post-lignite era

Towards the post-lignite era through RES development

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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.

Ministry officials questioned by DG Comp on electricity market

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The European Commission’s Directorate-General for Competition has expressed satisfaction over Greece’s pledge for decarbonization by 2028 as well as a privatization plan for distribution network operator DEDDIE/HEDNO, but the Brussels authority is demanding clarification on both procedures as details of an upcoming draft bill for power utility PPC concerning its planned coal generator withdrawals.

An energy ministry team headed by secretary-general Alexandra Sdoukou was summoned by the DG Comp for a meeting in Brussels yesterday. The DG Comp is looking for a clear picture of Greece’s new-look electricity market, still in the making.

An older case taking state-controlled PPC to European Court over the non-access of third parties to Greece’s lignite sources, monopolized by PPC, remains open following July’s derailing of an effort by PPC to sell lignite-fired power stations.

Brussels remains apprehensive and wants full details on the lignite sector as PPC will continue to control it for nearly a decade, until 2028, when every single coal generator in Greece is expected to have ceased operating, according to the decarbonization plan, announced recently by Prime Minister Kyriakos Mitsotakis.

It is feared that a new aggressive pricing policy expected to be announced by PPC early in 2020 could end up increasing the power utility’s retail electricity market share, reported at 71.77 percent in September.

PPC coal unit losses €596m in ’19, 80% of EU units in the red

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Power utility PPC’s lignite-fired power stations are projected to incur losses totaling 596 million euros this year, while four in five EU coal generators are no longer profitable and could lose 6.6 billion euros in 2019, according to a latest report by Carbon Tracker, an independent financial think tank.

In its report, titled “Apocoalypse Now” and released today, Carbon Tracker urges  policymakers and investors to plan for full dercarbonization by 2030 as the coal-generating sector will no longer be sustainable if not heavily subsidized.

European coal generators are losing considerable amounts owing to relentless competition from RES sources, as a result of continual cost reductions of wind and solar generation, as well as gas, noted Matthew Gray, Carbon Tracker’s head of power and utilities.

Ptolemaida V picture unclear but definitely lignite-free beyond 2028

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Though some time is still needed to examine all possible scenarios concerning the future of power utility PPC’s planned Ptolemaida V lignite-fired power station, now under construction, one thing is already clear, the facility will not be lignite-powered beyond 2028.

A highly ranked energy ministry official, speaking to journalists yesterday at the opening ceremony of Greece’s biggest wind energy complex – developed by Italy’s Enel Green Power on the island Evia, slightly northeast of Athens – indicated Ptolemaida V will not be lignite-fired following 2028.

The ministry official reiterated a recent objective set by Prime Minister Kyriakos Mitsotakis for full decarbonization in Greece by 2028.

All possibilities remain open for Ptolemaida V, from a non-lignite launch of the facility to its eventual conversion from lignite to biomass or natural gas by the 2028 decarbonization goal, the ministry official noted.

“Nothing is certain at the moment as the data, not at all simple, has not been calculated,” the official remarked.

Decarbonization plan prompts German investment interest

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Greece’s decarbonization plan, to be executed through a gradual withdrawal of power utility PPC lignite-fired power stations in the country’s west Macedonia region, in the north, and Megalopoli, in the Peloponnese, has prompted German investment interest.

The head of German electric utilities company RWE, Rolf Martin Schmitz, expressed an interest for green investments in Greece to Prime Minister Kyriakos Mitsotakis at a meeting yesterday in Germany. Schmitz highlighted his company’s knowhow in pursuing post-lignite plans.

The timing of yesterday’s meeting was not coincidental. Just weeks ago, Greece’s leader, speaking at the UN Climate Action Summit in New York, announced a decarbonization objective for the country by 2028.

Yesterday’s session can be seen as a follow-up to a meeting between Mitsotakis and German Chancellor Angela Merkel in Berlin last August.

The two leaders had discussed environmentally friendly investments and also announced a plan to stage an investment forum involving Greek and German firms possessing green energy experience.

The Greek government’s current search for a plan that will ensure a smooth transition to the post-lignite era no doubt signals investment opportunities in Greece for RWE.

Independent energy players rushing to fill PPC lignite void

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The country’s major independent energy groups are forging ahead with well anticipated plans to cover prospective electricity generating voids that will be created by power utility PPC’s withdrawal of lignite-fired units, now expected sooner following a government plan for a swifter withdrawal of all lignite-fired power stations, monopolized by the state-controlled power utility.

Speaking at the UN Climate Action Summit in New York last week, Prime Minister Kyriakos Mitsotakis declared full decarbonization would be achieved in Greece by 2028.

The Prime Minister’s pledge for a lignite-free Greece in less than a decade has not taken domestic independent energy groups by surprise. As early as three to four years ago, they had foreseen an approaching end of the lignite era in Greece and around Europe.

So, too, had PPC’s leadership. But the corporation’s lignite monopoly, lignite dependence of local economies in lignite-rich areas, especially Greece’s west Macedonia region, as well as perpetual political interests attached to PPC over the years, have all played roles that have prevented the utility from turning to other energy sources such as natural gas and renewables.

Over the past year or so, major energy groups in Greece such as Mytilineos, GEK-TERNA, Copelouzos and Elpedison, as well as enterprises such as Elvalhalcor and Karatzis, have taken decisions to seek licenses for the development of new gas-fired power stations. The foundation stone of a Mytilineos unit in Boetia (Viotia), northwest of Athens, will be placed by the Greek Prime Minister at a ceremony scheduled for tomorrow.

A planned decarbonization process in neighboring Bulgaria, electricity needs in North Macedonia, and Greek power grid operator IPTO’s imminent upgrade of grid interconnections with Balkan neighbors, especially the aforementioned countries, are all creating further electricity export opportunities for Greek market players.

 

 

Settlement of PPC €100m amount for north a first post-lignite support step

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A planned payment of an outstanding power utility PPC amount of 100 million euros to energy producing municipalities in the country’s north for regional development, owed since 2014, represents a first step in the west Macedonia region’s gradual transition towards a post-lignite era.

The prospective payment of this amount to the region’s municipalities will be included in a PPC draft bill being prepared by the energy ministry for presentation in October, energypress sources informed.

Local municipalities are eagerly awaiting payments in order to finance the completion of vital infrastructure projects needed to continue telethermal supply when it will no longer be offered by lignite-fired power stations.

Florina and Amynteo are among the locations whose telethermal projects are to be developed through the payment of PPC’s development funds.

The prospective settlement represents a first step in the post-lignite support plan for Greece’s west Macedonia region, where PPC’s mining and electricity generation activities account for 45 percent of the regional economy.

The local economy of Megalopoli in the Peloponnese is also greatly dependent on lignite.

Municipalities will anticipate further support for economic stability following 2028, when all lignite activity is expected to have stopped in Greece, according to a plan announced last week by Prime Minister Kyriakos Mitsotakis at the UN Climate Action Summit in New York.

Plenty of ministries will need to coordinate on numerous issues if a smooth and punctual transition to the post-lignite era, scheduled for less than a decade away, is to be achieved. Greece does not have a good track record in achieving targets of this scale.

The move towards decarbonization is a European challenge concerning many EU member states besides Greece, including Austria, the Czech Republic, Germany, Poland and Romania, all greatly exposed to lignite activity. They are hoping for generous support through Europe’s energy transition fund.

 

Gov’t seeking post-lignite plan, communities to be reassured

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The energy ministry is looking to reassure local authorities in the country’s lignite-dependent northern region of west Macedonia that Greece’s planned transition towards a post-lignite era will take place following comprehensive planning and also include financial support for affected communities through EU funds.

Deputy energy minister Gerassimos Thomas will travel to the region today for talks over the weekend with local authorities, union leaders and workers. Energy minister Costis Hatzidakis and power utility PPC’s chief executive may also follow up with visits to the region next week.

Prime Minister Kyriakos Mitsotakis, speaking at the UN Climate Action Summit in New York earlier this week, spoke of complete decarbonization in Greece by 2028. The prospect has unsettled lignite-dependent communities in Greece.

Shutting down all lignite-fired power stations in Greece will require considerable planning.

Power utility PPC’s activities in western Macedonia represent 45 percent of the region’s economic activity. Approximately 4,200 persons are employed at PPC’s mines and power stations in west Macedonia and Megalopoli, the country’s other major lignite source in the Peloponnese. Adding sub-contractors to this tally increases the workforce figure to 6,000.

The move towards decarbonization is a European challenge concerning many countries besides Greece, including Austria, the Czech Republic, Germany, Poland and Romania. All are currently seeking solutions.

Member states feeling insecure about their post-lignite futures are eagerly awaiting the new EU budget, expected to be completed by early 2020, to see if additional funding will become available for Europe’s energy transition fund, currently limited to 4.8 billion euros for 41 lignite-dependent regions around the continent.

All Ptolemaida V options now being officially examined

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A development decision on power utility PPC’s planned lignite-fired Ptolemaida V power station is now officially preoccupying authorities, examining various options, including a fuel switch to natural gas.

All appears possible at this stage. Besides an in-progress report from the McKinsey consulting firm, examining all possible scenarios for the unit along with PPC, Prime Minister Kyriakos Mitsotakis made reference to the matter for the first time yesterday while speaking at the UN Climate Change Summit. He spoke of total decarbonization in Greece by 2028.

Echoing this remark, energy minister Costis Hatzidakis left open the possibility of a zero-lignite energy mix by 2030 when asked if Greece’s new National Energy and Climate Plan, to soon be submitted to Brussels, would include such a target.

Hatzidakis hinted that such a prospect is possible. However, he did not commit on how the government would choose to handle Ptolemaida V.

“If you were to ask me about the existing lignite-fired power stations, I would have answered that we will have a clear picture on how many of these units are sustainable in three to four weeks,” Hatzidakis noted. “But this is not so for Ptolemaida V, where the matter is very complicated. At this stage, nobody can talk of an optimal solution.”

Contrary to the previous PPC administration, the power utility’s new leadership, headed by Giorgos Stassis, does not consider the Ptolemaida V investment a certainty. However, Stassis and his associates are also aware of how complex the matter is, making abandonment difficult.

For example, abandoning the Ptolemaida V project would severely impact the northern region’s local economy, dependent on lignite activity. Also, PPC has already spent close to 950 million euros. Turbine and generator orders have arrived, while agreements, including EPC contracts, have been signed.

As for the thoughts of a fuel switch, from lignite to natural gas, PPC would be better off building a new gas-fired power station in Lavrio, southeast of Athens, close to gas sources and urban centers consuming considerable electricity amounts.

 

First round of new ministry, lender talks this Wednesday

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The current financial standing of state-controlled power utility PPC, effort  to reduce the power corporation’s market share, competition in the electricity market, target model progress, and prospective energy utility privatizations will all feature on the agenda of the recently appointed energy ministry’s first official meeting with the country’s lender representatives, scheduled for this Wednesday in Athens, sources have informed.

Energy minister Costis Hatzidakis will participate in the meeting but the country’s lenders will not be represented at the highest level, the sources added. The energy minister’s participation at the meeting Wednesday highlights the political significance of the PPC rescue effort for the government, the sources noted.

Finalized decisions are not expected during Wednesday’s negotiations. Talks are expected to run until mid-November. A Greek post-bailout  appraisal has been deferred until then as a result of European Commission personnel changes following the European elections last May.

This Wednesday, the energy ministry will inform the country’s lenders on the results of a first round of measures taken by the new Greek government to prevent PPC’s collapse.

A government decision to abandon NOME auctions, introduced about three years ago to offer lower-cost wholesale electricity to independent players, will also be officially announced at Wednesday’s meeting. This measure has cost PPC approximately 600 million euros since its launch, according to Hatzidakis, the energy minister.

The energy ministry officials will also seek a revision of a PPC market share contraction agreement, included in the bailout terms, requiring the utility to reduce its retail market share to less than 50 percent by the end of this year. It is not yet clear if the lenders will accept this request and, if so, what the replacement plan could be.

The key aspects of a government plan for swifter decarbonization, including the closure of PPC’s Amynteo and Megalopoli III power stations; planned efforts for no further target model delays; as well as privatization plans concerning gas utility DEPA and Hellenic Petroleum ELPE will also be discussed Wednesday.

Key energy ministry official holds first session with lender technocrats

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The new energy ministry’s secretary-general Alexandra Sdoukou is expected to hold her first meeting today with technocrats representing the country’s lenders, currently in Athens.

Recent tariff hikes at power utility PPC, a campaign intended to improve the utility’s electricity bills collection record and a government plan for the gradual withdrawal of lignite units will all be presented by the energy ministry official.

Sdoukou also intends to present the government’s case supporting the need to end NOME auctions as well as details concerning the target model’s progress and finalized schedule.

NOME auctions have obligated PPC to offer below-cost wholesale electricity to rivals as a market share contraction measure over the past few years. The measure has affected the utility’s financial results and failed to produce results.

The ministry is seeking to establish a fresh setting for the country’s energy-sector negotiations with the country’s lenders, especially the European Commission, on Greece’s energy direction, the electricity market’s structure and PPC’s place in it.

The Greek bailout program includes objectives that have fallen too far behind to be achieved such as PPC’s market share contraction targets and disinvestment of lignite units.

The recently appointed energy minister Costis Hatzidakis is seeking a new overall solution for the country’s electricity market that would entail the adoption and implementation of EU strategic planning, as well as the eradication of any systemic threats, such as a possible collapse of PPC.

As part of this approach, the energy ministry has announced it will accelerate the withdrawal of lignite units and revise the National Energy and Climate Plan for even more ambitious RES targets.

The delay of a post-bailout appraisal of the Greek economy until mid-November, instead of October 31, should give the government additional time to prepare the details of its various energy sector plans, including lignite unit withdrawals, the termination of NOME auctions and privatization of distribution network operator DEDDIE/HEDNO.

McKinsey’s new PPC business plan to feature major changes

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Consulting firm McKinsey, set to prepare a new five-year business plan for power utility PPC, will base its proposals on three key factors: CO2 emission right costs;  lignite-fired units that should remain active or withdrawn; and the resulting impact of these decisions on the grid’s sufficiency.

The study, whose preparation will soon get underway, is expected to end up featuring major changes compared to a previous set of proposals as PPC’s current financial condition has deteriorated compared to early in 2018, when the previous business plan was delivered.

It had called for an improvement of the corporation’s operating profit by 500 million euros over a five-year period. The current demands are far more challenging.

The previous business plan, which was based on eight fronts, placed emphasis on renewable energy investments, new business activities, international expansion and overall investments totaling 3.9 billion euros, approximately half of which would have been channeled into networks and the RES sector. A 23 percent share of the investments was planned for the construction of a new lignite-fired power station, Ptolemaida V. Major changes are now expected along all these fronts.

A tougher stance on unpaid receivables; a plan entailing the partial sale of DEDDIE/HEDNO, the distribution network operator; and pricing policy adjustments are expected to feature in the new plan.

McKinsey’s examination to determine which lignite-fired power stations must keep operating or be withdrawn is expected to generate a voluntary retirement list of 2,000 employees.

If so, severance pay costs for PPC will amount to 30 million euros, as employees are currently entitled to 15,000-euro payments for early retirement.

 

 

Energy deputy in Brussels for electricity market negotiations

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Deputy energy minister Gerassimos Thomas (photo) and the ministry’s secretary-general Alexandra Sdoukou are both in Brussels to negotiate measures for the electricity market’s liberalization.

The Greek officials are scheduled to remain until September 5 for meetings with the European Commissioner for Climate Action and Energy Miguel Arias Canete and other Brussels officials, the intention being to pave the way for ensuing negotiations concerning the Greek economy’s post-bailout monitoring.

Thomas, the energy deputy, will present the recently elected Greek government’s plan for the energy sector, including its decision to abolish NOME auctions. They are seen as a loss-incurring measure for power utility PPC, obligated to offer below-cost wholesale electricity to independent suppliers since 2015.

Government plans entailing a partial privatization of distribution network operator DEDDIE and closure of old lignite-fired power stations run by PPC are also on the Brussels agenda.

In exchange for the termination of NOME auctions, which were introduced to reduce PPC’s retail electricity market dominance, the Greek officials will present a lignite unit withdrawal schedule that includes PPC’s Amynteo, Megalopoli III and Kardia power stations.

The European Commission’s overall position remains unknown.

The Greek government intends to renegotiate an older term committing PPC to reduce its retail electricity market share to less than 50 percent by the end of this year, sources informed. Athens will aim for a softer target of between 60 and 65 percent, the sources added.

More clarity on where the two sides stand is expected next week, when a team of Brussels technocrats is expected in Athens for further negotiations.

PPC working on withdrawal plan for lignite power stations

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Power utility PPC’s newly appointed administration is preparing to commission a cost-benefit analysis (CBA) to determine the order of lignite-fired power station withdrawals, as well as a follow-up plan for workers stationed at these facilities and related telethermal issues.

The withdrawal of old lignite-fired power stations represents a key part of the wider restructuring plan at PPC, under financial pressure and in need of a reshape.

The CBA is part of a new business plan being prepared by PPC for presentation around the end of the year.

Polluting levels of lignite-fired power stations will be a key factor in the order of withdrawals. State-controlled PPC’s Amynteo and Kardia units, operating virtually illegally following dubious extensions granted by the previous government’s energy ministry, are expected to be placed at the top of the withdrawal list.

The withdrawal of lignite units promises to represent a key bargaining tool in the energy ministry’s forthcoming negotiations in Athens with European Commission officials on electricity market reforms and the market position of PPC, still the dominant retail player on the strength of distorted terms not taking into account actual market conditions. These talks are expected to commence September 16.

The closure of older power stations could represent a last chance for PPC to keep alive its hopes of developing Ptolemaida V, a lignite-fired power station investment budgeted at 1.4 billion euros.

Talks between Greek officials and the European Commission aimed at boosting the country’s impetus towards a post-lignite era are already underway, sources informed.