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.

Three key factors pivotal for offshore wind farm development

Spatial planning-licensing, grid connectivity and the remuneration formula for investors are three key factors pivotal to the development of the country’s offshore wind farm industry, investors and authorities agree.

Speaking at an event staged yesterday by ELETAEN, the Greek Wind Energy Association, the energy ministry’s secretary-general Alexandra Sdoukou stressed that the right formula for the sector’s development needs to be based on these three factors.

This industry’s course abroad, so far, has shown that a variety of options can be adopted for each of these factors. Fellow European countries have followed a range of paths, often contradictory. Greece’s energy ministry will need to seek solutions that best suit local conditions.

The spatial planning-licensing options range from a liberal model adopted by the UK, offering offshore wind farm investors maximum freedom to develop their investment plans, as they deem best, including in choice of appropriate location for maximum commercial potential, and, at the other end, a state-regulated model, as practiced in countries such as Denmark and the Netherlands. In this latter case, state regulatory authorities are responsible for determining installation locations and capacities, through studies of their own, before staging auctions.

ELETAEN’s proposal favors a mixed approach, through which the state would initiate the process by allotting wider areas for offshore wind farm development.

The wind energy association also favors a mixed approach for network connectivity that would require power grid operator IPTO to develop main lines in areas designated by the state for offshore wind farm installations.

Local authorities and players still appear to disagree on whether non-auction fixed tariffs will need to be offered to investors as a catalyst for this industry during its early stage of development.

Sdoukou, the energy ministry’s secretary-general, did not rule out such an approach at yesterday’s ELETAEN event. But, regardless of whether a preliminary stage of non-auction fixed tariffs will be offered, all sides seem to agree that tariffs, later on, will be exclusively made available to offshore wind farm investors through auctions.

 

Greece climbs up to 12th place in EU electricity tariff cost rankings

Greece has climbed seven places, to 12th from 19th, in the EU rankings for retail electricity cost, pushed higher by a government decision reached last year to increase tariffs at state-owned power utility PPC, according to latest Eurostat data.

These tariff hikes at PPC were imposed by the government in August, 2019 to protect the utility from falling into bankruptcy.

The EU rankings concern electricity price levels for household consumption levels between 2,500 to 5,000 kWh, annually.

Electricity tariff increases for households in Greece rose by an average of 8.6 percent in the first half of 2020, compared to the previous half, when the country was ranked 19th.

The first-half tariff price for households averaged € 0.129 per KWh, not including taxes and surcharges, up from €0.1189 per KWh in the second half of 2019.

PPC remains Greece’s dominant supplier, representing 63 percent of electricity consumption.

The PPC tariff increase has made electricity more expensive in Greece than in countries with higher income per capita levels. Electricity is now more expensive in Greece than in France (€ 0.1247 per KWh), Finland (€ 0.1178 per KWh), Spain (€ 0.1178 per KWh) and Sweden (€ 0.1130 per KWh), all with higher income levels. Electricity is also more expensive in Greece than in Portugal (€0.1139 per KWh).

Despite the country’s rankings rise, electricity prices in Greece remain below the EU average (€0.1327 per MWh), a result of the competition generated by independent suppliers, subduing prices.

The biggest electricity tariff decreases in the first half of 2020, compared to the previous six-month period, were recorded by the Netherlands (-31%), Latvia (-12.8%), Slovenia (-11.4%), Sweden (-10%) and Estonia (-8.9%), the Eurostat data showed.

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.

Brussels considering PPC compensation for lignite units

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

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

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

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

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

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

Dutch offshore wind energy experience a guide for Greece

Local authorities and investors have turned to the Netherlands for information on the development of offshore wind energy parks.

Offshore wind energy parks in the Netherlands currently represent a capacity of 1 GW, expected to soon rise to 2.5 GW.

Local interest in this RES technology is growing, as highlighted by ongoing talks and public consultation for a related legal and regulatory framework.

In addition, the economic and commercial affairs department of the Greek Embassy in The Hague has prepared a detailed report on the Dutch wind energy sector, focused on offshore wind energy parks.

The Dutch government offers a number of competitive incentives to stimulate energy innovation and promote RES use, which, as a result, has strengthened the country’s position in RES research and development and in particular in wind turbine technology, the report notes.

This is further strengthened by strategic public-private partnerships and world-class institutions such as the Top Consortium for Offshore Winds (TKI Wind op Zee), the Energy Research Center (ECN) and Delft University of Technology, a leading specialist, worldwide, in the field of renewable energy, the report added.

 

RES auctions postponed throughout Europe

Governments throughout Europe are postponing RES auctions as a result of the coronavirus pandemic’s impact on markets.

Germany, France and Ireland have already taken steps back to protect new RES projects, currently at various development stages, according to a Green Tech Media report.

Germany had planned seven RES auctions for this year. The country has so far offered 400 MW for solar energy projects and 675 MW for wind farms, while a further 2.9 GW for onshore wind farms and 1.4 GW for solar energy facilities remain pending. Strong investment interest had been expressed prior to the postponements.

In France, a RES auction for solar energy projects has been postponed by two months. In Ireland, a session that had been planned for April 2 has now been rescheduled for April 30. Portugal has also postponed a RES auction offering 700 MW for solar energy projects.

On the contrary, Dutch authorities intend to press ahead with a RES auction at the end of this month, offering 700 MW for wind farms. Swedish multinational power company Vattenfall’s Dutch subsidiary has announced it will not participate.

 

 

 

Improved Gazprom deal raises DEPA in the eyes of investors

Lower-price deals sealed or about to be sealed between gas utility DEPA and its international suppliers are among the factors the government is relying on for a successful privatization procedure of the gas utility, a procedure launched yesterday, beginning with DEPA Trade, one of DEPA’s two new entities formed for the sale.

DEPA is believed to have renegotiated a far more favorable supply deal with Russia’s Gazprom, the Greek utility’s biggest supplier.

Forty percent of DEPA’s natural gas orders from Gazprom will no longer be pegged to fluctuating international oil prices. Instead, this percentage of DEPA’s Gazprom orders will be linked to price levels of Dutch gas trading platform TTF, one of Europe’s biggest hubs. Just days ago, prices at TTF were about half those of pipeline gas. The other 60 percent of DEPA’s orders with Gazprom will remain oil indexed.

This development promises to make DEPA’s supply deals with Gazprom far more competitive. Prospective bidders already appear to be warming to the prospect.

Major Greek corporate groups such as Mytilineos, Hellenic Petroleum (ELPE) – already holding a 35 percent stake in DEPA and considering teaming up with its Elpedison partner Edison for the DEPA sale – GEK Terna and Motor Oil are believed to be gearing up for bids. The Copelouzos group’s involvement in the DEPA Trade sale is considered certain – in a partnership with Czech entrepreneur Karel Komarek, holding a key stake in Greek lottery OPAP.

JinkoSolar supplies 40 MW to Obton for Almelo Project in the Netherlands

JinkoSolar, one of the largest and most innovative solar module manufacturers in the world, has announced that its affiliate has supplied approximately 40 MW of its ultra-high efficiency Cheetah HC 60 solar modules to Obton, one of the leading global developers and investors of photovoltaic solar energy. These modules were installed in the Almelo project in the Netherlands during the summer of 2019.

Anders Marcus, CEO of Obton, commented: “We are extremely proud of our role in helping the Netherlands transition towards renewable energy. The country is making significant progress towards a greener future and partnering with a globally respected firm such as JinkoSolar will allow us to push the development of solar energy to new heights.”

“We are very pleased to work with Obton, which I believe reflects the trust and confidence they have in us as their key supplier partner,” commented Frank Niendorf, General Manager Europe for JinkoSolar. “Our hero products, Cheetah HC and Cheetah Plus, account for a significant share of the Dutch PV market in 2019 and are helping create new growth opportunities for us next year.”

“Obton was looking for a bankable supplier and first-class products in terms of quality and LCOE for their Almelo project and chose our high efficiency Cheetah HC modules to increase IRR of the project by lowering CAPEX and pushing yield upwards,” added Arda Kristaporyan, Country Manager of Netherlands for JinkoSolar.

DEPA awaiting Gazprom news for lower gas price, LNG a market hit

Gas utility DEPA, which has asked for a lower natural gas supply price from Gazprom, can expect a response around June 15, the Russian gas giant has informed.

DEPA was driven to action by extremely low spot-market prices for LNG currently available in Europe.

Major European hubs, such as the TTF facility in the Netherlands, are currently offering prices of 10.928 euros per MWh, compared to Gazprom’s supply contract for the Balkans, including Greece, of approximately 20 euros per MWh.

It remains to be seen how DEPA will respond if the price-related news from Gazprom is not favorable.

LNG is projected to have captured roughly 55 percent of western European energy markets five years from now, up from approximately 40 percent last year, authorities told a recent forum in Brussels.

According to the World Energy Council, LNG will capture a 51 percent share of the global market by 2025, from 25 percent in 2000 and 45 percent in 2018, as a result of new production line investments in the USA, Qatar and Australia.

Lower LNG prices have coincided with an upgrade at the LNG terminal on Revythoussa, an islet just off Athens, resulting in its capacity increase to 220,000 cubic meters. This has enabled bigger incoming shipments.

So far this year, LNG shipments have arrived from Qatar and the USA. More are expected.

Meanwhile, DEPA’s domestic market share for LNG supply is on a downward trajectory and currently at around 30 percent as a result of intensifying competition.