post-lignite era

Revised NECP sets more ambitious targets for 2030

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Greece’s revised National Energy and Climate Plan, forwarded to the  European Commission and published on its website, sets new 2030 targets of 23.5 GW for all forms of renewables, 5.3 GW in energy storage, 7.7 GW in natural gas-fueled power stations, zero lignite presence, as well as a fleet of 460,000 electric vehicles.

In the RES sector, the country’s new NECP sets goals for 2030 of 9.5 GW in wind energy capacity, including 1.9 GW in offshore wind farms; 13.4 GW in solar power capacity; and 0.6 GW in other RES technologies.

Onshore wind farm capacity is planned to expected to increase by 12 GW between now and 2030, from 11.5 GW at present to 23.5 GW in 2030. The 2030 capacity goal for hydropower plants has been set at 3.8 GW.

The energy storage goal of 5.3 GW is expected to consist of 3.1 GW in batteries and 2.2 GW in pumped-storage hydropower stations.

Total annual electricity production is expected to reach 64.6 TWh in 2030, while electricity imports are forecast to be slashed to no more than 3 percent of Greece’s overall electricity generation, according to the revised NECP.

Renewables are planned to represent 44 percent of energy consumption by 2030, up from 35 percent in the previous NECP. Also renewables have been set an objective to contribute 80 percent of electricity production by 2030, significantly higher than the current NECP’s level of 61 percent, and close to 95 percent from 2035 onwards.

The revised NECP includes a zero-carbon emissions target in electricity generation from 2035 onwards.

Carbon emissions have already dropped significantly in 2023 as a result of the withdrawal of lignite-fired power stations.

Post-lignite area support programs worth over €820m

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Greek post-lignite authority EYDAM, the Just Transition Special Authority, is preparing twelve new programs budgeted at a total of more than 820 million euros for 2023 and 2024 to support businesses and other initiatives in northern Greece’s west Macedonia region and Arkadia in the Peloponnese, both lignite-dependent local economies.

The plan includes a 380 million-euro budget as support for investment plans in just-transition areas; 29.2 million euros for workforce empowerment interventions; as well as an 8.23 million-euro budget support program for unemployed young adults, vocational counselling and social empowerment.

Other aspects of the overall plan include a 30 million-euro budget for support of existing enterprises active in just-transition areas, a 20 million-euro budget for new enterprises either already active or preparing for launch in just-transition areas, as well as a 50 million-euro budget for the transformation and reuse of former lignite areas.

In addition, a 22 million-euro sum has been marked out for a special program aimed at the economic and productive transformation of entrepreneurial activity in the wider Megalopoli area’s bioeconomy.

IEA: Green transition progress made but long way to go

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Greece has made remarkable progress in its effort to end the country’s reliance on fossil fuels but still has a long way to go to achieve goals set, according to an International Energy Agency report due to be published tomorrow.

The IEA report, focused on Greece and the government’s effort to end the country’s reliance on fossil fuels, includes a series of recommendations and practices that have been implemented in other countries.

It highlights Athens’ progress towards a green transition and complete decarbonization and also provides a set of energy-policy recommendations and practices to help Greece reach its targets faster.

Greece has set a target to reduce greenhouse gas emissions by 55 percent by 2030 and reach zero emissions by 2050.

The measures proposed in the forthcoming IEA report are intended to offer guidance making Greece’s transition towards an efficient and flexible zero-carbon energy system as smooth as possible.

The effort will need to include a further significant reduction in the country’s reliance on lignite and also set a binding target ending lignite-based energy production by 2028, at the latest, according to the IEA report.

Significant progress has been achieved in renewable energy installations, which covered 20 percent of the country’s energy demand in 2021 and rose even higher in 2022, but much remains to be done, the report will note.

According to a global analysis published by IEA report a month ago, energy-related emissions around the world rose by 0.9 percent last year, reaching 36.8 billion tons. Carbon dioxide emissions increased by 1.6 percent, while diesel emissions rose by 2.5 percent but remained at pre-pandemic levels.

Plan backing local production of RES equipment imminent

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The energy ministry is preparing to launch the country’s first ever subsidy program supporting industrial production of renewable energy equipment, an initiative dubbed Produc-E Green and planned to offer manufacturers a sum of 200 million euros, through the Recovery and Resilience Facility (RRF).

The ministry intends to announce the support program’s guide, detailing conditions and terms, by the end of April.

The support program’s online platform for applications is now being developed and is expected to be launched soon after the guide has been announced.

Energy minister Kostas Skrekas made reference to the Produc-E Green program at the recent Power & Gas Forum in Athens, noting it represents the country’s first ever initiative to establish a domestic sector for production of RES equipment.

Greece, as a result, will no longer need to import all RES equipment that is necessary for the country’s energy transition, including batteries, storage systems, production and assembly of solar panels, as well as equipment for hydrogen and electromobility, the minister told the event.

Fast-track licensing, a lower  tax rate, labor-cost support during the development and launch period of production plants are among the incentives planned to be offered to investors.

Over ten production facilities around the country are expected to benefit from the Produc-E Green support program, including in the west Macedonia and Arkadia regions as part of the country’s decarbonization policy supporting post-lignite areas.

Two-thirds of PPC’s depleted lignite mines to the State

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Roughly two-thirds of power utility PPC’s depleted lignite mines are in the process of being transferred to the Greek State. The power utility has scheduled an extraordinary shareholders’ meeting on March 30 for approval of the transfer of ownership.

More specifically, 16,400 of 24,700 hectares of depleted lignite mine property is planned to be transferred to the Greek State. PPC will maintain control of the remainder, primarily for development of solar farms.

As noted by PPC, the completion of this transfer of property is subject, by law, to approvals by the General Assembly of PPC’s shareholders, the signing of a relevant notarial deed, as well as the receipt of all necessary approvals from competent authorities.

Ptolemaida V power station’s full-scale launch just weeks away

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Power utility PPC is just weeks away from commercially launching its new Ptolemaida V power station, a 660-MW facility in the country’s north now undergoing a final stage of trial runs.

Prime Minister Kyriakos Mitsotakis, scheduled to visit the area next week, is expected to highlight the significance of this project, including its role in the country’s anticipated post-lignite era.

Ptolemaida V, to initially operate as a low-emitting lignite-fired power station before eventually converting to natural gas, promises to greatly contribute to the grid’s energy sufficiency.

According to a latest estimate provided by power grid operator IPTO, in an energy sufficiency study, the facility may operate as a lignite-fired power station until the end of 2028 before being withdrawn for a two-year period and relaunched, at the beginning of 2031, as a 1,000-MW gas-fueled power station.

However, the power station’s switch to natural gas at a sooner date cannot be ruled out if gas prices de-escalate in the long-term and remain stable at lower price levels.

Lignite area €5bn upgrade plan presented at cabinet meeting

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The planned upgrade of Greece’s lignite-dependent areas – an effort of unprecedented domestic ambition budgeted at 5 billion euros that includes emblematic projects such as a hydrogen-producing facility, the country’s first; major-scale telethermal units; a 155-km natural gas pipeline in the north;  major-scale solar farms, including a 200-MW solar farm in Kozani being developed by Mytilineos for PPC Renewables; and the norther section of the E65 highway – will be presented at a cabinet meeting today.

A related draft bill includes provisions for the establishment of a special purpose vehicle for the overall effort, named Metavasi SA, meaning transition. The SPV will take over 16,400 hectares of power utility PPC’s lignite-related land, including fixed assets, except for property to be kept by the utility for its own green investments.

This transfer of 16,400 hectares represents 66 percent of PPC’s total land assets, currently measuring 24,700 hectares.

The Metavasi SPV will assume responsibility for the upgrade of the 16,400 hectares of land, currently hosting PPC lignite mines and lignite-fired power stations.

 

Technical chamber wants lignite maintenance in energy mix

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TEE, the Technical Chamber of Greece, favors the continued use of the country’s modern lignite-fired power stations for an energy-mix representation of between 10 and 12 percent over the next few years, as a means of securing electricity sufficiency and strategic reserves.

The chamber’s administration has officially approved an internal vote adopting this position. Its scientific committee, comprised of metallurgical engineers, expressed strong reservations over a government decision to prematurely terminate lignite-fired electricity production as part of the country’s decarbonization plan.

Extensive public debate and a detailed study, essential for a matter of such strategic importance for Greece, should have preceded the premature lignite withdrawal decision, the TEE scientific committee pointed out.

An approved master plan for the lignite withdrawals was rejected by regional authorities in Greece’s two lignite-dependent regions, western Macedonia, in the north, and Peloponnese’s Megalopoli, as proposals forwarded by local authorities and citizens were not considered or discussed, the committee noted.

A total of 19 months have elapsed and over 2,500 jobs lost since the government’s decision to prematurely withdraw lignite-fired units in the two areas, but the administration’s master plan for a fair transition, intended to restructure these lignite-dependent local economies, continues to lack clarity, the committee stressed.

EU funds made available for the restructuring of the two lignite-dependent economies, just over 700 million euros and well under a five billion-euro amount initially announced, are very limited for a proper and fair transition, the chamber added.

 

PPC to issue post-lignite bonds with yields of 6-7% to residents

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Power utility PPC is preparing to offer solar farm-project bonds with yields of 6 to 7 percent to residents of the lignite-dependent west Macedonia and Megalopoli regions, exclusively, where major-scale solar farms are planned as part of the utility’s decarbonization and economic transformation of the two areas.

The company aims to offer two sets of bonds representing 5 percent of its solar farm investments in these areas.

The issues will effectively offer residents a share of the economic growth potential of the west Macedonia and Megalopoli regions.

The lignite-related activity of the two regions has contributed significantly to the country’s GDP over the past six decades.

PPC plans to issue the two sets of bonds as soon as it has received finalized licenses for these solar farm projects.

The power utility has submitted licensing applications for a total capacity of 2.9 GW in both areas.

Assuming PPC is granted a 2-GW license for its west Macedonia project and construction costs average 700,000 euros per MW, the investment cost, for this project, would total 1.4 billion euros, meaning that a 5 percent share for residents would result in bonds worth a sum of 70 million euros.

A similar procedure would be implemented for PPC’s Megalopoli solar farm project, planned to offer a 500-MW capacity.

PPC wants to break up both issues into bonds worth 1,000 euros each so that they can be distributed to as many residents as possible.

 

‘Additional €3bn’ for lignite area redevelopment, SPV in making

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The transformation effort for Greece’s two lignite-dependent economies, west Macedonia, in the country’s north, and Megalopoli, in the Peloponnese, stands to receive three billion euros in additional support through two sources, Invest EU, established to fund decarbonization initiatives, and the European Investment Bank, Constantinos Mousouroulis, head of the government’s coordinating committee for the transition, announced at yesterday’s Delphi Economic Forum.

The three billion-euro amount, Mousouroulis noted, will add to two billion euros already made available for the effort through the EU’s Just Transition Fund and Recovery and Resilience Facility.

The official acknowledged that delays, especially financial, have held back the transition plan for the two regions, attributing the slow progress to the pandemic and, subsequently, the European Commission’s ability to operate.

Mousouroulis, at the forum, strongly defended recent efforts for the transformation of the west Macedonian and Megalopoli local economies, noting that complacency was prevalent for years.

“Not only was there no Plan B, but not even a Plan A for forthcoming changes concerning goals to combat climate change,” the official noted.

A total of 24,700 hectares of unutilized property to result from the closure of power utility PPC’s lignite-fired power stations and lignite mines in the west Macedonia and Megalopoli regions, both lignite-dependent economies for decades, is expected to be redeveloped through the program, to include PPC investments.

A special purpose vehicle is being established to attract investors, Mousouroulis said.

PPC results for 2020 out today, analyst projections disagree

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Power utility PPC’s financial results for 2020, set to be announced later today, are seen confirming the corporation’s ongoing positive course.

The company is expected to report robust 4Q results for 2020, including an EBITDA figure of 238 million euros, according to Pantelakis Securities, given its performance for the nine-month last year.

Operating expenses have been contained, fuel prices plunged, wholesale electricity prices fell, and the utility’s reliance on its loss-incurring lignite units was further diminished during the nine-month period.

For 2020 as a whole, the analyst projects PPC’s EBITDA will reach 938 million euros, a 180 percent increase compared to the 336.6 million euros posted in 2019, as a result of higher tariffs, lower energy purchase costs and reduced CO2 emission right expenses.

The extraordinary market conditions last year were favorable for PPC, the analyst pointed out, as the pandemic-related reduction of electricity demand enabled the utility to stop operating its high-cost lignite-fired power stations for extended periods.

PPC is currently phasing out its lignite facilities, until 2023, as part of the country’s decarbonization effort. CO2 emission right costs have begun rebounding since December.

Pantelakis Securities expects PPC’s sales to fall by 10 percent in 4Q to a level of 1.191 billion euros, while net profit for the fourth quarter is estimated at 39 million euros.

For 2020 as a whole, total turnover is expected to fall by 4 percent, year-on-year, to 4.71 billion euros and net profit is anticipated to be 53 million euros.

PPC’s net debt for 2020 is seen slipping to 3.5 billion euros from 3.68 billion euros at the end of 2019.

Optima Bank sees a less favorable picture for PPC’s 2020 results, projecting losses of 79 million euros, well below losses of 1.68 billion euros in 2019, and a total turnover reduction of 5.5 percent, to 4.655 billion euros.

 

Lignite areas from PPC to Greek State through SPVs

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Power utility PPC’s lignite zone areas not to be repurposed for the development of RES units as part of Greece’s decarbonization effort will be transferred to the Greek State through the establishment of two special purpose vehicles, one representing PPC, the other the Greek State.

At this stage, it appears that the power utility will transfer to the Greek State about two thirds of lignite areas it has used for electricity generation.

Talks between the coordinating committee, headed by government official Constantinos Mousouroulis, and PPC, held to determine which lignite areas and mines will remain under the wings of the state-controlled utility, are nearing completion.

Expenses that would have been covered by PPC for the repurposing of the lignite areas to be transferred to the Greek state will be taken into account for the agreement between the two sides.

PPC, as a result, will be spared of these expenses as the restoration of the lignite areas taken on by the Greek State will be funded through a 242 million-euro sum expected for the national recovery plan.

PPC has already begun procedures for the establishment of its SPV, sources have informed.

At the other end, a coordinating committee handling Greece’s just transition development is preparing a new section, for a related draft bill,  describing the charter of the Greek State’s SPV. This section will be forwarded for public consultation. Once the draft bill has been ratified, PPC’s unutilized lignite areas will be transferred to this SPV.

 

DESFA to push ahead with west Macedonia gas pipeline

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Gas grid operator DESFA is determined to push ahead with the development of a natural gas pipeline in northern Greece’s west Macedonia region, a project budgeted at 110 million euros, either with financial support from the EU’s current National Strategic Reference Framework or other financing solutions, including bank loans, if the project is ultimately excluded from EU recovery fund support.

Though a finalized decision on the list of projects to receive EU recovery fund support has not been reached, DESFA, according to energypress sources, will proceed with this pipeline project, part of the operator’s ten-year development plan for 2021 to 2030, totaling 545.5 million euros.

In examining its financing options for this gas pipeline project, DESFA will take decisions based on containing network usage fees to be paid by consumers.

The European Commission and European Investment Bank (EIB) no longer finance conventional gas-based infrastructure projects, unless eco-friendly hydrogen is incorporated into their plans. Even so, the west Macedonia gas pipeline has been included in the recovery fund catalogue as the project is linked to the post-lignite era.

Possessing a clearly developmental role with multiple benefits for the wider region, the pipeline represents part of the energy transition plan for west Macedonia, a lignite-dependent local economy, as it will help replace lignite-based energy, contribute to growth, and support the region’s industry.

The pipeline, to stretch 130 km, could be swiftly licensed, DESFA officials believe, as long as its financing plan is settled and municipal and regional authorities acknowledge the region’s gas penetration need. The pipeline’s delivery was forecast for within 2023 before questions concerning the project’s financing emerged.

Talks continue for EU recovery fund energy projects package

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Electricity network upgrades, including restricted underground cable installations – due to limited funds – at areas presenting serious energy security problems; decarbonization; as well as spatial planning and redevelopment for carbon-neutral cities feature as plans in an initial energy-projects package, worth over one billion euros, linked to the EU’s recovery fund, Brussels sources have informed.

Brussels authorities are currently appraising these projects, a procedure expected to be completed by the end of March. The Greek government will then need to immediately incorporate approved plans into a National Recovery and Resilience Plan and submit it to Brussels by early April.

Energy minister Kostas Skrekas and European Commission officials discussed the ministry’s proposals during a virtual conference yesterday.

Besides decarbonization, energy efficiency upgrades of buildings, as well as energy-related town and spatial planning, the government is also addressing the need to modernize infrastructure, especially networks, as was highlighted by problems encountered in many parts of Greece during recent snowstorms.

The installation of underground transmission cables will be restricted to between 2,000 and 2,500 kilometers of medium and low-voltage networks, given the amount of recovery funds available for this project, estimated at 200 million euros, according to energypress sources.

The cost of installing underground medium-voltage power lines is estimated at 100,000 euros per kilometer, compared to 30,000 euros for overhead lines. Installation costs for low-voltage power lines are estimated at 70,000 euros per kilometer, compared to 25,000 for overhead lines.

The overall effort is also expected to include an upgrade of ageing overhead transmission lines around Greece, dating back to the 70s and 80s.

Weather effects lend credibility to PPC lignite compensation bid

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The impact of last week’s heavy snowfall around Greece, prompting power outages in various areas, northern parts of Athens being hardest hit, has added credibility to state-controlled power utility PPC’s compensation bid to the European Commission for its need to keep using lignite-fired power stations.

Had IPTO, the power grid operator, not ordered the grid entry of PPC’s lignite-fired power stations, nowadays a high-cost option, widespread blackouts amid the adverse weather conditions would have been inevitable, making matters far worse, including at economic and political levels.

IPTO officials have stressed the country continues to need PPC’s lignite-fired power stations until their production capacity is gradually replaced by cleaner gas-fueled power stations. These are: PPC’s Ptolemaida V; a unit being developed by the Mytilineos Group in Viotia, northwest of Athens; and Terna’s prospective unit in Komotini, northeastern Greece, still at the planning stage.

The period between 2021 and 2024 will be crucial for the country’s power generating sufficiency as a result of the planned withdrawal of existing lignite-fired power stations, a related IPTO study has shown. The system’s sufficiency will depend on how swiftly the aforementioned gas-fueled power stations, totaling 2,150 MW, can be up and running.

If the planned completion dates for these three projects are maintained then there will be no reason to delay the withdrawal schedule of lignite-fired power stations, sources pointed out. The grid entry of PPC’s Ptolemaida V and Mytilineos’ Viotia unit, without the Terna unit, would suffice to cover the capacity gap to be left by the withdrawn lignite units, these sources added.

However, any delays in the completion of the new power stations could prompt Greek officials to request more time from the European Commission for the withdrawal of lignite-fired units, the sources said.

Post-lignite plan facing 19,000 job losses, €1.6bn GDP shrink

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Greece’s GDP will contract by 1.6 billion euros and over 19,000 jobs stand to be lost as a result of power utility PPC’s ongoing withdrawal of lignite facilities, a study conducted by IOBE, the Foundation for Economic and Industrial Research, has estimated, not taking into account a master plan of offsetting measures proposed for the lignite-dependent areas.

The total reduction in annual salaries as a result of these lignite unit withdrawals was estimated at 342 million euros by the IOBE study.

The Kozani area in northern Greece will be hardest hit, in terms of absolute numbers, among the country’s three lignite-dependent areas, the study estimates. Arkadia, in the central Peloponnese, and northern Greece’s Florina are the other two local economies depending on lignite.

The size of Kozani’s local economy is projected to shrink by 680 million euros, or 25 percent, according to the IOBE study. Job loss figures will also be biggest in Kozani, expected to reach 7,500, or 16 percent of the local workforce.

However, in a proportional sense, greater damage will be inflicted on Florina as its GDP is projected to contract by 28 percent, a 331 million-euro reduction. Job losses in Florina will also be considerable, reaching 2,900, or 15 percent, the IOBE study has projected.

Key issues in new minister’s first session with EC officials

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Today’s first meeting, via teleconference, between Greece’s recently appointed energy minister Kostas Skrekas and European Commission authorities, as part of Brussels’ ninth post-bailout review, will focus on four key issues: power utility PPC’s lignite monopoly; the proper functioning of target model markets; energy-sector privatizations, and the decarbonization plan for west Macedonia, a lignite-dependent area in the country’s north.

The four issues were addressed in preliminary talks last week between Alexandra Sdoukou, secretary-general of Greece’s environment and energy ministry and Brussels technocrats.

It remains to be seen if the European Commission will again commend Athens, and to what extent, for the target model’s functioning, as Brussels had done last November, when the model’s new markets in Greece were launched as a step to harmonize EU energy markets.

However, weeks into the launch, balancing market costs skyrocketed, leading to sharply increased wholesale electricity prices. RAE, the Regulatory Authority for Energy, is now considering to introduce an adjustable price-containing measure to be set as a percentage of day-ahead market prices.

The European Commission, in the latest talks, can also be expected to push for the launch of a market test concerning an agreement offering independent players access to PPC’s lignite-based electricity production.

Though the interest of independent players for lignite-based electricity may have diminished given its increased cost, this antitrust case, unresolved for years, remains a big concern for the government as Brussels could associate it with pending Greek issues.

The complexity of PPC’s lignite monopoly case was deepened following a decision by the previous energy minister, Costis Hatzidakis, to bundle the matter with a Greek compensation request based on the utility’s need to keep running lignite-fired power stations for energy sufficiency. According to reports, his successor, Skrekas, will not sway from this policy.

As for energy-sector privatizations, a sale plan for gas supplier DEPA Commercial has attracted considerable interest but officials are concerned as parent company DEPA is embroiled in an ongoing lawsuit with ELFE (Hellenic Fertilizers and Chemicals).

DEPA has appealed a verdict awarding the producer a compensation amount of 60 million euros following overcharging claims. The case could be deferred until September, meaning binding bids by possible DEPA Commercial buyers may need to be delayed.

Greece’s decarbonization master plan features 16 key investment proposals that are expected to create over 8,000 jobs, directly and indirectly, in lignite-dependent areas. However, numerous complex matters need to be resolved, including the transfer of related property controlled by PPC, Brussels’ approval of a series of incentives for new investments, and scores of licensing issues.

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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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.