Greek wholesale electricity prices topping European levels

Greek wholesale electricity prices are currently among Europe’s highest, energy exchange data covering the past few days has shown.

On August 11, the System Marginal Price, or wholesale price, in Greece’s day-ahead market reached 52.3 euros per MWh, Europe’s second-highest level following Poland.

On the same day, Germany’s SMP was significantly lower, at 36.3 euros per MWh, the level in Italy was 41.15 euros per MWh, Bulgaria registered 41.17 euros per MWh and Romania 40.82 euros per MWh.

In yesterday’s day-ahead market, Greece’s SMP was 52.3 euros per MWh, once again virtually topping European levels, exceeded only by the Polish price. Elsewhere, Germany registered 35.86 euros per MWh, Italy’s level was 42.96 euros per MWh, Bulgaria registered 39.13 euros per MWh, Romania 38.25 euros per MWh, while Spain and Portugal both registered 39.27 euros per MWh.

Greece’s SMP was once again second-highest, behind Poland, in the day-ahead market for today, registering a level of 42.5 euros per MWh. Germany registered 38.59 euros per MWh, Italy was at 41.34 euros per MWh, the Czech Republic’s level was 39.02 euros per MWh, Bulgaria registered 39.33 euros per MWh, Romania registered 40.14 euros per MWh, while the SMP level in Spain and Portugal was 40.52 euros per MWh.

Wholesale electricity prices down considerably in first half

The System Marginal Price, or wholesale electricity price, has fallen considerably and consistently throughout the first half of the year, driven down by lower natural gas prices and a dramatic contraction of lignite-fired generation, now a costly option.

Official data released by the energy exchange shows lignite’s energy mix dominance is fading and renewable energy sources are gaining ground, while natural gas-fueled generation is consistently at the helm. 

The SMP fell throughout the first-half period, falling 22.45 percent to 59.68 euros per MWh in January, compared to the equivalent month a year earlier; 28.55 percent to 49.23 euros per MWh in February; 43.65 percent to 43.65 euros per MWh in March; 54.31 percent to 28.51 euros per MWh in April; 48 percent to 34.27 euros per MWh in May; and 50.04 percent to 34.04 euros per MWh in June.

The SMP is primarily determined by natural gas-fueled power stations, their price-setting involvement measuring 60 percent in June, the energy exchange data showed.

Also in June, natural gas was responsible for 48.06 percent of overall generation, the RES sector generated 34.74 percent of total production, hydropower contributed 9.77 percent, while lignite-fired generation was limited to 7.42 percent.

Retail power prices among EU’s lowest, wholesale prices high

Retail electricity prices in Greece, during the second half of 2019, were among the lowest in the EU, while the country registered the second biggest drop in household electricity cost, down by 5.8 percent during this period, compared to the EU average of a 1.3 percent increase, according to official Eurostat data.

However, Greece’s wholesale price level, or more specifically, day-ahead market price, is one of the highest in south and southeast Europe.

The cost of electricity for households in Greece averaged 155 euros per MWh in the first half of 2019, compared to the EU average of 216 euros per MWh, the Eurostat data showed. The cost of electricity in Greece, including taxes and surcharges, was ranked 21st among the EU-27.

The cost of electricity for enterprises in Greece was below the EU average, placing Greece in 12th place with an average price of 108 euros per MWh compared to the EU’s 117 euros per MWh in the first half of 2019, the Eurostat data showed.

A recent study conducted by the European Commission’s Directorate-General for Energy showed that Greece’s day-ahead market price averaged 41 euros per MWh in the first half of 2019, well over the average of 34 euros per MWh in south and southeast Europe.

Market officials attributed this discrepancy to Greece possessing just a day-ahead market, forcing all electricity amounts to be channeled through this one market. In other parts of the EU, wholesale electricity markets also feature intra-day, forward, balancing reserve and capacity markets. As a result, electricity producers and importers operating elsewhere also retrieve costs from other markets, which is not possible in Greece.

Low-cost gas driving down wholesale electricity prices

The abundance of low-cost natural gas, enabling electricity producers operating gas-fired power stations to offer extremely competitive prices, is reshaping the wholesale electricity market.

Highlighting this development, the average level of the System Marginal Price, or wholesale electricity price, today, a day of strong demand, is expected to be contained below 40 euros per MWh, at 39.551 €/MWh.

Today’s electricity demand is expected to peak over 8.3 GW with total consumption reaching 168,674 MWh. The wholesale price during the peak hours will not exceed 38.850 €/MWh.

The market conditions for today are not an isolated incident but part of a wider trend that has developed during the week.

Yesterday’s average SMP was just 35.961 €/MWh despite a peak of 8,105 MW and total electricity consumption of 162,777 MWh.

On Wednesday, when demand peaked at 8,072 MW and overall consumption totaled 162,492 MWh, the SMP was 39.243 €/MWh.

The SMP exceeded the 40 €/MWh level just once this week, on Tuesday, reaching 40.689 €/MWh, a day whose peak was below 8000 MW.

The week started with Monday’s SMP average at 39.277 €/MWh, a lower peak of 7,649 MW, and total consumption for the day of 152,716 MWh.

SMP prices have been falling to even lower levels during weekends. Last Sunday, the average SMP was just 30.629 €/MWh with the peak down to 6,370 MW and the day’s consumption at 134,563 MWh.

The grid relied on just one lignite-fired power station, Agios Dimitris III, last Sunday. Demand was primarily covered by gas-fired generation, as well as renewable energy sources, hydropower units and electricity imports.

Grid passes summer’s first test, demand at 7,600 MW today

The country’s grid is set to face increased pressure as temperatures rise throughout the country and are forecast to reach as high as 39 degrees Celsius today. Electricity demand is expected to rise to 7,600 MW.

The country’s grid coped well during yesterday’s first major test for the summer. Electricity demand reached 7,300 MW amid temperatures marginally lower than the levels forecast for today.

The power utility PPC was forced to use its hydropower facilities. Water deposit levels have been extremely low this year. Further usage of the hydropower facilities will be needed today but PPC is expected to act cautiously as it awaits tougher days ahead.

PPC anticipates it may need to use 50 to 60 percent of its 3,171-MW total hydropower capacity in July.

The heat-related rise in electricity demand has coincided with increased wholesale electricity prices over the past week. They rose sharply from 28.62 euros per MWh on June 28 to 44.52 euros per MWh on Tuesday and 45.01 euros per MWh yesterday.

This first summer test for the grid has once again highlighted the extremely high costs entailed in operating lignite-fired power stations. Their generation costs are now between 90 and 100 euros per MWh.

During this heatwave, PPC, currently moving to withdraw most of its lignite units over the next three years, has opted to minimize its reliance on lignite, preferring instead to cover its generation needs through its natural gas units and hydropower stations.

 

 

 

One PPC rate for consumption above, below 2,000 kWh

Power utility PPC will continue offering a single tariff rate for consumption levels above and below 2,000 kWh per four-month billing period once the utility’s lockdown-related support package expires on June 26, sources have informed.

During lockdown, PPC offered an 8 percent tariff discount for consumption levels of more than 2,000 kWh per four-month billion period. This offer’s resulting tariff rate, 0.11058 euros per kWh, is being kept.

Prior to the lockdown package’s introduction, lasting three months, PPC customers were charge 0.11936 euros per kWh for consumption over 2,000 kWh. The lower rate also applies for consumption levels below 2,000 kWh.

PPC’s new pricing policy, still undisclosed, is also expected to offer benefits to customers paying their electricity bills on time.

The power utility’s independent rivals are offering like-minded packages. For at least one month now, independent suppliers have offered considerable tariff discounts at par with lower nighttime rates. These offers are valid for new customers as long as payment punctuality is maintained.

Energy costs – natural gas and wholesale electricity prices – fell considerably during the lockdown period, providing suppliers leeway for lower-price offers to customers.

According to the Greek energy exchange, the System Marginal Price (wholesale electricity price) ended May at 34.27 euros per MWh, down from 65.91 euros per MWh in the equivalent month a year earlier, a 48 percent year-on-year drop.

In May, natural gas-fueled power stations were responsible for 50.1 percent of Greece’s overall electricity generation, and RES facilities contributed 38.54 percent.

PPC’s high-cost lignite-fired power stations, once the country’s dominant generating source, contributed just 3.46 percent in May, an 87 percent year-on-year drop.

 

Natural gas, electricity imports most influential for Greek SMP levels

Natural gas and electricity imports are playing an increasingly important role in shaping System Marginal Prices, or wholesale prices, while the influence of more traditional energy sources is waning, latest monthly data provided by the Greek energy exchange has shown.

Natural gas’s influence on SMP levels grew between January and May this year, compared to other fuels and electricity imports and exports, the data showed.

Throughout the five-month period, natural gas-fueled power stations consistently ranked first in number of hours used for SMP levels, peaking in May with 491 hours. Electricity imports consistently followed as a the second most influential factor for all five months.

Lignite-fired power stations, previously a key factor for SMP levels, are now limited to a marginal role, their lowest contribution, one hour in an entire month, recorded in April, the January-to-May figures showed.

Greece’s international grid interconnections are playing an increasingly influential role in shaping the country’s SMP as well as covering energy demand, the data showed.

Power grid operator IPTO has increased capacities for electricity imports via Greece’s grid interconnections in the north.

PPC rivals awaiting utility’s next pricing move for response

Power utility PPC’s rivals are awaiting the utility’s next pricing-policy move before responding with offers of their own. A specially priced three-month package offered by PPC, the electricity market’s dominant player, to its customers as lockdown relief expires on June 26.

Lower wholesale electricity prices over the past couple of months as well as more efficient facility management by PPC, drastically reducing production from loss-incurring lignite-fired power stations, are two factors expected to enable the utility to keep offering appealing packages to customers, sector experts have told energypress.

An initiative taken by PPC during lockdown to equate usually higher tariff rates for consumption of more than 2,000 kWh with rates for consumption below the aforementioned limit could be an indicator of things to come from the power utility.

The market’s major independent suppliers are believed to have studied all possible scenarios in preparation for their respective responses.

PPC chief executive Giorgos Stassis has made clear the power utility’s intentions to regain part of its lost market share. The utility is expected to target specific customer profiles. In addition, bonus services may also be included in packages.

 

 

 

 

Household electricity cost down 4.4% in April, SMP clause off

Household electricity prices fell by 4.4 percent in April, a drop attributed to power utility PPC’s slightly reduced market share in the low-voltage market as well as an unprecedented fall of wholesale electricity prices levels, from 43 to 28 euros per MWh.

The plunge of wholesale electricity prices, determined by the System Marginal Price (SMP), prompted independent suppliers to deactivate an electricity-bill clause triggered when wholesale electricity prices exceed certain levels.

The reduced cost of electricity for households in April was reflected by the electricity price index, calculated by Greek electricity market price-comparison site allazorevma.gr.

Household electricity offers by independent suppliers ranged from 68.80 to 80.30 euros per MWh in April, the average being 75.52 euros per MWh, a 5 percent reduction.

Wholesale electricity prices rising, up to €47.30/MWh today

Wholesale electricity prices, determined by the System Marginal Price, are rebounding following a significant drop over the past few weeks.

The rise is being fueled by an anticipated increase in demand. A sidelined 600-MW line linking Greece with Bulgaria, depriving the system of electricity imports via this route, as well as a disruption in operations at an Elpedison power plant in Thessaloniki are two other contributing factors.

In addition, the Revythoussa LNG terminal just off Athens is not under any pressure, a factor subduing gas-fired unit bids and subsequently lowering the SMP.

Based on grid orders placed for today, the SMP has climbed to 47.30 euros per MWh, up from a level of around 30 euros per MWh five days earlier and 14.20 euros per MWh on May 1. Bidding by units has gradually risen since early May.

Demand, today, for domestic consumption and exports is estimated to reach 127 GWh, 40 percent of which is planned to be covered by natural gas-fired power stations, 30 percent by RES and hydropower plants, 23 percent by electricity imports, and 7 percent by lignite-fired power stations.

The SMP level will be determined by gas-fired power stations for 22 hours today, lignite-based generation will shape the price for one hour and imports for the remaining hour.

Mid-voltage battle toughens, reflecting lower wholesale cost

Competition between electricity suppliers has intensified in the mid-voltage category, where lower prices currently reflect a sharp drop in the cost of wholesale electricity and, subsequently, wider profit margins available to suppliers.

Competition has yet to intensify in the household and business markets despite discount packages offered by most electricity suppliers, including the power utility PPC, from the beginning of the coronavirus crisis.

This lack of competition has been attributed to a cautious stance adopted by independent suppliers as they wait to see how much profit margin leeway will be shed by a drop in electricity demand and electricity bill payment delays.

It is a different picture in the mid-voltage category, where suppliers are bombarding both existing and prospective customers with price offers.

Suppliers are spreading the risk of wholesale price fluctuations by diversifying their price offers. They are keeping a close watch on the System Marginal Price, determining wholesale prices.

The course of the SMP in coming days remains unclear. Signs of a possible rebound in wholesale electricity prices have emerged as the SMP is now clearly higher than levels registered last week.

Wholesale electricity prices have mainly fallen as a result of increased contributions to the grid by natural gas-fueled power stations, supplied low-cost LNG, as well as RES units.

 

Grid entry adjustment for PPC telethermal-linked lignite units

The energy ministry is set to satisfy a power utility PPC request prioritizing the grid entry of its lignite-based production for telethermal support without factoring in this input to calculations determining the system marginal price, or wholesale price.

This requested procedure already applies for PPC’s compulsory hydropower input and RES units.

Under the current system, state-controlled PPC is incurring losses when entering into the grid lignite-fired units for telethermal needs in the west Macedonia and Megalopoli regions. More specifically, the utility is being forced to not operate its gas-fueled power stations, despite their lower operating costs, prompted by the large reduction in gas prices.

PPC’s LNG purchases, as a result, are not being utilized.

The ministry is now preparing a legislative act for the adjustment. It could apply for a limited amount of time to cover remaining telethermal needs in the post-winter season.

Independent producers have reacted against the plan. Some producers appear determined to take the issue to the EU competition authority, noting priority rule exemptions can only be made for RES, Combined Cooling, Heat and Power (CCHP) and hydropower units.

 

Natural gas, LNG, CO2 right, wholesale power prices down

Besides lower oil prices in international markets over the past few days as a result of the coronavirus spread and price war between Saudi Arabia and Russia, energy commodities across the board are under great pressure, which has led to price reductions for natural gas, CO2 emission rights and electricity.

Lower oil and gas prices are offering relief for the economy and enterprises. However, there are two sides to this story, positive and negative. On the one hand, the price drops are creating opportunities for suppliers and consumers, while, on the other, natural gas futures indicate a decline until the end of the third quarter this year, meaning markets anticipate a downward trajectory in Chinese consumption and no sign of an economic rebound until at least September.

Prices at the Dutch trading platform TTF, a key index for LNG, slid to a three-month low on Monday, registering 8.627 dollars per MMBTU, before edging up to 8.993 dollars per MMBTU yesterday. This index has fallen 39.4 percent since the end of December’s three-month peak of 14.2 dollars per MMBTU.

Besides shaping LNG prices, according to new pricing formulas adopted at Gazprom, the TTF also greatly influences the rise of Russian pipeline gas.

CO2 emission right prices have fallen by 13.6 percent between December and early February, from 26.74 euros per ton to 23.11 euros per ton. A slight rise has been registered this week, to 23.25 euros per ton on Monday and 24.07 euros per ton on Tuesday. Lower prices on this front are favorable for lignite-fired power stations as well as energy-intensive industries.

Prices have also fallen in Greece’s wholesale electricity market. In the day-ahead market, the System Marginal Price (SMP) fell from 49.2 euros per MWh on Friday to 41.42 euros per MWh on Monday before edging up to 43.12 euros per MWh yesterday. A rise to 50.44 euros per MWh is expected today.

 

Limit on target model electricity contracts, consultation soon

An upper limit is expected to be imposed on the amount of electricity production companies will be entitled to negotiate for target model contracts, according to a decision by authorities to be forwarded for public consultation within the next few days.

The implementation of an upper limit restricting the amount of electricity a company is permitted to negotiate in the futures market is foreseen in the target model plan. The remainder of electricity will need to be channeled into the day-ahead market to ensure that necessary amounts are available.

For months now, officials have speculated about the level of the upper limit. A clearer picture is expected within the next few days, when terms are forwarded for consultation.

Power utility PPC and independent companies have offered differing views. PPC has insisted on an elevated maximum level, an opinion shared by industrial figures, including EVIKEN, the Association of Industrial Energy Consumers, who believe low-level limits would not enable them to establish contracts with PPC for electricity amounts fully covering their needs.

Authority wants to end virtually all power bill price clauses

RAE, the Regulatory Authority for Energy, has prepared a plan aiming to abolish all price-related clauses included in electricity bills except for one linked with fluctuations of the System Marginal Price (SMP), or the wholesale electricity price, sources have informed.

The overall objective of this plan, which could be forwarded for public consultation within the next few days, is to offer full transparency to consumers on procedures determining their electricity bill costs.

An existing clause enabling electricity suppliers to revise prices in accordance with CO2 emission cost levels would need to be abolished if the plan is implemented. Power utility PPC has already triggered this clause in reaction to rising CO2-related costs.

The existing SMP clause, currently triggered by all suppliers except for PPC, will be subject to strict rules, enabling consumers to know the cost of their bills with simplicity and precision by  factoring the SMP price into a formula for an immediate result, according to the RAE plan.

The complexity of the current billing system makes it difficult for consumers to make safe comparisons of supplier offers.

Independent power suppliers set to raise low-voltage prices

After raising electricity prices in the mid-voltage category, independent suppliers are now set to do likewise for low-voltage electricity, supplied to households and businesses. A first step by one or more suppliers is expected to  swiftly trigger action from the rest.

Virtually all independent suppliers have activated a clause used to cover elevated System Marginal Prices, or wholesale prices. The power utility PPC has already increased its mid-voltage electricity prices.

Higher tariffs at PPC, still the dominant player, have prompted many consumers to switch supplier in recent times, leading to considerable market share losses for the utility.

Though independent suppliers are currently gaining clients from the PPC outflow, they are also keeping a close watch on each other.

Independent suppliers must keep providing incentives to lure PPC customers, and, at the same time, lessen their risks of financial loss.

Lower-cost electricity acquired by independent suppliers at NOME auctions will soon run out. The government recently decided to abolish this procedure, loss-incurring for PPC. Independent suppliers should start being exposed to the wholesale market’s higher prices in January and will be fully exposed by June.

By this stage, the performance of independent suppliers will greatly depend on wholesale electricity market conditions.

If LNG prices remain subdued, a favorable prospect for the SMP, then independent suppliers, despite their increased exposure to the wholesale market’s conditions, will not be forced into loss-incurring deals but, instead, will be in a position to keep competing against PPC for market share gains.

State-controlled PPC has adopted into its business plan the prospect of a market share reduction to levels of around 60 percent or less by June, 2020. Subsequently, independent suppliers will control 40 percent of the retail electricity market, meaning competition between them, rather than against PPC, stands to intensify.

Any agreements reached during negotiations between the government and the European Commission in January will also impact the market.

Higher-cost lignite sidelining gas units a Greek market paradox

Greece’s wholesale electricity market is still adjusting as, despite sharp rises in CO2 emission right costs, lignite continues to play a leading market role. Contributions from lower-cost gas-fueled generators remain subdued.

A recent drop in temperatures around the country has led to wholesale electricity market demand peaks of more than 7,500 MW since the beginning of December, up from previous demand peaks ranging from 6,000 to 6,100 MW.

According to the energy exchange’s day-ahead market data, virtually all of the power utility’s coal generators are contributing to distribution without operating at full capacity. Instead, they are running at minimum levels. This is reducing the need for gas-fueled generators.

Yesterday, PPC’s Agios Dimitrios III, IV and V, Kardia III and IV, Amynteo I and Meliti all operated at minimum levels, while the contribution of gas-fueled generators was kept to a minimum. Sidelined units included Heron, ENTHES, Aliveri and Komotini, while Protergia and Korinthos Power units contributed only during peak demand hours.

The picture for today remains unchanged with the System Marginal Price (SMP), representing the wholesale price, at 63 euros per MWh, as was the case yesterday. Before the recent increase in demand, SMP levels ranged between 50 and 55 euros per MWh.

Power grid operator IPTO, offering an explanation for the ongoing dominance of coal over gas, despite the rising demand in the wholesale market, noted that turning off and withdrawing a lignite-fired power station – except for telethermal units – costs more than leaving a gas-fired power station sidelined without distribution input.

For PPC, the objective is to maintain the SMP at low levels as the utility is required to purchase energy from the pool given its big market share in supply and smaller share in production.

Greek wholesale electricity prices Europe’s highest

Wholesale electricity prices in Greece, averaging 65.5 euros per MWh, are Europe’s highest, well over the EU average of 43.3 eurpos per MWh, according to European Commission figures for the second quarter of 2019. This data highlights the lack of competition in Greece’s electricity market.

Malta’s wholesale electricity of 63.9 euros per MWh ranks the country second, while Poland is a distant third with an average price of 56.4 euros per MW/h in the second quarter, the data showed.

Price levels in Greece are well above those of neighboring Italy and Bulgaria, according to the data. In Italy, wholesale electricity averaged 51 euros per MWh while Bulgaria’s average was 41.2 euros per MWh.

Prices in central Europe were well below. Germany averaged 35.7 euros per MWh, Belgium 34.5 euros per MWh, the Netherlands 39.1 euros per MWh, France 35.3 euros per MWh, the Czech Republic 36.6 euros per MWh and Austria 36.9 euros per MWh.

Greece registered the second-biggest wholesale electricity price rise compared to a year earlier, the increase being 17 percent. Only Bulgaria surpassed this leap with a 22 percent increase. The EU average fell by one percent year-on-year.

These European Commission figures highlight the need for a swift and correct implementation of the target model in Greece in order to eliminate market distortions maintaining the country’s wholesale electricity market as Europe’s most expensive.

Ministry wants post-NOME measures for supplier protection

The energy ministry has asked RAE, the Regulatory Authority for Energy, for a detailed assessment on how the planned termination of NOME auctions would impact Greece’s electricity market as well as a proposal for normalization measures during the transition period leading to the target model, if the authority deems measures will be necessary.

Energy ministry officials already appear convinced measures will be needed for the pre-target model transition period as a means of covering the electricity needs of independent suppliers, protecting smaller non-vertically integrated players against possible collapse, and avoiding sharp energy cost increases for industry, especially high-level consumers in the mid-voltage category.

Legislative measures obligating power utility PPC into offering short-term contracts to suppliers, possibly even major-scale electricity consumers, for prices slightly below the wholesale price level, will probably be needed as an imminent arrival of an organized futures market at the energy exchange does not appear feasible.

At a recent meeting with deputy energy minister Gerassimos Thomas, retail electricity market representatives requested an adequate NOME replacement tool – if the auctions are abolished – that would enable hedging at competitive prices until the target model’s implementation.

Independent electricity suppliers fear a cancellation of this year’s final NOME auction in October, as is wanted by the energy ministry, would expose them to high prices that could affect their sustainability.

Sharp rise in wholesale, CO2 right costs behind tariff hikes

Increased System Marginal Prices (SMP), or wholesale electricity prices, and CO2 emission right costs are key factors behind the power utility PPC’s substantially higher operating costs, negative impact on the corporation’s financial results, and the resulting need to increase electricity tariffs, the utility’s new chief executive Giorgos Stassis is expected to underline at a board meeting tomorrow.

PPC’s pricing strategy and policy is shaped by a series of factors concerning the overall production and trade cost estimates of the vertically integrated company, the chief executive’s address is expected to stress.

The wholesale electricity price average for 2019 is estimated at 67.15 euros per MWh, up from 60.33 euros per MWh in 2018 and 54.70 euros per MWh in 2017, according to official industry data. A further rise, to 70.33 euros per MWh, is expected in 2020.

The CO2 emission right cost average for 2019 is projected to be 25.70 euros per MWh, a sharp rise from 14.68 euros per MWh in 2018 and 5.84 euros per MWh in 2017, according to the industry data. This cost is expected to escalate further, to 30.25 euros per MWh, in 2020.

PPC’s ‘uncertain future’ may require additional measures

A main power utility PPC annual report and certified auditor EY have both warned of an uncertain future for the utility that may require additional protective measures.

Reduced sales, as well as elevated losses and debt have increased the sustainability risk concerning PPC’s business activities, EY noted.

The auditor did not go as far as to warn of a bankruptcy risk at PPC but noted that various measures already taken will ensure the company’s future for the next twelve months. Additional measures, however, could be needed if CO2 emission right costs continue to rise, the auditor stressed.

The absence of cost-recovery mechanisms combined with a continued cash flow reduction and short-term liabilities that exceed short-term demands has left the company exposed to the possibility of sharp price increases, internationally, for CO2 emission right costs and wholesale electricity, PPC’s board noted in its annual report. Additional measures will be needed if such developments take place, the report added.

CO2 emission right costs yesterday struck a new high of 27.38 euros per ton.

 

Electricity suppliers pressured by rising wholesale prices

Price levels at yesterday’s NOME auction exceeded all expectations to reach a record high of 58.65 euros per MWh, creating stifling, if not impossible, market conditions for suppliers, as market sources have pointed out.

Current NOME prices, plus existing and prospective surcharges, have now reached levels higher than the retail electricity price for certain consumer groups, such as the mid-voltage category.

Besides independent electricity suppliers, who have depended on NOME auctions for access to lower-cost wholesale electricity purchases, the main power utility PPC’s administration has admitted pricing policy adjustments are necessary for sustainability.

Set to announce its 2018 results next week, state-controlled PPC is incurring losses and will keep facing major financial issues if its tariffs remain subdued, mainly due to government orders ahead of elections.

As for independent electricity suppliers, they are being forced to survive on extremely tight profit margins. Leftover electricity quantities bought at previous auctions for lower prices are still helpful.  But once these amounts are gone, the more recent higher-priced electricity purchases will come into play, making operations less sustainable. The introduction of a CAT surcharge, expected by early 2020, will further increase the burden.

CO2 emission right costs have also been on a sharp upward trajectory, reaching 27.56 euros per ton yesterday.

The week’s average System Marginal Price (SMP), or official wholesale electricity price, is just over 68 euros per MWh, close to the 69 euros per MWh average level in February, when demand peaked as a result of the cold winter weather. Prices are expected to rise as the summer approaches.

 

 

 

Record high NOME auction price seen this Wednesday

A 355 MWh/h electricity amount to be offered to independent electricity suppliers at this Wednesday’s NOME auction appears unlikely to fully cover current market needs, which can be expected to intensify bidding and drive prices higher.

This is an unfavorable prospect for independent players. The System Marginal Price (SMP), constituting the official wholesale price, is currently unsustainably high, and electricity prices abroad are also elevated, which has made NOME auctions the only remaining option for reasonably priced wholesale electricity. But the prevailing conditions are set to end the promise offered at these auctions.

Making the short-term market prospects worse for independent electricity suppliers, the current NOME auction starting price of 36.5 euros per MWh will be scrapped following Wednesday’s auction. A much higher starting price of about 55 euros per MWh, based on certain calculations, is expected to be set for the session to follow in June.

This is another key factor seen driving NOME auction prices higher on Wednesday. The record level of 54.74 euros per MWh could be broken.

CO2 emission right, LNG spot market and wholesale prices all rising

A series of energy exchange price rises over the past few days has increased electricity production costs, a development expected to impact wholesale prices both in Greece and abroad.

A rise in natural gas price rises, particularly LNG spot markets, ranks as the sector’s biggest price-related development. This rise was prompted by price hikes at the British and Dutch gas hubs following reduced inflow from the Norwegian pipeline.

Higher European prices have also led to LNG price increases in Asia, up by 10 cents to 4.5 dollars per MMBTU for orders to be delivered in May.

Even so, it should be noted that LNG prices have remained below the 5-dollar level, an all-time low.

Many companies and production terminals have begun maintenance work at facilities now that the winter season has passed.

Besides natural gas prices, CO2 emission rights have once again hit an upward trajectory. Last week, price levels exceeded the 24-euro per ton level, reaching 24.53 euros per ton on Friday, but eased slightly yesterday to 24.25 euros per ton. Industrial enterprises are stocking up on CO2 emission rights, fearing a further escalation in prices.

CO2 emission right prices last dropped to below 20 euros per ton on February 26 before exceeding this benchmark throughout March, the month’s peak being 23.18 euros per ton.

These developments are expected to impact wholesale electricity prices. The average System Marginal Price (SMP) in Greece was 69 euros per MWh in February and remained at elevated levels in March. The SMP level reached 71.6 euros per MWh last Friday but has eased to less than 70 euros over the past couple of days, according to day-ahead market data.

 

PPC punctuality discount cut promises mild relief for rivals

A main power utility PPC decision reducing its punctuality discount for customers paying electricity bills on time to 10 percent from 15 percent comes into effect today, promising independent electricity suppliers some relief.

The development has increased the expectations of independent electricity suppliers for market share and revenue gains as PPC’s discount policy revision, effectively a 5 percent price increase, will make rivals more competitive.

Many independent electricity suppliers were recently forced to trigger a tariff-increasing clause due to higher wholesale prices. This has emerged as a major disincentive for consumers considering moves away from PPC, still the dominant supplier.

A plan by authorities to soon return a RES special account surplus for 2018 to suppliers also represents good news for PPC’s rivals. This is made even more favorable for independent suppliers by the abolishment, from the beginning of the year, of a supplier surcharge they have been contributing to the RES account.

These developments promise some relief for independent electricity suppliers but market problems remain, as was highlighted by officials at last week’s Power and Gas Forum in Athens.

Key concerns include PPC’s lack of a cost-based pricing policy; the distorted implementation of NOME auctions and higher starting prices expected at these as of June; as well as the power utility’s insistence to continue operating two ageing power stations, Amynteo and Kardia, despite the exhaustion of time limits.

Higher wholesale electricity prices appear likely to keep rising in the immediate future as a result of elevated CO2 emission right costs and fuel prices.

 

RAE pushing ahead with fixed tariff option plan, consumers irate

RAE, the Regulatory Authority for Energy, is preparing to deliver, for public consultation, a plan whose implementation will require the country’s retail electricity suppliers to offer consumers fixed tariffs as an alternative to existing flexible tariffs adjusted by a clause permitting revisions during market cost shifts.

A growing number of consumers have filed complaints in recent times in reaction to higher-than-expected tariffs resulting from decisions by electricity suppliers to trigger price-adjusting clauses as a means of covering elevated wholesale electricity prices, including higher CO2 emisson right costs.

The tariff-revising clause has caused confusion among consumers, caught unaware as to when and under what conditions suppliers may trigger it. Consumers have also complained about the clause being hidden in fine print and for not being notified.

Until recently, independent suppliers had opted to absorb rising wholesale electricity costs for many months before finally triggering the clause at the risk of losing customers.

RAE’s plan proposes the inclusion of fixed tariffs as a customer choice for a one-year period, presumably at relatively higher prices.