EVIKEN expresses support for strategic reserve, opposes CRM

EVIKEN, the Association of Industrial Energy Consumers, has expressed support for the establishment of a strategic reserve mechanism but opposes a Capacity Remuneration Mechanism (CRM).

There is no immediate need for a CRM as current remuneration available to natural gas-fueled power stations through the balancing market ensures their profitability, EVIKEN members supported.

Both mechanisms have been included in the Market Reform Plan shaped by the government.

EVIKEN has rejected a related study’s findings contending that natural gas-fueled power stations are currently incurring losses.

The industrial energy consumers group called for measures that would transform the market so that it can operate at standards set by other European markets before talks can begin to seek additional remuneration for energy producers.

‘DAPEEP should manage PPAs platform, not energy exchange’

Preparations for the country’s Market Reform Plan, expected to soon be submitted to the European Commission for approval, have prompted a reaction from RES market operator DAPEEP, asserting it should be appointed operator of green-energy power purchase agreements (PPAs) instead of the energy exchange, as has been stipulated in the plan, now undergoing public consultation.

DAPEEP’s objection to the PPA plan, included in the Market Reform Plan, emerged at a meeting staged by RAE, the Regulatory Authority for Energy, uring discussion on the road map for domestic wholesale electricity market revisions.

DAPEEP’s operator’s chief official Yiannis Giarentis protested that the operator has supported the RES sector’s development for years, being at the helm of this market for 20 years, but has now been sidelined as green-energy PPAs, to facilitate bilateral agreements between RES producers and industrial consumers, are about to come into the picture.

RAE will now examine various proposals and views before taking a stance on the matter.

Market Reform Plan, Adequacy Report rush ahead of break

The energy ministry is striving to offer a swift response to a set of European Commission queries concerning Greece’s updated Market Reform Plan, forwarded for public consultation by RAE, the Regulatory Authority for Energy.

The energy ministry is aiming to submit a finalized plan to Brussels by the end of July, so that the European Commission can process and approve the plan before its officials take off for their summer breaks in August.

The queries forwarded by the European Commission primarily seek clarification and do not raise any fundamental issues, which has given Greek officials hope of the plan’s imminent finalization.

Brussels’ approval of the Market Reform Plan is crucial as it is one of two prerequisites faced by Athens before the government can submit an application for a support mechanism, either a Strategic Reserve, which would compensate power utility PPC for maintaining its lignite-fired power stations on emergency stand-by, or a Capacity Remuneration Mechanism.

The second requirement is Brussels’ approval of an Adequacy Report being prepared by IPTO, Greece’s power grid operator. Its finalization was originally planned for the end of July but this aim now seems set to be delayed by a week or two.

Target model revisions to enable new player entries, market coupling

The country’s Market Reform Plan, forwarded by RAE, the Regulatory Authority for Energy, for publication consultation, includes a road map for target model interventions, designed, amongst other things, to facilitate the target model market entry of new players as well as ensuing market coupling steps with neighboring countries.

This road map also includes a plan to lift existing target model restrictions, including a 20 percent upper limit for PPAs that is currently valid without any expiry date.

Another revision included in the Market Reform Plan is intended to separate energy used for balancing purposes and energy used for unit loading revisions during re-dispatching procedures for grid security or sufficiency reasons.

This separation process is planned to be implemented as of December 1, beginning with flagging of quantities activated as a result of loading revisions.

A second stage is planned to be introduced March 31, 2022, when clearing procedures for these quantities will be launched.

Power grid operator IPTO is expected to submit, today, its proposal concerning the first stage.

As for the revisions to facilitate the target model entry of new players, a demand response mechanism concerning all markets, not just the balancing market, is planned to be implemented February 1, 2022.

Just over a month later, on March 8, RES market balancing services will also be introduced, according to the road map.

Intraday market coupling of the Greek, Italian and Slovenia intraday markets is planned for September 21, through complementary regional intraday auctions (CRIDAs), a further step towards full unification of the European electricity market.

 

Green PPAs exchange platform, industrial subsidies in making

A Market Reform Plan being prepared by the government, to be submitted to the European Commission, includes provisions for the establishment of an energy exchange transaction platform concerning power purchase agreements (PPAs) between RES producers, as well as green aggregators, with suppliers and major-scale consumers.

The green PPAs, when concerning energy-intensive industrial enterprises, will receive state support, while a subsidy package for this category of agreements is also in the making, according to the plan.

Funds stemming from the recovery fund, the green fund as well as the RES special account will be used to fund the subsidy package, according to the government plan.

The aim of the effort is to ensure, in advance, the sale of prospective energy to be produced by new RES units, the intention being to  facilitate bank financing for their development given the fact that they will no longer be entitled to fixed tariffs, through auctions, over 20-year periods, as has been the case until now.

The plan is expected to result in lower-priced green energy for industrial consumers and also facilitate the development of new RES investments.

PPC’s hefty lignite costs lend credibility to strategic reserve mechanism request

Grid needs requiring power utility PPC to operate its lignite-fired power stations have cost the company considerably, lending credibility to the country’s request for a strategic reserve mechanism, a study containing revenue and cost details concerning all of Greece’s power stations over the past six months has shown.

This study has been forwarded to the European Commission as a preliminary step in the establishment of a Market Reform Plan being discussed between Athens and Brussels officials.

PPC has called for a sooner-than-planned withdrawal of its lignite-fired power stations as a result of the elevated cost entailed in operating these units, pushed higher by rising carbon emission right costs.

But the grid’s needs, as highlighted over the past few days of heatwave conditions, are preventing PPC from withdrawing lignite-fired units sooner.

Given the situation, the introduction of a strategic reserve mechanism, over a two-year period covering 2021 and 2022, has emerged as an alternative solution. This mechanism would enable PPC to seek compensation for maintaining its lignite-fired power stations on emergency stand-by.

The implementation of a capacity remuneration mechanism (CRM) will, according to Greece’s plan, ensue and offer incentive for new investments in projects such as gas-fueled power stations and energy storage.

The incorporation, into the strategic reserve mechanism, of the demand response system and natural gas-fired power stations is also being considered.

Athens and Brussels officials are striving for a finalized strategic reserve mechanism plan by the end of the year, which would enable its launch at the beginning of 2022.

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.