PPC chooses Greek energy exchange for lignite-fired electricity packages

Power utility PPC has chosen to offer lignite-fired electricity packages to third parties through the Greek energy exchange, not the European energy exchange, as it was also entitled to, sources have informed.

This main reason behind this decision, part of an imminent mechanism to be implemented as a remedy to a long-running antitrust case concerning PPC’s monopoly in the lignite sector, is that PPC sees the forthcoming mechanism as a good opportunity for the domestic futures market to gain momentum and, by extension, help improve the utility’s cash flow.

The mechanism’s launch, coming at a time of elevated wholesale electricity prices, will help PPC’s rivals offset the period’s price volatility, which is crucial support that will enable independent players to compete more effectively in the retail electricity market and offer stable prices to consumers, the European Commission’s Vice-President Margrethe Vestager, also Brussel’s Commissioner for Competition, noted in an official announcement.

A legislative revision for the mechanism offering lignite-fired electricity packages to third parties is likely to be submitted to parliament today by the energy ministry.

The plan is expected to begin offering lignite-fired electricity packages to third parties by the fourth quarter.

 

PPC local, European exchange option for lignite packages

Power utility PPC will be entitled to choose whether to offer lignite-fired electricity packages to third parties through the Greek energy exchange or European energy exchange, according to details of an upcoming mechanism to be implemented as a remedy to a long-running antitrust case concerning PPC’s monopoly in the lignite sector.

PPC preference for the domestic energy exchange would keep open the option of physical delivery of these lignite electricity packages and ensure the company greater flexibility in its portfolio management. Opting for the European energy exchange would not permit physical delivery, making the deals purely financial transactions.

All that remains for the implementation of the mechanism, whose details have been agreed to by the government and European Commission, is a decision by the energy ministry on when to submit a related legislative revision to parliament, according to sources.

The legislative revision has been completed and the ministry is believed to be on standby for an appropriate date, the objective being to make a first round of lignite-fired electricity packages available to third parties by the fourth quarter this year.

All electricity suppliers will be entitled to purchase these packages, to have three-month durations.

As previously reported by energypress, the electricity quantity planned to be offered to suppliers through the mechanism in the fourth quarter this year will represent 50 percent of lignite-fired output in the equivalent period of 2020.

Then, for every quarter in 2022 and 2023, lignite-fired electricity packages to be offered to PPC’s rivals will represent 40 percent of lignite-based production in equivalent quarters of the respective previous years.

According to the country’s decarbonization plan, all existing lignite-fired power stations will cease operating by the end of 2023.

 

Lignite-fired electricity packages to PPC rivals by fourth quarter

The energy ministry plans to soon submit to Parliament a legislative revision for a mechanism offering third parties access to power utility PPC’s lignite-fired electricity production. This move will enable the implementation of an agreement on the matter between the government and the European Commission as a remedy to a long-running antitrust case concerning PPC’s monopoly in the lignite sector.

Officials are aiming for a first round of lignite-produced electricity packages to become available to third parties imminently, by the fourth quarter of this year.

All electricity suppliers will be entitled to purchase these packages, to have three-month durations.

Electricity quantities planned to be offered to suppliers through the mechanism in the fourth quarter this year will be calculated to represent 50 percent of lignite-fired output in the equivalent period of 2020. Then, for every quarter in 2022 and 2023, lignite-fired packages to be offered to PPC’s rivals will represent 40 percent of lignite-based production in equivalent quarters of the respective previous years.

According to the country’s decarbonization plan, all existing lignite-fired power stations will cease operating and no longer participate in the electricity market by the end of 2023.

A prospective PPC facility, Ptolemaida V, is planned to be launched as a lignite-fired power station early in 2023 before it is withdrawn in December, 2024 for a fuel conversion and reintroduction.

 

 

Lignite area €5bn upgrade plan presented at cabinet meeting

The planned upgrade of Greece’s lignite-dependent areas – an effort of unprecedented domestic ambition budgeted at 5 billion euros that includes emblematic projects such as a hydrogen-producing facility, the country’s first; major-scale telethermal units; a 155-km natural gas pipeline in the north;  major-scale solar farms, including a 200-MW solar farm in Kozani being developed by Mytilineos for PPC Renewables; and the norther section of the E65 highway – will be presented at a cabinet meeting today.

A related draft bill includes provisions for the establishment of a special purpose vehicle for the overall effort, named Metavasi SA, meaning transition. The SPV will take over 16,400 hectares of power utility PPC’s lignite-related land, including fixed assets, except for property to be kept by the utility for its own green investments.

This transfer of 16,400 hectares represents 66 percent of PPC’s total land assets, currently measuring 24,700 hectares.

The Metavasi SPV will assume responsibility for the upgrade of the 16,400 hectares of land, currently hosting PPC lignite mines and lignite-fired power stations.

 

Technical chamber wants lignite maintenance in energy mix

TEE, the Technical Chamber of Greece, favors the continued use of the country’s modern lignite-fired power stations for an energy-mix representation of between 10 and 12 percent over the next few years, as a means of securing electricity sufficiency and strategic reserves.

The chamber’s administration has officially approved an internal vote adopting this position. Its scientific committee, comprised of metallurgical engineers, expressed strong reservations over a government decision to prematurely terminate lignite-fired electricity production as part of the country’s decarbonization plan.

Extensive public debate and a detailed study, essential for a matter of such strategic importance for Greece, should have preceded the premature lignite withdrawal decision, the TEE scientific committee pointed out.

An approved master plan for the lignite withdrawals was rejected by regional authorities in Greece’s two lignite-dependent regions, western Macedonia, in the north, and Peloponnese’s Megalopoli, as proposals forwarded by local authorities and citizens were not considered or discussed, the committee noted.

A total of 19 months have elapsed and over 2,500 jobs lost since the government’s decision to prematurely withdraw lignite-fired units in the two areas, but the administration’s master plan for a fair transition, intended to restructure these lignite-dependent local economies, continues to lack clarity, the committee stressed.

EU funds made available for the restructuring of the two lignite-dependent economies, just over 700 million euros and well under a five billion-euro amount initially announced, are very limited for a proper and fair transition, the chamber added.

 

Strategic reserve necessary, exchange reacts satisfactorily

The end of the Greek energy system’s reliance on lignite, being phased out to help the global climate change effort, needs to be accompanied by a strategic reserve mechanism, which would maintain certain generation capacities outside the electricity market for operation during emergency cases until the ongoing transition to cleaner energy sources has been completed, the extreme heatwave conditions around the country over the past few days have highlighted.

Record-level electricity consumption, combined with power line damages caused by major fires, pushed the grid to the limit, raising fears of widespread power outages.

The government, currently seeking the establishment of a strategic reserve mechanism as part of a Capacity Remuneration Mechanism (CRM), needing European Commission approval, will need to highlight the heatwave-related events that have occurred in Greece over the past ten days.

Sidelined lignite-fired power stations needed to be brought back into action to help the grid meet electricity demand. They offered crucial production contributions representing between 14 and 18 percent of the energy mix.

Lignite-generated output also played a key part in the effort to maintain energy sufficiency last winter, in February, during heavy snowfall that damaged power infrastructure.

The energy exchange has performed rationally during the heatwave conditions, proving its ability to respond to the market’s demand and supply. Day-ahead market price levels rose sharply during the heatwave’s peak and are now subsiding.

 

 

Consumption record expected, industry on switch-off standby

Electricity consumption today is expected to exceed yesterday’s level of 10,700 MWh, a ten-year high, and reach close to 11,000 MWh, which would represent an all-time high, as the prolonged heatwave peaks.

Industrial consumers are awaiting switch-off orders from power grid operator IPTO. Up until yesterday, they had yet to receive such instructions, but a number of industrial enterprises have already switched off voluntarily, while Prime Minister Kyriakos Mitsotakis has urged consumers to exercise restraint in electricity consumption.

Authorities are placing their hopes for grid sufficiency in strong summer breezes forecast for Thursday that should cool temperatures and significantly boost generation through the country’s wind energy facilities.

Though still too early to judge, the grid appears to have stood up to the heatwave’s challenge so far. Minor technical issues and brief outages in various parts of the wider Athens area, Larissa, central Greece, and Agrinio, in the northwest, have been reported.

Authorities remain on edge as the resilience of a largely outdated grid remains uncertain amid daily consumption levels of 9,000 to 10,000 MWh for days on end.

Lignite-generated input is playing a crucial role. It covered between 16 and 18 percent of consumption yesterday. Power utility PPC’s lignite-fired Megalopoli III power station, which has been sidelined for months as part of the country’s decarbonization phase-out plan, operated most of the day yesterday.

 

Imports, lignite, technical issue avoidance key to grid stability

The role of electricity imports, mobilization of power utility PPC lignite-fired power stations that have been sidelined for months, such as Megalopoli III, and unexpected technical failures at grid infrastructure and power stations are three key factors that will determine the performance of the country’s grid over the next few days, during which the ongoing heatwave conditions are forecast to peak and reach temperatures of as high as 45 degrees Celsius.

Power grid operator IPTO has already asked PPC to mobilize the Megalopoli III power station, a 250-MW unit headed for withdrawal and out of action over the past nine months as a result of grid saturation at the network in the Peloponnese.

But the extreme electricity demand has forced this unit’s return, highlighting the grid’s continuing dependence on lignite-fired generation during times of extreme need.

Over the past few days, lignite-based electricity has represented 16 percent of the country’s overall generation.

As for electricity imports, Greece, ideally, will need to import a few hundred MW from North Macedonia, Bulgaria and Turkey. The import potential from these sources is limited to between 1,400 and 1,500 MW annually.

A new interconnection to link Nea Santa, northeastern Greece, with Bulgaria’s Maritsa area in the country’s south, designed to double the grid interconnection capacity between the two countries, will not be ready before mid-2022.

The demand response system, compensating industrial consumers when the TSO (IPTO) asks them to shift their energy usage (lower or stop consumption) during high-demand hours, so as to balance the electricity system’s needs, is another tool that could be activated to save and re-channel approximately 1,000 MW.

Authorities on alert, heatwave leads to record price levels

The country’s latest prolonged heatwave conditions have made huge impact on the energy market, driving up today’s wholesale electricity average price to 136 euros per MWh and the price of natural gas to a 16-year high, once again testing the grid’s limits, as well as those of suppliers and their household and business customers.

Today’s wholesale price ascent to 136 euros per MWh adds to the steady rise of recent days, which began the week at 93 euros per MWh on Monday, following an average level of 75 euros per MWh last week. The increase represents an 83 percent wholesale electricity price increase in a week.

Continual use of air condition systems over the next few days of extreme hot weather, that has been forecast, is expected to further increase electricity demand and price levels, placing on high alert market players and officials, from the operators to RAE, the Regulatory Authority for Energy, the energy ministry, power utility PPC and independent energy producers.

Despite the increased pressure, grid sufficiency, for the time being, appears to be under control. No power station damages have been reported, while PPC’s lignite-fired power stations, nowadays representing a high-cost option, along with big RES units, have been mobilized, creating safe conditions for the challenging evening hours, from 7pm until midnight.

At present, supply is exceeding demand, typically reaching levels of approximately 9.5 GW in recent days, all hot.

 

 

Heatwave pushes up wholesale prices to over €100/MWh once again

The latest rise in temperatures, prompting further heatwave conditions around Greece, is impacting the wholesale electricity market as the average clearing price in the day-ahead market has risen again to levels of over 100 euros per MWh, following days of more subdued levels, according to energy exchange data.

The average clearing price for today is up to 103.8 euros per MWh, up from yesterday’s level of 93.47 euros per MWh and Sunday’s level of 75.34 euros per MWh.

According to the day-ahead market figures, overall electricity generation today is planned to reach 167,437,017 MWh, with lignite-fired power stations covering just 11,172 MWh, natural gas-fired power stations providing 86,541,739 MWh, hydropower facilities generating 11,829 MWh and all other RES units providing 57,894,278 MWh. Electricity imports are planned to reach 16,159,231 MWh.

Today’s electricity demand is expected to peak at 12.30pm, reaching 8,580 MW, according to data provided by IPTO, the power grid operator.

Three of power utility PPC’s lignite-fired power stations, Agios Dimitrios III, Megalopoli IV and Meliti, will be brought into action today, while five of the utility’s natural gas-fired power stations, Aliveri V, Lavrio IV and V, Komotini and Megalopoli V, will also be mobilized, along with gas-fired units operated by the independent players Heron, ENTHES, Elpedison (Thisvi), Protergia and Korinthos Power.

Lignite units to exit in August, according to IPTO plan

The introduction of a demand response mechanism in the balancing market within 2021 is projected in a Market Reform Plan, according to a power grid operator IPTO document that has been forwarded for public consultation until Wednesday.

The document notes that a related grid sufficiency study takes into account structural interventions in wholesale markets. These interventions have been included in the Market Reform Plan.

According to the reform plan, the demand response’s participation in markets is expected to be feasible as of the fourth quarter this year.

The new grid sufficiency study will be attached to the Market Reform Plan, whose draft copy has already been forwarded to Brussels, as previously reported by energypress.

The purpose of the study, along with a road map for wholesale market revisions, will be to support the need for a Strategic Reserve, during a first phase, as well as a Capacity Reserve Mechanism (CRM), planned to succeed it.

Besides these two mechanisms, IPTO also intends to take into account a plan entailing a swifter withdrawal of the country’s lignite-fired power stations. This is based on a key assumption that the power utility PPC, as it has announced, will withdraw remaining lignite units within August due to the unfeasibility of operating these units, nowadays high-cost as a result of elevated CO2 emission right costs.

Megalopoli III was withdrawn in March, even though IPTO had not offered its consent due to grid sufficiency concerns, while Agios Dimitrios, Megalopoli IV and Meliti are expected to follow in August.

The introduction of new units is expected to commence in September, 2022, beginning with a new Mytilineos natural gas-fired power station, and followed by Ptolemaida V early in 2023, initially as a lignite-fired unit before it is converted to gas in early 2026, a change that will also offer a capacity boost to 1,000 MW.

Also, new PPC hydropower facilities are expected to begin emerging midway through the decade, these being Metsovitiko (29 MW) in 2025, Mesohora (160 MW) in 2026 and Avlaki (83 MW) in 2028.

Wholesale prices driven higher by heatwave, lignite units enter

The heightened electricity demand prompted by the country’s ongoing heatwave is applying intense pressure on wholesale price levels. Given today’s grid requirements, expected to exceed 8 GW, the clearing price at the energy exchange is seen rising to over 100 euros for 16 hours, peaking at 9pm at a price level of €127.82/MWh.

According to a power grid operator IPTO forecast, the system’s demand peak is expected to exceed 8 GW for a three-hour period, reaching as high as 8,108 MW. Overall demand today is seen totaling 156,115 MWh.

In order to cover the grid’s electricity needs for today, IPTO, in addition to the natural gas-fired power stations operated by power utility PPC and independent players, has also recruited four PPC lignite-fired power stations, these being Agios Dimitrios I, II and IV and Meliti.

The RES sector is expected to cover 27,540 MWh of total demand, while natural gas-fired power stations and hydropower units are seen contributing 99,651 MWh and 10,449 MWh, respectively.

As for the natural gas-fired power stations recruited for today’s grid needs, the list is comprised of PPC’s Aliveri V, Lavrio IV and V, Komotini and Megalopoli V, as well as the independent units Heron, Elpedison Thessaloniki, Elpedison Thisvi, Protergia and Korinthos Power.

RAE scrutinizing greater lignite use, IPTO may need to clarify

RAE, the Regulatory Authority for Energy, is considering to seek clarification from power grid operator IPTO on a series of electricity market issues, including differing formations adopted for the day-ahead and ISP markets.

A first presentation, last week, of the target model’s new wholesale market, energy exchange market results and the energy mix has shown an increase in the use of lignite-fired power stations, despite their higher cost.

Power utility PPC’s lignite-fired power stations are still deemed necessary for electricity supply security, even when capacity levels are sufficient, to counter instability issues at the grid’s northern section, where interconnections facilitate electricity exports.

The use of lignite-fired power stations, such as Agios Dimitrios, Megalopoli IV and Meliti, despite the higher cost of CO2 emission rights, has significantly increased energy costs for suppliers and industry.

Also, when IPTO issues grid distribution orders to lignite-fired power stations, the grid-contribution programs of other units are consequently canceled out and remunerated by the energy exchange, even for energy amounts not contributed to the grid.

Meanwhile, lignite-fired power stations are remunerated through the balancing market at price levels that usually exceed 100 euros per MWh.

RAE’s intervention is intended to ensure the electricity market’s smooth functioning and efficiency, for the benefit of participants and consumers.

PPC Renewables expecting KAS nod for Ptolemaida solar farm projects

PPC Renewables is anticipating approval, today, by Greece’s Central Archaeological Council (KAS) for a large-scale cluster of solar farm projects totaling nearly 1 GW in the Ptolemaida plains of northern Greece, until now mined for their lignite deposits by parent company PPC, the power utility.

KAS has received an application from PPC Renewables for the solar energy projects Pteleonas 1, Pteleonas 2, Kardia 1, Exohi 8 and PPC Ptolemaida Mine A, B, C, D and E.

These projects, promising a total capacity of 960 MW, will be developed over a total land mass measuring 1,830 hectares.

PPC crews and sub-contractors have mined this land for decades, extracting lignite under the surveillance of KAS officials, watchful in the event of any archaeological discoveries.

Given PPC’s preceding mining activities in the region, PPC Renewables’ application for solar farm projects should not encounter any problems with KAS authorities.

Overall, PPC has submitted applications for solar farms in the area totaling 2.5 GW, which, if combined with applications lodged for solar farms in Megalopoli, Peloponnese, total 3 GW.

Lignite-fired power stations still operating despite elevated cost

Despite their increased operational cost, power utility PPC’s lignite-fired power stations remain essential, on an occasional basis, to ensure electricity supply security by countering various concerns that may arise, including voltage instability at the grid’s northern section.

Power grid operator IPTO needed to bring into the system one or two lignite-fired power stations throughout most of May, despite the high cost entailed, which would normally keep these units sidelined.

No lignite-fired power stations needed to be used for grid sufficiency on May 13 and 16, as is also the case for today.

The northern section of the country’s grid can be susceptible to voltage instability as a result of the international grid interconnections in the wider area, facilitating exports.

Until recently, northern Greece’s west Macedonia region was the country’s energy epicenter, courtesy of PPC’s extensive lignite portfolio in the area.

Regular use of higher-cost lignite-fired generation has increased price levels in the day-ahead and balancing markets, which, by extension, is increasing costs for suppliers.

PPC’s increased CO2 emissions, when the utility’s lignite-fired power stations are brought into operation, is also directly impacting industrial consumers, who are burdened by the resulting additional cost, passed on by the utility.

CO2 costs have risen sharply of late as a result of rallying carbon emission right costs.

Electricity demand up 7.5% in April, PPC market share steady

Electricity demand registered a sharp 7.5 percent rise in April, compared to the equivalent month a year earlier, driven by the government’s recent decision to ease lockdown measures, power grid operator IPTO’s latest monthly report has shown.

The relaxation of lockdown measures in Greece prompted a milder 1.5 percent increase in electricity demand in March, year-on-year.

On the contrary, electricity demand fell by 2.5 percent over the four-month period covering January to April, compared to the equivalent period a year earlier, according to the IPTO report.

This decline in electricity demand was approximately half the 5.1 percent drop, year-on-year, for the three-month period between January and March.

Electricity generation rose by 24.6 percent in April, compared to the same month a year earlier, according to the IPTO report.

Natural gas-fired power stations led the way, boosting their production by 52.4 percent, followed by lignite-fired power stations, whose output rose by 21.8 percent, RES units, increasing their generation by 5.8 percent and hydropower stations, which registered a 3.1 percent increase.

In terms of energy-mix shares, the pivotal role of natural gas-fired generation was once again made clear. It captured a 43 percent share of the energy mix in April, followed by the RES sector, capturing 36 percent, lignite with 11 percent, hydropower with 6 percent and electricity imports at 5 percent.

Power utility PPC’s share of electricity demand remained virtually unchanged for a third successive month in April, registering 65 percent, following a 64.8 percent share in March and 65.1 percent share in February.

Protergia, a member of the Mytilineos group, the frontrunner among the independent suppliers, was the only company to increase its market share in April. It rose to 8.2 percent share from 7.95 percent a month earlier.

Heron’s share was steady at 6.3 percent from 6.29 percent in March. Elpedison’s share experienced a mild drop to 4.72 percent from 4.88 percent. NRG’s share in April was unchanged at 3.99 percent, while Watt & Volt’s share slipped marginally to 2.44 percent from 2.58 percent.

PPC aims for EBITDA repeat of €900m, carbon cut ‘on track’

Power utility PPC is aiming for a repeat of last year’s EBITDA performance in 2021, a level of between 800 and 900 million euros, an objective to be supported by the corporation’s declining lignite-based electricity generation, both in terms of volume and energy-mix percentage, the company’s chief executive Giorgos Stassis has told analysts.

As part of its decarbonization effort, PPC plans to withdraw its Megalopoli III lignite-fired power station within the current year.

PPC managed to restrict its lignite-fired generation to 22 percent of total output in the first quarter this year, down from 44 percent a year earlier.

The utility needed to spend 138.5 million euros on CO2 emission rights in the first quarter, up from 119.7 million euros during the equivalent period last year, at an average cost of 31.7 euros per ton.

CO2 emission right prices have since risen further and currently register between 51 and 52 euros per ton.

Assuming CO2 emission right prices average 47 euros per ton in 2Q – this level could end up being be far higher – and PPC’s lignite-based generation remains at the current level, then the corporation’s carbon-cost outlay for this quarter will reach approximately 205 million euros, a 48 percent increase.

PPC, which recently borrowed through sustainability-linked bonds, committing itself to a carbon emission reduction of 40 percent by 2022, is confident this target will be achieved, the corporation’s administration told analysts.

 

Strategic reserve milestones set for next two months

A series of milestones have been set until autumn in preparation for Greece’s prospective Strategic Reserve Mechanism, which, if achieved, will enable its launch towards the end of the year.

The timeline and milestones leading to the possible launch of a Strategic reserve mechanism, keeping certain generation capacities outside the electricity market for operation only in emergencies, was discussed in detail during an online meeting yesterday between energy minister Kostas Skrekas and European Commission authorities.

Strategic reserves can be necessary to ensure security of electricity supply when electricity markets are undergoing transitions and reforms and are meant to insure against the risk of a severe supply crisis during such transitions.

Three main prerequisites will need to be satisfied by the end of July, the first being the completion of a market reform plan, intended to intensify competition in the wholesale electricity market.

The plan’s preparations will include the involvement of Pantelis Kapros, Professor of Energy Economics at the National Technical University of Athens, according to sources.

A new adequacy report, or updated study on grid sufficiency proving the need for the introduction of a Strategic Reserve mechanism, will also be needed.

Thirdly, the energy ministry will need to have fully responded, within the next month, to an extensive set of questions forwarded by European Commission officials on the prospective mechanism.

If these steps go well, an indefinite prospect at present, then a clearer picture on the mechanism’s details should have emerged by early autumn.

Any Strategic Reserve formula reached will need to be applied for a brief period so that an ensuing Capacity Remuneration Mechanism, to support new natural gas-fueled power stations, can immediately follow, the European Commission’s Vice-President Margrethe Vestager, also Brussel’s Commissioner for Competition, appears to have made clear to Skrekas, the energy minister, at a recent meeting.

Meanwhile, power utility PPC’s updated decarbonization plan is aiming for a withdrawal of all its lignite-fired power stations by 2025, at the very latest.

 

Ptolemaida V gas conversion board decision end of June

Power utility PPC is moving swiftly towards a finalized investment decision on a fuel-conversion plan for its prospective Ptolemaida V facility in northern Greece, to begin operating as a lignite-fired power station in 2022 before converting, a few years later, to a natural gas-fired facility equipped with infrastructure also enabling the use of hydrogen.

PPC’s chief executive Giorgos Stassis will present the plan to the company board at a meeting scheduled for the end of June, when it is expected to be approved, sources informed.

The plan will include schedules and financial studies for the conversion of Ptolemaida V, Greece’s last lignite-fired power station in development.

The PPC board is expected to stick to its plan of operating Ptolemaida V as a lignite-fired power station until 2025, instead of 2028, as was initially planned, before making the fuel switch to natural gas.

The country’s ambitious decarbonization targets and rallying CO2 emission right prices, currently at lofty levels ranging between 40 and 44 euros per ton, prompted Stassis, the CEO, to hasten PPC’s withdrawal of lignite units.

Ptolemaida V will be loss-incurring as a lignite-fired facility, the chief executive told analysts, responding to questions, during a recent presentation of the company’s financial results.

PPC also plans to increase the production capacity of Ptolemaida V to 1,000 MW from 660 MW. The facility will be flexible, possessing the ability to swiftly increase output from 300 to 1,000 MW within 30 minutes to an hour.

The facility’s fuel conversion cost is estimated at 250 million euros, sources have informed.

Stassis told analysts Ptolemaida V will be competitive even without support from the Capacity Remuneration Mechanism (CRM), being sought by the government from the European Commission as support for flexibility.

 

Mytilineos considering new gas-fired power units in Balkans

The Mytilineos group is examining the prospect of developing natural gas-fired power stations in Bulgaria and North Macedonia, seeing investment opportunities, like Greece’s other major energy players, in the Balkan region.

EU members Bulgaria and Romania, as well as non-EU members in the Balkan region, such as Albania, North Macedonia and Serbia, are announcing closures of old coal-fired power stations.

This development is creating investment opportunities as older units being withdrawn will, over the next few years, need to be replaced by new facilities, including natural gas-fired power stations.

A month ago, after receiving equipment for a new gas-fired power station unit in Agios Nikolaos, Viotia, northwest of Athens, Mytilineos informed that the company is examining the prospect of developing a similar combined cycle unit in Bulgaria.

Bulgaria, like Greece, is withdrawing its coal-fired power stations and aims to have completed the country’s decarbonization effort by 2025. The neighboring country will need to replace lost capacity through the introduction of natural gas-fired power stations and RES unit investments.

Extremely higher carbon emission right costs have made the withdrawal of coal-fired power stations a priority for Bulgaria and the wider region, one of Europe’s most lignite-dependent areas.

Greece, Bulgaria and Romania, combined, represent nearly ten percent of the EU’s total lignite electricity generation capacity.

Carbon emission right prices relaxed to 49.26 euros per ton yesterday after peaking at 56.65 euros per ton last Friday, following a months-long rally.

Last week, during a meeting with Greek Prime Minister Kyriakos Mitsotakis, North Macedonian leader Zoran Zaev disclosed that his government is discussing the prospect of a new gas-fired power station, in the neighboring country, with Mytilineos.

In Romania, projections for 2030 estimate the installation of 5.2 GW in wind energy units and approximately 5 MW in solar energy units.

Serbia, possibly offering even bigger green energy investment opportunities, aims to replace 4.4 GW of coal-fired generation by 2050. The country is now making plans for 8-10 GW in RES investments.

PPC strategic reserve, lignite exit compensation hopes fade

Power utility PPC’s prospects for some type of compensation in the foreseeable future, either through the Strategic Reserve Mechanism for the corporation’s withdrawal of units from the market and availability for back-up services, or for the utility’s earlier-than-planned closures of lignite-fired power stations, appear to have dwindled.

The reduced likelihood of any such compensation money for PPC became apparent at a meeting yesterday between energy minister Kostas Skrekas and the European Commission’s Vice-President Margrethe Vestager, also Brussel’s Commissioner for Competition.

Progress was made on an antitrust remedy, through which PPC will soon begin offering rival suppliers lignite-based electricity packages, but the same cannot be said of the strategic reserve.

Vestager made clear, during yesterday’s session, that a strategic reserve plan proposed by the Greek government cannot be approved by the European Commission. Instead, she noted, a new grid sufficiency plan, one aligned with EU directives, will need to be prepared to enable the implementation of an acceptable mechanism.

Subsequently, a strategic reserve plan must be  prepared from scratch, incorporating, besides PPC’s facilities, the demand response mechanism.

According to estimates by some officials, Brussels’ approval of a finalized strategic reserve proposal, requiring considerable work, could take as long as a year.

PPC lignite electricity packages through futures market

State-controlled power utility PPC will soon begin offering rival suppliers lignite-generated electricity packages through the target model’s futures market, energy minister Kostas Skrekas and the European Commission’s Vice-President Margrethe Vestager, also Brussel’s Commissioner for Competition, have agreed at a meeting yesterday.

Vestager, during the session, also made clear that the balancing cost of a mechanism concerning power purchase agreements (PPAs) between industrial producers and RES producers cannot be subsidized, but, instead, will need to be aligned with terms that apply for other EU member states.

Athens expects to submit its PPA plan to Brussels in June for approval.

Also next month, the government plans to submit its support framework proposal for energy storage units.

As for the country’s Strategic Reserve Mechanism, the European Commission’s deputy requested a new proposal from Athens, in line with new EU directives.

Under the Strategic Reserve Mechanism, PPC and all other electricity producers opting to withdraw units from the market for back-up services, would be remunerated for sidelining these units for periods determined by IPTO, the power grid operator.

Vestager stressed that the country’s Strategic Reserve Mechanism cannot coincide with the wider Capacity Remuneration Mechanism (CRM).

The Brussels deputy also pointed out that a compensation request made by Greece for PPC’s redevelopment of lignite areas, part of the decarbonization effort, is legally baseless and cannot be pursued further.

Brussels insists on PPC sale of lignite power packages to rivals

Power utility PPC must soon start offering rival suppliers portions of its lignite-based electricity production, as specified in an antitrust agreement, despite subdued interest by possible buyers expressed in a February market test, the European Commission insists.

The subject, which has remained stagnant for months following slow development over the past 13 years or so – ever since legal action was taken against PPC in 2008 over its lignite monopoly – will be one of the topics to be discussed at a meeting today between energy minister Kostas Skrekas and the European Commission’s Vice-President Margrethe Vestager, also Brussel’s Commissioner for Competition.

Given Brussels’ insistence, the energy ministry has devoted considerable time over the past few weeks to shape a lignite electricity sale plan, based on a January agreement between the minister and the country’s creditor institutions, that could finally settle the dispute.

The January agreement calls for the sale of energy packages, either quarterly or annually, representing, in 2021, 50 percent of the previous year’s lignite-based production.

The percentage of PPC’s lignite-based electricity quantities to be offered to rival suppliers in 2022 and 2023 should be reduced to 40 percent of the previous year’s output, according to the agreement.

These amounts are seen as insufficient to make any real impact on the retail electricity market’s standings.

Other issues to be discussed at today’s meeting between Skrekas and Vestager include Brussels’ support for a grid back-up model as part of a wider Capacity Remuneration Mechanism (CRM). Athens favors a separate Strategic Reserve Mechanism to remunerate units that are made available by electricity producers for grid back-up services.

Skrekas is also striving to establish a mechanism that would subsidize RES producers for power purchase agreements (PPAs) with energy-intensive industrial enterprises.

‘Additional €3bn’ for lignite area redevelopment, SPV in making

The transformation effort for Greece’s two lignite-dependent economies, west Macedonia, in the country’s north, and Megalopoli, in the Peloponnese, stands to receive three billion euros in additional support through two sources, Invest EU, established to fund decarbonization initiatives, and the European Investment Bank, Constantinos Mousouroulis, head of the government’s coordinating committee for the transition, announced at yesterday’s Delphi Economic Forum.

The three billion-euro amount, Mousouroulis noted, will add to two billion euros already made available for the effort through the EU’s Just Transition Fund and Recovery and Resilience Facility.

The official acknowledged that delays, especially financial, have held back the transition plan for the two regions, attributing the slow progress to the pandemic and, subsequently, the European Commission’s ability to operate.

Mousouroulis, at the forum, strongly defended recent efforts for the transformation of the west Macedonian and Megalopoli local economies, noting that complacency was prevalent for years.

“Not only was there no Plan B, but not even a Plan A for forthcoming changes concerning goals to combat climate change,” the official noted.

A total of 24,700 hectares of unutilized property to result from the closure of power utility PPC’s lignite-fired power stations and lignite mines in the west Macedonia and Megalopoli regions, both lignite-dependent economies for decades, is expected to be redeveloped through the program, to include PPC investments.

A special purpose vehicle is being established to attract investors, Mousouroulis said.

Greece carbon-free by 2025, among 20 fastest movers

Twelve European countries have, to date, fully withdrawn their coal-fired facilities, while a further seven, including Greece, have committed to do so by 2025.

A coal-free status in Greece is expected by 2025 as state-controlled power utility PPC has decided to convert its Ptolemaida V power station to a natural gas/hydrogen-run unit within the next four-and-a-half years, PPC’s chief executive Giorgos Stassis told analysts yesterday, during a presentation of the company’s 2020 results.

The Greek power utility is currently phasing out all other lignite-fired power stations and related mines until 2023.

Besides sparing PPC of certain losses, given an anticipated sharp rise in CO2 emission right costs, this course yet again reaffirms, to investors, PPC’s plan to transform into an eco-friendly corporation.

In addition, the prospect places PPC and Greece among the world’s fastest movers towards decarbonization.

Austria, Albania, Belgium, Cyprus, Estonia, Iceland, Latvia, Lithuania, Luxembourg, Malta, Sweden and Switzerland are all now carbon-free.

France is expected to be added to this list this year, Portugal and Slovakia anticipate their entries in 2023, the UK is seen turning carbon-free in 2024, while Greece, Hungary, Ireland and Italy are planned to join the carbon-free club in 2025.

PPC results for 2020 out today, analyst projections disagree

Power utility PPC’s financial results for 2020, set to be announced later today, are seen confirming the corporation’s ongoing positive course.

The company is expected to report robust 4Q results for 2020, including an EBITDA figure of 238 million euros, according to Pantelakis Securities, given its performance for the nine-month last year.

Operating expenses have been contained, fuel prices plunged, wholesale electricity prices fell, and the utility’s reliance on its loss-incurring lignite units was further diminished during the nine-month period.

For 2020 as a whole, the analyst projects PPC’s EBITDA will reach 938 million euros, a 180 percent increase compared to the 336.6 million euros posted in 2019, as a result of higher tariffs, lower energy purchase costs and reduced CO2 emission right expenses.

The extraordinary market conditions last year were favorable for PPC, the analyst pointed out, as the pandemic-related reduction of electricity demand enabled the utility to stop operating its high-cost lignite-fired power stations for extended periods.

PPC is currently phasing out its lignite facilities, until 2023, as part of the country’s decarbonization effort. CO2 emission right costs have begun rebounding since December.

Pantelakis Securities expects PPC’s sales to fall by 10 percent in 4Q to a level of 1.191 billion euros, while net profit for the fourth quarter is estimated at 39 million euros.

For 2020 as a whole, total turnover is expected to fall by 4 percent, year-on-year, to 4.71 billion euros and net profit is anticipated to be 53 million euros.

PPC’s net debt for 2020 is seen slipping to 3.5 billion euros from 3.68 billion euros at the end of 2019.

Optima Bank sees a less favorable picture for PPC’s 2020 results, projecting losses of 79 million euros, well below losses of 1.68 billion euros in 2019, and a total turnover reduction of 5.5 percent, to 4.655 billion euros.

 

Mechanisms, competition on Vestager agenda, here May 13

Energy minister Kostas Skrekas intends to present his case for the introduction of five support mechanisms encouraging energy-sector investments in Greece’s ongoing transition towards carbon neutrality to the European Commission’s Vice-President Margrethe Vestager, also Brussel’s Commissioner for Competition, on the occasion of the official’s upcoming visit to Athens, scheduled for May 13.

Vestager will be in the Greek capital with an agenda featuring two pending competition issues concerning state-controlled power utility PPC.

Greece has faced charges for PPC’s monopoly of the country’s lignite sources but an agreement was reached to end the case by introducing a mechanism offering the power utility’s rivals access to lignite-generated electricity.

A market test for this mechanism was completed some time ago but failed 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.

The second PPC-related matter to be discussed during Vestager’s visit concerns a recently initiated investigation by Brussels seeking to determine whether the power utility has engaged in activities impeding market competition.

Private-sector investors are pushing for a capacity remuneration mechanism (CRM) in order to go ahead with the development of natural gas-fueled power stations, needed as Greece heads towards a post-lignite era. Skrekas, the energy minister, has repeatedly said a CRM will be launched in June.

The minister also supports a strategic reserve mechanism to compensate PPC’s lignite-fired power stations, still needed for back-up services but nowadays loss-incurring as a result of higher CO2 emission right costs.

In addition, the government is seeking compensation for the premature closure of PPC’s lignite-fired power stations and related mines, being phased out until 2023.

The minister also supports a support framework for hybrid units on non-interconnected islands combining RES electricity generation and energy storage.

Skrekas is also striving to establish a mechanism that would subsidize RES producers for power purchase agreements (PPAs) with energy-intensive industrial enterprises as well as suppliers selling to major-scale consumers.

 

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.