UNICEN Position and Proposals for Electricity Market
- The model should ensure or - at least - allow industrial consumers access to competitive domestic energy sources (lignite, hydro).
- Change the institutional framework in order to allow bilateral contracts and flexible functioning of the daily market.
- Streamline regulated charges on the basis of transparent cost data and best international practices.
- Overcharging industrial energy consumption with various regulated charges (Grid, Social, RES and Excise duties) is anti-growth and creates a significant competitive disadvantage, especially for export oriented industries.
- The aggressive promotion of the most costly forms of renewable energy through excessive subsidies creates an ever increasing cost. There is an immediate need to revise the model.
Liberalization of the electricity market
Even though the reorganization of the electricity market in Greece towards the EU Target Model is an objective of priority, there is currently no specific action plan for the implementation of a specific scheme.
It should be noted that the authorities have not yet committed to a specific action plan to be implemented within a clearly defined timeframe. According to a joint study of the Energy Regulator, the System Operator and market Operator published in September 2014, the implementation process of the mechanisms for the intraday and balancing market requires at least 30 months.
Therefore, the timeline objective (end of 2017) for the creation of the intraday and balancing market, referred to in law 4336/2015, seems unrealistic.
In addition, transitional measures are being introduced with the approval of the European Commission (see B.2 AM/MW/mkl D*2015/103478/20.10.2015 referring with subj. SA.38968 Transitory Electricity flexibility remuneration mechanism) without prior impact assessment study. Measures such as eliminating all uplift charges on electricity exports are not compatible with the existing market model (mandatory pool), because in the absence of intraday market it confers undue costs to the entire wholesale market and to all end users.
It should be noted that the Government has not yet implemented - in accordance with the European Commission Guidelines- aid measures in the form of reductions of costs for energy intensive industries and/or other measures to enhance competitiveness such as bypassing the mandatory pool for electricity imports for own-consumption.
In our view, the liberalization and restructuring of the Greek electricity market towards the EU Target Model should include simultaneous implementation of the aforementioned measures, within a specific time framework:
- Bilateral contracts with suppliers that can take into account the specific characteristics of the customer and his consumption profile
- A quota of the cross-border capacity to be allocated to industry for direct imports, outside the mandatory pool
- Creation of forward, intraday and balancing markets
- Abolition of the mandatory pool market
- Increase of Greece’s international interconnections, especially with Italy. Access to Central Europe’s developed markets is a guarantee for a smooth operation of the Greek market.
Flexibility Remuneration Mechanism:
The Flexibility Remuneration Mechanism should be implemented for a predefined very limited timeframe, upon an impact assessment plan. The transitional mechanism should be market-based (price should be defined through auctions and not be regulated) and should not result in guaranteed returns for electricity generators, thus representing another source of competition distortion in the market.