Green Chaos: Greek Electricity System Faces Collapse
Reuters: The Greek electricity system came close to collapse in June when market operator LAGHE was overwhelmed by subsidies it pays to green power producers as part of efforts to bolster solar energy.
Greece, aiming to stave off a fresh energy crisis, plans to support its main electricity market operator through a temporary tax on renewable power producers and by extending an emergency loan, a senior official said on Friday.
Deputy energy minister Asimakis Papageorgiou told Reuters that Greece’s international lenders had dropped their opposition to the loan plan in view of the country’s critical energy situation.
The electricity system came close to collapse in June when market operator LAGHE was overwhelmed by subsidies it pays to green power producers as part of efforts to bolster solar energy.
LAGHE was already suffering in Greece’s debt crisis as bills were left unpaid by consumers protesting against the collection of an unpopular property tax via the bills of PPC, the country’s sole electricity retailer.
Papageorgiou also said that Greece would unveil by the end of 2012 plans for a market-based retail electricity network.
He said PPC, due to be privatized under a massive government sell-off plan to ease Greece’s budget crisis, will probably spin off some power stations and distribution lines to create one or two rival companies. PPC itself would find a strategic partner.
The state-run Loans and Consignments Fund, a key lifeline for the country’s energy system, will give LAGHE a one-year loan of 140 million euros ($180 million), Papageorgiou said.
“The troika (EU, IMF and ECB) approved it because they realized that these actions are necessary for the market to survive and return to a normal state,” he said.
Earlier this year the fund extended 100 million euros to state-owned natural gas supplier DEPA and another 110 million to dominant state-controlled utility PPC (DEHr.AT).
The temporary charge on renewable energy producers was a further measure to plug LAGHE’s deficit of more than 300 million euros.
“I’d call it a solidarity levy,” Papageorgiou said. “It will be in force over a very specific period… and set at such a level that will allow them to operate normally with satisfactory returns.”
Greece has slashed the guaranteed feed-in prices it pays to some solar operators and is no longer approving permits for their installation.
OVERHAULING POWER SYSTEM
In Greece, generating companies feed electricity into a mandatory wholesale pool, boosting independent operators which provide about a third of the country’s power.
But the system has not brought competition to the retail sector, where PPC has almost a 100 percent share of a market in which it often operates at a loss because its regulated tariffs are set at a low level for residential customers.
“The current model didn’t work. It can’t be fixed because it is too distorted. So we’re building a new one,” Papageorgiou said.