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.

Post-lignite transition plan for west Macedonia in three parts

Greece’s post-lignite transition plan for west Macedonia in the country’s north, concerning land owned by power utility PPC estimated to measure between 15,000 and 20,000 hectares, will be carried out through three concurrent cycles, authorities have announced.

The first of these three cycles will purely concern development of energy projects such as solar parks, waste-to-energy plants to be operated by power utility PPC, biomass facilities at Ptolemaida V following 2028, as well as hydrogen infrastructure.

This part of the overall effort will require a total expanse of between 4,000 and 5,000 hectares according to early estimates. Thousands of jobs are expected to be created during the next five years, it is believed.

“This obviously is not enough. The area needs a holistic development plan,” energy minister Costis Hatzidakis noted during a weekend visit to the lignite-dependent area.

The second cycle, expected to require 15 years, until 2035, to fully develop, entails land reinstatement of huge areas, including plantations.

“Workers who, until now, have been digging the land will now cover it for reinstatement, paving the way for its utilization in new ways,” energy minister Costis Hatzidakis noted.

The overall effort’s third section concerns National Transition Plan investments in the primary, secondary and tertiary sectors. This could include alternative farming, wine production, marble processing and agritourism. This third cycle is expected to require at least ten years to complete.

The land needed for the overall effort is owned by PPC, according to a series of decisions delivered by the Council of State, Greece’s supreme administrative court, meaning the project should not face  obstruction issues, as is often the case in Greece with major projects. However, the threat of resistance by local authorities cannot be ruled out.

Also, the absorption rate of EU development funds in this area, one of the EU’s poorest, will need to drastically improve from a level of just 20.35 percent, according to most recent data.

 

Top officials visit north for post-lignite fair transition plan talks

The leaders of Greece’s energy and development ministries and power utility PPC’s chief executive have scheduled a two-day visit, today and tomorrow, to Kozani and Florina, both lignite-dependent areas in Greece’s north, for an initial presentation to local authorities of the government’s plan for a fair transition towards the post-lignite era.

PPC’s lignite-fired power stations operating in the wider area are all headed for withdrawal by 2023 as part of the government’s decarbonization plan.

Energy minister Costis Hatzidakis, his deputy Gerassimos Thomas, secretary-general Alexandra Sdoukou, as well as development and investment minister Adonis Georgiadis, will offer local communities a first impression of the government’s fair transition plan.

For decades, these communities, in the west Macedonia region, have depended on PPC’s regional lignite mines and power stations for their livelihoods.

Hatzidakis, the energy minister, and PPC chief executive Giorgos Stassis will visit lignite fields and PPC facilities for talks with workers and supervisors. Stassis has also planned meetings with union groups.

In a symbolic gesture, the energy minister will also visit the environmental group Arcturos, his intention being to highlight the environmental importance of the government’s decarbonization effort.

Local mayors, MPs and representatives of the area’s business and academic communities are expected to present demands and opinions for the region’s post-lignite growth plan.

 

 

Coal electricity not competitive, Megalopoli facility workers told

Lignite-fired power stations are becoming a far less competitive electricity generation option by the day as a result of rising operating costs, workers at the power utility PPC’s Megalopoli III and IV units have been told by the energy ministry’s leadership.

Megalopoli, a lignite-dependent local economy in the Peloponnese, will receive some 25 million euros from a lignite withdrawal compensation fund, deputy energy minister Gerassimos Thomas told concerned Megalopoli workers.

The government has announced a plan to withdraw all existing lignite units over the next three years.

The operating time of lignite units is currently being kept to a minimum, the only justifiable reason to keep them running being the continued provision of telethermal needs, the workers were told.

Lignite-produced electricity, including CO2 emission costs, has steadily ranged between 80 and 90 euros per MWh, compared to 55-60 euros per MWh for gas-fueled power stations and a System Marginal Price (SMP), or wholesale price, of 59-60 euros per MWh, according to December figures, deputy energy minister Gerassimos Thomas told PPC’s Megalopoli workers.

In the renewable energy sector, latest auctions staged by RAE, the Regulatory Authority for Energy, produced wind energy prices from 55.8 to 58.3 euros per MWh and solar energy prices at 53.8 euros per MWh.

The Megalopoli workers were not convinced by the ministry’s arguments and, citing desulphurization investments worth 140 million euros at the power station in recent years, remained adamant on the sustainability of the Megalopoli III and IV lignite-fired units.

A special steering committee assembled to coordinate a fair national transition plan towards the post-lignite era for Megalopoli and west Macedonia, Greece’s other lignite-dependent area in the country’s north, is scheduled to hold its inaugural session later this week.

 

 

Negotiations on PPC lignite monopoly at crucial stage

Energy ministry officials and European Commission technocrats from the Directorate-General for Competition are negotiating for an agreement on a transitional mechanism to limit power utility PPC’s monopoly in lignite-fired electricity generation until its coal generators are gradually withdrawn from Greece’s energy system.

The transitional mechanism would operate until 2023, when the government plans to have withdrawn all of PPC’s existing lignite units, offering third parties access to lower-cost lignite-fired electricity.

In other words, PPC will need to sell lignite-fired electricity. However, the negotiating sides are at odds as to who will be able to buy. The Greek proposal limits the purchasing eligibility of lignite-fired electricity – through a mechanism, or an SPV – to energy-intensive industrial producers. Brussels also wants independent power  suppliers included.

Negotiations began soon after the festive season. The Brussels technocrats may also meet with Greek energy minister Costis Hatzidakis this week, possibly on January 23.

The European Commission technocrats are not yet convinced of the Greek  decarbonization plan’s adequacy. Greek officials are attributing the tough Brussels stance to the previous government’s failed sale effort of lignite units. An attempt is now being made to restore credibility, energy ministry officials noted.

Colossal task ahead for decarbonization goal

Greece faces a colossal task – in terms of money needed, level of complexity and coordination – to reach ambitious post-lignite objectives set by the government.

The effort could require as much as 4.4 billion euros in EU funds, deputy energy minister Gerassimos Thomas noted yesterday, plus many more billions from the private sector.

Greece is entitled to a considerable sum in EU funds for the country’s decarbonization effort but, as a first step, a cohesive master plan will need to be submitted to Brussels. It will then need to be executed. The plan’s rate of execution will depend on the country’s ability to absorb EU funds made available.

An inter-ministerial committee involving seven ministers and deputies and established to oversee the entire effort will stage its inaugural meeting today.

A collective effort will need to be made involving teamwork of at least five ministries (finance, environment & energy, development, interior and agricultural development), two regional authorities (west Macedonia and Peloponnese), and no less than four municipalities (Florina, Kozani, Amynteo and Megalopoli). The local economies of these regions are lignite-dependent at present.

A national action plan must now be swiftly prepared. Its specific project proposals will then need to be tabled to the European Commission for approval before any investment activity can commence.

Personnel retraining, heightened research activity and development of new technologies are other necessities.

 

PPC aiming for €650m EBITDA in 2020, seen as a pivotal year

Power utility PPC’s administration is aiming for a return to profitability in 2020, the objective, numerically, being to generate an EBITDA figure of between 650 and 700 million euros.

The company’s chief executive Giorgos Stassis presented PPC’s goals and challenges during a presentation, late in 2019, of a business and strategic plan for 2020, seen as a landmark year by the corporation’s leadership.

Within the next few days, PPC is expected to receive a 200 million-euro amount stemming from arrears linked to public service compensation in previous years. This amount, alone, promises to offer a considerable boost to PPC’s cash flow and operating profit.

Within the first quarter, PPC plans to stage a forum for investors and analysts during which the company business plan, objectives until 2024, as well as a restructuring plan will be presented in detail.

The PPC board may decide to proceed with an international bond issue during this period, once market conditions and reactions have been appraised. However, Stassis, the CEO, has clarified there is no great need to take such action fill any financial gap.

PPC is expected to securitize unpaid receivables worth 1.5 billion euros during the first quarter of 2020.

The company also intends to reshape its profile as perceived by customers. New products combining electricity and natural gas, as well as products reflecting household and business needs, will soon be marketed, possibly within the first two months of the year, sources informed.

The company’s transformation for a green-energy focus is one of PPC’s biggest challenges. As part of this effort, a series of partnerships with private-sector firms entailing joint RES investments are expected to be announced. Talks with ten investors have already taken place, the PPC boss noted during his presentation of the business plan.

PPC’s signing of a memorandum of cooperation with Masdar Taaleri Generation (MTG) for the development of wind and solar energy projects is expected to be followed by more initiatives.

Also, PPC will launch its decarbonization plan in 2020 with the withdrawal of its Amynteo I and II lignite-fired power stations.

The state-controlled power utility is also expected to announce details concerning the sale of a 49 percent stake in distribution network operator DEDDIE/HEDNO, a subsidiary firm. This privatization is seen generating major investment interest. Digitization of the country’s networks and installation of smart meters have fallen well behind schedule.

 

Post-lignite era fuel decision for Ptolemaida V next September

Power utility PPC is expected to have reached a decision by next September on the fuel mix to be used at its prospective lignite-fired power station Ptolemaida V beyond 2028, when this facility’s lignite-based operation is planned to end and complete the government’s decarbonization process.

The decision is expected to coincide with next September’s planned launch for Ptolemaida V, currently being constructed as a lignite-fired unit. The government has announced a plan to withdraw all of PPC’s existing coal generators by the end of 2023.

PPC is now looking to make project adjustments at Ptolemaida V that will enable a fuel conversion at the facility for lignite-free operation beyond 2028. Natural gas, biomass and waste-to-energy incineration, even a combination of all three generation methods, have been included as possible options in state-controlled PPC’s new business plan.

The power utility has requested a study from Mitsubishi-Hitachi, constructing the Ptolemaida V project, on future fuel alternatives for the facility. Finalized decisions will be made once the study has been delivered.

PPC chief executive Giorgos Stassis, speaking at a recent general shareholders’ meeting, assured a decision will be made by September, 2020 once all alternatives have been examined for an optimal solution, both technically and economically.

Ptolemaida V, a project with a 0.61-GW capacity budgeted at 1.5 billion euros, is expected to post operating profit before interest, taxes and depreciation if CO2 emission right costs range between 30 and 35 euros per ton, Stassis has noted.

 

Gov’t Council being assembled for support to lignite-dependent areas

The country’s administration is assembling a government council to be tasked with preparing a Just Transition Plan for Greece’s lignite-dependent areas needing support to offset the effects of the government’s planned withdrawal of all coal generators by 2028, including all existing units by 2023.

A Council of Ministers Act enabling the establishment and operation of the government council, to be headed by energy minister Costis Hatzidakis, has just been approved.

The west Macedonia region in Greece’s north as well as the Megalopoli area in the Peloponnese, both lignite-dependent local economies, will need support while adjusting to the post-lignite era.

The government council to work on the Just Transition Plan will be comprised of top officials from a number of ministries, which, besides the environment and energy ministry, include the finance, interior, development and investments, as well as agricultural development and food ministries.

“Ending the economy’s dependence on polluting lignite fuel is a key energy policy priority,” noted energy minister Costis Hatzidakis. “However, the withdrawal of all lignite units by 2028 must be done in a coordinated and responsible manner. The government’s top priority is to make the transition to the post-lignite era a fair one for western Macedonia and Megalopoli with claims of all necessary funds from Brussels,” he added.

A comprehensive, multidimensional and forward-looking plan will be presented by the new government council in mid-2020, the minister said.

Besides national and private funding, Greece will also seek EU support funds, including from the Just Transition Fund.

 

 

PPC presenting its new business plan today, market awaiting details

Power utility PPC’s new business plan, to be announced today, has attracted the attention of market officials, eagerly awaiting details on the utility’s transformation, objectives and how these can be achieved.

PPC is expected to make official a swifter withdrawal plan for all its existing lignite-fired power stations by 2023, a staff reduction plan numbering approximately 5,000 employees, as well as a renewable energy capacity boost of 1 GW by 2024.

Ptolemaida V, a 660-MW facility currently under construction, is expected to operate until 2028, Greece’s decarbonization deadline, according to the government, before it is converted into a  lignite-free unit. Details on this conversion plan remain unknown.

A recent study conducted by power grid operator IPTO determined that gas-fueled power stations offering a total capacity of between 2,400 and 2,800 MW can cover the gap to be created by the withdrawal of PPC’s lignite-fired units.

However, the IPTO study was conducted based on the assumption that PPC’s lignite-fired power stations would be withdrawn by 2028, the previous goal, not 2023, as has emerged more recently. It remains unclear how this change of plan could affect the overall capacity coverage equation and whether an additional study will be needed.

Market officials are also awaiting further details on the cost of PPC’s staff reduction plan. The  willingness of employees to accept voluntary exit plans will be crucial.

Also, the cost of the utility’s new focus for greater renewable energy production is another key aspect of the business plan being eagerly awaited by market officials.

 

PPC plan includes withdrawal of all existing lignite units by 2023

Power utility PPC will cease operating all of its existing lignite-fired power stations by 2023, according to the corporation’s new business plan, expected to be approved by the board today.

Just days ago, at a Greece-focused Capital Link Forum event in New York, PPC’s chief executive Giorgos Stassis said the utility does not intend to keep burning lignite until 2028, when Greece plans to have fully decarbonized, according to an objective announced recently by Prime Minister Kyriakos Mitsotakis.

The aggressive lignite-unit withdrawal program is made possible by the technology available today, Stassis pointed out. Greece, currently Europe’s biggest emitter of CO2, will develop into one of the lowest polluters on the continent, the PPC boss added.

Five units at the Agios Dimitrios lignite-fired power station totaling 1,456 MW, two units at Amynteo (546 MW), Meliti (289 MW), all four Kardia units (1,110 MW), and the two Megalopoli units (511 MW) make up the list of PPC’s existing lignite units planned for withdrawal by 2023.

Stassis has not offered any details on the future of PPC’s Ptolemaida V power station, currently under construction and initially planned to operate as a lignite-fired power plant. It will most likely be used until 2028.

Besides the environmental concerns, PPC’s lignite unit withdrawal plan is also needed as a result of a sharp rise in lignite costs, generating major losses at the utility, estimated at 200 million euros for 2018, according to the chief executive. These losses are seen rising to 300 million euros for 2019.

 

Gas supply for post-lignite west Macedonia added to grid plan

A natural gas outlet – stemming from the TAP project – for supply to Greece’s west Macedonian region intended to help cover the region’s energy needs in the post-lignite era is one of the few new features added to a gas grid operator DESFA ten-year development plan covering 2020 to 2029, slightly revised compared to its previous version.

The aim is to supply natural gas through pipelines to the region’s provincial cities of Kozani, Ptolemaida, Florina and Amynteo for use at telethermal facilities, currently operating through heat produced at power utility PPC’s lignite-fired power stations.

These PPC units, however, will soon be withdrawn as part of the government’s plan for a decarbonized Greece by 2028, incorporated into a new National Energy and Climate Plan.

The national gas grid’s 10-year development plan, prepared by DESFA, is undergoing public consultation for the second time since August for feedback on its minor changes, including the gas supply plan for west Macedonia.

The first round of public consultation was staged by DESFA while the second round is being held by RAE, the Regulatory Authority for Energy.

A total of 49 projects budgeted at over 2.5 billion euros, overall, are included in the ten-year plan. Responses to the latest public consultation procedure face a January 10 deadline.

TAP outlets for lignite-dependent north included in DESFA 10-year plan

Gas grid operator DESFA has added to its 10-year development plan a construction and management plan for three TAP outlets covering energy needs in the country’s west Macedonia region, energypress sources have informed.

This region in northern Greece is currently heavily dependent on lignite but requires an energy source adjustment as a result of the planned closure of power utility PPC’s coal generators and mines.

Prime Minister Kyriakos Mitsotakis has pledged full decarbonization in Greece by 2028.

Last year, RAE, the Regulatory Authority for Energy, had asked DESFA to include a natural gas supply plan for west Macedonia in its updated 10-year development plan, running from 2020 to 2029, as regional energy cover during Greece’s transition period leading to a green-energy future.

According to initial estimates, the TAP outlets, looking likely to be developed in the Ptolemaida, Kastoria, Naoussa and Edessa locations, will cost between 3 and 4 million euros.

TAP, the international consortium behind the TAP project, to bring Azeri gas to European markets via a route that includes a pipeline section running through northern Greece, has offered its consent for supply to the aforementioned Greek regions.

If DESFA submits its updated ten-year plan within the current month, RAE should be ready to offer its approval by the beginning of 2020, following public consultation.

Towards the post-lignite era through RES development

Panagiotis Papastamatiou, chief executive of HWEA/ELETAEN, the Greek Wind Energy Association, who took part in a seminar held by the British Embassy of Athens this week, declared the following:

Greece is coming out of the financial crisis and presents significant investment opportunities for Greek and foreign investors. The macroeconomic stabilization achieved in the previous years, is combined with a period of political stability. This is an important window of opportunity, which we should take advantage of.

The Government must move towards the necessary structural and institutional reforms in order to create the environment for sustainable economic growth that will provide jobs and prosperity.

In the sector of energy, the future is challenging. We are all forced to face our responsibilities and we cannot avoid them. For over two decades, battles have been fought against the opening of the market. The political system had not been able to effectively promote liberalization. In my opinion, this is the main reason – along with others – that our energy system has remained bound to an anachronistic and expensive model, at the expense of consumers, entrepreneurship and the environment.  Abandoning this model is inevitable. Care should be taken to ensure that the transition to a new, clean and competitive energy model is as smooth as possible. This will not be an easy task, as we are already running late.

Τhe consumers must be our policy criterion; and how to offer them many good and low-priced choices. The policy tool for achieving that, is the free market and entrepreneurship.

We are pleased that the political will for the energy transition has been clearly expressed at the highest possible level. The Prime Minister has announced two major strategic choices:

  • The phase-out of all lignite units by 2028
  • The increase of the RES target by 2030 to 35%

These two parallel goals are of great importance.

Greece must abandon lignite without jeopardizing its energy security, the stability of its trade balance and the provision of low-priced energy.

De-lignification must be achieved through the development of renewable energy sources. And it must be accomplished by improving energy efficiency and energy-saving, if the targets and forecasts for savings are realistic.

What we are called upon to do is exploit our 100% proven renewable energy resource, which can be utilized immediately.

Many wonders if the RES market can deliver that target. The answer is YES.

Renewable companies operating in Greece, continued to invest even in the midst of the recent, deep financial crisis. They have vast experience, high level of human resources and a strong capital base. It is the responsibility of the state to release the healthy forces of entrepreneurship and the scientific world from bureaucracy and reaction. So, let’s not wonder if we can. We can and we have proven it. It is now up to the state to demonstrate the same.

What is needed, is to create the conditions, which will enable the Prime Minister’s two commitments to be fulfilled without delay. This can be achieved through a variety of policy actions:

  1. Radical and immediate simplification of the licensing procedures, in order to develop new projects, re-design already licensed ones and promote repowering.
  2. Promote large investments. Large onshore wind farms in the interconnected system. Wind parks with underwater interconnections. Offshore wind farms. Promotion of large projects with floating wind turbines.
  3. Energy storage. Centralized and decentralized units. Storage is the bridge that will bring us from today’s polluting model to the 100% green energy future.
  4. International interconnections with all neighboring countries and Europe. The strategic goal of these new interconnections should be to exclusively use them for electricity produced by renewable sources, in order to make Greece a green energy exporter.
  5. Domestic interconnections, emphasizing on interconnecting islands and overcoming local saturation.
  6. Secure the sustainability of the mechanism for payments to renewable producers.

All of this requires an overall National Energy and Climate Plan. The new NECP should be accompanied by a specific action plan, with intermediate measurable objectives, clear KPIs and monitoring mechanisms, a clear administrative structure.

But, above all, the new NECP must respond to the essence of the Prime Minister’s two commitments, it must be radical and ambitious.

We are optimistic that we will have such a NECP. A NECP that will base de-lignification on RES and Energy Saving.