PPC compensation mechanism, market test talks at crucial stage

The European Commission is expected to show its cards next week on Greece’s quest for lignite compensation mechanisms supporting power utility PPC and the results of a market test concerning the utility’s availability of lignite-produced electricity to third parties.

These issues are expected to be discussed in detail by energy ministry and Directorate-General for Competition officials during a virtual meeting next week, following correspondence as well as a virtual meeting, on March 8, between energy minister Kostas Skrekas and the European Commission’s Vice-President Margrethe Vestager, also Brussel’s Commissioner for Competition.

State-controlled PPC has requested a strategic reserve mechanism for its lignite-fired power stations, still needed but nowadays loss-incurring as a result of higher CO2 emission right costs, as well as compensation for its premature closures of these units, currently being phased out until 2023.

All still appears to be vague on PPC’s market test for third-party access to its lignite-based electricity. The test was completed some time ago, failing to attract any real interest from rival suppliers.

The percentage of lignite-based electricity made available by PPC, initially set at 50 percent of total lignite-fired output and then lowered to 40 percent, is viewed, by third parties, as too small for any real gains.  Brussels has yet to comment on the market test’s result.

 

Emission rights over €42/ton, costing PPC €1.4m per day

Carbon emission rights have risen sharply to record-high levels, reaching 42.28 euros per ton at the end of trading yesterday, an ascent of more than 80 percent compared to last October’s levels of approximately 23 euros per ton.

This relentless upward drive is costing power utility PPC extraordinary amounts. The corporation, maintaining lignite-fired power stations and related mines to ensure grid sufficiency, has spent a total of 152 million euros on carbon emission rights between November, when the target model was launched, and March, according to market data.

Market officials have forecast that carbon emission right prices will rise even further, possibly to levels beyond 100 euros per ton.

PPC’s daily outlay on carbon emission rights, estimated at 1.4 million euros, would increase further if these projections prove to be accurate.

The ascent of carbon emission rights has driven up the cost of lignite-based electricity to levels of approximately 130 euros per MWh.

Despite the participation of lignite units in the Greek market, their elevated operating cost has not been reflected in price levels. Paradoxically, even though the cost of electricity exports exceeds 120 euros per MWh, these exports are being invoiced at a little over 40 euros per MWh, benefitting traders, who are making the most of these low price levels.

 

DG Comp motives for restart of older PPC probe unclear

The European Commission has brought back to the fore a Directorate-General for Competition investigation of power utility PPC and power grid operator DEDDIE/HEDNO over market dominance abuse, despite major market changes that have taken place since 2017, when the probe began.

The direction the investigation’s restart remains unknown. Negotiations between Greece and Brussels for new mechanisms being negotiated could be impacted, some pundits suspect.

Also, the government and state-controlled PPC are currently seeking compensation for the power utility’s need to keep lignite-fired power stations and related mines operational for grid sufficiency needs.

No findings of the investigation’s first round have been released. The probe included raids by DG Comp officials, both local and Brussels-based, of the PPC and IPTO headquarters in Athens that lasted several hours, resulting in confiscations of USB flash drives, documents and hard drives.

PPC’s then-administration, in an announcement at the time, informed that the raid concerned a check on the utility’s “supposed” abuse of market dominance in the wholesale market for electrical energy produced from 2010 onwards.

Prior to the investigation, Brussels suspected levels of the wholesale electricity price – known as the System Marginal Price (SMP), at the time – were being manipulated by PPC through its lignite and hydropower facilities.

In 2017, PPC held an 87 percent share of the retail electricity market and 57 percent of overall electricity generation, now down to approximately 67 and 39 percent, respectively.

Four years ago, PPC’s lignite facilities still dominated the corporation’s portfolio and the energy exchange and new target model wholesale markets did not exist.

The current market setting bears little resemblance to back then. Lignite has regressed into an unwanted, loss-incurring energy source that is being phased out by PPC until 2023, while the energy market is undergoing drastic transformation, as was acknowledged by the European Commission Vice-President Margrethe Vestager, also Brussels’ Commissioner for Competition, in an announcement yesterday.

 

EC examining compensation bid for PPC lignite closures

The government, determined to ensure compensation for state-controlled power utility PPC over its decision to prematurely close down its lignite-fired power stations, is seeking a solution through the European framework of options, an energy ministry announcement has informed.

The Greek State has submitted a compensation request to cover extraordinary costs related to the premature closure of four PPC lignite mines and lignite fired power stations, the ministry’s announcement noted.

European Commission Vice-President Margrethe Vestager, also Brussels’ Commissioner for Competition, has informed that the Commission views favorably the Greek initiative for a premature closure of these lignite facilities and is now examining the legal grounds of the compensation request, the energy ministry’s announcement added.

The Greek government wants compensation for PPC as the utility’s outgoing units have potential for a longer life, meaning PPC is being deprived of further earnings through these facilities.

A successful Greek compensation bid could also help cover extraordinary costs linked to the restructuring of lignite-dependent local economies.

The energy ministry is basing Greece’s compensation bid on a recent European Commission decision approving 52.5 million euros for the Netherlands as compensation for the premature closure of its Hemweg coal-fired power station.

The Netherlands has implemented law forbidding the use of coal for electricity generation beyond January 1, 2030.

PPC bond issue aims for real-money investors, market clout

Power utility PPC, which has just issued a 500 million-euro bond expiring in 2026, is aiming to attract foreign institutional investors – or real-money investors placed in the real economy, not hedge funds – to the issue, which, the corporation hopes, will also enjoy a solid course in secondary-market trading and help establish the company’s clout in capital markets.

PPC began presenting this bond issue to institutional investors yesterday and will continue to do so over the next two days in an effort to maximize the level of participation in the issue, a Sustainability-Linked Bond, the first of its kind to be offered by a Greek company.

The power utility is committing to a 40 percent CO2 emissions reduction by 2022, which if not achieved, will add 50 basis points to the bond’s yield.

The issue’s order book closes on Thursday. A clear picture on the turnout and type of investors drawn to the issue should emerge today or tomorrow, the latest.

PPC’s push to reduce CO2 emissions, which the company has told investors will fall from 23.1 million tons in 2019 to 13.9 million tons in 2022, is based on two key factors, a planned withdrawal of lignite-fired units representing a total capacity of 3.4 GW by 2023 and a change of investment direction focusing on renewables.

Data shows that PPC managed to reduce its CO2 emissions by 56 percent between 2005, when levels were 52.6 million tons, and 2019. A drop to the 2022 objective of 13.9 million tons would represent a 74 percent reduction, compared to 2005. If achieved, such a reduction would exceed the national target of 62 percent.

An improved BB- rating from Fitch late in December was a key factor in PPC’s decision to head to capital markets at this point in time.

IPTO study backing PPC lignite compensation bid soon to EC

The energy ministry is preparing to forward to the European Commission a power grid operator IPTO study that underlines the ongoing necessity of the country’s lignite-fired power stations for grid sufficiency.

The IPTO study was requested by energy minister Kostas Skrekas to bolster a compensation request submitted to Brussels by state-controlled power utility PPC as a result of the grid’s ongoing need for lignite units, nowadays loss-incurring facilities due to elevated CO2 emission right costs.

PPC, Greece’s sole operator of lignite units, plans to phase out its lignite units over the next three years as part of the country’s decarbonization strategy.

The energy ministry expects to forward the IPTO study to the European Commission within the next fortnight. Greece is seeking compensation for PPC through a support mechanism for as long as these lignite units remain in use.

Last week, the European Commission began examining whether a similar German compensation request complies with EU rules and should be approved.

European Commission Executive Vice-President Margrethe Vestager suggested that the German plan theoretically complies with Europe’s green energy agreement and its goals.

“Within this context, our role is to safeguard competition by ensuring that compensation for premature withdrawal [of lignite units] is kept to a minimum,” Vestager commented. “The information available at this point is not sufficient to judge.”

EU hesitation to the German plan concerns a number of aspects, including the duration of the compensation period.

DESFA focusing on gas pipeline for west Macedonia network

Gas grid operator DESFA and energy ministry officials are currently discussing financing options that could be sought for the operator’s plan to develop a gas pipeline needed to facilitate a gas network expansion in northern Greece’s west Macedonia region, energypress sources have informed.

DESFA is awaiting approval by RAE, the Regulatory Authority for Energy, for its ten-year development plan, worth more than 545 million euros, including the gas pipeline project.

The talks between DESFA and the energy ministry officials are focused on public funding possibilities, primarily European, to cover part of the cost of the gas pipeline, which would ultimately help contain the level of network usage tariffs to be covered by consumers.

Local officials anticipate this network expansion plan should qualify for EU development fund support, even though EU policy generally does not favor gas projects, as it clearly represents a development project that promises multiple regional benefits, including replacement of lignite-based energy, on the way out as a result of the country’s decarbonization strategy.

Besides the EU recovery fund, officials in Greece are also considering the prospects of financial support from the EU’s National Strategic Reference Framework or a number of regional development programs.

The gas network expansion plan in the country’s west Macedonia region will require the development of a 130-km gas pipeline from Trikala, in the mainland’s mid-north, a project budgeted at 110 million euros.

According to sources, DESFA has revised an original pipeline route plan, bringing the pipeline closer to cities where medium and low-pressure networks for households and businesses are to be developed by gas distributor DEDA.

Suppliers unimpressed by plan ending PPC lignite monopoly

Independent electricity suppliers have remained unimpressed by measures taken to end stare-controlled power utility PPC’s exclusive access to lignite, noting resulting lignite-generated electricity amounts offered to third parties are too small to bring about changes to competition.

The country’s independent suppliers had until yesterday to respond to a 15-question questionnaire forwarded by the European Commission as part of a market test on the effectiveness of the measures, recently agreed on between Brussels and new energy minister Kostas Skrekas.

Certain respondents explained that low-priced lignite electricity purchases, even at levels well below day-ahead market price levels, would not offer benefits as they cannot offset extremely higher wholesale electricity prices, pushed up by increased balancing market costs.

Some of the vertically integrated suppliers, not facing problems by the wholesale price shifts, noted the measures would end the prospects of a futures market operating at the energy exchange any time soon.

Post-lignite plan facing 19,000 job losses, €1.6bn GDP shrink

Greece’s GDP will contract by 1.6 billion euros and over 19,000 jobs stand to be lost as a result of power utility PPC’s ongoing withdrawal of lignite facilities, a study conducted by IOBE, the Foundation for Economic and Industrial Research, has estimated, not taking into account a master plan of offsetting measures proposed for the lignite-dependent areas.

The total reduction in annual salaries as a result of these lignite unit withdrawals was estimated at 342 million euros by the IOBE study.

The Kozani area in northern Greece will be hardest hit, in terms of absolute numbers, among the country’s three lignite-dependent areas, the study estimates. Arkadia, in the central Peloponnese, and northern Greece’s Florina are the other two local economies depending on lignite.

The size of Kozani’s local economy is projected to shrink by 680 million euros, or 25 percent, according to the IOBE study. Job loss figures will also be biggest in Kozani, expected to reach 7,500, or 16 percent of the local workforce.

However, in a proportional sense, greater damage will be inflicted on Florina as its GDP is projected to contract by 28 percent, a 331 million-euro reduction. Job losses in Florina will also be considerable, reaching 2,900, or 15 percent, the IOBE study has projected.

Market test on deal to end PPC lignite monopoly now underway

The European Commission has just launched a market test concerning its recent agreement with energy minister Kostas Skrekas to end power utility PPC’s monopoly of lignite-based electricity production.

Interested parties – suppliers and traders – will, by February 15, need to respond to 15 questions looking to assess the agreement’s prospects.

Brussels’ questions focus on the agreement’s ability to generate competition in the wholesale and retail electricity markets, enable new market entries, and end PPC’s market dominance by 2023.

The agreement will apply until 2023, when state-controlled PPC plans to have gradually withdrawn its lignite-fired power stations as part of the country’s decarbonization effort.

Brussels’ questionnaire also includes a rough presentation of the pricing formula to be applied to lignite-based electricity amounts that PPC will be required to offer to holders of supply licenses through bilateral agreements, regardless of whether these companies operate in the Greek market or not.

PPC’s lignite-based electricity is planned to become available to rivals as of October this year. Market test participants, in one question, have been asked to clarify how much sooner they would need to know the terms and conditions.

As part of the agreement, PPC, in 2021, will need to make available 50 percent of its previous year’s lignite-based production to rivals, followed by 40 percent of the previous year’s output in 2022 and 2023.

In practical terms, based on these terms, independent suppliers will be able to purchase close to 3 TWh, in total, this year, and between 2 and 3 TWh in 2022.

Efforts to end PPC’s lignite monopoly had dragged on for 14 years prior to the recent agreement.

Brussels once again scrutinizing PPC high-voltage market share

Power utility PPC’s solid market share, especially in the high-voltage category, is once again being scrutinized by European Commission officials as part of Brussels’ ninth post-bailout review.

According to sources, European Commission authorities are seeking explanations from Greek officials for the state-controlled power utility’s unabating market share in the high-voltage category.

Brussels officials appear to be holding PPC responsible for selling specially priced industrial electricity at extremely low levels. Industrial consumers, also contacted by European Commission officials as part of the review, have attributed their customer loyalty to a lack of competition in Greece’s industrial electricity market.

PPC has held on to virtually all of its industrial customers, except for AGET (Heracles General Cement Corporation). MEL (Macedonia Paper Mills) abandoned PPC for a short period but has since returned.

Brussels officials are also believed to have questioned PPC’s electricity price levels in the low and medium-voltage categories, suggesting that these, too, are low.

It remains to be seen if this overall probing by the European Commission will develop into any form of official pressure.

Just days ago, energy minister Kostas Skrekas reached an agreement with the European Commission to end a long-running anti-trust case against PPC by agreeing to gradually end the utility’s monopoly of lignite-based electricity production. Despite the development, a number of Brussels officials appear to be keeping PPC in the frame.

 

Athens ending PPC lignite monopoly, rival suppliers to gain

Newly appointed energy minister Kostas Skrekas has reached an agreement with European Commission authorities to gradually end power utility PPC’s monopoly of lignite-based electricity production, but a Greek effort aiming to secure compensation for the state-controlled electricity company as a result of its need to keep operating lignite-fired power stations for grid sufficiency will now be treated as a separate issue, reducing the probability of a successful compensation request.

The ministry, under Skrekas’ predecessor, Costis Hatzidakis, had bundled the compensation request with the lignite antitrust case, insisting Athens would only move ahead with the PPC lignite monopoly case – by staging a market test as a first step towards offering independent players access to PPC’s lignite-based electricity production – if compensation money was awarded to the power utility.

Greece appears to have sought 180, 150 and 200 million euros in compensation for 2021, 2022 and 2023, respectively.

The country’s lignite antitrust case has dragged on for 14 years. During this time, lignite has lost its advantage as a lower-cost energy source as result of high CO2 emission right costs. Even so, Brussels has kept the issue on the negotiating table, often attaching tough proposals to the matter.

Under the lignite monopoly agreement just reached between the energy ministry and Brussels, the power utility, through bilateral contracts, will offer rival suppliers small percentages of its lignite-based electricity production at prices slightly below day-ahead market prices over a three-year period.

These electricity amounts will gradually diminish over the three-year period as PPC plans to phase out virtually all of its lignite-fired power stations by 2023 as part of the country’s decarbonization effort.

The percentage of lignite electricity amounts to be made available to independent suppliers will be based on previous-year production. In 2021, PPC will sell 50 percent of its lignite-based electricity produced in 2020, while in 2022 and 2023, the utility will offer 40 percent of production in the respective previous years.

Given these terms, independent suppliers will be able to purchase a combined total of close to 3 TWh in lignite-based electricity this year and between 2 and 3 TWh in 2022.

Independent suppliers should benefit from the agreement given the wholesale electricity market’s higher price levels of late.

Key issues in new minister’s first session with EC officials

Today’s first meeting, via teleconference, between Greece’s recently appointed energy minister Kostas Skrekas and European Commission authorities, as part of Brussels’ ninth post-bailout review, will focus on four key issues: power utility PPC’s lignite monopoly; the proper functioning of target model markets; energy-sector privatizations, and the decarbonization plan for west Macedonia, a lignite-dependent area in the country’s north.

The four issues were addressed in preliminary talks last week between Alexandra Sdoukou, secretary-general of Greece’s environment and energy ministry and Brussels technocrats.

It remains to be seen if the European Commission will again commend Athens, and to what extent, for the target model’s functioning, as Brussels had done last November, when the model’s new markets in Greece were launched as a step to harmonize EU energy markets.

However, weeks into the launch, balancing market costs skyrocketed, leading to sharply increased wholesale electricity prices. RAE, the Regulatory Authority for Energy, is now considering to introduce an adjustable price-containing measure to be set as a percentage of day-ahead market prices.

The European Commission, in the latest talks, can also be expected to push for the launch of a market test concerning an agreement offering independent players access to PPC’s lignite-based electricity production.

Though the interest of independent players for lignite-based electricity may have diminished given its increased cost, this antitrust case, unresolved for years, remains a big concern for the government as Brussels could associate it with pending Greek issues.

The complexity of PPC’s lignite monopoly case was deepened following a decision by the previous energy minister, Costis Hatzidakis, to bundle the matter with a Greek compensation request based on the utility’s need to keep running lignite-fired power stations for energy sufficiency. According to reports, his successor, Skrekas, will not sway from this policy.

As for energy-sector privatizations, a sale plan for gas supplier DEPA Commercial has attracted considerable interest but officials are concerned as parent company DEPA is embroiled in an ongoing lawsuit with ELFE (Hellenic Fertilizers and Chemicals).

DEPA has appealed a verdict awarding the producer a compensation amount of 60 million euros following overcharging claims. The case could be deferred until September, meaning binding bids by possible DEPA Commercial buyers may need to be delayed.

Greece’s decarbonization master plan features 16 key investment proposals that are expected to create over 8,000 jobs, directly and indirectly, in lignite-dependent areas. However, numerous complex matters need to be resolved, including the transfer of related property controlled by PPC, Brussels’ approval of a series of incentives for new investments, and scores of licensing issues.

EBRD: Green projects in Greece a priority, RES-based economic recovery

The European Bank for Reconstruction and Development (EBRD) is strongly interested in Greek energy market investments, Andreea Moraru, the bank’s head of Greece and Cyprus, has stressed in an interview with energypress.

The EBRD official spoke extensively on significant investment opportunities being created by the energy transition.

Since 2015, the EBRD has invested over four billion euros in Greece, participating in numerous major projects, Moraru informed, noting its recent support for power utility PPC, an investment worth 160 million euros, one of the bank’s largest, to cover customer payment volatility following the outbreak of the pandemic, exemplifies EBRD’s strong support for Greece.

The full interview follows:

What is the role of the EBRD compared to that of other banking institutions? 

The EBRD is a development bank committed to furthering progress towards ‘market-oriented economies and the promotion of private and entrepreneurial initiative. Our role is to be complementary to the commercial banks, to work alongside them and to support them.

Αdditionality is among the founding principles underlying our work and the particular support and contribution that the EBRD brings to an investment project which is not available from commercial sources of finance. Alongside transition and sound Banking, it is one of the three founding principles underlying our work. By ensuring that we are additional in everything we do, we ensure that our support for the private sector makes a contribution beyond that available on the market and does not crowd out other private sector actors.

Whenever we consider financing a project, we analyze whether similar financing can be obtained from private sector local banks or non-banking institutions.

Many of our markets are relatively high risk, and the private sector will only lend for short periods of time or at such high rates as to make the project unfeasible. For major new projects in the field of infrastructure, for example, longer-term financing may not be available on reasonable terms or conditions. This is where the EBRD fits in.

Additionality can also be non-financial in nature, where EBRD’s interventions contribute to better project outcomes that would not have been required or offered by commercial financiers. This can include the provision of comfort to clients and investors by mitigating non-financial risks, such as country, regulatory, project, economic cycle or political risks. Additionality may also be derived from the EBRD’s involvement in helping projects and clients achieve higher standards than would have been required by the market, such as through sharing its expertise on better corporate governance or above ‘business as usual’ environmental or inclusion standards.

Do you consider the energy sector in Greece to be suitable to contribute to the development and reconstruction of the Greek economy? For what reasons?

Absolutely. In general, the EBRD’s vision for the energy sector is of a partnership between industry, governments and consumers that delivers the essential energy needs of societies and economies in a manner that is sustainable, reliable and at the lowest possible cost.

In Greece the energy sector is embarking upon its biggest transformation yet, moving away from its reliance on lignite (c. 20% of total electricity production in 2019) to renewables and a smaller fleet of significantly less carbon intensive gas generating units. The NECP aims to achieve reduction in greenhouse gas (GHG) emissions by more than 55% by 2030 compared to 2005, planned to be achieved through: (i) decommissioning of all 4 GW of lignite-fired generation capacity by 2028 (3.4GW by 2023), (ii) 8.7 GW of new renewable generation capacity to added by 2030, reaching a total of 19 GW, and (iii) 2 GW of new gas generation capacity added for system support and security. The country remains committed to implementing the NECP as planned despite the negative impacts the CV19 crisis is expected to have on the Greek economy in 2020 and beyond.

Greece’s withdrawal from coal is a fundamental transformation that will create substantial sector and social challenges with the following broad implications: (1) constructing large volumes of low carbon generating capacity in order to ensure energy security in an increasing electrified economy, (2) reengineering the country’s transmission and distribution networks to reflect the additional penetration of distributed, intermittent renewable energy, and (3) addressing the social and economic impacts of the closure of a major part of its existing energy infrastructure, i.e. ensuring a just and inclusive transition.

We have supported many energy projects so far, especially renewables, working together with leading companies, such as GEK Terna, Mytilineos and HELPE among others.

A recent milestone is our support for the largest renewable energy project in Greece and the largest solar energy project in south-eastern Europe to date, the new solar park in Kozani. In 2017, we also approved a framework committing up to €300 million to finance renewable energy investments in the country.

The main reasons why this sector is important for the development of the Greek economy and thus our participation, is first to help the decarbonization of the country and the transition to a greener economy, as well as to strengthen local linkages and regional integration.

What is the EBRD’S philosophy about its presence in the Greek economy and especially in the energy sector?

In Greece in particular, supporting sustainable energy and infrastructure is among our top priorities. In fact supporting sustainable energy and infrastructure is one of the pillars of the newly approved country strategy. Our investment strategy in the energy sector going forward will aim at further liberalization and diversification of the energy market focusing on renewables and increased renewable energy capacity and a more diversified energy mix to promote decarbonization of the economy. EBRD could support a second phase of feasible renewable energy projects with project preparation / technical assistance and financing (biomass and biogas plants, use of waste heat in greenhouses for high value-added agriculture, electricity storage facilities, green hydrogen production plants and other forms of energy storage.

We see that it’s challenging to meet EU climate goals in Greece and our goal is to support the country with that. Our approach and philosophy is in line with the National Energy and Climate Plan and we are very glad the Greek government is committed to close all lignite plants. We need to keep this momentum, despite the current Covid-19 crisis, and turn the country greener.

One good example is our recent support for PPC (DEI). This has been one of our largest investments (€160 million) and the first time we supported the public sector in Greece. This facility supports PPC’s working capital needs at a time of customer payment volatility following the outbreak of the crisis. It also strengthens the resilience of the electricity sector as a whole by ensuring the stability of essential utility supplies and maintaining the momentum towards decarbonization.

What are the characteristics of private companies that could apply to be supported by the EBRD?

When we consider financing a project we analyze different aspects, such as how it supports the green economy, if it promotes women or youth inclusion, if it can enhance the competitiveness and resilience of the Greek economy etc. We look at the financial strength of the project as we operate according to sound banking principles. We cannot finance companies in certain sectors like defence-related activities, tobacco, substances banned by international law or gambling facilities.  As I have already mentioned, we also need to be additional.

We work in a wide range of sectors, from energy, infrastructure, manufacturing, property, tourism, agriculture to trade and financial institutions. We also support SMEs with business advice, know-how transfer and trainings.

What are your conclusions from your cooperation so far with Greek companies and institutions?

We’re very proud of all our projects in Greece so far. Since commencing our operations in 2015, the Bank has invested more than €4 billion in the country, helping respond to the financial crisis. Against a turbulent political and economic backdrop, the EBRD helped stabilize the financial sector, support private companies through export-oriented growth and lay the foundations for greater private sector participation in critical energy and infrastructure projects that have also strengthened regional integration.

We faced several challenges because of the financial crisis, but this was expected and was exactly the reason why we came to the country. Our main conclusion is that Greek companies have strong potential and very talented workforce, who we’re glad to be working with. The COVID-19 pandemic has abruptly interrupted Greece’s steady recovery, but we’re confident that the country can build back better.

We have an excellent cooperation with the Greek Government whom we are supporting on a number of initiatives.  In late 2020, the EBRD joined forces with the Ministry of Development and Investments of Greece to establish a new public-private partnership (PPP) preparation facility cooperation account, following a request from the Greek authorities. We are also working close with the Ministry of Finance on development of a capital market strategy, a project supported by DG Reform.

What are your plans for the new year?

We will focus on supporting the recovery of the Greek economy, by helping with the immediate needs of the Greek businesses because of coronavirus, as well as with their long-term growth plans. Green projects, including in the energy sector, will be our priority, but we’ll also be active in other sectors. We’ll continue supporting the banking sector, too.

Do you consider the investment risk in our country increased after the great economic crisis and in the light of the current crisis due to a pandemic?

The financial crisis had a strong impact on Greece, but we recognize that the Greek economy had started recovering and growing in the recent years. It’s true that COVID-19 containment measures are likely to depress economic output and cause particular disruption to the tourism industry, reversing the economic recovery and hindering investments in the near term, not only in Greece, but also in most countries. There are still many things that need to be improved in the country to attract more investors, but we don’t consider the investment risk much higher than it used to be. The Greek economy can recover after the pandemic.

 

Wholesale prices in Greece well over European average in 3Q

Wholesale electricity prices in Greece during the third quarter of 2020 were three times over the €16/MWh European average, based on the Nord Pool power exchange, a European Commission report covering European electricity markets for this period has shown.

The report also traces the market’s 3Q rebound following a heavy slump in the preceding quarter.

Average prices rebounded at a slower pace in southeast Europe, compared to other regions, before reaching pre-pandemic levels in September as a result of weak demand and high production of wind energy and hydropower facilities, according to the Brussels report.

The average price in the third quarter rose by 43 percent, against 2Q, to €43/MWh, and was 30 percent lower, annually.

European price shifts in August moved in coordination, while the price gap between Greece and the European average narrowed significantly in 3Q as a result of the use of lignite-fired units and weak demand.

This gap vanished in September as a result of stronger wind energy output, which exceeded one TWh for the first time. As a result, prices in the region were between €46 and €47/MWh in September.

As for energy-mix developments, lignite-based production in Greece experienced a decreased share, captured by natural gas-fueled output.

In southeast Europe, the lignite-based output share contracted to 29 percent in 3Q from 35 percent in the equivalent period a year earlier; the gas-fueled sector’s production share rose to 20 percent from 18 percent; and the RES sector’s share of the energy mix increased to 34 percent from 30 percent.

Household electricity tariffs in Greece averaged €16.54/MWh (not including taxes and surcharges), while the country’s average for industrial tariffs was €10.62/MWh, the report showed.

Preliminary talks for 9th post-bailout review begin today

Power utility PPC’s lignite monopoly ordeal, the effort to ensure proper functioning of target model markets, the progress of privatization plans, and Greece’s decarbonization master plan for the lignite-dependent local economies of west Macedonia, in the country’s north, and Megalopoli, Peloponnese, are the key issues on the agenda of the ninth post-bailout review set to be conducted by the European Commission.

Preliminary review talks are scheduled to commence today between energy ministry officials and Brussels technocrats. These will be followed by higher-level talks involving technocrat chiefs and Greece’s newly appointed energy minister Kostas Skrekas.

Though his predecessors faced plenty of pressure, especially over PPC’s dominance, the new minister could be in for a hard time if pending energy-sector issues are not directly dealt with.

RAE, the Regulatory Authority for Energy, and power grid operator IPTO are still seeking solutions to tackle problems faced by the target model’s new markets. They got off to a problem-laden start in November, prompting a sharp rise in balancing market costs during the first few weeks.

As for energy-sector privatizations, the plan to offer a 49 percent stake in distribution network operator DEDDIE/HEDNO appears to be making sound progress and attracting strong interest, as exemplified by the participation of 19 participants in December’s market test.

On the contrary, the privatization plan for gas supplier DEPA Commercial could be destabilized by the company’s ongoing legal battle with ELFE (Hellenic Fertilizers and Chemicals) over an overcharging claim made by the latter. This battle could delay and affect the DEPA Commercial sale.

The Just Transition Plan for Greece’s decarbonization effort is now beginning to make some progress, but this unprecedented endeavor’s degree of complexity cannot be overlooked. Vast amounts of land controlled by PPC need to be repurposed, Brussels must approve investment incentives, and licensing matters need to be resolved, amongst other matters.

EBRD reports close to €800 million investment in Greece in 2020

The European Bank for Reconstruction and Development (EBRD) stepped up its investments in Greece in 2020 to address immediate needs caused by the coronavirus pandemic and to create the foundations for a recovery with a focus on building back better economies.

Continuing its support for the Greek economy in 2020, the Bank made €797 million new investments in 17 projects, compared to €571 million in 13 projects in 2019, putting Greece in the EBRD’s top five countries of investment last year. 

Andreea Moraru, EBRD Director for Greece, said: “We are very proud to contribute to the robust response of the Greek economy to the crisis, supporting the recovery, helping local businesses with their needs and facilitating the transition to greener economic activities.” 

The Bank provided a senior unsecured loan of up to €160 million power utility PPC. The facility will support PPC’s working capital needs at a time of customer payment volatility following the outbreak of the crisis. It will also strengthen the resilience of the electricity sector as a whole by ensuring the stability of essential utility supplies and maintaining the momentum towards decarbonization. 

The EBRD also stepped up its efforts to help the Greek private sector by investing €57.5 euros in GEK TERNA’s successful issuance of a seven-year €500 million bond. GEK TERNA S.A. is the holding company for a group active in concessions, renewable energy, thermal energy and construction, incorporated in Greece. 

This issuance was the largest bond transaction to be listed to date on the Athens Stock Exchange and the first corporate issuance in the country since the outbreak of the pandemic. The proceeds will be used to refinance secured commercial loans with longer tenors and reduced financing costs, enabling a corporate transformation that will optimize the capital structure of GEK TERNA. 

Facilitating the transition from fossil fuels to renewable sources of energy, EBRD launched its just transition initiative linking the transition to a low-carbon economy with inclusive economic development. One of the first projects under this approach was the Bank’s €75 million investment in the successful Eurobond tap issuance by Hellenic Petroleum (ELPE), in support of a new solar photovoltaic plant in Greece, the largest solar energy project in south-eastern Europe to date. 

The total funds of €100 million raised will enable ELPE to finance the construction of 18 solar photovoltaic (PV) plants with a total installed capacity of 204 MW in Kozani, western Macedonia, the country’s most coal-dependent region. The solar park will be built close to existing coal-fired power plants that are being phased out and is expected to reduce CO2 emissions by 320,000 tons annually.

In addition, the EBRD invested €50 million in the first senior preferred (SP) green bond issuance by the National Bank of Greece (NBG), combining support for capital market development and for the green economy in Greece. It was the first green bond issuance by a Greek bank and the first SP instrument to be issued by a Greek financial institution. 

Together with other investors, the EBRD invested in a €186.4 million securitization transaction of automotive leases, originated by Olympic Commercial and Tourist Enterprises S.A. (Avis), the leading car leasing company in Greece and master franchisee of the global car rental company Avis Budget Group.  

The transaction was an important milestone for the Greek securitization market as it was the largest issuance by a non-bank originator and the first auto lease asset-backed security transaction in the country with a sustainable and green element. 

Part of the proceeds will be used by Avis for the replacement of its existing fleet with lower CO2 emissions, electric and hybrid vehicles, helping the company to reduce its diesel footprint.

In late 2020, the EBRD joined forces with the Ministry of Development and Investments of Greece to establish a new public-private partnership (PPP) preparation facility cooperation account, following a request from the Greek authorities. 

The EBRD will manage the facility, which will provide high-quality, client-oriented project preparation, training and advisory services, policy support and institutional strengthening activities related to the infrastructure sector in Greece. The Ministry will fund the activities of the facility with €20 million. The project pipeline will mostly be in the social infrastructure sector (education and health), sustainable urban infrastructure, and water and waste management.

Keeping vital trade flows going, the Bank provided a €20 million factoring facility to ABC Factors under its Trade Facilitation Program (TTP). Building on the EBRD’s cooperation with Alpha Bank, the parent company of ABC Factors, the facility will enable the factoring subsidiary to further expand its portfolio of small and medium-sized enterprises (SMEs) and local corporate clients by providing funding for domestic and international factoring transactions. Greece remains the EBRD’s most active country under TFP, with close to €320 million trade transactions in 2020.  

In 2020, the EBRD started 41 new advisory projects with Greek SMEs in various areas, such as strategic and business planning, marketing and e-commerce, operational efficiency, financial management and digitalization, and delivered five online export training seminars to more than 100 participants. Donor funding from Greece, as well as from the European Union through the European Investment Advisory Hub of the European Investment Bank, has been crucial. 

Papoutsanis, a leading Greek manufacturer of soap and liquid cosmetics, became the first Greek firm to join the EBRD’s Blue Ribbon program, which combines business advice and finance for companies that stand out for their market leadership and high-growth potential. 

Furthermore, the Board of Directors of the EBRD approved a new strategy for Greece, which will guide the bank’s investment and policy engagement in the country during the next five years. 

The EBRD responded to the coronavirus pandemic with record investment of €11 billion in 2020 through 410 projects. This represents a 10 per cent increase in annual business investment relative to 2019, when the bank provided €10.1 billion to finance 452 projects.

Decarbonization compensation effort locked in bureaucracy

A Greek decarbonization compensation request forwarded to the European Commission for power utility PPC’s need to keep operating lignite-fired power stations, nowadays loss-incurring units, from 2021 to 2023, has developed into a slow-moving ordeal locked in Brussels bureaucracy.

Though, until recently, the Greek request appeared to be headed towards approval, Brussels officials have since slowed down the case, extensively questioning the claim through a stream of emails to the energy ministry.

State-run PPC is seeking respective compensation amounts of 180, 150 and 200 million euros for the three-year period.

The European Commission has been relentless with its questioning despite appearing to recognize the validity of the Greek compensation request.

The Netherlands and Germany have both received similar decarbonization compensation amounts.

Greece, according to some sources, has not pursued the right strategy as it should have delayed the decarbonization compensation request case until the finalization of an older antitrust case concerning PPC’s lignite monopoly.

Though Greece and the European Commission reached an agreement last October, according to which 40 percent of PPC’s lignite-generated electricity production must be exclusively made available to independent suppliers at a pre-determined price, not below cost, the decision has yet to be implemented.

A market test still needs to be conducted to measure the market’s level of interest in this offer. Given the cost of lignite, independent players may not be interested.

New minister, just appointed, has issues to resolve in 2021

Kostas Skrekas, just appointed new energy minister as part of the government’s cabinet reshuffle, in place of Costis Hatzidakis, who has headed the ministry for a constructive year and a half, faces a series of pending energy-sector matters that remained unresolved in 2020. They need to be addressed as soon as possible. Developments and conditions this year will be pivotal for these matters.

Skrekas was previously deputy minister for agricultural development and food.

Also in 2021, a year during which takeovers and mergers are seen occurring in the retail electricity and gas markets, rivals will continue battling for market share gains. The target model’s launch two months ago has brought about new conditions, strengthening the positions of vertically integrated suppliers.

The need for a normalization of the target model’s new markets stands as the energy ministry’s most pressing task at present. A sharp rise in wholesale electricity prices as a result of soaring balancing market costs has deeply unsettled the market, impacting the standings of non-vertically integrated suppliers, as well as industrial enterprises and consumers, who face rising bills.

Market coupling with Bulgaria’s day-ahead market, scheduled to take place within the first three months of the new year, is the next step of the target model, a procedure designed to harmonize EU energy markets and promote competition.

New energy-intensive industrial tariffs also need to be set soon. Though essentially a matter concerning state-controlled power utility PPC and Greece’s industrial players, the cost of industrial energy is crucial for Greek industry, carrying particular political and economic weight.

Also, Greece has little time left in its negotiations with Brussels for a framework to offer third parties access to PPC’s lignite-based generation. This issue is no longer as crucial as it once was because the country’s lignite output has been drastically reduced. Even so, it remains important for independent suppliers.

A number of energy-sector privatizations could be completed this year. Gas utility DEPA’s two new entities, DEPA Infrastructure and DEPA Commercial, electricity distribution network operator DEDDIE/HEDNO, and a tender for a tender for the development of an underground natural gas storage facility (UGS) in the almost depleted natural gas field of “South Kavala” in northern Greece are all on this year’s privatization list.

In renewable energy, the ministry needs to take decisions within the first few months to clarify terms regulating the sector. RES investment interest is currently high. Steps still need to be taken in an ongoing effort to simplify RES licensing procedures, while a legal framework must be established for energy storage, offshore wind farms and hydrogen use.

 

PPC holding back on Ptolemaida V fuel decision

Power utility PPC will take ongoing global technological developments and their comparative costs into account to decide, in approximately a year’s time, on the fuel to be used at its prospective Ptolemaida V power station in northern Greece from 2028 onwards, when a switch from lignite has been scheduled.

The facility, expected to be completed in 2022, is initially planned to operate as a lignite-fired power station for a six-year period before switching to another fuel or fuels.

All options are being left open, meaning that, beyond 2028, Ptolemaida V could run on natural gas, biomass, waste-to-energy or a combination of these energy sources.

Biomass represents an advantageous option as it can be produced at the utility’s older lignite-fired units in the area, PPC’s chief executive Giorgos Stassis has pointed out.

If a biomass option is chosen, PPC intends to provide land for farmers and cooperatives to cultivate plants for energy production. Yield potential and the local climate promise to be the two main factors behind PPC’s selection of plant species to be cultivated for biomass purposes.

Japan’s Mitsubishi, providing the new facility’s electromechanical equipment, was commissioned, some time ago, to conduct a study determining the optimal choice of fuel for Ptolemaida V beyond 2028.

Continued use of lignite, after 2028, at Ptolemaida V has also been tabled as a possibility if carbon-capture utilization and storage (CCUS) technology is applied for a zero net carbon footprint.

In such a case, the CCUS technology could be applied on a wider scale to lure industrial units to the region for the establishment of a new industrial zone.

PPC set for solid start in 2021, €400m inflow in coming days

Power utility PPC, in a positive start to the new year, expects to receive, in January, approximately 200 million euros linked to its large-scale securitization agreement reached last summer with international investment company Pimco for unpaid receivables of over 90 days, and, in addition, a 200 million-euro advance payment from the Greek State, by December 31, for public sector electricity consumption throughout 2021.

The amount to be received by PPC from Pimco represents the bulk of a 300 million-euro agreement.

The power utility intends to utilize this amount, along with a 150 million-euro sum received in November for a smaller-scale securitization agreement with JP Morgan, to initiate its investment plan for 2021.

PPC’s securitization deal with JP Morgan, for unpaid receivables of up to 60 days, is worth a total of 200 million euros.

Overall, PPC stands to receive 500 million euros from the two securitization packages. This sum will be reinforced by a 160 million-euro loan secured from the European Bank for reconstruction and Development (EBRD) last month, as well as a portion of the current year’s profit, once older arrears to market operators have been covered.

PPC’s expected collection of 200 million euros by December 31 from the Greek State as an advance payment – at a discount rate – for public sector electricity consumption in 2021 at the country’s ministries, public enterprises, hospitals and local government buildings, represents the first of two installments, or less than half the agreed sum for the year.

The Greek State’s second and final installment for 2021, to PPC, a 390.5 million-euro installment, is due on February 28.

In the previous two years, PPC had received full advance payments from the Greek State covering the entirety of public sector electricity costs for the respective years ahead.

Furthermore, PPC will achieve a cost reduction in 2021 through its closures of three lignite-fired power stations, Kardia III and IV and Megalopoli III.

The company’s anticipated return to capital markets with a bond issue, expected within the first half of 2021, should provide even greater support for the financing of its investment plan.

Lignite unit output up, target model overpricing a factor

Power utility PPC’s lignite-fired power stations, temporarily covering for gas-fueled plants undergoing maintenance work and also favored by power grid operator IPTO as a result of excessive target model market prices demanded by independent producers, have made somewhat of a production comeback despite the urgency of the government and state-owned utility to withdraw these high-cost units as soon as possible.

On December 3, eight of the country’s ten remaining lignite-fired power stations operated throughout the day, most close to full capacity.

Agios Dimitrios I, III, IV and V, Kardia III and IV, Meliti and Megalopoli IV covered almost one third of the country’s total electricity demand, supplying over 40,000 MWh of the day’s 139,000 MWh to the grid.

In recent days, between six and seven lignite-fired power stations have been called into action.

Heron’s two gas-fueled power stations are currently sidelined for service work as are two such units respectively operated by Elpedison and PPC in Thessaloniki and Lavrio, close to Athens. Furthermore, overpricing in the day-ahead market by independent producers has prompted IPTO to seek lignite unit coverage.

PPC is still operating at least four lignite-fired power stations on a daily basis, despite related losses, to cover telethermal needs in cities of the west Macedonia and Megalopoli regions.

The power utility intends to hasten the withdrawal of its Megalopoli III, Kardia III and IV lignite-fired units, all set to close in 2021, according to an updated PPC business plan announced earlier this month.

Decarbonization strategy’s spatial planning enters crucial stage

The country’s decarbonization master plan is entering one of its most crucial stages, the establishment of spatial planning for a just transition, or establishment of new commercial activity in regions to be financially impacted by the country’s withdrawal of lignite units, now underway.

These spatial plans, which will need to be submitted to the European Commission for approval, will determine the speed and success of the overall effort as just transition mechanism funding approval will be based on them.

A just transition mechanism sum of 5 billion euros is expected to be utilized. However, Greek officials will need to present analytical spatial plans detailing the transitions in accordance with the National Energy and Climate Plan. These plans will be incorporated into the EU’s National Strategic Reference Framework funding program.

Power utility PPC, monopolizing the country’s lignite facilities, will obviously be involved in the process. The utility will keep some of the land hosting lignite mines to develop its own investment plans, including solar energy parks.

The lignite-dependent economies of west Macedonia, in the country’s north, and Megalopoli, in the Peloponnese, will need to be completely redeveloped as part of the decarbonization plan.

It remains unclear when Greece’s spatial redevelopment plans will be ready to be submitted to the European Commission. They are not expected to be ready any time before the new year.

Big month for PPC begins with 9-month results, business plan

December promises to be a big month for power utility PPC on a number of fronts, beginning with the corporation’s announcement tomorrow of profitable nine-month results.

The results will be followed by the presentation of PPC’s  updated and ambitious business plan for 2021 to 2023 on Wednesday, and the launch, on Thursday, of a market test concerning the privatization of a 49 percent stake in distribution network operator DEDDIE/HEDNO, a PPC subsidiary.

In addition, PPC is also awaiting a response, imminently, from the European Commission on a compensation request linked to the utility’s plan to withdraw its lignite-fired power stations sooner than planned.

PPC may also opt to head to capital markets in December.

The power utility’s nine-month profit to be announced tomorrow, including operating profit in 3Q for the fourth quarter in succession, has been attributed to lower natural gas and wholesale prices as well as the utility’s diminished use of lignite. These latest results should pave the way for an EBITDA figure of over 900 billion euros.

Natural gas prices have been low in 2020, but higher price levels are expected in 2021.

PPC will present its updated business plan at Wednesday’s Investor Day, rescheduled as an online event amid the pandemic. It will involve the participation of dozens of Greek and foreign analysts.

Besides a RES energy-mix share of between 15 and 20 percent, the three-year plan will also feature a more aggressive commercial policy, electromobility and digitalization initiatives, as well as the DEDDIE/HEDNO privatization.

Government committee meets for decarbonization master plan

A government committee overseeing the country’s decarbonization master plan is scheduled to meet tomorrow to discuss and approve a funding mechanism concerning the new National Strategic Reference Framework’s just development transition.

The funding mechanism will be applied to manage funds and facilitate investment plans for lignite-dependent areas.

Consultation for the just development transition of Greece’s lignite-dependent area, west Macedonia, in the north, and Megalopoli in the Peloponnese, has been completed. Officials are currently processing the procedure’s comments and observations.

The government’s decarbonization master plan will aim for investments totaling 5 billion euros – both national and EU funds – to restructure the production models of Greece’s lignite-dependent areas and protect their respective employment markets.

The decarbonization plan’s coordinating committee is preparing a draft bill for the implementation of the master plan, whose features include incentives for investment, expected to be ready for Parliament in the first quarter of 2021.

Natural gas-fueled generation reaches energy-mix record share of 56.64%

The energy mix contribution of natural gas increased to a record-level share of 56.64 percent in October, a latest energy exchange monthly report has shown.

This significant rise in the energy-mix share of natural gas – to a level never before reported since the full liberalization of Greece’s electricity market – has been attributed to a major slowdown of power utility PPC’s lignite-based generation.

Natural gas-fueled power stations operated by power utility PPC and independent producers further consolidated their place in the energy mix standings, stretching further ahead of other fuel categories.

October’s 56.64 percent energy-mix share captured by natural gas broke this fuel’s previous record of 53.76 percent, registered in August. The natural gas energy-mix share had dipped slightly to 51.74 percent in September before rebounding for October’s record-breaking result.

A year earlier, the natural gas energy mix share was below 50 percent, at 49.86 percent, while lignite’s share was at approximately 22 percent.

Returning to the latest energy-mix figures, natural gas was followed by the RES sector, capturing 33.86 percent, lignite’s share shrunk further to 4.25 percent, and hydropower followed with a 3.21 percent share.

PPC’s lignite-based generation could rise slightly in coming months to cover telethermal needs.

The role of natural gas in the ongoing energy transition towards renewable energy dominance is expected to play a pivotal role for the grid’s sufficiency and security.

PPC’s upcoming Investor Day event on strength of good news

Power utility PPC plans to go into early December’s rescheduled Investor Day, an online event organized by the corporation for its presentation of an updated 2021-2023 business plan to international analysts, on the back of favorable developments, including yet another profitable quarter, the fourth in a row, as well as new business openings.

PPC had originally planned Investor Day for last March, in London, but was forced to postpone and reshape for an online version as a result of the pandemic’s outbreak.

A year earlier, PPC was struggling, but the succession of positive quarters has lifted the company into a confident higher flyer.

Its updated business plan will feature more specific goals of greater ambition for the three-year period. They are expected to include a RES market share target of between 15 and 20 percent and capacity of over 1 GW, as well as fresh news on the company’s digital transformation, electromobility effort, commercial policy, and, possibly, an even swifter withdrawal plan for the company’s lignite-fired power stations.

Just days ahead of the Investor Day event PPC will announce a series of favorable developments, namely an initial securitization deal collection of 150 million euros; a higher EBITDA figure for yet another quarter; the launch of a privatization procedure to offer 49 percent of distribution network operator DEDDIE/HEDNO, a subsidiary; and, on December 1, financial results for the nine-month period, including a profitable third quarter.

PPC is also expected to announce a further workforce reduction plan and employee shifts from lignite units headed for closure. Earlier this year, the power utility reported a 10 percent payroll cost reduction for the first half.

 

Lignite antitrust case agreement subject to PPC compensation

The country will implement an antitrust case agreement reached in late October with the European Commission – based on a Greek proposal that would offer 40 percent of power utility PPC’s lignite-generated electricity to suppliers at a predetermined price not below cost – only if Brussels approves a Greek compensation request concerning the state-controlled utility’s ongoing withdrawal of lignite facilities for a satisfactory sum reflecting amounts offered to EU member states in other such cases, energy ministry officials support.

A European Commission report on the Greek economy, released yesterday, has called for the need of a market test to determine whether sufficient supplier demand exists for the Greek proposal’s implementation in 2021.

Given the views of energy ministry officials, Greece will only go ahead with the proposal’s market test if the lignite withdrawal compensation request is approved by Brussels.

The Netherlands and Germany have both already been compensated for lignite facility withdrawals.

“In any case, as has been pointed out in the past, an overall solution that would harm PPC cannot be accepted,” an energy ministry official noted yesterday.

The Greek government has requested a three-year compensation package for PPC offering the utility approximately 180 million euros in 2021, 150 million euros in 2022 and 200 million euros in 2023.

The European Commission could offer a response to the request by the end of this month, energypress sources have informed.

 

PPC awaiting Brussels verdict on lignite unit exit compensation

The European Commission could reach a decision by the end of November on an energy ministry request seeking compensation for state-controlled power utility PPC’s plan to withdrawal lignite-fired power stations ahead of schedule.

The ministry has requested a compensation package of 180, 150 and 200 million euros for 2021, 2022 and 2023, respectively, for the power utility.

European Commission officials are currently closely examining the data and information accompanying the Greek application, energypress sources informed.

At best, a decision could be delivered in approximately three weeks, the sources estimated, adding that the Greek request has been favorably received.

Last May, the European Commission released a 52.5 million-euro compensation package to the Netherlands for the country’s premature closure of its Hemweg coal-fired facilities.

Greek officials had initially sought, quite some time ago, the approval of a cost recovery mechanism for PPC’s lignite-fired units, implemented in Germany as a strategic reserve capacity.

This proved too complex, prompting Greek officials to shift their focus onto the current compensation request for the country’s effort to decarbonize.

The European Commissioner for Competition Margrethe Vestager declared, in May, when the Hemweg compensation bid was approved, that EU member states must be compensated for their decarbonization efforts, adding that the Dutch compensation amount does not cause European market distortions.

PPC’s lignite unit losses are reported to have reached 300 million euros last year. The utility is seeking to limit such losses by closing such units sooner than planned.

PPC has announced its Megalopoli III facility will be shut down six months earlier, in the first half of 2021 instead of early 2022. If accomplished, this closure will represent PPC’s second PPC lignite unit withdrawal following Amynteo, closed down in May.

The utility intends to push for a swifter withdrawal of all other lignite-fired units, except Ptolemaida V.

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.