IPTO to challenge RAE’s €5m fine for west corridor line delay

Power grid operator IPTO will legally challenge a 5 million-euro fine imposed by RAE, the Regulatory Authority for Energy, for delays in the development of a “west corridor” transmission line in the Peloponnese, from Patras to Megalopoli, operator sources have informed energypress.

The authority’s decision is legally baseless and does not serve interests for optimal functionality in the energy market, the sources noted.

The RAE fine imposed on IPTO encourages local reaction in general and is detrimental to the effort being made for swift development of infrastructure projects around Greece, the operator’s sources added.

IPTO has never kept concealed delays it has faced to develop a small fraction of work remaining for the west corridor’s completion as a result of resistance raised by a regional monastery in the Kalavryta area, the operator sources asserted.

As soon as legal action was taken, late last year, against this project’s completion, IPTO informed RAE in writing about the initiative’s repercussions on the development plan, the sources said.

Also, IPTO does not accept any responsibility for balancing market cost increases, which have risen since last November’s target model launch, and will support its position by providing facts and evidence to RAE as well as other Greek and European authorities, the sources told.

 

Strict schedule for Crete target model transition plan

The European Commission has offered preliminary approval, still unofficial, of a Greek proposal concerning a transitional framework for Crete’s electricity grid link with target model markets.

This development will now enable RAE, the Regulatory Authority for Energy, to conduct public consultation for a temporary plan concerning the island’s participation in the target model’s wholesale markets.

RAE is expected to begin the public consultation procedure this week, sources said. It will feature a strict road map for the model’s implementation, from forthcoming steps all the way to legislation.

The plan’s framework will include two alternative methods for the island’s electricity supply transactions through a small-scale interconnection, with the Peloponnese.

The solution to be selected will greatly depend on the results of the public consultation process.

As previously reported by energypress, a transitional framework is necessary as Crete’s electricity needs will only be partially covered, at a level of about 30 percent, through the small-scale interconnection.

The framework will expire once the island’s full-scale grid interconnection, all the way to Athens, begins operating in 2023.

Target model tweaks to determine end of balancing market measures

The amount of time still needed before RAE, the Regulatory Authority for Energy, can lift balancing market measures designed to contain related surcharge costs by limiting offers of market participants will depend on the progress of a road map for structural interventions to the target model.

The road map, being prepared by RAE in collaboration with power grid operator IPTO, is expected to be ready within June.

It will offer a time frame for the implementation of all structural interventions planned and needed to promote rational behavior in wholesale electricity markets.

Restrictive measures were introduced on February 13 for an anticipated three-month period.

 

Target model non-compliance cost formula effective, IPTO notes

A new target model formula calculating discrepancy cost is proving effective as, in most cases, it is impacting the finances of electricity producers and suppliers when they deviate from distribution orders and loading plans, power grid operator IPTO has noted.

As a result, the discrepancy cost formula should, for the time being, continue to apply for both electricity producers and suppliers as it appears to be offering a balancing incentive, the operator has recommended.

IPTO’s proposal has been forwarded to public consultation, taking place until May 7, for a scheduled reassessment of factors concerning non-compliance charges following the target model’s recent launch.

Wholesale electricity cost up 8% in 1Q, surcharges double

The cost of wholesale electricity averaged 65.412 euros per MWh in the first quarter of 2021, up 8 percent compared to the equivalent period a year earlier, when the level averaged 60.67 euros per MWh, data provided by power grid operator IPTO has shown.

It should be pointed out that a direct price comparison of all components making up wholesale cost during these two quarters is not possible as, during this time, the structure of the wholesale electricity market changed from a mandatory pool system to the target model.

For example, a minimum RES-supporting surcharge burdening wholesale costs by an average of 3.4 euros per MWh during the first quarter last year has since been abolished. Also, the market-clearing price fell to 0.72 euros per MWh in the first quarter from 2.11 euros per MWh in the equivalent period a year earlier.

Even so, the reduction in these costs was outweighed by the increase in wholesale electricity prices. The total cost in the day-ahead and intraday markets averaged 55.17 euros per MWh in the first quarter this year, compared to last year’s average cost of 50.39 euros per MWh in the mandatory pool.

Surcharge costs also increased, averaging 9.53 euros per MWh in the first quarter this year, double the level of 4.78 euros per MWh a year earlier.

Particularly high prices registered late in 2020, during the early days of the target model launch, have eased so far this year. Last November and December, surcharge costs reached 17 and 16.09 euros, respectively.

Electricity consumption fell by 6 percent in the first quarter this year, compared to a year earlier, to 12.39 TWh from 13.175 TWh, as a result of lockdown measures amid the pandemic.

Authorities gearing up for intraday market entry of traders

Authorities are picking up the pace on moves needed to also enable traders to begin participating in Greece’s intraday electricity market, one of the new wholesale markets emerging with the target model’s recent introduction.

The Greek energy exchange will forward its proposal for necessary market regulation amendments to RAE, the Regulatory Authority for Energy, within the next two months, energypress sources informed.

These revisions will take finalized shape through ongoing discussions between the energy exchange, as operator of the intraday market, power grid operator IPTO, managing international grid interconnections, and RAE.

The authorities are seeking to establish an optimal formula for the intraday market entry of electricity traders.

The talks, until now, have indicated that intraday day interconnection rights will not be required for transboundary trade between intraday markets that have not undergone coupling.

Therefore, traders will be able to participate in the intraday market by utilizing the amount of daily interconnection rights they have secured and not used for transboundary transactions in the day-ahead market.

The addition of traders to the intraday market promises to boost its liquidity, currently low. This will help liberate market players by offering them greater flexibility, limiting the pressure on the balancing market.

DG Comp motives for restart of older PPC probe unclear

The European Commission has brought back to the fore a Directorate-General for Competition investigation of power utility PPC and power grid operator DEDDIE/HEDNO over market dominance abuse, despite major market changes that have taken place since 2017, when the probe began.

The direction the investigation’s restart remains unknown. Negotiations between Greece and Brussels for new mechanisms being negotiated could be impacted, some pundits suspect.

Also, the government and state-controlled PPC are currently seeking compensation for the power utility’s need to keep lignite-fired power stations and related mines operational for grid sufficiency needs.

No findings of the investigation’s first round have been released. The probe included raids by DG Comp officials, both local and Brussels-based, of the PPC and IPTO headquarters in Athens that lasted several hours, resulting in confiscations of USB flash drives, documents and hard drives.

PPC’s then-administration, in an announcement at the time, informed that the raid concerned a check on the utility’s “supposed” abuse of market dominance in the wholesale market for electrical energy produced from 2010 onwards.

Prior to the investigation, Brussels suspected levels of the wholesale electricity price – known as the System Marginal Price (SMP), at the time – were being manipulated by PPC through its lignite and hydropower facilities.

In 2017, PPC held an 87 percent share of the retail electricity market and 57 percent of overall electricity generation, now down to approximately 67 and 39 percent, respectively.

Four years ago, PPC’s lignite facilities still dominated the corporation’s portfolio and the energy exchange and new target model wholesale markets did not exist.

The current market setting bears little resemblance to back then. Lignite has regressed into an unwanted, loss-incurring energy source that is being phased out by PPC until 2023, while the energy market is undergoing drastic transformation, as was acknowledged by the European Commission Vice-President Margrethe Vestager, also Brussels’ Commissioner for Competition, in an announcement yesterday.

 

Industrial officials enraged by PPC energy-negotiation demands

Industrial producers are reacting against terms and demands tabled by power utility PPC in ongoing negotiations for new high-voltage tariffs and agreements that take into account new market conditions ushered in by the target model.

Energy-intensive producers, not appeased by PPC’s recent decision to extend its negotiating period by three months – thereby extending the validity of existing agreements with industrial customers until June – claim the power utility is not making any effort to achieve compromise solutions.

The industrial sector is already in crisis, and, furthermore, the recent disruption of operations at steel producer Halyvourgiki and state-controlled nickel producer Larco, leaving PPC with enormous unpaid electricity bills, illustrates the power utility is not adopting government policies for a strategic recovery of the country’s industrial sector, officials at energy-intensive industrial enterprises have complained.

Although industrial energy costs are already too high, PPC is proposing high-voltage tariff increases in the range of 40 to 50 percent, industrial firm officials have noted.

Despite their obvious feelings of discontent, officials at energy-intensive consumers appear willing to keep negotiating with PPC in search of solutions that can enhance the competitiveness of industries.

However, some industrial sub-sectors, such as heavy industry, appear to be far less tolerant. Officials at iron, copper, cement and steel industries believe their proposals are not being considered at PPC.

They want balancing cost and take-or-pay clauses removed from any new agreements. Heavy industry cannot assume such risks and, at the same time, remain productive and competitive, officials stressed.

PPC extends industrial tariff negotiations until June

Power utility PPC has extended by three months its negotiating period for new high-voltage industrial tariffs following a request by a number of energy-intensive producers, energypress sources have informed.

The negotiating sides acknowledge pandemic-related problems have prompted the need for additional time, during which  compromise solutions will be sought.

PPC had given industrial enterprises until February 28 to accept a new high-voltage tariff pricing formula. The previous system’s validity expired December 31.

Industrial electricity charges for the first two months of 2021 have been based on the terms of expired agreements.

According to sources, tariff levels are of secondary importance in these negotiations, the prime concern being a new pricing system sought by PPC, which, if implemented, would bring an end to fixed tariffs and volume discounts.

PPC contends that the target model and its accompanying energy exchange markets, such as the balancing market, need to be taken into account for new pricing formulas.

The negotiating sides appear determined to reach agreements that would bolster the competitiveness of industrial producers without obligating the state-controlled power utility to supply high-voltage electricity at below-cost levels.

Market coupling with Bulgaria expected by early May

Market coupling to unify the Greek and Bulgarian day-ahead markets, representing a second step for the participation of Greek wholesale electricity markets in a pan-European unification of markets through the target model, is planned for late April or early May, sources have informed.

The forthcoming step was preceded by market coupling between Greece and Italy, unifying, as of December 15, the day-ahead markets of the two countries through a single price coupling algorithm, EUPHEMIA (Pan-European Hybrid Electricity Market Integration Algorithm). It calculates energy allocation, net positions and transboundary electricity prices.

Greece’s market coupling with Bulgaria promises to create an even broader trading platform for market participants, sector officials noted. Besides bilateral contracts for energy imports and exports, market coupling will also facilitate automatic energy flow from the higher-priced country to the lower-priced country.

To date, Greece has clearly been an energy importer in its transboundary energy trading relationship with Bulgaria. It remains to be seen if this will be maintained under the new conditions.

Once market coupling of the Greek and Bulgarian day-ahead markets has been accomplished, Greece’s next step towards unification with European energy markets will be to link its intraday market with that of Italy, a step expected by next summer, through the implementation of complementary regional intraday auctions (CRIDA).

Further ahead, a third step, balancing market coupling through two European platforms, MARI (Manually Activated Reserves Initiative) and PICASSO (Platform for the International Coordination of Automated Frequency Restoration and Stable System Operation), is planned for the second half of 2022.

 

Balancing market cost falls to €10.99/MWh a week into measures

Balancing market measures recently introduced by RAE, the Regulatory Authority for Energy, have produced tangible results for market participants, judging by clearance price figures between February 15 to 21, the first full week since the measures were imposed.

However, market players were quick to point out that last week’s market conditions were shaped by unusual factors not making possible a safe assessment of the results produced by the measures. They were launched on February 13.

Extreme snowstorms affected electricity supply in many parts of the country and a technical breakdown at the Koumoundourou substation serving the wider Athens area required a full-scale response from the country’s electricity production units.

Between February 15 and 21, the balancing market cost registered 10.99 euros per MWh, down from 12.36 euros per MWh a week earlier, according to data provided by IPTO, the power grid operator.

The regulatory authority needed to intervene following a sharp rise in balancing market costs since November’s launch of the target model’s new markets.

Day-ahead market prices unusually low despite crisis conditions

Though the balancing market and its various problems since November’s launch of new target model markets may have been the focus of attention of late, irregularities have also troubled the day-ahead market, necessitating a closer look, officials have stressed.

This need was first pointed out by Alex Papalexopoulos, one of the architects of the country’s electricity system, who observed that the day-ahead market has shown signs of offers being systematically submitted at levels below actual cost. He said market dumping was taking place, referring to offers submitted by lignite-fired units.

These concerns have now also been raised by Dinos Benroubi, head of energy supplier Protergia’s electricity and gas divisions, as well as Antonis Kontoleon, the chief official at EVIKEN, Greece’s Association of Industrial Energy Consumers.

At a time of crisis, high electricity demand and calls on industrial producers to hold back on energy consumption, day-ahead market prices remain very low and full-scale electricity exports are taking place towards Italy, Kontoleon noted during a panel discussion at Athens Energy Dialogues, a conference held yesterday.

Protergia’s Benroubi took the issue a step further by noting that RAE, the Regulatory Authority for Energy, must implement a monitoring mechanism for the day-ahead market, as, despite serving as a base for the target model’s functioning, it is displaying irregularities.

Transitional hybrid plan for Cretan participation in markets

RAE, the Regulatory Authority for Energy, has decided on a transitional hybrid model for Crete’s participation in target model energy markets, covering production and consumption, once the island’s small-scale grid interconnection to the Peloponnese is soon launched.

The fundamentals of the transitional model – to be applied until Crete’s full-scale grid interconnection, all the way to Athens, is completed – have been agreed on by the participating market operators. But details still need to be worked out.

Power grid operator IPTO, distribution network operator DEDDIE/HEDNO and the energy exchange are currently shaping the finer details of the transitional plan, expected to be finalized over the next few days.

Under the transitional hybrid solution, Crete – whose grid will continue being managed by DEDDIE/HEDNO until IPTO takes on the responsibility when power utility PPC, DEDDIE/HEDNO’s parent company, has transferred its network ownership on the island to IPTO – will purchase electricity transmitted through the small-scale grid link at target model energy markets.

As for electricity flowing in the opposite direction, production of Cretan units will be represented by IPTO.

The transitional model, when ready, will be forwarded for public consultation. European Commission approval will be needed for the finalized plan. RAE has already briefed Brussels officials on its proposed transitional model.

Finding a solution for Crete has proven to be a challenge as the small-scale grid link to the Peloponnese will not fully cover the island’s energy needs, meaning it will not automatically cease to be a non-interconnected island once the small-scale grid link begins operating. However, a considerable part of Crete’s energy needs, approximately 30 percent, will be served by the small-scale interconnection.

Normally, when grid links for non-interconnected islands are completed, IPTO assumes responsibility of their electricity networks. However, Crete, Greece’s biggest and most populous island, represents a much bigger interconnection project that is being developed over two stages. The project’s second stage, to reach Athens, is anticipated in 2023.

Failure to find a transitional solution would threaten to leave the small-scale link unutilized.

RAE wants measure of balancing market distortion cost

RAE, the Regulatory Authority for Energy, has requested power grid operator IPTO to calculate the financial impact of balancing market distortion costs since November’s launch of new target model markets.

RAE has since decided to impose restrictions on balancing market offers. These are expected to be published in the government gazette today or tomorrow, enabling their implementation three days after the date of publication.

RAE estimates it will have implemented the balancing market restrictions by the end of this week.

It remains to be seen if RAE’s request towards IPTO for a measure of the higher balancing market costs incurred by suppliers will result in retroactive returns for affected parties dating back to the early-November launch of the target model.

Non-vertically integrated electricity suppliers, severely impacted by the increased balancing market costs that resulted in higher wholesale market prices, are demanding retroactive rebates.

Suppliers summoned to explain overdue surcharge transfers

RAE, the Regulatory Authority for Energy, has summoned power utility PPC and six independent electricity suppliers to hearings for explanations on overdue surcharge amounts they have yet to transfer to three market operators.

The authority had initially requested related data and explanations from suppliers and has now taken a further step by deciding to stage hearings for PPC and two other suppliers, followed by supplementary hearings involving a further four suppliers.

The three market operators, power grid operator IPTO, distribution network operator DEDDIE/HEDNO and RES market operator DAPEEP, will also be called upon by the authority to offer data on the overdue surcharge transfers by suppliers.

According to sources, RAE authorities are examining a variety of surcharges, including network transmission, distribution network and RES-supporting ETMEAR surcharges, up until October, 2020.

These surcharges, included in electricity bills and paid by consumers as part of their electricity bills, must then be handed over by suppliers to respective operators within a specific time period.

Conditions have recently deteriorated for electricity suppliers, primarily as a result of considerably higher wholesale costs since November’s launch of the target model’s new markets.

Electricity suppliers contend that amounts owed to them by the operators outweigh their unpaid surcharges and, as a result, want accounts offset. RAE has rejected this request.

Balancing market measures this week, cost restraint at €10/MWh

Measures prepared by RAE, the Regulatory Authority for Energy, with the aim of restricting offers in the balancing market following sharp price rises since November’s launch of new target model markets, are expected to be implemented this week as soon as the authority’s related decision is published in the government gazette.

To check the effectiveness of the new measures, electricity suppliers, hit hard by higher wholesale prices, have conducted simulated testing by applying the interventions to a considerable number of randomly selected 24-hour periods since the target model’s launch.

According to sources at some electricity supply firms, the testing has shown these measures can contain surcharge cost increases to single-digit figures.

The measures to be implemented any day now will combine to effectively create an upper limit for balancing market prices at levels of approximately 10 euros per MWh, as long as producers continue to exercise restraint when submitting offers, the sources added.

However, levels of approximately 10 euros per MWh remain unsatisfactory as they are many times over the balancing cost’s mandatory pool, ranging between 2 to 3 euros per MWh, the sources stressed.

Consumers paying the price for balancing market turbulence

Low and medium-voltage consumers – households, businesses, small-scale producers and industrial producers – are paying the price for the target model’s persisting market turbulence that has led to higher wholesale prices, especially in the balancing market, nearly three months after the launch of new markets.

Interventions made by authorities have yet to fully resolve issues and offer market stability.

Additional costs have been passed on to consumers despite no official price-hike announcements by electricity suppliers.

In the medium-voltage category, prices have risen to levels of between 67 and 69 euros per MWh from 59 to 61 euros per MWh prior to November’s launch of target model markets, introduced as a step towards harmonizing Greece’s market with EU markets.

The market turbulence has also overwhelmed consumers in the low-voltage category, where prices have risen consistently.

With the exception of the power utility PPC, whose prices have remained steady as the company’s supply contracts do not include wholesale market-related clauses, independent suppliers have passed on their elevated electricity purchasing costs to consumers through higher tariff rates. Most independent suppliers include wholesale market clauses in their supply agreements.

Making matters more troubling and confusing for consumers, independent suppliers each employ different wholesale market clause-activation levels and resulting pricing formulas, meaning it is difficult to tell whether their supply terms are being adhered to or not.

Price hikes by independent suppliers have ranged from 7 to 35 percent, electricity bills sent to energypress by frustrated consumers show.

At present, there is no sign of any price de-escalation. The cost of wholesale electricity in the balancing market has remained on an upward trajectory. Last week (January 18-24), price levels averaged 10.82 euros per MWh, up from 7.77 euros per MWh in the previous week.

The wholesale market clauses of independent suppliers are expected to keep producing price hikes for some time even if possible additional measures by RAE, the Regulatory Authority for Energy, lead to an overall price de-escalation. This is due to a latency between the wholesale clearing procedure and clause activation.

 

Retroactive enforcement of balancing market rules sought

Non-vertically integrated electricity suppliers are seeking retroactive implementation of measures introduced recently by RAE, the Regulatory Authority for Energy, to contain balancing market prices at rational levels.

Balancing market costs rose sharply in the weeks following November’s launch of new target model markets, prompting an escalation of wholesale electricity prices that severely increased the purchasing costs of non-vertically integrated electricity suppliers.

These suppliers are now determined to seek returns from RAE and power grid operator IPTO for additional outlays prompted by flaws in balancing market rules that were not detected until after the launch of new markets.

A set of new rules just introduced by RAE constitute recognition by the authority of the abusive behavior practiced by producers prior to the intervention, the suppliers contend.

Non-vertically integrated electricity suppliers are pushing for even stronger measures. They believe the new rules rely too much on the goodwill and cooperation of producers, still able to return to irrational behavior and consequently threaten the sustainability of firms and financially pressure consumers.

On the same wavelength, EVIKEN, the Association of Industrial Energy Consumers, has criticized RAE for backing away from its own proposals, noting industrial energy costs currently depend on whether balancing market participants will exercise pricing restraint.

Key issues in new minister’s first session with EC officials

Today’s first meeting, via teleconference, between Greece’s recently appointed energy minister Kostas Skrekas and European Commission authorities, as part of Brussels’ ninth post-bailout review, will focus on four key issues: power utility PPC’s lignite monopoly; the proper functioning of target model markets; energy-sector privatizations, and the decarbonization plan for west Macedonia, a lignite-dependent area in the country’s north.

The four issues were addressed in preliminary talks last week between Alexandra Sdoukou, secretary-general of Greece’s environment and energy ministry and Brussels technocrats.

It remains to be seen if the European Commission will again commend Athens, and to what extent, for the target model’s functioning, as Brussels had done last November, when the model’s new markets in Greece were launched as a step to harmonize EU energy markets.

However, weeks into the launch, balancing market costs skyrocketed, leading to sharply increased wholesale electricity prices. RAE, the Regulatory Authority for Energy, is now considering to introduce an adjustable price-containing measure to be set as a percentage of day-ahead market prices.

The European Commission, in the latest talks, can also be expected to push for the launch of a market test concerning an agreement offering independent players access to PPC’s lignite-based electricity production.

Though the interest of independent players for lignite-based electricity may have diminished given its increased cost, this antitrust case, unresolved for years, remains a big concern for the government as Brussels could associate it with pending Greek issues.

The complexity of PPC’s lignite monopoly case was deepened following a decision by the previous energy minister, Costis Hatzidakis, to bundle the matter with a Greek compensation request based on the utility’s need to keep running lignite-fired power stations for energy sufficiency. According to reports, his successor, Skrekas, will not sway from this policy.

As for energy-sector privatizations, a sale plan for gas supplier DEPA Commercial has attracted considerable interest but officials are concerned as parent company DEPA is embroiled in an ongoing lawsuit with ELFE (Hellenic Fertilizers and Chemicals).

DEPA has appealed a verdict awarding the producer a compensation amount of 60 million euros following overcharging claims. The case could be deferred until September, meaning binding bids by possible DEPA Commercial buyers may need to be delayed.

Greece’s decarbonization master plan features 16 key investment proposals that are expected to create over 8,000 jobs, directly and indirectly, in lignite-dependent areas. However, numerous complex matters need to be resolved, including the transfer of related property controlled by PPC, Brussels’ approval of a series of incentives for new investments, and scores of licensing issues.

Greek-Italian market coupling boosts transaction efficiency

The Greek-Italian electricity market coupling of day-ahead markets, launched on December 15 as part of the target model, is living up to its expectations as a safety valve facilitating optimal electricity flow between countries.

The initiative, operating through a single price coupling algorithm, EUPHEMIA (Pan-European Hybrid Electricity Market Integration Algorithm), which calculates energy allocation, net positions and transboundary electricity prices, has run smoothly since its launch over a month ago.

Greek-Italian transboundary electricity transactions admittedly enjoyed a high level of maturity prior to the introduction of market coupling, courtesy of reliable price forecasts by participants for the Greek and Italian markets.

A grid interconnection, in the form of a 163-km, 400-kV voltage and 500-MW capacity subsea cable, has been in service since 2002.

However, the market-coupling initiative has taken the efficiency of these transboundary Greek-Italian electricity transactions to a higher level as auctions allocating grid interconnection capacities are no longer required.

Since the mid-December coupling of the Greek and Italian energy markets, electricity has constantly flowed from the market offering lower prices to the higher-priced market, proving this market system’s ability to utilize interconnections to their fullest.

Market coupling of the Greek and Bulgarian day-ahead markets is planned to follow, its launch scheduled for spring.

An increased number of interconnected electricity markets promises to give the Greek wholesale electricity market a regional role. However, transboundary grid interconnections will need to be upgraded if this is to be achieved.

Balancing market costs subdued for second consecutive week

Balancing market costs remained subdued for a second consecutive week, the total cost of three uplift accounts, according to official data provided by power grid operator IPTO, registering 5.87 euros per MWh in the tenth week since the November 1 launch of the target model. Its introduction prompted sharp balancing cost increases in the first few weeks.

More specifically, the uplift 1 account reached €1.39 per MWh, uplift 2 was €0.79 per MWh, and uplift 3 registered €3.69 per MWh.

According to IPTO data on the three uplift accounts during the first ten weeks of the target model, their total cost was €8.37 per MWh in the first week, climbed to €15.68, €19.45 and €20.06 per MWh in the second, third and fourth weeks, respectively, before peaking at €43.37 per MWh in the fifth week. The uplift total then plunged to €8.08 per MWh in the sixth week, before eventually falling further to levels of €5.74 and €5.87 per MWh in the ninth and tenth weeks, respectively.

Day-ahead market prices have also been low over the past two weeks of subdued balancing market costs, meaning the overall cost in the wholesale market has dropped.

Low electricity demand as a result of the mild winter weather, so far; the lockdown measures, even if not absolute; more accurate electricity demand forecasts by power grid operator IPTO; as well as increased output by RES and hydropower units, have all been cited as factors in the reduced cost of wholesale electricity.

In addition, more rational offers by producers have also contributed to the normalization of balancing market prices.

Balancing market prices down for third successive week

Balancing market price levels have fallen considerably for a third consecutive week, between December 21 and 27, latest figures published by power grid operator IPTO have shown.

According to this data, the balancing market price averaged 7.18 euros per MWh for the seven-day period, considerably lower than levels of about 10.5 euros per MWh registered a week earlier.

RAE, the Regulatory Authority for Energy, is making an effort to normalize the target model’s new markets, launched two months ago.

Balancing market prices rose sharply during the first few weeks of the launch, especially troubling non-vertically integrated suppliers and forcing the authority to prepare a price ceiling for producer offers.

The recent downward trajectory in balancing market prices has been interpreted as an effort for price restraint by producers.

RAE now considers that it should wait before imposing tough restrictions on producer offers.

 

 

New minister, just appointed, has issues to resolve in 2021

Kostas Skrekas, just appointed new energy minister as part of the government’s cabinet reshuffle, in place of Costis Hatzidakis, who has headed the ministry for a constructive year and a half, faces a series of pending energy-sector matters that remained unresolved in 2020. They need to be addressed as soon as possible. Developments and conditions this year will be pivotal for these matters.

Skrekas was previously deputy minister for agricultural development and food.

Also in 2021, a year during which takeovers and mergers are seen occurring in the retail electricity and gas markets, rivals will continue battling for market share gains. The target model’s launch two months ago has brought about new conditions, strengthening the positions of vertically integrated suppliers.

The need for a normalization of the target model’s new markets stands as the energy ministry’s most pressing task at present. A sharp rise in wholesale electricity prices as a result of soaring balancing market costs has deeply unsettled the market, impacting the standings of non-vertically integrated suppliers, as well as industrial enterprises and consumers, who face rising bills.

Market coupling with Bulgaria’s day-ahead market, scheduled to take place within the first three months of the new year, is the next step of the target model, a procedure designed to harmonize EU energy markets and promote competition.

New energy-intensive industrial tariffs also need to be set soon. Though essentially a matter concerning state-controlled power utility PPC and Greece’s industrial players, the cost of industrial energy is crucial for Greek industry, carrying particular political and economic weight.

Also, Greece has little time left in its negotiations with Brussels for a framework to offer third parties access to PPC’s lignite-based generation. This issue is no longer as crucial as it once was because the country’s lignite output has been drastically reduced. Even so, it remains important for independent suppliers.

A number of energy-sector privatizations could be completed this year. Gas utility DEPA’s two new entities, DEPA Infrastructure and DEPA Commercial, electricity distribution network operator DEDDIE/HEDNO, and a tender for a tender for the development of an underground natural gas storage facility (UGS) in the almost depleted natural gas field of “South Kavala” in northern Greece are all on this year’s privatization list.

In renewable energy, the ministry needs to take decisions within the first few months to clarify terms regulating the sector. RES investment interest is currently high. Steps still need to be taken in an ongoing effort to simplify RES licensing procedures, while a legal framework must be established for energy storage, offshore wind farms and hydrogen use.

 

Zenith, Fysiko Aerio, Watt+Volt want lower price ceiling for producers

Three non-vertically integrated electricity suppliers, Zenith, Fysiko Aerio (Attiki GSC) and Watt+Volt, have called for a further reduction to an upper limit proposed by RAE, the Regulatory Authority for Energy, for producer offers in the balancing market.

The three suppliers expressed their common view through a joint letter forwarded to a public consultation procedure staged by RAE on the matter.

Balancing market costs have soared since the launch of the target model’s new markets several weeks ago, placing non-vertically integrated suppliers under great pressure.

In other proposals, Zenith, Fysiko Aerio and Watt+Volts also called for retroactive implementation of the price ceiling proposal, from November 1.

The trio described the balancing cost surge of the past few weeks as a “brutal transfer of wealth”, warning that retroactive enforcement of the measures proposed for the restoration of a smooth-operating balancing market, from its very first day, represents the last resort to avoid legal disputes between parties involved.

 

IPTO to cover balancing costs if its discrepancies are hefty

The projection of required system reserves has been identified as one of the problems increasing balancing market costs, RAE, the Regulatory Authority for Energy, seeking to resolve the issue for properly functioning target model markets, and power grid operator IPTO, responsible for the balancing market, have both determined.

The reserve amount is directly linked to IPTO forecasts on the grid’s needs, at high and low levels. Either way, producers are compensated for adding or removing energy from the system.

Responding to the sharp rise in balancing costs since the target model launch of new markets several weeks ago, RAE, the Regulatory Authority for Energy, is preparing to make a change to the current framework by adopting a formula that would offer IPTO an incentive for forecasts that are as accurate as possible so as to avoid large discrepancies.

The authority is looking to impose a discrepancy limit, which, if exceeded, either at low or high levels, will require IPTO, not electricity suppliers, to cover resulting costs.

RAE has also forwarded for public consultation another revision entailing special discrepancy charges for the Peloponnesian grid until a 400-KV transmission line begins operating in the area.

 

 

Target model decision needed in 2021, Elpedison chief points out

The new year will demand a decision from authorities and market participants on whether a true target model for the electricity market is desired, Nikos Zahariadis, chief executive at Elpedison, has pointed out in an article published by energypress as part of a feature on 2021 prospects.

The market was caught by surprise during the launch of the new electricity market in the final weeks of 2020, the official pointed out. Balancing market costs rose sharply during this period.

Most authorities and participants were expecting a different development, including a solution for the market’s chronic “missing money” problem, as well as a drop in retail electricity prices, Zahariadis noted, expressing belief that the new year will present an opportunity, even for the unprepared, to adjust to the new conditions that will ultimately enable the new energy market to operate without restrictions and showcase its advantages.

However, the new market, even when it has matured and stabilized, will still pose threats, especially for players seeking to keep distinctly separate retail and production portfolios, as protection against price manipulation has stopped functioning since the launch of the target model, he pointed out.

Looking towards the future, a gradual prevalence of the RES sector is discernible, as long as economically feasible energy storage technology is developed, Zahariadis projected. Until then, the grid will rely on natural gas-fueled power stations, the only flexible solution available at present, he added.

As for the natural gas sector, two unrelated events late in 2018, the first being an expansion at the Revythoussa LNG terminal facilities that enables bigger tankers to dock, and the second, a drop in LNG prices, have brought about permanent change in the Greek market, the Elpedison official noted.

Market players responded swiftly with LNG imports, prompting gas price reductions along with concurrent electricity price reductions. Also, the first steps were taken towards the establishment of a Balkan hub for transboundary LNG sales, Zahariadis noted.

More gas market opportunities will be offered in 2021 through the TAP project’s functioning, the company official pointed out.

Elpedison has played a leading role in sector developments, capitalizing on opportunities by importing significant LNG amounts and capturing a key position in the wholesale gas market, Zahariadis added.

The completion of equipment procurement tenders for a new 800-MW combined cycle power station, a project that will enable Elpedison to double its production as of 2023 and gradually increase sales to higher levels, stands as the company’s biggest challenge in the new year, he noted.

Suppliers want lower price limits for producers, retroactive returns

Electricity suppliers are demanding a further reduction to a price ceiling proposed by RAE, the Regulatory Authority for Energy, for balancing market offers by gas-fueled producers, and, in addition, also want an upper limit of 3.5 euros per MWh imposed on compensation for this service.

This 3.5-euro compensation rate per MWh, which reaches approximately 5 euros per MWh when system-loss charges are added, is one of the highest in Europe, suppliers contend.

Suppliers also want electricity and balancing market cost limits to apply retroactively as of November 1, 2020 with returns of resulting amounts owed by the end of this accounting year.

Non-vertically integrated electricity suppliers have reacted strongly against sharply increased balancing market costs and far higher wholesale electricity prices since the launch of the target model’s new markets several weeks ago.

Three of the country’s non-vertically integrated electricity suppliers took part in public consultation staged by RAE, the Regulatory Authority for Energy, to present their objections and proposals, energypress sources informed. The procedure ended yesterday.

 

EVIKEN requests balancing market restrictions for at least 6 months

EVIKEN, the Association of Industrial Energy Consumers, wants a price ceiling imposed for at least six months in the balancing market, warning producers are seeking to elevate industrial electricity tariffs despite the absence of any corresponding production cost increases.

Restrictive measures for a three-month duration, as proposed by RAE, the Regulatory Authority for Energy, in its related public consultation procedure would not suffice, EVIKEN warned.

The association, in a letter submitted to the public consultation procedure, also requested retroactive implementation of a price ceiling in the balancing market, beginning November 1, 2020.

Balancing market costs have risen sharply since the launch of new target model markets six weeks ago, pushing up wholesale and retail electricity prices.

The electricity market’s current structure enables oligopolistic practices that are not subject to monitoring, EVIKEN noted in its letter.