Small-scale RES investors to face tough big-project competition

The termination of a RAE (Regulatory Authority for Energy) RES auction category for photovoltaics up to 500 KW means smaller investors will encounter tough competition from major projects. Reference price levels have fallen drastically, a trajectory seen continuing this year.

Privately owned photovoltaics of up to 500 KW developed beyond auction terms will, on the one hand, take on low reference prices that will not secure high investment returns, but, on the other, these price levels will be significantly higher than levels expected to be set by authorities for RAE’s photovoltaic auctions during the same period.

These are some of the key conclusions reached following an analysis of reference price scenarios from 2020 until early 2021 by energypress with scientific support from Dr. Stelios Loumakis, president of SPEF, the Hellenic Association of Photovoltaic Energy Producers.

The analysis was conducted following the publication of a new ministerial decision by deputy energy minister Gerassimos Thomas on MW quantities per renewable energy technology to be offered at RES auctions in 2020, given the interest expressed by thousands of small-to-medium scale sector investors for installations of photovoltaics up to 500 KW.

Smaller PV investments risk being sidelined, producers warn

Renewable energy producers have warned that new small-scale PV investments face a heightened risk of being sidelined as a result of the recent dominance of major-scale plans in the sector.

The overwhelming dominance in the number of large-scale production license applications submitted to RAE, the Regulatory Authority for Energy, over the past year has smaller investors worried, sources at SPEF, the Hellenic Association of Photovoltaic Energy Producers, have told energypress.

Virtually all production license applications submitted over the past year have concerned project plans with capacities of 10 MW or more.

Once these investment plans have matured and licenses have been acquired, small-scale producers fear it will be impossible to compete against big investors  at auctions for viable tariff prices. One auction category has been established for all, regardless of size.

These concerns, expressed by Stelios Loumakis, SPEF’s president, are also shared by the majority of sector professionals, including engineers and installers. A market dominated by large-scale projects and investors will severely diminish opportunities for all others, they fear.

“Nobody wants major-scale investments to be obstructed. But this does not mean that space cannot be safeguarded and ensured for small-to-medium sized players, with fair terms,” Loumakis pointed out.

This is not the first time officials have requested protection for small-to-medium sized players in the PV market. The energy ministry received such proposals last September.

 

 

PV groups seek sustainable PV tariffs for units up to 500 MW

Two local photovoltaic groups have called for the establishment of a new mechanism offering steady and sustainable electricity generation sale prices for new PV installations with capacities of up to 500 MW.

The two industry groups, SPEF, the Hellenic Association of Photovoltaic Energy Producers, and SEF/HELAPCO, the Hellenic Association of Photovoltaic Companies, representing PV equipment traders and technicians, submitted a joint request to the energy ministry.

Current regulations enable PV installations, without any involvement in competitive procedures, for facilities of up to 500 MW, but the resulting tariffs offered for electricity production are extremely low as they are determined by a formula multiplying the previous year’s System Marginal Price by 1.1 or 1.2. Low tariffs offered through this procedure are keeping investors away.

The proposal made by the two associations calls for the establishment of steady tariffs through competitive procedures as a means of ensuring that PV equipment cost reductions are factored in and guaranteeing sustainable prices for new small-to-medium size installations.

 

RES-supporting supplier surcharge ‘compatible with target model’

The existing RES-supporting supplier surcharge can stand as a compatible part of the target model envisioning market coupling, or harmonization of EU wholesale markets, SPEF, the Hellenic Association of Photovoltaic Energy Producers, supports in a technical analysis.

The association has forwarded this analysis to energy minister Giorgos Stathakis, his secretary general Mihalis Veriopoulos, and RAE (Regulatory Authority for Energy) president Nikos Boulaxis.

SPEF, in the analysis, proposes a series of steps that may enable the continued implementation of the supplier surcharge amid the prospective market coupling environment.

The supplier surcharge is a necessary and fair measure in view of national RES penetration targets, along with the need for improved RES sector investment conditions, a prerequisite for the national economy as a whole, according to the SPEF study.

“Objectively speaking, we see no need for the abolishment of the supplier surcharge as a result of the target model’s market coupling plan, nor do we see any need for the implementation of an alternative measure as a replacement,” the study notes.

The RES-supporting supplier surcharge’s removal would take the country back to an era of catastrophic market distortions at the cost of the RES sector and the RES special account, the study warns, adding that suppliers would benefit and consumers would be burdened as they would subsequently face heavier RES-supporting ETMEAR surcharges.

‘Interruptability’ mechanism legal challenge by PV groups postponed

A legal case filed by two local PV producer associations, SPEF and PSAF, to the Council of State, Greece’s Supreme Administrative Court, against a ministerial decision supporting the demand response mechanism (interruptability) has been further postponed, beyond the hearing’s latest date, which had been set for September 19.

SPEF and PSAF have challenged the mechanism citing technical, financial and legal reasons. The plaintiffs contend that the mechanism has being unfairly applied and, as a result, proven detrimental to the interests of PV producers.

The mechanism enables major industrial enterprises to be compensated when the TSO (ADMIE/IPTO) requests that they shift their energy usage by lowering or stopping consumption during high-demand peak hours so as to balance the electricity system’s needs.

Following the latest postponement, the case is expected to be heard in 2018.

Greece’s current demand response mechanism is set to expire at the end of this month. Local industrialists are pressuring for a three-year extension. The Greek government is supporting this demand. Energy minister Giorgos Stathakis submitted an extension request to Brussels on July 25. If successful, the mechanism’s validity will be extended to September, 2020.

 

Electricity producers set for ‘interruptability’ fee returns

Energy Ministry, SPEF (Hellenic Association of Photovoltaic Energy Producers) and IPTO (Power Grid Operator) officials are currently engaged in a torrent of talks aiming for the return, to electricity producers, of unallocated demand response mechanism (interruptability) funds concerning 2016.

According to a ministerial decision through which the demand response mechanism was initiated early in 2016, transitional supply security fee (MTAE) amounts withheld from electricity producers on a monthly basis and determined by their respective revenues, are injected into a special supply security fund that needs to be balanced at the end of each year and, separately, upon expiry of the mechanism. Unallocated funds need to be returned to electricity producers, according to the ministerial decision.

The demand response mechanism was introduced to enable major industrial enterprises to be compensated when the TSO (ADMIE/IPTO) requests that they shift their energy usage by lowering or stopping consumption during high-demand peak hours so as to balance the electricity system’s needs.

According to SPEF estimates, unallocated amounts in 2016 exceeded 10 million euros, which means that 25 percent of the MTAE-related amount withheld from electricity producers, including RES producers, will need to be returned.

SPEF officials contend that the return of this MTAE-related amount to electricity producers is particularly crucial for PV producers as the 3.6 percent amount taken from their revenues is disproportionately high given the sub-sector’s narrow profit margin. The return to producers of the unallocated MTAE-related amount would reduce the contribution of PV producers in 2016 to 2.7 percent of their revenues.

The MTAE contribution rates also stand to drop for all other producers, including wind energy producers, from 1.8 percent to 1.35 percent, and small-scale hydropower producers, from 0.8 percent to 0.6 percent.

SPEF sources noted that minor yet pending account balancing issues concerning thermal producers have held up the return process, adding that the energy ministry is determined to have the entire issue resolved.

 

PV groups opt to file RES payment delay cases against operator, PPC

SPEF and PSAF, both photovoltaic producer associations, have requested their representative lawyers to take legal action on their behalf against LAGIE, the Electricity Market Operator, and the main power utility PPC over delayed payments to PV producers for output, board members of the two associations have informed energypress.

Both PV associations recently chose to suspend plans for legal action following a meeting with PPC chief executive Manolis Panagiotakis, who promised PV production payment delays would be dealt with. This expectation, however, failed to come through, prompting the associations to end their waiting periods and order legal action.

The PV associations intend to accuse LAGIE of delaying planned legal challenges against the electricity market operators IPTO and HEDNO, both subsidiaries of the main power utility PPC.

As for PPC, the PV associations, in their legal challenges, will accuse the power utility of withholding RES-supporting surcharge payments received through electricity bills. The PV associations will argue that PPC is not relaying these RES-supporting amounts to IPTO and HEDNO, part of the process before the amounts reach LAGIE, but instead using the money for other utility needs, which, ultimately, is depriving RES producers of entitled payments.

The two associations estimate RES-supporting amounts that have been collected by PPC but not relayed to IPTO and HEDNO – before being passed on to LAGIE and the RES producers – at around 350 to 400 million euros.

 

 

SPEF chief: ‘Cooperatives offer investment opportunities’

SPEF, the Hellenic Association of Photovoltaic Energy Producers, is examining the prospect of soon establishing a multi-membered cooperative to offer exisiting small and medium-sized investors greater investment opportunities in the renewable energy sources (RES) sector, the association’s president, Stelios Loumakis, disclosed during an interview with energypress.

Loumakis explained that such models, offering hundreds of united smaller investors the ability to proceed with investments they could otherwise not take on alone, have been successfully applied in other European markets, including the RES sector, for many years.

Responding to a question on a general distrust felt by local entrepreneurs for collective efforts and whether this could impede the formation of a cooperative, the SPEF head noted that bright examples exist in the Greek market. He cited the country’s pharmaceutical wholesale market, a multi-billion euro sub-sector in which cooperatives hold a dominant market share.

Loumakis said such success could be repeated in the RES sector, considering the widespread expertise in this domain.

The unification of many cooperative members, numbering 500 to 1,000 members, for example, can raise considerable capital amounts for projects and make bank loans unnecessary, Loumakis remarked.

SPEF is looking into forming a cooperative to invest in the wind-energy sector, expected to provide investment opportunities as a result of the new RES support framework being prepared by the government, Loumakis noted.

Current photovoltaic sub-sector tariff levels are insufficient for new investments, while this field will remain a low-priority area for at least the next two to three years, he added.

The SPEF chief estimated that between 30 and 50 MW in RES capacity could be developed by 2020 through cooperative initiatives.

The new RES support framework will include revisions that need to be adopted to adjust to technological developments, ensure that national targets for 2020 are met, and gradually implement the European target model, Loumakis stressed.

The association’s top official described the energy ministry’s plan to proceed with revisions that will eliminate distortions prompted by the current RES-supporting ETMEAR surcharge included in electricity bills as vitally important.

SPEF submits comprehensive proposal for RES sustainability

SPEF, the Hellenic Association of Photovoltaic Energy Producers, has forwarded a comprehensive proposal to the energy ministry for the country’s prospective renewable energy (RES) support plan, as part of ongoing public consultation procedures. The SPEF proposal is expected to impact proceedings and prompt debate.

Further growth in the RES sector, a government objective, combined with a reduction of the RES-supporting ETMEAR surcharge added to electricity bills, can be achieved, according to the SPEF proposal.

Tariff-related payments for RES producers, including the new feed-in-premium system proposed by the government, are a fundamental part of the association’s proposal. It contends that such payments do not help shape the System Marginal Price (SMP), but, instead, cannibalize it as RES production enters Daily Energy Planning at zero prices. This means that greater contributions of RES energy to the system lead to lower SMP levels, subsequently demanding higher ETMEAR surcharge amounts. This cannibalizing effect is known as the Merit Order Effect.

According to SPEF estimates, if the government’s target of an additional 2.5 GW of new RES projects by 2020 is achieved, and no changes are made to the formula determining the SMP, then the ETMEAR surcharge will need to be increased by a total of 5.8 euros per MWh (4.3 euros for the additional RES capacity and 1.5 euros per MWh for the futher contraction of the SMP as a result of the RES arrivals).

SPEF also noted that suppliers are benefiting from excessive profit margins as the fall in oil and natural gas prices has not been factored into electricity prices. Suppliers, as a result, could take on part of the burden of the ETMEAR surcharge currently supported by consumers, which would make a surcharge hike unnecessary, the association noted. Such a move could lead to the reduction of electricity bills, it added.