Operators disagree on Crete network responsibility shift

Power grid operator IPTO and distribution network operator DEDDIE are locked in a dispute over the point in time at which management responsibility of Crete’s small-scale grid interconnection, to reach the Peloponnese, should be transferred from DEDDIE, currently responsible for Crete’s network as the island is classified as a non-interconnected island, to IPTO.

DEDDIE contends that IPTO must take on the responsibility of managing the island’s network with the launch of the small-scale interconnection, anticipated in March, and not in 2023, when Crete’s full-scale interconnection, all the way to Athens, is expected to begin operating.

Crete should be considered an interconnected island as soon as the small-scale grid interconnection to the Peloponnese is launched, even though this infrastructure’s capacity will be able to cover about 30 percent of the island’s energy needs, DEDDIE contends.

Normally, the grid status of islands is automatically revised from non-interconnected to interconnected when grid interconnections serving their energy needs are launched. However, Crete, Greece’s biggest and most populous island, represents a much bigger interconnection project that is being developed over two stages.

DEDDIE, backing its case, has cited an older opinion forwarded by RAE, the Regulatory Authority for Energy, to the energy ministry, through which the authority supported that Crete’s network must be considered a part of the national grid, ending its non-interconnected island status, once the small-scale interconnection begins operating.

Also citing technical reasons to support its view, DEDDIE has pointed out that IPTO will be responsible for the operation and maintenance of the small-scale grid link, infrastructure directly influencing the Cretan network’s performance. Therefore, the island’s high-voltage network and the Crete-Peloponnese interconnection must be managed by the one operator, DEDDIE contends.

IPTO does not reject the prospect of eventually becoming responsible for Crete’s network, but the power grid operator does oppose the idea of assuming responsibility for a fixed asset that does not belong to the company. Crete’s high-voltage network is owned by power utility PPC.

At present, PPC does not appear ready to sell. As a result, IPTO believes DEDDIE must be responsible for the network’s management until this asset is transferred to the power grid operator.

EBRD reports close to €800 million investment in Greece in 2020

The European Bank for Reconstruction and Development (EBRD) stepped up its investments in Greece in 2020 to address immediate needs caused by the coronavirus pandemic and to create the foundations for a recovery with a focus on building back better economies.

Continuing its support for the Greek economy in 2020, the Bank made €797 million new investments in 17 projects, compared to €571 million in 13 projects in 2019, putting Greece in the EBRD’s top five countries of investment last year. 

Andreea Moraru, EBRD Director for Greece, said: “We are very proud to contribute to the robust response of the Greek economy to the crisis, supporting the recovery, helping local businesses with their needs and facilitating the transition to greener economic activities.” 

The Bank provided a senior unsecured loan of up to €160 million power utility PPC. The facility will support PPC’s working capital needs at a time of customer payment volatility following the outbreak of the crisis. It will also strengthen the resilience of the electricity sector as a whole by ensuring the stability of essential utility supplies and maintaining the momentum towards decarbonization. 

The EBRD also stepped up its efforts to help the Greek private sector by investing €57.5 euros in GEK TERNA’s successful issuance of a seven-year €500 million bond. GEK TERNA S.A. is the holding company for a group active in concessions, renewable energy, thermal energy and construction, incorporated in Greece. 

This issuance was the largest bond transaction to be listed to date on the Athens Stock Exchange and the first corporate issuance in the country since the outbreak of the pandemic. The proceeds will be used to refinance secured commercial loans with longer tenors and reduced financing costs, enabling a corporate transformation that will optimize the capital structure of GEK TERNA. 

Facilitating the transition from fossil fuels to renewable sources of energy, EBRD launched its just transition initiative linking the transition to a low-carbon economy with inclusive economic development. One of the first projects under this approach was the Bank’s €75 million investment in the successful Eurobond tap issuance by Hellenic Petroleum (ELPE), in support of a new solar photovoltaic plant in Greece, the largest solar energy project in south-eastern Europe to date. 

The total funds of €100 million raised will enable ELPE to finance the construction of 18 solar photovoltaic (PV) plants with a total installed capacity of 204 MW in Kozani, western Macedonia, the country’s most coal-dependent region. The solar park will be built close to existing coal-fired power plants that are being phased out and is expected to reduce CO2 emissions by 320,000 tons annually.

In addition, the EBRD invested €50 million in the first senior preferred (SP) green bond issuance by the National Bank of Greece (NBG), combining support for capital market development and for the green economy in Greece. It was the first green bond issuance by a Greek bank and the first SP instrument to be issued by a Greek financial institution. 

Together with other investors, the EBRD invested in a €186.4 million securitization transaction of automotive leases, originated by Olympic Commercial and Tourist Enterprises S.A. (Avis), the leading car leasing company in Greece and master franchisee of the global car rental company Avis Budget Group.  

The transaction was an important milestone for the Greek securitization market as it was the largest issuance by a non-bank originator and the first auto lease asset-backed security transaction in the country with a sustainable and green element. 

Part of the proceeds will be used by Avis for the replacement of its existing fleet with lower CO2 emissions, electric and hybrid vehicles, helping the company to reduce its diesel footprint.

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. 

The EBRD will manage the facility, which will provide high-quality, client-oriented project preparation, training and advisory services, policy support and institutional strengthening activities related to the infrastructure sector in Greece. The Ministry will fund the activities of the facility with €20 million. The project pipeline will mostly be in the social infrastructure sector (education and health), sustainable urban infrastructure, and water and waste management.

Keeping vital trade flows going, the Bank provided a €20 million factoring facility to ABC Factors under its Trade Facilitation Program (TTP). Building on the EBRD’s cooperation with Alpha Bank, the parent company of ABC Factors, the facility will enable the factoring subsidiary to further expand its portfolio of small and medium-sized enterprises (SMEs) and local corporate clients by providing funding for domestic and international factoring transactions. Greece remains the EBRD’s most active country under TFP, with close to €320 million trade transactions in 2020.  

In 2020, the EBRD started 41 new advisory projects with Greek SMEs in various areas, such as strategic and business planning, marketing and e-commerce, operational efficiency, financial management and digitalization, and delivered five online export training seminars to more than 100 participants. Donor funding from Greece, as well as from the European Union through the European Investment Advisory Hub of the European Investment Bank, has been crucial. 

Papoutsanis, a leading Greek manufacturer of soap and liquid cosmetics, became the first Greek firm to join the EBRD’s Blue Ribbon program, which combines business advice and finance for companies that stand out for their market leadership and high-growth potential. 

Furthermore, the Board of Directors of the EBRD approved a new strategy for Greece, which will guide the bank’s investment and policy engagement in the country during the next five years. 

The EBRD responded to the coronavirus pandemic with record investment of €11 billion in 2020 through 410 projects. This represents a 10 per cent increase in annual business investment relative to 2019, when the bank provided €10.1 billion to finance 452 projects.

PPC, RWE agreement near, aiming for RES joint venture by summer

PPC Renewables, a power utility PPC subsidiary, and RWE, Germany’s biggest power producer, are striving to launch a joint venture by next summer for RES investments in Greece.

The two companies, which signed a Memorandum of Understanding last March in Berlin for exchange of technical knowhow and RES development in Greece, are looking to equally contribute for the establishment of a joint RES portfolio totaling 2 GW.

State-controlled PPC is expected to offer its approval of the agreement between the two companies within the next few days, development and investment minister Adonis Georgiadis told an online New Year event staged yesterday by the Hellenic-German Chamber of Commerce and Industry.

However, the details of the PPC Renewables-RWE joint venture deal are not expected to be finalized until early February, according to sources.

The two sides have already agreed on the fundamentals of their partnership agreement, RWE’s local representative Giorgos Paterakis confirmed at the aforementioned event, adding that the two companies will soon have further, and more specific, details to announce.

Georgiadis, the development and investment minister, described the forthcoming partnership as one of the country’s two biggest green-energy developments, also naming a pilot electromobility investment planned by another German company, VW, on the Greek island Astypalea.

The two companies are also looking to collaborate on decarbonization.

Decarbonization compensation effort locked in bureaucracy

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

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

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

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

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

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

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

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

Gas market competition intensifies, TAP lowering prices

Competition has intensified in the country’s wholesale gas market at a time of changing conditions and negotiations for 2021 deals between importers and major-scale consumers, namely electricity producers and industrial enterprises.

Many gas supply contracts expired at the end of 2020, requiring a large number of players to renegotiate deals. Some of these big consumers have already reached new agreements with gas wholesalers.

Market conditions have changed considerably compared to a year earlier. Supply of Azeri gas through the new TAP route has already begun to Greece as well as Bulgaria, increasing overall supply, which has obliged, and permitted, gas utility DEPA to pursue a more aggressive pricing policy as the company pushes to absorb quantities it has committed to through clauses in existing contracts.

Also, the TAP-related increase of gas supply to Bulgaria, combined with this country’s inflow of Russian gas through oil-indexed price agreements, currently relatively cheaper, is now depriving Greek wholesale gas companies of entry into a neighboring market that was available for trading activity last year.

Furthermore, conditions have also been impacted by a competition committee decision no longer requiring DEPA to stage gas auctions to make available a share of its gas orders to rival traders. This measure was introduced and maintained to help liberalize Greece’s gas market.

The new conditions are pushing Greek traders towards more competitive pricing policies. They appear to have acknowledged that their profit margins will be narrower in 2021.

DEPA, helped by the fact that a sizeable proportion of its gas purchases is oil-indexed, is said to be playing a dominant role in the ongoing negotiations for new contracts with customers.

It should be pointed out that, unlike rival gas importers such as Mytilineos, Elpedison and Heron, all benefitting through self-consumption of a large part of their gas orders for gas-fired power stations they operate, DEPA does not self-consume.

Prometheus Gas, a member of the Copelouzos group, remains a formidable player, while the power utility PPC and petroleum company Motor Oil are less influential in the wholesale gas market.

Higher LNG prices, compared to pipeline gas, will decrease demand for LNG this year and weaken the interest of traders for LNG supply through gas grid operator DESFA’s Revythoussa terminal on the islet just off Athens. Last year, this facility was a hot spot of trading activity as a result of lower-priced LNG.

New minister, just appointed, has issues to resolve in 2021

Kostas Skrekas, just appointed new energy minister as part of the government’s cabinet reshuffle, in place of Costis Hatzidakis, who has headed the ministry for a constructive year and a half, faces a series of pending energy-sector matters that remained unresolved in 2020. They need to be addressed as soon as possible. Developments and conditions this year will be pivotal for these matters.

Skrekas was previously deputy minister for agricultural development and food.

Also in 2021, a year during which takeovers and mergers are seen occurring in the retail electricity and gas markets, rivals will continue battling for market share gains. The target model’s launch two months ago has brought about new conditions, strengthening the positions of vertically integrated suppliers.

The need for a normalization of the target model’s new markets stands as the energy ministry’s most pressing task at present. A sharp rise in wholesale electricity prices as a result of soaring balancing market costs has deeply unsettled the market, impacting the standings of non-vertically integrated suppliers, as well as industrial enterprises and consumers, who face rising bills.

Market coupling with Bulgaria’s day-ahead market, scheduled to take place within the first three months of the new year, is the next step of the target model, a procedure designed to harmonize EU energy markets and promote competition.

New energy-intensive industrial tariffs also need to be set soon. Though essentially a matter concerning state-controlled power utility PPC and Greece’s industrial players, the cost of industrial energy is crucial for Greek industry, carrying particular political and economic weight.

Also, Greece has little time left in its negotiations with Brussels for a framework to offer third parties access to PPC’s lignite-based generation. This issue is no longer as crucial as it once was because the country’s lignite output has been drastically reduced. Even so, it remains important for independent suppliers.

A number of energy-sector privatizations could be completed this year. Gas utility DEPA’s two new entities, DEPA Infrastructure and DEPA Commercial, electricity distribution network operator DEDDIE/HEDNO, and a tender for a tender for the development of an underground natural gas storage facility (UGS) in the almost depleted natural gas field of “South Kavala” in northern Greece are all on this year’s privatization list.

In renewable energy, the ministry needs to take decisions within the first few months to clarify terms regulating the sector. RES investment interest is currently high. Steps still need to be taken in an ongoing effort to simplify RES licensing procedures, while a legal framework must be established for energy storage, offshore wind farms and hydrogen use.

 

METKA winning bidder for PPC Renewables 200-MW solar farm

PPC Renewables has named METKA as the winning bidder of a tender for the development of a 200-MW solar farm in the country’s north, in the west Macedonia region.

PPC Renewables’ most ambitious project to date, it constitutes the third and largest section of a 230-MW solar energy complex.

Swift development of this third section is expected as PPC Renewables has already secured the project’s financing needs from a group of Greek banks.

Construction of the project, to be equipped with bifacial panels and trackers, is expected to commence in March.

As for the 230-MW solar energy project’s two smaller sections, both 15 MW, one is nearing completion while construction work at the other is in progress.

PPC Renewables, a subsidiary of power utility PPC, is also moving ahead with a tender for a 50-MW solar energy project in Megalopoli, Peloponnese. Bids submitted by five major groups, Greek and foreign, seeking this project’s development contract have been opened.

The Megalopoli solar farm is planned to be Greece’s first RES project that will not participate in RES auctions for tariffs. Instead, PPC Renewables intends to establish two-way contracts through the target model framework.

Over the next 24 months, PPC Renewables plans to begin developing projects with a total capacity of 500 MW, which would put the company on track towards achieving an installed-capacity target of 1.5 GW by 2024.

Parent company PPC’s updated business plan includes investments totaling 3.4 billion euros by 2023, 34 percent of these in the renewable energy sector. PPC is aiming for a fivefold increase in RES output, from 0.3 to 1.6 TWh.

PPC Renewables, possessing the country’s biggest RES portfolio following its latest moves and plans, may utilize some of its RES licenses for joint ventures with Germany’s RWE. Recent meetings between the two sides have increased the likelihood of a partnership.

PPC gains 3% in retail market for November share of 66.3%

Power utility PPC, the retail electricity market leader, gained an entire three percentage points in November, capturing a 66.33 percent share, up from 63.2 percent a month earlier, according to a latest energy exchange report.

The rankings among the market’s independent suppliers remained unchanged but minor market share gains and losses were reported for the month.

Protergia, a member of the Mytilineos group, shed over half a percentage point, dropping from 8.6 percent in October to 7.99 percent in November, but remained at the forefront among the independent suppliers.

Second-placed Heron also retreated slightly, to 6.55 percent in November from 6.97 percent in October, as did Elpedison, ranked third, to 4.67 percent from 5.05 percent.

Next in the rankings, NRG’s market share remained virtually unchanged, ending November at 3.37 percent from 3.38 percent in October.

Watt+Volt followed with a 2.69 share of the retail electricity market, up marginally from 2.67 percent, Volterra was next with 2.37 percent from 2.55 percent, Fysiko Aerio (Attiki GSC) made a slight gain to reach 1.61 percent from 1.48 percent, Zenith upped its share to 1.26 percent from 1.19 percent, Volton improved to 1.13 percent from 1.04 percent, and KEN remained virtually unchanged, at 0.59 percent from 0.6 percent.

Electricity exports increased and imports decreased in November, compared to a month earlier, the energy exchange data showed.

PPC’s business plan for 2021 to 2023 projects a reduction in customers from 6.1 million, last September, to 4.7 million, for a market share of 54 percent.

PPC holding back on Ptolemaida V fuel decision

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

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

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

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

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

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

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

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

PPC bids for North Macedonia’s Cebren hydropower plant

Power utility PPC is among ten international bidding teams from the energy and construction domains that have submitted pre-qualification offers to a tender for North Macedonia’s prospective Cebren hydropower plant, an investment expected to require at least 500 to 600 million euros.

This preliminary stage of the tender concerns water usage licensing rights for hydropower output at the neighboring country’s Crna Reka river. Preliminary bids were opened yesterday.

A related committee to soon be assembled by the North Macedonian government will examine whether the bids submitted fully meet the tender’s requirements before qualifiers are invited to a second round for offers concerning the project’s development in a Public Private Partnership (PPP) with state-owned power producer ESM.

Besides PPC, which has teamed up with energy and construction firm Archirodon, the other nine bids were submitted by: EVN-Verbund (Austria); Gezhouba Group China (China); Power Construction Corporation of China (China); EDF (France); Eiffage-Waterlu-Andritz-Norconsult (France, Austria); Webuild SPA Italia-Salini (Italy); Cobra-Cobra Hidraulika (Spain); ENKA-COLIN (Turkey); and Ozaltin-Yapi Merkezi (Turkey).

The North Macedonian government plans to commission a consultant for preparations concerning the tender’s second round.

In previous years, more than ten tenders have been staged for the construction and operation of the Cebren hydropower plant, but all efforts have proved fruitless, for a variety of reasons.

Prime Minister Zoran Zaev’s administration has noted that a serious effort is being made for the project’s development, ascertaining the current tender will be successfully completed.

It is planned to offer an installed capacity of between 333 and 458 MW for annual electricity production of 1,000 to 1,200 GWh.

Solid Fitch Ratings grading for PPC paves way to bond issue

American credit rating agency Fitch Ratings has delivered a favorable review of power utility PPC that enhances the company’s credit image and takes it a step closer to capital markets.

The credit agency has not only added PPC to its catalogue of companies reviewed, but also given the utility a BB- rating, noting that a firm outlook lies ahead. This status is twice as good as a B rating offered by S&P in November.

It enables PPC to begin examining the prospect of borrowing through a bond issue for the first time in six years.

The Fitch Ratings grading has been embraced at PPC’s Athens headquarters, as it not only seals a perfectly successful year but also puts in place a solid foundation for an even better year in 2021.

Interpretations of the outcome by some analysts remain cautiously optimistic. These analysts believe consolidation of PPC’s improved standing must wait for the release of its financial results for the year. Favorable news on the forthcoming 49 percent privatization of subsidiary DEDDIE/HEDNO, the distribution network operator, will also further enhance PPC’s image, they pointed out.

PPC’s integrated business structure, dominant market position, long-term sustainability as a result of strategic repositioning, as well as favorable energy sector reforms from 2019 to the present were key factors in the favorable Fitch Ratings grading.

RAE discusses balancing market ceiling with producers

RAE, the Regulatory Authority for Energy, is staging a series of meetings today with major-scale electricity producers to discuss its proposal, forwarded for public consultation last Thursday, for the imposition of a price ceiling on offers made by producers in the balancing market. Its price levels have risen sharply since a launch several weeks ago as part of the target model’s new markets.

Representatives of three electricity producers, power utility PPC, Protergia and Elpedison, all vertically integrated, have been invited by the authority to separately present their views on its price-ceiling proposal before they submit their official views to the matter’s public consultation procedure by tomorrow morning’s 11am deadline.

Producers operating gas-fueled power stations are generally believed to oppose the prospect of a price ceiling on their offers, as they consider the balancing market to be a useful tool measuring supply and demand in the electricity market, as is the case around Europe.

RAE has attached a three-month limit on the duration of its price-ceiling proposal. Restrictive measures such as the authority’s proposal are generally not embraced by the European Commission, as RAE chief executive Thanassis Dagoumas has admitted.

Non vertically integrated electricity suppliers, hit hard by price rises in the wholesale electricity market, of which the balancing market is a component, have called for the restrictive measure to take retroactive effect. This is considered an unlikely prospect by market officials.

Many critics of the target model preparation procedure had warned that its new markets should not begin operating unless a RAE monitoring mechanism is in full working order.

Latest market data published by power grid operator IPTO showed a mild de-escalation of balancing market price levels to between 12 and 13 euros per MWh for December 7 to 13, the new target model’s sixth week, but these levels are still regarded as being excessive.

CO2 right prices up 39% in 45 days, adding to wholesale market price ascent

CO2 emission right prices have hit new records, trading at levels of over 30 euros per ton in recent days for a rise of 39 percent over the past month and a half that has contributed to the wholesale market price ascent.

These elevated CO2 right levels peaked on Tuesday, at 32.02 euros per ton, well over a price of 23.05 euros per ton recorded just weeks ago, at the end of October.

The upward trajectory of CO2 emission right costs is also contributing to even higher prices in Greece’s wholesale electricity market.

Last Wednesday, the day-ahead market’s average price exceeded 80 euros per MWh, rising further to 93 euros per MWh hour yesterday.

If CO2 emission right trading prices persist at levels of more than 30 euros per ton, power utility PPC will activate a related wholesale price clause incorporated into its supply agreements.

Besides the increase in CO2 emission right costs, the Greek day-ahead market has followed the upward trajectory of other European markets, where the combination of higher demand and deteriorating weather conditions is pushing price levels higher.

According to Greek energy exchange data for today’s day-ahead market, the price will average 82.31 euros per MWh, peaking at 114.1 euros per MWh and dropping as low as 44.38 euros per MWh.

 

Strong market test turnout for DEDDIE sale, 18 players in all

A total of 18 prospective bidders have taken part in a market test staged by Goldman Sachs for power utility PPC’s forthcoming sale of a 49 percent stake in subsidiary firm DEDDIE/HEDNO, the distribution network operator.

The list, forwarded by Goldman Sachs to PPC, includes investors already familiar to the Greek market such as US firm Blackrock, specializing in transportation and energy infrastructure long-term investments; prominent infrastructure funds; as well as many European operators.

France’s Engie and Italy’s Enel, both often linked with the DEDDIE/HEDNO sale, were not among the 18 market test participants, sources informed.

Interestingly, no previous market test staged to gauge interest in the prospective sale of any Greek State asset has generated such a strong turnout.

Authorities behind DEDDIE/HEDNO’s partial privatization hope this more than promising response for the market test will result in intense bidding competition and a higher sale price.

A clear picture on the number and identity of the sale’s participants will become apparent on January 29, the deadline for the procedure’s first round official expressions of interest.

Officials have attributed the strong market test interest to five key factors: the operator’s new regulatory framework; an elevated WACC level of 6.7 percent for 2021 to 2024, well over levels of between 2.5 and 3 percent offered by other European operators; strong confidence in the governance of the country, pivotal for long-term investments; good timing, as, at present, no other network operator in Europe is up for sale; and a massive accumulation of global capital currently available for investment as a result of numerous lockdowns imposed in many parts of the world since March.

The Greek government will aim to complete DEDDIE/HEDNO’s partial privatization in the first half of 2021.

 

Consumers hit with tariff hikes of over 20% in low, mid-voltage

Sharply higher wholesale electricity prices registered over the past five weeks or so in the energy exchange’s new target model markets have, to a great extent, been quietly passed on by suppliers to consumer tariffs in the household, business and industrial categories, without any related announcements  from suppliers.

Price hikes by electricity suppliers have applied to approximately 35 percent of total electricity consumption, during this period, while tariff hikes have exceeded 20 percent in the low and mid-voltage categories.

In the low-voltage category, suppliers have activated clauses enabling tariff increases when wholesale price levels exceed certain levels.

Very few independent electricity suppliers, both vertically integrated and not, carry fixed-tariff agreements in their portfolios, exposing most consumers to wholesale electricity price fluctuations.

On the contrary, power utility PPC, representing roughly 65 percent of overall consumption, does not include wholesale price-related clauses in its supply agreements, meaning its tariffs have remained unchanged over the past few weeks.

Instead, PPC includes clauses linked to emission right prices in international markets. These have remained relatively steady in recent times.

Even if wholesale electricity prices happen to deescalate in the next few weeks, a likely prospect, some latency should be expected in any downward tariff adjustments by suppliers.

Numerous consumers have lodged complaints with RAE, the Regulatory Authority for Energy, over the tariff hikes by suppliers. Complaints by suppliers against energy producers setting excessively high prices in target model markets have also been made.

Investment funds targeted in operator DEDDIE’s 49% sale

Power utility PPC’s forthcoming sale of a 49 percent stake in subsidiary firm DEDDIE/HEDNO, the distribution network operator, will not be limited to potential buyers with energy-market backgrounds, according to the sale’s terms, published yesterday, suggesting the seller is aiming to attract investment funds.

DEDDIE/HEDNO’s investment plan for the next five years is worth 2.3 billion euros, including 850 million euros for a nationwide digital power meter upgrade, an amount the government will seek to draw from the EU recovery fund.

Three major infrastructure funds have already expressed unofficial interest in the operator’s sale through a market test staged by Goldman Sachs, sources informed.

The sale is planned to take place over two stages, beginning with expressions of interest by candidates until a January 29 deadline, followed by a second round of binding bids from second-round qualifiers.

They will be given access to a virtual data room for evaluations before binding offers are shaped and submitted.

The government will aim to complete DEDDIE/HEDNO’s partial privatization in the first half of 2021, energy minister Costis Hatzidakis noted during an online Capital Link Forum staged yesterday.

 

Smart meter 6-year installation plan forwarded for public consultation

Details of a DEDDIE/HEDNO distribution network operator project for the replacement of parent company power utility PPC’s old power meters around the country with digital meters have been included in a five-year, 2.3 billion-euro development plan prepared by the operator, just forwarded for public consultation.

The operator’s power meter upgrade, a project budgeted at 850 million euros and expected to require six years for completion, is expected to draw from the EU recovery fund.

The project will entail procurement and installation of 7.5 million smart meters for low-voltage consumers nationwide, as well as their inclusion in a new telemetric center with a capacity to host 8 million points.

Consumers stand to benefit from smart meters as the digital technology of these systems will enable monitoring of electricity consumption patterns and levels through home devices or web applications. As a result, consumers will be able to shift energy-intensive practices to lower-cost time zones.

Electricity suppliers will also gain from the conversion to smart meters as these new systems will permit suppliers to shape demand-based pricing policies, offering flexibility to consumers for more competitive packages.

At least 10 candidates emerge for DEDDIE sale’s market test

At least ten prospective bidders, among them a number of infrastructure funds as well as European operators, have taken part in a market test staged by distribution network operator DEDDIE/HEDNO in the lead-up to its sale of a 49 percent stake.

The privatization’s officials have deemed the turnout as considerably satisfactory, both in terms of numbers and the reputations of participants.

Some of the funds, both from Europe and beyond, that emerged for this market test are either already present in the Greek market or have been considering to make an entry for quite some time. They specialize in infrastructure and energy projects as long-term investments.

The board at power utility PPC, DEDDIE/HEDNO’s parent company, will be fully informed on the market test’s participants at a meeting scheduled for today, before the privatization is officially launched.

The privatization’s exact number of first-round participants should become known by the end of January, when the expression-of-interest deadline is expected to be set.

Officials believe the overall sale procedure can be completed by spring in 2021. Attractive WACC levels set recently by RAE, the Regulatory Authority for Energy – 7 percent for 2020 and 6.7 percent for 2021 to 2024 – are expected to lure candidates.

DEDDIE/HEDNO’s ambitious 2.3 billion-euro investment plan, included in the operator’s preliminary network development plan, its projects featuring the installation of 7.5 million digital power meters, transmission network upgrades and expansions, as well as a fiber optics project, should serve as further stimulus for a solid sale price.

PPC wants compensation for island support, tax exemption

Power utility PPC has raised a compensation claim for its maintenance of high-cost diesel-fueled power stations on islands – both interconnected and now in the process of being interconnected – as back-up, while also calling for an exemption from a special consumption tax (EFK) on the diesel it uses to run these facilities.

The two requests were expressed by PPC through public consultation held by power grid operator IPTO for its ten-year development plan covering 2021 to 2030.

To this very day, the power utility has fully met the grid operator’s requests concerning provision of back-up services to ensure uninterrupted electricity supply to consumers on the Cyclades, yet, despite the corporation’s initiatives and the costs it has shouldered, which are growing, an appropriate regulatory framework ensuring sustainability for this service has not been established, PPC noted in the public consultation procedure.

PPC Renewables portfolio boosted by 1.9 GW in producer certificates

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

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

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

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

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

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

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

Post-lignite telethermal plan presented in Parliament

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

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

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

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

 

PPC debt to end year at €600m, down from €900m last year

Power utility PPC’s debt owed to energy market operators as well as project contractors has continued to fall, quelling fears of a debt-reduction slowdown during the country’s second lockdown.

The power utility’s total debt figure is projected to end the year at approximately 600 million euros, down from 900 million euros in July, 2019, a 35 percent drop in a year and a half, according to sources.

The company’s debt reduction is declining at an average rate of 18 million euros per month, driven by an improved collection record for unpaid receivables and better operating profit figures.

PPC’s payments to RES market operator DAPEEP, power grid operator IPTO and distribution network operator DEDDIE have all improved for a complete turnaround compared to a year earlier.

The power utility’s outlay for liquid fuels, natural gas, solid fuels, CO2 emission rights and electricity purchases, down by 678.1 million euros during this year’s nine-month period compared to the equivalent period a year earlier, has been a favorable factor in PPC’s improved results and debt-reduction effort.

PPC aims to further reduce its total debt to a level of between 250 and 300 million euros by the end of 2021.

 

Lignite unit output up, target model overpricing a factor

Power utility PPC’s lignite-fired power stations, temporarily covering for gas-fueled plants undergoing maintenance work and also favored by power grid operator IPTO as a result of excessive target model market prices demanded by independent producers, have made somewhat of a production comeback despite the urgency of the government and state-owned utility to withdraw these high-cost units as soon as possible.

On December 3, eight of the country’s ten remaining lignite-fired power stations operated throughout the day, most close to full capacity.

Agios Dimitrios I, III, IV and V, Kardia III and IV, Meliti and Megalopoli IV covered almost one third of the country’s total electricity demand, supplying over 40,000 MWh of the day’s 139,000 MWh to the grid.

In recent days, between six and seven lignite-fired power stations have been called into action.

Heron’s two gas-fueled power stations are currently sidelined for service work as are two such units respectively operated by Elpedison and PPC in Thessaloniki and Lavrio, close to Athens. Furthermore, overpricing in the day-ahead market by independent producers has prompted IPTO to seek lignite unit coverage.

PPC is still operating at least four lignite-fired power stations on a daily basis, despite related losses, to cover telethermal needs in cities of the west Macedonia and Megalopoli regions.

The power utility intends to hasten the withdrawal of its Megalopoli III, Kardia III and IV lignite-fired units, all set to close in 2021, according to an updated PPC business plan announced earlier this month.

PPC, union in early talks for new collective labor agreement

Power utility PPC and its main union group Genop have begun preliminary talks on a new collective labor agreement under the shadow of financial consequences prompted by the ongoing pandemic, a situation likely to weigh down on union expectations and demands.

Though the current deal, implemented in June, 2018, expires in May, 2021, the two sides agreed to start discussions now in order to determine the issues that will need to be negotiated for the establishment of a new agreement.

Both sides are hoping for a swift conclusion, possibly between March and April, sources informed.

The union group has so far indicated it will not push its demands to extremes, the sources added.

At this early stage, Genop appears determined to maintain favorable older  revisions incorporated into preceding collective labor agreements, such as a daily food allowance of 4 euros per employee.

The union group is also expected to demand a three-year duration for the new collective labor agreement, as was agreed to for the existing deal expiring next May.

Genop may also seek improved salaries for lower-income earners, especially underpaid workers at higher-risk posts, including transmission tower climbers.

PPC’s administration appears willing to contribute to a labor framework that will ensure mutual satisfaction, especially in view of the corporation’s major transformation of activities.

PPC plan includes strategic investments for distr. operator

Power utility PPC’s new business plan, presented yesterday, envisages distribution network operator DEDDIE/HEDNO, a subsidiary, as a key catalyst in the country’s energy transformation with major investments lined up for the operator.

DEDDIE/HEDNO, according to the business plan, covering 2021 to 2023, will make 13 strategic investments worth a total of 1.6 billion euros.

These investment moves are expected to increase the operator’s regulated asset base by 500 million euros to 3.5 billion euros at the end of the three-year period and also boost PPC’s operating profit by 70 million euros by 2023.

The operator’s list of strategic investments includes control center and information system upgrades, smart meter installations, improved customer service, network automation, IT modernization, development of remote customer service systems, adoption of digital tools, supply chain reorganization, and a new data management system.

In addition, DEDDIE/HEDNO expects to save 80 million euros from operating cost improvements, including partial replacement of retiring personnel; automation and digitization of key operations; as well as the adoption of RES load forecast analysis systems and demand management tools.

PPC’s new business plan aims to quadruple EBITDA over 3 yrs

Power utility PPC’s new business plan covering 2021 to 2023 will strive to quadruple the corporation’s EBITDA figure concerning retail activity to 466 million euros from 104 million euros in 2019 through measures focused on maintaining and rewarding a quality customer base in the low-voltage category, company officials have announced.

PPC, which has just presented its three-year business plan to over 200 analysts and investors at PPC Investor Day 2020, projects a customer base contraction from 6.1 million last September to 4.7 million over the next three years, resulting in a retail market share drop to 54 percent from 64 percent at present.

PPC will seek to control the outflow of customers switching to rival suppliers by holding on to the cream of the crop. The utility will also seek to recapture positive-rated customers who have switched to rival suppliers in recent years.

The utility wants to increase its percentage of positive-rated low-voltage customers to 58 percent in 2023 from 48 percent at present. This goal will be driven by loyalty benefits and discounts specially adjusted to consumption profiles.

The corporation also aims to increase e-billing to represent 42 percent of customers in 2023 from just 10 percent at present. However, the utility will not abandon its network of conventional retail outlets. On the contrary, the company to increase its network of 110 outlets to 150 by 2023, all revamped and equipped with high-tech equipment, including automated payment machines.

PPC will also strive to decrease its unpaid receivables from 2.7 billion euros to 2.2 billion euros by 2023, its securitization packages and tougher collection campaigns being the key tools behind this objective.

 

 

PPC energy outlay falls €886m, key to strong 3Q results

A decreasing reliance on lignite-fired power stations, nowadays an extremely costly generation option as a result of high-priced CO2 emission rights; lower wholesale electricity prices; and a drop in diesel and natural gas prices reduced power utility PPC’s energy expenses by 885.6 million euros in the nine-month period, to 1.4 billion euros from approximately 2.1 billion euros in the equivalent period a year earlier, the power utility has reported.

This cost reduction, spearheaded by chief executive Giorgos Stassis and his administration, played an important role in favorable results announced yesterday.

PPC’s liquid fuel expenses fell by 33 percent to 357.5 million euros during this year’s nine-month period as a result of the corporation’s lower liquid fuel-based generation as well as lower mazut and diesel prices.

The nine-month natural gas outlay for PPC also fell significantly, by 41.8 percent, to 206 million euros from 353.7 million euros, as a result of a 42.4 percent drop in natural gas prices.

PPC’s CO2 emission right expenses fell to 263.1 million euros in the nine-month period, from 406.9 million euros in the equivalent period of 2019, as a result of the company’s reduced emission levels, down to 10.9 million tons from 17.9 million tons.

The power utility’s lignite-based generation during the nine-month period dropped by 50.6 percent year-on-year.

PPC appears to have given space to rival electricity producers in the nine-month period, while increasing its operating profit, despite a retail market share contraction to 69.3 percent from 76 percent a year earlier.

S&P upgrades PPC rating on strength of favorable prospects

Credit rating agency Standard & Poor’s has upgraded power utility PPC’s financial status, driven by the utility’s plan to decarbonize sooner than planned, as well as, by 2022, a projected EBITDA figure of between 900 million and one billion euros and an investment plan to reach a total of two billion euros.

S&P projects PPC’s swifter withdrawal of high-cost lignite facilities will result in a lignite-fired power station portfolio with a total capacity of just 700 MW in 2023, down from 3.7 GW in December, 2019. This development will decrease PPC’s electricity generation costs as a result of the utility’s greater emphasis on renewable energy sources and natural gas for production, the credit agency noted.

PPC, according to S&P, will invest two billion euros to increase its RES portfolio from 154 MW to 1.5 GW.

PPC’s retail electricity market share contraction, which reduced its customer base from 6.9 million in 2019 to 6.6 million in 2019, will be offset by bigger profit margins to be achieved through reduced discount rates for tariffs, S&P noted.

The credit agency projects PPC’s market share will drop sharply in 2022 to 60 percent, from 75.8 percent at present.

S&P has also taken into account the utility’s two securitization package collections for unpaid receivables, expect to bring in 500 million euros.

Big month for PPC begins with 9-month results, business plan

December promises to be a big month for power utility PPC on a number of fronts, beginning with the corporation’s announcement tomorrow of profitable nine-month results.

The results will be followed by the presentation of PPC’s  updated and ambitious business plan for 2021 to 2023 on Wednesday, and the launch, on Thursday, of a market test concerning the privatization of a 49 percent stake in distribution network operator DEDDIE/HEDNO, a PPC subsidiary.

In addition, PPC is also awaiting a response, imminently, from the European Commission on a compensation request linked to the utility’s plan to withdraw its lignite-fired power stations sooner than planned.

PPC may also opt to head to capital markets in December.

The power utility’s nine-month profit to be announced tomorrow, including operating profit in 3Q for the fourth quarter in succession, has been attributed to lower natural gas and wholesale prices as well as the utility’s diminished use of lignite. These latest results should pave the way for an EBITDA figure of over 900 billion euros.

Natural gas prices have been low in 2020, but higher price levels are expected in 2021.

PPC will present its updated business plan at Wednesday’s Investor Day, rescheduled as an online event amid the pandemic. It will involve the participation of dozens of Greek and foreign analysts.

Besides a RES energy-mix share of between 15 and 20 percent, the three-year plan will also feature a more aggressive commercial policy, electromobility and digitalization initiatives, as well as the DEDDIE/HEDNO privatization.