Norway

Supply chain promise signaled by Greek-Norwegian RES deal

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Greek steel company Lykomitros Steel has reached an agreement with Norway’s Moreld Ocean Wind, one of the world’s leading offshore floating wind farm designers, for a first order of floats, highlighting the opportunities available to domestic industry.

The two companies have signed an MOU concerning production, at the Greek manufacturer’s facilities, just outside Volos, of batches of floats for offshore floating wind farms to be supplied by the Norwegian company to customers around Europe who are entering this rapidly developing, yet still high-cost, nascent RES technology.

In essence, the Norwegian company has reached an agreement with Lykomitros Steel, already supplying floats for offshore wind projects in Scotland, France and Germany, to “jointly carry out the first floating European projects”, Moreld Ocean Wind’s CEO Wolfgang Wandl noted in a joint statement.

The development demonstrates that Greek industry can play a role in the establishment of a domestic supply chain if it can continue securing orders for floats concerning projects in the North Sea and other regions abroad.

The MOU between Lykomitros Steel and Moreld Ocean Wind was signed earlier this week at the Norwegian Embassy in Athens, in the presence of Norway’s deputy minister of foreign affairs Maria Varteressian, who was in Athens for the 9th edition of the “Our Ocean Conference”.

Energy crisis brings fossil fuels back to the forefront

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The energy crisis has brought about a revival of the hydrocarbons sector, as highlighted by a growing number of energy companies that have decided to reactivate exploration and production projects that had been put on hold as a result of climate-target pressure. Much of this reignited upstream activity is occurring in Europe. Greece must not be left behind.

Yesterday, French oil and gas giant TotalEnergies announced it would boost fossil fuel output over the next five years, a contrast to its reduced production in recent years.

Earlier in the week, on Wednesday, the UK’s North Sea Transition Authority approved plans for production at the new Rosebank oil and gas field in the North Sea, estimated to contain approximately half a billion barrels of oil.

Norwegian upstream giant Equinor, holding the biggest stake in the Rosebank field, estimates production will begin in 2030, with initial investments seen reaching roughly 3.8 billion dollars before totaling approximately 10 billion dollars by 2051.

Two two months earlier, UK Oil & Gas Plc had announced it would recommence production at its Avington oil field, estimated to contain 60 million barrels. Production at this field had been disrupted at an embryonic stage six years ago, with output having reached just several hundred thousand barrels.

In late August, Norway, which has captured the biggest share of Russia’s lost natural gas supply to the EU, announced that a latest round of tenders for licenses at 92 locations, 78 in the Barents Sea and 14 in the Norwegian Sea’s northwest, had attracted interest from 25 companies, including majors such as Shell, ConocoPhillips, Equinor and Aker BP.

The heightened interest expressed by majors highlights a turnaround of their green-focused investment policies of recent years. Shell, for instance, has announced it will disrupt an investment cutback plan of between 1 and 2 percent, annually, until 2030, adding it will increase investments in natural gas.

The hydrocarbons sector is also making a comeback in regions closer to Greece, Italy being a prime example. Italy had stopped issuing new licenses for many years but took a turn in November, when officials announced the country will be holding tenders offering ten-year licenses that offer total production potential of 15 bcm in natural gas from deposits in the Adriatic Sea.

Quite soon, companies operating in Greece will receive results from seismic surveys conducted west and southwest of Crete (ExxonMobil – HelleniQ Energy); Gulf of Kyparissia (Helleniq Energy); Ionian Sea (HelleniQ Energy); and Northwest Ionian (Energean – HelleniQ Energy).

In addition, Energean is awaiting an environmental permit to proceed with exploratory drilling in the Zitsa area, close to Ioannina, northwestern Greece.

Given the international developments and Greece’s energy needs – 6 bcm of natural gas a year and 300 barrels of oil per day – imported at lofty prices, the Greek State must facilitate, it has become clear, the endeavors of companies seeking to move ahead with their projects.

IPTO in deal with Israeli fund for Euroasia Interconnector

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Power grid operator IPTO has reached a preliminary agreement with an Israeli fund facilitating its entry into the equity capital of Euroasia Interconnector, the developer of the Crete-Cyprus grid interconnection, with a share of up to 33 percent, according to confirmed information.

This development seems to have injected new life into the project, which has encountered notable challenges in recent times, namely strict warnings by the European Commission over schedule delays and, even more crucially, the developer’s inability to produce a sound financial plan, an issue that has prompted the Cypriot State to seriously reassess its participation in the project.

Highlighting the urgency of the matter, it should be noted that, on the basis of a contract signed recently by Euroasia Interconnector with Norwegian company Nexans for the construction of a cable for the Crete-Cyprus interconnection, Euroasia Interconnector faces a September 7 deadline for a 50 million-euro payment.

If IPTO’s agreement with the Israeli fund goes ahead, it confirms, on the one hand, Israel’s increased interest in the project, which will potentially interconnect the Greek, Cypriot and Israeli power grids, and, on the other hand, it should provide a solution to the existing financial gap that has generated doubts over the project.

IPTO and the Israeli fund’s equity participation in Euroasia Interconnector promises sufficient equity capital for the project, which in turn could facilitate project borrowing from the European Investment Bank, while also formulating a comprehensive financing plan for the project.

 

Wholesale power highest in Europe at €154.63/MWh

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Greece’s wholesale electricity prices have risen sharply today, up 34.68 percent to an average of 154.63 euros per MWh from yesterday’s level of 114.81 euros per MWh, making them Europe’s highest.

The minimum price in Greece today will fall to an average of 96 euros per MWh, while the highest will peak at 377.18 euros per MWh.

Romania has registered Europe’s second-highest wholesale electricity price today, at 150.69 euros per MWh, followed by Bulgaria, at 150.13 euros per MWh.

Meanwhile, major European markets have registered significantly lower wholesale electricity prices today. Italy’s average wholesale price today is at 120.36 euros per MWh and Germany’s is 118.67 euros per MWh.

Norway has registered Europe’s lowest wholesale electricity price today, averaging 40.21 euros per MWh, followed by Turkey, at 82 euros per MWh, Sweden, at 87.6 euros per MWh, and Spain and Portugal, both registering an average of 89.66 euros per MWh.

As for Greece’s energy mix, natural gas-fueled power stations will cover 42.26 percent of the country’s energy needs today, followed by renewables, at 21.56 percent, electricity imports, at 20.26 percent, hydropower, at 7.91 percent, and lignite-fired power stations, at 2.62 percent.

The country’s electricity demand today is projected to reach 161.213 GWh, peaking at 7,946 MW at 12.30 pm.

 

Natural gas price spike prompts new market alert

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News that the Netherlands intends to soon stop production at Groningen, one of Europe’s largest gas fields, as a result of earthquake-related risks, pushed gas prices up by 28 percent yesterday, not surprising, as Groningen is a key gas source for countries in Europe’s west.

The development has made even more urgent the intention of Greece and Spain, along with other EU member states, to reestablish a common front as protection against the outbreak of any new energy crisis.

This group plans to request the continuation of a windfall earnings recovery mechanism in the wholesale electricity market when EU energy ministers meet on Monday to discuss a new structure for the bloc’s energy market.

The Dutch TTF benchmark has risen 113 percent over the past 15 days, from 23 euros per MWh to 49 euros per MWh yesterday, before easing off to 39 euros per MWh.

A temporary disruption of operations at some of Norway’s gas fields has unsettled European markets. Though production at these Norwegian gas fields will soon be normalized, the Netherlands have yet to reach a final decision on the country’s Groningen gas field. However, it is expected to continue producing should a new energy crisis hit Europe or if its upcoming winter is a cold one.

At this stage, ambiguity prevails as it remains unclear if Europe’s natural gas market finds itself at the onset of a new upward trajectory.

A sudden increase in LNG demand in Asia as a result of China’s post-pandemic return to full production is another major concern for European energy market players. Such a development promises to escalate prices.

 

Greek electricity cost Europe’s third highest, despite huge subsidies

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The cost of electricity for Greek households is currently ranked third-highest in Europe, following Portugal and Norway, despite the government’s enormous subsidy support packages, if taking into account the subdued purchasing power of local consumers, a study by ACER, Europe’s Agency for the Cooperation of Energy Regulators, has shown.

The ACER ranking takes into account taxes, surcharges and subsidies. The cost of electricity in Greece has consistently ranked highly in Europe over the years, given the country’s relatively lower income levels.

The enormous amount of electricity subsidies offered to consumers by the Greek government over recent months has not stopped the country’s rise in the rankings. In 2020, electricity cost for households in Greece was Europe’s fifth-highest, after factoring in income levels, but has now risen to third place.

Electricity subsidies offered in Greece are Europe’s highest, as a percentage of GDP, reaching 3.5 percent, the ACER study showed.

Offshore wind farm framework within first half, auction in ‘22

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A legal framework for offshore wind farms will be ready within the next few months, no later than the end of the year’s first half, enabling investments in this sector to begin in Greece, the energy ministry has assured.

The energy ministry’s leadership is expected to reiterate this stance, without offering further scheduling details, at an event to be staged today by ELETAEN, the Greek Wind Energy Association. Energy minister Kostas Skrekas and the ministry’s secretary-general Alexandra Sdoukou will be participating.

Norway, a country with extensive offshore wind farm knowhow, will be strongly represented at the ELETAEN event. The Norwegian Ambassador to Greece, Frode Overland Andersen, and Daniel Willoch, a representative of NORWEA, the Norwegian Wind Energy Association, will take part.

So, too, will Giles Dickson, CEO at Brussels-based WindEurope, promoting the use of wind power in Europe.

If all goes as planned with efforts being made by the energy ministry, as well as ELETAEN, a first auction for offshore wind farms in Greece could be staged within the first half of 2022.

Considerable progress has been made in recent months, but pending issues on important details concerning spatial and licensing matters, connectivity with power grid operator IPTO’s network, as well as a remuneration formula for investors, all still need to be settled. The overall effort is complex and involves a number of ministries.

Investor interest in offshore wind farms is high as studies project electricity costs concerning floating units in Greece will experience a 40 percent decline by 2050. This cost, according to an older European Commission study, was estimated to drop from 76 euros per MWh in 2030 to 46 euros per MWh in 2050.

The same study estimated Greece’s offshore wind farm capacity would reach 263 GW, a prospect promising investors sustainability for the development of such projects.

Norway’s Equinor has already expressed the strongest interest for offshore wind energy development in Greece. Denmark’s Copenhagen Offshore Partners, also a major global player, has also shown some signs of interest.

As for Greek companies, TERNA Energy, the Copelouzos Group, and RF Energy have, in the past, submitted applications for offshore wind energy parks to RAE, the Regulatory Authority for Energy.

 

Floating wind turbines tender likely in second half of 2020

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Greece is making plans to begin installing floating wind turbines and could introduce this renewable energy technology by the second half of next year, the energy ministry’s secretary general Mihalis Veriopoulos (photo) has announced.

The official, who took part in a recent related workshop co-organized by the Norwegian Embassy in Athens and ELETAEN, the Greek Wind Energy Association, said the energy ministry intends to soon select one of the sea regions defined by an older study and stage a pilot tender in the second half of 2020.

KAPE/CRES, the Center for Renewable Energy Sources and Saving, established 12 offshore zones in a study dating back to 2010. One of these will be selected for the pilot tender.

Investors backed by wind turbine technology suitable for Greece’s deep waters are expected to participate in the tender.

Floating wind turbines remain an expensive technology that is still at a relatively nascent stage. The objective is to reduce this technology’s energy production cost to a level of between 40 and 60 euros per MWh by the end of the next decade, Arne Eik, a representative of Norwegian firm Equinor, told the Athens workshop.

Floating wind turbines will significantly contribute to Greece’s effort to reach RES objectives, Dr. Dionysis Papachristou, a sector specialist heading the Public Relations and Press Office at RAE, the Regulatory Authority for Energy, told the event.

Panagiotis Ladakakos, director at ELETAEN, noted floating wind turbines promise to greatly contribute to the country’s GDP growth. Turbine technology constitutes just 40 percent of the overall cost, meaning that the other 60 percent, including floating platforms and anchoring systems, can be developed locally, Ladakakos stressed.

 

Norway’s Equinor eyeing Greek floating wind turbine potential

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Norwegian energy giant Equinor, formerly named Statoil, is believed to be examining Greece’s market opportunities for floating wind turbine investments.

The Norwegian Embassy in Athens, which has taken initiatives in this direction, plans to co-organize a seminar here in April with ELETAEN, the Greek Wind Energy Association, on floating wind turbines, offshore systems mounted on floating structures to generate electricity in water depths where fixed-foundation turbines are not feasible.

Through the event, the Norwegian Embassy will seek to highlight Norway’s experience in this domain and bring Greek renewable energy companies into contact with Norwegian experts. Greek government and energy sector officials are also expected to participate.

Despite the major potential offered by Greece, the local floating wind turbine market has remained stagnant since 2010. ELETAEN pointed out this lack of activity to the energy ministry in observations last December, during a public consultation procedure for Greece’s National Energy and Climate Plan.

The wind energy association called for renewed action on floating wind turbines, stressing the drastic cost reduction for this technology.