wholesale electricity market

RES producers rethink 2-year contract freezes as DAM falls

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Changing wholesale electricity market conditions that have led to lower prices are prompting RES producers to reconsider exercising a right to suspend, for two years, long-term operating contracts with RES market operator DAPEEP in order to establish PPAs or to engage in direct market participation.

Last month, numerous RES producers submitted applications to have their long-term operating contracts with DAPEEP suspended for two years but are now taking a step back and reevaluating whether it would be wise to do so.

Suspension applications submitted in February represented a total RES capacity of over 1,000 MW but investors who followed through to freeze their tariff agreements with DAPEEP, for two years as of March 1, totaled roughly 85 MW.

In January, when the two-year suspension right was introduced, RES producers representing roughly 150 MW went ahead with PPA suspensions. This figure is forecast to drop even lower, to a level of about 50 MW, in March.

Lower day-ahead market prices in the wholesale electricity market are forecast to remain low for quite some time. This is encouraging electricity consumers interested in establishing PPAs with RES producers to demand far lower prices for long-term supply agreements.

Subdued day-ahead market to result in lower retail prices this January

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The wholesale electricity market’s subdued day-ahead market prices, averaging 109.5 euros per MWh in the first eleven days of December, below the November average and well below predictions of levels between 120 and 122 euros per MWh, appear set to result in lower retail electricity prices in January, 2024, when energy crisis measures will be lifted, compared to levels in January this year.

Assuming no dramatic changes take place in day-ahead market prices during the rest of the month, power utility PPC’s basic tariff rate for January is expected to be set at approximately 14 cents per KWh for monthly consumption levels of up to 500 KWh, and 15.4 cents per KWh for consumption over 500 KWh.

Last January, PPC’s respective rates were 15.9 and 22.1 cents per KWh, following considerable subsidy support for all consumers. Universal electricity subsidies, introduced as a support measure during the energy crisis, will be terminated as of January 1.

Though there are no indications of conditions that could prompt a sharp rise in international wholesale electricity prices by the end of the month, a worst-case scenario lifting the wholesale average to 120 euros per MWh would still not suffice to push PPC’s basic retail tariff above 15.7 cents per KWh for monthly consumption up to 500 KWh and 16.7 cents per KWh for monthly consumption over 500 KWh.

Low-income households relying on electricity for heating should expect tariffs of 11 cents per KWh, once a social support package has been factored in.

Besides the favorable wholesale market conditions, the Greek electricity market’s new system, to offer four types of tariffs as of the new year, appears to have already triggered intense competition.

Ministry turns to wholesale market for cost-cutting leeway

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The energy ministry is preparing to scrutinize the wholesale electricity market in search of leeway for cost-cutting measures that could ultimately lead to lower retail electricity prices, ministry officials have told energypress.

This initiative comes following a series of cost-reduction measures prepared for the retail electricity market and set to be introduced.

The ministry intends to conduct a deeper examination of all market factors and tariff charges in an attempt to lower their cost and make them more competitive, energy minister Thodoris Skylakakis noted at a recent conference organized by IENE, the Institute of Energy for Southeast Europe.

The ministry’s effort will place emphasis on reducing Balancing Market costs by limiting quantities that need to be activated.

The Balancing Market is a mechanism ensuring that electricity supply matches demand in real-time. By optimizing the activation of balancing quantities, it is possible to enhance the efficiency of the market and potentially reduce associated costs.

The ministry’s series of retail electricity market cost-cutting measures, already prepared, include stricter rules to counter electricity theft; consumers switching suppliers despite owing overdue amounts at previous suppliers; and imposing limits to the country’s universal electricity supply service, offered, by law, by the top five suppliers as a last-resort solution to black-listed household and business consumers who have been shunned by suppliers over payment failures. The majority of consumers moving on to this service continue to not pay for electricity supply.

Power suppliers project sharp price rises if conditions persist

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Domestic electricity prices will inevitably rise by up to 15 percent as of January – when energy-crisis measures are planned to be lifted, reactivating indexation clauses – if current unfavorable international trends continue, local electricity market officials has projected.

Upward trajectories of natural gas and CO2 emission right prices, as well as the danger of a further rise in already-elevated interest rates, are worrisome factors whose combined effect could push up electricity prices, one official pointed out.

In Greece, wholesale electricity prices have soared by 80 percent over the past three days. On Sunday, wholesale electricity was priced at 93.49 euros per MWh, rose to 127.75 euros per MWh yesterday, before reaching 168.43 euros per MWh today.

Worse still, these wholesale electricity prices have yet to factor in October’s sharp rise in the price of natural gas, up approximately 30 to 35 percent in the first half of the month, to a peak of 56 euros per MWh, as Greece’s wholesale electricity market factors in gas prices from a month earlier.

Natural gas holds the dominant share of Greece’s energy mix, at 43.35 percent, followed by renewables, well below with a 21.37 percent share.

Though still well below last year’s astronomical price levels, natural gas prices of as low as 30 euros per MWh, recorded early this month, now seem to be a thing of the past.

The Israel-Gaza war and threat of a wider conflict in the Middle East – a negative development that has already disrupted operations at Israel’s Tamar gas field, from where gas quantities are delivered to Egypt and processed into LNG for export to Europe – is already impacting prices.

Price levels have been hit even harder by last week’s discovery of damage to the Estonian-Finnish Baltic-connector gas pipeline and telecommunications cable.

As for CO2 emission right prices, they have skyrocketed to levels 500 percent higher than pre-energy crisis levels, reaching approximately 90 euros per ton and, according to analysts, are projected to remain elevated over the next three years.

Levy on gas for power output to be terminated at end of year

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The energy ministry plans to terminate an extraordinary levy that was imposed on natural gas used for electricity generation at the beginning of 2024, along with the termination of other measures implemented in the wholesale and electricity markets during the energy crisis.

A joint ministerial decision issued last spring for subsidy distribution of amounts collected through the extraordinary levy is also set to expire on December 31, 2023.

The joint ministerial decision, which had been signed by then-energy minister Kostas Skrekas and former deputy finance minister Theodoros Skylakakis, now in charge of the country’s energy portfolio, facilitated the collection of funds through the levy on gas used for electricity production in order to contribute to electricity-bill subsidies offered through the Energy Transition Fund.

The formula of the levy on gas used for electricity production, introduced in November, 2022, was revised in May this year and set at 5 percent of the TTF index, replacing a previous fixed charge of 10 euro per MWh.

Though this revision did reduce the cost of the levy imposed on gas used for electricity production, it has continued distorting the domestic wholesale market, market officials have contended.

As a result, the levy has undermined the competitiveness of domestic gas-fueled power plants compared to counterpart units in neighboring countries, thus limiting their operating hours.

The TTF index, a key benchmark for natural gas prices in the European market, ended August at an average of 34.83 euros per MWh for contracts requiring delivery in September.

 

Emergency measures extended by 3 months over price fears

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Unsettling energy price forecasts have prompted the energy ministry to extend the country’s emergency measures by a further three months, meaning they will now remain valid until December 31, to protect consumers against any new upward price trajectory.

The energy ministry reached a decision last Friday to extend the emergency measures – namely a price cap imposed on the wholesale electricity market and a suspension of indexation clauses usually included in electricity bills. Both measures, introduced a year ago, were due to expire on October 1.

The energy ministry wants the financial support of the Energy Transition Fund, in order to provide electricity subsidies to consumers should the energy crisis flare up again.

Such Energy Transition Fund support would not be possible if the existing price cap in the wholesale electricity market were to be lifted, as any price levels over the cap would remain in the market and not be diverted into the Energy Transition Fund to cover electricity subsidy needs.

Since its introduction last July, the price cap on the wholesale electricity market has so far raised over 3.3 billion euros for electricity bill subsidies, the energy ministry pointed out in its announcement of the decision to extend the country’s emergency measures.

Highlighting concerns of possible energy price rises ahead, German electricity forward contracts for the fourth quarter of 2023 and the first quarter of 2024 have been set at 123 and 146 euros per MWh, respectively.

As for France, one of Europe’s other major energy markets, forward contracts for Q3 2023 and Q1 2024 were set at 155 and 218 euros per MWh, respectively.

Retail market shares steady in June, marginal loss at PPC

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Power utility PPC, the Greek retail electricity market’s dominant player, has ended June with a slightly contracted market share, down to 54.99 percent, from 55.68 percent in May, which takes the total market share held by the market’s independent suppliers to 45.01 percent from 44.32 percent, according to a latest Greek energy exchange report.

Market share figures in June remained largely settled compared to a period of greater activity in May, Heron being the prime mover. The independent supplier’s market share leapt to 10.82 percent in May from 7.76 percent in April following its supply agreement reached with Viohalco, one of Greece’s biggest electricity consumers, which became the third industrial producer to move away from PPC.

Viohalco’s retail electricity market share continued its ascent in June, to 11.30 percent, making the company the leading supplier amongst the independent players for a second consecutive month.

Mytilineos is ranked second amongst the independent suppliers with an 8.24 percent market share in June, up from 7.63 percent in May, followed by Elpedison, whose market share slipped to 5.80 percent in June from 6.28 percent in May.

NRG is next with 5.36 percent, up from 4.99 percent; followed by Watt and Volt, whose market share slipped to 4.59 percent from 5.15 percent in May. Next in the rankings, Fysiko Aerio’s market share rose marginally to 3.32 percent from 3.13 percent. Zenith’s market share remained unchanged at 2.32 percent share. Volterra gained slightly, to 2.14 percent from 2.12 percent, and Volton remained steady at 0.81 percent in May and June.

The day-ahead market’s average price for June dropped to 91.49 euros per MWh, a 13 percent reduction compared to May’s price level of 105.59 euros per MWh, the Greek energy exchange report noted.

 

Indexation clause set to remain suspended for 2 extra months

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The energy ministry appears to be receptive to a request made by a number of electricity suppliers for a short extension of emergency measures introduced to the retail electricity market during the early stages of the energy crisis.

Suppliers have called for an extension of emergency measures as an adjustment period for a return to normalized tariffs.

The ministry, energypress sources have informed, seems set to keep indexation clauses in electricity bills suspended for a further two months. This means they would be reactivated on December 1 rather than October 1, as was originally planned.

On the contrary, the ministry does not look like it will extend emergency measures that had been introduced to the wholesale electricity market, unless the energy crisis flares up again and leads to skyrocketing natural gas prices, as was the case for several months last year.

If electricity prices, greatly influenced by natural gas prices, remain steady until the end of September, then a current price cap imposed on the wholesale electricity market’s day-ahead and intraday markets will be terminated as of October 1.

New energy ministry needs to decide on emergency measures

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A decision on whether monthly electricity subsidies, one of the just-reelected government’s energy crisis measures introduced nearly a year ago, will  continue to be offered in July, stands as a top-priority issue for the new energy ministry, once the new government is sworn in.

Theodoros Skylakakis, the ruling center-right New Democracy party’s Alternate Minister of Finance, is being tipped to assume the energy ministry’s top post, in place of Kostas Skrekas, following the ND party’s resounding majority-securing victory in yesterday’s second round of the country’s general election.

The new energy ministry will need to decide on whether to offer consumers state electricity subsidies for July before the end of June.

During his short tenure, the caretaker government’s energy minister Pantelis Kapros succeeded in maintaining the right for a price cap in the wholesale electricity market, through its incorporation into relevant EU regulations. This extension will apply until July, 2024.

The new energy minister, however, will need to take the issue a step further and determine whether a wholesale cap would be useful beyond the end of September, when the current cap expires, in the event of any new spike in prices.

The minister must take into account that excess revenues recovered through the price cap are minimal and provided mostly by the RES sector as long as the crisis remains in decline.

An alternative formula will also need to be considered by the ministry as the current cap is prompting a series of side effects.

Spain, Greece want windfall recovery mechanism continued

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Greece and Spain, part of a group of EU member states seeking to reestablish a common front against any new energy crisis, intend to call for the continuation of a windfall earnings recovery mechanism in the wholesale electricity market when EU energy ministers meet on June 19 to discuss a new structure for the bloc’s energy market.

The European Commission last year adopted a windfall earnings recovery mechanism that was essentially based on a Greek model before it was applied by member states with some variation.

The Spanish government and the country’s energy minister Teresa Ribera want a recovery mechanism included in the European electricity market’s new structure and activated whenever any price crisis breaks out.

The proposal has already received support from Greece, to be represented at next Tuesday’s meeting by the interim government’s energy minister Pantelis Kapros, and a number of other EU member states.

This group of member states is now working on establishing a united stance on the recovery mechanism ahead of next week’s meeting.

It remains to be seen if the alliance will be strong enough to convince Brussels to include the mechanism in its plan for the new market structure.

Some EU member states remain concerned about the possibility of a new energy crisis despite EU gas storage facilities being 60 percent full and a  continual inflow of LNG at European ports.

 

 

DAM price collapse a major concern for RES producers

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The increased occurrence, in Greece, of day-ahead market prices reaching zero levels, or, as has been the case in other European markets, declines into negative territory, has emerged as a new threat for the financial sustainability of RES projects.

Last Sunday, Greece’s day-ahead market reached a zero-level price for eight continual hours, a result of elevated RES production, combined with subdued electricity demand and restricted exports.

Evangelos Mytilineos, president and CEO at the Mytilineos group, made reference to the impact on RES producer earnings of the crash in day-ahead market prices during the corporation’s annual shareholders’ meeting, held yesterday.

The zeroing out of wholesale prices is leading to hefty losses for RES producers with portfolios not possessing operating support contracts, or without green-energy PPAs, but, instead, participating in the market directly, Mytilieos pointed out.

RES sector now main Energy Transition Fund contributor

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The de-escalation of natural gas prices has drastically diminished the level of contributions made by power generation technologies to the Energy Transition Fund, virtually all input now provided by the RES sector, RAAEY, the Regulatory Authority for Waste, Energy and Water, has determined following an assessment of data concerning a related earnings recovery mechanism.

This recovery mechanism has essentially stopped functioning as, in recent months, the average wholesale price in the electricity market has fallen below upper limits set for electricity production technologies.

Since its introduction in the wholesale electricity market last July, the earnings recovery mechanism has so far amassed 3.2 billion euros, of which 2.1 billion euros have been provided by the RES sector.

More recently, over the past five months, a period during which energy prices have been on a downward trajectory, amounts injected into the Energy Transition Fund have shrunk. During this five-month period, a total of 374 million euros have been recovered for the Energy Transition Fund, of which 320 million euros has stemmed from the RES sector.

Power producers and suppliers have, for some time now, been calling for an end to emergency measures applied in the electricity market last summer. They contend that price caps per technology are no longer needed as energy prices have fallen. Maintaining these measures under the current conditions is only leading to market distortions, they support.

EU’s RES installations in ’22 climb to record level

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Wind and solar energy installations reached a record level in the EU last year, adding 57 GW to the continent’s grid, a 16 percent year-on-year rise, according to a European Commission report for the fourth quarter in 2022.

These increased RES installations helped renewable energy capture an increased share of the EU’s energy mix in 2022, rising 39 percent, up from 38 percent in 2021, the Brussels 4Q report showed.

Solar energy output rose by 26 percent in 2022, offering an additional 41 TWh, onshore wind farm generation increased by 10 percent, or 33 TWh, while offshore wind farm production grew by 4 percent, delivering an additional 2 TWh to Europe’s grid.

Solar and wind energy’s combined output in 2022 rose by 14 percent, offering an additional 76 TWh, according to the report.

Hydropower generation fell by 17 percent, or 61 TWh, as a result of dominant drought periods in a number of European countries during 2022.

Nuclear energy generation was also down in the EU last year, falling 17 percent, or 118 TWh, as a result of disruptions and facility maintenance delays in France.

The European Power Benchmark, the continent’s average wholesale baseload electricity price, rose 121 percent in 2022 compared to a year earlier, reaching 230 euros per MWh, the 4Q report showed.

Italy recorded Europe’s highest average wholesale electricity price in 2022, at 304 euros per MWh, followed by Malta, at 294 euros per MWh, Greece, at 279 euros per MWh, and France, at 275 euros per MWh, the European Commission report noted.

Energy crisis measures to be extended until September

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The energy ministry has decided to extend until September expiring emergency energy-crisis measures implemented in the wholesale electricity market, along with the suspension of a price adjustment clause for electricity tariffs.

A ministerial decision enabling extensions of these measures is expected to be signed today, if it has not been signed already, thereby triggering the extensions prior to this Sunday’s legislative election.

Under the current terms, a recovery mechanism for windfall earnings of electricity producers would expire on June 1. But this measure is now being extended for a further three months, until the start of September.

The ongoing suspension of a price adjustment clause concerning electricity tariffs was due to expire on July 1, but, as a result of the ministerial decision, it is also being extended, for two months, until the start of September.

As the energy crisis has continued to soften, these emergency price-absorbing measures have become less crucial and are deducting diminishing amounts from retail electricity prices of households and businesses.

In April, for example, the recovery mechanism retrieved just 46.3 million euros for the Energy Transition Fund, 41.7 million euros of this sum coming from RES units.

Market players call for end to measures in DG Energy meet

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Key local energy market players, meeting yesterday with the European Commission’s Directorate-General for Energy Ditte Juul-Joergensen, in Greece to take part in the ongoing Delphi Economic Forum, have called for emergency energy crisis measures implemented in the wholesale and retail electricity markets to be lifted.

The European Commission official informed that the Directorate-General for Energy plans to publish an impact assessment of temporary energy crisis measures adopted throughout the EU by the end of the month.

Juul-Joergensen asked her meeting’s participating energy market officials to name existing problems and challenges resulting from the energy crisis, discuss how these have been countered, and propose two to three energy policy priorities for Greece and the EU over the next few years.

Besides calling for an end to emergency energy crisis measures implemented in electricity markets, or more specifically, a cap on electricity producer earnings, representatives of ESAI, the Hellenic Association of Independent Power Producers, requested the establishment of a new availability market, either for available capacity or available flexibility capacity.

Representatives of ESPEN, the Greek Energy Suppliers Suppliers Association, who also took part in the meeting, noted that temporary energy subsidies provided in Greece have proved effective in protecting consumers from unprecedented electricity price increases, adding, however, that emergency measures implemented in the wholesale and retail markets have greatly impacted competition.

The pros and cons of measures adopted need to be carefully assessed before any extensions are granted, ESPEN officials noted.

The Greek government has submitted a request to Brussels for an extension of emergency energy market measures until the end of the year. The request is being assessed, Juul-Joergensen informed, without specifying when a decision could be reached.

 

Wholesale electricity cap deadline extension sought

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The energy ministry has taken action aiming to secure extensions for two energy-crisis protection measures, a wholesale electricity cap and freeze of indexation clauses, beyond approaching deadlines.

As part of the effort, the ministry has lodged an application to the European Commission for an extension of a recovery mechanism concerning windfall profits gained by electricity producers in spot markets.

If this application is approved by Brussels, day-ahead and intraday market inflow into the Energy Transition Fund will be maintained. However, this ETF inflow has, in more recent months, been limited by significantly lower wholesale electricity prices. Inflow in March was limited to 56 million euros, just a fraction, for example, of an 878 million-euro amount generated by the windfall profit recovery mechanism for the ETF last August.

Brussels’ approval of the application would pave the way for the suspension of an indexation clause concerning retail tariffs throughout 2023.

The European Commission has already given the green light to Spain and Portugal for extensions, until the end of 2023, of measures taken by the two countries to contain wholesale energy prices. The validity of these measures was due to expire in March.

Under current terms, Greece’s mechanism enabling the recovery of windfall profits gained by electricity producers is set to expire on June 1.

 

Wholesale power price falls 21% in March, reshuffled retailer rankings

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The country’s day-ahead market took a further step away from the energy crisis in March, price levels falling considerably, both year-to-year and compared to the previous month, the Hellenic Energy Exchange’s monthly report has shown.

The Greek wholesale electricity market’s DAM averaged a price level of 122.76 euros per MWh in March, down by 21.4 percent compared to February, when it ended the month with an average of 156.24 euros per MWh.

Local DAM prices peaked at 272.68 euros per MWh in March, 2022, when Russia’s war on Ukraine began to impact wholesale electricity and gas markets throughout Europe, and have since fallen by 55 percent.

Despite this price de-escalation, levels remain well above pre-energy crisis levels. In March, 2021, for instance, the wholesale electricity price in Greece averaged 57.64 euros per MWh, less than half the current level.

As for the country’s energy mix, renewables were ranked the most dominant contributor for yet another month in March, contributing 35 percent. Electricity imports were sizeable in March, covering 23 percent of the energy mix, the equivalent contribution of natural gas. Lignite was ranked fourth with a 13 percent share contribution to the Greek energy mix last month, the Hellenic Energy Exchange report showed.

In the retail electricity market, power utility PPC, the dominant player, experienced a market-share contraction in March to 61.53 percent from 63 percent, a loss gained by the independent suppliers.

Heron established itself as the new market leader among the independent electricity suppliers in March, capturing a 7.53 percent share, up from 7.24 percent. Mytilineos slipped to second place with 7.47 percent, down marginally from 7.49 percent, while Elpedison followed with 6.07 percent, up from 6 percent.

The list of top ten electricity retailers in Greece was completed by NRG, capturing 5.14 percent, up from 4.85 percent; Aerio Attikis, at 3.15 percent from 2.97 percent; Watt & Volt, 2.78% (2.08%); Volterra, 2.09% (1.92%); Zenith, 2.02% (2.14%); and Volton, 0.87% (0.98%).

 

April electricity tariffs to fall by at least 2 cents per KWh

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Electricity supplier tariffs for April, due, by law, to be announced by midnight, will be at least 2 cents per KWh below levels set for March, while a number of independent suppliers may even offer greater reductions of as much as 5 cents per KWh, sources have informed.

Recently introduced law requires the country’s electricity suppliers to announce their retail tariffs for each forthcoming month by the 20th of every preceding month.

The anticipated tariff reductions for April will not result in lower energy costs for users, but the government, which has been providing subsidies – through the Energy Transition Fund – during the energy crisis to maintain residential tariffs at between 15 and 16 cents per KWh, will be able to decrease its outlay on subsidies while keeping tariffs at the desired level.

Lower wholesale electricity prices and a current de-escalation of natural gas prices in international markets are the key reasons behind the anticipated reduction in electricity tariffs.

Intraday market electricity prices during the first half of March were approximately 20 percent less than a month earlier and nearly 55 percent below prices recorded in December.

EC proposes pre-determined RES, nuclear output prices

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Two-way Contracts for Difference (CfDs) for low-carbon emitting power plants that are in any way subject to state support are one of the most central reforms in the European Commission’s proposal for revisions to wholesale electricity markets.

Brussels’ proposal, to be officially presented tomorrow, has already sparked some criticism from market officials, citing ambiguities and lack of ambition.

A draft of the proposal obtained by energypress indicates there will be no fundamental changes to the EU electricity market’s structure.

The proposal includes measures aimed at establishing a mechanism that would absorb short-term fluctuations in wholesale markets from consumer bills, especially through wider use of long-term contracts.

CfDs, two-way Contracts for Difference, would be central to such an initiative as they could become mandatory for all low-carbon electricity generation technologies (RES, nuclear, hydro, geothermal) that benefit from state support.

In practical terms, all new investments belonging to categories requiring long-term contracts would be remunerated for output based on pre-determined rates, guaranteed by member states. Therefore, RES and nuclear facility prices for output would not be traded at energy exchanges as they would be pre-set.

 

Energy price drop reduces likelihood of market revisions

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Reduced energy prices in Europe have dampened the likelihood of any major market revisions, while, given the currently mild conditions, officials are most likely to enter a period of protracted talks before reaching any decisions, developments on the first day, yesterday, of an informal meeting between EU energy ministers in Stockholm have indicated.

The opening day of talks in Sweden, holding the EU’s rotating presidency for the first half of 2023, included a session on “Energy market planning and security of supply – preparing for next winter and beyond” and will today be followed up by talks on “Future energy policy for industrial competitiveness in all Member States”.

Greece, represented by the energy ministry’s secretary-general, Alexandra Sdoukou, is upholding its long-held view in support of radical market changes that would decouple electricity prices from those of natural gas so that final prices reflect actual cost rather than be influenced by gas price fluctuations.

Though natural gas prices have levelled off lately, they remain a constant threat given pricing methods used in wholesale electricity markets.

Greece, France, Spain, Portugal, Italy and Romania support radical market changes that would stop prices being fully shaped by the day-ahead market.

Some EU member states, including Denmark and the Netherlands, are in favor of certain market changes but are steering clear of radical restructuring, while others, among them Belgium and Hungary, propose no changes to the target model.

Germany has proposed deferring talks for any market revisions until 2024.

Electricity retailers expected to keep March prices unchanged

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The country’s retail electricity suppliers are expected to keep their nominal tariffs for March unchanged, or edge them up marginally, on Monday, when their price announcements for next month are due, based on a recent market rule requiring power retailers to announce every forthcoming month’s price levels by the 20th of each preceding month.

According to sources, the country’s electricity suppliers are expected to set March prices at a level of around 0.20 euros per KWh, roughly the level they were at in February.

Even though wholesale electricity prices have fallen this month, some electricity retailers may choose to wait until next month to correct their prices as their February offers undercut levels permitted by prevailing market conditions, sources noted.

As things stand, the retail electricity market appears to be entering a period of price stability. Barring any unforeseen circumstances, price levels in March and April are likely to remain stable, which does not mean the energy crisis has been tamed.

State subsidies for retail electricity are expected to remain low in March, at a level of roughly 0.04 euros per KWh, meaning consumers will be responsible for covering tariffs at levels of 0.16 to 0.17 euros per KWh, the government’s goal.

At such levels, budget support will not be needed to aid the government’s electricity subsidy effort.

 

Revision exempting PPAs from wholesale market cap nearing

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February has so far been a good month for the industrial sector as, following Brussels’ approval of a remuneration mechanism worth 1.36 billion euros as compensation for a carbon tax, the first wave of green-energy power purchase agreements (PPAs), which promise to reduce energy costs for industrial producers, are not far away.

A legislative revision exempting green-energy bilateral agreements from a wholesale market cap is now on the final stretch. This exemption will pave the way for PPAs promising industrial players fixed energy costs over long-term periods.

The legislative revision’s final shape is just about ready, while its ratification in parliament is expected within the next few weeks, energypress sources have informed.

For quite some time now, power utility PPC has been involved in PPA talks with metal manufacturer Viohalco and building materials producer TITAN, the country’s two most energy-intensive industries.

However, these negotiations have been held back by the need for the legislative revision exempting energy producers from the wholesale market price cap for supply of PPA-related electricity quantities to energy-intensive customers.

Indexation clause termination leads to higher nominal prices

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Though consumers have benefited from tolerable electricity tariffs over the last six months, courtesy of subsidies, the termination of indexation clauses in electricity bills has led to inflated nominal charges as tariffs incorporate the risk suppliers need to take when predicting the next month’s wholesale price levels ten days in advance.

New market rules introduced last August require suppliers to set and announce their electricity tariffs for each forthcoming month by the 20th of the preceding month.

The risk faced by suppliers through this new retail electricity market model has driven their nominal tariffs 20 percent higher, on average, compared to the previous system of floating tariffs with indexation clauses, triggered whenever wholesale prices exceeded certain limits.

Had the indexation clauses been maintained, power utility PPC, the dominant market player, would have recorded an average nominal retail price of 40.86 cents per KWh for the past six months, 28 percent below its average of 52.25 cents per KWh under the new system requiring the company to forecast wholesale price levels for each forthcoming month.

Market officials, including ESPEN, the Greek Energy Suppliers Association, had warned the new market model requiring wholesale electricity price forecasting would push up nominal retail prices, especially during times of market volatility, as is the case at present.

 

Recovery mechanism for supplier windfall earnings

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The energy ministry is moving ahead with a windfall earnings recovery mechanism for electricity suppliers in an effort to counter retailer pricing inaccuracies resulting from fluctuating wholesale electricity prices.

Electricity retailers are required to set their prices each month, by the 20th of the preceding month.

Contrary to August, a month for which suppliers set retail electricity prices that underestimated wholesale electricity price levels, supplier prices set for September overestimated wholesale electricity price levels. As a result, suppliers earned excessive amounts last month. .

The new recovery mechanism will be designed to retrieve excess earnings resulting from such retail pricing inaccuracies. According to the plan, it will be applied once a year, every November, to calculate a net annual result for all electricity suppliers.

Energy minister Kostas Skrekas yesterday informed that the new mechanism will be come into effect next month.

Splitting day-ahead market flawed move, expert warns

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An energy ministry proposal for a split of the day-ahead market into two entities is short-sighted, flawed, counter-productive and does not make economic sense, Dr. Alex Papalexopoulos, the architect behind Greece’s target model, has noted in an article for energypress.

As a result of a rush to eliminate CO2 emissions, investment in coal and gas-fired power plants in most regions has plummeted but investments in renewable energy sources have not been enough to fill the gap, Dr. Papalexopoulos noted, adding that strong demand and weak supply fueled the global energy crisis, which began unfolding last autumn.

Gas, coal and oil prices skyrocketed and, in addition to the climate challenge and emerging energy crisis, the war in Ukraine and its impact on natural gas supply has further exacerbated the chaotic situation in global energy markets, Dr. Papalexopoulos pointed out.

Decarbonization policies should be pursued without delay and at a faster pace, but the West needs to adopt an inclusive “all in” technology policy through which concurrent development of all technologies should be pursued, he stressed.

Amid this chaotic energy landscape, the role of wholesale energy markets is now even more crucial, while the temptation to rush big government interventions into the wholesale trade picture without the input of experts is a recipe for disaster, Dr. Papalexopoulos warned.

Splitting wholesale markets makes absolutely no economic sense as this would destroy price signals for demand-side resources and energy efficiency needed to provide system flexibility, Dr. Papalexopoulos explained, adding that such a move would reduce the liquidity of the day-ahead market.

Distorted day-ahead market prices will also create serious inconsistencies in futures markets, Dr. Papalexopoulos noted.

 

Wholesale power price reaches new record level, €466/MWh today

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The wholesale electricity market’s day-ahead market price has reached a new record level of 466 euros per MWh for Monday, up from 426 euros per MWh on Friday.

The maximum price has soared to 686 euros, while the minimum price is at 261 euros, demand close to 202 GWh.

Natural gas represents 43.1 percent of the energy mix, followed by renewables (23%), lignite (13%), hydropower (9.5%) and imports (8%).

As for the country’s neighbors, the wholesale electricity price is at 460 euros in Bulgaria and 527 euros in Italy.

 

New electricity market model launched, PPC role pivotal

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A new model for the country’s electricity market, intended to contain soaring prices brought about by the energy crisis, comes into effect today with the introduction, as a first step, of price caps in the wholesale market, setting remuneration upper limits for electricity producers of all categories.

A ministerial decision expected imminently, possibly today, will set upper limits of 112 euros per MWh for hydropower facilities, 85 euros per MWh for renewables, 253.98 euros per MWh for natural gas-fueled power stations and 206.71 euros per MWh for lignite-fired power stations. These limits will remain valid for the first one-month period, starting today.

Any discrepancy between these upper limits and the average price of the day-ahead market will be transferred to the Energy Transition Fund for subsidy support.

The government hopes its plan will subdue electricity prices to levels of between 20 and 30 percent higher than last summer.

Calculations for a finalized electricity price per KWh, following the deduction of subsidies, will be based on state-controlled power utility PPC’s new price list. The government, guided by the utility’s new price list, will set a single price for all suppliers. The level at which PPC will set the bar remains to be seen. The company’s market dominance will set a standard for the entire market.

Though not yet confirmed, it is believed PPC will announce, by July 10, a nominal price of between 460 and 490 euros per MWh, meaning 46-49 cents per KWh.

PPC and all other players are abandoning a 30 percent discount offered to customers. PPC’s subsidies for hydropower and lignite units will now end up with the State, which is assuming the discount-policy role.

Wholesale price clause suspension not instant relief

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The suspension of a wholesale electricity price clause included in power bills will not bring about instant price relief for consumers as suppliers are continuing to take on new costs that threaten to eliminate any prospective price reductions ahead of increased state subsidy support.

New regulations will require electricity suppliers to inform households and businesses on prices they will charge two months in advance. On July 10, when this pricing rule will be activated, suppliers will need to announce their price per KWh to be charged two months later, on September 10. On August 10, suppliers will need to do the same for their price on October 10, and so on.

Power utility PPC, the retail market’s dominant player, will play an influential role in market price levels. If the utility subdues prices levels, rival players will follow suit in an effort to their maintain market shares or possibly increase them.

Electricity consumers charged fixed tariffs – they represent a small percentage of the market – will, from now on, need to pay a penalty fee should they leave their supplier prior to the expiration of agreement.

Uncertainty will remain prevalent despite the new rules. At this stage, there is no model offering electricity price forecasts two month down the road, which is a problem given the market volatility. A single announcement by Russian president Vladimir Putin, or a European Commission package of sanctions against Russia, is enough to send natural gas prices flying and, as a result, lead to sharp wholesale electricity price increases.

 

RAE report step towards wholesale clause suspension

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RAE, the Regulatory Authority for Energy, has delivered a report on details concerning the planned suspension, for a year, of a wholesale price-related adjustment clause included in electricity bills by suppliers. The RAE report is the first step towards the suspension of the clause, planned as of July 1.

The energy ministry, the recipient of the report, will, as the sector authority, need to make a series of revisions to current electricity supply rules and, by extension, electricity bills, for the period during which wholesale electricity market measures will remain valid.

In practice, the RAE proposal means that the wholesale price-related adjustment clause will be removed from all existing tariffs that are currently not fixed.

Instead, a single charge for household and business category electricity will be introduced as part of the government’s wholesale market measures.

As of July 1, when the wholesale price-related adjustment clause is planned to be suspended, electricity suppliers will be able to offer three different types of tariffs – fixed, flexible with upper and lower limits, as well as flexible without upper and lower limits.

Existing electricity-bill customer agreements with wholesale price adjustment clauses will be converted to offer flexible price agreements, with our without limits, depending on the choice made by customers.

Subsidies will remain a key tool in the government’s effort to subdue energy costs for consumers.