PPC’s Kardia III and IV lignite power stations set for April 17 withdrawal

Power utility PPC’s Kardia III and IV lignite-fired power stations are nearing withdrawal as the two facilities are due to clock up 32,000 hours of operating time, their limit, on April 17.

PPC has scheduled to close down the two power stations this year as part of a decarbonization plan the company had announced in December, 2019. This plan was included in the National Energy and Climate Plan (NECP).

The two imminent power-station withdrawals, representing a capacity loss of 540 MW, will follow a first stage of exits carried out last year by PPC, when its withdrawal of Amynteo I and II, totaling 546 MW, launched the country’s decarbonization effort.

Besides producing electricity, the two Kardia units, located in Greece’s north, have also been used to provide district heating. Local authorities have asked the energy ministry to keep the two units on standby for a few more weeks until the early spring’s chilly weather is well and truly over.

PPC’s prospective Ptolemaida V unit will eventually take over district heating services following the adoption of intermediate solutions to cover next winter.

PPC also plans to withdraw Megalopoli III, in the Peloponnese, this year, earlier than the 2022 objective listed in the NECP.

PPC planning telecom entry with fiber optic installations

Power utility PPC is preparing to take its first steps into the telecommunications infrastructure sector by installing fiber optics, as a pilot program in certain parts of the country, with the aim of entering the wholesale telecoms market.

The power utility, as a first stage of a gradual five-year plan, estimated to require investments estimated between 700 and 800 million euros, intends to install fiber optics at certain segments of the 242,000-km network controlled by subsidiary firm DEDDIE/HEDNO, the distribution network operator.

PPC plans to add these fiber optics as installations to DEDDIE/HEDNO’s existing overhead electricity networks, a swifter and lower-cost option compared to going underground.

The power utility will aim to offer internet connections with speeds of around 1,000 Mbps.

The PPC plan, for its first stage, entails leasing the network to telecom companies.

This project, recently approved by the PPC board, features in the corporation’s new business plan, unveiled last December at an Investor Day event.

 

Electricity market shares unchanged in March, imports up

The overall market share of independent electricity suppliers remained unchanged at 34.2 percent in March, without any surprise reshuffling between these suppliers, as power utility PPC held on firmly to its previous month’s 65.8 percent share, a latest monthly report issued by the Greek energy exchange has shown.

Like PPC, the market shares of some independent suppliers remained unchanged in March, compared to the previous month, the report showed.

Mytilineos registered a 7.97 percent market share in March, unchanged from February.

Heron’s market share fell marginally to 6.34 percent in March from 6.38 percent in February; Elpedison’s market share rose to 4.85 percent from 4.79 percent; NRG captured 4 percent, up from 3.89 percent; Watt and Volt fell to 2.58 percent from 2.73 percent; Volterra registered 1.93 percent, from 1.96 percent; Fysiko Aerio Attikis rose to 1.81 percent from 1.75 percent; Volton captured 1.41 percent, from 1.39 percent; Zenith reached 1.41 percent, from 1.36 percent; ELTA’s market share remained unchanged at 0.63 percent; and KEN fell slightly to 0.56 percent from 0.58 percent.

Electricity imports exceeded electricity exports, in terms of volume, the energy exchange report showed.

Also, the number of hours of net imports grew against the number of hours of net exports, the data for March showed.

PPC set to sign securitization agreement with Pimco

Power utility PPC is set to sign a large-scale securitization agreement with international investment company Pimco for unpaid receivables of over 90 days.

PPC will receive approximately 200 million euros of 300 million in total, sources said.

This securitization package was preceded by a small-scale agreement with JP Morgan late last year for unpaid receivables of up to 60 days. PPC received 150 million euros in a deal worth a total of 200 million euros.

PPC and Pimco have both approved this latest securitization agreement, a 14,000-page text, with just their signatures pending, the sources informed.

The 350 million-euro sum coming from PPC’s two securitization agreements, along with 775 million euros raised by the corporation through two recent bond issues, represents major cash flow relief worth 1.2 billion euros that promises to facilitate the utility’s upcoming investments and cover operating costs.

In addition, funds to come from the anticipated privatization, in the second half, of a 49 percent stake in PPC subsidiary DEDDIE/HEDNO, the distribution network operator, promise to further boost the power utility’s investment ability.

Transitional plan for Cretan small-scale link sent to Brussels

Technical and other preparations are now being made to enable Crete’s imminent small-scale power grid interconnection, to the Peloponnese, to cover, for the time being, approximately 30 percent of the island’s electricity needs.

The energy ministry has forwarded to the European Commission its proposal for a transitional model concerning Crete’s participation in the target model’s new wholesale markets.

Also, the energy ministry has prepared a draft bill needed for the transfer, to power grid operator IPTO, of distribution network operator DEDDIE/HEDNO’s assets on Crete. This will enable IPTO to assume responsibility for the island’s small-scale interconnection.

Normally, when grid links for non-interconnected islands are carried out, IPTO takes on the responsibility of their electricity networks. However, Crete, Greece’s biggest and most populous island, represents a much bigger interconnection project that is being developed over two stages. The project’s second stage, to reach Athens, is anticipated in 2023.

The transitional plan, shaped with the assistance of consultant Reed Smith, includes the sale, by power utility PPC, DEDDIE/HEDNO’s parent company, to IPTO, of a 150-kV transmission line on Crete, running from Hania to Lasithi, based on decisions reached by RAE, the Regulatory Authority for Energy, concerning management of Crete’s grid for the island’s small-scale interconnection.

The transitional model, to expire once the island’s full-scale interconnection has been completed, will allow Crete to purchase electricity transmitted through the small-scale interconnection at the target model’s new wholesale markets.

HEDNO suitors all real-money investors with long-term views

All nine qualifiers through to the second round of a tender offering a 49 percent stake of distribution network operator DEDDIE/HEDNO possess extensive experience in infrastructure management around the world and are long-term, real-money investors.

The tender’s shortlist, announced yesterday, includes Blackrock, the world’s biggest investment fund, back in the Greek picture after subscribing to a bond issue staged last month by the operator’s parent company PPC, the power grid operator.

Blackrock has based these investment decisions on Greece’s economic prospects beyond the pandemic as well as common business principles shared with PPC.

The capital managed by the nine qualifiers is worth 10.2 trillion euros. More importantly, the qualifiers are backed by formidable profiles, their portfolios carrying investments in utilities, infrastructure and energy companies.

France’s Ardian, managing assets worth over 100 billion euros, Canadian investment corporation British Columbia Investments (BCI), handling a 100 billion-euro portfolio, the American funds Blackrock, managing assets worth 9 trillion dollars, CVC Capital Partners (120 bn), KKR (250 bn) and Oak Hill (50 bn), Italy’s infrastructure fund F21, as well as Australia’s Macquarie (420 bn) and First Sentier (180 bn) are all long-term investors.

BCI and Macquarie have jointly engaged in a series of takeovers, beginning in 2012 with German networks company Open Grids Europe, and following up, in 2014, with US electricity firm Cleco, and networks company Endeavour Energy in 2017. BCI also controls Chilean power distributor Transelec as well as Canada’s Corix.

Blackrock controls US corporation Hearthstone Utilities and the UK’s Kelas Midtream and Calisen PLC, active in smart meters.

America’s KKR acquired New Jersey water management company Bayonne Water and Wastewater Concession in 2012 and Middletown Water in 2014.

Macquarie’s portfolio includes Spain’s Viesgo, Germany’s Open Grid Europe, and the portfolio of First Sentier (previously First State) includes the UK’s Electricity North West and Anglian Water.

PPC’s 2020 results, out April 20, to reflect company ascent

Power utility PPC, planning to announce its financial results for 2020 on April 20, is expected to release robust figures confirming its positive course, including, according to analysts, an EBITDA level of approximately 900 million euros.

Given the corporation’s 618 percent EBITDA surge in this year’s nine-month period, up to 696 million euros from 96.9 million euros a year earlier, PPC should register operating profit well above the 2019 level, when its recurring EBITDA ended the year at 333.6 million euros.

Sharply declined fuel costs and wholesale electricity prices during the first three quarters, as well as the continual limitation of PPC’s lignite-fired power stations, now loss-incurring as a result of higher CO2 emission rights, have been the driving forces behind the 2020 EBITDA forecast of about 900 million euros.

An EBITDA objective of one billion euros by 2024 now appears achievable sooner, possibly as early as next year.

The company’s capitalization is currently at 2.11 billion euros.

PPC, needing to push ahead with RES investments, will require capital for the effort. An ongoing privatization offering a 49 percent stake in distribution network operator DEDDIE/HEDNO, a subsidiary, is expected to raise capital for PPC’s investment plans, including in renewable energy, and also lower the company’s debt level.

The shortlist of qualifiers into the second round of the DEDDIE/HEDNO sale is expected to be announced today.

HEDNO 49% privatization shortlist set to be announced tomorrow

A short list of qualifiers through to the second and final round of a privatization offering a 49 percent stake of distribution network operator DEDDIE/HEDNO is expected to be announced tomorrow, when endorsed by the board of the operator’s parent company PPC, the power utility.

The qualifiers will be given access to confidential data stored in the tender’s video data room.

Though PPC has not offered details on the first-round participants, informing only that the bidders, eleven in total, are strategic investors, network infrastructure operators and funds, banking officials have leaked their identities, revealing the turnout of leading international investors.

They include US fund Blackrock, the world’s biggest investment fund, as well as fellow American funds KKR, Oak Hill Advisors and CVC Capital Partners, the recent buyer of insurance company Ethniki Asfalistiki.

One of Europe’s biggest funds, France’s Ardian, two Australian funds, Macquarie and First Sentier, Italy’s infrastructure fund F21, Canadian investment corporation British Columbia Investments (BCI), Chinese consortium China South Power Grid – China Three Gorges, and fellow Chinese firm Guangzhou Power make up the other seven first-round entries.

DEDDIE/HEDNO’s new business plan, covering 2021 to 2024 and carrying investments totaling 3.5 billion euros, is a key driver behind the considerable interest, as is a yield rate of approximately 7 percent offered by the operator.

Standout features of the operator’s new business plan include an 850 million-euro project entailing the installation of 7.5 million digital power meters around the country, whose tender is nearing; an addition, to networks, of fiber optics for telecommunication and 5G services; as well as projects for undergrounding, upgrading and modernizing networks in anticipation of mass investments in RES units.

IPTO warns PPC against Megalopoli III closure this year

Power utility PPC’s Megalopoli III lignite-fired power station must not be withdrawn within 2021 – let alone about now, as the utility had initially planned – for reasons of grid sufficiency, the power grid operator IPTO has advised in a letter forwarded to PPC and RAE, the Regulatory Authority for Energy.

IPTO, in its letter, warns against the consequences of two PPC plans, the first, an intention to shut down Megalopoli III by the end of March, and, the second, premature withdrawal of its entire portfolio of lignite-fired power stations by the end of this coming August, or to the extent that is feasible, given grid sufficiency requirements.

Premature withdrawal, this summer, of all the lignite units would result in a capacity shortage measuring approximately 1,000 MW, which would need to be covered by electricity imports, IPTO has warned.

PPC’s chief executive Giorgos Stassis refenced the IPTO letter during yesterday’s Power and Gas Supply Forum, an online event staged by energypress, while commenting on the need to maintain lignite-fired power stations for grid stability, even if these units are now loss-incurring because of elevated CO2 emission right costs.

IPTO does not consent to any lignite unit withdrawals that would be ahead of schedule – based on a PPC plan for 2021 to 2023 – the power utility’s boss stressed during yesterday’s forum.

As a result, Stassis added, PPC will need to be compensated by the European Commission, through a support mechanism proposed by Greek officials, for needing to maintain loss-incurring units.

IPTO, in its letter, reiterated the findings of recent grid sufficiency study, noting that the two-year period from 2021 to 2022, especially the current year, will be crucial. The grid would be particularly exposed to deficiencies if generating capacity is reduced without replacement, the operator warned.

The Mytilineos group plans to launch a new 826-MW combined cycle gas turbine (CCGT) plant next year. Testing is expected to begin in the fourth quarter this year. Also next year, PPC plans to launch its Ptolemaida V unit, initially as a lignite-fired power station.

PPC production share dips since 2010, still among EU’s top 10 leaders

Eurostat data identifying the biggest energy producers of EU member states and their respective shares has highlighted a delay in Greece’s electricity market liberalization, specifically in the domain of electricity generation.

Greek power utility PPC maintained a 51.3 percent share of the country’s electricity production in 2019 – the year for which most recent data is available – placing the country in ninth place among 25 member states, in terms of the size of the leading producer’s market share.

Despite being ranked relatively high on this list, PPC’s share of production, from a long-range perspective, has contracted substantially over the past decade or so.

PPC has shed 33.8 percent since 2010, when its share of total electricity production stood at 85.1 percent. Independent producers began emerging in Greece’s electricity production market about a decade ago.

Similar electricity production share drops, by the leading producers, have also been recorded in other member states.

In Belgium, the share of the country’s top producer fell by 39.5 percent to 39.1 percent during the equivalent period. In France, the top producer’s share fell from 86.5 percent to 65.6 percent, while in Slovakia the dominant producer shed 28 percent of its share.

The biggest decline was registered in Luxembourg, where the leading electricity producer’s share of 85.4 percent in 2010 plummeted to 18.1 percent in 2019.

A full monopoly was maintained on Cyprus with the state-controlled utility representing 100 percent of generation in 2019.

The Cypriot utility, topping the list, was followed by the biggest producers in: Latvia (86.4%), Croatia (80%), Estonia (76.4%), France (65.6%), Czech Republic (60.5%), Slovenia (53%), and Slovakia (52.8%).

Elpedison launches tender for Thessaloniki power station

Energy company Elpedison has launched an international tender for procurement of mechanical equipment concerning its 826-MW gas-fueled power station project in northern city Thessaloniki’s Diavata area, sources have informed.

The company, also moving ahead with the project’s environmental permit procedure, is expected to soon finalize its investment decision.

Besides Elpedison, a number of other energy firms are also moving ahead with gas-fueled power station plans.

GEK-TERNA is planning a 665-MW facility in Komotini, northeastern Greece; power utility PPC recently secured a license for a 665-MW unit, also in Komotini; Elvalhalkor is pursuing plans for a 566-MW unit in Thisvi; the Copelouzos group is moving ahead with a 662-MW project in the industrial area of Alexandroupoli, in the northeast; and the Karatzis group is planning a 660-MW power station in Larissa, in the mid-north.

The Mytilineos group has already begun constructing an 826-MW gas-fueled power station in Viotia’s Agios Nikolaos area, northwest of Athens, a project expected to be launched late this year or early next year.

The establishment of a permanent CAT mechanism, anticipated by the investors behind these projects, promising grid flexibility, is crucial for the investment plans.

Electricity demand levels in the Greek market as well as the course of Greece’s decarbonization effort, expected to create openings for new power stations, are also vital factors.

 

PPC staging tender for generators as back-up on Crete this summer

Power utility PPC has just announced a tender for leasing contracts concerning power generators with a total capacity of 58 MW for Crete, to serve as back-up for grid sufficiency on the island during July and August, in anticipation of the tourism-related peak in electricity demand.

The generators, to be installed at PPC’s power station at Atherinolakkos, southeastern Crete, are intended to back an imminent subsea grid interconnection linking the island with the Peloponnese – the first step of a bigger interconnection project to reach Athens – which will have only been in operation for a few months when summer arrives.

The Crete-Peloponnese power grid interconnection is expected to be ready for launch in late April.

PPC’s plan for generators, budgeted at approximately 4 million euros, has been divided into two sections, one for 23 MW, the other for 35 MW. Participants can only submit offers for one of the tender’s two sections.

According to the tender’s terms, PPC will maintain the right to extend the lease contracts for all or some of the generators by a month, also covering September, if needed.

Distribution network operator DEDDIE/HEDNO has estimated that Crete will need between 75 and 80 MW in additional capacity this summer. Besides the 58 MW to be provided by the generators through the tender, PPC will secure the required remainder through back-up solutions already possessed by the power utility.

If all goes according to plan, PPC’s rented generators, mobile units running on high-cost diesel, will not need to be used at all while stationed on the island, meaning the initiative’s total cost would be limited to the value of the lease agreements.

PPC compensation mechanism, market test talks at crucial stage

The European Commission is expected to show its cards next week on Greece’s quest for lignite compensation mechanisms supporting power utility PPC and the results of a market test concerning the utility’s availability of lignite-produced electricity to third parties.

These issues are expected to be discussed in detail by energy ministry and Directorate-General for Competition officials during a virtual meeting next week, following correspondence as well as a virtual meeting, on March 8, between energy minister Kostas Skrekas and the European Commission’s Vice-President Margrethe Vestager, also Brussel’s Commissioner for Competition.

State-controlled PPC has requested a strategic reserve mechanism for its lignite-fired power stations, still needed but nowadays loss-incurring as a result of higher CO2 emission right costs, as well as compensation for its premature closures of these units, currently being phased out until 2023.

All still appears to be vague on PPC’s market test for third-party access to its lignite-based electricity. The test was completed some time ago, failing to attract any real interest from rival suppliers.

The percentage of lignite-based electricity made available by PPC, initially set at 50 percent of total lignite-fired output and then lowered to 40 percent, is viewed, by third parties, as too small for any real gains.  Brussels has yet to comment on the market test’s result.

 

PPC bond issue, ESG-linked, attracts top international funds

Some of the world’s biggest investors are among the foreign institutional investors who participated in power utility PPC’s recent bond issue as well as a supplementary issue staged yesterday, through which the corporation raised a grand total of 775 million euros.

Participants included US fund Blackrock, managing capital worth nearly 8 trillion dollars, fellow American fund Fidelity, whose portfolio is worth 440 billion dollars, the UK’s Apollo, managing 455 billion dollars, and France’s Pictet, with an investment portfolio worth 689 billion dollars.

The turnout for PPC’s bond issues was dominated by real-money investors, or institutional investors handling enormous amounts of cash reserves for long-term investments in companies with solid prospects. Their clients are chiefly retirement funds as well as corporations looking to the future.

Information made available until now on PPC’s bond issues indicates that 70 percent of subscribers were from abroad and 30 percent domestic. Among the foreign investors, half are institutional and real-economy investors, many of these cross-Atlantic.

US and European investors participated in the issues with shares of close to 50 percent each, while investors from Australia and Asia represented about 5 percent of subscriptions.

PPC’s initial bond issue raised 650 million euros at a borrowing rate of 3.875 percent, while yesterday’s follow-up issue raised an additional 125 million euros at 3.67 percent.

Bond issues linked with ESG (Environmental, Social and Governance) terms, as was the case with PPC’s two issues, are in high demand, internationally.

Through its issues, five-year bonds maturing in 2026, PPC has committed to a 40 percent reduction of CO2 emissions, from 23.1 million tons in 2019 to 13.9 million tons by 2022. If this target is not achieved, 50 basis points will be added to the yield.

PPC granted license for 665 MW gas-fueled power station

A power utility PPC investment plan entailing the development of a 665-MW gas-fueled power station in the industrial zone of Komotini, northeastern Greece has been granted a license by RAE, the Regulatory Authority for Energy, adding to the list of licensed projects to serve as a bridge in the country’s energy transition until the renewable energy sector fully prevails.

The project linked to this latest license, given a 35-year duration, is scheduled to be launched in December, 2024.

RAE has now granted five licenses to an assortment of companies for such investment plans, though not all will necessarily be developed.

An 826-MW gas-fueled power station being developed by Mytilineos in Viotia, slightly northwest of Athens, set to be launched at the end of this year, is the most advanced of these investment plans.

The maturity levels vary for other projects in terms of environmental licensing and other procedural matters. These include a 665-MW unit planned by Terna, also in Komotini; an 826-MW project planned by Elpedison in Thessaloniki; and an 830-MW facility planned by the Copelouzos Group’s Damco in Alexandroupoli, northeastern Greece.

Also, the power utility is expected to reach a decision on converting its prospective Ptolemaida V lignite-fired power station into a gas-fueled facility.

Emission rights over €42/ton, costing PPC €1.4m per day

Carbon emission rights have risen sharply to record-high levels, reaching 42.28 euros per ton at the end of trading yesterday, an ascent of more than 80 percent compared to last October’s levels of approximately 23 euros per ton.

This relentless upward drive is costing power utility PPC extraordinary amounts. The corporation, maintaining lignite-fired power stations and related mines to ensure grid sufficiency, has spent a total of 152 million euros on carbon emission rights between November, when the target model was launched, and March, according to market data.

Market officials have forecast that carbon emission right prices will rise even further, possibly to levels beyond 100 euros per ton.

PPC’s daily outlay on carbon emission rights, estimated at 1.4 million euros, would increase further if these projections prove to be accurate.

The ascent of carbon emission rights has driven up the cost of lignite-based electricity to levels of approximately 130 euros per MWh.

Despite the participation of lignite units in the Greek market, their elevated operating cost has not been reflected in price levels. Paradoxically, even though the cost of electricity exports exceeds 120 euros per MWh, these exports are being invoiced at a little over 40 euros per MWh, benefitting traders, who are making the most of these low price levels.

 

New PPC collective labor agreement ready, technical staff union reacts

Power utility PPC’s administration and Genop, the corporation’s main union group, have finalized a deal for a new collective labor agreement, covering a three-year period, which is expected to be signed on March 23.

The new agreement, worth 78 million euros, according to union sources, includes indirect pay rises for personnel through improvements to existing allowances that had remained unchanged for years as a result of the country’s bailout agreement commitments concerning public sector companies.

A daily food allowance for all PPC employees will return to a level of six euros per day, from a reduction to four euros per day by the previous administration. Resulting amounts from this two-euro reduction were injected into a company social security fund for workers.

Also, special allowances for personnel stationed at the company’s production units are being reinstated, retroactively as of January 1, 2019, under the new agreement. Resulting amounts will be offered to employees over three installments.

The revisions agreed to for the new three-year collective labor agreement will not be subject to reappraisal once the new deal has expired.

ETE, a union representing the utility’s technical staff, has reacted against the Genop-PPC deal, describing it as an “unacceptable” agreement of “submission”.

According to ETE, Genop failed to negotiate any payroll increases at a time when PPC is set to announce annual profit increases worth millions and the company’s executives are on extremely handsome remuneration packages.

DG Comp motives for restart of older PPC probe unclear

The European Commission has brought back to the fore a Directorate-General for Competition investigation of power utility PPC and power grid operator DEDDIE/HEDNO over market dominance abuse, despite major market changes that have taken place since 2017, when the probe began.

The direction the investigation’s restart remains unknown. Negotiations between Greece and Brussels for new mechanisms being negotiated could be impacted, some pundits suspect.

Also, the government and state-controlled PPC are currently seeking compensation for the power utility’s need to keep lignite-fired power stations and related mines operational for grid sufficiency needs.

No findings of the investigation’s first round have been released. The probe included raids by DG Comp officials, both local and Brussels-based, of the PPC and IPTO headquarters in Athens that lasted several hours, resulting in confiscations of USB flash drives, documents and hard drives.

PPC’s then-administration, in an announcement at the time, informed that the raid concerned a check on the utility’s “supposed” abuse of market dominance in the wholesale market for electrical energy produced from 2010 onwards.

Prior to the investigation, Brussels suspected levels of the wholesale electricity price – known as the System Marginal Price (SMP), at the time – were being manipulated by PPC through its lignite and hydropower facilities.

In 2017, PPC held an 87 percent share of the retail electricity market and 57 percent of overall electricity generation, now down to approximately 67 and 39 percent, respectively.

Four years ago, PPC’s lignite facilities still dominated the corporation’s portfolio and the energy exchange and new target model wholesale markets did not exist.

The current market setting bears little resemblance to back then. Lignite has regressed into an unwanted, loss-incurring energy source that is being phased out by PPC until 2023, while the energy market is undergoing drastic transformation, as was acknowledged by the European Commission Vice-President Margrethe Vestager, also Brussels’ Commissioner for Competition, in an announcement yesterday.

 

PPC reluctance ‘stalling talks with high-voltage customers’

Power utility PPC’s decision to further extend its negotiating period with industrial producers for new high-voltage tariff agreements is futile, EVIKEN, the Association of Industrial Energy Consumers has suggested in a statement, indicating the utility has no interest to compromise.

EVIKEN contended PPC’s reluctant tactics are stalling its negotiations with high-voltage customers.

PPC officially informed industrial customers of its decision to extend the negotiating period for new high-voltage tariff agreements until June 15, but, even so, as of today, has unilaterally revised existing terms, greatly reducing punctuality and advance-payment discounts offered to this consumer category.

These revisions promise to increase energy supply costs for PPC’s industrial customers by levels of between 4 to 12 percent, depending on respective profiles, according to estimates.

A preceding PPC extension for its negotiations with high-voltage customers, offering an additional two months, expired on February 28.

The power utility’s demands include increases that would result in energy-cost hikes of up to 40 percent, the cancellation of nighttime tariffs for steel industries, imposition of a clause linked with balancing market cost, as well as restrictions effectively obstructing industrial loads from market participation, the industrial energy consumers association noted in its announcement.

Despite the impasse prompted by its demands, PPC is now offering its industrial customers a new ultimatum in an effort to force them to accept unfavorable terms for new supply contracts, EVIKEN stated.

The key question is whether PPC ultimately wants constructive dialogue with industry to avoid a negotiation deadlock, which would be detrimental to all parties involved, EVIKEN noted.

The sector’s prolonged uncertainty over energy costs is hampering plans for production increases and new investments, greatly impacting the competitiveness of the country’s major producers, the association stressed.

PPC bond issue oversubscribed six times, key foreign investors dominant

International investment powerhouses and real-money investors, including US players, were key participants in power utility PPC’s bond issue this week, oversubscribed by six times with orders totaling three billion euros, a vote of confidence for the course being pursued by the company.

PPC promoted the issue by highlighting its comeback over the past year and a half.

Foreign investors – including institutional investors, private banks and hedge funds – comprised 70 percent of the issue’s subscribers, providing approximately 450 million euros of 650 million euros in total, according to estimates by sources.

The issue’s two coordinators, HSBC and Goldman Sachs, were still working on a finalized list of subscribers late last night.

Importantly, half the investment amount provided by foreign investors concerned real-money investors, including top global players handling portfolios worth trillions of dollars.

PPC’s issue, a sustainability-linked bond through which the utility has pledged, to investors, carbon emission reductions, was too good an offer to ignore. Its yield, 3.875 percent, was a standout prospect given far lower yields offered in the eurozone.

The results, since the order book’s opening on Monday, have exceeded PPC’s expectations in what is being hailed as an unprecedented success for a Greek bond issue, both in terms of the level of capital amounts offered and number of participants.

Also, this issue means PPC has succeeded in borrowing at an interest rate that is one-and-a-half percent below its current borrowing cost.

Banking sector officials pointed out the issue’s outcome highlights a wider change in perception of Greece by investors.

Suppliers want greater clarity on new customer switching rules

Electricity suppliers have agreed, in principle, on new rules proposed by RAE, the Regulatory Authority for Energy, for customer switching, but demand greater clarity on a rule concerning the imposition of an upper limit on outstanding bills owed by customers seeking to switch suppliers.

Seven suppliers – power utility PPC, Protergia (Mytilineos Group), Heron, Elpedison, Volterra, Zenith and Fysiko Aerio/Hellenic Energy Company – and two associations – ESPEN (Greek Energy Suppliers Association), ESEPIE (Hellenic Association of Electricity Trading & Supply Companies) – took part in second-round public consultation staged by RAE, requesting views on three topics.

Preparations for the introduction of a debt-flagging system – the public consultation procedure’s second topic – offering general protection to suppliers by informing and preparing them on the track records of incoming customers, are headed in the right direction, participants agreed.

They also backed a RAE proposal that would permit suppliers to request electricity supply cuts from distribution network operator DEDDIE/HEDNO for exiting customers who have not settled outstanding electricity bills.

This measure promises to contribute to more effective management of electricity-bill debt and support supplier receivables, participants pointed out.

RAE, in its proposals, sets a six-month limit for suppliers to take action against customers once they have switched companies.

Strong investor interest expressed in PPC’s bond issue

Strong demand expressed by Greek and foreign investors for power utility PPC’s five-year, 500 million-euro sustainability-linked bond, whose order book closes tomorrow, suggests the issue will be oversubscribed by two to three times, sources have estimated.

Local brokerage companies are submitting order requests that represent up to three times the size of actual amounts investors have decided to place in this SLB issue in an effort to ensure their clients will get the bond quantities they want.

The level of interest of foreign institutional investors, targeted by PPC as a key group for the success of this bond issue, is expected to be even higher.

Analysts attribute this heightened investor interest to two main factors, firstly the bond issue’s yield, which is expected to close between 3.5 and 4.2 percent, well over levels registered by corporate bond issues of the past few years in eurozone markets; and secondly, the bond’s sustainability terms.

PPC is committing to a 40 percent CO2 emissions reduction by 2022, from 23.1 million tons in 2019 to 13.9 million tons next year. If this goal is not achieved, 50 basis points will be added to the bond’s yield.

The issue’s environmental, social and governance (ESG) factors, even without guarantees, are also a key attraction for investors.

Since the wider outbreak of the pandemic early in 2020, an increasing number of funds have opted to invest in companies observing ESG criteria. Capital amounts invested by funds in companies maintaining ESG criteria have increased by 170 percent since 2015.

EC examining compensation bid for PPC lignite closures

The government, determined to ensure compensation for state-controlled power utility PPC over its decision to prematurely close down its lignite-fired power stations, is seeking a solution through the European framework of options, an energy ministry announcement has informed.

The Greek State has submitted a compensation request to cover extraordinary costs related to the premature closure of four PPC lignite mines and lignite fired power stations, the ministry’s announcement noted.

European Commission Vice-President Margrethe Vestager, also Brussels’ Commissioner for Competition, has informed that the Commission views favorably the Greek initiative for a premature closure of these lignite facilities and is now examining the legal grounds of the compensation request, the energy ministry’s announcement added.

The Greek government wants compensation for PPC as the utility’s outgoing units have potential for a longer life, meaning PPC is being deprived of further earnings through these facilities.

A successful Greek compensation bid could also help cover extraordinary costs linked to the restructuring of lignite-dependent local economies.

The energy ministry is basing Greece’s compensation bid on a recent European Commission decision approving 52.5 million euros for the Netherlands as compensation for the premature closure of its Hemweg coal-fired power station.

The Netherlands has implemented law forbidding the use of coal for electricity generation beyond January 1, 2030.

PPC bond issue aims for real-money investors, market clout

Power utility PPC, which has just issued a 500 million-euro bond expiring in 2026, is aiming to attract foreign institutional investors – or real-money investors placed in the real economy, not hedge funds – to the issue, which, the corporation hopes, will also enjoy a solid course in secondary-market trading and help establish the company’s clout in capital markets.

PPC began presenting this bond issue to institutional investors yesterday and will continue to do so over the next two days in an effort to maximize the level of participation in the issue, a Sustainability-Linked Bond, the first of its kind to be offered by a Greek company.

The power utility is committing to a 40 percent CO2 emissions reduction by 2022, which if not achieved, will add 50 basis points to the bond’s yield.

The issue’s order book closes on Thursday. A clear picture on the turnout and type of investors drawn to the issue should emerge today or tomorrow, the latest.

PPC’s push to reduce CO2 emissions, which the company has told investors will fall from 23.1 million tons in 2019 to 13.9 million tons in 2022, is based on two key factors, a planned withdrawal of lignite-fired units representing a total capacity of 3.4 GW by 2023 and a change of investment direction focusing on renewables.

Data shows that PPC managed to reduce its CO2 emissions by 56 percent between 2005, when levels were 52.6 million tons, and 2019. A drop to the 2022 objective of 13.9 million tons would represent a 74 percent reduction, compared to 2005. If achieved, such a reduction would exceed the national target of 62 percent.

An improved BB- rating from Fitch late in December was a key factor in PPC’s decision to head to capital markets at this point in time.

IPTO study backing PPC lignite compensation bid soon to EC

The energy ministry is preparing to forward to the European Commission a power grid operator IPTO study that underlines the ongoing necessity of the country’s lignite-fired power stations for grid sufficiency.

The IPTO study was requested by energy minister Kostas Skrekas to bolster a compensation request submitted to Brussels by state-controlled power utility PPC as a result of the grid’s ongoing need for lignite units, nowadays loss-incurring facilities due to elevated CO2 emission right costs.

PPC, Greece’s sole operator of lignite units, plans to phase out its lignite units over the next three years as part of the country’s decarbonization strategy.

The energy ministry expects to forward the IPTO study to the European Commission within the next fortnight. Greece is seeking compensation for PPC through a support mechanism for as long as these lignite units remain in use.

Last week, the European Commission began examining whether a similar German compensation request complies with EU rules and should be approved.

European Commission Executive Vice-President Margrethe Vestager suggested that the German plan theoretically complies with Europe’s green energy agreement and its goals.

“Within this context, our role is to safeguard competition by ensuring that compensation for premature withdrawal [of lignite units] is kept to a minimum,” Vestager commented. “The information available at this point is not sufficient to judge.”

EU hesitation to the German plan concerns a number of aspects, including the duration of the compensation period.

Industrial officials enraged by PPC energy-negotiation demands

Industrial producers are reacting against terms and demands tabled by power utility PPC in ongoing negotiations for new high-voltage tariffs and agreements that take into account new market conditions ushered in by the target model.

Energy-intensive producers, not appeased by PPC’s recent decision to extend its negotiating period by three months – thereby extending the validity of existing agreements with industrial customers until June – claim the power utility is not making any effort to achieve compromise solutions.

The industrial sector is already in crisis, and, furthermore, the recent disruption of operations at steel producer Halyvourgiki and state-controlled nickel producer Larco, leaving PPC with enormous unpaid electricity bills, illustrates the power utility is not adopting government policies for a strategic recovery of the country’s industrial sector, officials at energy-intensive industrial enterprises have complained.

Although industrial energy costs are already too high, PPC is proposing high-voltage tariff increases in the range of 40 to 50 percent, industrial firm officials have noted.

Despite their obvious feelings of discontent, officials at energy-intensive consumers appear willing to keep negotiating with PPC in search of solutions that can enhance the competitiveness of industries.

However, some industrial sub-sectors, such as heavy industry, appear to be far less tolerant. Officials at iron, copper, cement and steel industries believe their proposals are not being considered at PPC.

They want balancing cost and take-or-pay clauses removed from any new agreements. Heavy industry cannot assume such risks and, at the same time, remain productive and competitive, officials stressed.

PPC, on solid ground, set for SLB issue, possibly next week

Power utility PPC is set to issue – any day now, possibly during the upcoming week – a 500 million-euro Sustainability-Linked Bond, through which it would commit, to investors, to a specified carbon emission reduction.

Given the heightened activity of late by the corporation and its advisors for this issue, it appears PPC believes now is the right time to head to the bond market, as long as no big changes occur on the wider economic front.

The prospective SLB would mark PPC’s return to capital markets following a seven-year absence. It also promises to make the company the country’s first to issue a bond incorporating sustainability terms.

Until just a few weeks ago, PPC was aiming to make its SLB move within the year’s first half, but the company’s prospects have improved further, as reflected by a recent BB- rating from Fitch.

The power utility is now getting started on the implementation of a business plan aiming for a green-energy transformation at PPC.

SLBs differ to green bonds as they are associated with specific indices, including CO2 emission reduction figures throughout an issuing company’s business plan.

PPC does not necessarily expect any great interest rate improvement through the anticipated SLB issue. Instead, looking further ahead, a solid performance by the utility’s SLB in secondary-market trading would enable the corporation to borrow at a lower cost should it return to capital markets at a future date.

PPC’s share price has risen by more than 170 percent over the past year, from 3.28 euros yesterday, representing a market capitalization value of 761 million euros, to yesterday’s closing price of 8.87 euros per share, putting the utility’s market capitalization value at 2.057 billion euros.

Besides the bond issue, investors are also expecting a list of second-round qualifiers, from 11 possible suitors, in the sale of a 49 percent stake of distribution network operator DEDDIE/HEDNO, a PPC subsidiary. Second-round qualifiers are expected to be announced once PPC has completed its qualification process, seen requiring a few more weeks.

PPC extends industrial tariff negotiations until June

Power utility PPC has extended by three months its negotiating period for new high-voltage industrial tariffs following a request by a number of energy-intensive producers, energypress sources have informed.

The negotiating sides acknowledge pandemic-related problems have prompted the need for additional time, during which  compromise solutions will be sought.

PPC had given industrial enterprises until February 28 to accept a new high-voltage tariff pricing formula. The previous system’s validity expired December 31.

Industrial electricity charges for the first two months of 2021 have been based on the terms of expired agreements.

According to sources, tariff levels are of secondary importance in these negotiations, the prime concern being a new pricing system sought by PPC, which, if implemented, would bring an end to fixed tariffs and volume discounts.

PPC contends that the target model and its accompanying energy exchange markets, such as the balancing market, need to be taken into account for new pricing formulas.

The negotiating sides appear determined to reach agreements that would bolster the competitiveness of industrial producers without obligating the state-controlled power utility to supply high-voltage electricity at below-cost levels.

PPC seeks IPTO support for EC lignite compensation request

Power utility PPC wants power grid operator IPTO to provide a statement declaring whether the power utility’s lignite-fired power stations, nowadays loss-incurring units as a result of elevated carbon emission right costs, are still necessary for the achievement of grid sufficiency, the utility’s objective being to gain support for a lignite compensation request submitted to the European Commission, not to immediately shut down its lignite units, sources have informed.

Brussels has been examining the PPC compensation request for months, initially as part of a package incorporating the European Commission’s lignite antitrust case against Greece, and more recently, following settlement of the latter, as a separate issue that has dragged on.

Throughout the entire period, officials in Greece have needed to respond to extensive Brussels questioning over PPC’s compensation request. Most recently, the European Commission is reported to have informed PPC, by email, that it would deliver a decision as soon as possible, once all information has been processed.

PPC, in its letter to IPTO, informs that it would be prepared to shut down the lignite units now if the operator considers them unnecessary for grid sufficiency as they are the cause of losses on a daily basis.

The power utility has planned a phaseout of its lignite facilities over the next three years, as part of the country’s decarbonization effort.

IPTO, in a grid-sufficiency study covering 2020 to 2030, conducted within the framework of the National Energy and Climate Plan, has stressed the period between 2021 and 2024 will be crucial as a result of PPC’s planned phaseout of lignite-fired power stations.

Subsequently, the grid’s sufficiency will depend on how soon three new gas-fueled power stations with a capacity totaling 2,150 MW – PPC’s Ptolemaida V, and units being developed by Mytilineos and TERNA – will be ready for launch, IPTO’s NECP-linked study noted.

PPC awaiting right time for €500bn Sustainability-Linked Bond

Power utility PPC is all set and waiting for the right time to issue a 500 million-euro Sustainability-Linked Bond, through which it would commit, to investors, to a specified carbon emission reduction.

According to sources, PPC, keeping details on the issue under wraps, has not planned to market an SLB in March, but could, theoretically, do so at any given moment from here on if it deems market conditions are ripe.

An SLB issue by PPC promises to make the company the country’s first to issue a bond incorporating sustainability terms.

Companies that issue SLBs promising carbon emission reductions over an extended period of time represent lower-risk propositions for investors, enabling issuers to achieve better borrowing terms.

PPC does not necessarily expect any great interest rate improvement through an SLB issue, financing officials have pointed out, but, looking further ahead, a solid performance by the utility’s SLB in secondary-market trading would enable the corporation to borrow at a lower cost should it return to capital markets at a future date.

The company’s profile has greatly improved in the eyes of investors. PPC’s share price climbed to €9.05, its highest level since October, 2014, last Thursday, on the eve of the first-round deadline for bids in the sale of a 49 percent stake in subsidiary firm DEDDIE/HEDNO, the distribution network operator.