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.

 

IPTO warns PPC against Megalopoli III closure this year

Power utility PPC’s Megalopoli III lignite-fired power station must not be withdrawn within 2021 – let alone about now, as the utility had initially planned – for reasons of grid sufficiency, the power grid operator IPTO has advised in a letter forwarded to PPC and RAE, the Regulatory Authority for Energy.

IPTO, in its letter, warns against the consequences of two PPC plans, the first, an intention to shut down Megalopoli III by the end of March, and, the second, premature withdrawal of its entire portfolio of lignite-fired power stations by the end of this coming August, or to the extent that is feasible, given grid sufficiency requirements.

Premature withdrawal, this summer, of all the lignite units would result in a capacity shortage measuring approximately 1,000 MW, which would need to be covered by electricity imports, IPTO has warned.

PPC’s chief executive Giorgos Stassis refenced the IPTO letter during yesterday’s Power and Gas Supply Forum, an online event staged by energypress, while commenting on the need to maintain lignite-fired power stations for grid stability, even if these units are now loss-incurring because of elevated CO2 emission right costs.

IPTO does not consent to any lignite unit withdrawals that would be ahead of schedule – based on a PPC plan for 2021 to 2023 – the power utility’s boss stressed during yesterday’s forum.

As a result, Stassis added, PPC will need to be compensated by the European Commission, through a support mechanism proposed by Greek officials, for needing to maintain loss-incurring units.

IPTO, in its letter, reiterated the findings of recent grid sufficiency study, noting that the two-year period from 2021 to 2022, especially the current year, will be crucial. The grid would be particularly exposed to deficiencies if generating capacity is reduced without replacement, the operator warned.

The Mytilineos group plans to launch a new 826-MW combined cycle gas turbine (CCGT) plant next year. Testing is expected to begin in the fourth quarter this year. Also next year, PPC plans to launch its Ptolemaida V unit, initially as a lignite-fired power station.

Elpedison launches tender for Thessaloniki power station

Energy company Elpedison has launched an international tender for procurement of mechanical equipment concerning its 826-MW gas-fueled power station project in northern city Thessaloniki’s Diavata area, sources have informed.

The company, also moving ahead with the project’s environmental permit procedure, is expected to soon finalize its investment decision.

Besides Elpedison, a number of other energy firms are also moving ahead with gas-fueled power station plans.

GEK-TERNA is planning a 665-MW facility in Komotini, northeastern Greece; power utility PPC recently secured a license for a 665-MW unit, also in Komotini; Elvalhalkor is pursuing plans for a 566-MW unit in Thisvi; the Copelouzos group is moving ahead with a 662-MW project in the industrial area of Alexandroupoli, in the northeast; and the Karatzis group is planning a 660-MW power station in Larissa, in the mid-north.

The Mytilineos group has already begun constructing an 826-MW gas-fueled power station in Viotia’s Agios Nikolaos area, northwest of Athens, a project expected to be launched late this year or early next year.

The establishment of a permanent CAT mechanism, anticipated by the investors behind these projects, promising grid flexibility, is crucial for the investment plans.

Electricity demand levels in the Greek market as well as the course of Greece’s decarbonization effort, expected to create openings for new power stations, are also vital factors.

 

PPC granted license for 665 MW gas-fueled power station

A power utility PPC investment plan entailing the development of a 665-MW gas-fueled power station in the industrial zone of Komotini, northeastern Greece has been granted a license by RAE, the Regulatory Authority for Energy, adding to the list of licensed projects to serve as a bridge in the country’s energy transition until the renewable energy sector fully prevails.

The project linked to this latest license, given a 35-year duration, is scheduled to be launched in December, 2024.

RAE has now granted five licenses to an assortment of companies for such investment plans, though not all will necessarily be developed.

An 826-MW gas-fueled power station being developed by Mytilineos in Viotia, slightly northwest of Athens, set to be launched at the end of this year, is the most advanced of these investment plans.

The maturity levels vary for other projects in terms of environmental licensing and other procedural matters. These include a 665-MW unit planned by Terna, also in Komotini; an 826-MW project planned by Elpedison in Thessaloniki; and an 830-MW facility planned by the Copelouzos Group’s Damco in Alexandroupoli, northeastern Greece.

Also, the power utility is expected to reach a decision on converting its prospective Ptolemaida V lignite-fired power station into a gas-fueled facility.

PPC seeks IPTO support for EC lignite compensation request

Power utility PPC wants power grid operator IPTO to provide a statement declaring whether the power utility’s lignite-fired power stations, nowadays loss-incurring units as a result of elevated carbon emission right costs, are still necessary for the achievement of grid sufficiency, the utility’s objective being to gain support for a lignite compensation request submitted to the European Commission, not to immediately shut down its lignite units, sources have informed.

Brussels has been examining the PPC compensation request for months, initially as part of a package incorporating the European Commission’s lignite antitrust case against Greece, and more recently, following settlement of the latter, as a separate issue that has dragged on.

Throughout the entire period, officials in Greece have needed to respond to extensive Brussels questioning over PPC’s compensation request. Most recently, the European Commission is reported to have informed PPC, by email, that it would deliver a decision as soon as possible, once all information has been processed.

PPC, in its letter to IPTO, informs that it would be prepared to shut down the lignite units now if the operator considers them unnecessary for grid sufficiency as they are the cause of losses on a daily basis.

The power utility has planned a phaseout of its lignite facilities over the next three years, as part of the country’s decarbonization effort.

IPTO, in a grid-sufficiency study covering 2020 to 2030, conducted within the framework of the National Energy and Climate Plan, has stressed the period between 2021 and 2024 will be crucial as a result of PPC’s planned phaseout of lignite-fired power stations.

Subsequently, the grid’s sufficiency will depend on how soon three new gas-fueled power stations with a capacity totaling 2,150 MW – PPC’s Ptolemaida V, and units being developed by Mytilineos and TERNA – will be ready for launch, IPTO’s NECP-linked study noted.

Electricity demand falls 9.5% in January amid stricter lockdown

Stricter lockdown measures in January and their impact on business activity prompted a big reduction in electricity demand, down 9.5 percent compared to the equivalent month a year earlier, when lockdown measures had yet to be imposed, according to power grid operator IPTO’s monthly report.

Most of the country’s retailers were forced to disrupt their business activities in January following a period of less stringent retail measures in the form of a click-away service, enabling customers to pre-order and pick up goods from shops by appointment or, this measure’s extension, click-in-shop, permitting customers to enter stores, see and even try products by appointment.

Electricity demand in the high-voltage category was down by 3.3 percent in January compared to the same month a year earlier, the IPTO data showed.

Interestingly, despite the plunge in electricity demand, electricity production increased by 12.9 percent in January, hydropower being the biggest mover with a 221 percent increase, following power utility PPC’s decision to use its hydropower units as a result of elevated water reserves.

The domestic production increase was attributed to a fall in electricity imports and rise in electricity exports, the greatest quantity going to Italy (43%), followed by North Macedonia (24%), Bulgaria (22%), Albania (9%) and Turkey (2%).

RES output was higher by 43 percent in January as a result of strong winds during the month, while, on the contrary, lignite-fired generation fell 43 percent. Natural gas-fueled power station output was also down, marginally, by 2 percent.

In terms of energy mix share, natural gas-fueled power stations held a 36 percent share, RES units captured 35 percent, hydropower’s contribution represented 16 percent, and lignite was responsible for 13 percent of total electricity generation in January, the IPTO figures showed.

PPC covered 66.6 percent of electricity demand in January, followed by Mytilineos (7.52%), Heron (5.89%), Elpedison (4.63%), NRG (3.49%) and Watt & Volt (2.74%).

Weather effects lend credibility to PPC lignite compensation bid

The impact of last week’s heavy snowfall around Greece, prompting power outages in various areas, northern parts of Athens being hardest hit, has added credibility to state-controlled power utility PPC’s compensation bid to the European Commission for its need to keep using lignite-fired power stations.

Had IPTO, the power grid operator, not ordered the grid entry of PPC’s lignite-fired power stations, nowadays a high-cost option, widespread blackouts amid the adverse weather conditions would have been inevitable, making matters far worse, including at economic and political levels.

IPTO officials have stressed the country continues to need PPC’s lignite-fired power stations until their production capacity is gradually replaced by cleaner gas-fueled power stations. These are: PPC’s Ptolemaida V; a unit being developed by the Mytilineos Group in Viotia, northwest of Athens; and Terna’s prospective unit in Komotini, northeastern Greece, still at the planning stage.

The period between 2021 and 2024 will be crucial for the country’s power generating sufficiency as a result of the planned withdrawal of existing lignite-fired power stations, a related IPTO study has shown. The system’s sufficiency will depend on how swiftly the aforementioned gas-fueled power stations, totaling 2,150 MW, can be up and running.

If the planned completion dates for these three projects are maintained then there will be no reason to delay the withdrawal schedule of lignite-fired power stations, sources pointed out. The grid entry of PPC’s Ptolemaida V and Mytilineos’ Viotia unit, without the Terna unit, would suffice to cover the capacity gap to be left by the withdrawn lignite units, these sources added.

However, any delays in the completion of the new power stations could prompt Greek officials to request more time from the European Commission for the withdrawal of lignite-fired units, the sources said.

Lignite-unit grid input rises, re-electrification a challenge

Virtually all of the country’s power generating facilities will be called into action today, even if below full capacity, to help meet grid needs and cover greater demand anticipated as areas disconnected during heavy snowfall over the past couple of days are gradually re-electrified, putting the system to the test.

Officials are confident the country’s power generating facilities will not have problems covering the day’s electricity demand.

According to power grid operator IPTO’s grid schedule, a significant number of lignite-fired power stations – Agios Dimitrios III and IV, Kardia III and IV, and Meliti – will operate today.

Also, given heightened electricity demand levels, expected to reach 8,190 MW, natural gas-fired power stations will be on stand-by for grid entry.

Power utility PPC’s Aliveri V, Lavrio IV and V, Komotini and Megalopoli V, plus a number of independent gas-fuelled units, Heron III, Elpedison’s units in Thessaloniki and Thisvi, and Protergia and Korinthos Power units, will be ready to contribute if needed.

RES output is expected to reach 27.185 GWh, while hydropower output is planned to total 36.132 GWh.

Overall production for the day is expected to reach 166.685 GWh, a lower level compared to yesterday.

Network distribution operator DEDDIE/HEDNO crews are working overtime to repair transmission lines that were damaged by hundreds of collapsing trees during heavy snowfall around the country over the past couple of days. This repair effort could require days to complete.

Some 400 DEDDIE/HEDNO technicians in Athens, bolstered by colleagues brought in from other parts of Greece, are currently working to re-electrify affected areas in the capital.

Market restrictions on the way for electricity cost reduction

Energy minister Costis Hatzidakis’ recommendations to gas-fueled electricity producers for price restraint in the market have proven to be just partially effective, prompting RAE, the Regulatory Authority for Energy, to forward for public consultation restrictive measures, which, when legislated, will limit the levels of offers by producers in the balancing market.

Balancing market costs have risen sharply over the past six weeks, since the launch of target model markets, leading to elevated wholesale electricity prices that are now being passed on to the retail market, affecting consumers in the mid and low-voltage categories – households and businesses.

Sixth week target model market data made briefly available yesterday by power grid operator IPTO before being swiftly removed from the company website admittedly showed a de-escalation of price levels compared to unrealistically high levels reached in recent weeks, but, on average, these latest levels remained considerably high.

Taking this latest data into consideration, along with sharp price hikes recorded in the day-ahead market, the energy ministry is fully aware of the fact that electricity market prices could spin out of control if action is not taken.

The package of measures forwarded by RAE for public consultation is intended to restore market rationalization. It remains to be seen if these measures will prove effective.

Non vertically integrated electricity suppliers, hit hard by the increase in wholesale prices, are pushing for retroactive implementation of these upcoming restrictions.

 

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.

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

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

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

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

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

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

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

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

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

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

DESFA considering west Macedonia pipeline expansion

Gas grid operator DESFA’s next ten-year development plan, for 2021 to 2030, may include gas network extension projects in areas that have not featured in previous plans, including northern Greece’s west Macedonia region.

The shape and extent of the pipeline network expansion plan will depend on the development, or not, of regional natural gas-fired power stations by electricity producers.

Preliminary considerations for DESFA’s new ten-year development plan come just weeks after a delayed approval by authorities of the operator’s ten-year plan covering 2020 to 2029.

A prospective decision by power grid operator PPC on whether its Ptolemaida V power station will operate as a natural gas-fired unit will be instrumental in shaping DESFA’s investment decisions for pipeline network expansions in the west Macedonia area.

DESFA also intends to develop metering stations at TAP project corridor points as the capacity to be offered by the TAP project will not suffice to cover regional needs if natural gas-fired power stations are developed in the west Macedonia region.

DESFA plans to construct three new metering and regulating stations in the Eordea, Kastoria and Aspros (Edessa, Naoussa, Giannitsa) areas, their budget totaling 8 million euros. These stations, whose completion is expected by the end of 2022, will enable the development of a mid and low-voltage network for natural gas transmission to these areas.

 

PPC ups Megalopoli V output to full capacity of 811 MW

Power utility PPC’s Megalopoli V power station in the Peloponnese has, for the first time,  begun operating at a full-capacity level of 811 MW following five years of production well below full potential, a restriction whose cost the utility has estimated at 200 million euros.

Power grid operator IPTO yesterday gave PPC the green light for full-scale production at Megalopoli V after an extended period of pressure applied by the power utility.

In the lead-up, PPC was forced to operate its Megalopoli V facility at 60 percent of its full capacity, 500 MW, following instructions from IPTO, noting the Peloponnese region’s existing network could not carry a greater amount.

Trial runs at Megalopoli V, a natural gas-fired combined-cycle unit, began in April, 2015 but PPC had never been given permission to boost generation at this power plant by 311 MW to reach full capacity.

Meanwhile, PPC’s Megalopoli III and IV units, both lignite-fired, were either shut or operated well below full capacity as a result of hefty CO2 emission right costs.

A swifter full-scale launch of Megalopoli V would have enabled the power utility to completely switch off the engines at loss-incurring Megalopoli III, a 250-MW unit, PPC has noted.

Energy groups pressing ahead with natural gas-fired unit plans

The country’s major energy groups are pushing ahead with investment plans for new gas-fired power stations despite the pandemic’s unprecedented impact on the economy and electricity market.

Mytilineos, a vertically integrated group at the forefront of electricity production and supply, began constructing an 826-MW energy center at Agios Nikolaos in the Viotia area, slightly northwest of Athens, last October and is continuing to press ahead with this project.

Investment plans by other players are also maturing. GEK-TERNA is moving ahead with licensing procedures for a 660-MW unit in Komotini, northeastern Greece. The Copelouzos group is paving the way for a 660-MW facility in Alexandroupoli, also in the northeast, while Elpedison is carrying on with procedures for an 826-MW power station in Thessaloniki.

Copelouzos could partner with an investor for the group’s Alexandroupoli project, sources informed.

All the aforementioned corporate groups are positioning themselves in a new energy landscape being shaped by the dominant role of natural gas in the transition towards renewable energy and cleaner energy sources.

This trend became very apparent during the lockdown in Greece. Natural gas and the RES sector covered 60 percent of domestic electricity demand in March.

Power utility PPC is pushing ahead with its decarbonization program without any backtracking, despite the crisis. This is creating a need for new and modern gas-fired power stations.

Furthermore, Greek energy groups are continuing to eye Balkan markets for prospective electricity exports. Electricity generation in the neighboring region has not been satisfactorily upgraded in recent decades, market officials pointed out.

Vertically integrated groups are also eagerly anticipating a new permanent CAT mechanism.

Gas-fueled power stations still not fully recovering costs

The country’s independent gas-fueled power stations failed to fully recover their operating costs in 2019 despite increased operating hours, ongoing market distortions being a key factor, sources at ESAI/HAIPP, the Hellenic Association of Independent Power Producers, have stressed.

Though gas-fueled electricity production captured a 32 percent market share in 2019, far bigger than the lignite-fired share, gas-run units were unable to full cover costs as a result of persisting wholesale market restrictions.

For years, ESAI/HAIPP has contended that hydropower unit operations in Greece lead to a de facto price cap in the market. Price levels could theoretically be set at around 300 euros per MWh but the operating method of hydropower plants considerably lowers these levels.

This situation is preventing gas-fueled power stations from fully recovering costs. Their cost recovery is limited to variable costs. Revenues generated by these facilities do not suffice to cover capital investments and maintenance costs.

For some years now, ESAI/HAIPP, has pressured power grid operator IPTO for a new formula calculating available water reserves. RAE, the Regulatory Authority for Energy, launched an initial public consultation procedure on the matter in 2008 that failed to deliver any corrective action.

In the most recent public consultation procedure, staged in 2018, ESAI/HAIPP pointed out a series of factors requiring attention, including a need for greater transparency and publication of all relevant data.

Elvalhalcor power plant decision in first half of 2020, RES options considered

Elvalhalcor, the Hellenic Copper and Aluminium Industry, anticipating an imminent approval of its license application for gas-fueled electricity production, will decide whether it will develop a power plant during the first half of 2020, sources have informed.

This plan, however, could be put on hold if Elvalhalcor ends up deciding to pursue renewable energy options, either through acquisitions of existing units or development of its own.

Reduced RES installation and equipment costs have attracted the attention of Elvalhalcor officials, currently examining the company’s options.

Elvalhalcor’s application for a gas-fueled electricity production, submitted to RAE, the Regulatory Authority for Energy, last July, caught the market by surprise, pundits, until then, believing the construction of new power plants would be limited to energy groups.

The Elvalhalcor power plant, if developed, would be constructed in Thisvi, Boetia, slightly northwest of Athens, as a 566-MW facility, to cover the industrial enterprise’s sizable energy needs.

Greece’s heavy industry has been driven towards electricity production as a result of high energy costs – wholesale energy in Greece is Europe’s most expensive – delays in the implementation of the target model, power utility PPC’s most recent failure to sell lignite units, and Europe’s political turn to cleaner energy sources.

PPC’s new strategic business plan, expected soon, as well as Greece’s revised National Energy and Climate Plan, to shape the country’s energy-sector developments over the next decade, will both be pivotal factors in Elvalhalcor’s decisions.

 

Copelouzos, Karatzis groups also planning gas-fueled units

The Copelouzos and Karatzis corporate groups are the latest energy-sector players planning to develop new natural-gas fueled power stations, following Mytilineos, already granted a production license, and Gek Terna, whose project plan had become known but was not officially announced until yesterday.

The Copelouzos group has applied to RAE, Greece’s Regulatory Authority for Energy, for a production license concerning a 660-MW combined cycle power plant in Alexandroupoli, northeastern Greece. The Karatzis group, owner of the electricity supplier KEN, has submitted an application to the authority for the development of a 665-MW combined cycle facility in the mid-north Larissa area.

The Copelouzos group submitted its application to RAE in December while the Karatzis group forwarded its bid to the authority last month, energypress sources have informed.

As has been previously reported, the Mytilineos group plans to develop a 650-MW facility in the Viotia area, northwest of Athens, while Gek Terna is preparing to set up a 660-MW gas-fueled unit in Komotini, northeastern Greece.

The similar capacities envisioned for all four project plans are not coincidental. Technical experts consider power plant capacities of approximately 660 MW as ideal for optimal efficiency.