The government is establishing a permanent mechanism to deal with emergency situations in the internal electricity market, in addition to subsidies to deal with price increases expected for August.
As stated by the Minister of Environment and Energy Skylakakis and Deputy Minister A.Sdoukou during the presentation of containment measures of prices in August, the existence of extreme price differences in neighbouring markets attests to the imperfections of the internal market that cannot be resolved by the current Directive 1711/2024.
This directive allows governments to impose roof in electricity prices, but with very strict conditions which are:
-The existence of very high average prices on wholesale electricity markets, multiples of at least two and a half times the average price of the previous five years, and amounting to at least EUR 180/MWh, which are expected to continue for at least six months for the calculation of the average price over the previous five years does not take into account periods during which an electricity price crisis was declared at regional or Union level;
–70% increase in retail electricity prices expected to continue for at least three months.
Frequent seizures
How the electricity market looks like it will present all the time more often regional or short-term crises such as the current one, the government is adopting a response formula that will be activated when necessary, under less stringent conditions, with the approval of the European Commission, and will allow the imposition of a maximum limit on wholesale electricity sales in a manner analogous to that applied during the period of the energy crisis. The relevant regulations will be established with the law for the integration of Directive 171 1/2024 into national legislation, which is expected to be done immediately and in any case before the deadline of January 2025.
The government argues that the main causes of the rise in wholesale prices, not only in Greece but in the wider region of south-eastern Europe, were increased demand due to prolonged high temperatures and the inadequacy of cross-border interconnections to transfer power from countries where costs remain lower.
According to the data presented, wholesale prices on the Greek Stock Exchange spiked at certain times last week more than 750 euros per megawatt hour with an increased share (over 40%) of natural gas in the electricity generation mix, at a time when the international price of natural gas fluctuates at 33 euros per megawatt hour. In comparison, during the energy crisis, the wholesale price did not exceed 700 euros per megawatt hour, when the price of natural gas exceeded 160 euros.
The average wholesale price in Greece during the first half of July was 131 eurosi.e. significantly higher than in the first half of the year, when it fluctuated between €60 and €100. The aim of the government intervention is to prevent wholesale price increases from being passed on to retail tariffs in August, by introducing a subsidy whose value will depend on the level at which suppliers’ tariffs are set next month. The funding will come from the application of a tax on natural gas used in energy production, the amount of which will be determined in the coming days.
Subsidies will be granted to families with floating tariffs (“green” and “yellow”) for consumption in August up to 500 kilowatt-hours.
Source: RES-MPE
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