseidon pipeline. This project would greatly contribute to Europe’s efforts aiming to end the continent’s reliance on Russia for fossil fuels.

Contrary to expectations, the East Med project has not been included on the agenda of talks for Blinken’s official two-day visit to Athens, today and tomorrow, reliable sources informed.

Roughly a year ago, the US had announced it could not support this pipeline project, attributing this stance to a lack of feasibility. But the country’s willingness to maintain a balance in its regional geopolitical interests, especially between Greece and Turkey, is most likely the underlying reason.

Despite difficulties faced in its ties with Turkey, the US appears unwilling to support a regional gas pipeline project that would sideline this NATO ally.