The following speech, published in its entirety, was delivered by Manos Manousakis, chief executive at IPTO, Greece’s power grid operator, at the Athens Energy Forum yesterday.
Ladies and Gentlemen,
It is an honor and a pleasure to be one of the speakers of this year’s Athens Energy Forum, which is taking place against the backdrop of the radical transformation of the Greek energy market, which is being liberalized.
At the same time, the Greek market is gearing up to meet the main challenges arising from the implementation of the EU Energy Policy, namely:
- The increased penetration of Renewable Energy Sources in the Transmission System and Distribution Grid
- The de-carbonization of electricity production and
- The integration of the wholesale electricity markets of the EU member states through the introduction of the target model
I will start by briefly explaining the new ownership status and the benefits that stem from it.
As most of you probably know, in June 2017 the ownership unbundling of IPTO [locally acronymed ADMIE] took place.
The Greek State owns a controlling shareholding stake of 51%.
State Grid of China, the world’s largest utility company, is IPTO’s second biggest investor with a 24% stake and active participation in its management.
The company further diversified its investor base following the listing of its affiliate company IPTO Holding in the Athens Stock Exchange.
The strategic partnership between the Greek State and State Grid has already started to show results, through the improvement of the financial and operational ability.
With this structure, IPTO aims to exemplify the way a company under state control can modernize itself and improve its efficiency, in order to play a leading role in the new energy landscape.
In this context, the company has set two main objectives for 2018:
First, faster project delivery.
Second, successful implementation of the target model and specifically of the balancing market, which falls under IPTO’s responsibility.
The new administrative model of the company will facilitate the achievement of these objectives.
One milestone of the restructuring process, which took place at the end of 2017, was a voluntary exit scheme which was successfully completed a few days ago. The participation far exceeded management’s expectations.
Through this scheme, IPTO aimed to make room for younger, highly skilled employees who are sorely needed.
Another important element is that the active management of IPTO’s assets has been placed at the heart of its new organizational model.
The ambitious targets for RES penetration into the energy mix require the upgrade of the infrastructures for the electricity transmission and the ‘smartening’ of the grids.
All the modern TSOs in Europe (RTE from France, ELIA from Belgium, 50 Hertz from Germany etc.) consider asset management as one of their main functions.
IPTO is now following their example with the creation of a new Asset Management Unit.
The main mission of this Unit is the optimal exploitation of the company’s assets, the extraction of maximum value from their use.
In this regard, I would like to point out that IPTO is implementing a broad asset renovation program and the first tenders will be published in the near future.
With this new improved administrative structure, IPTO will be better prepared to pursue its first objective, which is the timely execution of the major interconnection projects that are foreseen in the company’s business plan.
We are talking about investments of 1 billion euros until 2021.
The company is prioritizing the Cyclades and Crete Interconnections.
The first phase of the Cyclades interconnection, which entails the interconnection of Syros, Paros and Mykonos to the mainland transmission system, is already in the test phase of electrification.
As a result, both the security of electricity supply and the environmental footprint of those islands will be upgraded.
The dated, fuel oil power plants [on islands] will soon cease to operate.
IPTO is also placing great emphasis on the Crete Interconnections which are of pivotal importance to the Greek economy.
Why? Because they will secure the energy supply of the country’s largest island and drastically reduce the cost of electricity for all Greek consumers.
In the course of the implementation of these projects, the company will benefit from the technical expertise of State Grid, which is spearheading China’s effort to transition to clean energy.
State Grid is a world leader in developing Ultra High Voltage Transmission Lines and building smart grids that promote the utilization of RES.
It boasts the largest installed capacity of wind and solar production in the world.
It is obvious that IPTO has a lot to earn from its know-how.
At a recent international conference, a State Grid executive stated that the company’s goal is to turn Greece into an electricity hub via interconnections to the Balkans, Africa and Asia.
It should be noted that according to a recent study of an Expert Group the development of new transnational electricity interconnections is becoming an EU priority, as the current interconnection target of 10% is not considered ambitious enough and it will be increased to 15% by 2030.
Europe is heading towards a well-integrated energy market.
Electricity interconnections are the physical component of making this market truly European by connecting Member States’ networks, thus offering:
-capacity for electricity trade
-improved security of supply
-integration of the growing share of renewable electricity production.
In this direction, IPTO is prioritizing the development of a second electricity transmission line between Greece and Bulgaria. This project has already been included in the list of Projects of Common Interest for the European Union.
Having mentioned the integration of the EU energy market, I would like to move on to the second objective of IPTO for this year, which is the setting up of the Balancing Market, the part of the target model for which the company is responsible.
I will try not to go into the highly technical details.
Let me just say that the Balancing Market is the last of the four Target Model markets.
However, its role is very important since it reflects the actual cost of balancing electricity supply and demand, close to real time.
A well designed Balancing Market is not only important to provide the TSO with sufficient Balancing Services at all times in order to safeguard secure system operation.
It is also essential to ensure an efficient functioning of the overall electricity market.
Consequently, they affect Participants’ decisions in the forward market timeline.
The basic principles of the Balancing Market design are:
-Central Dispatch System
-Unit based participation in the market
The Balancing Market consists of:
A Balancing Energy Market,
Balancing Reserve Market
Imbalances Market, which is an ex post market for settlement of imbalances
IPTO performed a Public Consultation on the Balancing Market Code between December 2017 and January 2018.
Participants’ comments were received and the most recent update is that a second version of the Code was sent to the Regulatory Authority for Energy for the subsequent phase two of the Public Consultation, which is going to be performed by the Authority.
I hope I gave you an oversight of the day after the ownership unbundling of IPTO.
Let me conclude my speech by saying that the future will be electric, de-carbonized and interconnected. IPTO will play an important role in this process.