Providing competitively price delectrical energy to energy – intensive industries
Industry’s contribution to both GDP and employment growth is crucial if the economy is to recover and transition to a more balanced growth model. Basing this on strong and competitive industry should be made an immediate and ongoing national priority.
UNICEN’s goals are:
In this regard, Greece should immediately follow the example of other European countries and formulate a coherent and effective industrial policy to highlight the role of industry and attract productive value-added investment, making full use of the possibilities of establishing state aid mechanisms in regards to the country’s industry, based on the currentEuropean framework and removing the distortions that place Greek companies at a disadvantage versus their European competitors.
Creating competitiveness in the electrical energy market
Over the last five years, Greek wholesale electricity market prices have remained stable and up to 40% higher than the average prices in European markets, which shows that the Greek market continues to be flooded with regulatory barriers, interventions and subsidies which have increasedelectricity costs and created unequal competitiveness conditions.
In this context, alongside restructuring the Greek electricity market and its coupling with ourneighbouring electricity markets, additional measures should be taken to create competitiveness conditions in the market as well asprevent oligopolistic behaviour.
To this end, more specifically, the following need to be implemented:
- Establishing a timetable abolishing the restriction placed on vertical supply companies on the quantities of energy that can be negotiated in the new market structure through futures products and bilateral contracts with physical deliveries.
- Revising the terms of RES auctions, so that they are on a par withboth market prices and the respective auction prices in European countries, especially for PV. In this way, on the one hand, the Special RES Account is kept in balancewhile on the other hand, RES producers are motivated to participate in the market through PPAs, which could be an alternative source of supply for the industry.
- Gradually increasing the auctioned capacity of the country’s northern interconnections to 70% of the transmission capacity according to article 16 par. 8 of Regulation 2019/943 regarding the internal electrical power market.
- Increasing the country’s international connections, so that the coupling of the Greek electricity market becomes feasible and fully operational in practice.
Ensuring equal demand-response participation in all electrical energy markets, either individually or through aggregators, in order to compete on fair terms with other market participants.
Streamlining regulated charges based on European Commission Guidelines
It is a common finding that European governments are taking systematic measures to curb industrial energy costs by intervening in the area of energy regulatory charges, resulting in European energy-intensive industries paying up to 40% less in final energy costsversusenergy costs borne by Greek industry.
In this way, EU Member Statesstrengthen the competitiveness of their industries, which are otherwise overburdened by electricity costs and dynamically support the investments made by developing industries.
This policy is implemented by all EU Member Statesin line with the European Commission guidelines on state aid related to energy and the environment (EEAG 2014).
There is therefore a clear need to take measures to ensurethat the country’s energy-intensive industries which are exposed to international competition can become more competitive, with immediate priority being given to the following:
- Notifying the European Commission of a mechanism reducing PSO charges, according to the EEAG.
- Exemption of eligible industries from all additional charges in the supply (indicatively, the variable cost weighted average or thermal power stations, Power Availability Certificates), according to the European Commission’s Guidelines.
- Reduction of the System Usage Charge, in stages, for annual consumptions higher than 30-35 GWH, in combination with consumption profiles (> 65-70%).
- Equation of the VAT of the MT industries with annual consumption > 13GWh with the VAT of the IT industries.
- Exemption from the Special Consumption Tax for electricity used in mineral processing (cement, glass), in the context ofharmonizing Greek legislation with the European Directive 2003/96/EC.
PWC study conducted on behalf of the Belgian Energy Regulatory Authority CREG: “A European comparison of electricity and gas prices for large industrial consumers”.
Establishing an effective mechanism offsetting CO2
According to the new guidelines concerning offsetting the indirect costs of CO2 emissions (2021-2030) subject to consultation by the European Commission, the offsetting is set at 75%, with the additional possibility for Member States being introduced, for the first time, to further reduce the burden of the indirect costs of CO2 emissions, in relation to the gross value added of companies belonging to sectors for which the burden, even after the application of a 75% compensation, remains disproportionately high.
With the publication of the new guidelines in the coming months, the Ministry should immediately notify the European Commission of the new mechanism for offsetting the indirect costs of CO2 emissions, by instituting the possibility of further reducing the burden in relation togross added values.
At the same time, the Ministry should immediately issue a ministerial decision, which will ensure that up to 20% of the proceeds from CO2 emissions allowances auctions will be used to finance the mechanism for offsetting the indirect costs of CO2 emissions.
In conclusion, if the goal for our country is to rehabilitate a productive economy and attract productive value-added investments, enabling industry to access competitively priced energy should be made a top priority.
In this regard, there is a clear need to take measures to ensure the competitiveness of the country’s major industries which are exposed to international competition, with interventions in all the individual parameters that shape final energy costs, with an emphasis on the following:
- Restructuring of the Greek electricity market in combination with additional measures which will aim at creating effective competition conditions in the market and encouraging demand participation.
- A rationalization of regulated charges under the Commission’s State Aid Guidelines in the fields of energy and the environment as well as the approved practices followed by European countries.
- Institutionalizing an effective mechanism for compensating for CO2 costs.