Electricity price intervention mechanism to parliament

A legislative amendment enabling the implementation of an electricity-price intervention mechanism has been prepared by the energy ministry and will soon be submitted to parliament for ratification.

The amendment includes the framework of a temporary compensation plan for electricity producers, offers details on price-cap formulas for respective electricity production technologies, and also sets a time period for these extraordinary measures.

According to sources, the mechanism will be implemented next month, on July 1, and remain effective until June 1, 2023, while a series of technical issues, including determination of compensation levels for electricity producers, will be set through ministerial decisions.

Natural gas and lignite-fired power stations will not exactly be subject to price caps, but algorithms taking into account a series of factors will be applied to control prices, the sources said.

Based on current market conditions, the upper-level compensation price for natural gas-fueled power stations has been estimated at between 220 and 230 euros per MWh.

An upper-level compensation price of between 85 to 90 euros will be set for RES producers, while a compensation price of 100 euros per MWh is expected for hydropower stations.

According to the plan, the Hellenic Energy Exchange will withhold the difference between the market clearing price and compensation amounts for electricity producers, transferring these amounts to the Energy Transition Fund. These amounts, along with related state budget sums, will be utilized for electricity-bill subsidies, the aim being to keep the average retail price of electricity at approximately 0.145 euros per KWh.

Rising PPA interest expressed by major-scale consumers

Major-scale energy consumers are expressing growing interest in power purchase agreements with RES producers, but supply currently remains subdued.

Banks are playing a key role in this development as they are encouraging customers to establish PPAs by offering low interest rates as an incentive, a new banking offer, as was noted by a sector official at the recent Athens Energy Dialogues conference.

Banks, increasingly acknowledging that PPAs are the way forward, prefer ten-year PPAs, deemed as agreements that protect from dangers and risks, while also being suitable for the Greek market, according to sector officials.

Market players are already seeking professional PPA advice from consulting firms to prepare for their entry into this new territory.

 

Electricity producer tax for windfall profits in parliament

A draft bill proposing an extraordinary 90 percent tax on windfall profits earned by electricity producers – primarily operators of natural gas-fueled power stations – as a result of sharply higher natural gas prices over the past nine-month period, has been submitted to parliament for discussion and ratification following talks on the matter between the finance and energy ministries.

The draft bill is planned to legislate this extraordinary tax as well as a formula to be used for calculating respective company amounts to be taxed.

Discounts offered by companies to customers will be reduced from sums to be taxed, along with any returns resulting from bilateral contracts.

Once the draft bill is legislated, RAE, the Regulatory Authority for Energy, will calculate amounts for each company to be subject to the extraordinary tax.

According to a related report prepared by RAE and delivered to the government and parliament, power utility PPC represents 729.91 million euros of the market’s total of 927.44 million euros in windfall profits amassed over a six-month period between October, 2021 and March, 2022.

The country’s independent producers, Mytilineos, Elpedison and Heron, along with RES producers participating in the market, represent the remaining 197.53 million euros in windfall profits, the RAE report determined.

RAE finalized windfall profit figures soon, producers react

RAE, the Regulatory Authority for Energy, is examining objections and observations made by electricity producers in response to the authority’s report on sector windfall profits, headed for taxation.

The electricity producers, including vertically integrated energy groups with retail representation, have objected to details of a formula applied by the authority to determine excess profits during the ongoing energy crisis’ period between October, 2021 and March, 2022.

The producers, claiming the report’s findings are erroneous, want a series of additional factors to also be taken into account, including discounts offered to customers, losses incurred through fixed tariffs, as well as financial costs resulting from initiatives taken to boost cashflow.

Energy ministry Kostas Skrekas has asked RAE to take into account the factors raised by electricity producers before delivering a finalized windfall profit figure, expected imminently.

The government is preparing a legislative bill for a 90 percent tax on windfall profits once RAE has delivered its finalized figures, sources informed.

The RAE report has valued the total sum of windfall profits earned during the aforementioned six-month period at 927.44 million euros.

Power utility PPC holds the lion’s share of this amount, 729.91 million euros, while the independent players Mytilineos, Elpedison, Heron and RES producers active in the market are linked to the remaining amount.

 

 

 

RES producers must return extra revenues from FIPs by December 17

A procedure for the return to DAPEEP, the RES market operator, of extra revenues generated by RES units with feed-in premiums through their participation in the electricity market prior to October, when the market clearing price was above their tariffs, is expected to start today.

According to energypress sources, DAPEEP, in association with banks, has finalized a formula for the return of extra revenues to the RES market operator. It is expected to upload, within the day, related information on the amounts to be returned for extra revenues up until August. Amounts for the other months are expected to be determined within the next few days.

A related energy ministry draft bill set to be ratified will require all extra revenues generated by RES units with feed-in premiums prior to October to be paid by December 17.

 

 

 

 

 

Green PPAs exchange platform, industrial subsidies in making

A Market Reform Plan being prepared by the government, to be submitted to the European Commission, includes provisions for the establishment of an energy exchange transaction platform concerning power purchase agreements (PPAs) between RES producers, as well as green aggregators, with suppliers and major-scale consumers.

The green PPAs, when concerning energy-intensive industrial enterprises, will receive state support, while a subsidy package for this category of agreements is also in the making, according to the plan.

Funds stemming from the recovery fund, the green fund as well as the RES special account will be used to fund the subsidy package, according to the government plan.

The aim of the effort is to ensure, in advance, the sale of prospective energy to be produced by new RES units, the intention being to  facilitate bank financing for their development given the fact that they will no longer be entitled to fixed tariffs, through auctions, over 20-year periods, as has been the case until now.

The plan is expected to result in lower-priced green energy for industrial consumers and also facilitate the development of new RES investments.

RES investors keen to talk PPAs with suppliers, industry

RES investors, especially from the solar energy field, but also wind energy, are engaging in talks with electricity supply companies and industrial enterprises to establish power purchase agreements (PPAs) for their future or under-construction projects as they anticipate a reduction in capacities at forthcoming RES auctions and even lower tariff prices than the low levels registered at the most recent auction.

This increased focus on PPAs highlights the major shift taking place in green-energy production as fixed tariffs, at auction, are gradually being phased out and the energy-exchange era is taking over.

RES producers need to establish contracts for the sale of their output in order to develop their projects as banks are not willing to finance such investments if potential earnings, at sufficient levels, have not been secured in advance.

No bilateral PPAs have yet been established, but the negotiations are continual and tenacious.

Potential RES producers have – since the previous RES auction – been willing to accept lower prices, proposing levels of as low as 40 euros per MWh attached with demands for shorter contracts, including five-year periods, sources have informed.

Market officials expect PPAs to start emerging over the next six months, noting that banks will play a decisive role in the price levels to be established as their project financing decisions will depend on profit margins presented by investors.

Brussels strategic reserve conditions discussed by RAE, IPTO, ministry

A new adequacy report and a new market reform plan, two conditions set by the European Commission for Greece’s adoption of a strategic reserve mechanism, have been discussed during an online meeting between RAE, the Regulatory Authority for Energy, power grid operator IPTO, and the energy ministry.

The European Commission’s Vice-President Margrethe Vestager, also Brussel’s Commissioner for Competition, during a preceding meeting, earlier last week, with energy minister Kostas Skrekas, called for a new adequacy report, in other words, an updated study proving the country’s need for a strategic reserve mechanism to cover actual grid needs.

The Brussels official also requested a new market reform plan detailing reforms designed to intensify competition in the wholesale electricity market.

Pantelis Kapros, Professor of Energy Economics at the National Technical University of Athens, has been asked to contribute to this new market reform plan, sources informed.

Besides the strategic reserve mechanism, RAE, IPTO and energy ministry officials also discussed details on prospective power purchase agreements (PPAs) between industrial enterprises and RES producers.

Vestager, at her meeting with Skrekas, the energy minister, recommended that Greece follow the examples of PPA models adopted by other EU member states, such as Spain.

PPC lignite electricity packages through futures market

State-controlled power utility PPC will soon begin offering rival suppliers lignite-generated electricity packages through the target model’s futures market, energy minister Kostas Skrekas and the European Commission’s Vice-President Margrethe Vestager, also Brussel’s Commissioner for Competition, have agreed at a meeting yesterday.

Vestager, during the session, also made clear that the balancing cost of a mechanism concerning power purchase agreements (PPAs) between industrial producers and RES producers cannot be subsidized, but, instead, will need to be aligned with terms that apply for other EU member states.

Athens expects to submit its PPA plan to Brussels in June for approval.

Also next month, the government plans to submit its support framework proposal for energy storage units.

As for the country’s Strategic Reserve Mechanism, the European Commission’s deputy requested a new proposal from Athens, in line with new EU directives.

Under the Strategic Reserve Mechanism, PPC and all other electricity producers opting to withdraw units from the market for back-up services, would be remunerated for sidelining these units for periods determined by IPTO, the power grid operator.

Vestager stressed that the country’s Strategic Reserve Mechanism cannot coincide with the wider Capacity Remuneration Mechanism (CRM).

The Brussels deputy also pointed out that a compensation request made by Greece for PPC’s redevelopment of lignite areas, part of the decarbonization effort, is legally baseless and cannot be pursued further.

Mechanisms, competition on Vestager agenda, here May 13

Energy minister Kostas Skrekas intends to present his case for the introduction of five support mechanisms encouraging energy-sector investments in Greece’s ongoing transition towards carbon neutrality to the European Commission’s Vice-President Margrethe Vestager, also Brussel’s Commissioner for Competition, on the occasion of the official’s upcoming visit to Athens, scheduled for May 13.

Vestager will be in the Greek capital with an agenda featuring two pending competition issues concerning state-controlled power utility PPC.

Greece has faced charges for PPC’s monopoly of the country’s lignite sources but an agreement was reached to end the case by introducing a mechanism offering the power utility’s rivals access to lignite-generated electricity.

A market test for this mechanism was completed some time ago but failed 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.

The second PPC-related matter to be discussed during Vestager’s visit concerns a recently initiated investigation by Brussels seeking to determine whether the power utility has engaged in activities impeding market competition.

Private-sector investors are pushing for a capacity remuneration mechanism (CRM) in order to go ahead with the development of natural gas-fueled power stations, needed as Greece heads towards a post-lignite era. Skrekas, the energy minister, has repeatedly said a CRM will be launched in June.

The minister also supports a strategic reserve mechanism to compensate PPC’s lignite-fired power stations, still needed for back-up services but nowadays loss-incurring as a result of higher CO2 emission right costs.

In addition, the government is seeking compensation for the premature closure of PPC’s lignite-fired power stations and related mines, being phased out until 2023.

The minister also supports a support framework for hybrid units on non-interconnected islands combining RES electricity generation and energy storage.

Skrekas is also striving to establish a mechanism that would subsidize RES producers for power purchase agreements (PPAs) with energy-intensive industrial enterprises as well as suppliers selling to major-scale consumers.

 

Plan for subsidized lower-cost RES power to industry explored

The energy ministry is working on a transitional state-support mechanism that would offer industrial consumers lower-cost electricity stemming from renewable energy sources.

The European Commission offers conditional approval to state aid resulting in green-energy access for energy intensive consumers.

The energy ministry’s effort to establish such a mechanism comes following the exclusion, from a government list of proposals for EU recovery fund support, of a plan envisaging power purchase agreements (PPAs) between industrial enterprises and RES producers.

The ministry’s new effort is expected to be a variation of the plan not included in the government’s list of proposals seeking support through the European Commission’s Recovery and Resilience Facility.

The ministry acknowledges that, under present conditions, direct and mutually beneficial agreements between energy-intensive industrial consumers and RES producers cannot be achieved, unless such deals concern companies belonging to vertically integrated groups.

The plan being explored would ensure RES producers remuneration for a percentage of their output absorbed,  through the state-support mechanism, at fixed tariffs and extended periods.

RAE freezes RES producer certificate process, prompting investor unrest

RAE, the Regulatory Authority for Energy, without explanation, has stopped issuing RES producer certificates for older applications submitted between October, 2018 and December, 2019, the first round of applications examined through new rules.

The development has prompted strong reaction and unrest among investors, who, according to comments made to energypress, have paid their related fees but not received RES producer certificates, as stipulated by the new law.

This round of applications underwent processing through a new online system adopted by RAE. RES investors were requested, via email, to pay a related fee through the banking system.

Responding to questions on the issue, the IT company handling RAE’s new software said it was ordered by RAE to not proceed to the next stage, offering automated RES producer certificates.

The authority is concurrently examining older applications submitted until June, 2018; applications lodged between October, 2018 and December, 2019; and also preparing new terms for a forthcoming round of applications rescheduled for December, instead of October.

Officials to decide on next round of RES applications, RAE overloaded

RAE, the Regulatory Authority for Energy, overloaded with a backlog of RES production license applications ahead of a new round, will discuss its pressing situation with the energy ministry’s secretary-general Alexandra Sdoukou at a meeting tomorrow.

The energy ministry will then decide on a date for the new round of applications. Officials have scheduled a next round for October, also stipulated by law. RES investors have expressed heightened interest during the approach.

RAE is concurrently examining older applications submitted until June, 2018, applications lodged between October, 2018 and December, 2019, and also preparing new terms for the forthcoming applications.

Older applications submitted until June, 2018 are being processed with support from software designed specifically for this purpose. These applications, numbering approximately 300, will also need to be examined, one by one, by the RAE board.

Similar software is also being used for the processing and examination of applications submitted between October, 2018 and December, 2019. Though this process is simpler, the numbers are bigger, tallying some 1,400.

RAE still has plenty of work to do to finalize a detailed proposal for producer certificate terms, intended to simplify the RES licensing procedure. Once ready, this proposal will need to be forwarded to the energy ministry, which, in turn, must sign a ministerial decision to bring the plan into effect.

Record-level interest by RES investors has been projected for the next round of applications. Two previous rounds that had been scheduled for March and June were not staged.

New rule soon for RES producer certificates, swifter licensing promised

A new rule concerning the introduction of RES producer certificates, to replace electricity production permits – a measure taken to help quicken licensing procedures – is expected to be announced within the next few days.

The replacement of RES electricity production permits with RES producer certificates, to be issued by RAE, represents the first step of a new RES licensing simplification framework presented by the energy ministry last April.

This plan will aim to drastically reduce the duration of RES licensing procedures to two years from the current average of seven years.

Procedures leading to new licensing rules have been slightly delayed by administration changes at RAE, the Regulatory Authority for Energy. The authority was originally scheduled to deliver its plan on August 7 for immediate approval by the energy ministry.

This deadline date was set to offer RAE sufficient time to inform RES investors of the supporting documents required as a result of the new rules ahead of a planned early-October launch for application submissions.

RAE will issue RES producer certificates once applicants have presented proof of payment for related fees.

These fees have been set as follows: 3,000 euros per MW for capacities up to 1 MW; 2,500 euros for capacities between 1 MW and 10 MW; 2,000 euros per MW for 10 MW to 50 MW; 1,500 euros per MW for 50 MW to 100 MW; and 1,000 euros per MW for over 100 MW.