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28/09/2016

Greek energy market hindered by lack of competition

Energy

Greek energy market hindered by lack of competition

Electricity power plant. Kozani, Greece.

[Lisa Murray/Flickr]

Greece’s geographical position could help it become an EU energy hub. But state monopolies are holding the country back, according to a Commission report. EurActiv Greece reports.

Published on Wednesday (18 November), the first EU report on the State of the Energy Union, said that Athens is heavily dependent on gas imports from Russia.

In 2013, Greece imported 66% of its gas from Russia (85% in 2005), well above the EU average (39%).

Gas and electricity hub

The report says that the Greek network has a central position in South East Europe, with existing and future connections to Italy, Bulgaria, Turkey and the Western Balkans.

“Therefore, Greece could play the role of an electricity hub in the region,” the document says.

The document continues, saying that Greece has the potential to become a regional gas hub as “it is located at the EU entry point of the Southern Gas Corridor, has access to LNG and gas supplies from Russia”.

Athens is currently involved in the TAP project.

The Western-backed Trans Adriatic Pipeline (TAP) is part of the Southern Gas Corridor, and will carry Azeri gas to European markets.

Seen as Europe’s alternative to its reliance on Russia, the 870-kilometre pipeline will connect to the Trans-Anatolian Pipeline (TANAP) near the Turkish-Greek border at Kipoi, and cross Greece and Albania, and the Adriatic, before reaching southern Italy.

>>Read: Putin and Gabriel team up on Nord Stream 2 against Brussels

Greece-Bulgaria interconnector (IGB) is another gas pipeline which will allow Bulgaria to receive Azeri gas from the Trans-Adriatic Pipeline section of the Southern Gas Corridor.

The pipeline aims to transport gas from Azerbaijan’s Shah Deniz II field in the Caspian Sea, one of the world’s largest gas fields, by the end of the decade. TAP is part of the Southern Gas Corridor.

But diplomatic sources recently informed EurActiv that Baku may lose interest in major energy projects, such as the TAP pipeline, as relations between Azerbaijan and the EU have reached a deadlock following an EU Parliament vote.

>>Read: Future uncertain for TAP and DESFA, following European Parliament vote

State monopolies

The European Commission stresses that the concentration of power generation and gas markets are high.

Natural gas importer and distributor (DEPA), and electricity company Public Power Corporation S.A. (PPC) are both controlled by the Greek government.

“There is no true level playing field with the incumbent (PPC) still having a dominant position,” the report reads.

The liberalization of the Greek electricity market started in 2001, but has had no results to date.

The Greek state controls 51% of the country’s electricity company Public Power Corporation S.A. (PPC), which enjoys the status of monopoly on the Greek electricity market.

In an interview with EurActiv Greece, Commissioner for Competition Margrethe Vestager said that affected generation and wholesale supply, and also the supply that reaches end consumers.

“This is bad news for consumers and for the economy. Clearly, there is a need to strengthen competition,” she noted.

>>Read: Vestager: Gazprom is partitioning markets in Central and Eastern Europe

“Whereas the Greek government has now committed to lowering the incumbent’s market share with 25% in the short-run and to 50% by 2020, effective measures fostering competition on electricity retail and generation remain to be implemented,” the energy report noted.

Having a total monopoly in generation, transmission and distribution, the tariffs are being unilaterally formulated by PPC for all kinds of customers, including the cash-strapped Greek industrial sector and energy-intensive companies, which have no alternatives for electricity supply.

>>Read: Greek industry puts hope in EU to ease the grip of national monopolies

According to the report, energy prices paid by industrial customers, both electricity and gas are significantly above EU average.

“Gas prices, in particular, are among the highest, also above the OECD average and those of most EU trading partners,” it said.

Regarding the gas, the reports noted that in 2012, 90% was imported by DEPA, the incumbent, and 10% by two other market players.

“However, a sharp decline was observed in 2013 in the percentage share of gas imports by the other parties. Greece’s gas retail markets are still legal monopolies and customers, with few exceptions, are not eligible.”

Background

Greece’s electricity company Public Power Corporation S.A. (PPC), in which the state holds 51% of the shares, enjoys the status of a monopoly on the Greek electricity market.

Greece is a net power importer, and imported 3.3% of its electricity need from Turkey, and 3.1% from the Former Yugoslav Republic of Macedonia (FYROM). The country is connected to all of its neighbors, including Italy (with a high voltage subsea DC link).

Greece’s state electricity supplier unilaterally imposes its tariffs on Greek energy intensive industry without previous negotiations resulting in unbearable and unpredicted costs for the Greek businesses.

The Commission insists PPC should negotiate its tariffs and not impose them unilaterally.

>>Read the Links Dossier: The energy conundrum in Bulgaria and Greece

Further Reading

EU INSTITUTIONS

PRESS ARTICLE