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Energy storage investors scan details ahead of first auction

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Investors looking to install energy storage units in Greece are currently exploring  market participation details and options and how these could secure feasibility as they prepare for a first auction for standalone batteries, expected to take place within the next few months.

Participants will be offered 50 percent of a total capacity of 900 to 1,000 MW currently allotted to energy storage units. Looking further ahead, the country’s updated National Energy and Climate Plan envisages the installation of 5.6 GW in batteries for energy storage over the next ten years.

For the time being, it appears investors will need to develop their energy storage projects without state support, meaning their respective business models will rely entirely on funds generated through the market.

These revenues will, on the one hand, be generated by storage facility contributions to daily coverage of demand, and on the other, remuneration that could be received for provision of a range of services, including grid congestion relief and balancing.

Indeed, in cases of markets such as the UK and Ireland, serving as models for the domestic market, the provision of such services constitute the main source of income for energy storage units, which explains concerns raised by investors in Greece and why they are seeking clarification on financial details in advance before making investment decisions.

It should be noted, however, that in any case, the establishment of capacity mechanisms is considered necessary for the viability of energy storage projects.

EU ministers to meet on carbon emission costs, causing alarm

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The EU’s energy ministers plan to meet in Ljubljana Wednesday in search of a solution to counter the relentless rise in carbon emission right costs, which, for some time now, have reached elevated levels that hang as a dark cloud over energy consumers, hundreds of suppliers and Europe’s energy transition strategy, breeding increasing Euroscepticism.

Carbon emission rights have been stuck at levels of no less than 60 euros per ton, prompting allegations of manipulation.

Last week, the European Commission submitted to European Parliament the EU’s more ambitious climate-change package, “Fit for 55”, aiming for a 55 percent reduction of carbon emissions by 2030, compared to 1990 levels. It is planned to lead to ETS mechanism revisions.

In response to accumulating messages of alarm from energy consumers and industrial enterprises from all over the continent, European MPs, at Wednesday’s meeting, are expected to push for stricter ETS rules.

Until now, governments of EU member states have been left to act independently for support measures whose extent is being determined by the capabilities of state budgets.

In Italy, the government, facing electricity cost increases of 40 percent, is lowering taxes linked to electricity bills. In France, low-income households stand to receive increased energy-cost coupon amounts, currently worth 150 euros annually.

The situation is far more dramatic in the UK. To date, seven electricity suppliers, under growing market pressure, have disrupted their operations, forcing over 600,000 customers to seek new suppliers. Bulb, one of the UK’s biggest electricity suppliers, serving 1.7 million customers, is on the verge of bankruptcy. A merger with a rival player is seen as the likeliest solution for this company.

 

Three key factors pivotal for offshore wind farm development

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Spatial planning-licensing, grid connectivity and the remuneration formula for investors are three key factors pivotal to the development of the country’s offshore wind farm industry, investors and authorities agree.

Speaking at an event staged yesterday by ELETAEN, the Greek Wind Energy Association, the energy ministry’s secretary-general Alexandra Sdoukou stressed that the right formula for the sector’s development needs to be based on these three factors.

This industry’s course abroad, so far, has shown that a variety of options can be adopted for each of these factors. Fellow European countries have followed a range of paths, often contradictory. Greece’s energy ministry will need to seek solutions that best suit local conditions.

The spatial planning-licensing options range from a liberal model adopted by the UK, offering offshore wind farm investors maximum freedom to develop their investment plans, as they deem best, including in choice of appropriate location for maximum commercial potential, and, at the other end, a state-regulated model, as practiced in countries such as Denmark and the Netherlands. In this latter case, state regulatory authorities are responsible for determining installation locations and capacities, through studies of their own, before staging auctions.

ELETAEN’s proposal favors a mixed approach, through which the state would initiate the process by allotting wider areas for offshore wind farm development.

The wind energy association also favors a mixed approach for network connectivity that would require power grid operator IPTO to develop main lines in areas designated by the state for offshore wind farm installations.

Local authorities and players still appear to disagree on whether non-auction fixed tariffs will need to be offered to investors as a catalyst for this industry during its early stage of development.

Sdoukou, the energy ministry’s secretary-general, did not rule out such an approach at yesterday’s ELETAEN event. But, regardless of whether a preliminary stage of non-auction fixed tariffs will be offered, all sides seem to agree that tariffs, later on, will be exclusively made available to offshore wind farm investors through auctions.

 

Going solar boosts UK house prices by average of £32,000

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The installation of roof-mounted solar energy systems is boosting property values as prospective buyers appreciate energy self-sufficiency and reduced energy bills in the long run.

In the UK, the market value of houses with roof-mounted PV systems increases by an average of 32,459 pounds, or 36,000 euros, according to a study conducted by energy solutions company EffectiveHome.co.uk in ten major cities.

The impact of roof-mounted PV installations on property value was biggest in London, prompting price increases in excess of 90,000 pounds for properties worth the city’s average housing price level of 686,321 pounds, according to the EffectiveHome.co.uk study.

Bristol followed with a property price boost of 45,142 pounds for properties worth the city’s average property level of 322,444 pounds. In Edinburgh, the boost measured 40,095 pounds for the average housing price of 286,397 pounds. Leicester followed with a 31,577-pound price boost for the average housing price level of 225,552 pounds. In Manchester, the increase is 29,278 pounds for the city’s average housing price level of 209,134 pounds.

PV systems offer potential electricity bill savings of at least 27,500 pounds over a 30-year period, the study determined.

“With house prices currently experiencing a mini boom, it’s interesting to see what impact solar energy and benefits such as reduced energy bills and lowering carbon emissions is having,” noted Dan Graby, director at EffectiveHome.

The value of properties equipped with PV systems is expected to be particularly boosted in countries with abundant sunshine, such as Greece, as the world increasingly turns its attention to green energy solutions.

A third round of a subsidy program – worth 850 million euros – supporting energy efficiency upgrades of properties in Greece is expected to be open for applications in October.

US reacts to Russian LNG in Boston, European shale battle rising

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The delivery of Russian LNG to freezing Boston, a psychological blow for US authorities, has prompted American officials to highlight the country’s major shale gas and oil production prospects for 2018.

Pundits noted that Washington is finding it increasingly difficult to remind European countries such as the UK, Portugal and France, which have already purchased Russian LNG from the Yamal station in northern Siberia, that they cannot only use ecomomic criteria in their dealings with Russsia and, as a result, breach sanctions imposed on the country.

Walter Peeraer, president of TAP, the Trans Adriatic Pipeline project, whose development is now approaching completion, intervened by stressing the pipeline’s plans do not entail transmitting Gazprom gas, despite an interest expressed by the Russian giant to do so.

In preceding remarks, French and Dutch officials noted that incoming Russian LNG is not being used in their countries but, instead, was reloaded on tankers to be sold to other markets offering greater profit. These destinations were not specified.

According to Bloomberg, it is not certain whether the aforementioned Russian LNG shipment to Boston represents the order’s final destination. The order was shipped from the UK by French firm Engie.

Responding to this delivery, the US International Information Adminstration, which has spearheaded the wider American reaction, declared that US oil production is expected to reach an average of 10.3 million barrels per day in 2018, a 970,000 bpd increase compared to 2017. Such a performance would easily surpass the previous US record of 9.6 million bpd, set in 1970 under the Nixon administration. American shale oil production is expected to reach 11 million bpd in 2019.

The major US oil production level forecast for 2018 promises to undermine efforts by OPEC and Russia to reduce oil production by 1.8 million bpd in an effort to boost prices levels.

Last night, the price of Brent crude reached 69.24 dollars a barrel in New York, its highest level since 2014.

The International Information Adminstration believes Brent prices, which averaged 54 dollars a barrel in 2017, will reach an average of 60 dollars a barrel in 2018 and 61 dollars a barrel in 2019.

Though American shale oil and gas prospects appear rosy, the cross-Atlantic prospects in the UK are far less promising. Efforts made by petroleum firms to convince the UK government and public of the need to exploit shale gas deposits, which could offer energy supply to Great Britain for the next 25 years, continue to face major obstacles.

The Scottish government has already banned fracking as a means of extracting shale gas while the UK public’s environmental concerns are particularly acute.

Ineos, the petrochemicals group headed by Jim Ratcliffe, is preparing to file a legal case against the Scottish government for abuse of ministerial power. Further south, in central England, companies such as Cuadriilla, Third Energy and IGas Energy, are preparing to launch campaigns in 2018 with the aim of convincing the UK public that shale gas extraction is not environmentally hazardous.

Brexit freezes investment prospects, including in energy

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The investment freeze expected until decisions are reached and repercussions analyzed with regards to the UK referendum’s Brexit outcome, if the result is implemented, is the greatest concern for the real economy, the energy sector being no exception.

At present, the perceived elevated risk and possible impact on borrowing costs, rather than the direct effects of a Brexit, is the biggest threat faced by energy-sector investments in Greece. Investments in the wind-energy sector could be exposed to this threat. The same applies for investments in energy networks, natural gas, as well as the breakaway plan for IPTO, the power grid operator, from parent company PPC, the main power utility, in a procedure to include the sale of between 20 and 25 percent to a European strategic investor.

This Thursday (June 30), PPC is scheduled to hold a general shareholders meeting during which approval of the plan to offer at least 20 percent of IPTO is expected.

Authorities hope the interest being expressed by European companies for IPTO will not be affected by the latest investment risk increase perceived for Europe’s south.

The current deteriorated investment climate may not exclusively concern Greece, but it does once again put the spotlight on the country as one of the fundamental weak spots of the EU.

“The market uncertainty being caused by the vote in favor of Brexit will affect the fragile eurozone economies in Europe’s south. Bond yields for Spain, Italy, Portugal and Greece will possibly increase,” geopolitical analyst Strafor warned in a recent report.

This new crisis hailing from the UK comes at a crucial time for Greece and the effort being made to revive the Greek economy. The investment climate has suddenly become negative amid the meltdown of markets. Developments between the UK and EU over the next few weeks will be crucial.