Existing restrictions in the country’s wholesale electricity markets, or target model, will gradually be lifted over the next year or two, at the latest, according to a Market Reform Plan submitted by the Greek government to the European Commission.
The plan to is intended to determine whether the country’s natural gas-fired electricity producers can fully recover costs in a liberalized market.
Greek officials are seeking to prove that, once all wholesale market restrictions have been lifted, natural gas-fired power stations will need Brussels-approved support mechanisms in the form of a strategic reserve, until the end of 2022, and a permanent Capacity Remuneration Mechanism (CRM) from 2023 onwards.
The Greek government forwarded a draft of the country’s Market Reform Plan to the European Commission in mid-June, while Brussels has since responded with an initial set of questions seeking clarification.
The first wholesale electricity market restriction expected to be lifted, probably within the next few months, concerns a 20 percent limit on futures contracts established by suppliers with a market share exceeding 4 percent.
Following up, officials are then expected to lift upper and lower limits imposed on offers.
The government is pushing to deliver, as soon as possible, to Brussels its plan for a Capacity Remuneration Mechanism (CRM), a challenging endeavor given the strict stance maintained by the European Commission’s Vice-President Margrethe Vestager during her meeting with energy minister Kostas Skrekas last month.
RAE, the Regulatory Authority for Energy, assisting the government’s effort with swift progress on preliminary procedures, has commissioned consulting firm E3-Modelling, a decision based on its specialized skills, to prepare an implementation plan, required by Brussels, in order to help eliminate regulatory distortions or market failures.
Vestager, at her meeting with minister Kostas Skrekas in May, made clear that Greece will need to incorporate its strategic reserve model – remunerating units made available by electricity producers for grid back-up services – into a wider Capacity Remuneration Mechanism.
The Brussels deputy, also the Commissioner for Competition, has demanded a new grid sufficiency study and the reserve mechanism’s restructuring from scratch, aligned with EU directives.
Besides remunerating power utility PPC facilities for grid back-up services, the mechanism will also need to incorporate a demand response system.
Brussels officials have indicated the Greek plan will need to have a short duration.
The E3-Modelling company’s team includes Pantelis Kapros, Professor of Energy Economics at the National Technical University of Athens, who possesses a high level of expertise in European energy market reforms, as well as other officials with the necessary expertise, to help the authority complete its task within the limited time given by the government.
Power utility PPC is looking to claim compensation for keeping its loss-incurring coal generators in operation to help meet the country’s electricity needs.
The utility aims to seek compensation through an EU cost-recovery mechanism for as long as its existing lignite-fired power stations will need to keep operating until a planned withdrawal procedure for these units is completed by 2023.
A strategic reserve capacity being used in Germany is being looked at by state-controlled PPC.
PPC chief executive Giorgos Stassis made the request to the Greek government, which in turn has relayed the matter to Brussels.
European Commission officials, who have held talks on the matter with energy ministry officials, have not responded favorably to the Greek request. On the contrary, they believe Greece owes amounts related to the country’s insistence on using coal generators as a European Court decision has not been implemented.
PPC has also made note of a compensation plan for gas-fueled power stations on the islands that are expected to be interconnected. The power utility believes it will be entitled to compensation if the operation of these units is deemed necessary for grid emergency back-up reasons.
The power utility also claims it would be entitled to compensation for any unrecovered amount of its investment in these gas-fueled power stations if they happen to be withdrawn prematurely.