RES producers are regulated by a separate RES Law 3468/2006 and its bylaws such as the RES Licensing Regulation (OJ B 2373/25.10.2011). The RES support system was amended in August 2016 by the law no. 4414/2016 (OJ A'149/09.08.2016) which introduced the Feed in Premium (FiP) scheme. Subsequently several Ministerial and RAE decisions were issued for the implementation of the new support system.
Some significant bylaws regulating the electricity sector, are: the Transmission System Code (OJ Β 103/31.1.2012) and a series of rulebooks in execution thereof, the Distribution Network Code (OJ B’ 78/20.01.2017), the Non-Interconnected Islands Network Code (OJ Β 304/11.2.2014), the Electricity Market Operation Code (OJ B 103/31.01.2012) and its rulebooks, the Electricity Supply Code (OJ B 832/9.4.2013), and the Licensing Regulation for Electricity Supply and Trade (OJ Β 2940/5.11.2012), while as regards production an older Licensing Regulation of 2000 still applies (OJ B 1498/8.12.2000). In order to support the Energy Exchange, some of these codes are currently being amended while several new are expected to be enacted in 2018.
The law 4513/2018 (OJ A 9/23.01.2018) on Energy Communities and other provisions, whose aim is to promote social economy, solidarity and innovation in energy, energy sustainability, and to increase energy efficiency in final consumption on local and regional level and use of RES and High Efficiency Cogeneration of Heat and Power (HECHP) was introduced in 2018. According to this law, energy communities should be established as civil law partnership and should engage in one of the activities such as: production, storage, self-consumption, sale of electricity or heating/cooling from RES or HECHP within the district of the seat of such energy community; management of raw material for production of electricity or heating/cooling from biomass, bio-waste, or biofuel; procurement for the members of energy communities of appliances and installations with increased energy efficiency as well as electric vehicles, vehicles using natural gas, biofuel or liquefied gas; distribution of electricity or supply of electricity and natural gas within the district of the seat of such energy community. Members of energy communities may be individuals, public and private law legal entities and/or local authorities of the seat of an energy community or its plant. The law, regulates, that energy communities are, as a rule, non-profit organizations, but will be entitled to distribute profit if they have at least 15 members, or 10 in case of islands with population below 3.100 inhabitants, 50% of which are individuals. Energy communities are entitled to receive certain financial incentives regulated by this law while some additional may be regulated by the respective decisions of the Ministry of Environment and Energy or RAE.
Who performs regulation and monitoring of the electricity sector?
Monitoring of the energy sector is performed by the Ministry of Environment and Energy, and the Regulatory Energy Agency (RAE).
The Ministry is in charge of creation of energy policy and adoption of specific acts, as provided in the Energy Framework Law, including issuing of the licensing regulations for production, supply and trade with electricity and of the Electricity Supply Code. The National Energy and Climate Committee was established in December 2017 (OJ no. 204/28.12.2017) as an advisory body to the Ministry of Environment and Energy with the aim to facilitate the preparation of a national action plan regarding energy and climate, as well as other policy level initiatives.
RAE is an independent energy regulator, established in 1999 authorised to control, regulate and supervise the operations of all sectors of the energy market. Its competences include the issuing of energy operation licences, certification of the Transmission System Operator, approving and issuing of the codes and approving methodologies for the access tariffs to the networks, approving and requesting amendments, if necessary, of a ten-year energy development plan (TYNDP). It also acts as a dispute settlement authority with respect to complaints against the network operators and/or owners and against any energy companies for infringement of their obligations regulated by the energy legislation and their energy licences. RAE has established a separate body with arbitral resolution competence, to which disputes between parties participating in the energy market may be voluntarily referred. It cooperates closely with the Hellenic Competition Commission, which has also issued some resolutions on energy disputes with a focus on competition law aspects.
How is the electricity sector in Greece structured?
All segments (production, trade and supply) of the Greek electricity sector are still dominated by the vertically integrated Public Power Corporation (PPC). It holds assets in lignite mines, power generation (including thermal plants, hydroelectric power plants and RES installations), transmission and distribution. In April 2018 the PPC’s share in the generation markets (RES producers not included) remained at 77,52% while its shares in the supply market was reduced from 97.9% in 2014 to 82%. The Third MoU (Memorandum of Understanding between Greece and its International Lenders provided in the law 4336/2015) obliges the Government to reduce PPC’s market share in production/import and in supply down to no more than 50% by 2020.
B. PRODUCTION
What is the licensing procedure for electricity production?
RAE grants licenses for electricity production a) for conventional production in accordance with the Energy Framework Law and the Licensing Regulation and b) for RES/ CHP production in accordance with the RES Law and the RES Licensing Regulation. Certain categories, such as conventional units with a capacity not exceeding 20 kW, are exempted from the obligation to obtain a production licence. Electricity production licence does not release the licensee from the obligation to acquire all other licences and permits provided by law (e.g. environmental, construction, installation and operation licences), while hydroelectric power plants are also subject to general water management obligations. A quicker licensing procedure (so called Fast Track procedure), is regulated by the law 3894/2010 on Accelerating the Implementation of Strategic Investments and Increasing Transparency in Licensing Procedures, as amended.
The Energy Framework Law provides that license for conventional production for micro isolated systems (as the case is for the vast majority of Greece’s Non Interconnected Islands (NII)) is until 1 January 2021 granted to PPC, based on a derogation granted in accordance with Directive 2009/72/EC, while for NII not falling under this category, licenses are issued to any interested person, unless capacity adequacy issues arise in which case licenses are granted by means of a tendering procedure or directly to PPC.
How are electricity producers remunerated?
The wind and solar RES producers, which are connected to the grid or which started operations after 1 January 2016, will be remunerated by the FiP in the amounts determined in auctions and will participate in the Mandatory Pool together with all other electricity producers and importers. Other RES producers continue to be remunerated by the Feed-in-Tariff (FiT). There have been two pilot projects for the FiP operational support for solar producers in 206/2017, while the first competitive procedure was launched in June/July 2018 for the wind and solar producers, in which the FiP for 300 MW for wind and 300 MW for solar will be determined.
Certain electricity producers also receive remuneration as part of the capacity mechanism named the Flexibility Service. The purpose of this capacity mechanism is to secure sufficient capacity during the reform of the electricity market, by providing compensation to certain production units in order to be available to quickly increase their production at the request of the operator. A temporary Flexibility Mechanism was after approval of the European Commission and replacing the previous one, introduced in 2017. It had duration from 1 May 2016 until 1 May 2017 and should have been replaced by a permanent one. The one proposed by Greece to replace the 2017 one is still pending the approval of the European Commission.
Are there any ongoing reforms in the electricity production sector?
In April 2018 the Law 4533/2018 (OJ A'75/27.04.2018) on structural measures for the access to lignite and further liberalisation of the wholesale electricity market and other provisions was enacted, regulating the procedure for the divestment of approximately 40% of PPC’s lignite-fired production units and lignite exploitation rights. The aim of the law is to increase competition in the Greek electricity market. In 2008 the European Commission found Greece in breach of the rules of fair competition, particularly Articles 102 and 106 of the Treaty on the Functioning of the European Union (COMP/38.700). Following numerous procedures, including appeals before both the General Court and the European Court of Justice, various negotiations and market tests, the Greek government proposed measures to rectify the breach and in January 2018 the Commission accepted the proposal, which have further been implemented in this law. The selected PPC’s assets (including Meliti 1 and Meleti 2 in Florina, and Megalopolis 3 and 4 in Peloponnesus, and the respective lignite reserves) have been transferred to two PPC’s newly formed subsidiaries and will be further sold to the investors selected in the international tender procedure. In addition, the new owner of Melitis will conclude with the Greek state a concession agreement for exploration and exploitation of lignite in the Vevi Region of Florina which has not been granted to PPC and is still owned by the state. The sale is planned to be finalised in 2018.
Greece has recently had several initiatives regarding development of RES production on the NII in order to reduce production from conventional plants, increase production from RES, and increase sustainability of the islands. Among other, the law no. 4495/2017 (OJ A’ 167/03.11.2017) in article 151 regulates organization of competitive procedures for construction and operation for two pilot projects of production of electricity from RES in combination with storing excess energy in battery storage system, smart metering and demand side management. The projects will receive Operational support for the produced electricity. In June 2017, similar project on other Greek island - Tilos (smart microgrid and hybrid power station project) won the Energy Islands Award and the Citizens’ Award in the EU Sustainable Energy Competition, organised as part of the EU Sustainable Energy Week. Further, the law, in article 152, provides for issuing of a ministerial decision regulating hybrid and RES power stations and district heating in one more Greek Island – Agios Efstratios.
C. NETWORKS
What is the current status of the network unbundling in Greece?
In 2016/2017, IPTO, formerly PPC 100% subsidiary, was unbundled from the PPC through the sale of 24% to a strategic investor and 25% to a state owned SPV and spin-up of 51% of its shares to the PPC’s shareholders. The operator of the distribution network, which is owned by PPC, and the network and market operator for the NII, HEDNO, is a PPC’s 100% subsidiary.
Are there any network development plans?
The TYNDP prepared by IPTO for the period 2017-2026 includes the construction of the grid connecting Cyclades and Crete with the Mainland grid and the gradual expansion of the grid in Peloponnesus. When approving the Plan RAE required, among other, that IPTO investigates the possibility to speed up constructions of the underwater grid connecting Crete with the Mainland of Greece whose capacity should be approximately 700-1.000 MW. In regard to this project, RAE and IPTO discussed particularly: splitting the project into two grids (one connecting Attica with Crete and one connecting Peloponnesus with Crete), capacity of each grid and the deadline for their construction. Recently RAE issued decision 256/2018 (OJ B’ 1570/08.05.2018) approving the new TYNDP for the period 2018-2027 and instructing IPTO to make an attempt in the TYNDP 2019-2018 so that the construction is finalized 2021, not in 2023.
D. WHOLESALE MARKET
Which are main features of the current wholesale market model?
The current Greek wholesale market model is organised on the basis of a regulated compulsory offer of electricity to a day-ahead market leading to a centrally organised sale of the electricity at a uniform price (System Marginal Price), which reflects the offer of the most expensive unit dispatched. Participants to the Mandatory Pool are, on the one hand, producers and importers of electricity and, on the other hand, suppliers and exporters of electricity. A distinct mechanism exists for the settlement of imbalances, i.e. deviations from day-ahead schedules, but there is no balancing market. Clearing of the day-ahead market is performed by the market operator LAGIE, while IPTO is responsible for conducting the real time dispatch, clearing the imbalances as well as settling payments for ancillary services and several other charges. Since October 2015 LAGIE is also competent to provide the Registered Reporting Mechanism (RRM) services to the energy market participants of Greece, according to Regulation (EU) No 1227/2011 (REMIT).
In 2016, the Law 4389/2016 introduced quarterly auctions whereby PPC sells the electricity term products with physical delivery to the alternative electricity suppliers (so called NOME auctions after the French acronym for such models). The purpose of this initiative is to reduce PPC’s retail market share in the Interconnected System from approximately 90% in 2016 to less than 50% in 2020. The annual quantity of PPC’s generated electricity to be sold at the auctions is gradually being increased by certain percentage (from 8% in 2016 to 13% in 2019). These auctions enable alternative suppliers to have access to cheaper electricity acquired beyond the Mandatory Pool, thus increasing competition with PPC. The first auction was held on 25 October 2016. There have been 4 auctions in 2017 with the total electricity sold in the annual forward contracts was 1153 MWh/h and the total of 4 auctions will be held in 2018 (two already performed in January and April 2018) with the total electricity to be sold in the annual forward contracts to be 1126 MWh/h.
Interruptability service, a temporary measure with the aim to support security of electricity supply, was introduced in December 2015 (Ministerial Decision no 184898/2015) issued upon receiving the prior approval of the European Commission (case SA.38711), with duration until 15 October 2017. The mechanism compensates certain energy extensive consumers located in the Greek Interconnected System for their availability to reduce their electricity consumption (Load Shedding) for a given period of time upon receiving of the Power Reduction Order from IPTO. The eligible energy intensive consumers and their remuneration price are determined in auctions organised by IPTO. In December 2017, the Interruptibility Services was extended until 31 December 2019 (OJ B’ 4546/2017) and in 2018 such extension was approved by the European Commission (SA.48780).
Is a reform of the wholesale market under way?
The current market model of the Compulsory Pool has been chosen for the immature Greek electricity market for a transitional period so as to enhance competition between PPC and new market entrants. It shall be gradually (starting from 2019) replaced by new markets, to be organised within the Greek Energy Exchange.
The Energy Exchange will operate: the day-ahead and the intraday electricity markets; the energy financial market; the natural gas market, including the natural gas balancing market; and the environment market. With regard to electricity, there will be four organised markets under the Interconnected System: the day-ahead market; the intraday market; the balancing market; and the energy financial market. Transactions involving energy financial means may be concluded bilaterally. The day-ahead market will operate sales with a physical delivery, including products purchased on the energy financial means market and other wholesale products with physical delivery. Producers will be obliged to offer products for the total of their capacity not already bound by energy financial means or other wholesale products involving a physical delivery. The balancing market will be operated by the IPTO in compliance with the balancing code. IPTO will be the regulated operator of the balancing markets for the balancing of electricity and capacity and should also: secure compliance at borders with Regulation 714/2009 and the Regulation on Wholesale Energy Markets Integrity and Transparency.
A new company, Hellenic Energy Exchange SA, has been established in compliance with this law, and while the main sections of LAGIE are currently being split-off to contribute to this company, which will undertake the role of market operator in Greece. After beginning the operations of the Hellenic Energy Exchange, LAGIE will become the operator of renewable energy sources and guarantees of origin and will continue to handle the day-ahead market sector's losses which are created before the registration of the division in the Company Register.
The Hellenic Energy Exchange will further establish a new company for clearing transactions performed on the day-ahead and intraday markets (the Clearing Company). Apart from the operation license to be obtained from RAE, it should also obtain from the Securities Commission a licence to operate the energy financial market. In order to perform these operations, the Hellenic Energy Exchange should conclude the respective agreements with ATHEXGroup and its subsidiary company for clearing of transactions of the Athens Stock Exchange or any other company relating to ATHEXGroup.
The supervisory authority over the Hellenic Energy Exchange shall be divided between RAE and the Securities Commission. The Bank of Greece will regulate the conditions for the participation of credit institutions in the energy markets.
E. RETAIL MARKET
What is the licensing procedure for electricity supply?
RAE issues licences for electricity supply in accordance with the Licensing Regulation for Electricity Supply and Trade. The main requirements from the applicants, with some variations in case of companies already providing such services in an EU member state, include: minimum capital of €600.000, sufficient and appropriate organisational structure and staff qualifications, and sufficient financial means. Similar are the requirements for the issuance of electricity trading licences, except that the minimum capital requirement is €60.000.
How is the electricity supply regulated?
The Electricity Supply Code introduces a very formal procedure for the conclusion of supply agreements; it also regulates the necessary content of the supply agreements, the switching of supplier, the protection of the customer’s rights, the content of the electricity bills and their issuing, the price negotiation with bigger customers etc. Additional protection is provided to Small and Vulnerable Customers. The 2016 (OJ B’1463/24.05.2016), amendments to the Code limit the right of consumers to terminate their supply agreements in case they have outstanding debts towards their current supplier.
Are there any expected or undergoing changes in the retail sector?
All segments (production, trade and supply) of the Greek electricity sector are still dominated by the PPC. The first significant changes in the retail market were introduced with the NOME auctions and the liberalisation of the NII, but have still not changed the general picture of one dominant supplier. Further and significant changes are expected in the forthcoming period due to changes in the production and wholesale sector described above.
