News from HAEE | December 2018 | Highlights of 2018


  • A step forward for Greek renewables auctions with lower prices and increased interest
  • Natural gas infrastructure projects moving forward in SE Europe and Greece
  • EU achieves deal on capacity mechanisms with an exemption for Poland
  • Constant rise for the price of CO2 allowances
  • Beijing and Brussels set the stage for the PV market
  • DEPA concludes deal to receive American LNG from Cheniere
  • Greek islands electrical interconnections going forward with a question mark about Crete
  • Renewables and infrastructure are a crucial part of the new energy plan


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News from HAEE | December 2018 | Highlights of 2018

A step forward for Greek renewables auctions with lower prices and increased interest

The Greek authorities interpret the progress made during the latest renewables auction, both in terms of prices and participation, as an important step and a vote of confidence for the sector.

During the latest auction conducted in December, the lowest price for wind energy was 55 Euros/MWh and the highest was 65 Euros. 14 projects with a total of 281.65 MW competed for a capacity of 160.94 MW.

Comparatively, during the previous auction in July, prices ranged from 68.18 to 71.93 Euros/MWh and average price was 69.53437 Euros/MWh.

In the segment of large photovoltaic plants, the auction was aborted due to a lack of adequate competition and will be repeated in January.

In small PV of under 1 MW, the price during December's auction ranged from 64 to 69 Euros per MWh versus 75.8 to 80 Euros in July. 180 projects with 102.19 MW competed for 61.95 MW.

The basic reasons for the price reduction in the tenders were on one hand, the lower technological cost and on the other hand, the lower connection cost and of course, increased investor interest.

Given the emphasis to renewables as part of the new Greek energy plan, all of the above constitute very positive developments in order for the country to achieve its goals for 2020 and 2030.

Natural gas infrastructure projects moving forward in SE Europe and Greece

Significant developments took place this year when it comes to the various natural gas pipelines and infrastructure projects in the region of SE Europe and Eastern Mediterranean, a fact that is expected to advance the role of Greece as an energy hub.

The IGB pipeline is now one step before construction, since certain delays concerning appeals in Bulgaria were overcome and during the first trimester of 2019 all relative tenders are expected to be concluded. The pipeline received an exemption from third party access, while a cooperation deal was signed with the TAP pipeline.

Moreover, the project for the floating LNG terminal in Alexandroupolis made progress, since ten companies participated in the tender for the FSRU and the construction process. At the same time, the results for the first phase of the market test are expected soon and already the deal was signed for DEPA's participation as a shareholder.

Another project where progress is being made is the extension of the Turkish Stream to the West. Greece and Bulgaria are competing to provide a route over their territory for the carrying of Russian gas. During autumn 2018, Bulgarian authorities said that Gazprom chose their own route for the extension of Turkish Stream. However, Russian president, Vladimir Putin, assured the Greek PM, Alexis Tsipras, during their meeting, that the Greek route remains on the table and is seriously considered.

Without a doubt, the most important project completed in 2018 was the upgrade of the Revythousa LNG terminal through the addition of a third storage tank. The tank has a capacity of 95,000 c.m. while the gasification system of the terminal was also upgraded. Their completion enhances energy security for Greece and the region, while it creates new opportunities in the internal market and provides greater flexibility.

Last but not least, the East Med pipeline continues to enjoy political support by all interested parties (Greece, Cyprus, Israel) and now the results of new drillings in Cyprus are awaited eagerly, as well as similar developments in the Egyptian and Israeli markets in order to evaluate the pipeline's viability and decide further steps.

EU achieves deal on capacity mechanisms with an exemption for Poland

European Union legislators reached an agreement in December over a proposed reform of electricity market rules that includes a 2025 cut-off date for coal subsidies, and a special clause for Poland.

The rule of 550g of emissions per kilowatt hour is the cornerstone of the agreement, and effectively rules out state aid for coal plants. The standard will start applying for all new power stations as soon as the regulation enters into force, and as of 1 July 2025 for existing generation facilities.

Poland finally agreed to the 550 rule applying to existing coal power plants as of 1 July 2025. In return, Poland won a grandfathering clause that will protect contracts awarded to energy generators under the country’s capacity scheme. The clause will apply to all contracts approved before 31 December 2019.

Commissionaire Cañete's proposal to exempt poorer EU countries from the CO2 limit, based on their lower average GDP was rejected by the Austrian EU Presidency and the European Parliament.

Constant rise for the price of CO2 allowances

The price of CO2 emissions became especially crucial for the viability of power plants during 2018.

CO2 futures started the year at 7.8 Euros per tone and their price has now surpassed 20 Euros. The basic reason for the increase is the significant change expected at the beginning of 2019, when millions of licenses will be forwarded to the market stability reserve which will be set up in order for the ETS to achieve its goal.

Power producers already react to this development by trying to protect themselves, while speculators also played an important role during the second half of 2018 in setting the price.

Beijing and Brussels set the stage for the PV market

China's decision in May to curtail annual installations to "just" 40 GW was of crucial importance for the global PV market.

The repercussions of that move were immediately felt in the markets, since it redefined production levels in Chinese factories and adjusted prices.

Beijing decided that the country has already achieved its previous goal for 105 GW of installations by 2020 and wants to avoid an overheating of the internal market. Nonetheless, the new target for 2020 is set at 210 GW, a very telling number for the country's abilities and scale.

Another important decision was made in Brussels this year, as the European Commission finally removed anti-dumping measures on Chinese PV imports. European authorities essentially accepted that these rules didi more harm than provided benefits to the sector.

DEPA concludes deal to receive American LNG from Cheniere

Greek DEPA signed a deal to buy its first American LNG cargo from Cheniere Energy.

Cheniere is the first company that built an LNG plant in the Eastern US coast with an aim of exporting quantities around the globe. The deal with DEPA foresees the supply of a spot LNG cargo of 150,000 c.m. or 1,000,000 MWh, which will be unloaded in Greece in December 29, 2018.

Said cargo will be the first to be loaded in Cheniere's new LNG plant in Corpus Christi, Texas. The cargo will be unloaded in DESFA's new, third LNG tank in the Revythousa terminal. Furthermore, the cargo will be delivered by Tsakos Navigation's brand new LNG tanker, "Maria Energy".

Greek islands electrical interconnections going forward with a question mark about Crete

A series of tenders was concluded in 2018 about the interconnection of the Greek islands to the country's main grid. In this way, the islands' energy isolation reaches an end after many years of using diesel for their needs.

More specifically, in the case of the Cyclades interconnection's second phase, the companies Greek Cables-Fulgor and Prysmian-NARI were selected for the three subcontracts which amount to 70 million Euros investments.

In July, the first phase of the Cyclades interconnection was completed through the inauguration of the infrastructure in Mykonos. According to estimations, the interconnection will save around 80 million Euros annually.

In another important milestone, the deal with Nexans for the third phase of the Cyclades interconnection was signed in December. It foresees the construction of the second underwater cable of 150 kV between Lavrio and Syros, with a length of 108 km.

Last but not least, discussions continue between ADMIE, Euroasia Interconnector and Brussels about the interconnection of Crete with Attica. ADMIE announced that a rise of shareholder capital is essential for the SPV "Ariadne Interconnection", which has been set up in order to carry out the project. Euroasia answered that it moves forward with the same move and it is capable of realizing the project. Now, all eyes are set on Brussels, since the EU needs to select a primary party for this important project.

Renewables and infrastructure are a crucial part of the new energy plan

The new Greek energy plan was published in November by the energy ministry and it caused many comments by the market.

Its conclusion is an obligation for the Greek government and the final version is now under preparation in order to be submitted to European authorities after the end of the public consultation, in which many companies, associations and citizens took place.

According to the new plan, a total of 32.7 billion Euros of investment is required by 2030 in order to bring renewables up to 32% of final energy consumption and 55% of power production. Also, a drop of 63% in greenhouse gas emissions is required as well as energy saving of 32%.

By 2030, lignite plants will contribute 9317 (17%) instead of 14800 (30.6%) in 2016, a very telling fact about the transition Greece needs to realize.

More specifically, the 32.7 billion Euro investments are allocated as follows:

1. Renewables, power production 8.5 billion

2. Power infrastructure 5.5 billion

3. New conventional power plants 1.9 billion

4. Digitization and development of the distribution network 3.3 billion

5. International gas pipelines 2.2 billion

6. Gas network and gas storage 2 billion

7. Research and innovation 300 million

8. Energy efficiency 9 billion.

The energy plan also calls for power storage capacity of 700 MW by 2030 for an investment of 500 million Euros.


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