EBRD: Green projects in Greece a priority, RES-based economic recovery

The European Bank for Reconstruction and Development (EBRD) is strongly interested in Greek energy market investments, Andreea Moraru, the bank’s head of Greece and Cyprus, has stressed in an interview with energypress.

The EBRD official spoke extensively on significant investment opportunities being created by the energy transition.

Since 2015, the EBRD has invested over four billion euros in Greece, participating in numerous major projects, Moraru informed, noting its recent support for power utility PPC, an investment worth 160 million euros, one of the bank’s largest, to cover customer payment volatility following the outbreak of the pandemic, exemplifies EBRD’s strong support for Greece.

The full interview follows:

What is the role of the EBRD compared to that of other banking institutions? 

The EBRD is a development bank committed to furthering progress towards ‘market-oriented economies and the promotion of private and entrepreneurial initiative. Our role is to be complementary to the commercial banks, to work alongside them and to support them.

Αdditionality is among the founding principles underlying our work and the particular support and contribution that the EBRD brings to an investment project which is not available from commercial sources of finance. Alongside transition and sound Banking, it is one of the three founding principles underlying our work. By ensuring that we are additional in everything we do, we ensure that our support for the private sector makes a contribution beyond that available on the market and does not crowd out other private sector actors.

Whenever we consider financing a project, we analyze whether similar financing can be obtained from private sector local banks or non-banking institutions.

Many of our markets are relatively high risk, and the private sector will only lend for short periods of time or at such high rates as to make the project unfeasible. For major new projects in the field of infrastructure, for example, longer-term financing may not be available on reasonable terms or conditions. This is where the EBRD fits in.

Additionality can also be non-financial in nature, where EBRD’s interventions contribute to better project outcomes that would not have been required or offered by commercial financiers. This can include the provision of comfort to clients and investors by mitigating non-financial risks, such as country, regulatory, project, economic cycle or political risks. Additionality may also be derived from the EBRD’s involvement in helping projects and clients achieve higher standards than would have been required by the market, such as through sharing its expertise on better corporate governance or above ‘business as usual’ environmental or inclusion standards.

Do you consider the energy sector in Greece to be suitable to contribute to the development and reconstruction of the Greek economy? For what reasons?

Absolutely. In general, the EBRD’s vision for the energy sector is of a partnership between industry, governments and consumers that delivers the essential energy needs of societies and economies in a manner that is sustainable, reliable and at the lowest possible cost.

In Greece the energy sector is embarking upon its biggest transformation yet, moving away from its reliance on lignite (c. 20% of total electricity production in 2019) to renewables and a smaller fleet of significantly less carbon intensive gas generating units. The NECP aims to achieve reduction in greenhouse gas (GHG) emissions by more than 55% by 2030 compared to 2005, planned to be achieved through: (i) decommissioning of all 4 GW of lignite-fired generation capacity by 2028 (3.4GW by 2023), (ii) 8.7 GW of new renewable generation capacity to added by 2030, reaching a total of 19 GW, and (iii) 2 GW of new gas generation capacity added for system support and security. The country remains committed to implementing the NECP as planned despite the negative impacts the CV19 crisis is expected to have on the Greek economy in 2020 and beyond.

Greece’s withdrawal from coal is a fundamental transformation that will create substantial sector and social challenges with the following broad implications: (1) constructing large volumes of low carbon generating capacity in order to ensure energy security in an increasing electrified economy, (2) reengineering the country’s transmission and distribution networks to reflect the additional penetration of distributed, intermittent renewable energy, and (3) addressing the social and economic impacts of the closure of a major part of its existing energy infrastructure, i.e. ensuring a just and inclusive transition.

We have supported many energy projects so far, especially renewables, working together with leading companies, such as GEK Terna, Mytilineos and HELPE among others.

A recent milestone is our support for the largest renewable energy project in Greece and the largest solar energy project in south-eastern Europe to date, the new solar park in Kozani. In 2017, we also approved a framework committing up to €300 million to finance renewable energy investments in the country.

The main reasons why this sector is important for the development of the Greek economy and thus our participation, is first to help the decarbonization of the country and the transition to a greener economy, as well as to strengthen local linkages and regional integration.

What is the EBRD’S philosophy about its presence in the Greek economy and especially in the energy sector?

In Greece in particular, supporting sustainable energy and infrastructure is among our top priorities. In fact supporting sustainable energy and infrastructure is one of the pillars of the newly approved country strategy. Our investment strategy in the energy sector going forward will aim at further liberalization and diversification of the energy market focusing on renewables and increased renewable energy capacity and a more diversified energy mix to promote decarbonization of the economy. EBRD could support a second phase of feasible renewable energy projects with project preparation / technical assistance and financing (biomass and biogas plants, use of waste heat in greenhouses for high value-added agriculture, electricity storage facilities, green hydrogen production plants and other forms of energy storage.

We see that it’s challenging to meet EU climate goals in Greece and our goal is to support the country with that. Our approach and philosophy is in line with the National Energy and Climate Plan and we are very glad the Greek government is committed to close all lignite plants. We need to keep this momentum, despite the current Covid-19 crisis, and turn the country greener.

One good example is our recent support for PPC (DEI). This has been one of our largest investments (€160 million) and the first time we supported the public sector in Greece. This facility supports PPC’s working capital needs at a time of customer payment volatility following the outbreak of the crisis. It also strengthens the resilience of the electricity sector as a whole by ensuring the stability of essential utility supplies and maintaining the momentum towards decarbonization.

What are the characteristics of private companies that could apply to be supported by the EBRD?

When we consider financing a project we analyze different aspects, such as how it supports the green economy, if it promotes women or youth inclusion, if it can enhance the competitiveness and resilience of the Greek economy etc. We look at the financial strength of the project as we operate according to sound banking principles. We cannot finance companies in certain sectors like defence-related activities, tobacco, substances banned by international law or gambling facilities.  As I have already mentioned, we also need to be additional.

We work in a wide range of sectors, from energy, infrastructure, manufacturing, property, tourism, agriculture to trade and financial institutions. We also support SMEs with business advice, know-how transfer and trainings.

What are your conclusions from your cooperation so far with Greek companies and institutions?

We’re very proud of all our projects in Greece so far. Since commencing our operations in 2015, the Bank has invested more than €4 billion in the country, helping respond to the financial crisis. Against a turbulent political and economic backdrop, the EBRD helped stabilize the financial sector, support private companies through export-oriented growth and lay the foundations for greater private sector participation in critical energy and infrastructure projects that have also strengthened regional integration.

We faced several challenges because of the financial crisis, but this was expected and was exactly the reason why we came to the country. Our main conclusion is that Greek companies have strong potential and very talented workforce, who we’re glad to be working with. The COVID-19 pandemic has abruptly interrupted Greece’s steady recovery, but we’re confident that the country can build back better.

We have an excellent cooperation with the Greek Government whom we are supporting on a number of initiatives.  In late 2020, the EBRD joined forces with the Ministry of Development and Investments of Greece to establish a new public-private partnership (PPP) preparation facility cooperation account, following a request from the Greek authorities. We are also working close with the Ministry of Finance on development of a capital market strategy, a project supported by DG Reform.

What are your plans for the new year?

We will focus on supporting the recovery of the Greek economy, by helping with the immediate needs of the Greek businesses because of coronavirus, as well as with their long-term growth plans. Green projects, including in the energy sector, will be our priority, but we’ll also be active in other sectors. We’ll continue supporting the banking sector, too.

Do you consider the investment risk in our country increased after the great economic crisis and in the light of the current crisis due to a pandemic?

The financial crisis had a strong impact on Greece, but we recognize that the Greek economy had started recovering and growing in the recent years. It’s true that COVID-19 containment measures are likely to depress economic output and cause particular disruption to the tourism industry, reversing the economic recovery and hindering investments in the near term, not only in Greece, but also in most countries. There are still many things that need to be improved in the country to attract more investors, but we don’t consider the investment risk much higher than it used to be. The Greek economy can recover after the pandemic.

 

Preliminary talks for 9th post-bailout review begin today

Power utility PPC’s lignite monopoly ordeal, the effort to ensure proper functioning of target model markets, the progress of privatization plans, and Greece’s decarbonization master plan for the lignite-dependent local economies of west Macedonia, in the country’s north, and Megalopoli, Peloponnese, are the key issues on the agenda of the ninth post-bailout review set to be conducted by the European Commission.

Preliminary review talks are scheduled to commence today between energy ministry officials and Brussels technocrats. These will be followed by higher-level talks involving technocrat chiefs and Greece’s newly appointed energy minister Kostas Skrekas.

Though his predecessors faced plenty of pressure, especially over PPC’s dominance, the new minister could be in for a hard time if pending energy-sector issues are not directly dealt with.

RAE, the Regulatory Authority for Energy, and power grid operator IPTO are still seeking solutions to tackle problems faced by the target model’s new markets. They got off to a problem-laden start in November, prompting a sharp rise in balancing market costs during the first few weeks.

As for energy-sector privatizations, the plan to offer a 49 percent stake in distribution network operator DEDDIE/HEDNO appears to be making sound progress and attracting strong interest, as exemplified by the participation of 19 participants in December’s market test.

On the contrary, the privatization plan for gas supplier DEPA Commercial could be destabilized by the company’s ongoing legal battle with ELFE (Hellenic Fertilizers and Chemicals) over an overcharging claim made by the latter. This battle could delay and affect the DEPA Commercial sale.

The Just Transition Plan for Greece’s decarbonization effort is now beginning to make some progress, but this unprecedented endeavor’s degree of complexity cannot be overlooked. Vast amounts of land controlled by PPC need to be repurposed, Brussels must approve investment incentives, and licensing matters need to be resolved, amongst other matters.

Decarbonization compensation effort locked in bureaucracy

A Greek decarbonization compensation request forwarded to the European Commission for power utility PPC’s need to keep operating lignite-fired power stations, nowadays loss-incurring units, from 2021 to 2023, has developed into a slow-moving ordeal locked in Brussels bureaucracy.

Though, until recently, the Greek request appeared to be headed towards approval, Brussels officials have since slowed down the case, extensively questioning the claim through a stream of emails to the energy ministry.

State-run PPC is seeking respective compensation amounts of 180, 150 and 200 million euros for the three-year period.

The European Commission has been relentless with its questioning despite appearing to recognize the validity of the Greek compensation request.

The Netherlands and Germany have both received similar decarbonization compensation amounts.

Greece, according to some sources, has not pursued the right strategy as it should have delayed the decarbonization compensation request case until the finalization of an older antitrust case concerning PPC’s lignite monopoly.

Though Greece and the European Commission reached an agreement last October, according to which 40 percent of PPC’s lignite-generated electricity production must be exclusively made available to independent suppliers at a pre-determined price, not below cost, the decision has yet to be implemented.

A market test still needs to be conducted to measure the market’s level of interest in this offer. Given the cost of lignite, independent players may not be interested.

PPC holding back on Ptolemaida V fuel decision

Power utility PPC will take ongoing global technological developments and their comparative costs into account to decide, in approximately a year’s time, on the fuel to be used at its prospective Ptolemaida V power station in northern Greece from 2028 onwards, when a switch from lignite has been scheduled.

The facility, expected to be completed in 2022, is initially planned to operate as a lignite-fired power station for a six-year period before switching to another fuel or fuels.

All options are being left open, meaning that, beyond 2028, Ptolemaida V could run on natural gas, biomass, waste-to-energy or a combination of these energy sources.

Biomass represents an advantageous option as it can be produced at the utility’s older lignite-fired units in the area, PPC’s chief executive Giorgos Stassis has pointed out.

If a biomass option is chosen, PPC intends to provide land for farmers and cooperatives to cultivate plants for energy production. Yield potential and the local climate promise to be the two main factors behind PPC’s selection of plant species to be cultivated for biomass purposes.

Japan’s Mitsubishi, providing the new facility’s electromechanical equipment, was commissioned, some time ago, to conduct a study determining the optimal choice of fuel for Ptolemaida V beyond 2028.

Continued use of lignite, after 2028, at Ptolemaida V has also been tabled as a possibility if carbon-capture utilization and storage (CCUS) technology is applied for a zero net carbon footprint.

In such a case, the CCUS technology could be applied on a wider scale to lure industrial units to the region for the establishment of a new industrial zone.

PPC Renewables portfolio boosted by 1.9 GW in producer certificates

RAE, the Regulatory Authority for Energy, has granted PPC Renewables producer certificates for a total capacity of 1.9 GW, a pivotal step in the power utility PPC subsidiary’s effort to realize its ambitious investment plan. It features the installation of major-scale solar energy parks in north Greece’s west Macedonia region, facing a post-lignite transition.

A proportion of these new producer certificates, which elevate PPC Renewables into a major PV market player, could be utilized for state-controlled PPC’s planned collaboration with Germany’s RWE. A prospective partnership between the two sides appears near, recent meetings between the two sides have indicated.

The establishment of this partnership is close to being finalized, energy minister Costis Hatzidakis told Parliament yesterday, confirming an energypress report.

PPC and RWE signed a memorandum of understanding last March. A team of RWE officials then visited lignite fields in the west Macedonia region. Ensuing talks have since intensified. A finalized agreement by the end of the year has not been ruled out.

PPC Renewables is already developing two key PV projects, a 230-MW solar energy facility in Ptolemaida, northern Greece, and a 50-MW solar park in Megalopoli, Peloponnese.

Development of about 15 MW of the Ptolemaida project and a high-voltage sub-station are expected to be ready around January. Construction of a further 15 MW is already in progress, while work on the project’s additional 200 MW is scheduled to begin in the first half of 2021.

As for the Megalopoli project, PPC Renewables is currently staging a tender offering a construction contract. Five major foreign and Greek groups have submitted bids.

Post-lignite telethermal plan presented in Parliament

Sustainable heating solutions for the residents of provincial cities in Greece’s Mecedonia region, as well as Megalopoli, in the Peloponnese, to replace telethermal systems supported by power utility PPC’s regional lignite-fired power stations that are gradually being withdrawn, have been included in an upgraded just transition plan presented in Parliament yesterday.

This replacement plan was included in a memorandum of understanding and strategic cooperation signed last September by regional and municipal authorities, PPC officials and gas grid operator DESFA.

The plan features the development of network interconnections as well as a thermal hub consisting of the Ptolemaida V power station, now being developed for an annual capacity of between 300-400 MWh; a new combined heat and power (CHP) unit expected to produce between 270 and 350k MWh per year; electric boilers (0-125k MWh per year); and a natural gas boiler (10-125k MWh per year).

According to the plan, the Kardia region will be equipped with 80-MWth electric boilers by October, 2021, to eventually serve as back-up for the system, while new natural gas-fueled thermal energy facilities will also be developed for a total capacity of 160 MWth, along with a CHP unit and natural gas boilers.

 

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.

Mineral processing investment proposals submitted to post-lignite plan

Seven, possibly eight, investment proposals, for the construction of industrial plants to process raw minerals in northern Greece’s west Macedonia region into building and industrial materials, have been submitted to a committee overseeing the Just Transition Plan for lignite-dependent areas, energypress sources have informed.

An abundance of mineral deposits in the region, combined with incentives being legislated, are attracting the interest of enterprises active in the aforementioned domains.

Greece’s Just Transition Plan was published by the energy ministry earlier this month for public consultation until October 31.

Mineral deposits in the area include rock crystal, used to produce industrial glass, bricks, porcelain and colours; nickel, whose uses include reinforcing the durability of defense weapons and tanks; chromite, an iron chromium oxide; huntite, most commonly used as a natural mixture with hydromagnesite to produce a fire retardant additive for polymers; and attapulgite, its uses including mortar restoration.

Just Transition Plan objectives include the development of an industrial zone in the west Macedonia region that could host processing facilities for these mineral deposits in the post-lignite era.

PPC green plan includes pumped storage, hydrogen, old generator use

Power utility PPC’s green-energy plan represents a key part of the company’s new business plan, along with a newly adopted customer-oriented approach and the digital transformation of production and distribution networks, deputy chief executive Giannis Kopanakis has pointed out during a speech at the 3rd Athens Investment Forum.

PPC’s green energy plan will be based on decarbonization, through a gradual withdrawal of the corporation’s lignite-fired power stations, and RES market penetration, the deputy noted.

Telethermal need coverage, development of large-scale solar energy farms at former lignite mines, and investments in energy storage, biomass, hydrogen and other new technologies all feature in the transition plan for lignite-dependent local economies, Kopanakis told the conference.

As for energy storage, PPC, besides batteries, also intends to develop pumped-storage systems at depleted lignite sites, appropriate for use as small-scale reservoirs.

The development of hydrogen producing facilities, also included in the PPC plan, will greatly depend on decisions concerning the fuel mix the corporation’s new Ptolemaida V power station will run on beyond 2028.

PPC also plans to utilize existing mechanical equipment of lignite-fired power stations either closed or headed for closure through use at other company facilities. Generators at old power stations are planned to be converted into condensers for grid voltage stability. Such systems will be needed as a result of the sharp increase in RES stations.

PPC’s investment plan, budgeted at 2.2 billion euros, is expected to create at least 900 permanent jobs as well as 3,000 temporary positions, for the construction of new projects, Kopanakis said.

 

PPC’s new image a prelude to revised business plan, imminent

Retail outlets to open for extended business hours, digital products and new services, swifter withdrawals of lignite-fired power stations, as well as an acceleration in the development of major-scale and smaller RES projects are among the factors contributing to power utility PPC’s new corporate image, showcased yesterday, during a 40-minute event, by chief executive Giorgos Stassis, who described the new image as a prelude to a revised business plan to be presented towards the end of the year.

The revised business plan, to have a three-year duration, will be a more ambitious and confident plan than last year’s version as, besides swifter lignite unit exits, it will feature bolder digitalization steps, a more aggressive retail market policy, aim for a RES portfolio well over 1 GW over the next three years, through a pool of prospective projects totaling 6 GW, and also feature network and personnel investments.

Next year, the company will aim to double 24 existing retail outlets – they begin operating for extended business hours as of today – as well as 75 service centers that may be visited by appointment only.

Yesterday’s announcements represent just part of the developments to be gradually announced by PPC, the most imminent being a new series of digital products, dubbed PPC myHome, to be launched within the next few days.

The new business plan’s level of ambition will also depend on external factors, Brussels being pivotal. Settlement of the country’s ten-year lignite dispute with the European Commission will offer state-controlled PPC greater leeway.

PPC is also hoping for a favorable Brussels response within November on a compensation request for 200 million euros, annually, for every year lignite-fired power stations in the west Macedonia and Megalopoli regions will need to keep operating.

JTF plan includes 16 post-lignite projects budgeted at €2.5bn

The total cost of sixteen investment proposals concerning the decarbonization of Greece’s lignite-dependent areas included in the country’s Just Transition Fund plan, just released by the energy ministry for public consultation until October 31, is estimated between 2.3 and 2.5 billion euros.

The plan, offering project description and cost details, includes eleven proposals for west Macedonia, in northern Greece, and five proposals for Megalopoli, in the Peloponnese.

The proposals for west Macedonia include 2-GW solar farm projects by power utility PPC.

The power utility is currently developing a 230-MW solar farm budgeted at 133 million euros.

A Solaris Bus & Coach project for a RES-based hydrogen unit budgeted at one billion euros is also among the eleven proposals for west Macedonia, as is a 250-MW energy storage project by Eunice, to cost 280 million euros.

The five Megalopoli proposals included in Greece’s JTF plan include PPC solar farms with a capacity of 50 MW and budgeted at 250 million euros; a pharmaceutical production facility to cost 90 million euros and create 400 jobs; a smart-technology livestock and animal feed farm budgeted at 40 million euros; a theme park for entertainment and educational purposes to cost 40 million euros; as well as other public-sector investments worth 30 million euros.

 

 

 

PPC, going green, to present transformation plan on Monday

Power utility PPC’s new three-year business plan, to transform the company from a lignite-centered utility into a RES-focused enterprise backed by a range of modern and digital commercial services, will be officially presented on Monday by the state-controlled company’s board, headed by chief executive Giorgos Stassis (photo), with Prime Minister Kyriakos Mitsotakis in attendance.

A new company logo symbolizing PPC’s shift from lignite to renewables will also be unveiled at the event along with the launch of the motto “PPC welcomes the future”.

PPC’s trademark lightning bolt-bearing logo that has featured for years at the façade of the company’s Athens headquarters has already been removed to make way for the the new logo, to be unveiled at Monday’s event.

On the day, PPC will present details on its plan to develop a RES portfolio with a capacity of between 2,000 and 3,000 MW over the next three years. This effort will coincide with the utility’s phase-out of lignite-fired power stations.

The privatization plan for the forthcoming sale of a 49 percent stake in subsidiary DEDDIE/HEDNO, the distribution network operator, expected to begin towards the end of this year, will also be presented at Monday’s event.

So, too, will an abundance of new services, including house repair and maintenance insurance.

PPC’s new three-year plan, at its core, will aim for high profitability and an annual EBITDA figure of between 700 and 900 million euros. It will also detail the company’s interest in DEPA Commercial, a new gas utility DEPA entity headed for privatization.

On Monday, PPC will also offer an update on ongoing talks with investors, including Germany’s RWE, for the development of solar farms worth 1.2 billion euros in northern Greece’s lignite-dependent west Macedonia region.

Funds of between 500 and 550 million euros stemming from PPC’s securitization of unpaid receivables will be used to help finance RES investments. The company is also considering a bond issue for the end of the year. Funds to be raised through the prospective DEDDIE/HEDNO sale will also be used for these investments.

Sensing a bright future at PPC, a growing number of institutional investors and hedge funds from abroad are considering the company’s share. They include Allianz Global Investors, Bell Rock Capital, Helm Investment Partners, Bluecrest Capital Management, Polygon, Fiera Capital, Zenon and Prince Street Capital.

 

 

 

Government’s post-lignite master plan set for one-month consultation

The government’s post-lignite master plan for the west Macedonia region in the country’s north, and Megalopoli in the Peloponnese, both lignite-dependent economies, is set to be forwarded for public consultation, possibly within the day, to enable observations and comments for a one-month period.

Power utility PPC plans to phase out its lignite-fired power stations and mines over the next three years as part of Greece’s decarbonization strategy.

The master plan’s draft will feature specific targets, studies conducted to reach conclusions, and the government plan prepared by a special decarbonization committee headed by government official Constantinos Mousouroulis.

The availability of funds necessary to support the development of this strategic plan will be pivotal.

Energy minister Costis Hatzidakis has announced that funds totaling over 5 billion euros will be made available for the post-lignite master plan through the EU’s National Strategic Reference Framework; national sources; the Just Transition Fund; European Investment Bank; and the European Fund for Strategic Investments, commonly referred to as the Juncker Plan.

Nearly 70 investment proposals have been submitted to the special decarbonization committee headed by Mousouroulis, while 16 major investment plans are now regarded as mature plans possessing the ability to create new jobs in west Macedonia and Megalopoli and reform the economies of these regions.

 

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.

Excessive cost, for PPC, of running lignite-fired units hastening exit plan

The financial burden on power utility PPC as a result of its continued use of lignite-fired power stations at a time when the EU is racing towards climate neutrality has prompted the utility to revise its lignite unit phase-out plan for power stations in northern Greece’s west Macedonia region and Megalopoli in the Peloponnese.

According to latest information, PPC’s administration is planning further premature withdrawals of lignite-fired power stations after announcing a precipitated exit of its Megalopoli III unit, as was reported by energypress yesterday.

The Megalopoli III unit will be shut down six months sooner, in mid-2021, instead of early 2022. This 250-MW lignite-fired facility has operated for just six hours since April.

The average variable cost of lignite-based energy generation is €0.80 per MWh, well over the System Marginal Price of €0.45 per MWh, according to data presented by energy minister Costis Hatzidakis.

According to some sources, PPC has once again raised, to the European Commission, a compensation claim for being required to keep operating high-cost power stations in order to secure grid sufficiency and security.

PPC will be forced to proceed with swifter lignite unit exits if this compensation request is not satisfied, pundits said.

Power grid operator IPTO has the final say on the assessment of energy security matters.

PPC’s lignite-fired power stations covered just 36.8 percent of the country’s overall electricity demand in the first half, its lignite units playing a diminished role.

 

Ministry proposal seen ending PPC lignite monopoly case

Independent electricity retailers would be entitled to lignite-generated electricity supply from power utility PPC at a predetermined price, definitely not below cost for the utility, in quantities constituting 40 percent of each lignite-fired power station’s production, to be distributed to suppliers in proportion to their respective retail electricity market shares, until 2023, when  lignite-fired units are expected to have been phased out as part of the country’s decarbonization plan, according to a finalized proposal forwarded by the energy ministry to the European Commission’s Directorate-General for Competition a fortnight ago in an effort to resolve a long-running antitrust case.

Energy ministry officials are confident this formula will end the antitrust dispute, now a decade long, concerning’s PPC’s lignite sector monopoly.

Back in 2010, lignite dominated Greece’s energy mix but there is now much less at stake as lignite-fired power stations are being phased out over the next three years.

PPC’s lignite-fired electricity generation dropped 47.8 percent in the first half, diving 70 percent in the second quarter, the utility announced just days ago when presenting its first-half results.

PPC’s lignite-based output totaled 3,000 GWh in the first half and just 756 GWh in the second quarter.

Energy ministry officials believe the Directorate-General for Competition will not resist accepting the Athens proposal as a rejection would take the dispute back to European Court, meaning a case would not be heard any sooner than late-2021. By then, PPC’s lignite-fired power stations Kardia III and IV and Megalopoli III will have all been withdrawn, according to the latest schedule announced by energy minister Costis Hatzidakis earlier this week.

 

Gas, renewables cover 76% of electricity demand in June

Natural gas and renewable energy sources covered 76 percent of electricity demand in June, limiting lignite’s contribution to a mere 5 percent, latest figures provided by power grid operator IPTO have shown.

The development highlights the fast-approaching end of the lignite era in Greece, currently in transition towards green energy.

Natural gas-fueled generation in June covered 37 percent of electricity demand, plus 2 percent contributed by cooling, heating and power (CCHP) generation, while renewables contributed 37 percent, including hydropower input of 9 percent.

Highlighting lignite’s severely diminished role in generation, PPC restricted its lignite-fired generation last month by 75 percent compared to the equivalent month a year earlier.

During this same one-year period, renewable energy source generation increased by 7.6 percent, while natural gas-based electricity production was up by a milder 1.2 percent, the IPTO data showed.

In another noteworthy statistic, all of the country’s lignite units were switched off for 40 hours, continuously, for the first time in June.

Rising CO2 right prices signal irreversible post-lignite course

Higher CO2 emission right costs, forecast to rise even further over the next few years, and this trend’s growing cost for power utility PPC’s lignite-fired power stations, highlight the country’s irreversible course towards the post-lignite era.

CO2 emission right costs have climbed to levels of about 30 euros per ton, the highest since 2006, Nikos Mantzaris, policy analyst at The Green Tank, an independent, non-profit environmental think tank, noted yesterday during a presentation of a new report, by the think tank, on Just Transition, the EU policy to end lignite dependence in Europe.

CO2 emission right prices will increase further over the next five years to reach levels of 35 to 40 euros per ton, sector experts have projected, Mantzaris said.

Stricter CO2 emission right regulations to be implemented by the European Commission in 2021 will push prices even higher, Mantzaris supported.

This upward trajectory of CO2 emission right costs is weighing heavy on PPC. Energy minister Costis Hatzidakis has estimated that PPC’s CO2-related costs in 2020 will amount to at least 300 million euros, a repeat of last year.

PPC has already made moves to restrict its lignite-fired generation for the grid. “The downward trend became even steeper following a full decarbonization decision announced [by the government] in September, 2019, which led, in May, 2020, to lignite covering just 6 percent of electricity demand on the grid, a historic low,” according to the latest Green Tank report.

For the first time in seven decades, not a single lignite-fired power station in Greece’s west Macedonia region operated on May 20 this year, while, between June 7 and 9, all the country’s lignite-fired power stations did not operate for 40 hours, the report noted.

 

 

EU recovery fund compromise cuts into JTF for lignite end

A significant contraction of the Just Transition Fund that has resulted from a major compromise deal just reached between the EU’s north and south for a huge post-coronavirus recovery package has raised questions about the decarbonization effort’s financing and ability to progress smoothly.

A sum of 30 billion euros initially planned by the European Commission to be offered to lignite-dependent EU members states for their transition to cleaner energy will be cut to 10 billion euros.

A variety of post-coronavirus recovery sub-funds have been reduced in size, including the JTF, established to support Europe’s decarbonization process.

Prior to the compromise deal, a European Commission proposal had been made to increase the JTF amount for the EU’s lignite-dependent members to 40 billion euros from an initial sum of 7.5 billion euros.

Subsequently, Greece now stands to receive a few hundred million euros for its  decarbonization policy following an earlier estimate for a sum of 1.7 billion euros. The loss for Greece is worth approximately one billion euros.

The recovery package talks over the past few days saw a split between nations hardest hit by the virus and “frugal” members who were concerned about costs.

The deal centers on a 390 billion-euro program of grants to member states hardest hit by the pandemic. Italy and Spain are expected to be the main recipients.

It is the biggest joint borrowing ever agreed by the EU. Summit chairman Charles Michel described it as a “pivotal moment” for Europe.

 

Telethermal plan for the north enables faster lignite unit exits

Power utility PPC’s prospective combined cooling, heat and power plant in Kardia, northern Greece, will be designed to operate both independently and in connection with Ptolemaida V and provide telethermal needs to the regional provincial cities Ptolemaida and Kozani, seen as vital coverage that will enable the power utility to withdraw lignite-fired units, cost-incurring facilities, sooner than planned.

Ptolemaida V, a new facility nearing its launch and planned to remain as the power utility’s last lignite-fired power station, will spare PPC’s other lignite-fired units in the region from telethermal responsibilities.

This overall plan was agreed to yesterday by the government, municipal authorities, PPC and gas grid operator DESFA.

Ptolemaida V, when operating, will provide necessary telethermal energy through pipelines to the Kardia CCHP unit, which, in turn, will offer heating.

Even when Ptolemaida V is not generating electricity, the prospective Kardia CCHP unit, to run on natural gas, will be able to function independently and offer telethermal needs to residents in the region.

Authorities are pushing for the Kardia unit’s completion and launch by 2022, admitting that it could take until 2023.

Post-lignite plan to Boston Consulting, Grant Thorton

Boston Consulting and Grant Thorton have been awarded contracts by Greece’s privatization fund to prepare a master plan for Greece’s post-lignite era, due at the end of 2020, energypress sources have informed.

The two professional services companies, awarded deals totaling 200,000 euros plus VAT, will need to deliver a draft of their master plan to a coordinating committee heading the task around early autumn, three months after contracts have been signed.

Their finalized version must be completed and delivered six months from now, or roughly at the end of the year.

The master plan will include policies to tackle job losses as a result of Greece’s decarbonization policy, as well as policies for the establishment of new businesses and jobs in Greece’s west Macedonia and Megalopoli areas, both lignite-dependent local economies that will be severely impacted by the decarbonization plan.

Boston Consulting and Grant Thorton will need to analyze all related data, including  demographics and infrastructure-related data, and identify competitive advantages offered by the two aforementioned regions.

Industrial infrastructure, farming, research and innovation, tourism, logistics, energy and the environment, as well as social policies will all be examined for sustainable growth not requiring state support following the post-lignite transition.

Most of power utility PPC’s lignite units are expected to be phased out by the end of 2023.

Decarbonization an independent business plan linked to NSRF

The decarbonization master plan for the west Macedonian region in Greece’s north and Megalopoli in the Peloponnese, both lignite dependent local economies, will be an independent business plan linked to the new National Strategic Reference Framework, running from 2021 to 2027, exclusively funded and based on four main axes, sources have informed energypress.

A draft of the master plan has already been prepared and endorsed by the development ministry, while a competitive procedure will be staged for the shaping of the finalized plan.

A special advisory committee will present its opinion to the privatization fund, involved in the process, for the hiring of a consultant and development of the decarbonization master plan.

Its four main axes will be comprised of industry, the primary sector, tourism-culture and differentiation of lignite area energy identities, the sources said.

Though specific plans have yet to be set out as to how the country’s two main lignite zones will be restored, a tendency towards industrial development is already emerging.

The decarbonization project’s progress to date, procedural matters and its four axes will be discussed by the coordinating committee of the fair development plan at its next meeting, scheduled for this Friday.

DESFA 10-year plan approved, virtual pipelines not included

Gas grid operator DESFA’s ten-year development plan has been approved by RAE, the Regulatory Authority for Energy, following a lengthy procedure, including consultation, that lasted several months.

A virtual pipeline proposal envisioning LNG supply to Crete, the north Aegean islands and the Dodecanese via tankers from the operator’s Revythoussa terminal just off Athens was left out of the approved plan. This is the ten-year plan’s only notable change compared to the draft forwarded for consultation.

LNG virtual pipelines serve as a substitute for conventional gas pipelines to enable the transport of LNG to points of use by sea, road or a combination of these.

The virtual pipeline proposal was removed from the DESFA ten-year plan following concerns expressed by consultation participants over higher surcharge costs for consumers that could have been imposed as part of the project’s cost recovery procedure.

The gas grid operator’s ten-year plan includes, for the first time, a natural gas outlet along the TAP route for the west Macedonia region in Greece’s north.

This TAP outlet, a project budgeted at 3 million euros and expected to be launched late in 2022, is intended to supply natural gas to the area’s provincial cities of Kozani, Ptolemaida, Florina and Amynteo for use at telethermal facilities as well as other energy needs in the post-lignite era.

The area’s telethermal system currently relies on energy produced by power utility PPC’s lignite-fired power stations, soon set for withdrawal as part of the country’s decarbonization effort.

 

PPC’s Amynteo unit set to shut down, temporary closure for Kardia

Power utility PPC’s Amynteo and Kardia lignite-fired power stations in Greece’s north are both planned to cease operating at the end of this month, but the Kardia unit is scheduled to restart in October to cover the area’s telethermal needs, running between October and May.

Despite its closure, the Amynteo unit will be placed on stand-by – along with power grid operator IPTO – for possible electricity contributions between June 20 and August 20, when electricity demand peaks in Greece as a result of the tourism season. This, however, is seen as a highly unlikely prospect this summer given the severe impact of the coronavirus pandemic on electricity demand and the tourism industry.

A joint ministerial decision that had been tabled by former energy minister Giorgos Stathakis offered both the Amynteo and Kardia facilities 32,000-hour operating extensions, meaning they are entitled to operate until May, 2021.

However, state-controlled PPC, taking into consideration the current government’s ambitious decarbonization plan, has opted to withdraw Amynteo on April 30, it has informed RAE, the Regulatory Authority for Energy, and IPTO. The government is aiming for a withdrawal of all existing lignite-fired units by 2023.

PPC and union group Genop are currently engaged in talks concerning the futures of the 400 or so workers employed at the power utility’s Amynteo facility. Some 250 are stationed at the power station and 150 work the mines.

Some of these workers could be transferred to PPC’s Kardia and Agios Dimitrios units, while others will head for retirement, according to one proposal, energypress has been informed.

Voluntary exit programs will also be offered, especially for Amynteo staff.

The Kardia facility workers could be transferred to the Agios Dimitrios facility between the end of this month and the new thermal season, in October, when they are expected to return to the unit.

 

New NSRF funds for decarbanization effort to reach at least €600m

EU funds to be made available to Greece through the new National Strategic Reference Framework (2021-2027) for the country’s decarbonization effort are estimated to reach at least 600 million euros, sources have informed.

The NSRF amount is expected to be double the 300 million euros to be received by Greece through the Just Transition Fund, also for decarbonization projects.

The national contribution, expected to range between 10 and 20 percent, or roughly 150 million euros, will take the overall decarbonization amount to about one or 1.1 billion euros.

These funds will be used to fund a smooth post-lignite transition for Greece’s west Macedonia region in the country’s north and Megalopoli in the Peloponnese, both lignite-dependent local economies.

Two or three major foreign investments are expected to also draw private capital.

A change of mentality will be needed in both regions for sufficient post-lignite project development enabling full absorption of the support funds.

NSRF absorption in the entire west Macedonia region has been limited to just 200 million euros over the past few years.

 

RWE, to invest €1bn in Greek RES market, signing MoU today

German energy group RWE intends to invest approximately one billion euros in Greece’s renewable energy market over the next few years.

Details of the investment plan will be included in a Memorandum of Understanding expected to be signed today by the company heads of the German group and Greek power utility PPC at a Greek-German economic forum in Berlin.

RWE’s investment plan includes providing PPC expertise for its decarbonization effort. A prospective conversion of an existing PPC lignite-fired power station into a biomass facility, as well as joint investments in solar and wind energy projects with PPC subsidiary PPC Renewables are among the projects listed in the investment plan.

German renewable energy investment interest is focused on solar and wind energy projects. Other related technologies such as offshore wind facilities, as had been reported in the past, are not being considered.

RWE chief executive Rolf Martin Schmitz had informed Greek Prime Minister Kyriakos Mitsotakis of the German energy group’s interest to invest and provide knowhow at a meeting in Germany last October.

Between 2012 and 2018, RWE reduced its CO2 emissions by 60 million tons, a 30 percent reduction. The group, looking to be fossil fuel-free by 2040, will focus on further development in the RES and energy storage domains, an investment effort estimated at 1.5 billion euros. Germany has pledged to be carbon-free by 2038.

Lignite end’s socioeconomic hurdles stressed in EC report

Greece will face socioeconomic challenges as a result of the government’s decision to gradually shut down the country’s lignite units in the northern region of west Macedonia and Megolopoli, in the Peloponnese, for a climate-neutral economy by 2050, the European Commission has noted in a report delivered as an addition to its post-bailout report on the Greek economy.

Some 27,000 jobs could be lost in both areas, according to the report, delivered as an additional chapter intended to serve as basis for talks between Brussels and Athens on Greece’s transition towards a lignite-free era.

The two sides are already negotiating funding details from the Just Transition Fund, expected to financially support a new growth plan for west Macedonia and Megolopoli between 2021 and 2027.

Also, the Greek government has assembled an interministerial committee tasked with shaping a post-lignite plan for the west Macedonia and Megolopoli areas, both lignite-dependent local economies. The committee will deliver a plan by June, according to the energy ministry.

In its latest report, Brussels highlights the significance of lignite for the local economy and community of west Macedonia, whose population numbers 280,000, especially Kozani, representing more than half this figure with a population of 150,000.

“The [country’s] biggest mines and most lignite-fired power stations are located in this area. Lignite-based electricity generation is its most significant economic sector, representing over one-third of the area’s GDP,” the report notes.

An estimated 5,500 jobs at the lignite mines and power stations are directly threatened, while a further 20,000 jobs are indirectly threatened, the report’s authors added.

The west Macedonia region is already burdened by one of the highest unemployment rates (31% according to 2016 data) of all the EU’s lignite areas, the report notes. The region’s GDP per capita fell from 86 percent to 59 percent of the EU average between 2009 and 2017, it adds.

Over 100,000 residents are linked to telethermal systems for lignite power station-based domestic heating, the report also highlights. The replacement of lignite units in the area is one of the challenges that must be dealth with, it adds.

As for Megalopoli, the lignite sector is by far the most significant economic activity in this Peloponnesian region of 6,000 residents, the report notes. Some 1,600 jobs are at risk of being lost here, it adds, which takes the overall tally of jobs on the line, including in west Macedonia, to just over 27,000.

 

 

Solar-based hydrogen output considered for Ptolemaida PVs

The government and its energy ministry are considering a solar-based hydrogen production initiative through major-scale photovoltaic facilities planned at state-controlled power utility PPC’s lignite fields in northern Greece’s Ptolemaida area, on the way out as a result of Greece’s decarbonization plan.

Discussions for solar-based hydrogen production are still at an early stage. However, if pursued, the initiative would be launched in the Ptolemaida area, until now a lignite-dependent local economy.

Major-scale photovoltaic facilities such as a 230-MW project being planned by PPC in Ptolemaida, as part of a wider 2-GW initiative for the region, are considered ideal for solar-based hydrogen production, requiring considerable amounts of energy.

Solar-based hydrogen production utilizes photovoltaic (PV) cells in combination with water electrolysis. The resulting hydrogen can be stored and used to reproduce electricity whenever needed by the grid.

Current electricity production costs linked to this technology are high. However, technological developments such as the mass production of electrolytes could lower power production costs and lead to economies of scale, making such an investment feasible.

Greece is already taking part in a European initiative looking to promote hydrogen production. Germany, preparing to take over the EU’s rotating presidency from Croatia in July, appears determined to push ahead with hydrogen production initiatives.

Brussels links lignite withdrawal plan with cost recovery bid

European Commission energy authorities have linked the progress of the Greek government’s lignite withdrawal program with a possible approval of a lignite-related cost recovery mechanism sought by state-controlled power utility PPC, controlling the country’s lignite sector.

If Brussels authorities remain dissatisfied with the progress of Greece’s lignite withdrawal plan they will refuse to discuss any implementation of a cost recovery mechanism.

Also, the European Commission is expecting a solution for an end to PPC’s lignite monopoly if it is to endorse a lignite cost recovery mechanism.

Greek officials plan to soon stage a new round of related talks in Brussels.

For the time being, Brussels remains suspicious as to whether the Greek government will be able to pull off its lignite withdrawal schedule and shut down units on time.

The government has announced a plan to withdraw all existing PPC lignite units by 2023.

Brussels would consider the closure of PPC’s Amynteo units this year, as is scheduled, a constructive first step.

PPC’s interest in cost-recovery support for its lignite units, loss-incurring facilities still needed to cover the country’s energy requirements, was first publically discussed by the utility’s chief executive Giorgos Stassis in December, during a presentation of the company’s business plan. Other countries benefit from such support, he noted, without elaborating.

PPC’s lignite withdrawal plan also requires IPTO approval

Power utility PPC’s lignite withdrawal plan, involving an exit of lignite-fired units with an overall capacity of roughly 3.4 GW by 2023, has already been included in the National Energy and Climate Plan, subject to EU approval, but will also need to be endorsed by the country’s power grid operator IPTO.

The operator will make its decision after having fully assessed the grid’s needs to ensure energy sufficiency.

According to energypress sources, state-controlled PPC, whose lignite withdrawal plan is fundamental to the government’s decarbonization objectives, has already submitted its withdrawal schedule proposal to IPTO for endorsement.

It begins with an exit of PPC’s Amynteo I and II units this coming April. Next on the schedule are Kardia III and IV in 2021, once these units have clocked up 32,000 hours of operating time. Then, in 2022, PPC plans to withdraw Megalopoli III and Agios Dimitrios I, II, III and IV. PPC intends to complete the withdrawal plan in 2023 with the withdrawals of Megalopoli IV, Meliti I and Agios Dimitrios V.

Ptolemaida V, a prospective power station now under construction, is planned to enter the system as a lignite-fired unit in 2022 and operate as such until 2028 before being converted to run on an alternate fuel source. Various options, including biomass, natural gas, waste-to-energy, as well as combinations of these, are being examined at present.

PPC chief executive Giorgos Stassis, who last weekend visited northern Greece’s west Macedonia region, a lignite-dependent local economy, explained that the gradual withdrawal plan would facilitate finding solutions for company staff, regional telethermal needs and grid stability. PPC lignite-fired units are incurring losses, primarily as a result of rising CO2 emission right costs.