IPTO moves to develop links for private RES projects on islands

Power grid operator IPTO has submitted a request to RAE, the Regulatory Authority for Energy, for a grid management rule revision that would enable the operator to take on the planning and development of new subsea interconnections for private RES projects whose licenses include cable installations.

The operator’s proposal includes a formula through which IPTO would assume the entire cost of subsea cable installations for private projects and recover these costs via network surcharges.

This formula mainly concerns bigger projects, over 250 MW, while the cable interconnections could, according to the operator’s proposal, remain independent or serve as capacity boosts for projects already included in IPTO’s ten-year development plan. They include the fourth stage of the Cyclades interconnection and links in the northern Aegean and the Dodecanese.

This is, after all, one of the advantages possessed by the operator, able to offer a complete plan, ensure equal treatment of investment plans, and utilize projects in a uniform way to achieve economies of scale and ultimately provide benefits for the electricity market as a whole.

In addition, IPTO, like other European operators, is seeking a key role in the development of offshore energy transmission infrastructure, promising  links for offshore wind farms, either floating or fixed.

JTF aid for 6 islands closing polluting local power stations

The government plans to provide financial support to six Greek islands through the Just Transition Fund in order to tackle issues expected following planned withdrawals of local petrol-fueled power stations.

JTF support for these islands will be used to tackle sector unemployment, retrain personnel and also offer other support.

Further RES installations on islands, plus the completion of grid interconnection projects, will enable the closure of local petrol-fueled power stations in four parts of Crete – Heraklion, Lasithi, Hania, Rethymnos – plus Lesvos, Samos, Chios, Rhodes and Mykonos.

This step will help align Greece with clean-energy EU initiatives for European islands. The RES potential of Crete and the Aegean islands is extremely high.

Greece produces greenhouse gas emissions of 9.2 tons per capita, annually, compared to the EU average of 8.8 tons, according to an official JTF report.

This has been mainly attributed to Greece’s dependence on fossil fuels, still providing over 30 percent of overall electricity generation through production at the country’s two lignite mining centers of west Macedonia, in the country’s north, and Megalopoli, in the Peloponnese; and close to 10 percent through diesel-based generation on the islands.

The government has committed to closing high-polluting diesel-fueled power stations, the JTF report noted.

The production of every KWh on non-interconnected islands costs the Greek power utility PPC between 1.5 and 16 times more than the utility’s average generation cost nationwide, according to recent company data.


Competitive procedures for island hybrid stations, EC says

The European Commission is demanding competitive procedures for the installation of energy storage units or hybrid stations on the Greek islands as a condition for the establishment and approval of a thorough support framework covering such investments, energypress sources have informed.

Energy ministry officials are currently engaged in talks with the European Commission on energy storage and hybrid station installations for the islands.

A universal pricing framework offering investors specific tariffs for all the islands will not be possible if the European Commission condition for competitive procedures is to prevail.

Greek officials are pushing for a universal pricing framework for non-interconnected networks, hybrid units with RES facilities, and energy storage units, on the grounds that these greatly contribute to grid sufficiency and security and can also offer major cost savings by eliminating the need for high-cost, high-polluting diesel-fueled power stations that operate on non-interconnected islands.

In particular, the energy ministry is seeking Brussels’ approval for a transitional framework to support hybrid units on islands with mature investment proposals and production licenses.

Speaking at an Economist conference yesterday, the energy ministry’s secretary-general Alexandra Sdoukou said a plan for such a support mechanism has been submitted to the European Commission.

“We hope to have a response from the European Commission by the end of the year so that we can soon complete the pricing framework and make possible the actualization of these projects,” Sdoukou noted.

Initiatives are also being taken for the development of offshore solar farms and hydrogen-run unit, she added.

“We will continue to shape policies that promote renewables and guarantee that we will be at the forefront of the European energy transition,” Sdoukou concluded.

IPTO in talks with investors, operators for Crete interconnection

Investors – funds and major operators – are believed to be expressing strong interest for a minority stake in power grid operator IPTO’s subsidiary Ariadne Interconnection, the project developer of the Athens-Crete electricity grid interconnection.

Talks with parties interested in an Ariadne Interconnection stake have commenced, the power grid operator’s deputy chief Yiannis Margaris informed media during a press call for a presentation of the company’s annual financial results.

Prospective Ariadne shareholders must be financially robust, well acquainted with energy-sector matters, and focused on long-term investments, Margaris pointed out, setting terms and conditions.

The operator is focusing its search on big groups with portfolios carrying major investments, the deputy said.

IPTO’s administration is already engaged in talks with European operators such as Belgium’s Elia and French operator RTE, Margaris indicated.

IPTO expects to sign a bank loan agreement this month for an amount between 400 and 500 million euros to help finance the Athens-Crete interconnection. A sum stemming from Ariadne’s cash reserves worth 200 million euros and National Strategic Reference Framework (NSRF) funds of between 300 and 400 million euros are also expected to contribute.

The Athens-Crete link project is set to start and all the funds must be in place, IPTO officials said.

The possible involvement in Ariadne of investors will help achieve better borrowing terms, the officials added, while stressing the two procedures – search for a minority shareholder and capital – are moving ahead independently of each other.

Talks are also in progress with investors for island interconnections to facilitate RES projects, Margaris said.

IPTO island links over next 10 years to offer 2.6 GW capacity

Power grid operator IPTO’s interconnections planned for the next decade will prepare the ground for new island-based RES projects representing a total capacity of 2.6 GW.

The operator’s ten-year national electricity grid development plan for 2021 to 2030, forwarded to RAE, the Regulatory Authority for Energy, for approval, offers major investment opportunities in the renewable energy sector.

Wind and solar energy farms operating on islands will be able to transmit their output to the mainland via underwater cables.

The IPTO ten-year plan offers a RES project installation capacity of 2,442 MW for Crete, the Cyclades, the Dodecanese and the northeast Aegean islands. This capacity represents potential investments estimated at 2.6 billion euros.

The completion of all four phases of the Cyclades interconnections, scheduled for the second half of 2024, will offer 332 MW for this region. Andros and Tinos will have a RES installation capacity of 72 MW, the capacity for Syros, Paros, Mykonos and Naxos will total 160 MW, while Santorini, Folegandros, Milos and Serifos will be offered a 100-MW installation capacity.

The completion of Crete’s small-scale mainland interconnection to the Peloponnese, scheduled for the second half this year, will offer a RES installation capacity of 160 MW. A further 600 MW will be added once the island’s major-scale interconnection to Athens is completed in 2023, when Crete’s wind and solar energy capacity total of new and existing RES projects is expected to reach 1,080 MW.

The RES expansion capacity on the Dodecanese and northeast Aegean islands will reach 1,030 MW, according to the IPTO ten-year plan. Samos, Chios and Lesvos will be offered a 360-MW share of this total; Limnos, Kos, Rhodes and Karpathos will get 570 MW, while Skyros will be offered the remaining 100 MW.

The grid interconnections in the island regions will be developed over three phases to be respectively completed in 2027, 2028 and 2029, according to the IPTO plan.


Cash-flow relief measures in the making for electricity suppliers

Two cash-flow relief measures for electricity suppliers, one offering installment-based payments of regulated charges, the other, reduced guarantee costs for the right to operate on non-interconnected islands, are currently being prepared by the energy ministry.

Electricity suppliers collecting reduced customer payments will be able to service about 30 percent of their regulated charges through interest-free installments over a limited period of time.

Also, the level of guarantees provided by electricity suppliers to distribution network operator DEDDIE/HEDNO for the right to operate on 29 non-interconnected islands will be reduced for the six-month period running from April to September.

In other measures, the government yesterday announced a support framework for trade and distribution companies operating in the electricity and gas markets. Employees in these sectors will each be entitled to 800-euro allowances covering a 45-day period if their job contracts have been temporarily suspended. In addition, tax debt payments for these employees will be suspended for four months.

The establishment of a support fund for energy companies is also being examined.

Big RES projects on islands to be given IPTO cable access

Investors behind major-scale RES project plans for non-interconnected islands and island complexes, previously granted licenses incorporating the installation of cable interconnections, will now be able to develop their renewable energy facilities and reserve capacities through interconnection infrastructure developed by power grid operator IPTO.

The energy ministry intends to attach a related amendment to a draft bill concerning environmental permits.

Licenses granted to investors in the past for major-scale wind energy farms on non-interconnected islands and island complexes expected investors to install related cable infrastructure for energy distribution.

Such licenses have been granted to the Copelouzos group and Terna for projects on Crete and Iberdrola Rokas for investment plans in the North Aegean.

The new legal framework being prepared by the ministry promises to offer investors greater flexibility as development of interconnection infrastructure will no longer be set as a condition for related RES project licenses.

Instead, investors will be able to reserve capacities through cable interconnections being developed by IPTO. However, investors will need to contribute to the cost of this infrastructure in accordance with their reserved share of the overall capacity.

Lower-cost gas may save PPC an estimated €100m this year

The sharp drop in energy product prices, pressured by the coronavirus outbreak and an oil price war between Russia and Saudi Arabia, promises major and unexpected financial relief for power utility PPC.

The plunge of gas prices, alone, should benefit the Greek power utility by an estimated 100 million euros this year – assuming this drop is not ephemeral.

In the first half of 2019, PPC’s total purchasing cost for natural gas reached 222.5 million euros, a 57.1 percent increase.

In the liquid fuels category, PPC’s purchase expenses were also elevated, reaching 319.7 million euros, as a result of higher prices paid for mazut and diesel used by the utility at power stations on non-interconnected islands. To the delight of PPC, mazut and diesel prices are also tumbling.

Electricity tariff hikes made by PPC last September as well as a revised payback plan offering consumers greater incentive to service electricity-bill arrears through monthly installments are both producing favorable results.

A series of memorandums of cooperation, such as an agreement signed this week with Germany’s RWE, all promising dynamic penetration into Greece’s renewable energy market, offer further potential for PPC.

However, the power utility still faces an uphill struggle along its road to recovery. PPC’s financial results for 2019 will be announced in April.


Island hybrid station remuneration level and method recalculated

The energy ministry is currently preparing a new remuneration system for hybrid stations on non-interconnected islands, as well as revised payment levels.

Though the ministry’s proposal is expected to take into account the recommendations of a related RAE (Regulatory Authority for Energy) study, it should differ greatly.

The proposal, as promised by the ministry’s secretary-general Alexandra Sdoukou, will undergo public consultation before a new pricing framework for hybrid stations is approved. The European Commission will also need to endorse any new system.

Besides helping recoup investment costs, the new framework is intended to secure the lowest possible costs for consumers.

The new system will not feature any capacity or technology restrictions and will concern all non-interconnected islands, regardless of whether these will remain autonomous or be interconnected.

Figures are being recalculated at the energy ministry as the remuneration levels of investments will represent a key part of the proposal.

The consultation process could take place before the end of this year, according to sources.

Meanwhile, RAE has tasked the National Technical University of Athens with updating an older study on energy storage needs for the Greek grid ahead of the government’s ambitious 2030 RES targets and decision to strongly promote RES installations.


RAE energy storage support framework plan by end of year

A new energy storage support framework aiming to foster renewable energy growth is being prepared by RAE, the Regulatory Authority for Energy, and should be completed by the end of the year, the authority’s chief executive Nikos Boulaxis has told the Thessaloniki International Fair.

“The future of renewable energy is linked to the ability to store it. RES growth and  decarbonization cannot be achieved without storage and strong interconnections,” Boulaxis noted.

The RAE boss underlined storage system development is vital for the non-interconnected islands as this would encourage RES installations prior to the completion of grid interconnection projects and also offer support to the interconnections.

The energy storage plan has already undergone public consultation. RAE is now working on shaping its proposal in collaboration with the energy ministry, responsible for any legislative revisions to be needed.

Also, the plan will soon be discussed with the European Commission for approval details concerning state aid as well as its target model compatibility.

DEDDIE summoned to hearing over island wind energy limits

Administrative and legal officials at DEDDIE/HEDNO, the Hellenic Electricity Distribution Network Operator, have been summoned to a RAE (Regulatory Authority for Energy) hearing to offer explanations for complaints over the operator’s alleged mismanagement of electricity grids on non-interconnected islands, sources have informed. This is believed to have restricted the input of wind-energy production into local grids.

Though DEDDIE is responsible for operating local grids on the non-interconnected islands, where diesel-fueled power units run by the power utility PPC continue to play a key role, the operator is not directly represented by an office and staff on most of these islands. Instead, grid management duties have been left to the discretion of PPC employees, meaning they ultimately decide on whether wind energy, generated by rival companies, will enter the system.

The RAE hearing comes following repeated complaints by companies operating wind-energy farms on non-interconnected islands over substantial RES electricity restrictions imposed through non-transparent practices.

It has been a common occurrence for local PPC staff, acting on behalf of DEDDIE, to order wind energy farms to stop operating at times of heightened production potential, RES companies have reported.

DEDDIE insists it maintains control over grid management decisions on non-interconnected islands.


RAE opts for north Aegean grid link over LNG alternative

Power grid operator IPTO has included a grid interconnection project linking the north Aegean islands with the mainland to its ten-year development plan covering 2019 to 2028 following a recommendation from RAE, Regulatory Authority for Energy.

The authority was driven towards supporting the interconnection  plan by the results of a comparative study pitting the project against an LNG supply alternative for electricity generation on the islands Lesvos, Chios, Limnos and Samos.

RAE commissioned a team of experts at the National Technical University of Athens (NTUA) to conduct feasibility studies and was convinced by the results of a second report.

According to sources, the study recommends a grid interconnection from either Thrace, northeastern Greece, or Evia, Greece’s second-largest island slightly northeast of Athens.

RAE still needs to endorse the study so that procedures concerning the project’s plan and scheduling can commence.

Crete link national development ‘will not burden consumers’

A separation of the Crete-Athens grid interconnection project from the wider PCI-status Greek-Cypriot-Israeli interconnection, appearing highly likely, will not financially burden Greek consumers but instead offer surcharge-related benefits, leading energy ministry officials told energypress on the sidelines of the just-completed Delphi Economic Forum.

Swift development of the Crete-Athens link, as a national project, promises to spare consumers of public service compensation (YKO) surcharges costing approximately 400 million euros per year, energy ministry officials stressed.

These YKO surcharges are added to electricity bills to cover high-cost electricity production at power facilities maintained on non-interconnected islands.

The Crete-Athens grid will cost the country roughly one billion euros to develop, regardless of the development option chosen, the energy ministry officials supported.

Euroasia Interconnector, a consortium of Cypriot interests heading the wider PCI-status Greek-Cypriot-Israeli project, has claimed a withdrawal of the Crete-Athens grid project from the consortium for development as a national project would deprive Greece of EU funding worth 355 million euros from the CEF (Connecting Europe Facility).

Electricity consumers in Greece will need to cover this amount through increased network surcharges over the long term, the Euroasia Interconnector consortium has warned.

The Delphi Economic Forum was held to identify and assess global trends and their impact on decision makers of the wider eastern Mediterranean region.

North Aegean electricity options estimated between €600m-1bn

The cost of developing various project alternatives for the electricity needs of the country’s islands in the North Aegean, currently non-interconnected, ranges between 600 million and one billion euros, according to a study conducted by the National Technical University of Athens (NTUA) for RAE, the Regulatory Authority for Energy.

The study presents ten electrification proposals for the North Aegean islands, including floating and land-based facilities. The costliest alternative, budgeted at one billion euros, envisions an LNG gasification facility combined with a power plant.

The cost of converting existing units in the region so that they may run on natural gas is comparable to the cost of interconnecting the islands, the NTUA study indicated.

Islands examined in the study include Ikaria, Agathonisi, Samos, Lesvos, Limnos, Chios and Skyros.

The interconnection of the North Aegean islands has, for the time being, not been included in power grid operator IPTO’s ten-year plan. However, the operator is believed to be extremely interested in becoming involved.

Meanwhile, the gas utility DEPA, in conjunction with the main power utility PPC, is looking at a plan entailing the transportation of small LNG shipments from large terminals to regional terminals and storage stations in areas detached from the country’s gas network.

Spain’s Enagás, whose Greek market interests have grown since its recent acquisition of a stake in the natural gas grid operator DESFA, is also eyeing projects in the North Aegean.

Limnos favored as pilot project location for microgrid proposed by Tesla

A microgrid proposal for Greece’s non-interconnected islands presented by US energy company Tesla officials at the energy ministry yesterday appears likely to be developed on Limnos, in the northern Aegean, regarded as suitably sized and populated for this pilot project.

DEDDIE/HEDNO, the Hellenic Electricity Distribution Network Operator, intends to stage an international tender in spring for the development an energy self-sufficient island. At yesterday’s meeting, energy minister Giorgos Stathakis invited Tesla to take part in the anticipated tender.

Tesla’s microgrid presentation yesterday was made with Rhodes in mind but energy ministry officials described this island as an inappropriate choice for the pilot project given its heavy summer tourism. This brought Limnos, a quieter yet sizable island, into the picture.

Limnos is Greece’s eighth largest island, measuring 476 square kilometers, while its coastline is the country’s fourth longest.

These dimensions, along with the island’s relatively lower electricity demand in the summer, make Limnos a more suitable location for the installation of a microgrid system, Greek officials noted.

Tesla’s microgrid solution, dubbed Powerpack and based on solar panels and large-capacity batteries, has already been developed on American Samoa, unincorporated US territory including five main islands in the South Pacific Ocean, as a replacement for inefficient diesel-fueled generators consuming 1,400 liters of diesel per day.

RAE calls for island grid link delay penalties of up to 10%

RAE, the Regulatory Authority for Energy, has forwarded a proposal to the energy ministry detailing the terms and formula of a delay clause for the grid interconnection projects concerning the country’s non-interconnected islands, which, if triggered, would lead to annual penalties for promoters of as much as 10 percent of each project’s budget.

If, however, project promoters manage to gradually catch up on construction delays and their interconnections end up being electrified on time, then any penalty amounts paid during the intermediate period would be returned, according to the RAE proposal.

The proposed penalty amounts have been calculated to represent percentages of public service compensation (YKO) costs concerning islands being affected by grid interconnection project delays.

This penalty system is also seen as a warning to the project promoters of Crete’s major-scale interconnection, to link the island with Athens. Swift action and work will be needed if its 2022 completion date is to be achieved.

Previous island interconnection projects in Greece have moved at a notoriously slow pace, prompting RAE and the energy ministry to seek increased protection against any further delays for prospective projects.

Tesla presents microgrid plan for non-interconnected islands

US energy company Tesla has presented a plan for the development of a microgrid on Greece’s non-interconnected islands at a meeting yesterday with Greek energy minister Giorgos Stathakis.

The Tesla proposal, a system dubbed Powerpack and based on solar panels and large-capacity batteries, has already been developed on American Samoa, unincorporated US territory including five main islands in the South Pacific Ocean, as a replacement for inefficient diesel-fueled generators consuming 1,400 liters of diesel per day.

Tesla’s system for American Samoa entailed installing solar panels with a 1.4-MW capacity and 60 Tesla Powerpacks for a battery energy storage capacity of 6 MWh.

Regarded as one of the world’s most advanced electricity microgrid solutions, this system ensures electricity supply for as many as three days without sunshine, while its batteries may be fully recharged in seven hours.

According to Tesla, the Powerpack system’s resulting energy cost ranges between 170 and 135 euros per MWh, which is 15 to 30 percent less than the cost of diesel-generator electricity, reaching 200 euros per MWh.

Tesla’s power-network proposal for Greece’s non-interconnected islands, growing into a major attraction for energy sector investors, is the latest following presentations by companies such as Enagas, Socar and EdF.

PPC may seek compensation for power station withdrawals

The main power utility PPC is considering seeking compensation for the undepreciated value of power stations on islands to stop operating as a result of the launch of grid interconnection projects.

This detail has been included in PPC’s Strategic and Business Plan for 2018 to 2022, prepared by consulting firm McKinsey.

One chapter in the consulting firm’s plan, totaling approximately 80 pages, focuses on the repercussions to be experienced by the power utility as a result of interconnection projects concerning Crete, Rhodes, the Dodecanese and the Cyclades.

It has been estimated by McKinsey that PPC will need to seek compensation worth a total of 269 million euros, of which 211 million concerns the withdrawal of diesel-fueled power stations in Crete’s Hania, Linoperamata and Atherinolakos regions.

The compensation amount concerning power station withdrawals on Dodecanese and Cyclades islands has been estimated at 38 million euros, while a further 20 million euros has been linked to the undepreciated value of units to stop operating on Rhodes.




High operator guarantee costs a barrier for island market entries

A series of problems, especially disproportionately high and inelastic operator guarantee costs, are keeping independent suppliers out of non-interconnected island electricity markets, sources have informed.

DEDDIE/HEDNO, the electricity operator responsible for the islands, demands extremely lofty guarantees that are imposed at a standard level, a stark contrast to the flexible guarantees formula applied by IPTO, the power grid operator covering the mainland.

IPTO offers electricity suppliers guarantee reductions based on certain criteria such as number of years in business, solvency levels and number of customers.

As a result, the IPTO guarantee payment expected from PPC, the main power utility, ends up being approximately 20 percent of the total amount, while independent suppliers, smaller and newer, are expected to cover between 60 and 70 percent of the full guarantee amount.

On the contrary, flat guarantee amounts are demanded by DEDDIE/HEDNO on the islands, which leads to disproportionate amounts. For example, IPTO guarantee costs for suppliers serving 50,000 customers work out to costing no more than 3.5 million euros whereas DEDDIE/HEDNO guarantee costs for suppliers serving 5,000 customers on any of the non-interconnected islands reach 3 million euros.

Such conditions create barriers for suppliers aiming to enter electricity markets on non-interconnected islands, despite claims by authorities that these markets have opened for all.


RAE seeks power generator licensing improvements

RAE, the Regulatory Authority for Energy, has taken action aimed at improving licensing procedures for the installation of power generators.

The matter has been the cause of friction between the authority and PPC, the main power utility, which, in the past, has criticized RAE for delaying the issuance of licenses needed to install power generators on islands. PPC argued these delays have negatively impacted the power utility and electricity consumers on islands.

PPC has also criticized the regulatory authority for failing to recognize transportation and installation costs concerning mobile power generators used on non-interconnected islands. The power utility had undertaken such initiatives without previous approval from RAE. Costs for such ventures are recoverable only in cases for which production licences have been issued.

The dispute between the two sides, dating back to 2016, was eventually resolved but matters concerning the issuance of licenses, especially the need to hasten the process, remained pending.

It remains to be seen whether the new framework decided on by RAE will help hasten licensing procedures.

RAE has pointed out that restrictions concerning the use of mobile power generators, which run on diesel and mazut, are necessary as a result of EU climate change policies and emission targets set by the Paris climate accord.



IPTO: The day after the ownership unbundling

The following speech, published in its entirety, was delivered by Manos Manousakis, chief executive at IPTO, Greece’s power grid operator, at the Athens Energy Forum yesterday. 

Ladies and Gentlemen,

It is an honor and a pleasure to be one of the speakers of this year’s Athens Energy Forum, which is taking place against the backdrop of the radical transformation of the Greek energy market, which is being liberalized.

At the same time, the Greek market is gearing up to meet the main challenges arising from the implementation of the EU Energy Policy, namely:

  1. The increased penetration of Renewable Energy Sources in the Transmission System and Distribution Grid
  2. The de-carbonization of electricity production and
  3. The integration of the wholesale electricity markets of the EU member states through the introduction of the target model

I will start by briefly explaining the new ownership status and the benefits that stem from it.

As most of you probably know, in June 2017 the ownership unbundling of IPTO [locally acronymed ADMIE] took place.

The Greek State owns a controlling shareholding stake of 51%.

State Grid of China, the world’s largest utility company, is IPTO’s second biggest investor with a 24% stake and active participation in its management.

The company further diversified its investor base following the listing of its affiliate company IPTO Holding in the Athens Stock Exchange.

The strategic partnership between the Greek State and State Grid has already started to show results, through the improvement of the financial and operational ability.

With this structure, IPTO aims to exemplify the way a company under state control can modernize itself and improve its efficiency, in order to play a leading role in the new energy landscape.

In this context, the company has set two main objectives for 2018:

First, faster project delivery.

Second, successful implementation of the target model and specifically of the balancing market, which falls under IPTO’s responsibility.

The new administrative model of the company will facilitate the achievement of these objectives.

One milestone of the restructuring process, which took place at the end of 2017, was a voluntary exit scheme which was successfully completed a few days ago. The participation far exceeded management’s expectations.

Through this scheme, IPTO aimed to make room for younger, highly skilled employees who are sorely needed.

Another important element is that the active management of IPTO’s assets has been placed at the heart of its new organizational model.

The ambitious targets for RES penetration into the energy mix require the upgrade of the infrastructures for the electricity transmission and the ‘smartening’ of the grids.

All the modern TSOs in Europe (RTE from France, ELIA from Belgium, 50 Hertz from Germany etc.) consider asset management as one of their main functions.

IPTO is now following their example with the creation of a new Asset Management Unit.

The main mission of this Unit is the optimal exploitation of the company’s assets, the extraction of maximum value from their use.

In this regard, I would like to point out that IPTO is implementing a broad asset renovation program and the first tenders will be published in the near future.

With this new improved administrative structure, IPTO will be better prepared to pursue its first objective, which is the timely execution of the major interconnection projects that are foreseen in the company’s business plan.

We are talking about investments of 1 billion euros until 2021.

The company is prioritizing the Cyclades and Crete Interconnections.

The first phase of the Cyclades interconnection, which entails the interconnection of Syros, Paros and Mykonos to the mainland transmission system, is already in the test phase of electrification.

As a result, both the security of electricity supply and the environmental footprint of those islands will be upgraded.

The dated, fuel oil power plants [on islands] will soon cease to operate.

IPTO is also placing great emphasis on the Crete Interconnections which are of pivotal importance to the Greek economy.

Why? Because they will secure the energy supply of the country’s largest island and drastically reduce the cost of electricity for all Greek consumers.

In the course of the implementation of these projects, the company will benefit from the technical expertise of State Grid, which is spearheading China’s effort to transition to clean energy.

State Grid is a world leader in developing Ultra High Voltage Transmission Lines and building smart grids that promote the utilization of RES.

It boasts the largest installed capacity of wind and solar production in the world.

It is obvious that IPTO has a lot to earn from its know-how.

At a recent international conference, a State Grid executive stated that the company’s goal is to turn Greece into an electricity hub via interconnections to the Balkans, Africa and Asia.

It should be noted that according to a recent study of an Expert Group the development of new transnational electricity interconnections is becoming an EU priority, as the current interconnection target of 10% is not considered ambitious enough and it will be increased to 15% by 2030.

Europe is heading towards a well-integrated energy market.

Electricity interconnections are the physical component of making this market truly European by connecting Member States’ networks, thus offering:

-capacity for electricity trade

-improved security of supply

-integration of the growing share of renewable electricity production.

In this direction, IPTO is prioritizing the development of a second electricity transmission line between Greece and Bulgaria. This project has already been included in the list of Projects of Common Interest for the European Union.

Having mentioned the integration of the EU energy market, I would like to move on to the second objective of IPTO for this year, which is the setting up of the Balancing Market, the part of the target model for which the company is responsible.

I will try not to go into the highly technical details.

Let me just say that the Balancing Market is the last of the four Target Model markets.

However, its role is very important since it reflects the actual cost of balancing electricity supply and demand, close to real time.

A well designed Balancing Market is not only important to provide the TSO with sufficient Balancing Services at all times in order to safeguard secure system operation.

It is also essential to ensure an efficient functioning of the overall electricity market.

Consequently, they affect Participants’ decisions in the forward market timeline.

The basic principles of the Balancing Market design are:

-Central Dispatch System

-Unit based participation in the market

The Balancing Market consists of:

A Balancing Energy Market,

Balancing Reserve Market

Imbalances Market, which is an ex post market for settlement of imbalances

IPTO performed a Public Consultation on the Balancing Market Code between December 2017 and January 2018.

Participants’ comments were received and the most recent update is that a second version of the Code was sent to the Regulatory Authority for Energy for the subsequent phase two of the Public Consultation, which is going to be performed by the Authority.

I hope I gave you an oversight of the day after the ownership unbundling of IPTO.

Let me conclude my speech by saying that the future will be electric, de-carbonized and interconnected. IPTO will play an important role in this process.

Thank you

RAE set for PPC, IPTO, HEDNO decisions following hearings

RAE, the Regulatory Authority for Energy, plans to discuss payment delays by the main power utility PPC towards IPTO, the power grid operator, and HEDNO, the Hellenic Electricity Distribution Network Operator, at a board meeting tomorrow, the aim being to take decisions in the immediate future, energypress sources have informed.

These payment delays, determined following a series of hearings held by RAE, summoning PPC, IPTO and HEDNO officials, were meant to be dealt with far sooner, but understaffing problems at the authority slowed down the process.

Various developments that have taken place in the meantime will be taken into account tomorrow.

RAE’s efforts, on the matter, have focused on an accumulation of overdue amounts owed by PPC to the two operators. The utility has attributed these delays to its poor cashflow, stemming from the mass of unpaid electricity bills by consumers.

RES sector officials have criticized PPC for withholding electricity bill sums received from consumers – meant to be relayed to cover a RES-supporting ETMEAR surcharge, a network surcharge and other obligations – in order to service its own corporate needs.

IPTO is also under the RAE spotlight for not having maintained books to keep a record of revenues and expenses influencing Public Service Compensation (YKO) levels paid by consumers to support electricity generation on the non-interconnected islands as well as the Social Residential Tariff (KOT) program.

During the preceding RAE hearings, IPTO blamed a variety of technical issues and problems for its failure to keep YKO-related books.

Also, HEDNO, the electricity operator responsible for the non-interconnected islands, was summoned by RAE, during the hearings, to explain why it has not complied with sector regulations to prevent PPC from taking inappropriate action. Island-based RES producers have criticized PPC for unlawfully ofsetting ETMEAR-related sums and not relaying these to HEDNO, as it should.



Non-interconnected island markets not luring suppliers

Though the electricity markets of 30 non-interconnected islands are now fully liberalized as of January 1 – following the opening up of the electricity markets of Rhodes, last January, and Crete in August, 2016 –  independent suppliers, facing various obstacles, especially elevated wholesale prices, are hesitating to enter these new markets.

Negative factors affecting conditions in the thirty new island markets have also impacted independent electricity suppliers seeking to penetrate the markets of Rhodes and Crete. At present, independent suppliers on these two islands are moving conservatively in an effort to keep their ventures afloat rather than pursue more aggressive, and costly, marketing policies.

Independent electricity suppliers opting to enter the markets of non-interconnected islands have no choice but to purchase power directly from the grid at a high cost as no other alternatives, such as NOME auctions, exist. NOME electricity amounts acquired by independent suppliers are currently not being utilized for non-interconnected islands as these amounts concern demand in other markets.

In addition, Public Service Compensation (YKO) payments to independent suppliers are being delayed, which is forcing firms to rely on company resources for financing their actions.

Dodecannese, all Cyclades interconnections proposed

The findings of a scientific committee assembled by RAE, the Regulatory Authority for Energy, in December, 2015, to study the possibilities and feasibility of electricity interconnections at the country’s non-interconnected islands, call for the inclusion of the remainder of Cyclades islands still not included in the authority’s development plan as well as the addition of the Dodecannese.

The scientific committee has now forwarded the majority of its findings to RAE.

It has proposed the construction of new natural gas-fueled power stations for the north Aegean islands as the most feasible option. Alternative interconnection options are also being examined.

RAE is striving to include on its ten-year energy system development plan all island interconnection projects deemed necessary, with binding time frames, within 2018.

Though largely unknown, legislation ratifed last August gives RAE the authority and responsibility to determine optimal electrification solutions for the islands. RAE also reserves the right to revoke licenses of old petrol-fueled power stations currently operating on islands as a means of pressuring IPTO, the power grid operator, to develop interconnection projects at these locations, if deemed feasible.

RAE also maintains the right to offer contracts for needed interconnection projects to other companies shoud IPTO not prepared to develop these. In this case, IPTO would then be obligated to operate these interconnections.

RAE president Nikos Boulaxis recently expressed confidence in the development prospects of the country’s needed interconnections. He cited political will and IPTO’s reinvigorated activity as factors behind his positive outlook. China’s SGCC recently became IPTO’s strategic partner with a 24 percent stake.

Even so, Boulaxis has warned RAE would be prepared to take action, including legal, to push ahead interconnection projects.

The development of island interconenctions would greatly reduce current Public Service Compensation (YKO) payments included on electricity bills to primarily subsidize high-cost electricity production on Greece’s non-interconnected islands.

Power suppliers lack incentive to enter island markets

The elecricity markets of the country’s non-interconnected islands cannot open up to competition as of January 1, as is planned, because insurmountable obstacles are discouraging the entry of independent suppliers.

Though regulations for this prospect were established back in 2014 market liberalization has so far been restricted to the islands of Crete and Rhodes.

Crete’s electricity market was opened up to independent suppliers in August, 2016, while Rhodes followed last January.

Theoretically, as of January 1 consumers on the country’s 30 non-interconnected islands, not including Crete and Rhodes, will supposedly be free to choose electricity suppliers.

Independent suppliers made dynamic entries into the markets of the aforementioned islands, especially Crete, but the early enthusiasm has since faded.

Suppliers operating in these markets do not have access to any NOME auction equivalent and, as a result, are purchasing electricity from the system at high prices.

NOME auctions were introduced in Greece’s main electricity market just over a year ago to offer independent suppliers access to the main power utility PPC’s low-cost lignite and hydropower sources.

The lack of any NOME equivalent for the non-interconnected islands stands as a major disincentive for independent electricity suppliers eyeing the islands, especially those with developed tourism sectors.

The resulting hesitancy of independent suppliers is expected to become very apparent in the new year, when little is expected to change, despite the liberalization of island markets.


RAE pushing for more specific interconnection project targets

IPTO, the country’s power grid operator, is facing RAE (Regulatory Authority for Energy) pressure to establish more specific targets for the development of submarine island interconnection projects, especially those concerning Crete and the Cyclades, which are included in the operator’s ten-year plan (2018-2027), sources have informed.

RAE wants realistic target dates to be set, which, if missed, would lead to penalties, unless the delays are justified by certain circumstances, such as legal proceedings, for example.

The energy authority is increasing the pressure to avoid further delays, a common occurence at IPTO with major projects in the past.

Completion of the interconnection projects would reduce energy generation costs, a benefit that would be rolled over to consumers, currently covering high-cost electricity generation on the non-interconnected islands through Public Service Compensation (YKO) surcharges imposed on electricity bills.

Binding targets for IPTO are expected to come into effect in 2018 and include the Cretan interconnection project, to be developed over two stages (minor and major interconnections) and the Cyclades interconnection (second and third stages).

The new IPTO board, established following SGCC’s (State Grid Corporation of China) recent acquisition of a 24 percent stake, has already accelerated the pace at which the interconnection project is being handled by the operator, according to sources.

Prior to the arrival of IPTO’s Chinese strategic partner, RAE’s leadership often threatened to transfer the island interconnection projects to other companies. These threats are no longer being made.

According to IPTO’s current ten-year development plan, the minor Cretan interconnection (140-180 MW) is expected to link the island, Greece’s largest, with the Peloponnese by 2020, while the major interconnection (700 MW) is planned to link Crete with the wider Athens area by December, 2023. However, the operator has noted that Cretan electricity demand will not be fully integrated into the country’s grid until 2025, a prospect that has raised concerns.

Progress of the minor Cretan interconnection has been hampered as a result of legal action taken by residents of the Lakonia region’s Malea peninsula, where the submarine cable running from Crete is planned to reach the Peloponnese. Local residents are demanding revisions, including an alternate location, and have taken their case to the Council of State, Greece’s Supreme Administrative Court.


RAE preparing to set hybrid power plant output payment levels

RAE, the Regulatory Authority for Energy, is moving to soon determine payment levels for hybrid power plant output on the non-interconnected islands, keenly awaited by market players before they proceed with investment plans.

The authority has commissioned a National Technical University of Athens (NTUA) department to conduct a related study, whose findings, expected within the next two months, will serve to guide RAE in its hybrid power station output payment rate decisions.

According to recent data made available by HEDNO (Hellenic Electricity Distribution Network Operator), a total of 24 hybrid power station projects exist around the country, 18 of these on Crete, representing a total capacity of 571.5 MW; three on Rhodes with a total capacity of 36 MW; one on Tilos, offering 0.4 MW; one on Lesvos with a 15-MW capacity; and another on Ikaria, measuring 2.55 MW.

Besides the hybrid power station output payment rates, sector investors are also anticipating the development of interconnection projects to link the non-interconnected islands with the mainland. These projects, crucial for the sector, are behind schedule.

Hybrid power plants often contain a renewable energy component that is balanced via a second form of generation or storage such as a diesel genset, fuel cell or battery storage system.

All island electricity markets to be liberalized start of 2018

RAE, the Regulatory Authority for Energy, has decided to fully liberalize the retail electricity markets of all the country’s non-interconnected islands as of January 1, 2018, the authority’s chief officials announced yesterday at the ongoing Thessaloniki International Fair.

To date, Crete and Rhodes are the country’s only non-interconnected islands whose electricity markets have been fully liberalized.

Island consumers – households and businesses – on all of the country’s non-interconnected islands will be able to select their electricity supplier of choice as of the beginning of next year in a bid to reduce their energy costs, RAE chief Nikos Boulaxis informed.

The Cretan electricity market was liberalized in August, 2016, and Rhodes followed as of January 1 this year.

Approximately 17 percent of consumers on Crete have switched electricity suppliers while between 5 and 6 percent have shifted to alternate suppliers on Rhodes.


PPC granted permits for extra generating capacity on islands

RAE, the Regulatory Authority for Energy, has granted the main power utility PPC permission to increase electricity producing capacity on non-interconnected islands through the installation of additional generators, resolving a dispute between the two sides.

As a result, PPC can now increase its electricity generation capacities by 8 MW on Santorini, 20 MW on Rhodes, 3 MW on Ikaria, 3 MW on Mykonos, 1 MW on Antiparos and 2 MW on Karpathos.

Responding to the need for greater electricity generation on these islands, PPC had taken the initiative to boost the capacity of its generators prior to RAE’s issuance of the necessary licensing. This move caused friction between PPC and RAE.

PPC recently forwarded a letter to RAE urging the authority to deliver all necessary permits as soon as possible.

RAE also decided to grant PPC license extensions for two already-installed facilities at Soroni, Rhodes, a 25.18-MW capacity generator and a 23.6-MW wind-energy unit.


Island interconnections to slash public service expenses

The Greek government’s anticipated response to a RAE (Regulatory Authority for Energy) proposal calling for the country’s electricity-related social policy to be funded through a special consumption tax (EFK) imposed on fuel rather than the present public service compensation (YKO) surcharges added to electricity bills will indicate the administration’s preference as to who should foot the bill.

The tax-funded energy social policy proposal made by RAE would require approval from both the Greek government and European Commission if it is to be implemented.

The public service compensation accumulated through electricity bills in Greece is primarily used to subsidize high-cost electricity production on the country’s non-interconnected islands.

A new EU directive advising EU members states imposing public service compensation surcharges to instead finance energy-linked social policy costs through their state budgets is sure to generate wide debate in Greece.

Unlike other European countries whose territories include islands, Greece has yet to develop interconnection projects for lower-cost electricity supply to its numerous islands. Once interconnection projects serving these needs are completed, Greece’s annual public service compensation costs stand to drop from approximately 600 million euros at present to no more than 150 million euros.

An interconnection project to link the Cyclades with Greece’s mainland is expected to be completed by 2018, while Crete’s interconnection may be completed between 2020 and 2022, at best. The Dodecanese and northern Aegean island interconnections will then need to be developed, meaning that completion of the overall project will require anywhere between 10 to 15 more years.

In Spain, the most comparable European example to Greece in terms of geographical make-up, energy-related social policy costs are shared by the national budget and consumers. Though a late starter, Spain, from 2011 onwards, managed to develop interconnection projects covering many of its island complexes, thereby greatly reducing the country’s public service compensation costs.

Also in 2011, Italy developed an interconnection project linking Sardinia with the mainland, a move that also drastically reduced public service compensation charges for consumers. Other European countries whose territories include islands, such as Germany, the UK and the Scandinavian countries, developed their needed interconnection problems long ago.