Mytilineos highlights energy cost woes faced by industry

Leading industrialist Evangelos Mytilineos, chairman and CEO of the Mytilineos group, has pointed out the energy-cost challenges faced by group member Aluminium of Greece ahead of its expiring electricity supply agreement with power utility PPC.

The power utility has already made clear it cannot continue offering favorable electricity supply agreements to industrial consumers, especially under the current market conditions.

Aluminium of Greece’s electricity supply agreement with PPC expires in 2023. Other energy-intensive industries are also under pressure to resolve their energy-cost issues. For some, the problem is even more acute as their supply agreements with PPC end at the end of this year.

PPC, in negotiations with industrial consumers, has remained adamant on its position, insisting it cannot keep offering favorable terms, especially given the adverse market conditions and a current wholesale market model that  severely restricts profit margins of electricity producers and transfers excess revenues to the Energy Transition Fund for financing of household support measures.

In response, the government is now looking for solutions that would offer incentive for power purchase agreements (PPAs) between renewable energy producers and industrial enterprises, the objective being to ease the energy-cost burden on industries.

Energy minister Kostas Skrekas recently sat in at a meeting staged by SEV, the Hellenic Association of Industrialists, which called for urgent action that could resolve the energy cost concerns faced by industrial enterprises.


Industry may be spared of public service compensation cost

Energy minister Kostas Skrekas has, for the first time, in public comments, left open the possibility of industrial enterprises being spared of paying public service compensation (YKO) amounts for a five-month period covering November to March, as part of an effort to reduce industrial energy costs.

“We will assess the public service compensation account’s revenues and, if deemed necessary following the five-month period, will gradually impose these charges,” the minister noted at an event focused on industrial energy cost.

Speaking at the same event, Giorgos Xirogiannis, deputy general manager of SEV, the Hellenic Association of Industrialists, underlined the problems faced by industrial producers as a result of the sharp rise in energy costs.

Greek industry is currently 20 to 30 percent less competitive than European industrial enterprises, the SEV deputy noted.

He raised a series of energy cost-related issues that need to be addressed, including the YKO surcharge added to electricity costs, distribution costs and energy taxes.

Investments in renewable energy infrastructure and networks need to be accelerated in coming years for the achievement of a favorable energy mix balance, the SEV official added.

Also, the impact on the cost of energy of the EU’s “Fit for 55” package, aiming for a 55 percent reduction of carbon emissions by 2030, compared to 1990 levels, needs to be discussed, the SEV deputy added.


Reducing industrial energy costs a key aim of new gov’t committee

High energy costs and a discouraging, for investments, amortization status, are two main factors holding back Greek manufacturing and placing it in a disadvantageous position compared to those of rivals, Michalis Stasinopoulos, president of industrial body Hellenic Production, stressed during yesterday’s inaugural session of a new government committee for the industrial sector.

The assembly of a government committee for industrial matters has been welcomed as a  positive step by the industrial sector, hoping the committee can contribute to needed coordination between various political offices as the fragmentation of responsibilities and absence of an industry ministry has not helped counter issues faced by the manufacturing sector, Stasinopoulos pointed out.

The new government committee’s line-up includes ministers covering industrial matters, namely development and investment minister Adonis Georgiadis, finance minister Christos Staikouras, environment and energy minister Kostas Skrekas, labor and social affairs minister Kostis Hatzidakis, digital governance minister Kyriakos Pierrakakis, and education and religious affairs minister Niki Kerameus, represented at yesterday’s session by her deputy, Zetta Makri.

The industrial sector was represented by SEV, the Hellenic Association of Industrialists, SBE, the Federation of Industries of Greece, Hellenic Production, the Athens Chamber of Commerce and Industry, IOBE (Foundation for Economic and Industrial Research), and the Association of Greek Regions.

Licensing delays, bureaucracy ruining RES investment plans

Renewable energy sector players may have been able to absorb the cost of bureaucratic delays in the past, but market changes, shaped by auctions, no longer allow for such latency, meaning investments plans could well be cancelled amid the new conditions if license applications continue being delayed, sector officials have stressed at an investment conference staged by SEV, the Hellenic Association of Industrialists.

Highlighting the bureaucratic obstacles in the sector, major energy groups such as Mytilineos and Terna Energy are currently developing or completing wind energy project investments licensed about 15 years ago as a result of various delays prompted by authorities.

“Two months have gone by since we submitted an application for a production license to RAE [Regulatory Authority for Energy] and we have yet to receive a response. I would have expected a quicker reaction for a 350 million-euro investment,” remarked Dinos Benroubi, the energy division head at the Mytilineos corporate group.

Greek licensing procedures for wind energy projects appear to be even more complicated than those concerning thermal facilities, or natural gas fueled power stations, it was noted at the SEV conference.

Participants explained that, amid the current conditions, energy groups aiming to concurrently strive for multiple licenses concerning many RES projects would need to maintain oversized teams just for RES sector matters.

Employees at forestry and archaeological services are capable of severely holding up RES investment plans, despite the availability of funds, conference participants noted.

Though the Greek State assumed the responsibility of developing offshore wind energy farms nearly a decade ago, not a single such project has been developed, despite the wider investor interest, participants reminded.

All too often, renewable energy investment plans are blocked by cases filed at the Council of State, Greece’s Supreme Administrative Court, even by non residents, it was also pointed out.


SEV energy top officials call for fairer industry conditions

The uneven implementation of a measure compensating carbon emission right costs, delays in adjusting to EU directives, and the weight of a supplier surcharge are seriously threatening the level of competitiveness of Greece’s energy-intensive industrial enterprises, the energy committee heads at SEV, the Hellenic Association of Industrialists, have stressed.

Distortions affecting the carbon emission right offsetting measure are burdening the industrial sector with additional energy costs of more than 50 million euros, the SEV energy committee leaders, Evangelos Mytilineos, CEO at the Mytilineous corporate group, and Titan cement’s chief Dimitris Papalexopoulos, stressed in a joint letter.

It was forwarded to energy minister Giorgos Stathakis, deputy prime minister Yiannis Dragasakis and Mihalis Filippou, the head of LAGIE, the Electricity Market Operator.

Carbon emission right compensation amounts for the industrial sector are based on average emission right price costs of the previous year, whereas the main power utility PPC is applying emission right price levels of the previous month. This has led to a huge discrepancy in compensation amounts offered as, in 2017, the average emission price cost was 5.7 euros per ton while the price level in late February ranged between 13 and 14 euros per ton.

The heads of SEV’s energy committee called for the energy ministry and LAGIE to fully resort to existing laws, at national and EU levels, to resolve the matter.

The RES-supporting supplier surcharge is causing serious problems for the industrial sector, the SEV energy committee leaders also noted in their letter. The surcharge has hindered competition in the retail electricity market and also represents another setback affecting the industrial sector’s level of competititiveness, the officials noted.


PPC pledges best deals possible in talks with industrial consumers

PPC, the main power utility, has released a statement underlining current negotiations being conducted by the utiility separately with the country’s major industrial enterprises for revised tariff agreements will be pursued to the fullest for the fairest possible agreements.

The announcement also noted PPC’s main objective is to establish constructive cooperation with all its consumer categories, including industrial firms.

The utility’s administration recognizes the crucial role being played by high-voltage industrial firms in the country’s effort to overcome the deep recession, as well as their key role in providing employment, the statement noted.

PPC is scheduled to hold a shareholders meeting on Monday. Prior to today’s PPC announcement, the utility’s chief executive Manolis Panagiotakis received a letter from Theodoros Fessas, president of SEV, the Hellenic Association of Industrialists, in which PPC was strongly advised not to take unilateral action on new industrial tariffs at Monday’s meeting. Besides being prohibited by market regulations, such an initiative would undermine current negotiations between PPC and industrial consumers, the SEV chief noted.

Industry chief offers sector’s views ahead of PPC meeting

Theodoros Fessas, president of SEV, the Hellenic Association of Industrialists, has forwarded a letter to main power utility PPC chief executive Manolis Panagiotakis outlining the industrial sector’s views on expected electricity tariff revisions for the sector as well as other requests intended to compensate for the abolishment of a 20 percent discount for industry, a bailout demand.

The SEV chief’s letter, offering a framework for the industrial sector’s ties with PPC, was forwarded ahead of this coming Monday’s shareholders meeting at the utility.

In the letter, Fessas notes unilateral actions determining industrial tariffs without prior completion of negotiations are prohibited by market regulations. Any approval of new industrial tariffs at next Monday’s PPC shareholders meeting will be regarded as a form of unilateral action and would undermine current negotiations between PPC and the country’s major-scale industries, the SEV chief stressed. These negotiations are being conducted separately based on consumer profiles. Unilateral action would also raise competition issues, considering PPC’s market dominance, Fessas noted.

The SEV chief underlined that unilateral action errors on industrial pricing policy committed at a previous PPC shareholders meeting in February, 2014 must not be repeated. Industrial authorities fear unilateral action could again prompt European Commission intervention, as was the case with the 20 percent industrial tariff discount, a PPC shareholders initiative now being abolished.

The SEV letter also notes that PPC’s reduced operational costs, resulting from lower oil and natural gas prices, down considerably compared to two years ago, as well as the abolishment of regulatory charges in 2015, provide a basis for cost-reflective tariff negotiations with industry.

Fessas also pointed out that, until now, all verdicts concerning Greek industrial tariff disputes between the sector and PPC have vindicated industrialists, both at domestic and European Commission levels. The SEV chief noted it would be constructive for PPC and the industrial sector to eventually establish cooperative relations.