Extraordinary conditions push SMP as high as €105 per MWh

Extraordinary conditions resulting from coinciding temporary closures of various power facilities, both in Greece and abroad, have pushed up the System Marginal Price, or wholesale electricity, to levels of as much as 105 euros per MWh, as was the case yesterday.

Four domestic gas-fired power stations – Enthes (Elpedison), Heron CC, Lavrio IV and Protergia – were out of order yesterday, for different reasons.

Problems beyond the Greek border have made matters worse. Bulgaria’s 1,000-MW Kozloduy nuclear power plant is currently out of order. The Greek-Bulgarian line serves as a transit route towards North Macedonia as a line linking Bulgaria and North Macedonia is out of order. So, too, is a line linking Greece with Italy.

Power stations that rarely operate, such as an open-cycle Heron unit, needed to be called into action as a result of the problems on these various fronts. Their necessary contributions pushed the SMP to far higher levels.

Three power utility PPC lignite-fired power stations, Agios Dimitrios II and III and Melitis, along with PPC’s gas-fired power stations Aliveri V, Lavrio V, Komotini, Megalopoli V, as well as units run by the independent energy firms Heron, Thisvi and Corinth Power, all needed to be called into action to cover the grid’s needs.

The market appears to have normalized for today. SMP levels are down to relatively satisfactory levels, averaging 44.49 euros per MWh, primarily as a result of significant RES contributions, covering more than 50 percent of the overall demand, 123.993 GWh.

The lignite-fired power stations used yesterday – Agios Dimitrios II and III and Melitis – will remain closed today.

PPC’s second voluntary exit plan this year achieves 85% success rate

Power utility PPC’s second voluntary exit program offered to employees this year has achieved a success rate of 85 percent, convincing 465 staff members to sign up, from a target group of 550.

Applicants needed to meet two prerequisites for this latest PPC exit program. Firstly, applicants must be on the way to turning at least 55 years of age by December 31, 2020. Secondly, they needed to have already qualified for pension rights before applying for the exit plan.

Without the pension right criterion, the program would have applied to a far broader group of as many as 1,700 employees at PPC units around the country.

PPC is believed to be satisfied with the course of its voluntary exit plan this year. The tally of voluntary exits this year is seen reaching 1,200, over an initial estimate of 1,000.

Employees who sign up for the program each receive compensation packages totaling 35,000 euros.

The power utility is expected to keep downsizing. According to last year’s business plan, PPC is aiming for a workforce reduction of 4,500 employees by 2023.

PPC, turning to green energy, has scheduled to shut down its Kardia III and IV and Megalopoli III lignite-fired power stations in 2021, followed by Agios Dimitrios I and II in 2022. Megalopoli III could be withdrawn sooner than planned, the company recently announced.

PPC’s new image a prelude to revised business plan, imminent

Retail outlets to open for extended business hours, digital products and new services, swifter withdrawals of lignite-fired power stations, as well as an acceleration in the development of major-scale and smaller RES projects are among the factors contributing to power utility PPC’s new corporate image, showcased yesterday, during a 40-minute event, by chief executive Giorgos Stassis, who described the new image as a prelude to a revised business plan to be presented towards the end of the year.

The revised business plan, to have a three-year duration, will be a more ambitious and confident plan than last year’s version as, besides swifter lignite unit exits, it will feature bolder digitalization steps, a more aggressive retail market policy, aim for a RES portfolio well over 1 GW over the next three years, through a pool of prospective projects totaling 6 GW, and also feature network and personnel investments.

Next year, the company will aim to double 24 existing retail outlets – they begin operating for extended business hours as of today – as well as 75 service centers that may be visited by appointment only.

Yesterday’s announcements represent just part of the developments to be gradually announced by PPC, the most imminent being a new series of digital products, dubbed PPC myHome, to be launched within the next few days.

The new business plan’s level of ambition will also depend on external factors, Brussels being pivotal. Settlement of the country’s ten-year lignite dispute with the European Commission will offer state-controlled PPC greater leeway.

PPC is also hoping for a favorable Brussels response within November on a compensation request for 200 million euros, annually, for every year lignite-fired power stations in the west Macedonia and Megalopoli regions will need to keep operating.

PPC, going green, to present transformation plan on Monday

Power utility PPC’s new three-year business plan, to transform the company from a lignite-centered utility into a RES-focused enterprise backed by a range of modern and digital commercial services, will be officially presented on Monday by the state-controlled company’s board, headed by chief executive Giorgos Stassis (photo), with Prime Minister Kyriakos Mitsotakis in attendance.

A new company logo symbolizing PPC’s shift from lignite to renewables will also be unveiled at the event along with the launch of the motto “PPC welcomes the future”.

PPC’s trademark lightning bolt-bearing logo that has featured for years at the façade of the company’s Athens headquarters has already been removed to make way for the the new logo, to be unveiled at Monday’s event.

On the day, PPC will present details on its plan to develop a RES portfolio with a capacity of between 2,000 and 3,000 MW over the next three years. This effort will coincide with the utility’s phase-out of lignite-fired power stations.

The privatization plan for the forthcoming sale of a 49 percent stake in subsidiary DEDDIE/HEDNO, the distribution network operator, expected to begin towards the end of this year, will also be presented at Monday’s event.

So, too, will an abundance of new services, including house repair and maintenance insurance.

PPC’s new three-year plan, at its core, will aim for high profitability and an annual EBITDA figure of between 700 and 900 million euros. It will also detail the company’s interest in DEPA Commercial, a new gas utility DEPA entity headed for privatization.

On Monday, PPC will also offer an update on ongoing talks with investors, including Germany’s RWE, for the development of solar farms worth 1.2 billion euros in northern Greece’s lignite-dependent west Macedonia region.

Funds of between 500 and 550 million euros stemming from PPC’s securitization of unpaid receivables will be used to help finance RES investments. The company is also considering a bond issue for the end of the year. Funds to be raised through the prospective DEDDIE/HEDNO sale will also be used for these investments.

Sensing a bright future at PPC, a growing number of institutional investors and hedge funds from abroad are considering the company’s share. They include Allianz Global Investors, Bell Rock Capital, Helm Investment Partners, Bluecrest Capital Management, Polygon, Fiera Capital, Zenon and Prince Street Capital.

 

 

 

Government’s post-lignite master plan set for one-month consultation

The government’s post-lignite master plan for the west Macedonia region in the country’s north, and Megalopoli in the Peloponnese, both lignite-dependent economies, is set to be forwarded for public consultation, possibly within the day, to enable observations and comments for a one-month period.

Power utility PPC plans to phase out its lignite-fired power stations and mines over the next three years as part of Greece’s decarbonization strategy.

The master plan’s draft will feature specific targets, studies conducted to reach conclusions, and the government plan prepared by a special decarbonization committee headed by government official Constantinos Mousouroulis.

The availability of funds necessary to support the development of this strategic plan will be pivotal.

Energy minister Costis Hatzidakis has announced that funds totaling over 5 billion euros will be made available for the post-lignite master plan through the EU’s National Strategic Reference Framework; national sources; the Just Transition Fund; European Investment Bank; and the European Fund for Strategic Investments, commonly referred to as the Juncker Plan.

Nearly 70 investment proposals have been submitted to the special decarbonization committee headed by Mousouroulis, while 16 major investment plans are now regarded as mature plans possessing the ability to create new jobs in west Macedonia and Megalopoli and reform the economies of these regions.

 

GEK TERNA, Elpedison close to decisions on gas-fueled units

GEK TERNA and Elpedison are expected to announce finalized investment decisions for new gas-fueled power stations with total capacity over 1,400 MW within the next two months, energypress sources informed.

GEK TERNA plans to develop a 660-MW power station at the industrial zone of Komotini, northeastern Greece, while Elpedison, a joint venture involving Hellenic Petroleum ELPE and Italy’s Edison, intends to construct units with a total capacity of 826 MW at the ELPE facilities in Thessaloniki.

These project plans are estimated to be worth a total of at least 600 million euros.

The energy companies have already received energy production licenses as well as other licensing requirements, including environmental permits, for these prospective units, regarded as mature investment plans.

Both companies are awaiting new CAT mechanism details for gas-fueled power stations before finalizing their investment plans. The economic uncertainty caused by the pandemic, plus the anticipation of a second wave, are also crucial factors influencing the thinking behind these investment decisions.

Market capacity exists for new combined-cycle gas-fueled power stations during the energy transition over the next ten to 15 years, electricity market officials insist.

The planned withdrawal of power utility PPC’s lignite-fired power stations over the next three or so years combined with a lack of development in RES energy storage systems offers gas-fueled power generation an opportunity to cover capacity to be lost by lignite-fired power station closures.

A recent BloombergNEF report noted big natural gas-fueled power stations are not necessary. However, market officials point to the National Energy and Climate Plan as proof of the need for such units.

The Mytilineos group is developing an 826-MW CCGT in the Agios Nikolaos area of Boetia, northwest of Athens, with the aim of a launch in late-2021.

Brussels considering PPC compensation for lignite units

Certain European Commission officials are believed to be considering a compensation request made by power utility PPC for its three-year phase-out, between 2021 and 2023, of all existing lignite-fired power stations, severely burdened by elevated CO2 emission right costs.

Brussels officials had flatly rejected a compensation request made by PPC nearly a year ago. However, a shift by Brussels has become apparent in recognition of the Greek decarbonization effort’s progress.

The European Commission has offered compensation elsewhere for lignite units withdrawals. Last May, Brussels made available compensation worth 52.5 million euros for the Netherlands as a result of the country’s premature closure of its Hemweg coal-fired facilities.

At the time, the European Commissioner for Competition Margrethe Vestager had declared EU member states may need to compensate companies for their efforts to end their coal reliance, adding that the Dutch compensation amount does not threaten to cause market distortions at a European level.

PPC officials expect European Commission developments on the issue during the final quarter of this year.

Taking into account Brussels’ handling of such issues in the past, PPC officials also believe an antitrust case concerning the Greek power utility’s lignite monopoly and the corporation’s compensation request could be resolved simultaneously.

Excessive cost, for PPC, of running lignite-fired units hastening exit plan

The financial burden on power utility PPC as a result of its continued use of lignite-fired power stations at a time when the EU is racing towards climate neutrality has prompted the utility to revise its lignite unit phase-out plan for power stations in northern Greece’s west Macedonia region and Megalopoli in the Peloponnese.

According to latest information, PPC’s administration is planning further premature withdrawals of lignite-fired power stations after announcing a precipitated exit of its Megalopoli III unit, as was reported by energypress yesterday.

The Megalopoli III unit will be shut down six months sooner, in mid-2021, instead of early 2022. This 250-MW lignite-fired facility has operated for just six hours since April.

The average variable cost of lignite-based energy generation is €0.80 per MWh, well over the System Marginal Price of €0.45 per MWh, according to data presented by energy minister Costis Hatzidakis.

According to some sources, PPC has once again raised, to the European Commission, a compensation claim for being required to keep operating high-cost power stations in order to secure grid sufficiency and security.

PPC will be forced to proceed with swifter lignite unit exits if this compensation request is not satisfied, pundits said.

Power grid operator IPTO has the final say on the assessment of energy security matters.

PPC’s lignite-fired power stations covered just 36.8 percent of the country’s overall electricity demand in the first half, its lignite units playing a diminished role.

 

Megalopoli III to exit 6 months ahead of schedule, in mid-2021

Power utility PPC plans to prematurely withdraw its Megalopoli III lignite-fired power station in mid-2021, six months earlier than planned, energy minister Costis Hatzidakis announced yesterday while presenting the government’s decarbonization plan.

A decision was taken to shut down Megalopoli III, in the Peloponnese, ahead of schedule as this facility has operated for a total of just one week since spring, indicating its output is no longer required to secure grid sufficiency.

In his comments to media yesterday, Hatzidakis, the energy minister, highlighted the high cost entailed in operating lignite-fired power stations.

The averages variable cost of lignite-based energy is €0.80 per MWh, well over the System Marginal Price of €0.45 per MWh, according to data presented by the minister.

A 550-MW PPC lignite-fired power station at Amynteo, northern Greece, has already been shut down.

For the time being, no other PPC lignite unit withdrawal plan revisions were reported at yesterday’s news conference.

Kardia III and IV are still planned to be withdrawn in 2021. These will be followed by Agios Dimitrios I, II, III and IV, representing a total capacity of 1,100 MW, in 2022. Their withdrawal will coincide with the entry of a new unit, Ptolemaida V, to offer a 610-MW capacity. It will be launched as a lignite-fired unit before continuing to generate on cleaner fuel as of 2028.

PPC is also scheduled to withdraw 260-MW Megalopoli IV, 290-MW Meliti I and 340-MW Agios Dimitrios V in 2023.

 

PPC power demand coverage down to 36.8%, lignite savings

Power utility PPC’s lignite-fired electricity production plunged 70 percent in the second quarter of 2020, its generation covered just 36.8 percent of overall electricity demand in the first half, while the corporation’s retail electricity market share has contracted to 69.9 percent, first-half company results have shown.

These shifts highlight the major changes occurring in Greece’s energy market – in terms of energy mix and retail competition.

PPC’s retail electricity market share drop to 69.9 percent followed a 77 percent share reported for the equivalent period a year earlier.

Electricity demand fell just 1.7 percent in the first quarter before sliding 12.7 percent in the second quarter, the PPC results showed.

A significant part of the corporation’s recurring EBITDA figure of 457.3 million euros reported for the first half was attributed to the utility’s diminished reliance on lignite-fired generation, until recently Greece’s dominant energy source. PPC’s lignite units have been kept shut or used minimally, saving the corporation from losses.

However, this is one side of the story for PPC. The company’s reduced reliance on lignite may be saving the power utility considerable amounts, but its coverage of overall electricity demand has dropped to 36.8 percent in the first half, from 46.9 percent in the first half last year. Gas-fired and hydropower generation have been low.

This downward slide at PPC is expected to continue until the corporation’s green energy output rises to between 2,000 and 3,000 MW, a level that would take the company into a new era. A period of at least two to three years will be needed before this can be achieved.

The pandemic and its downward pressure on energy price levels has helped PPC. Company outlays for fuels, natural gas, CO2 emission rights and electricity purchases fell by 33.7 percent, or 561.3 million euros, in the first half, compared to the equivalent period a year earlier.

PPC saved 95 million euros on fuel costs, 110.2 million euros on natural gas costs, approximately 80 million euros on CO2 emission rights, and 260.2 million euros on electricity purchases, the first half results showed.

Energy products may rebound in the second half, meaning PPC has no other choice but to accelerate its foray into the RES sector.

Despite the encouraging first-half results, there is no room for complacency, PPC’s chief executive Giorgos Stassis stressed.

 

 

Wholesale electricity prices down considerably in first half

The System Marginal Price, or wholesale electricity price, has fallen considerably and consistently throughout the first half of the year, driven down by lower natural gas prices and a dramatic contraction of lignite-fired generation, now a costly option.

Official data released by the energy exchange shows lignite’s energy mix dominance is fading and renewable energy sources are gaining ground, while natural gas-fueled generation is consistently at the helm. 

The SMP fell throughout the first-half period, falling 22.45 percent to 59.68 euros per MWh in January, compared to the equivalent month a year earlier; 28.55 percent to 49.23 euros per MWh in February; 43.65 percent to 43.65 euros per MWh in March; 54.31 percent to 28.51 euros per MWh in April; 48 percent to 34.27 euros per MWh in May; and 50.04 percent to 34.04 euros per MWh in June.

The SMP is primarily determined by natural gas-fueled power stations, their price-setting involvement measuring 60 percent in June, the energy exchange data showed.

Also in June, natural gas was responsible for 48.06 percent of overall generation, the RES sector generated 34.74 percent of total production, hydropower contributed 9.77 percent, while lignite-fired generation was limited to 7.42 percent.

Rising CO2 right prices signal irreversible post-lignite course

Higher CO2 emission right costs, forecast to rise even further over the next few years, and this trend’s growing cost for power utility PPC’s lignite-fired power stations, highlight the country’s irreversible course towards the post-lignite era.

CO2 emission right costs have climbed to levels of about 30 euros per ton, the highest since 2006, Nikos Mantzaris, policy analyst at The Green Tank, an independent, non-profit environmental think tank, noted yesterday during a presentation of a new report, by the think tank, on Just Transition, the EU policy to end lignite dependence in Europe.

CO2 emission right prices will increase further over the next five years to reach levels of 35 to 40 euros per ton, sector experts have projected, Mantzaris said.

Stricter CO2 emission right regulations to be implemented by the European Commission in 2021 will push prices even higher, Mantzaris supported.

This upward trajectory of CO2 emission right costs is weighing heavy on PPC. Energy minister Costis Hatzidakis has estimated that PPC’s CO2-related costs in 2020 will amount to at least 300 million euros, a repeat of last year.

PPC has already made moves to restrict its lignite-fired generation for the grid. “The downward trend became even steeper following a full decarbonization decision announced [by the government] in September, 2019, which led, in May, 2020, to lignite covering just 6 percent of electricity demand on the grid, a historic low,” according to the latest Green Tank report.

For the first time in seven decades, not a single lignite-fired power station in Greece’s west Macedonia region operated on May 20 this year, while, between June 7 and 9, all the country’s lignite-fired power stations did not operate for 40 hours, the report noted.

 

 

Low-cost gas driving down wholesale electricity prices

The abundance of low-cost natural gas, enabling electricity producers operating gas-fired power stations to offer extremely competitive prices, is reshaping the wholesale electricity market.

Highlighting this development, the average level of the System Marginal Price, or wholesale electricity price, today, a day of strong demand, is expected to be contained below 40 euros per MWh, at 39.551 €/MWh.

Today’s electricity demand is expected to peak over 8.3 GW with total consumption reaching 168,674 MWh. The wholesale price during the peak hours will not exceed 38.850 €/MWh.

The market conditions for today are not an isolated incident but part of a wider trend that has developed during the week.

Yesterday’s average SMP was just 35.961 €/MWh despite a peak of 8,105 MW and total electricity consumption of 162,777 MWh.

On Wednesday, when demand peaked at 8,072 MW and overall consumption totaled 162,492 MWh, the SMP was 39.243 €/MWh.

The SMP exceeded the 40 €/MWh level just once this week, on Tuesday, reaching 40.689 €/MWh, a day whose peak was below 8000 MW.

The week started with Monday’s SMP average at 39.277 €/MWh, a lower peak of 7,649 MW, and total consumption for the day of 152,716 MWh.

SMP prices have been falling to even lower levels during weekends. Last Sunday, the average SMP was just 30.629 €/MWh with the peak down to 6,370 MW and the day’s consumption at 134,563 MWh.

The grid relied on just one lignite-fired power station, Agios Dimitris III, last Sunday. Demand was primarily covered by gas-fired generation, as well as renewable energy sources, hydropower units and electricity imports.

PPC staff left idle by lignite unit closures to be transferred

Power utility PPC employees left idle as a result of the corporation’s planned phaseout of lignite-fired power stations until 2023 will be transferred to other company units and posts, the PPC board has decided.

The company’s leadership anticipates PPC’s two voluntary exit programs this year will end up attracting some 1,200 participants, a figure deemed satisfactory considering the company’s financial figures.

PPC is preparing to launch a second voluntary exit program on September 1. It will concern some 1,700 company employees, of which 500 have already qualified for full pension rights.

The full details of the upcoming voluntary exit offer have not yet been announced but are expected within the next few weeks.

It is known that interested parties will face a September 31 deadline to lodge their applications. Also, the follow-up voluntary exit plan will offer outgoing employees bonus payments of 20,000 euros on top of severance pay worth 15,000 euros.

An initial voluntary exit program offered by PPC earlier in the year drew 702 employees from PPC’s lignite-fired units, slightly below the target figure, prompting company savings estimated at 48 million euros.

PPC broadens next voluntary exit plan, set for September

The board at power utility PPC has decided to broaden its voluntary exit program to include eligible staff from all divisions, currently estimated at between 1,700 and 1,800 employees aged over 55.

However, less than a third of these employees, some 500 in total, are believed to have accumulated pension rights, sources said.

Though this shortfall is likely to discourage employees from taking up the voluntary exit offer, PPC’s chief executive Giorgos Stassis is determined to push ahead with the plan and invite interested parties to lodge their applications between September 1 and 30.

The PPC voluntary exit package offers employees a 20,000-euro bonus payment as an addition to severance pay worth 15,000 euros.

An initial voluntary exit effort already staged by PPC attracted 602 employees from the utility’s Meliti and Megalopoli lignite-fired power stations and a further 123 employees from related subsidiaries, producing annual savings of 48 million euro for the company.

PPC had set an objective to attract some 900 employees from the lignite-fired power stations to its initial voluntary exit plan.

Stassis, PPC’s boss, has promised to soon carry out a targeted recruitment plan for staff with specialized skills, according to Pantelis Karaleftheris, the workers’ representative on the PPC board.

 

PPC rivals awaiting utility’s next pricing move for response

Power utility PPC’s rivals are awaiting the utility’s next pricing-policy move before responding with offers of their own. A specially priced three-month package offered by PPC, the electricity market’s dominant player, to its customers as lockdown relief expires on June 26.

Lower wholesale electricity prices over the past couple of months as well as more efficient facility management by PPC, drastically reducing production from loss-incurring lignite-fired power stations, are two factors expected to enable the utility to keep offering appealing packages to customers, sector experts have told energypress.

An initiative taken by PPC during lockdown to equate usually higher tariff rates for consumption of more than 2,000 kWh with rates for consumption below the aforementioned limit could be an indicator of things to come from the power utility.

The market’s major independent suppliers are believed to have studied all possible scenarios in preparation for their respective responses.

PPC chief executive Giorgos Stassis has made clear the power utility’s intentions to regain part of its lost market share. The utility is expected to target specific customer profiles. In addition, bonus services may also be included in packages.

 

 

 

 

PPC to report better 1Q results, approve voluntary exit plan

Power utility PPC will, later today, report significantly improved financial results for the first quarter, compared to the equivalent period a year earlier, sources have informed.

The results, to show higher operating profit and a sustained rebound following a downward trajectory experienced in the final quarter of 2019, according to the sources, will be officially announced once the day’s trading session at the Athens stock exchange has ended.

PPC’s improved results will reflect the positive impact of a series of changes made by the power utility’s new administration last August, especially a decision to increase tariffs, the sources noted.

Interestingly, the financial effects of the pandemic have been subdued as a reduction in electricity-bill collections was far lower than feared, the sources said.

State-controlled PPC may also announce a 160 million-euro financing plan stemming from a European financial institution as a measure to boost the corporation’s cash flow.

The first-quarter results will be accompanied by a PPC announcement on the corporation’s ongoing implementation of initiatives for restructuring and adjustment to modern energy-transition demands, the sourced informed.

Also today, the PPC board is expected to approve a voluntary exit plan for between 700 and 1,000 of approximately 4,500 employees working at the corporation’s lignite-fired power stations units, all headed for closure by 2023. Ptolemaida V, now under construction, will keep operating until 2028, according to the government’s decarbonization plan.

 

Electricity demand down 12.6% in April, industrial use slumps 23.6%

Electricity demand slumped 12.6 percent in April compared to the same month a year earlier, the biggest drop registered by high-voltage industrial consumers, forced to suspend or restrict output during the lockdown, power grid operator IPTO’s monthly report has shown.

Industrial electricity consumption in April fell sharply by 23.6 percent, the IPTO report showed.

The drop in electricity consumption linked to mining activity was even sharper, falling 55.5 percent in April. Besides the lockdown, this drop was also attributed to significant operational restrictions implemented at power utility PPC’s lignite-fired power plants.

Electricity generation in April fell by 3.2 percent, to 2,893 GWh compared to 2,990 during the same month a year earlier, according to the data.

This reduction was mild compared to major shifts observed in sources of generation. Lignite-based generation fell by 62.7 percent year-on-year, confirming, most emphatically, the commencement of PPC’s decarbonization effort.

High costs for lignite-based generation severely reduced the operational time of PPC’s lignite-fired power plants, limiting lignite’s share of the electricity production mix to just 10 percent in April.

On the contrary, the production share of interconnected RES facilities, benefiting from favorable conditions, rose sharply by 33.9 percent, year-on-year, to capture a market-leading 36 percent share of overall electricity generation in April.

Natural gas-fired power plants followed with a 30 percent share following an 11 percent year-on-year rise in output.

Electricity imports (grid interconnections) contributed 18 percent, while hydropower facilities increased their output by 19.8 percent to capture a 6 percent share in April.

PPC provided 951 GWh, or 56.6 percent of the production, while independent producers covered 43.4 percent.

Among the independent producers, Mytilineos led the way with 228.1 GWh, followed by Elpedison (210.4 GWh), Korinthos Power (154.1 GWh) and Heron II (136.3 GWh).

The IPTO data on generation highlights an increasing shift towards cleaner energy sources.

 

 

PPC’s Amynteo unit set to shut down, temporary closure for Kardia

Power utility PPC’s Amynteo and Kardia lignite-fired power stations in Greece’s north are both planned to cease operating at the end of this month, but the Kardia unit is scheduled to restart in October to cover the area’s telethermal needs, running between October and May.

Despite its closure, the Amynteo unit will be placed on stand-by – along with power grid operator IPTO – for possible electricity contributions between June 20 and August 20, when electricity demand peaks in Greece as a result of the tourism season. This, however, is seen as a highly unlikely prospect this summer given the severe impact of the coronavirus pandemic on electricity demand and the tourism industry.

A joint ministerial decision that had been tabled by former energy minister Giorgos Stathakis offered both the Amynteo and Kardia facilities 32,000-hour operating extensions, meaning they are entitled to operate until May, 2021.

However, state-controlled PPC, taking into consideration the current government’s ambitious decarbonization plan, has opted to withdraw Amynteo on April 30, it has informed RAE, the Regulatory Authority for Energy, and IPTO. The government is aiming for a withdrawal of all existing lignite-fired units by 2023.

PPC and union group Genop are currently engaged in talks concerning the futures of the 400 or so workers employed at the power utility’s Amynteo facility. Some 250 are stationed at the power station and 150 work the mines.

Some of these workers could be transferred to PPC’s Kardia and Agios Dimitrios units, while others will head for retirement, according to one proposal, energypress has been informed.

Voluntary exit programs will also be offered, especially for Amynteo staff.

The Kardia facility workers could be transferred to the Agios Dimitrios facility between the end of this month and the new thermal season, in October, when they are expected to return to the unit.

 

Grid entry adjustment for PPC telethermal-linked lignite units

The energy ministry is set to satisfy a power utility PPC request prioritizing the grid entry of its lignite-based production for telethermal support without factoring in this input to calculations determining the system marginal price, or wholesale price.

This requested procedure already applies for PPC’s compulsory hydropower input and RES units.

Under the current system, state-controlled PPC is incurring losses when entering into the grid lignite-fired units for telethermal needs in the west Macedonia and Megalopoli regions. More specifically, the utility is being forced to not operate its gas-fueled power stations, despite their lower operating costs, prompted by the large reduction in gas prices.

PPC’s LNG purchases, as a result, are not being utilized.

The ministry is now preparing a legislative act for the adjustment. It could apply for a limited amount of time to cover remaining telethermal needs in the post-winter season.

Independent producers have reacted against the plan. Some producers appear determined to take the issue to the EU competition authority, noting priority rule exemptions can only be made for RES, Combined Cooling, Heat and Power (CCHP) and hydropower units.

 

PPC’s lignite withdrawal plan also requires IPTO approval

Power utility PPC’s lignite withdrawal plan, involving an exit of lignite-fired units with an overall capacity of roughly 3.4 GW by 2023, has already been included in the National Energy and Climate Plan, subject to EU approval, but will also need to be endorsed by the country’s power grid operator IPTO.

The operator will make its decision after having fully assessed the grid’s needs to ensure energy sufficiency.

According to energypress sources, state-controlled PPC, whose lignite withdrawal plan is fundamental to the government’s decarbonization objectives, has already submitted its withdrawal schedule proposal to IPTO for endorsement.

It begins with an exit of PPC’s Amynteo I and II units this coming April. Next on the schedule are Kardia III and IV in 2021, once these units have clocked up 32,000 hours of operating time. Then, in 2022, PPC plans to withdraw Megalopoli III and Agios Dimitrios I, II, III and IV. PPC intends to complete the withdrawal plan in 2023 with the withdrawals of Megalopoli IV, Meliti I and Agios Dimitrios V.

Ptolemaida V, a prospective power station now under construction, is planned to enter the system as a lignite-fired unit in 2022 and operate as such until 2028 before being converted to run on an alternate fuel source. Various options, including biomass, natural gas, waste-to-energy, as well as combinations of these, are being examined at present.

PPC chief executive Giorgos Stassis, who last weekend visited northern Greece’s west Macedonia region, a lignite-dependent local economy, explained that the gradual withdrawal plan would facilitate finding solutions for company staff, regional telethermal needs and grid stability. PPC lignite-fired units are incurring losses, primarily as a result of rising CO2 emission right costs.

PPC, reducing workforce, boosts voluntary exit plan bonus by €2,000

Power utility PPC, looking to decrease its workforce by some 3,800 persons, from 15,300 to 11,500 employees until 2024, has increased the bonus payment offered through its voluntary exit plan by 2,000 euros to 7,000 euros.

No employees will be dismissed nor will salaries be cut, the power utility’s chief executive Giorgos Stassis promised during a weekend visit to Ptolemaida, west Macedonia, in the heart of northern Greece’s lignite-dependent area.

PPC is planning to withdraw all existing lignite-fired power stations over the next three years as part of the government’s decarbonization plan for the country.

Under the current PPC retirement plan, departing staff members receive a 15,000-euro payment, not including the bonus amount.

The PPC boss, speaking at an event staged by local authorities in the west Macedonia region, stressed company employees will be provided alternatives. Options will include transfers to other company divisions, retraining as well as voluntary exits for staff eligible for retirement, Stassis explained.

PPC is awaiting a finalized business plan from McKinsey to decide on the exact number of its staff exodus.

Coal electricity not competitive, Megalopoli facility workers told

Lignite-fired power stations are becoming a far less competitive electricity generation option by the day as a result of rising operating costs, workers at the power utility PPC’s Megalopoli III and IV units have been told by the energy ministry’s leadership.

Megalopoli, a lignite-dependent local economy in the Peloponnese, will receive some 25 million euros from a lignite withdrawal compensation fund, deputy energy minister Gerassimos Thomas told concerned Megalopoli workers.

The government has announced a plan to withdraw all existing lignite units over the next three years.

The operating time of lignite units is currently being kept to a minimum, the only justifiable reason to keep them running being the continued provision of telethermal needs, the workers were told.

Lignite-produced electricity, including CO2 emission costs, has steadily ranged between 80 and 90 euros per MWh, compared to 55-60 euros per MWh for gas-fueled power stations and a System Marginal Price (SMP), or wholesale price, of 59-60 euros per MWh, according to December figures, deputy energy minister Gerassimos Thomas told PPC’s Megalopoli workers.

In the renewable energy sector, latest auctions staged by RAE, the Regulatory Authority for Energy, produced wind energy prices from 55.8 to 58.3 euros per MWh and solar energy prices at 53.8 euros per MWh.

The Megalopoli workers were not convinced by the ministry’s arguments and, citing desulphurization investments worth 140 million euros at the power station in recent years, remained adamant on the sustainability of the Megalopoli III and IV lignite-fired units.

A special steering committee assembled to coordinate a fair national transition plan towards the post-lignite era for Megalopoli and west Macedonia, Greece’s other lignite-dependent area in the country’s north, is scheduled to hold its inaugural session later this week.

 

 

Brussels pressuring for wider access to PPC lignite power

The European Commission’s Directorate-General for Competition has proposed wider participation in a Special Purpose Vehicle plan tabled by the energy ministry that would effectively also take on board independent electricity suppliers, not just energy-intensive industrial enterprises, for purchases of lower-cost lignite-generated electricity produced by power utility PPC.

Energy ministry officials began talks aiming for further electricity market liberalization in Greece in the lead-up to the Christmas break. These are expected to continue following the festive season and end by mid-January.

The energy ministry officials went into the talks having proposed the establishment of an SPV that would exclusively facilitate lignite-generated electricity purchases made by energy-intensive industrial enterprises.

This is seen as a plan that could contribute to the power utility’s market share contraction in the high-voltage category and also support emission cost savings.

Greece’s pledge for a thorough plan promising to fully liberalize the electricity market and break PPC’s ongoing dominance has been under the spotlight during these talks.

Going into the negotiations, Brussels made note of Greece’s non-compliance with a European Court ruling on PPC’s lignite monopoly.

The European Commission has remained relentless in its demand for corrective anti-monopoly measures on lignite, including, according to sources, the establishment of auctions along the lines of the NOME auctions recently abolished by the Greek government.

Brussels insists the SPV would need to be supplied electricity by PPC through auctions. Greek officials have sought to avoid discussing such a prospect given the government’s recent decision to end NOME auctions, arguing these have cost PPC plenty without delivering results in terms of market share contraction at the utility.

A proposal entailing hydropower sourced electricity supply to the SPV, in addition to lignite-generated electricity, has also been tabled at these talks. This would help limit emission costs if suppliers also enter the SPV.

The European Commission may have applauded the government’s recent decision for a swifter decarbonization process, but it has remained adamant on the necessity for third-party access to lignite – until 2023, when all of PPC’s existing lignite units are planned to have been withdrawn – as well as hydropower  if full market liberalization is to be achieved.

 

Gov’t Council being assembled for support to lignite-dependent areas

The country’s administration is assembling a government council to be tasked with preparing a Just Transition Plan for Greece’s lignite-dependent areas needing support to offset the effects of the government’s planned withdrawal of all coal generators by 2028, including all existing units by 2023.

A Council of Ministers Act enabling the establishment and operation of the government council, to be headed by energy minister Costis Hatzidakis, has just been approved.

The west Macedonia region in Greece’s north as well as the Megalopoli area in the Peloponnese, both lignite-dependent local economies, will need support while adjusting to the post-lignite era.

The government council to work on the Just Transition Plan will be comprised of top officials from a number of ministries, which, besides the environment and energy ministry, include the finance, interior, development and investments, as well as agricultural development and food ministries.

“Ending the economy’s dependence on polluting lignite fuel is a key energy policy priority,” noted energy minister Costis Hatzidakis. “However, the withdrawal of all lignite units by 2028 must be done in a coordinated and responsible manner. The government’s top priority is to make the transition to the post-lignite era a fair one for western Macedonia and Megalopoli with claims of all necessary funds from Brussels,” he added.

A comprehensive, multidimensional and forward-looking plan will be presented by the new government council in mid-2020, the minister said.

Besides national and private funding, Greece will also seek EU support funds, including from the Just Transition Fund.

 

 

PPC claiming compensation for operation of coal generators

Power utility PPC is looking to claim compensation for keeping its loss-incurring coal generators in operation to help meet the country’s electricity needs.

The utility aims to seek compensation through an EU cost-recovery mechanism for as long as its existing lignite-fired power stations will need to keep operating until a planned withdrawal procedure for these units is completed by 2023.

A strategic reserve capacity being used in Germany is being looked at by state-controlled PPC.

PPC chief executive Giorgos Stassis made the request to the Greek government, which in turn has relayed the matter to Brussels.

European Commission officials, who have held talks on the matter with energy ministry officials, have not responded favorably to the Greek request. On the contrary, they believe Greece owes amounts related to the country’s insistence on using coal generators as a European Court decision has not been implemented.

PPC has also made note of a compensation plan for gas-fueled power stations on the islands that are expected to be interconnected. The power utility believes it will be entitled to compensation if the operation of these units is deemed necessary for grid emergency back-up reasons.

The power utility also claims it would be entitled to compensation for any unrecovered amount of its investment in these gas-fueled power stations if they happen to be withdrawn prematurely.

 

PPC presenting its new business plan today, market awaiting details

Power utility PPC’s new business plan, to be announced today, has attracted the attention of market officials, eagerly awaiting details on the utility’s transformation, objectives and how these can be achieved.

PPC is expected to make official a swifter withdrawal plan for all its existing lignite-fired power stations by 2023, a staff reduction plan numbering approximately 5,000 employees, as well as a renewable energy capacity boost of 1 GW by 2024.

Ptolemaida V, a 660-MW facility currently under construction, is expected to operate until 2028, Greece’s decarbonization deadline, according to the government, before it is converted into a  lignite-free unit. Details on this conversion plan remain unknown.

A recent study conducted by power grid operator IPTO determined that gas-fueled power stations offering a total capacity of between 2,400 and 2,800 MW can cover the gap to be created by the withdrawal of PPC’s lignite-fired units.

However, the IPTO study was conducted based on the assumption that PPC’s lignite-fired power stations would be withdrawn by 2028, the previous goal, not 2023, as has emerged more recently. It remains unclear how this change of plan could affect the overall capacity coverage equation and whether an additional study will be needed.

Market officials are also awaiting further details on the cost of PPC’s staff reduction plan. The  willingness of employees to accept voluntary exit plans will be crucial.

Also, the cost of the utility’s new focus for greater renewable energy production is another key aspect of the business plan being eagerly awaited by market officials.

 

PPC plan includes withdrawal of all existing lignite units by 2023

Power utility PPC will cease operating all of its existing lignite-fired power stations by 2023, according to the corporation’s new business plan, expected to be approved by the board today.

Just days ago, at a Greece-focused Capital Link Forum event in New York, PPC’s chief executive Giorgos Stassis said the utility does not intend to keep burning lignite until 2028, when Greece plans to have fully decarbonized, according to an objective announced recently by Prime Minister Kyriakos Mitsotakis.

The aggressive lignite-unit withdrawal program is made possible by the technology available today, Stassis pointed out. Greece, currently Europe’s biggest emitter of CO2, will develop into one of the lowest polluters on the continent, the PPC boss added.

Five units at the Agios Dimitrios lignite-fired power station totaling 1,456 MW, two units at Amynteo (546 MW), Meliti (289 MW), all four Kardia units (1,110 MW), and the two Megalopoli units (511 MW) make up the list of PPC’s existing lignite units planned for withdrawal by 2023.

Stassis has not offered any details on the future of PPC’s Ptolemaida V power station, currently under construction and initially planned to operate as a lignite-fired power plant. It will most likely be used until 2028.

Besides the environmental concerns, PPC’s lignite unit withdrawal plan is also needed as a result of a sharp rise in lignite costs, generating major losses at the utility, estimated at 200 million euros for 2018, according to the chief executive. These losses are seen rising to 300 million euros for 2019.

 

Higher-cost lignite sidelining gas units a Greek market paradox

Greece’s wholesale electricity market is still adjusting as, despite sharp rises in CO2 emission right costs, lignite continues to play a leading market role. Contributions from lower-cost gas-fueled generators remain subdued.

A recent drop in temperatures around the country has led to wholesale electricity market demand peaks of more than 7,500 MW since the beginning of December, up from previous demand peaks ranging from 6,000 to 6,100 MW.

According to the energy exchange’s day-ahead market data, virtually all of the power utility’s coal generators are contributing to distribution without operating at full capacity. Instead, they are running at minimum levels. This is reducing the need for gas-fueled generators.

Yesterday, PPC’s Agios Dimitrios III, IV and V, Kardia III and IV, Amynteo I and Meliti all operated at minimum levels, while the contribution of gas-fueled generators was kept to a minimum. Sidelined units included Heron, ENTHES, Aliveri and Komotini, while Protergia and Korinthos Power units contributed only during peak demand hours.

The picture for today remains unchanged with the System Marginal Price (SMP), representing the wholesale price, at 63 euros per MWh, as was the case yesterday. Before the recent increase in demand, SMP levels ranged between 50 and 55 euros per MWh.

Power grid operator IPTO, offering an explanation for the ongoing dominance of coal over gas, despite the rising demand in the wholesale market, noted that turning off and withdrawing a lignite-fired power station – except for telethermal units – costs more than leaving a gas-fired power station sidelined without distribution input.

For PPC, the objective is to maintain the SMP at low levels as the utility is required to purchase energy from the pool given its big market share in supply and smaller share in production.

Carbon-capture option latest proposal for Ptolemaida V

A carbon-capture proposal that would enable power utility PPC’s Ptolemaida V plant, currently under construction, to keep operating beyond 2028, a decarbonization deadline set by the government, has emerged as the latest option for the project’s future.

Carbon capture, a process preventing carbon dioxide from entering the atmosphere, would limit emissions by approximately 80 percent, making the Ptolemaida unit in Greece’s north, close to Kozani, feasible amid an environment of escalating CO2 emission right costs.

It is believed opting for a carbon-capture solution would equate Ptolemaida V’s emission-related costs with those of a natural gas-fired unit. Carbon storage is also being examined.

Ptolemaida V was initially planned as a coal generator but a number of alternatives, including a switch to natural gas powering, are now being considered, especially since the government’s recent pledge of a decarbonized Greek energy sector by 2028.

PPC and energy ministry officials have received the carbon capture proposal for Ptolemaida V.

Greek government MP Giorgos Amanatidis, representing the lignite-rich Kozani constituency, has contacted a scientific team behind the development of a major carbon-capture project in Texas, USA.

The MP has also spoken with investors interested in such a solution for Ptolemaida V.

A carbon-capture option would enable the continuation of lignite mining in the Kozani area, seen as key support for the local economy.